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EXHIBIT 10.35
STOCK PURCHASE AGREEMENT
Dated as of November 30, 1998, by and among
Waste Connections, Inc.
Xxxxxx Disposal Service, Inc.
Mother Lode Sani-Hut, Inc.
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxx and G. Xxxxx Xxxxxxxx, as Trustees of the Xxxxxxxx 1981 Trust
Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx, as Co-Trustees
of the Xxxxx 1981 Family Trust
Xxxxx Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxx X. Xxxxxxx
and
Xxxxxxx X. Xxxxxxx
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November
30, 1998, is entered into by and among Waste Connections, Inc., a Delaware
corporation ("WCI"), Mother Lode Sani-Hut, Inc., a California Corporation
("MOTHER LODE"), Xxxxxx Disposal Service, Inc, a California corporation doing
business as Calaveras Disposal and Xxxxxx Recycling ("XXXXXX") (Mother Lode and
Xxxxxx shall collectively be referred to as the "CORPORATION"), and Xxxxxx X.
Xxxxxxxx ("XXXXXXXX"), Xxxxx Xxxxxxxx ("X. XXXXXXXX"), Xxxxx Xxxxxx and G. Xxxxx
Xxxxxxxx, as Trustees of the Xxxxxxxx 1981 Trust (the "XXXXXXXX TRUST"), Xxxxxx
X. Xxxxx and Xxxxxxxx X. Xxxxx, as Co-Trustees of the Xxxxx 1981 Family Trust
("XXXXX TRUST"), Xxxxx Xxxxxx ("SESSER"), Xxxx X. Xxxxxxxx ("XXXXXXXX"), Xxxxxx
Xxxxxx ("XXXXXX"), Xxxxxx Xxxxxx ("XXXXXX"), Xxxx X. Xxxxxxx ("X.X. XXXXXXX"),
and Xxxxxxx X. Xxxxxxx ("J.R. XXXXXXX") (Grunigen, X. Xxxxxxxx, Xxxxxxxx Trust,
Xxxxx Trust, Sesser, Marchini, Xxxxxx, Xxxxxx, X.X. Xxxxxxx and J.R. Xxxxxxx
shall collectively be referred to as the ("SHAREHOLDERS").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste and recyclables in the Cities of Ione, Xxxxxx Creek and Plymouth,
California, and in the unincorporated areas of Calaveras, Xxxxxx, and El Dorado
Counties, California, including the operation and management of the materials
recovery facility and transfer station for the County of Xxxxxx and the
operation and management of the Xxxxxx County Landfill, and other related
activities;
WHEREAS, with the exception of certain real estate in Xxxxxx County
used in connection with the Xxxxxx County Landfill, the Corporation owns all of
the real estate used in connection with the business and operations of the
Corporation, including without limitation the Xxxxxx Creek Recycling Convenience
Center and the Corporation owns each of the buildings and improvements currently
situated on land used in connection with the Corporation's operations at the
Xxxxxx County Landfill; and
WHEREAS, the Shareholders own all of the issued and outstanding
capital stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, WCI wishes to acquire from the Shareholders all of the
Corporation's Stock; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
1.1 Shares to be Purchased. At the Closing (as defined in Section 2),
the Shareholders shall sell and deliver to WCI all of the issued and outstanding
shares of the Corporation's Stock, being the number of shares of the Corporation
set forth on Schedule 3.2 opposite each Shareholder's name. At the Closing, WCI
shall purchase the Corporation's Stock
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and in exchange therefor shall deliver to the Shareholders at the Closing or
thereafter as provided by this Agreement the purchase price described in Section
1.2 (the "PURCHASE PRICE"), plus any and all additions to the Purchase Price
payable pursuant to Section 1.3.
1.2 Purchase Price. The Purchase Price is: six million five hundred
thousand dollars ($6,500,000), (i) minus the Closing Date Debt (as defined in
Section 3.22(a)), (ii) plus or minus, as the case may be, the amount by which
the Effective Date Current Assets (as defined in Section 3.22(b)) are greater or
less than the Effective Date Current Liabilities (as defined in Section 3.22(b),
and (iii) minus that amount, if any, set forth on Schedule 3.21 attributable to
bonus payments, increased compensation, or other dividends or distributions
paid, promised or declared to any Shareholder, director, officer, employee or
agent of the Corporation from the Effective Date through Closing. The Closing
Date Debt shall be based on pay-off letters obtained from the Corporation's
lenders. The Effective Date Current Assets and Effective Date current
Liabilities shall be based on estimates of such amounts delivered to WCI by the
Corporation at Closing. At Closing, the following portion of the Purchase Price
shall be paid to the Shareholders in immediately available funds by wire
transfer or check payable in clearinghouse funds: six million five hundred
thousand dollars ($6,500,000) minus (x) the Closing Date Debt, and (y) that
amount by which the Effective Date Current Liabilities exceed the Effective Date
Current Assets, if at all (the "WORKING CAPITAL DEFICIT"). Within 120 days after
the Closing, WCI and the Shareholders shall determine the actual Closing Date
Debt, Effective Date Current Assets and Effective Date Current Liabilities. If
the actual Closing Date Debt is less than the estimated Closing Date Debt, WCI
shall promptly pay the difference to the Shareholders. If the actual Effective
Date Current Assets exceed the actual Effective Date Current Liabilities or if
the actual Working Capital Deficit is less than the estimated Working Capital
Deficit, WCI shall promptly pay such excess to the Shareholders. If at the time
of Closing there was no estimated Working Capital Deficit and the actual
Effective Date Current Liabilities exceed the actual Effective Date Current
Assets, or if the actual Working Capital Deficit exceeds the estimated Working
Capital Deficit, Shareholders shall promptly pay such excess to WCI.
1.3 Additional Contingent Purchase Price. If within eighteen (18)
months following the Closing Date any of the Shareholders assist WCI or any of
its affiliates or subsidiaries in acquiring directly or indirectly (through
asset purchase, stock purchase, merger or otherwise) the waste collection
operations (the "ACQUIRED OPERATIONS") of any other company or companies
providing such services, WCI shall pay to the Shareholders as additional
contingent purchase price a cash amount equal to two percent (2%) of the
Projected Net Revenues (as defined below) with respect to the Acquired
Operations, which amount shall be paid within thirty (30) days after the date
any such acquisition is consummated. For the purposes of this Section 1.3,
"PROJECTED NET REVENUES" shall mean the gross revenues for an Acquired Operation
for the twelve (12) months preceding the closing date for such acquisition less
all disposal costs, transfer fees, franchise fees, and taxes related to host
fees or disposal taxes (excluding income and sales taxes) projected for such
Acquired Operation for the twelve (12) months following the closing date of such
acquisition as determined from WCI's pro forma financial statements for such
Acquired Operation. WCI shall have sole discretion in determining whether and on
what terms it will consummate any such acquisition, and WCI shall not be liable
to any of the Shareholders for any decision not to pursue any such acquisition
or its failure to consummate any such acquisition, without regard to the reason
therefor.
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1.4 Allocation of the Purchase Price. Twenty five thousand dollars
($25,000) of the Purchase Price shall be allocated to the covenants not to
compete as described in Section 8.1(a) hereof, and the balance of the Purchase
Price shall be allocated to the Corporation's Stock.
1.5 Excluded Assets. The Assets of the Corporation listed on Schedule
1.5 (the "EXCLUDED ASSETS") shall be distributed to the Shareholders prior to
the Closing, and WCI shall acquire no interest in or claim to any of the
Excluded Assets.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "Closing") shall take place concurrent
with the execution of this Agreement or on such other date as WCI and the
Shareholders 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 Corporation and
the Shareholders shall deliver to each other the documents, instruments and
other items described in Section 5 of this Agreement. At the election of WCI and
the Shareholders, the Closing of this transaction may take place through an
exchange of consideration and documents using overnight courier service or
facsimile. Upon consummation of the transactions contemplated by this Agreement
and without regard for the Closing Date, the Closing will be deemed to be
effective and the transfer of the Corporation's Stock will be deemed to have
occurred, for tax and financial reporting purposes, as of 12:01 a.m. local time
on November 1, 1998 (the "Effective Date"). Accordingly, all income generated
from the Corporation's operations and business on and after the Effective Date
will remain with the Corporation and, indirectly, for the benefit of WCI.
Shareholders hereby acknowledge that for the period from the Effective Date
until Closing when the physical transfer of certificates evidencing the
Corporation's Stock will actually take place, Shareholders will hold such
certificates for the benefit of WCI and such certificates will be deemed
delivered as of the Effective Date, subject to the other provisions of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDERS
The Corporation and the Shareholders jointly and severally represent
and warrant to WCI, which representations and warranties will be true and
correct as of the Closing Date, as follows:
3.1 Organization, Standing and Qualification. The Corporation is duly
organized, validly existing and in good standing under the laws of the State of
California. The Corporation has full corporate power and authority to own and
lease its properties and to carry on its business as now conducted. The
Corporation is not required to be qualified or licensed to conduct business as a
foreign corporation in any other jurisdiction.
3.2 Capitalization. Schedule 3.2 sets forth, as of the Closing Date,
the authorized and outstanding capital of the Corporation, 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
Purchase Price among the Shareholders as agreed to
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among themselves, and wire transfer instructions for each Shareholder relating
to the bank account to which the cash portion of the Purchase Price should be
sent. All of the issued and outstanding shares of the capital stock of the
Corporation are owned of record and beneficially by the Shareholders, as set
forth in Schedule 3.2, and are and as of the Closing Date will be free and clear
of all liens, security interests, encumbrances, restrictions, pledges and claims
of every kind except as set forth in Schedule 3.2. Each share of the capital
stock of the Corporation is duly and validly authorized and issued, fully paid
and nonassessable, and was not issued in violation of any preemptive rights of
any past or present shareholder of the Corporation. No option, warrant, call,
conversion right or commitment of any kind (including any of the foregoing
created in connection with any indebtedness of the Corporation) exists which
obligates the Corporation to issue any of its authorized but unissued capital
stock or other equity interest or which obligates the Shareholders to transfer
any Corporation's Stock to any person. The Corporation's Stock has been issued
in accordance with all applicable federal and state securities laws.
3.3 All Stock Being Acquired. The Corporation's Stock being acquired
by WCI hereunder constitutes all of the outstanding capital stock of the
Corporation.
3.4 Authority for Agreement. The Corporation and the Shareholders have
full right, power and authority to enter into this Agreement and all documents
and agreements necessary to give effect to the provisions of this Agreement, and
to perform its, his or her obligations hereunder. The execution and delivery of
this Agreement by the Corporation and the consummation of the transactions
contemplated hereby by the Corporation has been duly authorized by the
Corporation's Board of Directors. This Agreement and all other agreements and
documents executed in connection herewith have been and will be, as the case may
be, duly and validly executed and delivered by the Corporation and the
Shareholders and, subject to the due authorization, execution and delivery by
WCI, constitute the legal, valid and binding obligations of the Corporation and
the Shareholders enforceable against the Corporation and the Shareholders in
accordance with their respective terms.
3.5 No Breach or Default. Except as disclosed on Schedule 3.5, the
execution and delivery by the Corporation and the Shareholders of this
Agreement, and the consummation by the Shareholders 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 contract,
agreement, license or other instrument or obligation of any kind or
nature to which the Corporation or any of the Shareholders is a party,
or by which the Corporation or any of the Shareholders, or any of the
Corporation's or the Shareholders' assets, is or may be bound or
affected; or
(b) violate any law, rule or regulation, or any order, writ,
injunction or decree of any court, administrative agency or
governmental authority, or require the approval, consent or permission
of any governmental or regulatory authority; or
(c) violate the Articles of Incorporation or Bylaws of the
Corporation.
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3.6 Subsidiaries. Schedule 3.6 lists as of the Closing Date any and all
subsidiaries of the Corporation and any securities of any other corporation or
any securities or other interest in any other business entity owned by the
Corporation or any of the Corporation's subsidiaries.
3.7 Financial Statements. The Corporation has delivered to WCI, as
Schedule 3.7, copies of financial statements ("FINANCIAL STATEMENTS") for the
Corporation's three most recent fiscal years and interim financial statements
for the Corporation for the period ended October 31, 1998 (the "BALANCE SHEET
DATE"). Such financial statements have been audited by Xxxxxxx & Xxxxxxxx, LLP.
The Financial Statements are true and correct and fairly present (i) the
financial position of the Corporation in accordance with generally accepted
accounting principles, applied as of the respective dates of the balance sheets
included in said statements, and (ii) the results of operations for the
respective periods indicated. The Financial Statements have been prepared in
accordance with generally accepted accounting principles, applied consistently
with prior periods. Except to the extent reflected or reserved against in the
Corporation's balance sheet as of the Balance Sheet Date, or as disclosed on
Schedule 3.7 or Schedule 3.8, the Corporation did not have as of the Balance
Sheet Date, nor will the Corporation 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.
3.8 Liabilities. Parts I, II, III and IV of Schedule 3.8, are accurate
lists and descriptions of all liabilities of the Corporation required to be
described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Closing 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 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 Closing Date,
all claims, suits and proceedings which are pending against the
Corporation and, to the knowledge of the Corporation and the
Shareholders, all contingent liabilities and all claims, suits and
proceedings threatened or anticipated against the Corporation. 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 Corporation's or a
Shareholder's possession or control.
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(c) Part III of Schedule 3.8 lists, as of the Closing 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 the Corporation (including any Corporate 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 Closing 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 the
Corporation is a party as lessor or lessee or, to the knowledge of the
Corporation or a Shareholder, affecting or relating to any Corporate
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,
neither the Corporation nor any of the Shareholders has made any
payment or committed to make any payment since the Balance Sheet Date
on or with respect to any of the liabilities or obligations listed on
Schedule 3.8 except, in the case of liabilities and obligations listed
on Parts I, III and IV of Schedule 3.8, periodic payments required to
be made under the terms of the agreements or instruments governing such
obligations or liabilities or made in the ordinary course of business.
3.9 Accurate and Complete Records. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of the Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material corporate
transactions required to be authorized by the Board of Directors and/or
shareholders of that Corporation and do not contain or reflect any
material discrepancies.
3.10 Permits and Licenses.
(a) Schedule 3.10(a) is a full and complete list, and
includes copies, of all permits, licenses, franchises, and service
agreements pursuant to which the Corporation is authorized to collect
and haul industrial, commercial and residential solid waste (the
"COLLECTION FRANCHISES"), and of all other material permits, licenses,
titles (including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents
constituting a material authorization or entitlement or otherwise
material to the operation of the business of the Corporation
(collectively the "GOVERNMENTAL PERMITS") owned by,
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issued to, held by or otherwise benefiting the Corporation or the
Shareholders as of the Closing Date. The status of the Governmental
Permits related to the disposal areas owned or used by the Corporation,
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 Shareholders,
the Corporation 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. All such consents have been obtained prior to the Closing.
Except as set forth on Schedule 3.10(a), all of the Collection
Franchises and other Governmental Permits enumerated and listed on
Schedule 3.10(a) are adequate for the operation of the business of the
Corporation and of each Corporate Property as presently operated and
are valid and in full force and effect. All of said Collection
Franchises and other Governmental Permits and agreements have been duly
obtained and are in full force and effect, and there are no proceedings
pending or, to the knowledge of the Corporation or the Shareholders,
threatened which may result in the revocation, cancellation, suspension
or adverse modification of any of the same. Neither the Corporation nor
any of the Shareholders has any knowledge of any reason why all such
Governmental Permits and agreements will not remain in effect for the
period or term stated therein, subject to WCI's full compliance
therewith, after consummation of the transactions contemplated hereby.
(b) Schedule 3.10(b) includes: (i) all records,
notifications, reports, permit and license applications, engineering
and geologic studies, and environmental impact reports, tests or
assessments (collectively, "Records, Notifications and Reports") that
(A) are material to the operation of the business of the Corporation,
or (B) relate to the discharge or release of materials into the
environment and/or the handling or transportation of waste materials or
hazardous or toxic substances or otherwise relate to the protection of
the public health or the environment, or (C) were filed with or
submitted to appropriate governmental agencies during the past
twenty-four (24) months by the Corporation or the Shareholders or their
agents with respect to the business of the Corporation, and (ii) all
material notifications from such governmental agencies to the
Corporation, the Shareholders or their agents in response to or
relating to any of such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists each facility owned, leased,
operated or otherwise used by the Corporation, 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 Corporation or owned
by any of the Shareholders or an Affiliate (as hereinafter
defined) of any of the Shareholders and leased to the
Corporation is fully licensed, permitted and authorized to
carry on its current business under all applicable federal,
state and local statutes, orders, approvals, zoning or land
use requirements, rules and regulations, and, none of such
Facilities or the current use thereof constitutes a
non-conforming use or is
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otherwise subject to any restrictions regarding the
operation, renovation or reconstruction thereof. To the
knowledge of the Corporation and the Shareholders, no
Facility that is leased by the Corporation 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 Corporation and the
Shareholders, there are no circumstances, conditions or
reasons which 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 Corporation or owned by any of the Shareholders
or an Affiliate (as hereinafter defined) of any of the
Shareholders and leased to the Corporation, and to the
knowledge of the Corporation and the Shareholders 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 Corporation from a third party
who is not an Affiliate (as hereinafter defined) of the
Shareholders.
3.11 Certain Receivables. Schedule 3.11 is an accurate list as of the
Closing Date of the accounts and notes receivable of the Corporation from and
advances to employees, former employees, officers, directors, the Shareholders
and Affiliates of the foregoing which have not been fully repaid. For purposes
of this Agreement, the term "AFFILIATE" means, with respect to any person, any
person that directly or indirectly through one or more intermediaries controls
or has an ownership interest in, or is controlled or owned in whole or in part
by, or is under common control or ownership in whole or in part with such
person, and in the case of the Corporation includes directors and officers, in
the case of individuals includes the individual's spouse, father, mother,
grandfather, grandmother, brothers, sisters, children and grandchildren and in
the case of a trust includes the grantors, trustees and beneficiaries of the
trust.
3.12 Fixed Assets and Real Property.
(a) Schedule 3.12(a) lists, as of the Closing Date, all the
fixed assets (other than real estate) of the Corporation, including,
without limitation, identification of each vehicle by description and
serial number, identification of machinery, equipment and general
descriptions of parts, supplies and inventory. Except as described on
Schedule 3.12(a), all of the Corporation's containers, vehicles,
machinery and equipment necessary for the operation of the
Corporation's businesses are in operable condition, and all of the
motor vehicles and other rolling stock of the Corporation are in
compliance with all applicable laws, rules and regulations. All such
containers, vehicles, machinery and equipment are 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
Corporation nor, to the knowledge of the Corporation or the
Shareholders, any other party to such leases is in breach of any of the
material provisions thereof.
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(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Closing Date (the "CORPORATE
PROPERTY"), including the street address and, in the case of Corporate
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 Corporate Property, as well as a current commitment
for title insurance issued by a title insurance company satisfactory to
WCI with respect to each Corporate Property owned or being purchased by
the Corporation, 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; neither the Corporation nor any other party to any such lease
is in breach of any of the material provisions thereof; to the
knowledge of the Corporation and the Shareholders, the landlord's
interest in each such lease has not been assigned to any third party
nor has any such interest been mortgaged, pledged or hypothecated; and
the Corporation has not assigned any such lease or sublet all or any
part of the Corporate 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 Corporate Property
and each such Facility is in good condition and repair.
(c) The Corporation possesses good, valid and marketable
title to all properties and assets, real, personal, and mixed, tangible
and intangible, actually used or necessary for the conduct of its
business, free of any encumbrance or charge of any kind except: (i)
liens for current taxes not yet due; (ii) minor imperfections of title
and encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the use of the property subject
thereto, do not materially impair the value of the Corporation, and
have arisen only in the ordinary course of business and consistent with
past practice; and (iii) the liens identified on Parts I and III of
Schedule 3.8 (collectively, the "PERMITTED LIENS"). Except as described
on Schedule 3.12(b), 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 Corporate Property, or any portion thereof,
or create in or confer on any person or entity any right, title or
interest therein or in any portion thereof.
3.13 Related Party Transactions. None of the Shareholders or their
respective Affiliates has entered into any transaction with or is a party to any
agreement, lease or other instrument, or as of the date of this Agreement is
indebted to or is owed money by a Corporation not disclosed in the Financial
Statements. Except as disclosed in the Financial Statements, none of the
Shareholders or their Affiliates owns any direct or indirect interest of any
kind in, or controls or is a director, officer, employee, shareholder or partner
of, or consultant or lender to or borrower from or has the right to participate
in the profits of, any Person which is a competitor, supplier, customer,
landlord, tenant, creditor or debtor of the Corporation.
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3.14 Contracts and Agreements; Adverse Restrictions.
(a) Schedule 3.14(a) lists, as of the Closing Date, and
includes copies of, all material contracts and agreements, and written
summaries of key terms of all oral contracts, to which the Corporation
is a party or by which it or any of its property is bound (other than
leases and documents included with Schedule 3.12(b)) including, but not
limited to, joint venture or partnership agreements, contracts with any
labor organizations, promissory notes, loan agreements, bonds,
mortgages, deeds of trust, liens, pledges, conditional sales contracts
or other security agreements. For the purposes of this Section 3.14,
"MATERIAL CONTRACT" shall mean any contract with a municipality or
other governmental entity relating to the operations or assets of the
Corporation. Except as disclosed on Schedule 3.14(a), all 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), neither the Corporation nor, to the
Corporation's or any Shareholder's knowledge, any other parties to such
contracts and agreements is in breach thereof, and none of the parties
has threatened to breach any of the material provisions thereof or
notified the Corporation or any of the Shareholders 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
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate Properties, nor has
the Corporation 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 Closing Date, of all insurance policies in effect on the Closing Date
or, with respect to "OCCURRENCE" policies that were in effect, in respect of the
Corporate Properties or any other property used by the Corporation specifying,
for each policy, the name of the insurer, the type of risks insured, the
deductible and limits of coverage, and the annual premium therefor. The
Corporation currently carries insurance covering the Corporation and its
operations, assets and personnel in the type and amount ordinarily carried by
owners or corporations in similar circumstances. During the last five years,
there has been no lapse in any material insurance coverage of the Corporation.
For each insurer providing coverage for any of the contingent or other
liabilities listed on Schedule 3.8, except to the extent otherwise set forth in
Part II of Schedule 3.8, each such insurer, if required, has been properly and
timely notified of such liability, no reservation of rights letters have been
received by the Corporation and the insurer has assumed defense of each suit or
legal proceeding. All such proceedings are fully covered by insurance, subject
to normal deductibles.
3.16 Personnel. Schedule 3.16 is a complete list, as of the Closing
Date, of all officers, directors and employees (by type or classification) of
the Corporation 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 Corporation's motor vehicles.
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3.17 Benefit Plans and Union Contracts.
(a) Schedule 3.17(a) is a complete list as of the Closing
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 Corporation, 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 Closing
Date. Except for the employee benefit plans described on Schedule
3.17(a), the Corporation has 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 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. The Corporation has
not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or U.S. Department of Labor nor any liability
to the Pension Benefit Guaranty Corporation for any employee benefit
plan, and neither the Corporation, nor a party-in-interest or
disqualified person, has engaged in any transaction or other activity
which would give rise to such liability. The Corporation has not
participated in or made contributions to any "multi-employer plan" as
defined in the Employee Retirement Income Security Act of 1974
("ERISA"), nor would the Corporation 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 the
Corporation and any collective bargaining group, nor have there ever
been any such contracts in effect. The Corporation is in compliance in
all material respects with all applicable federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and
is not engaged in any unfair labor practice. There is no charge pending
or, to the Corporation's or any Shareholder's knowledge, threatened,
against the Corporation 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 Corporation; no union organizational activity
exists respecting employees of the
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Corporation, 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
Corporation. The Corporation has not 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 Corporation (the "RECIPIENT") pursuant to
any employment contract, severance agreement or other arrangement (the
"GOLDEN PARACHUTE PAYMENT") will be nondeductible by the Corporation
because of the application of Sections 280G and 4999 of the Code to the
Golden Parachute Payment, nor will the Corporation 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 Corporation has timely filed or will timely file all
requisite federal, state, local and other tax and information returns
due for all fiscal periods ended on or before the Closing Date. All
such returns are accurate and complete. Except as set forth on Schedule
3.18, 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 a Corporation relating to federal, state,
local or other taxes (including penalties and interest) for any period
or periods prior to and including the Closing Date and no notice of any
claim for taxes has been received. Copies of (i) any tax examinations,
(ii) extensions of statutory limitations and (iii) the federal income,
and state franchise, income and sales tax returns of the Corporation
for its last three fiscal years are attached as part of Schedule 3.18.
Copies of all other federal, state, local and other tax and information
returns for all prior years of the Corporation's existence have been
made available to WCI and are among the records of the Corporation that
will accrue to WCI at the Closing. The Corporation has not been
contacted by any federal, state or local taxing authority regarding a
prospective examination.
(b) Except as set forth on Schedule 3.18 (which schedule also
includes the amount due with respect to the Corporation) the
Corporation has duly paid all taxes and other related charges required
to be paid prior to the date of this Agreement. The reserves for taxes
contained in the Financial Statements of the Corporation are adequate
to cover the Corporation's tax liability as of the Closing Date.
(c) The Corporation has withheld all required amounts from
its employees for all pay periods in full and complete compliance with
the withholding provisions of applicable federal, state and local laws.
All required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes have
been duly filed by the Corporation 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.
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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 Corporation, as amended to the Closing Date, and the copies of all
leases, instruments, agreements, licenses, permits, certificates, site
assessments or other documents that have been delivered to WCI in connection
with the transactions contemplated hereby (the "DELIVERED DOCUMENTS") are
complete and accurate as of the Closing Date and are true and correct copies of
the originals thereof. Except as specifically disclosed on Schedule 3.19, any
rights and benefits the Corporation may have under the Delivered Documents 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. Except for any consents and approvals listed on
Schedule 3.19 and except for Required Governmental Consents (all of which have
been given or obtained prior to the Closing), none of the Delivered Documents
requires notice to, or consent or approval of, any governmental agency or other
third party to any of the transactions contemplated hereby.
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 the Corporation serves 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, the Corporation's accounts and notes
receivable are fully collectible in the amounts shown on Schedules 3.11
and 3.20; and
(c) the average monthly revenues of the Corporation 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
Corporation nor any Shareholder has any knowledge of any reason why a
Corporation's average monthly revenues derived from xxxxxxxx to its
customers 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 Corporation. Except as set forth on
Schedule 3.21, since the Balance Sheet Date, the business of the Corporation has
been conducted only in the ordinary course and there has been no change in the
condition (financial or otherwise) of the assets, liabilities or operations of
the Corporation other than changes in the ordinary course of business, none of
which either singly or in the aggregate has been materially adverse to the
Corporation. Specifically, and without limiting the generality of the foregoing,
except as set forth on Schedule 3.21, with respect to the Corporation, since the
Balance Sheet Date, there has not been:
(a) any material change in its financial condition, assets,
liabilities (contingent or otherwise), income, operations or business
which would have a material adverse effect
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on the financial condition, assets, liabilities (contingent or
otherwise), income, operations or business of the Corporation, taken as
a whole;
(b) any material damage, destruction or loss (whether or not
covered by insurance) adversely affecting any material portion of its
properties or business;
(c) any change in or agreement to change (i) its shareholders,
(ii) ownership of its authorized capital or outstanding securities, or
(iii) its securities;
(d) any declaration or payment of, or any agreement to declare
or pay, any dividend or distribution in respect of its capital stock or
any direct or indirect redemption, purchase or other acquisition of any
of its capital stock;
(e) any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or
other special compensation to any employee or any severance or
termination pay paid to any of its present or former officers or other
key employees;
(f) any labor dispute or any other event or condition of any
character with respect to the Corporation's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any other
person, including, without limitation, the Shareholders and their
Affiliates, other than in the ordinary course of business;
(h) any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including,
without limitation, any indebtedness or obligation of any of the
Shareholders or any Affiliate thereof;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or
assets outside the ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any existing
material contract, agreement, license, permit or other right to which
it is a party; or
(m) any other material transaction outside the ordinary course
of its business.
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3.22 Closing Date Debt; Closing Date Current Assets and Closing Date
Current Liabilities.
(a) Schedule 3.22(a) lists (i) the amount of the aggregate
debt (excluding trade payables) of the Corporation outstanding on the
Closing Date required to be repaid by WCI or the Corporation at or
immediately after the Closing Date and all prepayment penalties
incurred or to be incurred by WCI or the Corporation in connection with
the repayment of any such debt, (ii) the amount of the aggregate debt
(excluding trade payables) of the Corporation outstanding on the
Closing Date which will remain outstanding obligations of the
Corporation after the Closing Date, and all prepayment penalties
applicable to such debt if repaid prior to maturity, including in each
case all interest accrued through and including the Closing Date, (iii)
the aggregate amount of the present value as of the Closing Date,
discounted at the lease rate factor, if known, inherent in the lease
or, if the lease rate factor is not known, at the rate charged to the
Corporation by a third party lender in connection with its most recent
borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations and (iv) the
aggregate amount of the present value as of the Closing Date of all
capitalized lease obligations (determined in accordance with generally
accepted accounting principles) of the Corporation (the "CLOSING DATE
DEBT"). Schedule 3.22(a) includes 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 Effective Date
of the amount of the aggregate current liabilities (including any
reserve for unpaid taxes and excluding the current portion of long-term
debt to the extent such current portion is included in Closing Date
Debt) and trade payables of the Corporation as of the Effective Date
(the "EFFECTIVE DATE CURRENT LIABILITIES") and the amount of the
aggregate cash and other current assets of the Corporation as of the
Effective Date, including prepaid expenses the benefit of which
survives the Effective Date and the accounts receivable of the
Corporation earned prior to the Effective Date, and collectible (less
an allowance for doubtful accounts) on or after the Effective Date (the
"EFFECTIVE DATE CURRENT ASSETS").
3.23 Bank Accounts.
(a) Schedule 3.23(a) is a complete and accurate list, as of
the Closing Date, of:
(i) the name of each bank in which the Corporation
has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are
held;
(iii) the type of account; and
(iv) the name of each person authorized to draw
thereon or have access thereto.
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(b) Schedule 3.23(b) is a complete and accurate list, as of
the Closing Date, of:
(i) each credit card or other charge account issued
to the Corporation; 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
Corporation has complied with, and the Corporation is 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, there has been no assertion by any party
that the Corporation is in violation of any Laws. Specifically and without
limiting the generality of the foregoing, except as disclosed on Schedule 3.24:
(a) To the Corporation's or the Shareholders' knowledge, and
except as permitted under applicable laws and regulations, including,
without limitation, the federal Resource Conservation Recovery Act, 42
USC ss.6901 et seq. ("RCRA"), the Corporation has not accepted,
processed, handled, transferred, generated, treated, stored or disposed
of any Hazardous Material (as defined in Section 3.24(e) below) nor has
the Corporation accepted, processed, handled, transferred, generated,
treated, stored or disposed of asbestos, medical waste, radioactive
waste or municipal waste, except in compliance with Environmental Laws.
(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other
than that allowed under Environmental Laws, including, without
limitation, RCRA, has been disposed of, or otherwise released on any
Corporate Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Corporate Property has ever
been subject to or received any notice of any private, administrative
or judicial action, or notice of any intended private, administrative
or judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Corporate
Property or any real property now or previously owned or leased by a
Corporation. There are no pending and, to the Corporation's and
Shareholders' knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of the Corporate Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
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(d) Except as allowed under Environmental Laws, the
Corporation has 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 California, or other applicable
state 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. The Corporation has not granted any power of
attorney (except routine powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar agreement whereby a
third party may bind or commit the Corporation in any manner.
3.26 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 Corporate Property. Except as set forth on Schedule
3.26, the Corporation has not owned or leased any real property not included in
the Corporate Property having any underground storage tanks containing petroleum
products or wastes or other hazardous substances regulated by 40 CFR 280. As to
each such underground storage tank ("UST") identified on Schedule 3.26, the
Corporation has 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 the Corporation currently owns or leases the property on
which the UST is located (and if the Corporation does not 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 Corporation's or the Shareholders' 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,
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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
Corporation has 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 Corporation or which it is licensed to use (other than
licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). No
patents, trade secrets, knowledge intellectual property, trademarks, trade
names, assumed names, copyrights, or designations used by the Corporation in its
business infringe on any patents, trademarks, or copyrights, or any other rights
of any person. Neither the Corporation nor any of the Shareholders 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. The Corporation owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, necessary to permit it to carry on its business and operations as
presently conducted, and, except as disclosed on Schedules 3.5, 3.10(a),
3.10(c), 3.14(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 Corporation nor any of the
Shareholders has any knowledge of any reason why all such Collection Franchises
and Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
3.29 Condemnation. No Corporate Property owned or leased by a
Corporation is the subject of, or would be affected by, any pending condemnation
or eminent domain proceedings, and, to the knowledge of the Corporation and the
Shareholders, no such proceedings are threatened.
3.30 Suppliers and Customers. The relations between the Corporation and
its customers are good. Neither the Corporation nor any of the Shareholders has
knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the suppliers supplying products, components,
materials or providing use of, or access to, landfills or disposal sites to the
Corporation intends to cease providing such items to the Corporation, nor does
the Corporation or any of the Shareholders have knowledge of any fact (other
than general economic and industry conditions) which indicates that any of the
customers of the Corporation intends to terminate, limit or reduce its business
relations with the Corporation.
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3.31 Absence of Certain Business Practices. Neither the Corporation nor
any of the Shareholders has directly or indirectly within the past five years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of the Corporation in connection with any actual or proposed
transaction which (a) might subject the Corporation 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 Corporation, or (c) if not continued in
the future, might adversely affect the financial condition, business or
operations of the Corporation or which might subject the Corporation to suit or
penalty in any private or governmental litigation or proceeding.
3.32 Disclosure Schedules. Any matter disclosed on any Schedule to this
Agreement shall be deemed to have been disclosed on every other Schedule that
refers to such Schedule by cross reference so long as the nature of the matter
disclosed is obvious from a fair reading of the Schedule on which the matter is
disclosed.
3.33 No Misleading Statements. The representations and warranties of
the Corporation and the Shareholders contained in this Agreement, the Exhibits
and Schedules 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.
3.34 Knowledge. Wherever reference is made in this Agreement to the
"KNOWLEDGE" of the Shareholders, such term means the actual knowledge of the
Shareholders or any knowledge which should have been obtained by the
Shareholders 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. Wherever reference is made in
this Agreement to the "KNOWLEDGE" of the Corporation, such term means the actual
knowledge of any management employee, officer or director of the Corporation or
any knowledge which should have been obtained by any such person upon reasonable
inquiry by a reasonable business person.
3.35 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Corporation or a Shareholder in
connection with the transactions contemplated by this Agreement and no person is
entitled to any broker's, finder's, financial advisory or similar fee or payment
in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of a Corporation or a Shareholder.
3.36 S Corporation . The Corporation has elected to be treated as an S
Corporation within the meaning of the Federal Income Tax Code of 1986, as
amended (the "Code"), for the years listed on Schedule 3.36.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders, which representations
and warranties will be true and correct as of the Closing Date, as follows:
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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 Corporation and the Shareholders, 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 No Misleading Statements. The representations and warranties of WCI
contained in this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to the Shareholders pursuant hereto are
accurate and complete in all material respects, and do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made not misleading.
4.5 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI in connection with the transactions
contemplated by this Agreement and no person is entitled to any broker's,
finder's, financial advisory or similar fee or payment in respect thereof based
in any way on any agreement, arrangement or understanding made by or on behalf
of WCI.
4.6 Disclosure Schedules. Any matter disclosed by WCI on any Schedule
to this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature disclosed
is obvious from a fair reading of the Schedule on which the matter is disclosed.
5. COVENANTS FROM SIGNING TO CLOSING DATE
5.1 Operations. Between the date of this Agreement (the "Signing Date")
and the Closing Date, the Corporation will, and the Shareholders will cause the
Corporation to:
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(a) carry on its business in substantially the same manner as
it has heretofore and not introduce any material new method, or
discontinue any existing material method, of operation or accounting;
(b) maintain its 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 of its material obligations under agreements
relating to or affecting its assets, properties, business operations
and rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(e) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business
relations with it;
(f) file on a timely basis all notices, reports or other
filings required to be filed with or reported to any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or any instrumentality of any of the foregoing wherever located
with respect to the continuing operations of the Corporation;
(g) maintain compliance with all Collection Franchises and
Governmental Permits and all laws, rules, regulations and consent
orders;
(h) file on a timely basis all complete and correct
applications or other documents necessary to maintain, renew or extend
any site assessment, permit, license, variance or any other approval
required by any governmental authority necessary and/or required for
the continuing operation of the Corporation's business operations,
whether or not such approval would expire before or after the Closing;
and
(i) advise WCI promptly in writing of any material change in
any document, Schedule, Exhibit, or other information delivered
pursuant to this Agreement.
5.2 No Change. Between the Signing Date and the Closing Date, the
Corporation will not, and the Shareholders will not permit the Corporation to,
take any action described below without the prior written consent of WCI:
(a) make any change in its Articles of Incorporation or
Bylaws;
(b) authorize, issue, transfer, pledge, distribute or sell any
of the Corporation's Stock or any other securities;
(c) except as set forth on Schedule 3.21, declare or pay any
dividend or make any distribution in respect of its capital stock
whether now or hereafter outstanding, or purchase, redeem or otherwise
acquire or retire for value any shares of its capital stock;
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(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 Schedule 3.16 or Schedule 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) sell, assign, lease or otherwise transfer or dispose of
any property or equipment other than in the ordinary course of
business;
(h) merge or consolidate or agree to merge or consolidate with
or into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend, terminate or enter into any material agreement or
any site assessment, permit, license or other right, without the prior
written consent of WCI;
(k) enter into any other transaction outside the ordinary
course of the Corporation's business or prohibited hereunder; or
(l) take any action or suffer or permit any event to occur
that would cause any representation or warranty of the Corporation or
the Shareholders to become untrue as of the Closing Date.
5.3 Obtain Consents. Promptly after the Signing Date, the Corporation
will, and the Shareholders shall cause the Corporation to, make all filings and
take all steps reasonably necessary to obtain all other approvals and consents
required to be obtained by the Corporation or the Shareholders to consummate the
transactions contemplated by this Agreement and otherwise to satisfy the
conditions of Section 6.7.
5.4 Access; Confidential Information. Between the Signing Date and the
Closing Date, the Shareholders and the Corporation will, and the Shareholders
will cause the Corporation to, afford to the officers and authorized
representatives of WCI, including, without limitation, its engineers, counsel,
independent auditors and investment bankers, access to the Facilities, plants,
Corporate Properties and other properties, books and records of the Corporation,
and will furnish WCI with such additional financial and operating data and other
information as to the business and properties of the Corporation as WCI may from
time to time reasonably request. The Shareholders will and will cause the
Corporation to cooperate with WCI, its representatives and counsel in the
preparation of any documents or other material which may be required by any
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governmental agency. WCI will cause all information obtained from the
Shareholders and the Corporation in connection with the negotiation and
performance of this Agreement which the Shareholders or the Corporation have
stamped or otherwise marked as confidential 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 detri-mental to the
Corporation or the Shareholders. The Corporation will not, and the Shareholders
will not and will cause the Corporation not to, disclose to any third persons
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 the
prior written consent of WCI.
5.5 Notice of Material Adverse Change. The Corporation and the
Shareholders shall promptly notify WCI of any material adverse change in the
business or financial condition of the Corporation, including any lawsuit,
claim, audit, investigation, or other proceeding, between the date of this
Agreement and the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE
The obligations of WCI under this Agreement are subject to the
satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by WCI:
6.1 Representations and Warranties. All representations and warranties
of the Corporation and the Shareholders contained in this Agreement or in any
statement, Exhibit, Schedule, certificate or document delivered by the
Corporation or the Shareholders under this Agreement shall be true, correct and
complete on and as of the date when made and at all times prior to the Closing
Date, shall be deemed to be made again on the Closing Date, and shall then be
true, correct and complete in all material respects as of the Closing Date.
6.2 Conditions. The Corporation and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
6.3 No Material Adverse Change. Since the Signing Date, there shall not
have been any material adverse change in the condition (financial or otherwise)
of the business, properties or assets of the Corporation.
6.4 Certificates. The President of each Corporation shall have
delivered to WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to the fulfillment of the conditions
set forth in Sections 6.1, 6.2 and 6.3, and the Shareholders shall have
delivered to WCI a certificate dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to the fulfillment of the conditions
set forth in Section 6.1, 6.2 and 6.3 applicable to the Shareholders.
6.5 No Litigation. None of the transactions contemplated hereby shall
have been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand shall have
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been made by any federal or state governmental branch, agency, commission or
regulatory authority.
6.6 Other Deliveries. The Shareholders shall have delivered the items
which they are required to deliver under Section 8 of this Agreement.
6.7 Governmental Approvals; Consents to Transfer. All governmental
consents and approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been received, and each
other party whose consent is required to the transactions contemplated by this
Agreement, including without limitation (if applicable) each party to any
contract with the Corporation, each municipality or other jurisdiction that has
granted a franchise to the Corporation and each jurisdiction issuing or granting
any other Governmental Permit, shall have consented to such transactions, and
every other Required Governmental Consent shall have been obtained.
6.8 Release of Security Interests. All security interests in assets of
the Corporation that have been created in favor of financial institutions or
other lenders to secure indebtedness of the Shareholders or their Affiliates
shall have been released.
6.9 Due Diligence. WCI and its representatives have and shall continue
to have reasonable rights of inspection of the Corporation's business and assets
in connection with WCI's due diligence review, and the results of WCI's due
diligence review shall be acceptable to it. WCI shall have reviewed all of the
schedules to this Agreement and all documents related to any of the
Corporation's benefits plans, and all such schedules and documents shall be
satisfactory to WCI or any problems reflected in, or indicated by, such
schedules or documents shall have been resolved to the satisfaction of WCI.
6.10 Approval of Board of Directors. This Agreement and the
consummation of the transactions contemplated hereunder will have been approved
by the Board of Directors of WCI.
6.11 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement will be completed to the mutual satisfaction of the parties within
fourteen (14) days after the Signing Date.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS TO CLOSE
The obligations of the Shareholders under this Agreement are subject to
the satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by the Shareholders:
7.1 Representations and Warranties. All representations and warranties
of WCI contained in this Agreement or in any statement, Exhibit, Schedule,
certificate or document delivered by WCI under this Agreement shall be true,
correct and complete on and as of the date when made and at all times prior to
the Closing 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.
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7.2 Conditions. WCI shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it on or before the Closing Date.
7.3 Certificate. WCI shall have delivered to the Shareholders a
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Shareholders, certifying to the fulfillment of the conditions set forth in
Sections 7.1 and 7.2. 7.4 No Litigation. None of the transactions contemplated
hereby shall have been enjoined by any court or by any federal or state
governmental branch, agency, commission or regulatory authority and no suit or
other proceeding challenging the transactions contemplated 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 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement shall be completed to the mutual satisfaction of the parties within
fourteen (14) days after the Signing Date.
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.
(b) WCI shall deliver to Shareholders the certificate set
forth in Section 7.3.
8.2 Shareholders Deliveries.
(a) The Shareholders shall deliver to WCI the certificates
representing the outstanding Corporation's Stock free and clear of all
liens, security interests, encumbrances, restrictions, pledges and
claims, accompanied by a stock power duly executed in blank.
(b) The Shareholders shall deliver to WCI an opinion of
counsel for the Shareholders, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit 8.2(b).
(c) The Shareholders 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 and all required consents of the
landlords under all real estate leases to which the Corporation is a
party, were obtained
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and the Shareholders shall deliver an estoppel certificate from the
landlords under all real estate leases to which the Corporation 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 Corporation 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.
(d) The Corporation 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 benefits
approved by WCI) or other benefits with non-union employees of that
Corporation (including, without limitation, stock options or other
rights to obtain equity in that Corporation) have been terminated,
effective on or before the Closing Date.
(e) The Shareholders shall cause each officer and director of
the Corporation to deliver a resignation as an officer and/or director
of the Corporation together with a general release, substantially in
the form attached hereto as Exhibit 8.2(e).
(f) The Shareholders shall execute and deliver such other
documents and instruments as are reasonably requested by WCI in order
to consummate the transactions contemplated by this Agreement.
(g) The Corporation and the Shareholders shall deliver to WCI
the certificates set forth in Section 6.4.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS
9.1 No Delay. The Corporation, the Shareholders and WCI covenant and
agree from and after the date hereof not to hinder in any way or unreasonably
delay the Closing Date and to use their respective reasonable efforts to obtain
required Governmental Consents and otherwise to cause the Closing Date to occur
as soon as reasonably practicable after the date of this Agreement, provided,
however, that in using its reasonable efforts WCI shall not be required to take
any action or to agree to any condition, including without limitation any
condition imposed by any government authority with respect to the transfer of
any Governmental Permit, that, in WCI's reasonable judgment, imposes a
materially adverse financial burden or operating condition on WCI.
9.2 Release of Guaranties. WCI shall use reasonable efforts to obtain
the termination and release on or before the Closing Date of the personal
guaranties of the Shareholders listed on Schedule 9.2, all of which relate to
any indebtedness of the Corporation included in the Financial Statements as of
the Balance Sheet Date or, at its option, WCI shall indemnify the Shareholders
and hold them harmless from and against all losses, expenses or claims by third
parties to enforce or collect indebtedness owed by the Corporation as of the
Closing Date which is personally guaranteed by the Shareholders pursuant to such
guaranties. The Shareholders may notify the obligees under such guaranties that
they have terminated their obligations under such guaranties. The Shareholders
shall cooperate with WCI in obtaining such releases.
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9.3 Release of Security Interests. Between the Signing Date and the
Closing Date, the Shareholders and their respective Affiliates shall cause those
security interests in the assets of the Corporation that have been created in
favor of financial institutions or other lenders to secure indebtedness (other
than indebtedness of that Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
9.4 Confidentiality. Neither the Corporation nor any of the
Shareholders shall disclose or make any public announcements of the transactions
contemplated by this Agreement 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
twenty-four (24) hours before such disclosure or announcement is expected to be
made.
9.5 Broker's and Finder's Fees. Each party shall pay and be responsible
for any broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
9.6 Taxes. WCI shall reasonably cooperate with the Shareholders, at the
Shareholders expense, with respect to any matters involving the Shareholders
arising out of the Shareholders' ownership of the Corporation prior to the
Closing, including matters relating to tax returns and any tax audits, appeals,
claims or litigation with respect to such tax returns or the preparation of such
tax returns. In connection therewith, WCI shall make available to the
Shareholders such files, documents, books and records of the Corporation for
inspection and copying as may be reasonably requested by the Shareholders and
shall cooperate with the Shareholders with respect to retaining information and
documents which relate to such matters.
9.7 Short Year Tax Returns. After the Closing Date, the Shareholders
shall prepare at their sole cost and expense all short year federal, state,
county, local and foreign tax returns required by law for the period beginning
with the first day of the Corporation's fiscal year in which the Closing occurs
and ending with the Effective Date. Each such return shall be prepared in a
financially responsible and conservative manner and shall be delivered to WCI,
together with all necessary supporting schedules within 120 days following the
Closing Date or at least sixty (60) days prior to the required filing date,
whichever is earlier, for WCI's approval (such approval, however, shall not
relieve the Shareholders of their responsibility for the taxes assessed under
these returns). The Shareholders shall be responsible for the payment of all
taxes shown to be due or that may come to be due on such returns or otherwise
relating to the period prior to the Effective Date in excess of the amount of
any reserve for taxes included in Closing Date Current Liabilities. The
Shareholders shall also be responsible for all taxes arising from the conversion
of the Corporation from a cash to an accrual basis of reporting whether or not
due on such returns or on the first return filed by that Corporation for the
period commencing after the Effective Date. At the time of the delivery of the
returns, the Shareholders shall contemporaneously deliver to WCI checks payable
to the respective taxing authorities in amounts equal to the amount due. WCI
shall sign tax returns and cause such returns to be timely filed with the
appropriate authorities. The Shareholders shall be entitled to receive all
refunds
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shown on said returns and any such refunds received by the Corporation or WCI
shall be remitted to the Shareholders.
9.8 General Release by Shareholders. Each of the Shareholders hereby
fully releases and discharges the Corporation and its directors, officers,
agents and employees from all rights, claims and actions, known or unknown, of
any kind whatsoever, which any of such Shareholders now has or may hereafter
have against the Corporation and its directors, officers, 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 Corporation for current periods
expressly described and specifically excepted from such release on Schedule 9.8,
and (c) for the obligations of the Corporation arising after the Closing Date
under this Agreement. Specifically, but not by way of limitation, each of the
Shareholders waives any right of indemnification, contribution or other recourse
against the Corporation which he now has or may hereafter have against the
Corporation with respect to representations, warranties or covenants made in
this Agreement by the Corporation.
Each of the Shareholders hereby waives and relinquishes all rights and
benefits afforded by Section 1542 of the California Civil Code, which states as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS TO WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Each of the Shareholders understands and acknowledges the significance and
consequence of this waiver of Section 1542 and nevertheless elects to, and does,
release those claims described in this Section 9.8, known or unknown, that it
may have now or in the future arising out of or relating to any event arising on
or prior to the date of this Agreement.
9.9 Certain Tax Matters. The Shareholders acknowledge that WCI has
indicated its intention to make an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. The Shareholders agree that WCI, in
its discretion, may make such election; provided, however, that such election
shall be made no later than the due date for such election. If such election is
made by WCI:
(a) WCI shall be authorized to complete Form 8023-A;
(b) The Shareholders shall sign such completed Form 8023-A at
the Closing; and
(c) WCI and the Shareholders shall agree upon the allocation
of the Purchase Price among the assets (including intangible assets) of
the Corporation.
(d) If WCI does make its election under Section 338(h)(10) of
the Internal Revenue Code of 1986 as amended, WCI shall "gross-up" the
Purchase Price to off-set Shareholders' tax detriment as if the
election had not been made.
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9.10 Covenants of WCI and Shareholders. Should WCI acquire directly or
indirectly (through asset purchase, stock purchase, merger or otherwise) the
business and operations of ACES Disposal, Inc., WCI agrees that neither WCI nor
any of its Affiliates will employ Xxxx Xxxxxxxxx, Xx. in connection therewith or
as a part of any other business or operation of WCI. In exchange for the
exemption to the Non-Compete in favor of Shareholders set out in Section
11.1(a)(2), Shareholders hereby grant to WCI and its Affiliates a right of first
refusal to purchase (through asset sale, stock purchase, merger or otherwise)
within the Restricted Period (as defined) any subsidiaries or Affiliates of, or
any of the business operations, routes, or assets of, South Tahoe Refuse
operating or otherwise situated Alpine County, California. In addition,
Shareholders agree to sell to WCI, at WCI's option, that portion of any business
operations or assets hereafter acquired pursuant to Section 11.1(a)(2) that are
situated or conducted outside of Alpine County, California but otherwise within
the Restricted Area (as defined) (the "OVERFLOW OPERATIONS"). If the Overflow
Operations are not acquired by WCI, Shareholders hereby agree to cease such
operations and remove all related assets.
10. INDEMNIFICATION
10.1 Indemnity by the Shareholders. The Shareholders, jointly and
severally, subject to the limitations set forth in Section 10.2, covenant and
agree that they will indemnify and hold harmless WCI, the Corporation and their
respective directors, officers and agents and their respective successors and
assigns (collectively the "WCI INDEMNITEES"), from and after the date of this
Agreement, 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 Shareholders; provided that in
either case any such Claims Notice shall be given or the litigation commenced
prior to the expiration of the second anniversary of the Closing Date or, in the
case of Fraud (as defined below) or any Claims based on the breach of any of the
Absolute Covenants (as defined below), prior to ninety (90) days following the
expiration of the applicable statute of limitations (irrespective of the date of
discovery), with respect to each of the following contingencies (all, the "10.1
INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the
Shareholders or the Corporation 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) The design, development, construction or operation of any
Facility or any other "ENVIRONMENTAL SITE" as hereinafter defined, or
the installation or operation of a UST during any period on or prior to
the Closing Date, in excess of the amount of liability with respect
thereto, if any, set forth on Part II of Schedule 3.8. As used in this
Agreement, "ENVIRONMENTAL SITE" shall mean any Facility, any UST and
any other waste
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storage, processing, treatment or disposal facility, and any other
business site or any other real property owned, leased, controlled or
operated by a Corporation 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 Facility, any UST or any other
Environmental Site, including, but not limited to (x) any actual or
alleged violation of any law or regulation respecting the protection of
the environment, including, but not limited to, RCRA and CERCLA or any
other law or regulation respecting the protection of the air, water and
land and (y) any remedies or violations, whether by a private or public
action, alleged or sought to be assessed as a consequence, directly or
indirectly, of any Release (as defined below) of pollutants (including
odors) or Hazardous Substances from any Facility, any UST or any other
Environmental Site resulting from activities thereat prior to Closing,
whether such Release is into the air, water (including groundwater) or
land, and whether such Release is discovered before or after the
Closing Date. The term "RELEASE" as used herein means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the ambient environment.
Notwithstanding anything in this paragraph to the contrary, it is
specifically understood and agreed that a Release composed solely of
Hazardous Substances contained in household waste lawfully disposed of
in a landfill during the time a Corporation owned and/or operated such
landfill does not constitute an Environmental Site Loss.
(c) All matters on Schedule 3.8, Part II, or required to be
described on Schedule 3.8, Part II, of which the Corporation or the
Shareholders have knowledge on the Closing Date and which are not so
described.
(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incident to any of the foregoing.
10.2 Limitations on Shareholders' Indemnities.
(a) The obligations of the Shareholders 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 forty
thousand dollars ($40,000) (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,
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3.22, 3.24 and 6.6 hereof and pursuant to Section 10.1(c) (the
"ABSOLUTE COVENANTS") shall not be subject to the General Deductible
Amount. In the event that a representation contained in this Agreement
is breached and such representation is qualified by words or phrases
such as "material," "materially," "immaterial," "immaterially,"
"nonmaterial," "substantially" or words of similar import, such
qualifiers shall be disregarded solely for purposes of calculating the
amount of any obligation of indemnity arising pursuant to this Section
10.
(b) Absent Fraud and except with respect to Claims based on the breach
of any of the Absolute Covenants, 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 in the aggregate exceed four
million eight hundred seventy-five thousand dollars ($4,875,000) with
respect to Claims made prior to the first anniversary of the Closing
Date, four million two hundred twenty-five thousand dollars
($4,225,000) with respect to Claims made on or after the first
anniversary of the Closing Date and prior to the second anniversary of
the Closing Date, and thereafter nothing in the absence of Fraud or
Claims with respect to any of the Absolute Covenants. For the purposes
of this Agreement, "FRAUD" shall mean fraud, fraudulent inducement or
intentional misrepresentation or concealment.
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 Shareholders (as applicable collectively,
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) does 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 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.
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(c) If, within ten (10) 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 except 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.
10.5 No Exhaustion of Remedies or Subrogation; Right of Setoff. The
Shareholders waive any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due any
Shareholder 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
Indemnitees may have against Shareholders or their successors.
10.6 Assignment by WCI . No consent of Shareholders shall be required
for any assignment or reassignment of the rights of WCI or the Corporation under
this Section 10.
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11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
11.1 Restrictive Covenants. As to the Corporation, the Shareholders and
their Affiliates acknowledge that (i) WCI, as the purchaser of the Corporation's
Stock, is and will be engaged in the same business as the Corporation (the
"BUSINESS"); (ii) the Shareholders and their Affiliates are intimately familiar
with the Business; (iii) the Business is currently conducted in the State of
California and WCI intends to continue the Business in California and intends,
by acquisition or otherwise, to expand the Business into other geographic areas
where it is not presently conducted; (iv) the Shareholders and their 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 Shareholders and their 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 11 will not impair such ability.
The Shareholders covenant and agree as set forth in (a), (b) and (c) below with
respect to the Corporation:
(a) Non-Compete. For a period commencing on the Closing Date
and terminating five years thereafter (the "RESTRICTED PERIOD"),
neither the Shareholders nor any of their Affiliates shall, anywhere
within a 50-mile contiguous radius surrounding each of Calaveras,
Xxxxxx and El Dorado Counties, California (the "RESTRICTED AREA"),
directly or indirectly, acting individually or as the owner,
shareholder, partner, or employee of any entity other than WCI or one
of its subsidiaries, (i) engage in the operation of a solid waste
collection, transporting, disposal and/or composting business, transfer
facility, recycling facility, materials recovery facility or solid
waste landfill; (ii) enter the employ of, or render any personal
services to or for the benefit of, or assist in or facilitate the
solicitation of customers for, or receive remuneration in the form of
salary, commissions or otherwise from, any business engaged in such
activities; (iii) as owner or lessor of real estate or personal
property, rent to or lease any facility, equipment or other assets to
any business engaged in the same business as the Corporation; or (iv)
receive or purchase a financial interest in, make a loan to, or make a
gift in support of, any such business in any capacity, including,
without limitation, as a sole proprietor, partner, shareholder,
officer, director, principal, agent, trustee or lender; provided,
however, that any of the Shareholders may own, directly or indirectly,
solely as an investment, securities of any business traded on any
national securities exchange or NASDAQ, provided none of the
Shareholders is a controlling person of, or a member of a group which
controls, such business and further provided that the Shareholders do
not, in the aggregate, directly or indirectly, own 2% or more of any
class of securities of such business. Notwithstanding the foregoing,
none of the following will be deemed a breach of this covenant: (1) the
ownership and/or operation by the Shareholders or their Affiliates of
South Tahoe Refuse or other current business operations in a manner
consistent with past operations, or (2) the ownership and/or operation
by South Tahoe Refuse or any of its subsidiaries or Affiliates of any
current or future business operations solely within the boundaries of
Alpine County, California.
(b) Confidential Information. During the Restricted Period and
thereafter, the Shareholders and their 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
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the Business ("CONFIDENTIAL INFORMATION"), including, without
limitation, knowledge, trade secrets, customer lists, supplier lists,
details of contracts, pricing policies, operational methods, marketing
plans or strategies, bidding information, practices, policies or
procedures, product development techniques or plans, and technical
processes; provided, however, that the term "CONFIDENTIAL INFORMATION"
shall not include information that (i) is or becomes generally
available to the public other than as a result of disclosure by the
Shareholders or (ii) is general knowledge in the solid waste handling
and landfill business and not specifically related to the Business.
Notwithstanding the foregoing, Shareholders may disclose and discuss
confidential information with their legal and tax advisors, and as is
required in connection with any legal proceedings, and the Shareholders
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 Shareholders or the Corporation or made available to them relating
to the Business, but excluding any materials (other than the minute
books of the Corporation) maintained by any attorneys for the
Corporation or the Shareholders 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.
(d) Non-Solicitation. Without the consent of WCI, which may be
granted or withheld by WCI in its discretion, the Shareholders and
their Affiliates shall not solicit any employees of the Corporation to
leave the employ of the Corporation and join the Shareholders or any
Affiliate in any business endeavor owned or pursued by the
Shareholders.
(e) No Disparagement. From and after the Closing Date, none of
the Shareholders shall, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate WCI or
any of its subsidiaries, or any officer, director or employee, or any
product or service or procedure of any such company whether or not such
denigrating or derogatory statements shall be true and whether or not
such statements are based on acts or omissions which are learned by the
Shareholders 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, none of the
Shareholders shall, 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.
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11.2 Rights and Remedies Upon Breach. If the Shareholders 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 Shareholders from any violation thereof.
(b) Accounting. The right and remedy to require the
Shareholders to account for and pay over to WCI all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Shareholders as the result of any transactions
constituting a breach of the Restrictive Covenants.
(c) Severability of Covenants. The Shareholders acknowledge
and agree that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof,
is invalid or unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Shareholders
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic
scope of the Restrictive Covenants. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention
of WCI and the Shareholders that such determination not bar or in any
way affect WCI's right to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent
covenants.
12. GENERAL
12.1 Additional Conveyances. Following the Closing, the Shareholders
and WCI shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon
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such additional instruments as WCI or the Shareholders may reasonably request
for the purpose of carrying out this Agreement. The Shareholders will cooperate
with WCI and/or the Corporation 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 Shareholders; 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.
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.
12.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or upon delivery by
registered or certified U.S. mail or one business day following deposit with an
air courier service:
If to the Shareholders: at their respective addresses set forth on
Schedule 3.2
With a copy to: Xxxxx Xxxxx, Esq.
Xxxxx & Xxxxxx, P.C.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
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
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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 Applicable Law; Attorneys' Fees. This Agreement shall be governed
by and construed in accordance with the laws of the State of California without
regard to its conflict of laws provisions. In the event of any dispute or
controversy between WCI on the one hand and the Corporation or the Shareholders
on the other hand relating to the interpretation of this Agreement or to the
transactions contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and expenses incurred by
the prevailing party, as awarded by the court. Such award shall include
post-judgment attorney's fees and costs.
12.7 No waiver Relating to Claims for Fraud. Notwithstanding anything
herein to the contrary, the liability of any party under this Agreement shall be
in addition to, and not exclusive of any other liability that such party may
have at law or equity based on such party's Fraud. Notwithstanding anything in
this Agreement to the contrary, none of the provisions set forth in this
Agreement, including, but not limited to, the provisions set forth in Sections
7.1 or 7.2, shall be deemed a waiver by any party to this Agreement of any right
or remedy which such party may have at law or equity based on any other party's
Fraud, nor shall any such provisions limit, or be deemed to limit, (a) the
amounts of recovery sought or awarded in any such claim for Fraud, (b) the time
period during which such a claim for Fraud may be brought, or (c) the recourse
which any such party may seek against another party with respect to such a claim
for Fraud.
12.8 Payment of Fees and Expenses. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the
Shareholders, any such fees, expenses and disbursements paid or accrued by, or
charged to, the Corporation).
12.9 Incorporation by Reference. All Schedules and Exhibits attached
hereto are incorporated herein by reference as though fully set forth at each
point referred to in this Agreement.
12.10 Captions. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
12.11 Number and Gender of Words; Corporation. Whenever the singular
number is used herein, the same shall include the plural where appropriate, and
shall apply to all of such number, and to each of them, jointly and severally,
and words of any gender shall include each other gender where appropriate.
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12.12 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, the Shareholders
and WCI and supersedes any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement may be modified or amended only
by a written instrument executed by the Corporation, the Shareholders and WCI
acting through its officers, thereunto duly authorized by its Board of
Directors.
12.13 Waiver. No waiver by any party hereto at any time of any breach
of, or compliance with, any condition or provision of this Agreement to be
performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
12.14 Construction. The language in all parts of this Agreement must be
in all cases construed simply according to its fair meaning and not strictly for
or against any party. Unless expressly set forth otherwise, all references
herein to a "day" are deemed to be a reference to a calendar day. All references
to "business day" mean any day of the year other than a Saturday, Sunday or a
public or bank holiday in 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.
13. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Absolute Covenants 10.2(a)
Acquired Operations 1.3
Affiliate 3.11
Agreement Page 1
Xxxxxx Page 1
at will 8.2(d)
Balance Sheet Date 3.7
Business day 12.14
Business 11.1
X. Xxxxxxxx Page 1
Claim 10.3(a)
Claims Notice 10.3(a)
Closing Date Debt 3.22(a)
Closing Date Current Liabilities 3.22(b)
Closing Section 2
Closing Date Section 2
Closing Date Current Assets 3.22(b)
Code 3.36
Collection Franchises 3.10(a)
Company Parties
Confidential Information 11.1(b)
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Corporate Property 3.12(b)
Corporation Parties
Corporation's Stock Recitals
Day 12.14
Delivered Documents 3.19
Environmental Site 10.1(b)
Environmental Site Losses 10.1
Environmental Laws 3.24
ERISA 3.17(a)
Excluded Assets 1.5
Facility 3.10(c)
Financial Statements 3.7
Fraud 10.2(b)
General Deductible Amount 10.2(a)
golden parachute 3.17(a)
Golden Parachute Payment 3.17(c)
Governmental Permits 3.10(a)
Grunigen Page 1
Hazardous Material 3.24(e)
Hazardous Waste 3.24(e)
Indemnifying Party 10.3(a)
X.X. Xxxxxxx Page 1
J.R. Xxxxxxx Page 1
Knowledge 3.34
Laws 3.24
Xxxxxx Page 1
Xxxxxxxx Page 1
Xxxxxxxx Trust Page 1
Mother Lode Page 1
Occurrence 3.15
Overflow Operations 9.10
Permitted Liens 3.12(c)
Projected Net Revenues 1.3
Purchase Price 1.1
Xxxxx Trust Page 1
RCRA 3.24(a)
Real Estate Recitals
Recipient 3.17(c)
Records, Notifications and Reports 3.10(b)
Release 10.1(b)
Representations and Warranties 10.4
Required Governmental Consents 3.10(a)
Restricted Area 11.1(a)
Restricted Period 11.1(a)
Restrictive Covenants 11.2
Signing Date 5.1
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10.1 Indemnity Events 10.1
Sesser Page 1
Shareholders Page 1
Xxxxxx Page 1
UST 3.26
WCI Parties
WCI Indemnitees 10.1
Working Capital Deficit 1.2
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
CORPORATION: XXXXXX DISPOSAL SERVICE, INC.
By: ___________________________
Its: ___________________________
MOTHER LODE SANI-HUT, INC.
By: ___________________________
Its: ___________________________
WCI: WASTE CONNECTIONS, INC.
By: ___________________________
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer & President
SHAREHOLDERS:
________________________________
Xxxxxx X. Xxxxxxxx
________________________________
Xxxxx Xxxxxxxx
________________________________
Xxxxx Xxxxxx, as Trustee of the
Xxxxxxxx 1981 Trust
________________________________
G. Xxxxx Xxxxxxxx, as Trustee of the
Xxxxxxxx 1981 Trust
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________________________________
Xxxxxx X. Xxxxx, as Co-Trustee of the
Xxxxx 1981 Family Trust
________________________________
Xxxxxxxx X. Xxxxx, as Co-Trustee of the
Xxxxx 1981 Family Trust
________________________________
Xxxxx Xxxxxx
________________________________
Xxxx X. Xxxxxxxx
________________________________
Xxxxxx Xxxxxx
________________________________
Xxxxxx Xxxxxx
________________________________
Xxxx X. Xxxxxxx
________________________________
Xxxxxxx X. Xxxxxxx
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TABLE OF CONTENTS
PAGE
1. PURCHASE OF CORPORATION'S STOCK.....................................................................1
1.1 Shares to be Purchased.........................................................................1
1.2 Purchase Price.................................................................................2
1.3 Additional Contingent Purchase Price...........................................................2
1.4 Allocation of the Purchase Price...............................................................3
1.5 Excluded Assets................................................................................3
2. CLOSING TIME AND PLACE..............................................................................3
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDERS..............................3
3.1 Organization, Standing and Qualification.......................................................3
3.2 Capitalization.................................................................................3
3.3 All Stock Being Acquired.......................................................................4
3.4 Authority for Agreement........................................................................4
3.5 No Breach or Default...........................................................................4
3.6 Subsidiaries...................................................................................5
3.7 Financial Statements...........................................................................5
3.8 Liabilities....................................................................................5
3.9 Accurate and Complete Records..................................................................6
3.10 Permits and Licenses...........................................................................6
3.11 Certain Receivables............................................................................8
3.12 Fixed Assets and Real Property.................................................................8
3.13 Related Party Transactions.....................................................................9
3.14 Contracts and Agreements; Adverse Restrictions................................................10
3.15 Insurance.....................................................................................10
3.16 Personnel.....................................................................................10
3.17 Benefit Plans and Union Contracts.............................................................11
3.18 Taxes.........................................................................................12
3.19 Copies Complete; Required Consents............................................................13
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3.20 Customers, Xxxxxxxx, Current Receipts and Receivables.........................................13
3.21 No Change With Respect to the Corporation.....................................................13
3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current Liabilities...........15
3.23 Bank Accounts.................................................................................15
3.24 Compliance With Laws..........................................................................16
3.25 Powers of Attorney............................................................................17
3.26 Underground Storage Tanks.....................................................................17
3.27 Patents, Trademarks, Trade Names, etc.........................................................18
3.28 Assets, etc., Necessary to Business...........................................................18
3.29 Condemnation..................................................................................18
3.30 Suppliers and Customers.......................................................................18
3.31 Absence of Certain Business Practices.........................................................19
3.32 Disclosure Schedules..........................................................................19
3.33 No Misleading Statements......................................................................19
3.34 Knowledge.....................................................................................19
3.35 Brokers; Finders..............................................................................19
3.36 S Corporation.................................................................................19
4. REPRESENTATIONS AND WARRANTIES OF WCI..............................................................19
4.1 Existence and Good Standing...................................................................20
4.2 No Contractual Restrictions...................................................................20
4.3 Authorization of Agreement....................................................................20
4.4 No Misleading Statements......................................................................20
4.5 Brokers; Finders..............................................................................20
4.6 Disclosure Schedules..........................................................................20
5. COVENANTS FROM SIGNING TO CLOSING DATE.............................................................20
5.1 Operations....................................................................................20
5.2 No Change.....................................................................................21
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5.3 Obtain Consents...............................................................................22
5.4 Access; Confidential Information..............................................................22
5.5 Notice of Material Adverse Change.............................................................23
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE.................................................23
6.1 Representations and Warranties................................................................23
6.2 Conditions....................................................................................23
6.3 No Material Adverse Change....................................................................23
6.4 Certificates..................................................................................23
6.5 No Litigation.................................................................................23
6.6 Other Deliveries..............................................................................24
6.7 Governmental Approvals; Consents to Transfer..................................................24
6.8 Release of Security Interests.................................................................24
6.9 Due Diligence.................................................................................24
6.10 Approval of Board of Directors................................................................24
6.11 Schedules and Exhibits........................................................................24
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS TO CLOSE....................................24
7.1 Representations and Warranties................................................................24
7.2 Conditions....................................................................................25
7.3 Certificate...................................................................................25
7.4 No Litigation.................................................................................25
7.5 Other Deliveries..............................................................................25
7.6 Schedules and Exhibits........................................................................25
8. CLOSING DELIVERIES.................................................................................25
8.1 WCI Deliveries................................................................................25
8.2 Shareholders Deliveries.......................................................................25
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS..................................26
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9.1 No Delay......................................................................................26
9.2 Release of Guaranties.........................................................................26
9.3 Release of Security Interests.................................................................27
9.4 Confidentiality...............................................................................27
9.5 Broker's and Finder's Fees....................................................................27
9.6 Taxes.........................................................................................27
9.7 Short Year Tax Returns........................................................................27
9.8 General Release by Shareholders...............................................................28
9.9 Certain Tax Matters...........................................................................28
9.10 Covenants of WCI and Shareholders.............................................................29
10.INDEMNIFICATION....................................................................................29
10.1 Indemnity by the Shareholders.................................................................29
10.2 Limitations on Shareholders' Indemnities......................................................30
10.3 Notice of Indemnity Claim.....................................................................31
10.4 Liability for Breaches of Representations and Warranties......................................32
10.5 No Exhaustion of Remedies or Subrogation; Right of Setoff.....................................32
10.6 Assignment by WCI.............................................................................32
11.OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI...........................................33
11.1 Restrictive Covenants.........................................................................33
11.2 Rights and Remedies Upon Breach...............................................................35
12.GENERAL............................................................................................35
12.1 Additional Conveyances........................................................................35
12.2 Assignment....................................................................................36
12.3 Public Announcements..........................................................................36
12.4 Counterparts..................................................................................36
12.5 Notices.......................................................................................36
12.6 Applicable Law; Attorneys' Fees...............................................................37
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12.7 No waiver Relating to Claims for Fraud........................................................37
12.8 Payment of Fees and Expenses..................................................................37
12.9 Incorporation by Reference....................................................................37
12.10 Captions......................................................................................37
12.11 Number and Gender of Words; Corporation.......................................................37
12.12 Entire Agreement..............................................................................38
12.13 Waiver........................................................................................38
12.14 Construction..................................................................................38
13.GLOSSARY...........................................................................................38
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