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EXHIBIT 2.2
PURCHASE AND SALE AGREEMENT
BY AND AMONG
SYNAGRO TECHNOLOGIES, INC.,
XXXX X. XXXXXXX,
XXXXXX XXXXXXX,
AS TRUSTEE OF THE
XXXX X. XXXXXXX 1998 GRAT,
XXXXXXX X. XXXXXXXX,
XXXXXXX X. XXXXXXXX,
AS EXECUTRIX OF THE ESTATE OF
XXXXXXX X. XXXXXXXX
AND
XXXXXXX X. XXXXXXXX AND XXXXXX XXXXXX,
AS CO-TRUSTEES OF THE
XXXXXXX X. XXXXXXXX REVOCABLE TRUST
UNDER AGREEMENT DATED NOVEMBER 2, 1998
OCTOBER 20, 1999
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.....................................................................................2
Section 1.1. Accounting Terms............................................................2
Section 1.2. Defined Terms...............................................................2
ARTICLE II
CLOSING.........................................................................................2
Section 2.1. Closing.....................................................................2
ARTICLE III
SALE OF OWNERSHIP INTERESTS.....................................................................2
Section 3.1. Ownership Interests.........................................................2
Section 3.2. Purchase Price..............................................................2
Section 3.3. Purchase Price Adjustment...................................................3
Section 3.4. Earn Out Payment............................................................4
Section 3.5. Closing Deliveries..........................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................10
Section 4.1. Organization and Qualification.............................................10
Section 4.2. Capitalization.............................................................10
Section 4.3. Authority; Non-Contravention; Approvals....................................11
Section 4.4. Registration Statements....................................................12
Section 4.5. Reports and Financial Statements...........................................12
Section 4.6. Brokers and Finders........................................................13
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
CONCERNING THE TRANSACTION................................................................13
Section 4A.1. Ownership..................................................................13
Section 4A.2. Authority..................................................................14
Section 4A.3. Brokers and Finders........................................................14
Section 4A.4. Registration Statements....................................................14
Section 4A.5. Investment Representations.................................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE COMPANIES.........................16
Section 5.1. Organization and Qualification.............................................16
Section 5.2. Capitalization.............................................................16
Section 5.3. Authority; Non-Contravention; Approvals....................................17
Section 5.4. Subsidiaries...............................................................18
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Section 5.5. Financial Statements.......................................................18
Section 5.6. Absence of Undisclosed Liabilities.........................................18
Section 5.7. Absence of Certain Changes or Events.......................................18
Section 5.8. Litigation.................................................................19
Section 5.9. Accounts Receivable........................................................19
Section 5.10. No Violation of Law; Compliance with Agreements............................19
Section 5.11. Insurance..................................................................19
Section 5.12. Taxes......................................................................20
Section 5.13. Employee Benefit Plans.....................................................21
Section 5.14. Employee and Labor Matters.................................................23
Section 5.15. Environmental Matters......................................................23
Section 5.16. Non-Competition Agreements.................................................25
Section 5.17. Title to Assets............................................................25
Section 5.18. Contracts, Agreements, Plans and Commitments...............................26
Section 5.19. Supplies...................................................................27
Section 5.20. Brokers and Finders........................................................27
Section 5.21. Intellectual Property......................................................27
Section 5.22. Relationships..............................................................27
Section 5.23. Year 2000..................................................................28
Section 5.24. Certain Payments...........................................................28
Section 5.25. Books and Records..........................................................28
Section 5.26. Condition and Sufficiency of Assets........................................28
ARTICLE VI
CONDUCT OF BUSINESS PENDING CLOSING............................................................29
Section 6.1. Conduct of Business by the Sellers Pending Closing.........................29
Section 6.2. Other Offers...............................................................30
Section 6.3. Access to Information......................................................31
Section 6.4. Commercially Reasonable Efforts............................................31
ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES...........................................32
Section 7.1. Consents...................................................................32
Section 7.2. Further Assurances.........................................................32
Section 7.3. Expenses and Fees..........................................................32
Section 7.4. Agreement to Cooperate.....................................................32
Section 7.5. Notification of Certain Matters............................................32
Section 7.6. Registration Statements....................................................33
Section 7.7. Purchaser's Liquidity Program..............................................34
Section 7.8. Exchange Listing...........................................................34
Section 7.9. Public Statements..........................................................35
Section 7.10. Section 338(h)(10) Election................................................35
Section 7.11. Allocation of Purchase Price...............................................35
Section 7.12. Code Section 754 Adjustments...............................................35
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Section 7.13. Control of Tax Returns.....................................................35
Section 7.14. Supplements to Disclosure Schedules........................................36
ARTICLE VIII
CONDITIONS TO CLOSING..........................................................................36
Section 8.1. Conditions to Each Party's Obligation to Close.............................36
Section 8.2. Conditions to Obligation of the Sellers....................................36
Section 8.3. Conditions to Obligations of Purchaser.....................................37
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER..............................................................38
Section 9.1. Termination................................................................38
Section 9.2. Effect of Termination......................................................39
Section 9.3. Extensions; Waiver.........................................................40
Section 9.4. Purchaser's Option to Extend...............................................40
ARTICLE X
INDEMNIFICATION AND LIMITATION ON LIABILITY....................................................40
Section 10.1. The Sellers' Indemnity Obligations.........................................40
Section 10.2. Purchaser's Indemnity Obligations..........................................41
Section 10.3. Indemnification Procedures.................................................41
Section 10.4. Limitation of Sellers' Liability...........................................43
Section 10.5. Limitation of Purchaser's Liability........................................44
ARTICLE XI
GENERAL PROVISIONS.............................................................................44
Section 11.1. Survival...................................................................44
Section 11.2. Notices....................................................................45
Section 11.3. Interpretation.............................................................47
Section 11.4. Miscellaneous..............................................................47
Section 11.5. Governing Law..............................................................48
Section 11.6. Binding Arbitration........................................................48
Section 11.7. Amendment..................................................................50
Section 11.8. Counterparts...............................................................50
Section 11.9. Parties in Interest........................................................50
Section 11.10. Validity...................................................................50
Section 11.11. Guarantee..................................................................50
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Exhibits
Exhibit A Glossary
Exhibit B Form of Estimated Adjustment Amount Worksheet
Exhibit C Form of Release of Claims Agreement
Exhibit D Form of Consulting Agreement
Exhibit E Form of Covenant Not to Compete Agreement
Exhibit F Form of Covenant Not to Compete Agreement
Schedules
Schedule 1 The Companies
Schedule 3.3(d) Projects
Schedule 3.4(i) Operating Practices
Schedule 3.4(j) Capital Budget
Schedule 3.4(k) Projects Excepted from Earn Out
Schedule 3.5 Guarantees or Surety Obligations
Schedule 4A.3 Sellers' Brokers and Finders
Schedule 5.3 Non-Contravention; Approvals
Schedule 5.5 Financial Statements
Schedule 5.6 Absence of Undisclosed Liabilities
Schedule 5.7 Absence of Certain Changes or Events
Schedule 5.8 Litigation
Schedule 5.10 No Violation of Law; Compliance with Agreements
Schedule 5.12 Taxes
Schedule 5.13 Employee Benefit Plans
Schedule 5.14 Employee and Labor Matters
Schedule 5.15 Environmental Matters
Schedule 5.16 Non-Competition Agreements
Schedule 5.17 Title to Assets
Schedule 5.18 Contracts, Agreements, Plans and Commitments
Schedule 5.20 Companies' Brokers and Finders
Schedule 5.21 Intellectual Property
Schedule 5.22 Relationships
Schedule 5.23 Year 2000 Compliance
Schedule 5.26 Condition and Sufficiency of Assets
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT, dated as of October 20, 1999 (the
"Agreement"), is by and among SYNAGRO TECHNOLOGIES, INC., a Delaware corporation
(the "Purchaser"), and XXXX X. XXXXXXX, individually ("Xx. Xxxxxxx"), XXXXXX
XXXXXXX, as Trustee of the Xxxx X. Xxxxxxx 1998 Grat (the "Grat"), XXXXXXX X.
XXXXXXXX, individually ("Xxx. Xxxxxxxx"), XXXXXXX X. XXXXXXXX, as Executrix of
the Estate of Xxxxxxx X. Xxxxxxxx (the "Estate"), and XXXXXXX X. XXXXXXXX and
XXXXXX XXXXXX, as Co-Trustees of the Xxxxxxx X. Xxxxxxxx Revocable Trust under
Agreement dated November 2, 1998 (the "Trust"). Each of Xx. Xxxxxxx, the Grat
and the Estate is a "Seller" and, collectively, they are sometimes referred to
as the "Sellers". The Purchaser and each of the other signatories to this
Agreement are a "Party" and, collectively, they are sometimes referred to as the
"Parties." Xxx. Xxxxxxxx, individually and in her capacity as Co-Trustee of the
Trust, and Xxxxxx Xxxxxx, in his capacity as Co-Trustee of the Trust, join this
Agreement for purposes of guaranteeing the performance by the Estate and the
Trust, as the case may be, of their respective joint and several obligations
under this Agreement, as further set forth in Section 11.11 of this Agreement.
W I T N E S S E T H:
WHEREAS, the Sellers own, directly or indirectly, all of the
outstanding capital stock, limited partnership interests and membership
interests (the "Ownership Interests") of those corporations, limited
partnerships and limited liability companies set forth on Schedule 1 (each of
which is a "Company" and which, collectively, are sometimes referred to as the
"Companies"), as of the date hereof;
WHEREAS, the Companies are engaged in the business of sewage sludge
disposal in the northeastern United States, including the hauling, treatment and
disposal of sewage sludge; the providing of non-hazardous biosolids
transportation, treatment and disposal services to municipal wastewater
treatment plants and commercial customers; and the operation, maintenance,
repair and management of sewage sludge treatment and incineration facilities
(the "Business");
WHEREAS, Purchaser desires to purchase from the Sellers, and the
Sellers desire to sell to the Purchaser, the Ownership Interests upon the terms
and conditions set forth herein; and
WHEREAS, the Sellers, Xxx. Xxxxxxxx and the Trust are making certain
representations, warranties, covenants, agreements and indemnities herein, as an
inducement to Purchaser to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements stated herein, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, covenant and agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP") and on a basis not inconsistent with those
applied in the preparation of the financial statements referred to in Sections
4.5(d) and 5.5 hereof.
SECTION 1.2. DEFINED TERMS. As used in this Agreement, certain words
and terms have the meanings ascribed to them in the Glossary attached hereto as
Exhibit A. Other capitalized terms have the meanings ascribed to them elsewhere
in this Agreement.
ARTICLE II
CLOSING
SECTION 2.1. CLOSING. Subject to the terms and provisions of Article
IX, the closing of the purchase and sale provided for herein (the "Closing")
shall take place at the offices of XXXXXXXX & X'XXXX, LLP, 00 Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx as promptly as practicable (but in any event within five
(5) business days) following the date on which the last of the conditions set
forth in Article VIII is fulfilled or waived, or at such other time and place as
the Purchaser and Sellers shall agree. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
ARTICLE III
SALE OF OWNERSHIP INTERESTS
SECTION 3.1. OWNERSHIP INTERESTS. Subject to the terms and conditions
of this Agreement, the Sellers will sell, transfer and deliver to the Purchaser,
and the Purchaser will purchase, the Ownership Interests directly owned by the
Sellers as set forth on Schedule 1 (the "Direct Ownership Interests") on the
Closing Date.
SECTION 3.2. PURCHASE PRICE. The aggregate purchase price (the
"Purchase Price") for the Direct Ownership Interests and the representations,
warranties, covenants and agreements referenced herein shall be:
(i) cash equal to Forty-Four Million Dollars
($44,000,000) minus (1) the Companies' Indebtedness as of Closing, plus or minus
(2) the amount, if any, by which the Companies' Net Working Capital as of
Closing is greater than or less than One Million One Hundred Forty Thousand
Dollars ($1,140,000). The amount, if any, by which the cash portion of the
Purchase Price is adjusted pursuant to this Section 3.2(i) (i.e., the sum of (1)
and (2) above) is referred to herein as the "Adjustment Amount"; and
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(ii) the Earn Out Payments, if any, as defined and
further described in Section 3.4 below.
The portion of the Purchase Price payable in cash at Closing (as determined in
accordance with Section 3.2 and Section 3.3) (the "Cash Portion") shall be
allocated as follows: (i) the Estate shall receive fifty percent (50%) of the
Cash Portion less $2,250,000, and (ii) the Grat shall receive ninety-nine
percent (99%) and Xx. Xxxxxxx shall receive one percent (1%) of the remaining
Cash Portion. The Earn Out Payments (as determined in accordance with Section
3.4), if any, shall be paid sixteen percent (16%) to the Estate and eighty-four
percent (84%) to the Earn Out Representative (for the benefit, and in
satisfaction of Purchaser's payment obligations regarding the Earn Out Payments
to, the Grat and Xx. Xxxxxxx).
SECTION 3.3. PURCHASE PRICE ADJUSTMENT.
(a) Prior to the Closing Date, Xx. Xxxxxxx shall deliver to
the Purchaser a worksheet, in the form attached as Exhibit B hereto, setting
forth a reasonable estimate of the Indebtedness and Net Working Capital as of
the Closing Date, as well as a computation of the estimated Adjustment Amount
(the "Estimated Adjusted Amount"). The worksheet shall be prepared by Xx.
Xxxxxxx and reasonably acceptable to the Purchaser. If the Estimated Adjustment
Amount is a positive number, the Cash Portion as allocated to (i) Xx. Xxxxxxx
shall be decreased in an amount equal to one-half percent (0.5%) of the positive
Estimated Adjustment Amount; (ii) the Grat shall be decreased in an amount equal
to forty-nine and one-half percent (49.5%) of the positive Estimated Adjustment
Amount and (iii) the Estate shall be decreased in an amount equal to fifty
percent (50%) of the positive Estimated Adjustment Amount. If the Estimated
Adjustment Amount is a negative number (i.e., the excess Net Working Capital
exceeds the Indebtedness), the Cash Portion as allocated to (i) Xx. Xxxxxxx
shall be increased in an amount equal to one-half percent (0.5%) of the negative
Estimated Adjustment Amount; (ii) the Grat shall be increased in an amount equal
to forty-nine and one-half percent (49.5%) of the negative Estimated Adjustment
Amount and (iii) the Estate shall be increased in an amount equal to fifty
percent (50%) of the negative Estimated Adjustment Amount.
(b) Within 90 days after the Closing, Purchaser shall cause
the Companies to prepare a consolidated balance sheet of the Companies as of the
Closing Date (the "Closing Date Balance Sheet"), including a computation of the
actual Adjustment Amount of the Companies as of the Closing Date (the "Actual
Adjustment Amount"). If within 15 days following delivery of the Closing Date
Balance Sheet to Xx. Xxxxxxx, Xx. Xxxxxxx does not object in writing thereto,
then the Actual Adjustment Amount shall be as computed on such Closing Date
Balance Sheet. If Xx. Xxxxxxx does object in writing to the computation within
such 15-day period, then the Purchaser and Xx. Xxxxxxx shall negotiate in good
faith and attempt to resolve their disagreement. Should such negotiations not
result in an agreement within 20 days, then the matter shall be submitted to an
independent accounting firm of national reputation mutually acceptable to the
Purchaser and Xx. Xxxxxxx (the "Neutral Auditors"). If the Purchaser and Xx.
Xxxxxxx are unable to agree on the Neutral Auditors, then they shall request the
American Arbitration Association to appoint the Neutral Auditors. All fees and
expenses relating to appointment of the Neutral Auditors and the work, if any,
to be performed by the Neutral Auditors will be borne equally by
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the Purchaser and Xx. Xxxxxxx. The Neutral Auditors will deliver to the
Purchaser and Xx. Xxxxxxx a written determination (such determination to include
a worksheet setting forth all material calculations used in arriving at such
determination and to be based solely on information provided to the Neutral
Auditors by the Purchaser and Xx. Xxxxxxx, or their respective affiliates) of
the disputed items within 30 days of receipt of the disputed items, which
determination will be final, binding and conclusive on the Parties.
(c) Promptly following agreement on or delivery of the final,
binding and conclusive Closing Date Balance Sheet setting forth the Actual
Adjustment Amount, the Purchaser, the Estate, the Grat and Xx. Xxxxxxx shall
account to each other as provided for in this Section 3.3(c). If the Estimated
Adjustment Amount less the Actual Adjustment Amount is a positive number, the
Estate, the Grat and Xx. Xxxxxxx shall have a right to receive aggregate cash
payments from Purchaser equal to such excess. If the Estimated Adjustment Amount
less the Actual Adjustment Amount is a negative number, Purchaser shall be
entitled to receive aggregate cash payments from each of the Estate, the Grat
and Xx. Xxxxxxx equal to such deficit. Any such excess or deficit payment shall
be due and payable within three (3) business days after the Actual Adjustment
Amount is determined pursuant to this Section 3.3. Any payments due from or to
the Estate, the Grat and Xx. Xxxxxxx pursuant to this Section 3.3(c) shall be
payable or paid (i) fifty percent (50%) by or to the Estate, (ii) forty-nine and
one-half percent (49.5%) by or to the Grat, and (iii) one-half percent (0.5%) by
or to Xx. Xxxxxxx.
(d) For purposes of determining the Net Working Capital
pursuant to this Section 3.3, any cash payments made or current liabilities
incurred on or after August 1, 1999, and prior to Closing with respect to the
projects described on Schedule 3.3(d) hereto, up to an aggregate amount of cash
and current liabilities of $1,050,000, shall not be deducted in the Net Working
Capital computation.
SECTION 3.4. EARN OUT PAYMENT.
(a) As soon as practicable after December 31, 2000, and after
the last day of each succeeding calendar year through and including December 31,
2007 (the "Earn Out Period"), the Purchaser's independent auditor (the
"Auditor") shall audit the financial statements of the Companies as of the last
day of the calendar year then ended and the Purchaser's calculation of the
Earnings of the Companies during such calendar year in the manner specified in
this Section 3.4. No later than April 30th of each year from 2001 through 2008,
the Purchaser shall deliver notice of the Earnings of the Companies for the
preceding calendar year to the Earn Out Representative and the Estate, as
audited by the Auditor, together with the Auditor's audit report on the
Companies' financial statements and on Purchaser's calculation of Earnings
during the calendar year then ended.
(b) The Companies' Earnings shall be calculated in accordance
with this Section 3.4 and the definition of Earnings and in a manner consistent
with that used to compute the Earn Out Baseline referenced in Section 3.4(c)
below. For purposes of calculating the Earnings pursuant to this Section 3.4
only, the term "Companies" shall also include (i) New England Treatment Company,
Inc. and (ii) any newly-organized Affiliate of the Companies
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formed by the Purchaser during the Earn Out Period to conduct any new biosolids
incineration or lime stabilization business of the Companies in New England.
During the Earn Out Period and thereafter until the last Earn Out Payment, if
any, is actually made pursuant to this Section 3.4, the Companies and the
Purchaser shall give the Sellers and their respective accountants, counsel and
other representatives, reasonable and prompt access during normal business hours
to (x) all of the properties, books, contracts, commitments and records related
to the Companies, and (y) all other information concerning the Companies that
the Sellers may reasonably request and that is necessary to evaluate and propose
changes to the computation of the Companies' Earnings.
(c) In the event that the Earnings of the Companies are less
than or equal to Four Million Seventy-One Thousand Five Hundred Forty-Nine
Dollars ($4,071,549) (as adjusted from time to time pursuant to this Section
3.4, the "Earn Out Baseline") during any calendar year during the Earn Out
Period, then no additional amounts shall be payable to the Sellers with respect
to such calendar year. In the event that the Companies' Earnings exceed Four
Million Seventy-One Thousand Five Hundred Forty-Nine Dollars ($4,071,549) during
any calendar year during the Earn Out Period, an additional amount (an "Earn Out
Payment") shall be calculated and paid by the Purchaser to the Sellers in
accordance with this Section 3.4(c) (and pro rata in accordance with the
percentages set forth in Section 3.2) with respect to such calendar year and
shall equal fifty percent (50%) of such excess. In no event shall the aggregate
Earn Out Payments payable to the Sellers (together with any Accelerated Amounts
(as defined below)) under this Section 3.4 exceed Twelve Million Dollars
($12,000,000). At the Purchaser's option each Earn Out Payment shall be paid
either (i) in all cash or other immediately available funds or (ii) fifty
percent (50%) in cash or other immediately available funds and fifty percent
(50%) in Purchaser Common Stock. The number of shares of Purchaser Common Stock
shall be calculated using the Average Purchaser Common Stock Price.
(d) Each Earn Out Payment shall be paid by the Purchaser to
the Earn Out Representative and the Estate (pro rata in accordance with the
percentages set forth in Section 3.2) on or before the date that the Purchaser
is required to deliver the annual report of the Auditor to the Earn Out
Representative and the Estate.
(e) Upon receipt of an annual report of the Auditor regarding
the Companies' Earnings, the Earn Out Representative shall have 30 days in which
to object in writing to the Purchaser with respect to the Purchaser's
calculation of the Companies' Earnings (an "Earnings Dispute Notice"). In the
event the Earn Out Representative does not object to the Purchaser's calculation
of the Companies' Earnings within such 30-day period, the Purchaser's
calculation of the Companies' Earnings, as notified to the Earn Out
Representative, shall be deemed final, conclusive and binding on all Parties. In
the event the Earn Out Representative gives a timely Earnings Dispute Notice,
then the Earn Out Representative and Purchaser shall work together in good faith
to reach an agreement on an appropriate adjustment to the Earn Out Payment. If
within 15 days after Purchaser's receipt of an Earnings Dispute Notice, the Earn
Out Representative and Purchaser have not reached an agreement, the Earn Out
Representative and Purchaser shall engage the Accounting Arbitrator to calculate
the amount of an appropriate adjustment to Purchaser's calculation of the
Companies' Earnings, if any, except as otherwise provided in Section 3.4(f)
hereof. The decision of the Accounting Arbitrator shall be final,
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conclusive and binding on all Parties. The Accounting Arbitrator shall make its
determinations using the accounting and other principles set forth in Section
3.4(b) hereof. The Accounting Arbitrator shall be directed to make its
determination within 45 days of its engagement. Payment of any adjustment to the
Earn Out Payment from the Purchaser to the Earn Out Representative and the
Estate, if any, shall be due within ten (10) days after the resolution of any
such dispute.
(f) In the event that the Earn Out Representative alleges in
an Earnings Dispute Notice an entitlement to a higher Earn Out Payment because
of breaches of the Purchaser's covenants set forth in Section 3.4(i) or (j)
hereof, and the Earn Out Representative and Purchaser are unable to resolve the
dispute within the 15-day resolution period provided for in Section 3.4(e)
hereof, then the Accounting Arbitrator shall not be engaged and the dispute
shall be resolved in accordance with Section 11.6 hereof.
(g) Purchaser will not issue any certificates for any
fractional shares of Purchaser Common Stock otherwise issuable pursuant to
either Section 3.2 or Section 3.4. In lieu of issuing such fractional shares,
Purchaser shall pay cash to the Earn Out Representative and the Estate (pro rata
in accordance with the percentages set forth in Section 3.2), such cash payments
to be based on the value of such fractional shares using the Average Purchaser
Common Stock Price.
(h) As soon as practicable after the completion of the first
two years of operations of the Rhode Island Project (as defined in Schedule 5.6)
(such two (2) year period beginning the first day of the calendar month
following the Purchaser's receipt of notice from the Earn Out Representative
that the Rhode Island Project has commenced operation for purposes of this
Section 3.4), the Auditor shall audit the Purchaser's calculation of the
Earnings attributable to the Rhode Island Project over such two years of
operations (the "Rhode Island Earnings"). No later than 120 days after the end
of such two years of operations of the Rhode Island Project, the Purchaser shall
deliver (i) notice of the Purchaser's calculation of the Rhode Island Earnings
to the Earn Out Representative and the Estate, as audited by the Auditor,
together with the Auditor's audit report on the Purchaser's calculation of the
Rhode Island Earnings (the "Rhode Island Notice") and (ii) an accelerated Earn
Out Payment to the Estate and the Earn Out Representative (pro rata in
accordance with the percentages set forth in Section 3.2) equal to twenty-five
percent (25%) of the Rhode Island Earnings multiplied by the number of years
then remaining in the Earn Out Period (the "Accelerated Amount"). The Earn Out
Baseline shall be adjusted to reflect the payment of the Accelerated Amount by
the addition of one-half of the Rhode Island Earnings (i.e., the one-year
average of the Earnings attributable to the Rhode Island Project over such two
years of operations) to the Earn Out Baseline set forth in Section 3.4(c). Upon
receipt of the Rhode Island Notice, the Earn Out Representative shall have 30
days in which to object in writing to the Purchaser with respect to the
Purchaser's calculation of the Rhode Island Earnings (a "Rhode Island Earnings
Dispute Notice"). In the event the Earn Out Representative does not object to
the Purchaser's calculation of the Rhode Island Earnings within such 30-day
period, the Purchaser's calculation of the Rhode Island Earnings, as set forth
in the Rhode Island Notice, shall be deemed final, conclusive and binding on all
Parties. In the event the Earn Out Representative gives a timely Rhode Island
Earnings Dispute Notice, then the Earn Out Representative and Purchaser shall
work together in good faith to reach an agreement
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on an appropriate adjustment to the calculation of the Rhode Island Earnings, if
any. If within 15 days after the Purchaser's receipt of a Rhode Island Earnings
Dispute Notice, the Earn Out Representative and Purchaser have not reached an
agreement, the Earn Out Representative and the Purchaser shall engage the
Accounting Arbitrator to calculate the amount of an appropriate adjustment to
the calculation of the Rhode Island Earnings, if any. The decision of the
Accounting Arbitrator shall be final, conclusive and binding on all Parties. The
Accounting Arbitrator shall make its determinations consistent with the terms
hereof. The Accounting Arbitrator shall be directed to make its determination
within 45 days of its engagement.
Within ten (10) days after determination of a final, conclusive and
binding calculation of the Rhode Island Earnings, the Purchaser shall pay any
adjustment amount to the Estate and the Earn Out Representative in accordance
with the foregoing formula and the Earn Out Baseline shall be further adjusted
to reflect the payment of such adjustment amount.
(i) Until the earlier of the end of the Earn Out Period or the
satisfaction of all of the Purchaser's payment obligations under this Section
3.4, the Purchaser shall use commercially reasonable efforts to operate or cause
the Companies to be operated as stand-alone entities in New England in
conformity with past operating practices, as illustrated generally by the
adjusted income statement for the trailing twelve (12) month period ended July
31, 1999, attached hereto as Schedule 3.4(i). Without limiting the generality of
the foregoing, until the earlier of the end of the Earn Out Period or the
satisfaction of all of the Purchaser's payment obligations under this Section
3.4, the Purchaser agrees with respect to business in New England that without
the prior consent of the Earn Out Representative, Purchaser: (1) shall not alter
in any material respect the pricing formulas in any customer contract of any of
the Companies; (2) shall not, and shall not permit any of its other Affiliates
to, solicit any present customer of any of the Companies; (3) shall not, and
shall not permit any of its other Affiliates to, bid for or otherwise solicit
any Governmental Authority for the construction or operation of any biosolids
incineration or lime stabilization facility in New England and (4) will not sell
or transfer control of any of the Companies or any of their respective operating
facilities, except (i) to another Company or (ii) a sale or transfer of control
of any of the Companies which is incidental to either a sale, transfer of
control or internal reorganization of Purchaser.
(j) Until the earlier of the end of the Earn Out Period or the
satisfaction of all of the Purchaser's payment obligations under this Section
3.4, the Purchaser shall use its commercially reasonable efforts to provide
capital to the Companies in such amounts (at market rates) and at such times as
set forth on Schedule 3.4(j).
(k) At any time until the earlier of the end of the Earn Out
Period or the satisfaction of all of the Purchaser's payment obligations under
this Section 3.4, in the event that the Purchaser or any of its Affiliates
(other than a Company) either (i) with the consent of the Earn Out
Representative, engages in any of the activities described in Section 3.4(i)(2)
or (3) hereof, or (ii) enters into any business or solicits any contract (except
existing contracts with customers of Purchaser or its Affiliates or renewals
thereof) that competes with any of the Companies in New England through the use
of a biosolids management technology other than incineration or lime
stabilization, the Companies' Earnings shall be deemed to include twenty
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(20%) of the Purchaser's (or its Affiliate's) earnings attributable to such
activity, such earnings to be calculated in a manner reasonably consistent with
that used to compute the Companies' Earnings and shall otherwise be subject to
all of the procedural requirements of this Section 3.4. Notwithstanding the
foregoing sentence, the Companies' Earnings shall not be deemed to include any
of the Purchaser's (or its Affiliate's) earnings attributable to any of the
projects identified on Schedule 3.4(k), hereto.
(l) The Purchaser acknowledges that it is the intention of the
Earn Out Representative to retain certain employees of the Companies to act as
independent contractors for the Earn Out Representative and certain of the
Sellers with respect to monitoring and assisting the Earn Out Representative in
earning the Earn Out Payments.
(m) Until the earlier of the end of the Earn Out Period or the
satisfaction of all of the Purchaser's payment obligations under this Section
3.4, the Purchaser shall cause the Companies to (i) provide the Earn Out
Representative with monthly financial reports of the operations of the Companies
within 14 days following the close of each calendar month, accompanied by a
management report disclosing all material developments during such period with
respect to the Companies, and (ii) upon reasonable prior notice from the
Sellers, provide the Sellers with access to the management employees of the
Companies.
(n) Any Purchaser Common Stock issued by Purchaser to the
Sellers pursuant to Section 3.4 shall be allocated first to Earnings
attributable to the New England Treatment Company, Inc. ("NETCO"), if any.
Notwithstanding any other provision set forth herein, the aggregate of Earn Out
Payments paid in cash attributable to the Earnings of NETCO shall not exceed an
amount determined, in the sole judgment of the Earn Out Representative, to be
the maximum amount of cash payable in order for the transactions contemplated by
the Merger Agreement to comply with Section 368(a)(2)(E) of the Code (assuming
the portion of the Earn Out Baseline attributable to NETCO being equal to
$500,000), unless the Earn Out Representative elects to waive this limitation.
(o) A copy of any and all correspondence and/or notices sent
pursuant to this Section 3.4 between (i) Purchaser and (ii) the Earn Out
Representative and/or Xx. Xxxxxxx, shall simultaneously be sent to Xxxxxx X.
Xxxxx, c/o Astra Zeneca, 000 Xxxxxxxxxxxx Xxxx., Xxxxx, XX 00000.
SECTION 3.5. CLOSING DELIVERIES.
(a) At the Closing, the Sellers shall deliver to the
Purchaser:
(i) certificates representing all of the certificated
Ownership Interests, either registered in the name of one of the Companies or,
with respect to the Direct Ownership Interests, duly endorsed for transfer to
the Purchaser or accompanied by duly executed assignment documents, which shall
transfer to the Purchaser good and valid title to all of the certificated Direct
Ownership Interests, free and clear of all Liens, and, with respect to
uncertificated Direct Ownership Interests, if any, duly executed assignment
documents, which
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shall transfer to Purchaser good and valid title to any uncertificated Direct
Ownership Interests, free and clear of all Liens;
(ii) Release of Claims Agreements executed by the
officers, directors, stockholders, partners and members of the Companies
releasing the Companies from any and all prior claims of such officers,
directors, stockholders, partners and members, in the form attached hereto as
Exhibit C;
(iii) all corporate, accounting, business and tax
records of the Companies;
(iv) a legal opinion from Xxxxxxxx & O'Neil, LLP,
counsel to Xx. Xxxxxxx and the Companies, in a form reasonably satisfactory to
Purchaser;
(v) a legal opinion from Xxxxxx, Xxxxxxx & Xxxxxxx,
counsel to the Grat, in a form reasonably satisfactory to Purchaser;
(vi) a legal opinion from Xxxxxxx, Rock & Talbot,
P.C., counsel to Xxxxxxx Xxxxxxxx, individually, the Estate and the Trust, in a
form reasonably satisfactory to Purchaser;
(vii) a Consulting Agreement between the Purchaser
and Xx. Xxxxxxx, individually, in the form attached as Exhibit D hereto;
(viii) Covenant Not to Compete Agreements between the
Purchaser and each of Xx. Xxxxxxx, individually, and the Grat, in the form
attached as Exhibit E hereto;
(ix) Covenant Not to Compete Agreements between the
Purchaser and each of Xxx. Xxxxxxxx, individually, the Estate, the Trust and X.
X. Xxxxxxxx Trucking Company, Inc. (the "Trucking Company"), in the form
attached as Exhibit F hereto; and
(x) such other documents, including certificates of
the Sellers, as may be required by this Agreement or reasonably requested by the
Purchaser.
(b) At the Closing, the Purchaser shall deliver to:
(i) the Sellers, the cash portion of the Purchase
Price determined in accordance with and allocated as set forth in Section 3.2,
in immediately available funds;
(ii) Xx. Xxxxxxx, individually, a Consulting
Agreement, in the form attached as Exhibit D;
(iii) Xx. Xxxxxxx, individually, and the Grat, a
Covenant Not to Compete Agreement, in the form attached as Exhibit E;
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(iv) each of the Estate, Xxx. Xxxxxxxx, individually,
the Trust and the Trucking Company, a Covenant Not to Compete Agreement, in the
form attached as Exhibit F; and
(v) documents relating to the removal of the Sellers
from any and all personal guarantees and/or surety obligations in connection
with the Companies' debts or operations listed on Schedule 3.5; and,
(vi) legal opinions from in-house legal counsel to
the Purchaser, dated the Closing Date, in a form reasonably satisfactory to the
Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Sellers as follows, except as
set forth in the Purchaser's Form 10-K for the fiscal year ended December 31,
1998, all quarterly reports on Form 10-Q filed with the SEC since January 1,
1999, and all amendments to any of the foregoing:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has the requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Purchaser is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not have, or could not reasonably be anticipated to have,
individually or in the aggregate, a Material Adverse Effect (as defined in
Exhibit A).
SECTION 4.2. CAPITALIZATION.
(a) As of June 30, 1999, the authorized capital stock of
Purchaser consisted of 100,000,000 shares of Purchaser Common Stock, of which
17,392,790 shares were issued and outstanding, and 10,000,000 shares of
preferred stock, par value $.002 per share, of which 500,000 shares have been
designated as "Preferred Stock-Junior Participating Series A" and reserved for
issuance upon exercise of rights evidenced by the certificates representing all
outstanding shares of Purchaser Common Stock, but no such shares are issued and
outstanding. All of the issued and outstanding shares of Purchaser Common Stock
were validly issued and are fully paid, nonassessable and free of preemptive
rights.
(b) As of June 30, 1999, except for 4,020,393 options granted
pursuant to Purchaser incentive or option plans (or to current or former
employees of Purchaser), warrants to acquire 770,000 shares of Purchaser Common
Stock and shares issuable in connection with proposed acquisitions, if any,
there are no outstanding (i) securities of Purchaser convertible into
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or exchangeable for shares of capital stock or voting securities of Purchaser or
(ii) options or other rights to acquire from Purchaser or other obligations of
Purchaser to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Purchaser.
(c) The shares of Purchaser Common Stock to be issued as part
of the Purchase Price have been duly authorized and when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and non-assessable, and the issuance thereof is not subject
to any preemptive or other similar right.
SECTION 4.3. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Purchaser has full corporate power and authority to
execute and deliver this Agreement and, subject to the Purchaser Required
Statutory Approvals (as defined in Section 4.3(c)), to consummate the
transactions contemplated hereby. This Agreement has been approved by the Board
of Directors of the Purchaser and no other corporate proceedings on the part of
Purchaser are necessary to authorize the execution and delivery of this
Agreement or the consummation by Purchaser of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Purchaser, and,
assuming the due authorization, execution and delivery hereof by the other
Parties, constitutes a valid and legally binding agreement of Purchaser
enforceable against Purchaser in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby do not
and will not violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien, upon, any of the properties or
assets of Purchaser or any of its Subsidiaries under any of the terms,
conditions or provisions of (i) the respective charters or bylaws of Purchaser
or any of its Subsidiaries, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
Governmental Authority applicable to Purchaser or any of its Subsidiaries or any
of their respective properties or assets (assuming compliance with the matters
referred to in Section 4.3(c)) or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Purchaser or any of its
Subsidiaries is now a party or by which Purchaser or any of its Subsidiaries or
any of their respective properties or assets may be bound or affected, except,
in the case of clauses (ii) and (iii), for matters as would not have, or could
not reasonably be anticipated to have, individually or in the aggregate, a
Material Adverse Effect or materially impair the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
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(c) Except for the filing of the Registration Statements (as
defined in Section 4.4) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and
the declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities (the "Purchaser Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, have,
or could not reasonably be anticipated to have, individually or in the
aggregate, a Material Adverse Effect or materially impair the ability of
Purchaser to consummate the transactions contemplated by this Agreement.
SECTION 4.4. REGISTRATION STATEMENTS. None of the information to be
supplied by Purchaser or its Subsidiaries for inclusion in the Registration
Statements on Form S-3 to be filed under the Securities Act with the SEC by
Purchaser pursuant to Section 7.6 of this Agreement for the purpose of
registering the Purchaser Shares (as amended or supplemented, the "Registration
Statements") will, at the time they become effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
SECTION 4.5. REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1999, Purchaser has filed with the SEC
all material forms, statements, reports and documents (including all exhibits,
amendments and supplements thereto) required to be filed by it under each of the
Securities Act, the Securities Exchange Act of 1934, as amended, and the
respective rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the appropriate acts and
the rules and regulations thereunder.
(b) Purchaser has previously made available or delivered to
the Companies or the Sellers copies of Purchaser's (a) Annual Reports on Form
10-K for the fiscal year ended December 31, 1998, and for the immediately
preceding fiscal year, as filed with the SEC, (b) proxy and information
statements relating to (i) all meetings of its shareholders (whether annual or
special) and (ii) any actions by written consent in lieu of a shareholders'
meeting from January 1, 1999, until the date hereof, and (c) all other reports,
including quarterly reports, or registration statements filed by Purchaser with
the SEC since January 1, 1999 (other than Registration Statements filed on Form
S-8) (the documents referred to in clauses (a), (b) and (c), including the
exhibits thereto, are collectively referred to as the "Purchaser SEC Reports").
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(c) As of their respective dates, the Purchaser SEC Reports
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The audited consolidated financial statements and
unaudited interim consolidated financial statements of Purchaser included in
such reports (collectively, the "Purchaser Financial Statements") have been
prepared in accordance with GAAP (except as may be indicated therein or in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Purchaser and its Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended, subject, in the case of the unaudited interim financial statements, to
normal year-end and audit adjustments and any other adjustments described
therein.
SECTION 4.6. BROKERS AND FINDERS. Purchaser has not entered into any
contract, arrangement or understanding with any Person or firm which may result
in the obligation of Purchaser to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby. There is no claim for payment by Purchaser of any
investment banking fees, finder's fees, brokerage or agent commissions or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby.
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
CONCERNING THE TRANSACTION
Each Seller, severally but not jointly, represents and warrants to the
Purchaser as follows:
SECTION 4A.1 OWNERSHIP.
(a) The Seller holds of record and beneficially all of the
equity securities of the Companies shown as owned by the Seller on Schedule 1
free and clear of any Liens (except for Liens arising under Federal and state
securities laws and restrictions arising under the Companies' organizational
documents which have been waived).
(b) There are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, debenture, instrument or other agreement obligating the Seller to
deliver or sell, or cause to be delivered or sold, any Ownership Interests in
any of the Companies, or obligating the Seller to grant, extend or enter into
any such agreement or commitment. There are no voting trusts, proxies or other
agreements or understandings to which the Seller is a party or is bound with
respect to the voting of any ownership interest of any of the Companies.
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SECTION 4A.2 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) The Seller has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been approved by the respective boards of directors, partners
and/or members of the Companies, and no other proceedings on the part of the
Seller are necessary to authorize the execution and delivery of this Agreement
by the Seller or the consummation by the Seller of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Seller, and,
assuming the due authorization, execution and delivery hereof by the other
Parties, constitutes a valid and legally binding agreement of the Seller,
enforceable against the Seller in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally, and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by the Seller
and the consummation by the Seller of the transactions contemplated hereby do
not and will not violate or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Seller under any of the terms, conditions or
provisions of (i) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or Governmental
Authority applicable to the Seller, or any of its properties or assets, or (ii)
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Seller is now a party or by which the Seller or any of the
Seller's properties or assets may be bound or affected.
(c) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by the
Seller or the consummation by the Seller of the transactions contemplated
hereby.
SECTION 4A.3 BROKERS AND FINDERS. Except as disclosed on Schedule 4A.3,
the Seller has not entered into any contract, arrangement or understanding with
any Person or firm which may result in the obligation of any of the Companies to
pay any finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby.
SECTION 4A.4 REGISTRATION STATEMENTS. None of the information to be
supplied by the Seller for inclusion in the Registration Statements will contain
any untrue statement of any material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
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SECTION 4A.5 INVESTMENT REPRESENTATIONS. Each Seller acknowledges,
represents and agrees that:
(a) (i) Purchaser has made available to Seller the
information and documents described in Section 4.5 hereof, (ii) Seller
understands the risks associated with ownership of Purchaser Common Stock, and
(iii) Seller is capable of bearing the financial risks associated with such
ownership;
(b) The Purchaser Shares included within the Purchase
Price have not been registered under the Securities Act or registered or
qualified under any applicable state securities laws;
(c) The Purchaser Shares are being issued to Seller in
reliance upon exemptions from such registration or qualification requirements,
and the availability of such exemptions depends in part upon Seller's bona fide
investment intent with respect to the Purchaser Shares;
(d) Seller's acquisition of the Purchaser Shares is
solely for his own account for investment, and Seller is not acquiring such
Purchaser Shares for the account of any other Person or with a view toward
resale, assignment, fractionalization, or distribution thereof;
(e) Seller shall not offer for sale, sell, transfer,
pledge, hypothecate or otherwise dispose of any of the Purchaser Shares except
in accordance with this Agreement and (i) the registration requirements of the
Securities Act and applicable state securities laws or (ii) upon delivery to
Purchaser of an opinion of legal counsel reasonably satisfactory to Purchaser
that an exemption from registration is available or pursuant to an effective
registration statement covering the Purchaser Shares to be sold;
(f) Seller has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
investment in the Purchaser Shares, and to make an informed investment decision
with respect thereto;
(g) Seller has had the opportunity to ask questions of,
and receive answers from, Purchaser's officers and directors concerning Seller's
acquisition of the Purchaser Shares and to obtain such other information
concerning Purchaser and the Purchaser Shares, to the extent Purchaser's
officers and directors possessed the same or could acquire it without
unreasonable effort or expense, as Seller deemed necessary in connection with
making an informed investment decision; and
(h) In addition to any other legends required by law or
the other agreements entered into in connection herewith, each certificate
evidencing the Purchaser Shares will bear a conspicuous restrictive legend
substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED
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FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED
EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE
ACT AND SUCH OTHER STATE LAWS OR UPON DELIVERY TO THIS
CORPORATION OF AN OPINION OF LEGAL COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE COMPANIES
The Sellers, jointly and severally, represent and warrant to the
Purchaser as follows:
SECTION 5.1. ORGAnIZATION AND QUALIFICATION. Each of the Companies is a
corporation, limited partnership or limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
organization and has the requisite organizational power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. Each of the Companies is duly qualified to do business
as a foreign entity and is in good standing in each jurisdiction in which the
properties owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not have, or could not reasonably be
anticipated to have, individually or in the aggregate, a Material Adverse
Effect. True, accurate and complete copies of each of the Companies' articles of
incorporation, certificate of partnership, certificate of formation, or other
organizational documents, as amended, and each of the Companies' bylaws,
partnership agreement, regulations, or other similar documents, in each case as
in effect on the date hereof, including all amendments thereto, have heretofore
been delivered to Purchaser.
SECTION 5.2. CAPITALIZATION.
(a) One or more of the Companies holds of record and
beneficially all of the equity securities of the Companies, excluding the Direct
Ownership Interests, as set forth on Schedule 1. Schedule 1 also sets forth for
each Company (i) its name, jurisdiction of organization and form of
organization, (ii) the classes and number of shares of its authorized capital
stock or other equity securities, (iii) the number of issued and outstanding
shares of each class of its capital stock or other equity securities, and (iv)
the number of shares of its capital stock or other equity securities held in
treasury. All of the Sellers' ownership interests in the Companies were validly
issued and are fully paid, and nonassessable. No Subsidiary of any of the
Companies, other than as described on Schedule 1, holds any ownership interests
in any of the Companies.
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(b) Except as disclosed on Schedule 5.2(b), there are no
outstanding (i) subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, debenture,
instrument or other agreement obligating any of the Companies to issue, deliver
or sell, or cause to be issued, delivered or sold, additional ownership
interests in any of the Companies, or obligating any of the Companies to grant,
extend or enter into any such agreement or commitment or (ii) obligations of any
of the Companies to repurchase, redeem or otherwise acquire any securities
referred to in clause (i) above. There are no voting trusts, proxies or other
agreements or understandings to which any of the Companies is a party or is
bound with respect to the voting of any ownership interests of any of the
Companies.
SECTION 5.3. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) This Agreement has been approved by the respective boards
of directors, partners and/or members of the Companies, and no other proceedings
on the part of the Companies are necessary to authorize the execution and
delivery of this Agreement or the consummation by the Companies and the Sellers
of the transactions contemplated hereby.
(b) Except as disclosed on Schedule 5.3 hereto, the execution
and delivery of this Agreement by the Sellers and the consummation by the
Sellers of the transactions contemplated hereby do not and will not violate or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of any of the
Companies under any of the terms, conditions or provisions of (i) the respective
charters, bylaws, partnership agreements, regulations or other similar documents
of any of the Companies, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
Governmental Authority applicable to any of the Companies, or any of their
respective properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which any of the Companies is
now a party or by which any of the Companies or any of their respective
properties or assets may be bound or affected.
(c) Except as disclosed on Schedule 5.3 hereto, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary on the part of the Companies for the execution and delivery of this
Agreement by the Sellers or the consummation by the Sellers of the transactions
contemplated hereby.
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SECTION 5.4. SUBSIDIARIES. Except as set forth on Schedule 1, none of
the Companies has any Subsidiaries, nor do any of the Companies hold any equity
interest in or control (directly or indirectly, through the ownership of
securities, by contract, by proxy, alone or in combination with others, or
otherwise) any corporation, limited liability company, partnership, business
organization or other Person.
SECTION 5.5. FINANCIAL STATEMENTS. The audited financial statements of
the Companies (excluding NETCO-Waterbury, Limited Partnership, NETCO-Waterbury
Systems, Inc. and NETCO-Residuals Management Systems, Inc.) for the fiscal year
ended December 31, 1998, attached as part of Schedule 5.5, have been prepared in
accordance with GAAP (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the financial position of
the Companies as of the dates thereof and the results of their operations and
cash flows for the periods then ended. The unaudited financial statements for
NETCO-Waterbury, Limited Partnership, NETCO-Waterbury Systems, Inc. and
NETCO-Residuals Management Systems, Inc. for the fiscal year ended December 31,
1998, and the unaudited interim financial statements of the Companies for the
seven (7) months ended July 31, 1999, also attached as part of Schedule 5.5 (and
together with the audited financial statements described in the preceding
sentence, the "Companies' Financial Statements"), have been prepared in
accordance with the accrual method of accounting and fairly present in all
material respects the financial position of the Companies as of the dates
thereof and the results of their operations and cash flows for the seven (7)
month period then ended, subject to normal year-end adjustments and any other
adjustments described therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on
Schedule 5.6, the Companies have not incurred any liabilities or contingencies
(whether absolute, accrued, contingent or otherwise) of any nature, except
liabilities (i) which are accrued or reserved against the Companies' Financial
Statements or reflected in the notes thereto or (ii) which were incurred after
December 31, 1998, and were incurred in the ordinary course of business and
consistent with past practices.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since July 31, 1999,
and except as described on Schedule 5.7, (i) the Companies have not declared or
set aside or paid any dividend or made any other distribution with respect to
any outstanding securities or ownership interests, or, directly or indirectly,
purchased, redeemed or otherwise acquired any of their securities or ownership
interests and (ii) the Companies have not granted any general increase in the
compensation of any of their officers, directors or employees (including any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment) and have not paid any bonuses to any officers, directors or
employees. Since December 31, 1998, and except as described on Schedule 5.7, (i)
the Companies have not adopted, entered into or amended any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement, trust fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law; (ii) the Companies have not
made any amendment to any of their articles of incorporation, certificates of
partnership, regulations, bylaws, partnership agreements, operating agreements
or other similar documents or changed the character of any of their businesses
in any
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manner; (iii) the businesses of the Companies have been conducted in the
ordinary course of business consistent with past practices; and (iv) there has
not been any event, occurrence, development or state of circumstances or facts
which has had, or could reasonably be anticipated to have, individually or in
the aggregate, a Material Adverse Effect.
SECTION 5.8. LITIGATION. Except as described on Schedule 5.8, there are
no claims, suits, actions, Environmental Claims, inspections, investigations or
proceedings pending or, to the knowledge of any of the Companies or Sellers,
threatened against, relating to or affecting any of the Companies before any
court, governmental department, commission, agency, instrumentality, authority,
or any mediator or arbitrator. Except as described on Schedule 5.8, none of the
Companies is subject to any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality, authority,
or any mediator or arbitrator.
SECTION 5.9. ACCOUNTS RECEIVABLE. All accounts receivable reflected on
the Companies' Financial Statements represent sales actually made in the
ordinary course of business and are collectible in the ordinary course of
business.
SECTION 5.10. NO VIOLATION OF LAW; COMPLIANCE WITH AGREEMENTS.
(a) Except as disclosed on Schedule 5.10, none of the
Companies is in violation of, and none of the Companies has been given notice or
been charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
Environmental Law) of any governmental or regulatory body or authority. To the
knowledge of the Sellers, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same.
Except as disclosed on Schedule 5.10, the Companies have all permits (including
without limitation Environmental Permits), licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
required or necessary to conduct their business as presently conducted
(collectively, the "Company Permits"). The Companies are not in violation of the
terms of any of the Company Permits.
(b) Except as disclosed on Schedule 5.10, none of the
Companies nor any of the Sellers is in breach or violation of or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party, could result in a
default under, (i) the charter, bylaws, partnership agreement, regulations or
similar organizational instruments of any of the Companies or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which any of the Companies is a party
or by which any of the Companies is bound or to which any of their property is
subject.
SECTION 5.11. INSURANCE. The Sellers have heretofore delivered to the
Purchaser true and correct copies of all insurance policies owned by the
Companies or by which any of the Companies or any of their properties or assets
is covered against present losses, all of which are
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now in full force and effect. No insurance has been refused with respect to any
operations, properties or assets of any of the Companies nor has coverage of any
insurance been limited by any insurance carrier that has carried, or received
any application for, any such insurance during the last three years. No
insurance carrier has denied any claims made against any of the Companies'
policies.
SECTION 5.12. TAXES.
(a) Except as set forth on Schedule 5.12, (i) the Companies
have (x) duly filed (or there have been filed on their behalf) with the
appropriate taxing authorities all Tax Returns (as hereinafter defined) required
to be filed by the Companies on or prior to the date hereof, and (y) duly paid
in full or made adequate provision therefor on the Companies' Financial
Statements in accordance with GAAP (or there have been paid or adequate
provision has been made on their behalf) for the payment of all Taxes (as
hereinafter defined) for all periods ending through the date hereof; (ii) all
such Tax Returns filed by or on behalf of the Companies are true, correct and
complete in all material respects; (iii) the Companies are not the beneficiary
of any extension of time within which to file any Tax Return; (iv) no claim has
been made since January 1, 1997 by any authority in a jurisdiction where the
Companies do not file Tax Returns that they are or may be subject to taxation by
that jurisdiction; (v) the liabilities and reserves for Taxes reflected in the
most recent balance sheet included in the Companies' Financial Statements to
cover all Taxes for all periods ending at or prior to the date of such balance
sheet have been determined in accordance with GAAP, and there is no material
liability for Taxes for any period beginning after such date other than Taxes
arising in the ordinary course of business; (vi) there are no Liens for Taxes
upon any property or assets of the Companies, except for Liens for Taxes not yet
due; (vii) the Companies have not made any change in accounting methods since
December 31, 1998; (viii) the Companies have not received a ruling from any
taxing authority or signed an agreement with any taxing authority; (ix) the
Companies have complied in all respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code,
as amended or similar provisions under any foreign laws) and have, within the
time and the manner prescribed by law, withheld and paid over to the appropriate
taxing authority all amounts required to be so withheld and paid over under all
applicable laws in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, partner, member or other third
party; (x) no federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any Taxes
or Tax Returns of the Companies, and as of the date of this Agreement the
Companies have not received a written notice of any pending audits or
proceedings; (xi) no partner, stockholder, member, director or officer (or
employee responsible for Tax matters) of the Companies expects any authority to
assess any additional Taxes with respect to the Companies for any period for
which Tax Returns have been filed; (xii) the federal income Tax Returns of the
Companies have been examined by the Internal Revenue Service ("IRS") (which
examination has been completed) or the statute of limitations for the assessment
of federal income Taxes of the Companies has expired, for all periods through
and including December 31, 1994, and no deficiencies were asserted as a result
of such examinations which have not been resolved and fully paid; (xiii) no
adjustments or deficiencies relating to Tax Returns of the Companies have been
proposed, asserted or assessed by any taxing
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authority, except for such adjustments or deficiencies which have been fully
paid or finally settled; and (xiv) the Companies have delivered to the Purchaser
true, correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Companies since December 31, 1993.
(b) There are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies against the Companies, and no power of attorney granted by
any of the Companies with respect to any Taxes is currently in force. The
Companies have disclosed on their federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Section 6662 of the Code. The Companies are not a
party to any agreement providing for the allocation or sharing of Taxes with an
entity that is not directly or indirectly a wholly-owned Subsidiary of one of
the Companies. The Companies have not, with regard to any assets or property
held, acquired or to be acquired by it, filed a consent to the application of
Section 341(f) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by the Companies. None of the Companies (i)
has been a member of an affiliate group filing a consolidated federal income Tax
Return (other than a group the common parent of which was one of the Companies)
and (ii) has liability for Taxes of any Person (other than any of the Companies
and their Subsidiaries) under Section 1.1502-6 of the United States Treasury
Regulations (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
SECTION 5.13. EMPLOYEE BENEFIT PLANS.
(a) Each Plan and each Benefit Program (as such terms are
defined below) is listed on Schedule 5.13 hereto. No Plan or Benefit Program is
or has been (i) covered by Title IV of the Employer Retirement Income Security
Act of 1974, as amended ("ERISA"), (ii) subject to the minimum funding
requirements of Section 412 of the Code or (iii) a "multi-employer plan" as
defined in Section 3(37) of ERISA, nor have any of the Companies contributed to,
or ever had any obligation to contribute to, any multi-employer plan. Each Plan
and Benefit Program intended to be qualified under Section 401(a) of the Code is
designated as a tax-qualified plan on Schedule 5.13 and is so qualified. No Plan
or Benefit Program provides for any retiree health benefits for any employees or
dependents of any of the Companies other than as required by the Consolidated
Budget Reconciliation Act of 1985, as amended ("COBRA"). There are no claims
pending with respect to, or under, any Plan or any Benefit Program, other than
routine claims for benefits, and there are no disputes or litigation pending or,
to the knowledge of any of the Companies, threatened, with respect to any such
Plans or Benefit Programs.
(b) The Sellers have heretofore delivered to Purchaser true
and correct copies of the following, if any:
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(i) each Plan and each Benefit Program listed on
Schedule 5.13, all amendments thereto as of the date hereof and all current
summary plan descriptions provided to employees regarding the Plans and Benefit
Programs;
(ii) each trust agreement and annuity contract (or
any other funding instruments) pertaining to any of the Plans or Benefit
Programs, including all amendments to such documents to the date hereof;
(iii) each management or employment contract or
contract for personal services and a complete description of any understanding
or commitment between any of the Companies and any officer, consultant,
director, employee or independent contractor of any of the Companies; and
(iv) a complete description of each other plan,
policy, contract, program, commitment or arrangement providing for bonuses,
deferred compensation, retirement payments, profit sharing, incentive pay,
commissions, hospitalization or medical expenses or insurance (including,
without limitation, health, dental, life and disability insurance) or any other
benefits for any officer, consultant, director, annuitant, employee or
independent contractor of any of the Companies as such or members of their
families (other than directors' and officers' liability policies), whether or
not insured (a "Benefit Program"). For purposes of this Agreement, "Plan" means
an "employee benefit plan" (as defined in Section 3(3) of ERISA) which is or has
been established or maintained, or to which contributions are or have been made,
by any of the Companies or by any trade or business, whether or not
incorporated, which, together with any of the Companies, is under common
control, as described in Section 414(b) or (c) of the Code.
(c) Except as disclosed on Schedule 5.13, to the best
knowledge of the Sellers, each Plan and Benefit Program has been maintained and
administered in compliance with its terms and in accordance with all applicable
laws, rules and regulations. The Companies have no commitment or obligation to
establish or adopt any new or additional Plans or Benefit Programs or to
increase the benefits under any existing Plan or Benefit Program.
(d) Except as set forth on Schedule 5.13, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will (i) result in any payment to be made by
any of the Companies, including, without limitation, severance, unemployment
compensation, golden parachute (defined in Section 280G of the Code) or
otherwise, becoming due to any employee of any of the Companies, or (ii)
increase any benefits otherwise payable under any Plan or any Benefit Program.
(e) As of the date hereof, the Companies do not sponsor any
simplified employee pension plans as described in Section 408(k) of the Code and
there are no claims against any of the Companies for benefits relating to any
such plans.
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SECTION 5.14. EMPLOYEE AND LABOR MATTERS.
(a) Schedule 5.14 hereto includes a true and complete list,
dated as of August 19, 1999, of all employees of the Companies, listing the
title or position held, base salary or wage rate and, for the period since July
31, 1999, any bonuses, commissions or profit sharing payable to such employees.
(b) Except as set forth on Schedule 5.14, none of the
Companies is a party to or bound by any written employment agreements or
commitments, other than on an at-will basis. The Companies are in compliance
with all applicable laws respecting the employment and employment practices,
terms and conditions of employment and wages and hours of their employees and
are not engaged in any unfair labor practice. To the best knowledge of the
Sellers, all employees of the Companies who work in the United States are
lawfully authorized to work in the United States according to federal
immigration laws. There is no labor strike or labor disturbance pending or, to
the knowledge of the Sellers, threatened against any of the Companies with
respect to the Business and, during the past five years, the Companies have not
experienced a work stoppage.
(c) Except as set forth on Schedule 5.14, (i) none of the
Companies is a party to or bound by the terms of any collective bargaining
agreement or other union contract applicable to any employee of any of the
Companies and no such agreement or contract has been requested by any employee
or group of employees of any of the Companies, nor has there been any discussion
with respect thereto by management of any of the Companies with any employees of
any of the Companies, (ii) the Sellers are not aware of any union organizing
activities or proceedings involving, or any pending petitions for recognition
of, a labor union or association as the exclusive bargaining agent for, or where
the purpose is to organize, any group or groups of employees of any of the
Companies, or (iii) there is not currently pending, with regard to any of its
facilities, any proceeding before the National Labor Relations Board, wherein
any labor organization is seeking representation of any employees of any of the
Companies.
SECTION 5.15. ENVIRONMENTAL MATTERS. Except as set forth on Schedule
5.15 to this Agreement:
(a) None of the Companies nor any of their Business Facilities
(as defined in Exhibit A), is in violation of, or has violated, or has been or
is in non-compliance with, any Environmental Law, including, but not limited to,
the conduct of the business of the Companies or the ownership, use, maintenance
or operation of any of the Business Facilities by the Companies.
(b) Except in compliance with Environmental Laws (including,
without limitation, by obtaining necessary Environmental Permits), (i) no
Materials of Environmental Concern (as defined in Exhibit A) have been used,
generated, extracted, mined, beneficiated, manufactured, stored, treated, or
disposed of, or in any other way released (and no release is threatened) by any
of the Companies, on, under or about any Business Facility or transferred or
transported by any of the Companies to or from any Business Facility, and (ii)
to the knowledge of the Sellers no Materials of Environmental Concern have been
generated, manufactured, stored or treated or disposed of, or in any other way
released (and no release is threatened) by any of the
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Companies, on, under, about or from any property adjacent to any current
Business Facility;
(c) There are no Environmental Claims known, pending or, to
the knowledge of the Sellers, threatened against any of the Companies or any of
their Business Facilities, and, to the knowledge of the Sellers, there is no
basis for same;
(d) The Companies and all of their Business Facilities have
obtained all Environmental Permits applicable to the operation of the business
of the Companies as presently conducted, and the Companies and their Business
Facilities are in compliance with all terms and conditions of such Environmental
Permits. The Company and all of their Business Facilities have timely filed
applications for renewal of all such Environmental Permits. Regarding all
Environmental Permits for which renewal, amendment, or modification is sought or
pending, no material expenditures, capital improvements, or changes in operation
will be necessary as a condition or as a result of such renewal, amendment, or
modification;
(e) The Companies have all environmental and pollution control
equipment necessary to comply with all Environmental Laws (including, without
limitation, to comply with all applicable Environmental Permits applicable to
the operation of the business of the Companies as presently conducted;
(f) To the knowledge of the Sellers, there are no Materials of
Environmental Concern on any Business Facility of any of the Companies exceeding
any standard or limitation established, published or promulgated pursuant to
Environmental Laws, or which would require reporting to any Governmental
Authority or Remediation to comply with the Requirements of Environmental Laws
(as defined in Exhibit A);
(g) To the knowledge of the Sellers, none of the off-site
locations where Materials of Environmental Concern generated from any Business
Facility of any of the Companies, or for which any of the Companies has arranged
for their disposal, treatment or application, has been nominated or identified
as a facility which is subject to an existing or potential claim under
Environmental Laws;
(h) None of the Companies have been named as a potentially
responsible party under, and no Business Facility of the Companies have been
nominated or identified as a facility which is subject to, an existing or
potential claim under CERCLA or comparable Environmental Laws, and, to the
knowledge of the Sellers, no Business Facility of the Companies is subject to
any Lien arising under Environmental Laws;
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(i) The Companies have not received any notice of any release
or threatened release of Materials of Environmental Concern, or remedial
obligation under, Environmental Laws or Permits, relating to the ownership, use,
maintenance, operation of any Business Facility of the Companies or in
connection with the business of the Companies, nor, to the knowledge of the
Sellers, is there any basis for any of the foregoing, nor have the Companies
voluntarily undertaken Remediation or other decontamination or cleanup of any
facility or site or entered into any agreement for the payment of costs
associated with such activity;
(j) To the knowledge of the Sellers, there is no Environmental
Law or Requirement of Environmental Laws that will require future compliance
costs on the part of the Companies in excess of One Hundred Thousand Dollars
($100,000) above costs currently expended in the ordinary course of business;
(k) The Companies have filed all notices, notifications,
financial security, waste managements plans, or applications which are required
to be filed by the Companies for the operation of its business or the use or
operation of any Business Facility of any of the Companies; and
(l) Except for sludge and processed by-products, no current
Business Facility (or equipment thereon) of the Companies contains any lead
containing materials, asbestos containing materials or polychlorinated biphenyls
in any form.
For purposes of this Section, the "Companies" shall include any entity which is,
in whole or in part, a predecessor of any of the Companies and all of their
present and former Subsidiaries and their successors of predecessors.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Except as disclosed on
Schedule 5.16 hereto, none of the Companies or the Sellers is a party to any
agreement which purports to restrict or prohibit any of them from, directly or
indirectly, engaging in any business currently engaged in by the Companies. None
of the Sellers' is a party to any agreement which, by virtue of such person's
relationship with one or more of the Companies, restricts the Companies or any
Subsidiary of any of the Companies from, directly or indirectly, engaging in any
of the businesses described above.
SECTION 5.17. TITLE TO ASSETS. Except as disclosed on Schedule 5.17,
the Companies have good and indefeasible title to their assets and valid
leasehold interests in their leased assets and properties, as reflected in the
most recent balance sheet included in the Companies' Financial Statements,
except for properties and assets that have been disposed of in the ordinary
course of the conduct of the Business since the date of the latest balance sheet
included therein, free and clear of all Liens, except (i) Liens for current
taxes, payments of which are not yet delinquent, (ii) such imperfections in
title and easements and encumbrances, if any, as are not substantial in
character, amount or extent and do not interfere with the present use of the
property subject thereto or affected thereby, or otherwise impair the Companies'
business operations (in the manner presently carried on by the Companies), or
(iii) any Lien securing any debt or obligation described on Schedule 5.17 which
is expressly referenced as being secured.
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All leases under which the Companies lease any real property have been delivered
to Purchaser and are in good standing, valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event which, with notice or lapse of time or both, would become a
default by or on behalf of the Companies or their Subsidiaries, or by or on
behalf of any third party.
SECTION 5.18. CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. Schedule
5.18 hereto sets forth a complete list of the following contracts, agreements,
plans and commitments (collectively, the "Contracts") to which any of the
Companies is a party or by which any of the Companies or any of their assets is
bound as of the date hereof:
(a) any contract, commitment or agreement that involves
aggregate expenditures by one or more of the Companies of more than Fifty
Thousand Dollars ($50,000) per year;
(b) any contract or agreement (including any such contracts or
agreements entered into with any Governmental Authority) relating to the
maintenance or operation of the Business that involves aggregate expenditures by
one or more of the Companies of more than Fifty Thousand Dollars ($50,000);
(c) any indenture, loan agreement or note under which any of
the Companies has outstanding indebtedness, obligations or liabilities for
borrowed money;
(d) any lease or sublease for the use or occupancy of real
property;
(e) any non-competition agreement described in Section 5.16;
(f) any guarantee, direct or indirect, by any Person of any
contract, lease or agreement entered into by any of the Companies;
(g) any partnership, joint venture or construction and
operation agreement;
(h) any agreement of surety, guarantee or indemnification with
respect to which any of the Companies is the obligor, outside of the ordinary
course of business;
(i) any contract that requires any of the Companies to pay for
goods or services substantially in excess of its estimated needs for such items
or the fair market value of such items;
(j) any contract, agreement, agreed order or consent agreement
that requires any of the Companies to take any actions or incur any expenses to
remedy non-compliance with any Environmental Law; and
(k) any other contract material to any of the Companies or
their business.
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True, correct and complete copies of each of such contracts, agreements, plans
and commitments have been delivered to or made available for inspection by
Purchaser. All such contracts, agreements, plans and commitments (i) were duly
and validly executed and delivered by one or more of the Companies and (ii) to
the knowledge of the Sellers, are valid and in full force and effect. Except as
set forth on Schedule 5.18, the Companies have fulfilled all material
obligations required of the Companies under each such contract, agreement, plan
or commitment to have been performed by them prior to the date hereof, including
timely paying all interest on its debt as such interest has become due and
payable. Except as set forth on Schedule 5.18, there are no counterclaims or
offsets under any of such contracts, agreements, plans and commitments.
SECTION 5.19. SUPPLIES. To the knowledge of the Sellers, the Supplies
of the Companies are of a quantity and quality that have been normal for the
Companies in the ordinary course of business of the Companies.
SECTION 5.20. BROKERS AND FINDERS. Except as disclosed on Schedule
5.20, none of the Companies has entered into any contract, arrangement or
understanding with any Person or firm which may result in the obligation of any
of the Companies to pay any finder's fees, brokerage or agent commissions or
other like payments in connection with the transactions contemplated hereby.
There is no claim for payment by any of the Companies of any investment banking
fees, finder's fees, brokerage or agent commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
SECTION 5.21. INTELLECTUAL PROPERTY. To the knowledge of the Sellers,
except as disclosed on Schedule 5.21 hereto, the Companies have rights to use,
whether through ownership, licensing or otherwise, all patents, trademarks,
service marks, trade names, copyrights, software, trade secrets and other
proprietary rights and processes that are material to its business as now
conducted (collectively, the "Company Intellectual Property Rights"). Except as
set forth on Schedule 5.21, the Companies do not own any patents. The Companies
have no knowledge of any infringement by any other Person of any of the Company
Intellectual Property Rights, and, other than within the ordinary course of
business, the Companies have not entered into any agreement to indemnify any
other party against any charge of infringement of any of the Company
Intellectual Property Rights. To the knowledge of the Sellers, the Companies
have not and do not violate or infringe any intellectual property right of any
other Person, and the Companies have not received any communication alleging
that they violated or infringed the intellectual property right of any other
person. The Companies have not been sued for infringing any intellectual
property right of another person. There is no claim or demand of any Person
pertaining to, or any proceeding which is pending or, to the knowledge of any of
the Companies, threatened, that challenges the rights of the Companies in
respect of any Company Intellectual Property Rights, or that claims that any
default exists under any Company Intellectual Property Rights. None of the
Company Intellectual Property Rights is subject to any outstanding order,
ruling, decree, judgment or stipulation by or with any court, tribunal,
arbitrator, or other Governmental Authority.
SECTION 5.22. RELATIONSHIPS. Except as set forth on Schedule 5.22,
since January 1,
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1999, the Companies have not received notice from any customer, supplier or any
party to any Contract involving more than Fifty Thousand Dollars ($50,000)
annually with one or more of the Companies (each a "Contract Party") that such
Contract Party intends to discontinue doing business with the Companies, and,
since such date, no Contract Party has indicated any intention (a) to terminate
its existing business relationship with any of the Companies or (b) not to
continue its business relationship with any of the Companies, whether as a
result of the transactions contemplated hereby or otherwise. Except as set forth
on Schedule 5.22, the Companies have not entered into or participated in any
related party transaction during the past year.
SECTION 5.23. YEAR 2000. To the knowledge of the Sellers, after
reasonable investigation by the Sellers and except as disclosed on Schedule 5.23
hereto, all emissions monitors and computers controlling the operation of
incinerators used by the Companies are Year 2000 Compliant. "Year 2000
Compliant" means as to any device (including, without limitation, all software,
firmware, microprocessing chips and/or other data processing devices related to
such device) utilized by and material to the business operations of any of the
Companies, that such device will be able to accurately process date data from,
into and between the twentieth and twenty-first centuries when used in
accordance with the applicable documentation setting forth the requirements for
the use of the specific item.
SECTION 5.24. CERTAIN PAYMENTS. To the best knowledge of the Sellers,
none of the Companies nor any stockholder, member, partner, officer, director or
employee of the Companies have paid or received or caused to be paid or
received, directly or indirectly, in connection with any of the businesses of
the Companies (a) any bribe, kickback or other similar payment to or from any
domestic or foreign government or agency thereof or any other Person or (b) any
contribution to any domestic or foreign political party or candidate (other than
from personal funds of such stockholder, member, partner, officer, director or
employee not reimbursed by the Companies or as permitted by applicable law).
SECTION 5.25. BOOKS AND RECORDS. To the knowledge of the Sellers, the
minute books and other organizational records of the Companies are correct and
complete in all material respects and the signatures appearing on all documents
contained therein are the true signatures of the person purporting to have
signed the same. To the knowledge of the Sellers, all actions reflected in said
books and records were duly and validly taken in compliance with the laws of the
applicable jurisdiction and no meeting of the Board of Directors of any of the
Companies or any committee thereof has been held for which minutes have not been
prepared and are not contained in the minute books. All such books and records
are located in the offices of the Companies.
SECTION 5.26. CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of
the Sellers, except as disclosed on Schedule 5.26 hereto, all buildings,
improvements and equipment owned or leased by the Companies are structurally
sound, in good operating condition and repair (subject to normal wear and tear)
and adequate for the uses to which they are being put, and none of the
buildings, improvements and equipment owned or leased by the Companies is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs not in excess of $100,000 per repair.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING CLOSING.
SECTION 6.1. CONDUCT OF BUSINESS BY THE SELLERS PENDING CLOSING. After
the date hereof and prior to the Closing Date, unless Purchaser shall otherwise
agree in writing, the Sellers shall, and the Sellers shall cause the Companies
to:
(a) conduct their businesses in the ordinary and usual course
of business and consistent with past practice;
(b) not (i) amend or propose to amend any of the Companies'
charters or bylaws or other similar documents, (ii) split, combine, reorganize,
reclassify, recapitalize or take any similar action with respect to any of the
Companies' outstanding capital stock or other equity securities or (iii)
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional share of, or any options, warrants or
rights of any kind to acquire any share of, any of the Companies' capital stock
or other equity securities of any class or any debt or equity securities
convertible into or exchangeable for such capital stock or other equity
securities;
(d) not (i) incur or become contingently liable with respect
to any indebtedness for borrowed money, (ii) redeem, purchase, acquire or offer
to redeem, purchase or acquire any shares of any of the Companies' capital stock
or any options, warrants or rights to acquire any of the Companies' capital
stock or other equity securities or any security convertible into or
exchangeable for any of the Companies' capital stock or other equity securities,
(iii) make any acquisition of any assets or businesses other than expenditures
for fixed or capital assets described on Schedule 3.3(d) hereto or in the
ordinary course of business not exceeding $100,000 in any instance or $200,000
in the aggregate, (iv) sell, pledge, dispose of or encumber any assets or
businesses other than sales in the ordinary course of business or (v) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(e) use all reasonable efforts to preserve intact the
Companies' business organization and goodwill, keep available the services of
the Companies' respective present officers and key employees, and preserve the
goodwill and business relationships with customers and others having business
relationships with them and not engage in any action, directly or indirectly,
with the intent to adversely impact the transactions contemplated by this
Agreement;
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(f) not enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees;
(g) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law or as contemplated hereunder;
(h) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on the Companies' tangible
assets and its businesses in such amounts and against such risks and losses as
are consistent with past practice;
(i) not make, change or revoke any material Tax election or
make any material agreement or settlement regarding Taxes with any taxing
authority;
(j) not make any change in the Companies' financial, Tax or
accounting methods, practices or policies, or in any assumption underlying such
a method, practice or policy;
(k) give prompt written notice to Purchaser of the
commencement of any Environmental Claim, or non-routine inspection by any
Governmental Authority with responsibility for enforcing or implementing any
applicable Environmental Laws, and provide to Purchaser such information as
Purchaser may reasonably request regarding any such Environmental Claim, any
developments in connection therewith, and, as applicable, any anticipated or
actual response thereto;
(l) not enter into or assume any contracts or agreements
having a value or imposing an obligation upon any of the Companies in excess of
$100,000 annually and all contracts or agreements having a value to or imposing
an obligation on any of the Companies that have remaining obligations of
$200,000 or more, regardless of the annual payment;
(m) maintain the Companies' books of account and records in
the usual, regular and ordinary manner consistent with past policies and
practice;
(n) not compromise, settle, grant any waiver or release
relating to or otherwise adjust any litigation or claims of any nature
whatsoever pending against any of the Companies; and
(o) not take any action or omit to take any action, which
action or omission would result in a breach of any of the representations and
warranties set forth in this Agreement.
SECTION 6.2. OTHER OFFERS. Except in connection with the transactions
contemplated by this Agreement, from and after the date hereof, and continuing
through the earlier of Closing or
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the termination of this Agreement in accordance with the terms hereof, the
Sellers shall not, and shall not permit any of the Companies or the Companies'
officers, directors, employees, Affiliates, representatives or agents to,
directly or indirectly, (i) solicit, initiate or knowingly encourage any offer
or proposal for, or any indication of interest in, a merger or business
combination involving any of the Companies or the acquisition of an equity
interest in, or any substantial portion of the assets of, any of the Companies
or (ii) engage in negotiations with or disclose any nonpublic information
relating to any of the Companies or Purchaser, or afford access to the
properties, books or records of any the Companies, to any Person. The Companies
shall promptly notify and provide copies to Purchaser of any offer, proposal,
solicitation or indication of interest, or communication with respect thereto,
delivered to or received from any third party.
SECTION 6.3. ACCESS TO INFORMATION. The Sellers shall, and shall cause
the Companies to, give the Purchaser, its accountants, counsel, financial
advisors, and other representatives (the "Purchaser Representatives") full
access (and shall otherwise fully cooperate, including by making available
copies of all of the following documents which are susceptible to photostatic
reproduction) during normal business hours throughout the period prior to
Closing to all of its respective properties, books, records (including, but not
limited to, Tax Returns and any and all records or documents which are within
the possession of governmental or regulatory authorities, agencies or bodies,
and the disclosure of which the Company can facilitate or control), Contracts,
premises, permits, Environmental Permits, licenses, Governmental Authorizations,
commitments of any nature (whether written or oral) and records, and shall
permit the Purchaser and Purchaser Representatives to make such inspections
(including without limitation environmental inspections, sampling, and analysis)
as they may require and furnish to the Purchaser and Purchaser Representatives
during such period all such information concerning the Companies and their
affairs as the Purchaser may reasonably request.
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS. The Sellers will use all
reasonable commercial efforts to cause the representations and warranties
contained in Articles IV-A and V hereof to continue to be true and correct
through the Closing Date and to obtain the satisfaction of the conditions to
Closing set forth in Section 8.1 and 8.3 hereof.
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ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 7.1. CONSENTS. Subsequent to the Closing Date, the Sellers will
use all reasonable commercial efforts, at the request of the Purchaser provided
that the Purchaser reimburses the Sellers for all out of-pocket costs and
expenses, to assist the Purchaser in obtaining all necessary, proper,
appropriate or advisable consents, novations, approvals or waivers which the
Purchaser may reasonably seek from time to time in order to effect, confirm or
document the transactions contemplated by this Agreement, including using their
reasonable commercial efforts to obtain all necessary, proper, appropriate or
advisable consents, novations, approvals or waivers of third parties required in
order to preserve material contractual relationships of the Companies.
SECTION 7.2. FURTHER ASSURANCES. The Parties shall execute and deliver
to the others, after the Closing Date, any other instrument which may be
requested by another Party and which is reasonably appropriate to perfect or
evidence any of the sales, assignments, transfers or conveyances contemplated by
this Agreement or to obtain any consents or licenses necessary for Purchaser to
operate the Business in the manner operated by the Companies prior to the date
hereof.
SECTION 7.3. EXPENSES AND FEES. The Companies shall pay all costs and
expenses incurred by the Companies in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, any and all
broker's commissions, employee bonuses, and the fees and expenses of the
Companies' attorneys and accountants. The Companies will make all necessary
arrangements so that the Purchaser will not be charged with any such costs or
expenses, and all such costs and expenses shall be accrued on the financial
books and records of the Companies prior to Closing and shall be included in the
calculation of Net Working Capital. Each Seller shall be responsible for all
costs and expenses incurred by such Seller in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, the fees
and expenses of the Seller's attorneys. Purchaser shall pay all costs and
expenses incurred by Purchaser in connection with this Agreement and the
transactions contemplated hereby, including without limitation, the fees and
expenses of its attorneys and accountants.
SECTION 7.4. AGREEMENT TO COOPERATE. Subject to the terms and
conditions herein provided, the Parties shall use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary, proper or
advisable waivers, consents and approvals under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts to obtain all necessary or
appropriate waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of the Companies.
SECTION 7.5. NOTIFICATION OF CERTAIN MATTERS. Each of the Parties
agrees to give prompt notice to each other Party of, and to use their respective
reasonable efforts to prevent or promptly remedy, (i) the occurrence or failure
to occur or the impending or threatened occurrence or failure to occur, of any
event which occurrence or failure to occur would be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material
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respect (or in all respects in the case of any representation or warranty
containing any materiality qualification) at any time from the date hereof to
the Closing and (ii) any material failure (or any failure in the case of any
covenant, condition or agreement containing any materiality qualification) on
its part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder. The Sellers shall give prompt
written notice to Purchaser of the commencement of any Environmental Claim, or
inspection by any Governmental Authority with responsibility for enforcing or
implementing any applicable Environmental Laws, and provide to Purchaser such
information as Purchaser may reasonably request regarding such Environmental
Claim, any developments in connection therewith, and, as applicable, the
Companies' anticipated or actual response thereto. Notwithstanding the other
provisions of this Section 7.5 and except for those supplements to the
Disclosure Schedules permitted in Section 7.14 hereof, the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the Party receiving such notice.
SECTION 7.6. REGISTRATION STATEMENTS.
(a) The Sellers as a group shall be entitled to a maximum of
four demand registrations with respect to Purchaser Shares issued pursuant to
Section 3.4 to the Sellers as Earn Out Payments in accordance with this Section
7.6. Purchaser shall use reasonable efforts to file with the SEC promptly upon
receipt of a written request from all of the Sellers as a group (provided that
(i) the first request may not be made or delivered any earlier than the date
(eleven) 11 months after the first issuance of Purchaser Shares by the Purchaser
to Seller pursuant to Section 3.4, (ii) the Purchaser shall not be obligated to
effect more than one (1) demand registration in any two (2) year period and
(iii) no such requests may be made after December 31, 2009), a Registration
Statement registering all of the Purchaser Shares then held by the Sellers and
shall use reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly as reasonably practicable. Purchaser shall also
take any action required to be taken under applicable state blue sky or
securities laws in connection with the issuance and registration of Purchaser
Shares pursuant hereto. Purchaser and the Sellers shall promptly furnish to each
other all information, and take such other actions, as may reasonably be
requested in connection with any action by any of them in connection with this
Section. Except as otherwise provided in this Section 7.6, no Purchaser Shares
may be transferred or sold during the twelve (12) months following issuance of
such Purchaser Shares. The Registration Statements shall cover the resale of the
Purchaser Shares on Form S-3, if available, and the Purchaser may combine
registrations of Purchaser Shares under this Section 7.6 with registrations of
Purchaser Common Stock required under the Merger Agreement. The Purchaser shall
use its commercially reasonable efforts to cause such shelf Registration
Statement to become effective as soon as practical after such filing, and to
cause the Purchaser Shares to be qualified in such state jurisdictions as the
Sellers may reasonably request. The Purchaser shall use commercially reasonable
efforts to keep the shelf Registration Statement current and effective for one
year after it is first declared effective.
(b) If Purchaser proposes to register for its own account any
of its securities under the Securities Act for sale (other than a registration
statement on Form S-4 or S-8, a registration statement filed in connection with
an exchange offer or an offering of securities
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solely to Purchaser's existing shareholders, or a registration statement filed
in connection with an exchange offer or an offering of securities by any of the
Purchaser's shareholders), Purchaser shall give written notice to the Sellers of
the Purchaser's intention to effect such a registration not later than 15 days
prior to the anticipated date of filing with the SEC of a Registration
Statement, which notice shall offer the Sellers the opportunity to include in
such Registration Statement any of the Purchaser Shares held by the Sellers that
the Sellers may request be included therein (a "Piggyback Registration").
Notwithstanding the preceding sentence, Purchaser's obligation under this
Section 7.6(b) shall be limited to registrations as to which a Registration
Statement is to be filed (i) during the period beginning on the second
anniversary of the Closing Date and ending on December 31, 2009, and (ii) only
if the Sellers are subject to the volume restrictions set forth in Rule 144 of
the Securities Act. Subject to the provisions of this Agreement, Purchaser will
use its reasonable efforts to cause all the Purchaser Shares for which the
Sellers have requested registration to be registered under the Securities Act to
the extent required to permit the sale by the Sellers of such Purchaser Shares;
provided, that if a Piggyback Registration relates to an underwritten public
offering and the managing underwriter or underwriters believe that the inclusion
of all shares requested to be included in the proposed registration would
adversely affect the marketing of such shares, Purchaser may first include in
such registration all securities Purchaser proposes to sell, and the Sellers
shall accept a reduction (including a total elimination) in the number of shares
to be included in such registration, pro rata (among the Sellers, in accordance
with the percentages set forth in Section 3.2) with the other holders of
Purchaser Common Stock making requests for registration, on the basis of the
number of shares of Purchaser Common Stock so requested to be included by the
Sellers and the other selling shareholders. Nothing in this Section 7.6(b) shall
limit Purchaser's ability to withdraw a Registration Statement it has filed
either before or after effectiveness.
(c) Purchaser shall pay the expenses incurred in connection
with any proposed registration of securities by Purchaser under this Section
7.6, whether or not effected or consummated, including, without limitation, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for Purchaser.
SECTION 7.7. PURCHASER'S LIQUIDITY PROGRAM. Notwithstanding any other
provision set forth herein, with respect to all sales by the Sellers of
Purchaser Shares through the NASDAQ or any such other exchange, each Seller may
only sell such shares on any day after the first sale of Purchaser Common Stock
has occurred through the NASDAQ or such other exchange and on such day, Sellers
may only sell 1,000 Purchaser Shares in the aggregate for each 1,000 shares of
Purchaser Common Stock sold by unrelated third parties through the NASDAQ or
such other exchange on such day. In no event shall the plan of distribution of
Purchaser Shares include the use of a contractual underwriter, nor shall
Purchaser have any obligation to enter into an underwriting agreement with any
investment banking firm participating as a broker in the execution of any such
resales. Purchaser agrees that it will furnish to the Sellers such number of
prospectuses, prospectus supplements, or other documents incident to any
registration, qualification or compliance referred to herein as the Sellers from
time to time may reasonably request.
SECTION 7.8. EXCHANGE LISTING. Purchaser shall use its reasonable
efforts to effect, at or
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before the effective date of a Registration Statement, authorization for listing
on NASDAQ, upon official notice of issuance, of the shares of Purchaser Common
Stock to be issued pursuant to the transactions contemplated by this Agreement.
SECTION 7.9. PUBLIC STATEMENTS. Except as required by law or the
National Association of Securities Dealers ("NASD"), the Parties shall obtain
the written consent of the other Party prior to issuing any press release or any
written public statement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or written public
statement prior to such consent, which will not be unreasonably withheld.
SECTION 7.10. SECTION 338(h)(10) ELECTION. At the Purchaser's election,
Sellers and Purchaser shall timely make a joint election under Section
338(h)(10) of the Code (and any corresponding elections under state, local or
foreign tax law) (collectively the "Section 338(h)(10) Election") with respect
to the purchase and sale of the stock of the Companies hereunder. Sellers will
pay any Tax imposed on them under the Tax laws as a direct result of the making
of the Section 338(h)(10) Election, and the Purchaser and the Companies will pay
any Tax imposed on them. The value of the assets is hereby agreed to be as
follows: all assets other than depreciable assets will be reflected at net book
value, depreciable assets at net tax basis, and all excess value will be
allocated to good will. Purchaser will prepare the election forms and provide
them to Sellers for Sellers' review at least 30 days before the date the Section
338(h)(10) Election is due. Sellers will execute and return the election forms
to Purchaser at least 15 days before the date the Section 338(h)(10) Election is
due, and Purchaser will file such election forms on or before the respective due
dates for each such election form.
SECTION 7.11. ALLOCATION OF PURCHASE PRICE. Within 60 days following
the Closing Date, Sellers, Purchaser and the Companies shall agree to an
allocation of the Purchase Price and the liabilities of the Companies (plus
other relevant items) among the Companies and (consistent with Section 7.10 and
Section 7.12 to the assets of the Companies for all purposes (including Tax and
financial accounting purposes). Sellers and Purchaser will file all Tax Returns
(including amended returns and claims for refund) and information reports in a
manner consistent with such allocation.
SECTION 7.12. CODE SECTION 754 ADJUSTMENTS. The Sellers agree to
cooperate with the Purchaser to elect under Code Section 754, to the extent
Purchaser deems such cooperation necessary or desirable, in order to elect to
adjust the tax basis of the assets of the Partnerships. The value of the assets
is hereby agreed to be as follows: all assets other than depreciable assets will
be reflected at net book value, depreciable assets at net tax basis, and all
excess value will be allocated to good will. "Partnership" means the Companies
identified as limited partnerships or limited liability companies on Schedule 1.
SECTION 7.13. CONTROL OF TAX RETURNS. Sellers shall be responsible for
preparing and filing all income Tax Returns of the Companies for periods ending
on or before the Closing Date (including short periods ending on the Closing
Date as a result of the application of Section 708, Section 338(h)(10) or
Section 1362 of the Code). The Parties agree to make the election under Section
1362(e)(3) to the extent applicable. Except as provided in the first sentence of
this
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Section, after the Closing, Purchaser and the Companies shall be responsible for
preparing and filing all Tax Returns of the Companies. The Parties shall provide
each other such information and assistance as may be necessary to prepare and
file the Tax Returns.
SECTION 7.14. SUPPLEMENTS TO DISCLOSURE SCHEDULES. From time to time
prior to the date ten (10) days prior to Closing, the Sellers may update the
Disclosure Schedules to this Agreement in order to make the information set
forth therein complete and accurate, so long as such an update does not disclose
an event, fact or condition which could have a Material Adverse Effect on one or
more of the Companies. In the event such an update discloses an event or
condition which could have a Material Adverse Effect on one or more of the
Companies, then Purchaser may terminate this Agreement if (i) the Purchaser
notified the Seller that Purchaser believed, in its reasonable business
judgment, that the updated information disclosed an event, fact or condition
which could have a Material Adverse Effect on one or more of the Companies, (ii)
the Purchaser negotiated in good faith with the Seller with respect to
adjustments, if any, to the terms of this Agreement as a result of the updated
information, and (iii) the Parties failed to agree on any such adjustments.
ARTICLE VIII
CONDITIONS TO CLOSING.
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE. The
respective obligations of each Party to close the transactions contemplated
hereby shall be subject to the fulfillment or waiver, if permissible, of the
following conditions on or prior to the Closing Date:
(a) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in effect
(each Party agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted); and
(b) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the transactions contemplated by this Agreement or make the consummation of the
transaction contemplated by this Agreement illegal; and
(c) the transactions contemplated by the Agreement and Plan of
Merger dated the same date as this Agreement by and among Purchaser, RESTEC
Acquisition Corp., Xx. Xxxxxxx, NETCO, Xxx. Xxxxxxxx, the Estate and the Trust
(the "Merger Agreement") shall have been consummated.
SECTION 8.2. CONDITIONS TO OBLIGATION OF THE SELLERS. Unless waived by
the Sellers, the obligation of the Sellers to close the transactions
contemplated herein shall be subject to the fulfillment of the following
additional conditions on or prior to the Closing Date:
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(a) Purchaser shall have performed in all material respects
(or in all respects in the case of any agreement containing any materiality
qualification) its agreements contained in this Agreement required to be
performed on or prior to the Closing Date;
(b) the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date;
(c) the Sellers shall have received a certificate executed on
behalf of Purchaser by the President or a Vice President of the Purchaser with
respect to (a) and (b) above;
(d) the Sellers shall have received legal opinions from
in-house legal counsel to the Purchaser, dated the Closing Date, in a form
reasonably satisfactory to the Sellers; and
(e) the Purchaser shall have entered into a Consulting
Agreement with Xx. Xxxxxxx, individually, in the form attached hereto as Exhibit
D.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PURCHASER. Unless waived by
Purchaser, the obligation of Purchaser to close the transactions contemplated
herein shall be subject to the fulfillment of the following additional
conditions on or prior to the Closing Date:
(a) the Sellers and the Companies shall have performed in all
material respects (or in all respects in the case of any agreement containing
any materiality qualification) their agreements contained in this Agreement
required to be performed on or prior to the Closing Date;
(b) the representations and warranties of the Sellers
contained in this Agreement shall be true and correct in all material respects
(or in all respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date;
(c) since the date hereof, there shall have been no changes
that constitute, and no event or events shall have occurred which have resulted
in or constitute, a Material Adverse Effect;
(d) the Purchaser shall have obtained financing in an amount
and pursuant to terms satisfactory to Purchaser to consummate the transactions
contemplated in this Agreement;
(e) Purchaser shall have received legal opinions from legal
counsel to the Sellers, dated the Closing Date, in a form reasonable
satisfactory to Purchaser, and as described in Section 3.5(a);
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(f) the Sellers shall have executed Release of Claims
Agreements, in the form attached hereto as Exhibit C;
(g) Xx. Xxxxxxx, individually, shall have entered into a
Consulting Agreement, in the form attached hereto as Exhibit D;
(h) Xx. Xxxxxxx, individually, and the Grat shall have entered
into Covenant Not to Compete Agreements, in the form attached hereto as Exhibit
E;
(i) the Estate, Xxx. Xxxxxxxx, the Trust and the Trucking
Company shall have entered into Covenant Not to Compete Agreements, in the form
attached hereto as Exhibit F;
(j) Purchaser shall have received certificates representing
the certificated Ownership Interests duly endorsed for transfer as described in
Section 3.5(a)(i);
(k) Purchaser shall have received a certificate executed by
each of the Sellers with respect to (a) and (b) above; and
(l) Purchaser shall have entered into employment agreements
with Xxxx XxXxxxxxx and Xxxxx Xxxxxxxxx.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
(a) Any Seller shall have the right to terminate this
Agreement:
(i) if the representations and warranties of
Purchaser shall fail to be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made or, except in the case of
any such representations and warranties made as of a specified date, on and as
of any subsequent date as if made at and as of such subsequent date and such
failure shall not have been cured in all material respects (or in all respects
in the case of any representation or warranty containing any materiality
qualification) within 15 days after written notice of such failure is given to
Purchaser by the Seller;
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(ii) if the transactions contemplated hereby are not
completed by November 1, 1999, (provided that (a) the right to terminate this
Agreement under this Section 9.1(a)(ii) shall not be available to the Seller if
the failure of the Seller to fulfill any obligation to Purchaser under or in
connection with this Agreement has been the cause of or resulted in the failure
of the transactions contemplated hereby to occur on or before such date and (b)
Purchaser has not exercised its option to extend under Section 9.4);
(iii) if the transactions contemplated hereby are
enjoined by a final, unappealable court order; or
(iv) if Purchaser (A) fails to perform in any
material respect (or in all respects in the case of any covenant containing any
materiality qualification) any of its covenants in this Agreement and (B) does
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within 15 days after
notice of such default is given to Purchaser by the Seller.
(b) Purchaser shall have the right to terminate this
Agreement:
(i) if the representations and warranties of the
Sellers shall fail to be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made or, except in the case of
any such representations and warranties made as of a specified date, on and as
of any subsequent date as if made at and as of such subsequent date and such
failure shall not have been cured in all material respects (or in all respects
in the case of any representation or warranty containing any materiality
qualification) within 15 days after written notice of such failure is given to
the Sellers by Purchaser;
(ii) if the transactions contemplated hereby are not
completed by November 1, 1999, as such date may be extended pursuant to Section
9.4 below (provided that the right to terminate this Agreement under this
Section 9.1(b)(ii) shall not be available to Purchaser if the failure of
Purchaser to fulfill any obligation to the Sellers under or in connection with
this Agreement has been the cause of or resulted in the failure of the
transactions contemplated hereby to occur on or before such date);
(iii) if the Sellers (A) fail to perform in any
material respect (or in all respects in the case of any covenant containing any
materiality qualification) any of their covenants in this Agreement and (B) do
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within 15 days after
notice of such default is given to the Sellers by Purchaser; or
(iv) pursuant to Section 7.14.
(c) The Sellers and Purchaser mutually agree in writing.
SECTION 9.2. EFFECT OF TERMINATION. The following provisions shall
apply in the event of a termination of the Agreement:
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(a) If this Agreement is terminated by either Purchaser or the
Sellers pursuant to the provisions of Section 9.1, this Agreement shall
forthwith become void and there shall be no further obligations on the part of
the Sellers or Purchaser or its stockholders, directors, officers, employees,
agents or representatives. Notwithstanding the preceding sentence or any other
provision set forth herein, nothing in this Section 9.2 shall relieve any Party
from liability for any breach of this Agreement, including, without limitation,
any breach of the prohibition in Section 7.14 against updating the Disclosure
Schedules with information which could have a Material Adverse Effect on one or
more of the Companies.
(b) The Parties acknowledge and agree that Purchaser, as a
result of the actual damages Purchaser would sustain by reason of such negligent
or willful failure of the Sellers to perform their obligations hereunder, could
not be made whole by monetary damages, and it is accordingly agreed that
Purchaser shall have the right to elect, in addition to any and all other
remedies at law or in equity, to enforce specific performance under this
Agreement and the Sellers waive the defense in any such action for specific
performance that a remedy at law would be adequate.
SECTION 9.3. EXTENSIONS; WAIVER. At any time prior to the Closing Date,
the Parties may (a) extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant thereto and (c) waive compliance with any of the agreements or
conditions herein. Any agreement on the part of a Party to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such Party.
SECTION 9.4. PURCHASER'S OPTION TO EXTEND. At Purchaser's option
(exercised by providing written notice to the Sellers prior to November 1,
1999), the deadline of November 1, 1999 set forth in Sections 9.1(a)(ii) and
9.1(b)(ii), above, may be extended to December 31, 1999; provided, however, that
if the transactions contemplated hereby fail to close by the expiration of such
extended period, Purchaser shall pay to the Companies $300,000 in the aggregate
as reimbursement for the costs and expenses incurred by the Companies in
connection with the negotiation and execution of this Agreement, as well as the
Merger Agreement, unless the Sellers have breached this Agreement or the failure
of any Seller to fulfill any obligation to Purchaser under or in connection with
this Agreement has been the cause of or resulted in the failure of the
transactions contemplated hereby to close before the expiration of such extended
period.
ARTICLE X
INDEMNIFICATION AND LIMITATION ON LIABILITY
SECTION 10.1. THE SELLERS' INDEMNITY OBLIGATIONS.
(a) Each Seller shall, severally but not jointly (except for
the obligations of
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Xx. Xxxxxxx and the Grat, which shall be joint and several obligations of Xx.
Xxxxxxx and the Grat), indemnify and hold harmless the Companies (after the
Closing), Purchaser and the Companies' (after the Closing) and the Purchaser's
respective officers, directors, stockholders, partners, members, employees,
agents, representatives and Affiliates (each a "Purchaser Indemnified Party")
from and against any and all claims, actions, causes of action, arbitrations,
proceedings, losses, damages, remediations, liabilities, strict liabilities,
judgments, fines, penalties and expenses (including, without limitation,
reasonable attorneys' fees) (collectively, the "Indemnified Amounts") paid,
imposed on or incurred by a Purchaser Indemnified Party, directly or indirectly,
(i) relating to, resulting from or arising out of (x) any breach or
misrepresentation in any of the representations and warranties made by such
Seller in Article IV-A of this Agreement, or any certificate or instrument
delivered by such Seller in connection with this Agreement, or (y) any violation
or breach by such Seller of, or default by such Seller under, the terms of this
Agreement or any certificate or instrument delivered by such Seller in
connection with this Agreement, or (ii) relating to, resulting from or arising
out of any allegation of a third party of the events described in Sections
10.1(a)(i), above.
(b) The Sellers shall, jointly and severally, indemnify and
hold harmless the Purchaser and the Companies (after the Closing) and the other
Purchaser Indemnified Parties from and against any and all Indemnified Amounts
paid, imposed on or incurred by a Purchaser Indemnified Party, directly or
indirectly, (i) relating to, resulting from or arising out of any breach or
misrepresentation in any of the representations and warranties made by the
Sellers in Article V of this Agreement, including without limitation with
respect to environmental matters, or any certificate or instrument delivered in
connection with this Agreement or (ii) relating to, resulting from or arising
out of any allegation of a third party of the events described in Sections
10.1(b)(i), above.
(c) For purposes of Section 10.1(a) and (b), Indemnified
Amounts shall include without limitation those Indemnified Amounts ARISING OUT
OF THE STRICT LIABILITY (INCLUDING BUT NOT LIMITED TO STRICT LIABILITY ARISING
PURSUANT TO ENVIRONMENTAL LAWS) OR NEGLIGENCE OF ANY OF THE PARTIES, INCLUDING
ANY PURCHASER INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, ACTIVE OR PASSIVE.
SECTION 10.2. PURCHASER'S INDEMNITY OBLIGATIONS. Purchaser shall
indemnify and hold harmless the Sellers and the Sellers' agents, representatives
and Affiliates (each a "Sellers Indemnified Party") from and against any and all
Indemnified Amounts incurred by a Sellers Indemnified Party as a result of (a)
any breach or misrepresentation in any of the representations and warranties
made by or on behalf of Purchaser in this Agreement or any certificate or
instrument delivered in connection with this Agreement, or (b) any violation or
breach by Purchaser of or default by Purchaser under the terms of this Agreement
or any certificate or instrument delivered in connection with this Agreement.
SECTION 10.3. INDEMNIFICATION PROCEDURES. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
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(a) Promptly after receipt by an indemnified party under
Section 10.1 or 10.2 of notice of the commencement of any third-party claim or
claims asserted against it ("Third-Party Claim"), such indemnified party will,
if a claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Third-Party Claim referred to in Section 10.3(a) is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Third-Party Claim, the indemnifying party
will, unless the claim involves Taxes, be entitled to participate in such
Third-Party Claim and, to the extent that it wishes (unless (i) the indemnifying
party is also a party to such Third-Party Claim and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Third-Party Claim and
provide indemnification with respect to such Third-Party Claim), to assume the
defense of such Third-Party Claim with counsel satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified party of
its election to assume the defense of such Third-Party Claim, the indemnifying
party will not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Article X for any fees of other counsel or any
other expenses with respect to the defense of such Third-Party Claim, in each
case subsequently incurred by the indemnified party in connection with the
defense of such Third-Party Claim, other than reasonable costs of investigation.
If the indemnifying party assumes the defense of a Third-Party Claim, (i) it
will be conclusively established for purposes of this Agreement that the claims
made in that Third-Party Claim are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of law, rule, regulation or
other legal requirement or any violation of the rights of any Person and no
effect on any other claims that may be made against the indemnified party, (B)
the indemnified party receives as part of such settlement a legal, binding and
enforceable unconditional satisfaction and/or release, in form and substance
reasonably satisfactory to it, providing that such Third-Party Claim and any
claimed liability of the indemnified party with respect thereto is being fully
satisfied by reason of such compromise or settlement and that the indemnified
party is being released from any and all obligations or liabilities it may have
with respect thereto, and (C) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Third-Party Claim and the indemnifying party does not,
within ten days after the indemnified party's notice is given, give notice to
the indemnified party of its election to assume the defense of such Third-Party
Claim, the indemnifying party will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good
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faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Third-Party Claim, but the
indemnifying party will not be bound by any determination of a Third-Party Claim
so defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction
of any court in which a Third-Party Claim is brought against any indemnified
party for purposes of any claim that an indemnified party may have under this
Agreement with respect to such Third-Party Claim or the matters alleged therein,
and agree that process may be served on Sellers with respect to such a claim
anywhere in the world.
(e) In the event any indemnified party should have a claim
against any indemnifying party hereunder that does not involve a Third-Party
Claim, the indemnified party shall transmit to the indemnifying party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the indemnified party's request for
indemnification under this Agreement.
SECTION 10.4. LIMITATION OF SELLERS' LIABILITY.
(a) Notwithstanding anything to the contrary contained in
Article X, the aggregate liability of the Estate for any event or occurrence
giving rise to the Estate being required to indemnify Purchaser Indemnified
Parties pursuant to Section 10.1 of this Agreement shall be limited to the cash
portion of the Purchase Price received by the Estate plus any amounts deducted
from such cash portion of the Purchase Price pursuant to Section 3.2(a)(ii)(1)
and (2).
(b) Notwithstanding anything to the contrary contained in
Article X, the aggregate liability of each of Xx. Xxxxxxx and the Grat for any
event or occurrence giving rise to such Seller being required to indemnify
Purchaser Indemnified Parties pursuant to Section 10.1 of this Agreement shall
be limited to the combined cash portions of the Purchase Price received by Xx.
Xxxxxxx and the Grat plus any amounts deducted from such cash portions of the
Purchase Price pursuant to Section 3.2(a)(ii)(1) and (2).
(c) Purchaser Indemnified Parties are entitled to
indemnification pursuant to Section 10.1 as follows:
(i) until and including the first anniversary of the
Closing Date, only if the amount of any Indemnified Amount, individually or in
the aggregate with all other Indemnified Amounts hereunder and under the terms
of the Merger Agreement, exceeds Two Hundred Fifty Thousand Dollars ($250,000),
and then only to the extent of such excess; and
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(ii) after the first anniversary of the Closing Date, only if
the amount of any Indemnified Amount, individually or in the aggregate with all
other Indemnified Amounts hereunder and under the terms of the Merger Agreement
since the Closing Date, exceeds Five Hundred Thousand Dollars ($500,000), and
then only to the extent of such excess.
SECTION 10.5. LIMITATION OF PURCHASER'S LIABILITY. Sellers Indemnified
Parties are entitled to indemnification pursuant to Section 10.2 as follows:
(i) until and including the first anniversary of the Closing
Date, only if the amount of any Indemnified Amount, individually or in the
aggregate with all other Indemnified Amounts hereunder and under the terms of
the Merger Agreement, exceeds Two Hundred Fifty Thousand Dollars ($250,000), and
then only to the extent of such excess; and
(ii) after the first anniversary of the Closing Date, only if
the amount of any Indemnified Amount, individually or in the aggregate, with all
other Indemnified Amounts hereunder and under the terms of the Merger Agreement
since the Closing Date, exceeds Five Hundred Thousand Dollars ($500,000), and
then only to the extent of such excess.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. SURVIVAL. The representations, warranties, covenants and
agreements (including, but not limited to, indemnification obligations) set
forth in this Agreement and in any certificate or instrument delivered in
connection herewith shall be continuing and shall survive the Closing for a
period of two years following the date of Closing; provided, however, that in
the case of all such representations, warranties, covenants and agreements
(including, but not limited to, indemnification obligations) there shall be no
such termination with respect to any such representation, warranty, covenant or
agreement as to which a bona fide claim has been asserted by written notice of
such claim delivered to the Party or Parties making such representation,
warranty, covenant or agreement prior to the expiration of the survival period;
provided, further, that (i) the representations and warranties set forth in
Sections 4A.1 (Ownership), 4A.2 (Authority; Non-Contravention; Approvals) and
5.2 (Capitalization) hereof shall survive the Closing indefinitely, (ii) Section
5.12 (Taxes) shall survive the Closing for the greater of two years or the
statutory survival period applicable to Taxes, (iii) the covenants contained in
this Agreement to be performed after the Closing shall survive until fully
performed; and (iv) the indemnification obligations of the Sellers set forth in
Section 10.1(a) and Section 10.1(b) shall survive the Closing until the
termination of the respective representations and warranties.
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SECTION 11.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by a
nationally recognized overnight delivery service, mailed by registered or
certified mail (return receipt requested) or sent via facsimile to the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice):
(a) If to Purchaser or the Companies (on or after
Closing), to:
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Rome
Telecopy: 713/369-1760
with a copy to:
Xxxxx Xxxxxxx & Xxxx LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: 713/223-3717
(b) If to Xx. Xxxxxxx or the Companies (prior to
Closing), to:
Xxxx X. Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/633-9064
with a copy to:
Xxxxxx X. Xxxx, Esq.
Xxxxxxxx & X'Xxxx, LLP
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/869-6565
(c) If to Xxxxxxx X. Xxxxxxxx, as
Executrix of the Estate of Xxxxxxx X. Xxxxxxxx
or as Co-Trustee of the Xxxxxxx X. Xxxxxxxx
Revocable Trust, to:
Xxxxxxx X. Xxxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
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with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxx, Rock & Talbot, P.C.
000 Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/250-1795
and
Xxxxxx X. Xxxxx
c/o Astra Zeneca
000 Xxxxxxxxxxxx Xxxx.
Xxxxx, Xxxxxxxxxxxx 00000
Telecopy: 610/695-4491
(d) If to Xxxxxxx X. Xxxxxxxx, individually, to:
Xxxxxxx X. Xxxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxxxxx & Xxxxxxx, LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Gold, Esq.
Telecopy: 203/324-8191
and
Xxxxxx X. Xxxxx
c/o Astra Zeneca
000 Xxxxxxxxxxxx Xxxx.
Xxxxx, Xxxxxxxxxxxx 00000
Telecopy: 610/695-4491
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(e) If to Xxxxxx Xxxxxx, as Co-Trustee of the Xxxxxxx X.
Xxxxxxxx Revocable Trust, to:
Xxxxxx Xxxxxx (Personal and Confidential)
c/o X. X. Xxxxxxxx, Inc.
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/723-5640
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxx, Rock & Talbot, P.C.
000 Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/250-1795
(f) If to Xxxxxx Xxxxxxx, as Trustee of the Xxxx X.
Xxxxxxx 1998 Grat, to:
Xxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: 203/633-9064
with a copy to:
Xxxxxx Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 212/732-3232
SECTION 11.3. INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
interpretation of this Agreement. In this Agreement, unless a contrary intention
is specifically set forth, (i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any Party solely because
such Party or its legal representative drafted such provision.
SECTION 11.4. MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein and the Schedules and Exhibits attached
hereto) constitutes the
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entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the Parties, or any of them, with respect to the
subject matter hereof. Neither this Agreement nor the rights, interests and
obligations arising pursuant to this Agreement (including the documents and
instruments referred to herein and the Schedules and Exhibits attached hereto)
shall not be assigned by operation of law or otherwise except that Purchaser may
assign this Agreement to any other wholly-owned Subsidiary of Purchaser, but no
such assignment shall relieve the Purchaser of its obligations hereunder.
SECTION 11.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE.
SECTION 11.6. BINDING ARBITRATION.
(a) General. Notwithstanding any provision of this Agreement
to the contrary, upon the request of any Party (defined for the purpose of this
provision to include Affiliates, principals and agents of any such Party), any
dispute, controversy or claim arising out of, relating to, or in connection
with, this Agreement or any agreement executed in connection herewith or
contemplated hereby, or the breach, termination, interpretation, or validity
hereof or thereof (hereinafter referred to as a "Dispute"), shall be finally
resolved by mandatory and binding arbitration in accordance with the terms
hereof. Any Party may bring an action in court to compel arbitration of any
Dispute. Any Party who fails or refuses to submit any Dispute to binding
arbitration following a lawful demand by the opposing Party shall bear all costs
and expenses incurred by the opposing Party in compelling arbitration of such
Dispute.
(b) Governing Rules. The arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of the arbitration, except as they may be
modified herein or by mutual agreement of the Parties. The seat of the
arbitration shall be New York, New York. Notwithstanding Section 11.6, the
arbitration and this clause shall be governed by the Federal Arbitration Act, 9
U.S.C. xx.xx. 1 et seq. (the "Federal Arbitration Act"). The arbitrator shall
award all reasonable and necessary costs (including the reasonable fees and
expenses of counsel) incurred in conducting the arbitration to the prevailing
Party in any such Dispute. The Parties expressly waive all rights whatsoever to
file an appeal against or otherwise to challenge any award by the arbitrators
hereunder; provided, that the foregoing shall not limit the rights of any Party
to bring a proceeding in any applicable jurisdiction to confirm, enforce or
enter judgment upon such award (and the rights of the other Party, if such
proceeding is brought to contest such confirmation, enforcement or entry of
judgment, but only to the extent permitted by the Federal Arbitration Act).
(c) No Waiver; Preservation of Remedies. No provision of, nor
the exercise of any rights under this Agreement shall limit the right of any
Party to apply for injunctive relief or similar equitable relief with respect to
the enforcement of this Agreement or any agreement executed in connection
herewith or contemplated hereby, and any such action shall not be deemed an
election of remedies. Such rights can be exercised at any time except to the
extent
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such action is contrary to a final award or decision in any arbitration
proceeding. The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof. The institution and maintenance of an action for injunctive relief or
similar equitable relief shall not constitute a waiver of the right of any
Party, including without limitation the plaintiff, to submit any Dispute to
arbitration nor render inapplicable the compulsory arbitration provisions of
this Agreement.
(d) Arbitration Proceeding. In addition to the authority
conferred on the arbitration tribunal by the rules specified above, the
arbitration tribunal shall have the authority to order reasonable discovery,
including the deposition of party witnesses and production of documents. The
arbitral award shall be in writing, state the reasons for the award, and be
final and binding on the Parties with no right of appeal. All statutes of
limitations that would otherwise be applicable shall apply to any arbitration
proceeding. Any attorney-client privilege and other protection against
disclosure of confidential information, including without limitation any
protection afforded the work-product of any attorney, that could otherwise be
claimed by any Party shall be available to and may be claimed by any such Party
in any arbitration proceeding. No Party waives any attorney-client privilege or
any other protection against disclosure of confidential information by reason of
anything contained in or done pursuant to or in connection with this Agreement.
Each Party agrees to keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information to the Parties' legal
counsel or auditors or those required by applicable law. The arbitrators shall
determine the matters in dispute in accordance with the substantive law of the
State of Delaware, without regard to conflict of law rules. The obligation to
arbitrate any dispute shall be binding upon the successors and assigns of each
of the Parties.
(e) Appointment of Arbitrators. The arbitration shall be
conducted by three (3) arbitrators. The Party initiating arbitration (the
"Claimant") shall appoint its arbitrator in its request for arbitration (the
"Request"). The other Party (the "Respondent") shall appoint its arbitrator
within 30 days after receipt of the Request and shall notify the Claimant of
such appointment in writing. If the Respondent fails to appoint an arbitrator
within such 30-day period, the arbitrator named in the Request shall decide the
controversy or claim as sole arbitrator. Otherwise, the two (2) arbitrators
appointed by the Parties shall appoint a third (3rd) arbitrator within 30 days
after the Respondent has notified Claimant of the appointment of the
Respondent's arbitrator. When the third (3rd) arbitrator has accepted the
appointment, the two (2) Party-appointed arbitrators shall promptly notify the
Parties of the appointment. If the two (2) arbitrators appointed by the Parties
fail to appoint a third (3rd) arbitrator or so to notify the Parties within the
time period prescribed above, then the appointment of the third (3rd) arbitrator
shall be made by the American Arbitration Association, which shall promptly
notify the Parties of the appointment. The third (3rd) arbitrator shall act as
Chair of the panel.
(f) Other Matters. This arbitration provision constitutes the
entire agreement of the Parties with respect to its subject matter and
supersedes all prior discussions,
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arrangements, negotiations and other communications on dispute resolution. This
arbitration provision shall survive any termination, amendment, renewal,
extension or expiration of this Agreement or any agreement executed in
connection herewith or contemplated hereby unless the Parties otherwise
expressly agree in writing. The obligation to arbitrate any dispute shall be
binding upon the successors and assigns of each of the Parties.
SECTION 11.7. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the Parties.
SECTION 11.8. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 11.9. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each Party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 11.10. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 11.11. GUARANTEE. Xxxxxxx Xxxxxxxx, individually and as
Co-Trustee of the Trust, and Xxxxxx Xxxxxx, as Co-Trustee of the Trust, jointly
and severally, unconditionally and irrevocably guarantee the full, prompt and
complete performance of all obligations of the Estate and Trust, as the case may
be, under this Agreement and the documents executed and delivered by the Estate
and Trust in connection with the transactions contemplated in this Agreement.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement effective as of the date first written above.
SYNAGRO TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx, Chairman and Chief
Executive Officer
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx, individually
THE XXXXXXX X. XXXXXXXX REVOCABLE
TRUST
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Co-Trustee
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx, Co-Trustee
THE SELLERS:
/s/ Xxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxxx, individually
THE ESTATE OF XXXXXXX X. XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Executrix
THE XXXX X. XXXXXXX 1998 GRAT
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx, Trustee
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EXHIBIT A
GLOSSARY
For purposes of this Agreement, the following terms shall have the
meaning specified or referred to below when capitalized (or if not capitalized,
unless the context clearly requires otherwise) when used in this Agreement.
"Accounting Arbitrator" shall mean an independent accounting firm
selected by mutual agreement of the Auditor and the Earn Out Representative's
independent accounting firm.
"Affiliate(s)" with respect to any Person, means any Person directly or
indirectly controlling, controlled by or under common control with such Person,
and any natural person who is an officer, director or partner of such Person and
any members of their immediate families living within the same household. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Auditor" shall have the meaning given in Section 3.4.
"Average Purchaser Common Stock Price" means the average of the Daily
Per Share Prices for the twenty(20) consecutive trading days beginning on the
twenty-first (21st) trading day prior to the last day of the applicable calendar
year for purposes of Section 3.4.
"Business Facility" or "Business Facilities" includes any property
(whether real or personal) which the Companies or any of their Subsidiaries
currently lease, operate, or own or manage in any manner or which the Companies
or any of their Subsidiaries or any of their respective organizational
predecessors formerly leased, operated, owned or managed in any manner.
"Code" means the Internal Revenue Code of 1986, as amended, or any
amending or superseding tax laws of the United States of America.
"Daily Per Share Price" means the per share closing price on the NASDAQ
Small Cap Exchange (the "NASDAQ") of Purchaser Common Stock (as reported by The
Wall Street Journal for that day).
"Earn Out Payment" shall have the meaning given in Section 3.4.
"Earn Out Period" shall have the meaning given in Section 3.4.
"Earn Out Representative" means Xxxx X. Xxxxxxx, or, if Xx. Xxxxxxx
dies, resigns or for any reason refuses or is unable to act, a substitute
specified in a written notice of substitution
Exhibit A - Page 1
58
delivered to the Purchaser and signed by the Grat and Xx. Xxxxxxx (or his legal
representative, heirs, successors or designees).
"Earnings" shall mean, with respect to any period, the total revenues
of the Companies during such period after deduction for direct operating
expenses, other expenses, interest expense, depreciation and amortization but
before deduction for income taxes; provided, however, that in determining
Earnings there shall be no deduction for (or inclusion as an expense in respect
of) (a) any expenses directed by the Purchaser or its Affiliates in excess of
those reasonably required to operate the Companies in accordance with past
practices (as illustrated generally by the adjusted income statement for the
trailing twelve (12) month period ended July 31, 1999, attached hereto as
Schedule 3.4(j) and subject to normal inflation increases), unless approved in
writing by the Earn Out Representative before being incurred; (b) any management
fees charged by the Purchaser or its Affiliates to the Companies; (c) any
allocation of corporate overhead of the Purchaser or its Affiliates, provided,
however, that the Purchaser may allocate a reasonable amount to the Companies,
consistent with the Companies' past expenditures, for accounting services
(including fifty percent (50%) of the cost of any special accounting services
rendered by the Auditor and Accounting Arbiter pursuant to Section 3.4 hereof);
(d) any expenses incurred in connection with the transactions contemplated by
this Agreement; (e) any amortization of goodwill recognized in connection with
the transactions contemplated by this Agreement or any purchase accounting
adjustments recorded by the Purchaser or its Affiliates in connection with the
transactions contemplated by this Agreement; and (f) any extraordinary or
non-recurring transition expenses resulting from the transactions contemplated
by this Agreement, including, without limitation, lease and insurance
cancellation penalties.
"Earnings Dispute Notice" shall have the meaning given in Section 3.4.
"Environmental Claim(s)" means any claim; litigation; demand; action;
cause of action; suit; loss; cost, including, but not limited to, attorneys'
fees, diminution in value, and expert's fees; damage; punitive damage; fine,
penalty, expense, liability, criminal liability, strict liability, judgment,
governmental or private investigation and testing; notification of status of
being potentially responsible for clean-up of any facility or for being in
violation or in potential violation of any Environmental Law; proceeding;
consent or administrative orders, agreements or decrees; lien; personal injury
or death of any person; or property damage, whether threatened, sought, brought
or imposed, that is related to or that seeks to recover losses, damages, costs,
expenses and/or liabilities related to, or seeks to impose liability for: (i)
improper use or treatment of wetlands, pinelands or other protected land or
wildlife; (ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials ("NORM")); (iv) explosives; (v) pollution, contamination,
preservation, protection, decontamination, remediation or clean-up of the air,
surface water, groundwater, soil or protected lands; (vi) solid, gaseous or
liquid waste generation, handling, discharge, release, threatened release,
treatment, storage, disposal or transportation; (vii) exposure of persons or
property to Materials or Environmental Concern and the effects thereof; (viii)
the release or threatened release (into the indoor or outdoor environment),
generation, extraction, mining, beneficiating, manufacture, processing,
distribution in commerce, use, transfer, transportation, treatment, storage,
disposal of Remediation of Materials of Environmental Concern; (ix) injury to,
death of or threat to the
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health or safety of any person or persons caused directly or indirectly by
Materials of Environmental Concern; (x) destruction caused directly or
indirectly by Materials of Environmental Concern or the release or threatened
release of any Materials of Environmental Concern or any property (whether real
or personal); (xi) the implementation of spill prevention and/or disaster plans
relating to Material of Environmental Concern; (xiii) community right-to-know
and other disclosure laws; or (xiii) maintaining, disclosing or reporting
information to Governmental Authorities of any other third person under any
Environmental Law. The term, "Environmental Claim," also includes, without
limitation, any losses, damages, costs, expenses and/or liabilities incurred in
testing, if such testing confirms the presence of Materials of Environmental
Concern.
"Environmental Law(s)" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, guidance document, order, consent agreement,
order or consent judgment, decree, injunction, requirement or agreement with any
governmental entity or any judicial or administrative decision relating to (x)
the protection, preservation or restoration of the environment (including,
without limitation, air, water, vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, application, production, release or disposal of Materials of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker protection or community's right to know. The term "Environmental Law"
includes, without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal Act and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Occupational Safety and Health Act of 1970, each as amended from
time to time, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Materials of Environmental Concern.
"Environmental Permit(s)" means all permits, licenses, certificates,
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent, and exemptions necessary for the ownership, use
and/or operation of any current Business Facility or to conduct the Companies'
business as currently conducted in compliance with Requirements of Environmental
Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means U.S. generally accepted accounting principals applied on a
consistent basis.
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"Governmental Authority" or "Governmental Authorities" means any nation
or government, any state or political subdivision thereof and any agency or
entity exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.
"Indebtedness" means the aggregate long-term indebtedness, net of
sinking fund and other cash reserves described on Schedule 3.2 hereto that are
not included in Net Working Capital, and other long-term liabilities of the
Companies determined in accordance with GAAP.
"Lien(s)" means any mortgage, pledge, hypothecation, security interest,
encumbrance, claim, right of first refusal, option, lien, charge, condition,
restriction or burden of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction).
When used in this Agreement in connection with the Companies and their
Subsidiaries, or the Purchaser and its Subsidiaries, as the case may be,
"Material Adverse Effect" means any event, occurrence, fact, condition, change,
development or effect that is or could reasonably be anticipated to be
materially adverse to the business, assets (including intangible assets),
liabilities, financial condition, results of operations, properties (including
intangible properties) or business prospects of the Companies and all of their
Subsidiaries or the Purchaser and all of its Subsidiaries, as applicable, taken
as a whole.
"Materials of Environmental Concern" means: (i) those substances
included within the statutory and/or regulatory definitions or listings of
"hazardous substance," "medical waste," "special waste," "hazardous waste,"
"extremely hazardous substance," "regulated substance," "solid waste,"
"hazardous materials," or "toxic substances," under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A) petroleum, oil or a
fraction thereof, (B) explosives, or (C) radioactive materials (including
naturally occurring radioactive materials); and (iii) such other substances,
materials, or wastes that are or become classified or regulated as hazardous or
toxic under any applicable federal, state or local law or regulation.
"Net Working Capital" means the aggregate current assets of the
Companies less the aggregate current liabilities of the Companies determined in
accordance with GAAP.
"New England" means Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island and Vermont.
"Person" means any individual, partnership, joint venture, corporation,
limited liability company, association, trust, unincorporated organization,
government or agency or subdivision thereof or any other entity.
"Purchaser Common Stock" means validly issued, fully paid and
nonassessable shares of common stock, par value $.002 per share, of Purchaser.
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"Purchaser Shares" means the shares of Purchaser Common Stock issuable
to Xx. Xxxxxxx as determined pursuant to Section 3.4 of the Agreement.
"Remediation" means any action necessary to: (i) comply with and ensure
compliance with the Requirements of Environmental Laws and (ii) the taking of
all reasonably necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened release of Materials of
Environmental Concern at, on, in, about, under, within or near the air, soil,
surface water, groundwater or soil vapor at any Business Facility of the
Companies or any of their Subsidiaries or of any property affected by the
business, operations, acts omissions, or Materials of Environmental Concern of
the Companies or any of their Subsidiaries.
"Requirement(s) of Environmental Law(s)" means all requirements,
conditions, restrictions or stipulations of Environmental Laws imposed upon or
related to the Companies or any of their Subsidiaries or the assets, Business
Facilities and/or the business of the Companies or any of their Subsidiaries.
"Subsidiary" or "Subsidiaries" shall mean, when used with reference to
an entity, any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions, or a majority of the outstanding
voting securities of which, are owned directly or indirectly by such entity.
"Supplies" means all office supplies, kitchen supplies, laundry
supplies, medical supplies, spare parts, safety equipment, maintenance supplies,
other supplies used or consumed in the Business and other similar items which
exist on the Closing Date.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
severance, environmental, license, net worth, payroll, employment, franchise,
transfer and recording taxes, fees and charges, imposed by the IRS or any other
taxing authority (whether domestic or foreign including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments.
"Tax Return(s)" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns and documents (i) with respect to or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information, including any schedule or attachment
thereto and any amendment thereof.
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