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EXHIBIT 10.25
STOCK PURCHASE AGREEMENT
Dated as of May 8, 1998, by and among
Waste Connections, Inc.
▇▇▇▇▇▇' Sanitation, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 8, 1998, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), ▇▇▇▇▇▇'
Sanitation, Inc., a South Dakota corporation (the "CORPORATION"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the "SHAREHOLDERS").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste and recyclables in the Cities of Deadwood, Whitewood, Nisland and
Central City, South Dakota, the unincorporated areas of ▇▇▇▇▇▇▇▇ County, South
Dakota and Butte County, South Dakota and other related activities;
WHEREAS, the Shareholders own all of the issued and outstanding
capital stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, WCI wishes to acquire from the Shareholders all of the
Corporation's Stock;
WHEREAS, concurrent with the execution of this Agreement, WCI, as
lessee, and the Shareholders, as lessor (the "LESSOR"), will enter into a Lease
(the "LEASE") of certain real estate located in Deadwood, South Dakota, used in
the Corporation's business;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
1.1 SHARES TO BE PURCHASED. At the Closing (as defined in Section
2), the Shareholders shall sell and deliver to WCI all of the issued and
outstanding shares of the Corporation's Stock, being the number of shares of
the Corporation set forth on Schedule 3.2 opposite each Shareholder's name. At
the Closing, WCI shall purchase the Corporation's Stock and in exchange
therefor shall deliver to the Shareholders at the Closing or thereafter as
provided by this Agreement the purchase price described in Section 1.2 (the
"PURCHASE PRICE").
1.2 PURCHASE PRICE. The Purchase Price is:
(a) six hundred thousand dollars ($600,000), (i) minus
the Closing Date Debt (as defined in Section 3.22(a)), and (ii) plus
or minus, as the case may be, the amount by which the Closing Date
Current Assets (as defined in Section 3.22(b)) are greater or less
than the Closing Date Current Liabilities (as defined in Section
3.22(b)). The $600,000 minus the Closing Date Debt shall be payable
to the Shareholders at Closing in cash by
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wire transfer or check payable in clearinghouse funds. Within 120
days after the Closing Date, WCI shall perform all necessary
calculations, adjustments and other acts necessary to convert the
Corporation from a cash to accrual basis of financial reporting, and
then, based on such accrual method, WCI shall determine the actual
Closing Date Debt. If the difference between the actual amount and
the estimated amount provided at the Closing Date of Closing Date Debt
results in an increase in the amount that should have been paid at the
Closing over the amount that was so paid, WCI shall promptly pay such
amount to the Shareholder; if the result is a decrease in the amount
that should have been paid at the Closing from the amount that was so
paid, the Shareholders shall promptly pay such amount to WCI. In
addition, within 120 days after the Closing Date, WCI shall determine
the actual Closing Date Current Assets and Closing Date Current
Liabilities. If the Closing Date Current Assets are greater than the
Closing Date Current Liabilities, WCI shall promptly pay the
difference between the two amounts to the Shareholder; if the Closing
Date Current Liabilities are greater than the Closing Date Current
Assets, the Shareholders shall promptly the difference between the two
amounts to WCI;
(b) 27,272 shares (the "SHARES") of the WCI's Common
Stock, $0.01 par value (the "WCI STOCK"), which shall be delivered by
WCI to the Shareholders at the Closing;
(c) At the Closing, WCI shall deliver to the Shareholders
a Promissory Note (the "SHAREHOLDER NOTE") in the aggregate principal
amount of two hundred fifty thousand dollars ($250,000), which
Shareholder Note shall be payable in three equal annual installments
of eighty-three thousand three hundred thirty-three dollars ($83,333)
each. These annual installments shall be paid on the first, second
and third anniversaries of the Closing Date. The Shareholder Note
shall be non-interest bearing and shall be secured by a lien on all of
the assets of the Corporation;
(d) At the Closing, WCI shall deliver to ▇▇▇▇▇ a
Promissory Note (the "▇▇▇▇▇ NOTE") in the aggregate principal amount
of one hundred fifteen thousand five hundred dollars ($115,500), which
▇▇▇▇▇ Note shall be payable in thirty-six equal monthly installments
of three thousand two hundred eight dollars and thirty-three cents
($3,208.33) each. These monthly installments shall be paid on the
same day of each month as the date on which the Closing Date occurs;
and
(e) If a Shareholder owes the Corporation money
("SHAREHOLDER DEBT") and the Corporation owes a Shareholder money
("CORPORATION DEBT"), the amount by which the Shareholder Debt exceeds
the Corporation Debt will be deducted from the Purchase Price payable
to that Shareholder or the amount by which the Corporation Debt
exceeds the Shareholder Debt will be added to the Purchase Price
payable to that Shareholder and the remaining Corporation Debt and
Shareholder Debt shall be cancelled.
1.3 PRICE PROTECTION FOR SHARES OF THE WCI STOCK. If the gross
offering price of the WCI Stock in the IPO (as defined below), before
underwriting discounts and commissions and
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payment of expenses of the offering (the "IPO PRICE"), is less than nine
dollars ($9.00) per share, WCI will, within 15 days after the closing of the
IPO, issue to Seller a number of additional shares of the WCI Stock determined
by multiplying (x) the difference between the IPO Price and nine dollars
($9.00) and (y) 27,272 shares and dividing that product by the IPO price. In
lieu of issuing any fractional shares, WCI shall pay cash to Seller an amount
equal to the fraction of a share that would have been delivered times the IPO
Price. For purposes of this agreement, "IPO" means a public offering of the
WCI Stock registered under the Securities Act of 1933 (the "ACT") and sold
through underwriters pursuant to a firm commitment in the amount of at least
five million dollars at an IPO Price of at least five dollars ($5.00) per
share. If the closing of the IPO shall not have occurred by July 31, 1998,
Seller may, at its option exercised no later than August 15, 1998, by written
notice to WCI, cause WCI to repurchase all or any portion of the WCI Stock
issued to Seller for eleven dollars ($11.00) per share, payable by wire
transfer to the account of Seller. Promptly upon exercise of such option,
Seller and WCI shall arrange for a closing of the sale of such WCI Stock, such
closing to occur no later than August 31, 1998.
1.4 ALLOCATION OF THE PURCHASE PRICE. Ten thousand dollars
($10,000) of the Purchase Price shall be allocated to the covenant not to
compete as described in Section 8.1(a) hereof, and the balance of the Purchase
Price shall be allocated to the Corporation's Stock.
1.5 EXCLUDED ASSETS. The Assets of the Corporation listed on
Schedule 1.5 (the "EXCLUDED ASSETS") shall be distributed to the Shareholders
prior to the Closing, and WCI shall acquire no interest in or claim to any of
the Excluded Assets.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "CLOSING") shall take place
concurrent with the execution of this Agreement or on such date as WCI and the
Shareholders' Representative shall agree (the "CLOSING DATE"). The Closing
shall take place through an exchange of consideration and signed documents by
facsimile, to be promptly followed by an exchange of documents bearing original
signatures by overnight courier service. At the Closing, WCI, the Corporation
and the Shareholders shall deliver to each other the documents, instruments and
other items described in Section 5 of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDERS
The Corporation and the Shareholders, jointly and severally, (i)
represent and warrant that each of the following representations and warranties
is true as of the Closing Date, and (ii) agree that such representations and
warranties shall survive the Closing.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is
duly organized, validly existing and in good standing under the laws of the
State of South Dakota. The
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Corporation has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. The Corporation is
not required to be qualified or licensed to conduct business as a foreign
corporation in any other jurisdiction.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Closing
Date, the authorized and outstanding capital of the Corporation, the names,
addresses and social security numbers or taxpayer identification numbers of the
record and beneficial owners thereof, the number of shares so owned, the
allocation of the cash and Shares among the Shareholders as agreed to among
themselves, and wire transfer instructions for each Shareholder relating to the
bank account to which the Purchase Price should be sent. On the Closing Date,
all of the issued and outstanding shares of the capital stock of the
Corporation are owned of record and beneficially by the Shareholders, as set
forth in Schedule 3.2, and are free and clear of all liens, security interests,
encumbrances and claims of every kind except as set forth in Schedule 3.2.
Each share of the capital stock of the Corporation is duly and validly
authorized and issued, fully paid and nonassessable, and was not issued in
violation of any preemptive rights of any past or present shareholder of the
Corporation. No option, warrant, call, conversion right or commitment of any
kind (including any of the foregoing created in connection with any
indebtedness of the Corporation) exists which obligates the Corporation to
issue any of its authorized but unissued capital stock or other equity interest
or which obligates any Shareholder to transfer the Corporation's Stock to any
person.
3.3 ALL STOCK BEING ACQUIRED. The Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporation.
3.4 AUTHORITY FOR AGREEMENT. The Corporation and each of the
Shareholders have full right, power and authority to enter into this Agreement
and to perform its, his or her obligations hereunder. The execution and
delivery of this Agreement by the Corporation and the consummation of the
transactions contemplated hereby by the Corporation have been duly authorized
by its Board of Directors. This Agreement has been duly and validly executed
and delivered by the Corporation and each of the Shareholders and, subject to
the due authorization, execution and delivery by WCI, constitutes the legal,
valid and binding obligation of the Corporation and each of the Shareholders
enforceable against each of them in accordance with its terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporation and the Shareholders of this
Agreement, and the consummation by the Shareholders of the transactions
contemplated hereby, will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party
from any obligation under, any mortgage, lease, note, bond, indenture,
or material contract, agreement, license or other instrument or
obligation of any kind or nature to which the Corporation or any of
the Shareholders is a party, or by which the Corporation or any of the
Shareholders, or any of its or their assets, is or may be bound
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or affected; or
(b) violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental authority,
or require the approval, consent or permission of any governmental or
regulatory authority; or
(c) violate the Articles of Incorporation or Bylaws of
the Corporation.
3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Closing Date any
and all subsidiaries of the Corporation and any securities of any other
corporation or any securities or other interest in any other business entity
owned by the Corporation or any of its subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporation has delivered to WCI,
as Schedule 3.7, copies of financial statements ("FINANCIAL STATEMENTS") for
its three most recent fiscal years, compiled by Lang & ▇▇▇▇▇▇ and unaudited
interim financial statements for the Corporation, prepared by ▇▇▇▇▇ ▇▇▇▇▇▇ &
Associates, Certified Public Accountants, for the period ended January 31, 1998
(the "BALANCE SHEET DATE"). The Financial Statements are true and correct and
fairly present (i) the financial position of the Corporation as of the
respective dates of the balance sheets included in said statements, and (ii)
the results of operations for the respective periods indicated. Except to the
extent reflected or reserved against in the Corporation's balance sheet as of
the Balance Sheet Date, or as disclosed on Schedule 3.7 or Schedule 3.8, the
Corporation had as of the Balance Sheet Date, and has as of the Closing Date,
no liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due.
3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of the Corporation required
to be described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Closing Date,
other than with respect to trade payables and as of the end of the
month prior to the Closing Date with respect to trade payables, all
indebtedness for money borrowed and all other fixed and uncontested
liabilities of any kind, character and description (excluding all real
and personal property leasehold interests included in Part IV of
Schedule 3.8), whether reflected or not reflected on the Financial
Statements and whether accrued or absolute, and states as to each such
liability the amount of such liability and to whom payable. From the
date as of which information is provided with respect to trade
payables, trade payables have been incurred only in the ordinary
course of business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the Closing
Date, all claims, suits and proceedings which are pending against the
Corporation, all contingent liabilities, and, to the knowledge of the
Corporation and the Shareholders, all contingent liabilities and all
claims, suits and proceedings threatened or anticipated against the
Corporation. Part II of Schedule 3.8 includes a summary description
of each such liability, including, without
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limitation, (A) the name of each court, agency, bureau, board or body
before which any such claim, suit or proceeding is pending, (B) the
date such claim, suit or proceeding was instituted, (C) the parties to
such claim, suit or proceeding, (D) a brief description of the factual
basis alleged to underlie such claim, suit or proceeding, including
the date or dates of all material occurrences, and (E) the amount
claimed and other relief sought, together with copies of all material
documents, reports and other records relating thereto to the extent
that they are in the Corporation's or the Shareholders' possession or
control.
(c) Part III of Schedule 3.8 list, as of the Closing Date
and to the extent not otherwise included in Part I of Schedule 3.8,
all liens, claims and encumbrances secured by or otherwise affecting
any asset of the Corporation (including any Corporate Property, as
hereafter defined), including a description of the nature of such
lien, claim or encumbrance, the amount secured if it secures a
liability, the nature of the obligation secured, and the party holding
such lien, claim or encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the Closing Date
and to the extent not otherwise included in Part I or Part III of
Schedule 3.8, all real and personal property leasehold interests to
which the Corporation is a party as lessor or lessee or, to the
knowledge of the Corporation or the Shareholders, affecting or
relating to any Corporate Property, and includes a description of the
nature and principal terms of such leasehold interest, including,
without limitation, the identity of the other party thereto, the term
of such leasehold interest (including renewal options), the base rent
and any additional rent owing thereunder (including any adjustments
thereto), security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule 3.8,
neither the Corporation nor any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or with respect
to any of the liabilities or obligations listed on Schedule 3.8 except, in the
case of liabilities and obligations listed on Parts I, III and IV of Schedule
3.8, periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in the ordinary
course of business. Between the Balance Sheet Date and the Closing Date, trade
payables have been incurred only in the ordinary course of business consistent
with comparable prior periods.
3.9 CONDUCT OF BUSINESS. Except as set forth on Schedule 3.21,
since the Balance Sheet Date:
(a) The business of the Corporation has been conducted
only in the ordinary course; and
(b) There has been no change in the condition (financial
or otherwise) of the assets, liabilities or operations of the
Corporation other than changes in the ordinary course of business,
none of which either singly or in the aggregate has been materially
adverse.
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3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, and
service agreements pursuant to which the Corporation is authorized to
collect and haul industrial, commercial and residential solid waste
(the "COLLECTION FRANCHISES"), and of all other material permits,
licenses, titles (including motor vehicle titles and current
registrations), fuel permits, zoning and land use approvals and
authorizations, including, without limitation, any conditional or
special use approvals or zoning variances, occupancy permits, and any
other similar documents constituting a material authorization or
entitlement or otherwise material to the operation of the business of
the Corporation (collectively the "GOVERNMENTAL PERMITS") owned by,
issued to, held by or otherwise benefitting the Corporation or the
Shareholders as of the Closing Date. The status of the Governmental
Permits related to the disposal areas owned or used by the
Corporation, including, without limitation, any conditions thereto
and, if applicable, the expiration dates thereof, are also described
in Schedule 3.10(a). Schedule 3.10(a) also sets forth the name of any
governmental agency or other third party from whom the Shareholders,
the Corporation or WCI must obtain consent (the "REQUIRED GOVERNMENTAL
CONSENTS") in order to effect a direct or indirect transfer of the
Collection Franchises or other Governmental Permits required as a
result of the consummation of the transactions contemplated by this
Agreement. All such consents have been obtained. Except as set forth
on Schedule 3.10(a), all of the Collection Franchises and other
Governmental Permits enumerated and listed on Schedule 3.10(a) are
adequate for the operation of the business of the Corporation and of
each Corporate Property as presently operated and are valid and in
full force and effect. All of said Collection Franchises and other
Governmental Permits and agreements have been duly obtained and are in
full force and effect, and there are no proceedings pending or, to the
knowledge of the Corporation or the Shareholders, threatened which may
result in the revocation, cancellation, suspension or adverse
modification of any of the same. Neither the Corporation nor any of
the Shareholders has any knowledge of any reason why all such
Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
(b) Schedule 3.10(b) includes: (i) all records,
notifications, reports, permit and license applications, engineering
and geologic studies, and environmental impact reports, tests or
assessments (collectively, "RECORDS, NOTIFICATIONS AND REPORTS") that
(A) are material to the operation of the business of the Corporation,
or (B) relate to the discharge or release of materials into the
environment and/or the handling or transportation of waste materials
or hazardous or toxic substances or otherwise relate to the protection
of the public health or the environment, or (C) were filed with or
submitted to appropriate governmental agencies during the past 24
months by the Corporation or any of the Shareholders or their agents
with respect to the business of the Corporation, and (ii) all material
notifications from such governmental agencies to the Corporation, the
Shareholders or their agents in response to or relating to any of such
Records,
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Notifications and Reports.
(c) Schedule 3.10(c) lists, as of the Closing Date, each
facility owned, leased, operated or otherwise used by the Corporation,
the ownership, lease, operation or use of which is being transferred
to, assumed by or otherwise acquired directly or indirectly by WCI
pursuant to this Agreement (each, a "FACILITY" and collectively, the
"FACILITIES"). Except as otherwise disclosed on Schedule 3.10(c):
(i) Each Facility is fully licensed, permitted
and authorized to carry on its current business under all
applicable federal, state and local statutes, orders,
approvals, zoning or land use requirements, rules and
regulations, and no Facility or the current use thereof
constitutes a non-conforming use or is otherwise subject to
any restrictions regarding the operation, renovation or
reconstruction thereof.
(ii) All activities and operations at each
Facility are being and have been conducted in compliance in
all material respects with the requirements, criteria,
standards and conditions set forth in all applicable federal,
state and local statutes, orders, approvals, permits, zoning
or land use requirements and restrictions, variances,
licenses, rules and regulations.
(iii) Each Facility is located on real property
owned or leased by the Corporation (each a "FACILITY
PROPERTY") and each Facility Property owned by the Corporation
is legally described on the preliminary title reports, surveys
or site plans attached to Schedule 3.10(c) (the "FACILITY
SURVEYS/SITE PLANS"), which accurately depict the respective
Facility Property.
(iv) There are no circumstances, conditions or
reasons which are likely to be the basis for revocation or
suspension of any Facility's site assessments, permits,
licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any Facility owned
by the Corporation or owned by any of the Shareholders or an
Affiliate (as hereinafter defined) of any of the Shareholders
and leased to the Corporation, and to the knowledge of the
Corporation and the Shareholders there are no circumstances,
conditions or reasons which are likely to be the basis for
revocation or suspension of any site assessment, permits,
licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any Facility.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as of
the Closing Date of the accounts and notes receivable of the Corporation from
and advances to employees, former employees, officers, directors, the
Shareholders and Affiliates of the foregoing which have not been repaid. For
purposes of this Agreement, the term "AFFILIATE" means, with respect to any
person, any person that directly or indirectly through one or more
intermediaries controls or has an ownership interest in, or is controlled or
owned in whole or in part by, or is under common control or ownership in whole
or in part with such person, and in the case of the Corporation
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includes directors and officers, in the case of individuals includes the
individual's spouse, father, mother, grandfather, grandmother, brothers,
sisters, children and grandchildren and in the case of a trust includes the
grantors, trustees and beneficiaries of the trust.
3.12 FIXED ASSETS AND REAL PROPERTY.
(a) Schedule 3.12(a) lists, as of the Closing Date,
substantially all the fixed assets (other than real estate) of the
Corporation, including, without limitation, identification of each
vehicle by description and serial number, identification of machinery,
equipment and general descriptions of parts, supplies and inventory.
Except as described on Schedule 3.12(a), all of the Corporation's
containers, vehicles, machinery and equipment necessary for the
operation of its business are in operable condition, and all of the
motor vehicles and other rolling stock of the Corporation are in
material compliance with all applicable laws, rules and regulations.
All such containers, vehicles, machinery and equipment are
substantially free of known defects that would cause them to fail.
All leases of fixed assets are in full force and effect and binding
upon the parties thereto; neither the Corporation nor, to the
knowledge of the Corporation or the Shareholders, any other party to
such leases is in breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Closing Date (the "CORPORATE
PROPERTY"), including the street address and, in the case of Corporate
Property owned or being purchased, the legal description thereof, is
listed on Schedule 3.12(b) - Part I, and attached to said Schedule
3.12(b) - Part I are copies of all leases, deeds, outstanding
mortgages, other encumbrances and any existing title insurance
policies or lawyer's title opinions relating to each Corporate
Property, as well as a current commitment for title insurance issued
by a title insurance company satisfactory to WCI with respect to each
Corporate Property owned or being purchased by the Corporation,
together with copies of all of the title exceptions referred to in
each such commitment. All leases listed on Schedule 3.12(b) - Part I
are in full force and effect and binding on the parties thereto;
neither the Corporation nor any other party to any such lease is in
breach of any of the material provisions thereof; the landlord's
interest in any such lease has not been assigned to any third party
nor has any such interest been mortgaged, pledged or hypothecated; and
the Corporation has not assigned any such lease or sublet all or any
part of the Corporate Property which is the subject of any such lease.
Except as described on Schedule 3.12(b) - Part II, there are no
material physical or mechanical defects in any Facility located on any
Corporate Property and each such Facility is in good condition and
repair.
(c) The Corporation has good, valid and marketable title
to all properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the conduct of its
business, free of any encumbrance or charge of any kind except: (i)
liens for current taxes not yet due; (ii) minor imperfections of title
and encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the
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use of the property subject thereto, do not materially impair the
value of the Corporation, and have arisen only in the ordinary course
of business and consistent with past practice; and (iii) the liens
identified on Part III of Schedule 3.8 (collectively, the "PERMITTED
LIENS"). Except as described on Schedule 3.12(b) - Part I, there are
no leases, occupancy agreements, options, rights of first refusal or
any other agreements or arrangements, either oral or written, that
create or confer in any person or entity the right to acquire, occupy
or possess, now or in the future, any Facility, any Corporate
Property, or any portion thereof, or create in or confer on any person
or entity any right, title or interest therein or in any portion
thereof.
3.13 ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on
Schedule 3.13, since the Balance Sheet Date, the Corporation has not acquired
or sold or otherwise disposed of any properties or assets which, singly or in
the aggregate, have a value in excess of $10,000, or which are material to the
operation of the Corporation's business as presently conducted, without the
prior written consent of WCI.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Closing Date, and
includes copies of, all material contracts and agreements (other than
leases and documents included with Schedule 3.12(b)) to which the
Corporation is a party or by which it or any of its property is bound
(including, but not limited to, joint venture or partnership
agreements, contracts with any labor organizations, promissory notes,
loan agreements, bonds, mortgages, deeds of trust, liens, pledges,
conditional sales contracts or other security agreements). Except as
disclosed on Schedule 3.14(a), all such contracts and agreements
included in Schedule 3.14(a) are in full force and effect and binding
upon the parties thereto. Except as described or cross referenced on
Schedule 3.14(a), neither the Corporation nor, to the Corporation's or
any of the Shareholder's knowledge, any other parties to such
contracts and agreements is in breach thereof, and none of the parties
has threatened to breach any of the material provisions thereof or
notified the Corporation or any of the Shareholders of a default
thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate Properties, nor
has the Corporation been notified that any such judgment, order, writ,
injunction or decree has been requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes
copies, as of the Closing Date, of all insurance policies in effect on the
Closing Date or, with respect to "occurrence" policies that were in effect,
carried by the Corporation in respect of the Corporate Properties or any other
property used by the Corporation specifying, for each policy, the name of the
insurer, the type of risks insured, the deductible and limits of coverage, and
the annual premium therefor. The Corporation currently carries insurance in
the type and amount ordinarily carried by owners
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or corporations in similar circumstances, in respect to the Corporation
properties, assets and business. WCI shall continue to maintain insurance
policies at least equivalent to coverages currently carried by the Corporation
and shall use reasonable efforts to designate ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ as additional insureds. During the last five years, there has been no
lapse in any material insurance coverage of the Corporation. For each insurer
providing coverage for any of the contingent or other liabilities listed on
Schedule 3.8, except to the extent otherwise set forth in Part II of Schedule
3.8, each such insurer, if required, has been properly and timely notified of
such liability, no reservation of rights letters have been received by the
Corporation and the insurer has assumed defense of each suit or legal
proceeding. All such proceedings are fully covered by insurance, subject to
normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the
Closing Date, of all officers, directors and employees (by type or
classification) of the Corporation and their respective rates of compensation,
including (i) the portions thereof attributable to bonuses, (ii) any other
salary, bonus, stock option, equity participation, or other compensation
arrangement made with or promised to any of them, and (iii) copies of all
employment agreements with non-union officers, directors and employees.
Schedule 3.16 also lists the driver's license number for each driver of the
Corporation's motor vehicles.
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3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the Closing
Date, and includes complete copies (or, in the case of oral
arrangements, descriptions), of all employee benefit plans and
agreements (written or oral) currently maintained or contributed to by
the Corporation, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement plans,
welfare benefit plans and deferred compensation agreements, together
with copies of such plans, agreements and any trusts related thereto,
and classifications of employees covered thereby as of the Closing
Date. Except for the employee benefit plans described on Schedule
3.17(a), the Corporation has no other pension, retirement, welfare,
profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plans or arrangements with any
party. Except as disclosed on Schedule 3.17(a), all employee benefit
plans listed on Schedule 3.17(a) are fully funded and in substantial
compliance with all applicable federal, state and local statutes,
ordinances and regulations. All such plans that are intended to
qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and
copies of such determination letters are included as part of Schedule
3.17(a). Except as disclosed on Schedule 3.17(a), all reports and
other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely
filed or distributed, and copies thereof are included as part of
Schedule 3.17(a). All employee benefit plans listed on such Schedule
have been operated in accordance with the terms and provisions of the
plan documents and all related documents and policies. The
Corporation has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or U.S. Department of Labor nor
any liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, nor has the Corporation, nor party-in-interest
or disqualified person, engaged in any transaction or other activity
which would give rise to such liability. The Corporation has not
participated in or made contributions to any "multi-employer plan" as
defined in the Employee Retirement Income Security Act of 1974
("ERISA"), nor would the Corporation or any affiliate be subject to
any withdrawal liability with respect to such a plan if any such
employer withdrew from such a plan immediately prior to the Closing
Date. No employee pension benefit plan is under funded on a
termination basis as of the date of this Agreement.
(b) Schedule 3.17(b) is a complete list, as of the
Closing Date, and includes complete copies of all union contracts and
agreements between the Corporation and any collective bargaining
group. The Corporation is in compliance in all material respects with
all applicable federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and
hours, and nondiscrimination in employment, and is not engaged in any
unfair labor practice. There is no charge pending or, to the
Corporation's or the Shareholders' knowledge, threatened, against the
Corporation before any court or agency and alleging unlawful
discrimination in
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employment practices and there is no charge of or proceeding with
regard to any unfair labor practice against it pending before the
National Labor Relations Board. There is no labor strike, dispute,
slow down or stoppage as of the Closing Date, existing or threatened
against the Corporation; no union organizational activity exists
respecting employees of the Corporation not currently subject to a
collective bargaining agreement; the union contracts or other
agreements delivered as part of Schedule 3.17(b) constitute all
agreements with the unions or other collective bargaining groups, and
there are no other arrangements or established practices relating to
the employees covered by any collective bargaining agreement; and
Schedule 3.17(b) contains as of the date it is delivered a list of all
arbitration or grievance proceedings that have occurred since the
Balance Sheet Date. No one has petitioned within the last five years,
and no one is now petitioning, for union representation of any
employees of the Corporation. The Corporation has not experienced any
labor strike, slow-down, work stoppage, labor difficulty or other job
action during the last five years.
(c) No payment made to any employee, officer, director or
independent contractor of the Corporation (the "RECIPIENT") pursuant
to any employment contract, severance agreement or other arrangement
(the "Golden Parachute Payment") will be nondeductible by the
Corporation because of the application of Sections 280G and 4999 of
the Code to the Golden Parachute Payment, nor will the Corporation be
required to compensate any Recipient because of the imposition of an
excise tax (including any interest or penalties related thereto) on
the Recipient by reason of Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) The Corporation has timely filed all requisite
federal, state, local and other tax and information returns due for
all fiscal periods ended on or before the Closing Date. All such
returns are accurate and complete. Except as set forth on Schedule
3.18, there are no open years (other than those within the statute of
limitations), examinations in progress, extensions of any statute of
limitations or claims against the Corporation relating to federal,
state, local or other taxes (including penalties and interest) for any
period or periods prior to and including the Closing Date and no
notice of any claim for taxes has been received. Copies of (i) any
tax examinations, (ii) extensions of statutory limitations and (iii)
the federal income, and state franchise, income and sales tax returns
of the Corporation for its last three fiscal years are attached as
part of Schedule 3.18. Copies of all other federal, state, local and
other tax and information returns for all prior years of the
Corporation's existence have been made available to WCI and are among
the records of the Corporation which will accrue to WCI at the
Closing. The Corporation has not been contacted by any federal, state
or local taxing authority regarding a prospective examination.
(b) Except as set forth on Schedule 3.18 (which schedule
also includes the amount due with respect to the Corporation) the
Corporation has duly paid all taxes and
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other related charges required to be paid prior to the Closing Date.
The reserves for taxes contained in the Financial Statements of the
Corporation are adequate to cover its tax liability as of the Closing
Date.
(c) The Corporation has withheld all required amounts
from its employees for all pay periods in full and complete compliance
with the withholding provisions of applicable federal, state and local
laws. All required federal, state and local and other returns with
respect to income tax withholding, social security, and unemployment
taxes have been duly filed by the Corporation for all periods for
which returns are due, and the amounts shown on all such returns to be
due and payable have been paid in full.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on
Schedule 3.19, the certified copies of the Articles of Incorporation and Bylaws
of the Corporation, both as amended to the Closing Date, and the copies of all
leases, instruments, agreements, licenses, permits, certificates or other
documents that have been delivered to WCI in connection with the transactions
contemplated hereby are complete and accurate as of the Closing Date and are
true and correct copies of the originals thereof. Except as specifically
disclosed on Schedule 3.19, the rights and benefits of the Corporation will not
be adversely affected by the transactions contemplated hereby, and the
execution of this Agreement and the performance of the obligations hereunder
will not violate or result in a breach or constitute a default under any of the
terms or provisions thereof. None of such leases, instruments, agreements,
licenses, permits, site assessments, certificates or other documents requires
notice to, or consent or approval of, any governmental agency or other third
party to any of the transactions contemplated hereby, except the Required
Governmental Consents, such consents and approvals as are listed on Schedule
3.19; all of which will have been given or obtained prior to the Closing.
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES.
Schedule 3.20 is a current, accurate and complete list of, and includes:
(a) the customers the Corporation serves on an ongoing
basis, including name, location and current billing rate, as of the
Closing Date;
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month
preceding the month in which such Schedule is delivered, showing
amounts due in 30-day aging categories. Except to the extent of the
allowance for bad debts reflected on the Financial Statements or
otherwise disclosed on Schedules 3.11 and 3.20, the Corporation's
accounts and notes receivable are collectible in the amounts shown on
Schedules 3.11 and 3.20; and
(c) the average monthly revenues of the Corporation
derived from ▇▇▇▇▇▇▇▇ to its customers for each of the twelve months
preceding the Closing Date. Except as set forth on Schedule 3.20, the
Corporation and the Shareholders have no knowledge of any reason why
the Corporation's average monthly revenues derived from ▇▇▇▇▇▇▇▇ to
its customers after the Closing Date should not continue at
approximately the same rate as
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before the Closing Date.
3.21 NO CHANGE WITH RESPECT TO THE CORPORATION. Except as set
forth on Schedule 3.21, since the Balance Sheet Date, the business of the
corporation has been conducted only in the ordinary course and there has been
no change in the condition (financial or otherwise) of the assets, liabilities
or operations of the Corporation other than changes in the ordinary course of
business, none of which either singly or in the aggregate has been materially
adverse. Specifically, and without limiting the generality of the foregoing,
except as set forth on Schedule 3.21, with respect to the Corporation, since
the Balance Sheet Date, there has not been:
(a) any material change in its financial condition,
assets, liabilities (contingent or otherwise), income, operations or
business which would have a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), income,
operations or business of the Corporation, taken as a whole;
(b) any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion of
its properties or business;
(c) any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or outstanding
securities, or (iii) its securities;
(d) any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of its capital
stock or any direct or indirect redemption, purchase or other
acquisition of any of its capital stock;
(e) any material increase or bonus or promised increase
or bonus in the compensation payable or to become payable by it, in
excess of usual and customary practices, to any of its directors,
officers, employees or agents, or any accrual or arrangement for or
payment of any bonus or other special compensation to any employee or
any severance or termination pay paid to any of its present or former
officers or other key employees;
(f) any labor dispute or any other event or condition of
any character with respect to the Corporation's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any other
person, including, without limitation, the Shareholders and their
Affiliates, other than in the ordinary course of business;
(h) any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to it,
including, without limitation, any indebtedness or obligation of any
of the Shareholders or any Affiliate thereof;
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(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement,
plan or arrangement to purchase or acquire, any of its property,
rights or assets outside the ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any
existing material contract, agreement, license, permit or other right
to which it is a party;
(m) any other material transaction outside the ordinary
course of its business.
3.22 CLOSING DATE DEBT; CLOSING DATE CURRENT ASSETS AND CLOSING
DATE CURRENT LIABILITIES.
(a) Schedule 3.22(a) is as of the Closing Date (i) the
amount of the aggregate debt (excluding trade payables) of the
Corporation outstanding on the Closing Date required to be repaid by
WCI at or immediately after the Closing Date and all prepayment
penalties incurred or to be incurred by WCI or the Corporation in
connection with the repayment of any such debt, (ii) the amount of the
aggregate debt (excluding trade payables) of the Corporation
outstanding on the Closing Date which will remain outstanding
obligations of the Corporation after the Closing Date, and all
prepayment penalties applicable to such debt if repaid prior to
maturity, including in each case all interest accrued through and
including the Closing Date, (iii) the aggregate amount of the present
value, discounted at the lease rate factor, if known, inherent in the
lease or, if the lease rate factor is not known, at the rate charged
to the Corporation by a third party lender in connection with its most
recent borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations and (iv) the
aggregate amount of the present value of all capitalized lease
obligations (determined in accordance with generally accepted
accounting principles) of the Corporation (the "CLOSING DATE DEBT").
Schedule 3.22(a) includes wire transfer instructions for creditors
whose Closing Date Debt WCI has designated for payment, and attached
to Schedule 3.22(a) are pay-off letters or instructions from such
creditors in the form provided by WCI's bank.
(b) Schedule 3.22(b) is an estimate as of the Closing
Date of the amount of the aggregate current liabilities (including any
reserve for unpaid taxes and excluding the current portion of
long-term debt to the extent such current portion is included in
Closing Date Debt) and trade payables of the Corporation as of the
Closing Date (the "CLOSING DATE CURRENT LIABILITIES") and the amount
of the aggregate cash and other current assets of the Corporation as
of the Closing Date, including prepaid expenses the benefit of
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which survives the Closing Date and the accounts receivable of the
Corporation earned prior to the Closing Date, and collectible (less an
allowance for doubtful accounts) on or after the Closing Date (the
"CLOSING DATE CURRENT ASSETS"). The Corporation and the Shareholder
expressly acknowledge that in arriving at the Closing Date Current
Assets, accounts receivable owed to the Corporation that are
outstanding sixty (60) days or less prior to the Closing Date are
valued at one hundred percent (100%) of their amount, accounts
receivable outstanding sixty-one (61) to ninety (90) days prior to the
Closing Date are valued at forty percent (40%) of their amount, and
that any amounts outstanding more than ninety (90) days prior to the
Closing Date are valued at zero.
3.23 BANK ACCOUNTS.
(a) Schedule 3.23(a) is a complete and accurate list, as
of the Closing Date, of:
(i) the name of each bank in which the
Corporation has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes
are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw
thereon or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate list, as
of the Closing Date, of:
(i) each credit card or other charge account
issued to the Corporation; and
(ii) the name of each person to whom such credit
cards or other charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24,
the Corporation has complied with, and the Corporation is presently in
compliance with, federal, state and local laws, ordinances, codes, rules,
regulations, Governmental Permits, orders, judgments, awards, decrees, consent
judgments, consent orders and requirements applicable to it (collectively
"LAWS"), including, but not limited to, the Americans with Disabilities Act,
the Federal Occupational Safety and Health Act, and Laws relating to the public
health, safety or protection of the environment (collectively, "ENVIRONMENTAL
LAWS"). Except as disclosed on Schedule 3.24, there has been no assertion by
any party that the Corporation is in violation of any Laws. Specifically and
without limiting the generality of the foregoing, except as disclosed on
Schedule 3.24:
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(a) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the
Corporation has not accepted, processed, handled, transferred,
generated, treated, stored or disposed of any Hazardous Material (as
defined in Section 3.24(e) below) nor has it accepted, processed,
handled, transferred, generated, treated, stored or disposed of
asbestos, medical waste, radioactive waste or municipal waste, except
in compliance with Environmental Laws.
(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other
than that allowed under Environmental Laws, including, without
limitation, RCRA, has been disposed of, or otherwise released on any
Corporate Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Corporate Property has ever
been subject to or received any notice of any private, administrative
or judicial action, or notice of any intended private, administrative
or judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Corporate
Property or any real property now or previously owned or leased by the
Corporation. There are no pending and, to the Corporation's and
Shareholders' knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of the Corporate Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Corporation has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL" means
the substances (i) defined as "HAZARDOUS WASTE" in 40 CFR 261, and
substances defined in any comparable South Dakota statute or
regulation; (ii) any substance the presence of which requires
remediation pursuant to any Environmental Laws; and (iii) any
substance disposed of in a manner not in compliance with Environmental
Laws.
3.25 POWERS OF ATTORNEY. The Corporation has not granted any power
of attorney (except routine powers of attorney relating to representation
before governmental agencies) or entered into any agency or similar agreement
whereby a third party may bind or commit the Corporation in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on
Schedule 3.26, no
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underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or Environmental Laws are
currently or have been located on any Corporate Property. Except as set forth
on Schedule 3.26, the Corporation has never owned or leased any real property
not included in the Corporate Property having any underground storage tanks
containing petroleum products or wastes or other hazardous substances regulated
by 40 CFR 280. As to each such underground storage tank ("UST") identified on
Schedule 3.26, the Corporation has provided to WCI, on Schedule 3.26:
(a) the location of the UST, information and material,
including any available drawings and photographs, showing the
location, and whether the Corporation currently owns or leases the
property on which the UST is located (and if the Corporation does not
currently own or lease such property, the dates on which it did and
the current owner or lessee of such property);
(b) the date of installation and specific use or uses of
the UST;
(c) copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body
or agency relating to the UST;
(e) other material records with regard to the UST,
including, without limitation, repair records, financial assurance
compliance records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the
above, a summary description of instances, past or present, in which,
to the Corporation's, or the Shareholders' knowledge, the UST failed
to meet applicable standards and regulations for tightness or
otherwise and the extent of such failure, and any other operational or
environmental problems with regard to the UST, including, without
limitation, spills, including spills in connection with delivery of
materials to the UST, releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation has
complied with Environmental Laws regarding the installation, use, testing,
monitoring, operation and closure of each UST described on Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists
all patents, tradenames, fictitious business names, trademarks, service marks,
and copyrights owned by the Corporation or which it is licensed to use (other
than licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). No
patents, trade secrets, know-how, intellectual property, trademarks, trade
names, assumed
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names, copyrights, or designations used by the Corporation in its business
infringe on any patents, trademarks, or copyrights, or any other rights of any
person. Neither the Corporation nor any of the Shareholders knows or has any
reason to believe that there are any claims of third parties to the use of any
such names or any similar name, or knows of or has any reason to believe that
there exists any basis for any such claim or claims.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. The Corporation owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.5, 3.10(a), 3.10(c),
3.14(a) and 3.19, is a party to all Collection Franchises and Governmental
Permits and other agreements necessary to permit it to carry on its business as
presently conducted. All of said Collection Franchises and Governmental
Permits and agreements have been duly obtained and, except as disclosed on
Schedules 3.5, 3.8-Part II, 3.10(a), 3.10(c) 3.14(a) and 3.19, are in full
force and effect and there are no proceedings pending or threatened which may
result in the revocation, cancellation, suspension or adverse modification of
any of the same. Neither the Corporation nor any of the Shareholders has any
knowledge of any reason why all such Collection Franchises and Governmental
Permits and agreements will not remain in effect after consummation of the
transactions contemplated hereby.
3.29 CONDEMNATION. No Corporate Property owned or leased by the
Corporation is the subject of, or would be affected by, any pending
condemnation or eminent domain proceedings, and, to the knowledge of the
Corporation and the Shareholders, no such proceedings are threatened.
3.30 SUPPLIERS AND CUSTOMERS. The relations between the
Corporation and its customers are good. Neither the Corporation nor any of the
Shareholders has knowledge of any fact (other than general economic and
industry conditions) which indicates that any of the suppliers supplying
products, components, materials or providing use of, or access to, landfills or
disposal sites to the Corporation intends to cease providing such items to the
Corporation, nor does the Corporation or any of the Shareholders have knowledge
of any fact (other than general economic and industry conditions) which
indicates that any of the customers of the Corporation intends to terminate,
limit or reduce its business relations with the Corporation.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the
Corporation nor any of the Shareholders has directly or indirectly within the
past five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of the Corporation in connection with
any actual or proposed transaction which (a) might subject the Corporation to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (b) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of the Corporation,
or (c) if not continued in the future, might adversely affect the financial
condition, business or operations of the Corporation or which might subject the
Corporation to suit or penalty in any private or governmental litigation or
proceeding.
3.32 RELATED PARTY TRANSACTIONS. None of the Shareholders or their
respective
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Affiliates has entered into any transaction with or is a party to any
agreement, lease or other instrument, or as of the date of this Agreement is
indebted to or is owed money by, the Corporation not disclosed on the Financial
Statements delivered to WCI prior to the date of this Agreement. Except as
disclosed in the Financial Statements, none of the Shareholders or their
Affiliates owns any direct or indirect interest of any kind in, or controls or
is a director, officer, employee, shareholder or partner of, or consultant or
lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Corporation.
3.33 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature of the
matter disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
3.34 NO MISLEADING STATEMENTS. The representations and warranties
of the Corporation and the Shareholders contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to WCI and its representatives pursuant hereto are complete and accurate in all
material respects and do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made and to be
made not misleading.
3.35 ACCURATE AND COMPLETE RECORDS. The corporate minute books,
stock ledgers, books, ledgers, financial records and other records of the
Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material
corporate transactions required to be authorized by the Boards of
Directors and/or shareholders of the Corporation and do not contain or
reflect any material discrepancies.
3.36 KNOWLEDGE. Wherever reference is made in this Agreement to
the "KNOWLEDGE" of the Shareholders, such term means the actual knowledge of
the Shareholders or any knowledge which should have been obtained by the
Shareholders upon reasonable inquiry by a reasonable business person. In the
case of a Shareholder that is a trust, the term "knowledge" means the actual
knowledge of the trustee or trustees of the trust or any knowledge which should
have been obtained by the trustee or trustees upon reasonable inquiry by a
reasonable business person. Wherever reference is made in this Agreement to
the "knowledge" of the Corporation, such term means the actual knowledge of any
management employee, officer or director of the Corporation or any knowledge
which should have been obtained by any such person upon reasonable inquiry by a
reasonable business person.
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3.37 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for the Corporation or the
Shareholders in connection with the transactions contemplated by this Agreement
and no person is entitled to any broker's, finder's, financial advisory or
similar fee or payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of the Corporation or the
Shareholders.
3.38 INVESTMENT REPRESENTATIONS. The Shareholders further
represent that:
(a) Each of the Shareholders has such knowledge and
experience in financial matters, either alone or with the
Shareholder's professional advisors, that he or she is capable of
evaluating the merits and risks of the investment in the Shares.
(b) Each is a resident of the State of South Dakota.
(c) Each of the Shareholders has had access to such
information relating to WCI as such Shareholder feels is reasonably
necessary to make an informed investment decision with respect to the
Shares.
(d) Each of the Shareholders has had the opportunity to
ask questions and receive answers concerning the terms and conditions
of the transactions contemplated by this Agreement and to obtain
additional information that WCI possesses or can obtain without
unreasonable effort or expense that is necessary to verify the
accuracy of the information provided.
(e) Each of the Shareholders is acquiring the Shares
pursuant to this Agreement for its own account, not as a nominee or
agent. No one else has any interest, beneficial or otherwise, in any
of the Shares.
(f) Each of the Shareholders is able to bear the economic
risk of such an investment in the Shares is aware that he, she or it
must be prepared to hold such Shares for an indefinite period and is
aware that the Shares have not been registered under the Act, or
registered or qualified under the securities laws of any state, on the
ground, among others, that no unregistered distribution or public
offering of Shares is to be effected and the Shares are being issued
by WCI without any public offering within the meaning of section 4(2)
of the Act.
(g) Without in any way limiting the representations
herein, each of the Shareholders further agrees that such Shareholder
shall not encumber, pledge, hypothecate, sell, transfer, assign or
otherwise dispose of, or receive any consideration for, any Shares or
any interest in them, unless and until prior to any proposed
encumbrance, pledge, hypothecation, sale, transfer, assignment or
other disposition, (i) a registration statement on Form S-1 or S-3 (or
any other form appropriate for the purpose or replacing such form)
under the Act with respect to the shares proposed to be
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transferred or otherwise disposed of shall be then effective (ii)(a)
he, she or it shall have furnished WCI with a detailed statement of
the circumstances of the proposed disposition, and (b) he, she or it
shall have furnished WCI with an opinion of counsel or no-action
letter issued by the Staff of the Securities and Exchange Commission
("SEC") (obtained at the Shareholders' expense) in form and substance
satisfactory to WCI to the effect that such disposition will not
require registration of any such Shares under the Act or qualification
of any such Shares under any other securities law; or (iii) Rule 144
is available with respect to such transaction.
(h) Each of the Shareholders understands and agrees that
each certificate or other instrument representing the Shares will bear
a legend on the face thereof (or on the reverse thereof with a
reference to such legend on the face thereof) which legend restricts
the sale, transfer or other disposition of the Shares otherwise than
in accordance with Sections 3.38(g) of this Agreement provided,
however, that WCI shall, on the request of any of the Shareholders,
cause such legends to be removed from the certificates or other
instrument evidencing the Shares if such Shareholder has held such
Shares for the period contemplated by Rule 144(k) under the Act and if
the Shareholder is not then and has not been during the three months
preceding such request an affiliate of WCI (as defined in Rule 144
under the Act).
(i) Each of the Shareholders understands and agrees that
the Shares will be "restricted securities" as that term is defined in
Rule 144 under the Act and, accordingly, that the Shares must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
(j) The Shareholders agree to be bound with respect to
the Shares by any "lock up" provisions to which the executive officers
and directors of WCI are also bound as may be requested by any
underwriters of any offering of WCI Stock or securities convertible
into WCI Stock.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders that each of the
following representations and warranties is true as of the date of this
Agreement and will be true as of the Closing Date, and agrees that such
representations and warranties shall survive the Closing:
4.1 EXISTENCE AND GOOD STANDING. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WCI has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. WCI is not required
to be qualified or licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a material adverse
effect on its financial condition.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any article,
document or
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instrument to which WCI is a party or by which it is bound which would be
violated by consummation of the transactions contemplated by this Agreement.
4.3 AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due
authorization, execution and delivery by the Corporation and the Shareholders,
constitutes a legal, valid and binding obligation of WCI. WCI has full
corporate power, legal right and corporate authority to enter into and perform
its obligations under this Agreement and to carry on its business as presently
conducted. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and the fulfillment of and compliance
with the terms and conditions hereof do not and will not, after the giving of
notice, or the lapse of time or otherwise: (a) violate any provisions of any
judicial or administrative order, award, judgment or decree applicable to WCI;
(b) conflict with any of the provisions of the Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws of WCI; or (c) conflict with,
result in a breach of or constitute a default under any material agreement or
instrument to which WCI is a party or by which it is bound.
4.4 STATUS OF SHARES. The Shares delivered to the Shareholders at
the Closing are duly authorized and delivered shares of WCI, and shall be fully
paid and nonassessable.
4.5 NO MISLEADING STATEMENTS. The representations and warranties
of WCI contained in this Agreement, the Exhibits and Schedules hereto and all
other documents and information furnished to the Shareholders pursuant hereto
are materially complete and accurate, and do not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
4.6 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for WCI in connection with the
transactions contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of WCI.
4.7 DISCLOSURE SCHEDULES. Any matter disclosed by WCI on any
Schedule to this Agreement shall be deemed to have been disclosed on every
other Schedule that refers to such Schedule by cross reference so long as the
nature disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
5. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
5.1 WCI DELIVERIES.
(a) WCI shall deliver the cash portion of the Purchase
Price required to be delivered on the Closing Date pursuant to Section
1.2(a).
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(b) WCI shall deliver to the Shareholders certificates
for the Shares.
(c) WCI shall execute and deliver an Employment Agreement
with ▇▇▇▇▇ substantially in the form of the draft included in Exhibit
5.1(d).
(d) WCI shall execute and deliver the Lease.
(e) WCI shall execute and deliver the Shareholder Note
and the accompanying Security Agreement.
(f) WCI shall execute and deliver the ▇▇▇▇▇ Note.
5.2 SHAREHOLDERS DELIVERIES.
(a) The Shareholders shall deliver to WCI the
certificates representing the outstanding Corporation's Stock free and
clear of all liens, security interests, claims and encumbrances,
accompanied by a stock power duly executed in blank.
(b) The Shareholders shall deliver to WCI an opinion of
counsel for the Shareholders, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit 5.2(c).
(c) The Shareholders shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby, including without limitation all
Required Governmental Consents and all required consents of the
landlords under all real estate leases to which the Corporation is a
party, were obtained and the Shareholders shall deliver an estoppel
certificate from the landlords under all real estate leases to which
the Corporation is a party confirming the terms thereof and the rental
amount owing thereunder, certifying that such lease is in full force
and effect, that the Corporation is not in default under any of the
terms or conditions thereof, that there have been no amendments or
modifications to any such lease (or specifying the same), and
otherwise containing such statements and certifications as the
Corporation may require.
(d) The Corporation shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts and
all oral employment contracts other than those that are terminable "at
will" without payment of severance (other than normal severance
benefits approved by WCI) or other benefits with non-union employees
of the Corporation (including, without limitation, stock options or
other rights to obtain equity in the Corporation) have been
terminated, effective on or before the Closing Date.
(e) ▇▇▇▇▇ shall execute and deliver the Employment
Agreement in the form of Exhibit 5.1(d).
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(f) The Lessor shall execute and deliver the Lease.
(g) The Shareholders shall cause each officer and
director of the Corporation to deliver a resignation as an officer
and/or director of the Corporation.
(h) The Shareholders shall execute and deliver the
Security Agreement in connection with the Shareholder Note.
(i) The Shareholders shall deliver a One Hundred Eighty
Day Real Estate Mortgage.
(j) The Shareholders shall deliver original motor vehicle
titles.
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS
6.1 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to
obtain the termination and release promptly after the Closing Date of the
personal guaranties of the Shareholders listed on Schedule 6.1, all of which
relate to indebtedness of the Corporation included in the Financial Statements
as of the Balance Sheet Date or WCI shall indemnify the Shareholders and hold
them harmless from and against all losses, expenses or claims by third parties
to enforce or collect indebtedness owed by the Corporation as of the Closing
Date which is personally guaranteed by the Shareholders pursuant to such
guaranties. The Shareholders may notify the obligees under such guaranties
that they have terminated their obligations under such guaranties. The
Shareholders shall cooperate with WCI in obtaining such releases.
6.2 RELEASE OF SECURITY INTERESTS. On or after the Closing Date,
the Shareholders and their respective Affiliates shall cause those security
interests in the assets of the Corporation that have been created in favor of
financial institutions or other lenders to secure indebtedness (other than
indebtedness of the Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
6.3 CONFIDENTIALITY. Neither the Corporation nor any of the
Shareholders shall disclose or make any public announcements of the
transactions contemplated by this Agreement without the prior written consent
of WCI, unless required to make such disclosure or announcement by law, in
which event the party making the disclosure or announcement shall notify WCI at
least 24 hours before such disclosure or announcement is expected to be made.
WCI shall not disclose or make any public announcement of the transactions
contemplated by this Agreement without the prior written consent of the
Shareholders' Representative, unless in connection with the initial public
offering of WCI Stock or otherwise required to make such disclosure or
announcement by law, in which event WCI shall notify the Shareholders'
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Representative at least 24 hours before such disclosure or announcement is
expected to be made.
6.4 BROKERS AND FINDERS FEES. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee incurred by
such party in connection with the transactions contemplated by this Agreement.
6.5 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters involving the
Shareholders arising out of the Shareholders' ownership of the Corporation
prior to the Closing, including matters relating to tax returns and any tax
audits, appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
Corporation for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to
retaining information and documents which relate to such matters.
6.6 SHORT YEAR TAX RETURNS. After the Closing Date, the
Shareholders shall prepare at their sole cost and expense, all short year
federal, state, county, local and foreign tax returns required by law for the
period beginning with the first day of the Corporation's fiscal year in which
the Closing occurs and ending with the Closing Date. Each such return shall be
prepared in a financially responsible and conservative manner and shall be
delivered to WCI together with all necessary supporting schedules within 120
days following the Closing Date for its approval (but such approval shall not
relieve the Shareholders of their responsibility for the taxes assessed under
these returns). The Shareholders shall be responsible for the payment of all
taxes shown to be due or that may come to be due on such returns or otherwise
relating to the period prior to the Closing Date in excess of the amount of any
reserve for taxes included in Effective Date Current Liabilities. The
Shareholders shall also be responsible for all taxes arising from the
conversion of the Corporation from a cash to accrual basis of reporting whether
or not due on such returns or on the first return filed by the Corporation for
the period commencing after the Closing Date. At the time of the delivery of
the returns, shall contemporaneously deliver to WCI checks payable to the
respective taxing authorities in amounts equal to the amount due. WCI shall
sign tax returns and cause such returns to be timely filed with the appropriate
authorities. The Shareholders shall be entitled to receive all refunds shown
on said returns and any such refunds received by the Corporation or WCI shall
be remitted to the Shareholders.
6.7 TITLE INSURANCE. The Shareholders shall arrange for an
irrevocable commitment from a title insurance company reasonably acceptable to
WCI to issue, within three business days after the Closing Date, a CLTA Owner's
Policy of title insurance for the Corporate Property, in an amount as shall be
reasonably agreed upon by the Shareholders and WCI, insuring fee simple title
to the Corporate Property in the Corporation, subject only to current real
property taxes and assessments, standard printed conditions and exceptions, and
such title exceptions as shall have been accepted in writing by WCI, and
containing such endorsements as WCI may reasonably require. The cost of such
title insurance shall be paid one-half by the Shareholders and one-half by WCI.
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6.8 SHAREHOLDERS' REPRESENTATIVE.
(a) In order to administer efficiently the rights
and obligations of the Shareholders under this Agreement, the
Shareholders hereby designate and appoint ▇▇▇▇▇ as the Shareholders'
Representative, to serve as the Shareholders' agent, proxy and
attorney-in-fact for the limited purposes set forth in this Agreement.
(b) Each of the Shareholders hereby appoints the
Shareholders' Representative as such Shareholder's agent, proxy and
attorney-in-fact, with full power of substitution, for all purposes
set forth in this Agreement, including, without limitation, the full
power and authority on such Shareholder's behalf (i) to consummate the
transactions contemplated by this Agreement, (ii) to disburse any
funds received hereunder to the Shareholders, (iii) to execute and
deliver on behalf of each Shareholder any amendment or waiver under
this Agreement, to agree to the amount of the actual Closing Date
Debt, Closing Date Current Assets and Closing Date Current Liabilities
pursuant to Section 1.2(a), and to agree to resolution of all Claims
hereunder, (iv) to retain legal counsel and other professional
services, at the expense of the Shareholders, in connection with the
performance by the Shareholders' Representative of this Agreement, and
(v) to do each and every act and exercise any and all rights which
such Shareholder or Shareholders are permitted or required to do or
exercise under this Agreement and the other agreements, documents and
certificates executed in connection herewith. Each of the
Shareholders agrees that such agency and proxy are coupled with an
interest, are therefore irrevocable without the consent of the
Shareholders' Representative and shall survive the death, bankruptcy
or other incapacity of any Shareholder.
(c) Each of the Shareholders hereby agrees that
any amendment or waiver under this Agreement, and any action taken on
behalf of the Shareholders to enforce the rights of the Shareholders
under this Agreement, and any action taken with respect to any
adjustment or Claim (including any action taken to object to, defend,
compromise or agree to the payment of such adjustment or Claim), shall
be effective if approved in writing by persons who were the holders of
a majority of the Corporation's Stock immediately prior to the
Closing, and that each and every action so taken shall be binding and
conclusive on every Shareholder, whether or not such Shareholder had
notice of, or approved, such amendment or waiver.
(d) ▇▇▇▇▇ shall serve as the Shareholders'
Representative until he resigns or is otherwise unable or unwilling to
serve. In the event that a Shareholders' Representative resigns from
such position or is otherwise unable or unwilling to serve, the
remaining Shareholders shall select, by the vote of the holders of a
majority of the Corporation's Stock immediately prior to the Closing,
a successor representative to fill such vacancy, shall provide prompt
written notice to WCI of such change and such substituted
representative shall then be deemed to be the Shareholders'
Representative for all purposes of this Agreement.
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6.9 GENERAL RELEASE BY SHAREHOLDERS. Except as may be otherwise
covered by any policy of insurance carried by the Corporation, each of the
Shareholders hereby fully releases and discharges the Corporation and its
directors, officers, agents and employees from all rights, claims and actions,
known or unknown, of any kind whatsoever, which any of such Shareholders now
has or may hereafter have against the Corporation and its directors, officers,
agents and employees, arising out of or relating to events arising prior to or
on the Closing Date, except (a) as may be described in written contracts
disclosed in Schedule 6.9 and expressly described and specifically excepted
from this release in Schedule 6.9, (b) compensation as an employee of the
Corporation for current periods expressly described and excepted from such
release on schedule 6.9, and (c) for the obligations of the Corporation arising
after the Closing Date under this Agreement. Specifically, but not by way of
limitation, each of the Shareholders waives any right of indemnification,
contribution or other recourse against the Corporation which he now has or may
hereafter have against the Corporation with respect to representations,
warranties or covenants made in this Agreement by the Corporation.
Each of the Shareholders hereby waives and relinquishes all
rights and benefits afforded by Section 1542 of the California Civil Code,
which states as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS TO WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Each of the Shareholders understands and acknowledges the significance and
consequence of this waiver of Section 1542 and nevertheless elects to, and
does, release those claims described in this Section 6.9, known or unknown,
that it may have now or in the future arising out of or relating to any event
arising on or prior to the date of this Agreement.
6.10 CONTINUING EMPLOYEES. WCI shall maintain the same or
comparable compensation and insurance coverage for employees of the Corporation
after the Closing Date so long as those employees remain employees of the
Corporation.
7. INDEMNIFICATION
7.1 INDEMNITY BY THE SHAREHOLDERS. Except as may be otherwise
covered by any policy of insurance carried by the Corporation, each of the
Shareholders, jointly and severally, subject to the limitations set forth in
Section 7.2, covenants and agrees that he or she will indemnify and hold
harmless WCI, the Corporation and their respective directors, officers and
agents and their respective successors and assigns (collectively the "WCI
INDEMNITEES"), from and after the date of this Agreement, against any and all
losses, damages, assessments, fines, penalties, adjustments, liabilities,
claims, deficiencies, costs, expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation),
expenditures, including, without limitation, any "Environmental Site Losses"
(as such term is hereinafter defined) identified by a WCI Indemnitee in a
Claims Notice (as defined in Section 7.3(a)), or
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asserted by a WCI Indemnitee in litigation commenced against the Shareholders
provided that in either case any such Claims Notice shall be given or the
litigation commenced prior to the third anniversary of this Agreement
(irrespective of the date of discovery), with respect to each of the following
contingencies (all, the "7.1 INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the
Shareholders or the Corporation pursuant to the terms of this
Agreement or any misrepresentation in or omission from any Exhibit,
Schedule, list, certificate, or other instrument furnished or to be
furnished to WCI pursuant to the terms of this Agreement, regardless
of whether, in the case of a breach of a representation or a warranty,
WCI relied on the truth of such representation or warranty or had any
knowledge of any breach thereof.
(b) The design, development, construction or operation of
any Facility or any other "Environmental Site" as hereinafter defined,
or the installation or operation of a UST during any period on or
prior to the Closing Date, in excess of the amount of liability with
respect thereto, if any, set forth on Part II of Schedule 3.8. As
used in this Agreement, "ENVIRONMENTAL SITE" shall mean any Facility,
any UST and any other waste storage, processing, treatment or disposal
facility, and any other business site or any other real property
owned, leased, controlled or operated by the Corporation or by any
predecessor thereof on or prior to the Closing Date. As used in this
Agreement, "ENVIRONMENTAL SITE LOSSES" shall mean any and all losses,
damages (including exemplary damages and penalties), liabilities,
claims, deficiencies, costs, expenses, and expenditures (including,
without limitation, expenses in connection with site evaluations, risk
assessments and feasibility studies) arising out of or required by an
interim or final judicial or administrative decree, judgment,
injunction, mandate, interim or final permit condition or restriction,
cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any
other remedial action that is required to be undertaken under federal,
state or local law in respect of operating activities on or affecting
any Facility, any UST or any other Environmental Site, including, but
not limited to (x) any actual or alleged violation of any law or
regulation respecting the protection of the environment, including,
but not limited to, RCRA and CERCLA or any other law or regulation
respecting the protection of the air, water and land and (y) any
remedies or violations, whether by a private or public action, alleged
or sought to be assessed as a consequence, directly or indirectly, of
any "Release" (as defined below) of pollutants (including odors) or
Hazardous Substances from any Facility, any UST or any other
Environmental Site resulting from activities thereat, whether such
Release is into the air, water (including groundwater) or land and
whether such Release arose before, during or after the Closing Date.
The term "RELEASE" as used herein means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the ambient environment.
Notwithstanding anything in this paragraph to the contrary, it is
specifically understood and agreed that a Release composed solely of
Hazardous Substances contained in household waste lawfully disposed of
in a landfill during the time the Corporation owned
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and/or operated such landfill does not constitute an Environmental
Site Loss.
(c) All matters on Schedule 3.8 - Part II.
(d) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
7.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES.
(a) Except as may be otherwise covered by any policy of
insurance carried by the Corporation, subject to the provisions of
7.2(b) hereof, the obligations of the Shareholders to indemnify the
WCI Indemnitees as provided in Section 7.1 shall be equal to the
amount by which the cumulative amount of all such liabilities, claims,
damages deficiencies, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses, expenditures and
Environmental Site Losses with respect to any or all 7.1 Indemnity
Events exceed $40,000 (the "GENERAL DEDUCTIBLE AMOUNT"); provided,
that the amount of any obligation of indemnity arising pursuant to
Section 7.1(a) with respect to any representation, warranty or
covenant contained in Sections 3.1 through 3.5, 3.12(c), 3.18, 3.22
and 6.6 hereof and pursuant to Section 7.1(c) shall not be subject to
the General Deductible Amount.
(b) The maximum amount which WCI can recover as a result
of one or more 7.1 Indemnity Events shall not exceed the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof.
For this purpose, the Shares shall be valued at the $300,000 in the aggregate.
(c) WCI shall use reasonable efforts to pursue any
insurance coverage it may have with respect to any matter resulting in a 7.1
Indemnity Event and shall apply any insurance recoveries it receives in
connection with any 7.1 Indemnity Event towards its recovery from the
Shareholder for such 7.1 Indemnity Event. Nothing herein shall require WCI
from pursuing any such insurance coverage prior to pursuing any claim against
the Shareholder.
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7.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any WCI Indemnitee as to
which such Indemnitee may be entitled to indemnification hereunder,
the WCI Indemnitee shall notify the Shareholders (as applicable
collectively, the "INDEMNIFYING PARTY") in writing thereof (the
"CLAIMS NOTICE") within 60 days after (i) receipt of written notice of
commencement of any third party litigation against such WCI
Indemnitee, (ii) receipt by such WCI Indemnitee of written notice of
any third party claim pursuant to an invoice, notice of claim or
assessment, against such WCI Indemnitee, or (iii) such WCI Indemnitee
becomes aware of the existence of any other event in respect of which
indemnification may be sought from the Indemnifying Party (including,
without limitation, any inaccuracy of any representation or warranty
or breach of any covenant). The Claims Notice shall describe the
Claim and the specific facts and circumstances in reasonable detail,
and shall indicate the amount, if known, or an estimate, if possible,
of the losses that have been or may be incurred or suffered by the WCI
Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including
such Claims) do not exceed the limit set forth in Section 7.2 at the
time the Claim is made, by the Indemnifying Party's own counsel;
provided, however, the Indemnifying Party may assume and undertake the
defense of such a third party Claim only upon written agreement by the
Indemnifying Party that the Indemnifying Party is obligated to fully
indemnify the WCI Indemnitee with respect to such action. The WCI
Indemnitee may participate, at the WCI Indemnitee's own expense, in
the defense of any Claim assumed by the Indemnifying Party. Without
the written approval of the WCI Indemnitee, which approval shall not
be unreasonably withheld, the Indemnifying Party shall not agree to
any compromise of a Claim defended by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall not
have provided the written agreement required by Section 7.3(b) and
elected to defend the Claim, the WCI Indemnitee shall have the right
to assume control of the defense and/or compromise of such Claim, and
the costs and expenses of such defense, including reasonable
attorneys' fees, shall be added to the Claim. The Indemnifying Party
shall promptly, and in any event within thirty (30) days after demand
therefor, reimburse the WCI Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall
keep the other party reasonably informed at all times of the progress
and development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the parties to this Agreement shall cooperate with each other and make
available to each other and
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their representatives all available relevant records or other
materials required by them for their use in defending, compromising or
contesting any Claim. The failure to timely deliver a Claims Notice
or otherwise notify the Indemnifying Party of the commencement of such
actions in accordance with this Section 7.3 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder but only
to the extent that the Indemnifying Party establishes by competent
evidence that it has been prejudiced thereby.
(e) In the event both the WCI Indemnitee and the
Indemnifying Party are named as defendants in an action or proceeding
initiated by a third party, they shall both be represented by the same
counsel (on whom they shall agree), unless such counsel the WCI
Indemnitee, or the Indemnifying Party shall determine that such
counsel has a conflict of interest in representing both the WCI
Indemnitee and the Indemnifying Party in the same action or proceeding
and the WCI Indemnitee and the Indemnifying Party do not waive such
conflict to the satisfaction of such counsel.
7.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement and
in any certificate, Exhibit or Schedule delivered pursuant hereto, or in any
other writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any persons other than as specifically set forth herein or
therein. There are no third party beneficiaries to this Agreement other than
the WCI Indemnitees.
7.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF.
The Shareholders waive any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due any
Shareholder any amount to which any WCI Indemnitee is entitled to be
indemnified hereunder with respect to any 7.1 Indemnity Event. Such right of
set off shall be separate and apart from any and all other rights and remedies
that the Indemnities may have against Shareholders or their successors.
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
8.1 RESTRICTIVE COVENANTS. As to the Corporation, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the purchaser of
the Corporation's Stock, is and will be engaged in the same business as the
Corporation (the "BUSINESS"); (ii) the Shareholders and their Affiliates are
intimately familiar with the Business; (iii) the Business is currently
conducted in the State of South Dakota and WCI intends to continue the Business
in South Dakota and intends, by
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acquisition or otherwise, to expand the Business into other geographic areas of
South Dakota where it is not presently conducted; (iv) the Shareholders and
their Affiliates have had access to trade secrets of, and confidential
information concerning, the Business; (v) the agreements and covenants
contained in this Section 8.1 are essential to protect the Business and the
goodwill being acquired; and (vi) the Shareholders and their Affiliates have
the means to support themselves and their dependents other than by engaging in
a business substantially similar to the Business and the provisions of this
Section 8 will not impair such ability. The Shareholders covenant and agree as
set forth in (a), (b) and (c) below with respect to the Corporation:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating five years thereafter (the "RESTRICTED PERIOD"),
neither the Shareholders nor any of their Affiliates shall, anywhere
in the Cities of Deadwood, Whitewood, Nisland or Central City, South
Dakota; the Counties of ▇▇▇▇▇▇▇▇, Perkins, Meade, Butte, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and Custer, South Dakota, the Counties of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
and Westin, Wyoming, or ▇▇▇▇▇▇ County, Montana; where WCI or one of
its subsidiaries owns or operates a business similar to the Business
(the "RESTRICTED COUNTIES"), directly or indirectly, acting
individually or as the owner, shareholder, partner, or employee of any
entity, (i) engage in the operation of a solid waste collection,
transporting, disposal and/or composting business, transfer facility,
recycling facility, materials recovery facility or solid waste
landfill; (ii) enter the employ of, or render any personal services to
or for the benefit of, or assist in or facilitate the solicitation of
customers for, or receive remuneration in the form of salary,
commissions or otherwise from, any business engaged in such
activities; (iii) as owner or lessor of real estate or personal
property, rent to lease any facility, equipment or other assets to any
business engaged in the same business as the Corporation; or (iv)
receive or purchase a financial interest in, make a loan to, or make a
gift in support of, any such business in any capacity, including,
without limitation, as a sole proprietor, partner, shareholder,
officer, director, principal, agent, trustee or lender; provided,
however, that any of the Shareholders may own, directly or indirectly,
solely as an investment, securities of any business traded on any
national securities exchange or NASDAQ, provided none of the
Shareholders is a controlling person of, or a member of a group which
controls, such business and further provided that the Shareholders do
not, in the aggregate, directly or indirectly, own 2% or more of any
class of securities of such business.
(b) CONFIDENTIAL INFORMATION. During the Restricted
Period and thereafter, the Shareholders and their Affiliates shall
keep secret and retain in strictest confidence, and shall not use for
the benefit of themselves or others, all data and information relating
to the Business ("CONFIDENTIAL INFORMATION"), including without
limitation, know-how, trade secrets, customer lists, supplier lists,
details of contracts, pricing policies, operational methods, marketing
plans or strategies, bidding information, practices, policies or
procedures, product development techniques or plans, and technical
processes; provided, however, that the term "Confidential Information"
shall not include information that (i) is or becomes generally
available to the public other than as a result of disclosure by the
Shareholders or (ii) is general knowledge in the solid waste handling
and landfill
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business and not specifically related to the Business.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or
on behalf of the Shareholders or the Corporation or made available to
them relating to the Business, but excluding any materials (other than
the minute books of the Corporation) maintained by any attorneys for
the Corporation or the Shareholders prior to the Closing, are and
shall be the property of WCI and have been delivered or will be
delivered or made available to WCI at the Closing.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the Shareholders
and their Affiliates shall not solicit any employees of the
Corporation to leave the employ of the Corporation and join the
Shareholders or any Affiliate in any business endeavor owned or
pursued by the Shareholders.
(e) NO DISPARAGEMENT. From and after the Closing Date,
none of the Shareholders shall, in any way or to any person or entity
or governmental or regulatory body or agency, denigrate or derogate
WCI or any of its subsidiaries, or any officer, director or employee,
or any product or service or procedure of any such company whether or
not such denigrating or derogatory statements shall be true and are
based on acts or omissions which are learned by the Shareholders from
and after the date hereof or on acts or omissions which occur from and
after the date hereof, or otherwise. A statement shall be deemed
denigrating or derogatory to any person or entity if it adversely
affects the regard or esteem in which such person or entity is held by
investors, lenders or licensing, rating, or regulatory entities.
Without limiting the generality of the foregoing, none of the
Shareholders shall, directly or indirectly in any way in respect of
any such company or any such directors or officers, communicate with,
or take any action which is adverse to the position of any such
company with any person, entity or governmental or regulatory body or
agency who or which has dealings or prospective dealings with any such
company or jurisdiction or prospective jurisdiction over any such
company. This paragraph does not apply to the extent that testimony
is required by legal process, provided that WCI has received not less
than five days' prior written notice of such proposed testimony.
8.2 RIGHTS AND REMEDIES UPON BREACH. If any of the Shareholders
or any Affiliate breaches, or threatens to commit a breach of, any of the
provisions of Section 8.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have
the following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to WCI
at law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive
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Covenants specifically enforced by any court of competent jurisdiction,
it being agreed that any breach or threatened breach of the Restrictive
Covenants would cause irreparable injury to WCI and that money damages
would not provide an adequate remedy to WCI. Accordingly, in addition
to any other rights or remedies, WCI shall be entitled to injunctive
relief to enforce the terms of the Restrictive Covenants and to
restrain the Shareholders from any violation thereof.
(b) ACCOUNTING. The right and remedy to require the
Shareholders to account for and pay over to WCI all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Shareholders as the result of any transactions
constituting a breach of the Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholders
acknowledge and agree that the Restrictive Covenants are reasonable
and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect, without regard to the invalid
portions.
(d) BLUE-PENCILING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall reduce the duration or scope of such provision, as the
case may be, to the extent necessary to render it enforceable and, in
its reduced form, such provision shall then be enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI and the
Shareholders intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographic scope of the Restrictive Covenants. If the courts of any
one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of WCI and the Shareholders that such determination
not bar or in any way affect WCI's right to the relief provided above
in the courts of any other jurisdiction within the geographic scope of
the Restrictive Covenants as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
9. GENERAL
9.1 ADDITIONAL CONVEYANCES. Following the Closing, the
Shareholders and WCI shall each deliver or cause to be delivered at such times
and places as shall be reasonably agreed upon such additional instruments as
WCI or the Shareholders may reasonably request for the purpose of carrying out
this Agreement. The Shareholders will cooperate with WCI and/or the
Corporation on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings or
disputes of any nature with
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respect to matters pertaining to all periods prior to the date of this
Agreement.
9.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI
and the heirs, legal representatives or assigns of the Shareholders; provided,
however, that any such assignment shall be subject to the terms of this
Agreement and shall not relieve the assignor of its or his responsibilities
under this Agreement.
9.3 PUBLIC ANNOUNCEMENTS. Except as required by law, no party
shall make any public announcement or filing with respect to the transactions
provided for herein prior to the Closing Date without the prior consent of the
other parties hereto.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.5 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage prepaid registered or certified U.S.
mail, return receipt requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given hereunder, and shall
be effective upon personal delivery or facsimile transmission thereof or upon
delivery by registered or certified U.S. mail or one business day following
deposit with an air courier service:
If to the Shareholders: at their respective addresses set forth on
Schedule 3.2
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Law Offices
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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9.6 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporation or the Shareholders on the
other hand relating to the interpretation of this Agreement or to the
transactions contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and expenses incurred
by the prevailing party. Such award shall include post-judgment attorney's
fees and costs.
9.7 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of South Dakota without
regard to its conflict of laws provisions.
9.8 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the
Shareholders, any such fees, expenses and disbursements paid or accrued by, or
charged to, the Corporation).
9.9 INCORPORATION BY REFERENCE. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
9.10 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.11 NUMBER AND GENDER OF WORDS; CORPORATION. Whenever the
singular number is used herein, the same shall include the plural where
appropriate, and shall apply to all of such number, and to each of them,
jointly and severally, and words of any gender shall include each other gender
where appropriate.
9.12 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, the
Shareholders and WCI and supersedes any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be
modified or amended only by a written instrument executed by the Corporation,
the Shareholders (or the Shareholders' Representative on their behalf) and WCI
acting through its officers, thereunto duly authorized by its Board of
Directors.
9.13 WAIVER. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
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9.14 CONSTRUCTION. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Unless expressly set forth otherwise, all
references herein to a "day" are deemed to be a reference to a calendar day.
All references to "BUSINESS DAY" mean any day of the year other than a
Saturday, Sunday or a public or bank holiday in South Dakota or California.
Unless expressly stated otherwise, cross-references herein refer to provisions
within this Agreement and are not references to the overall transaction or to
any other document.
10. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Act Section 1.6
Affiliate Section 3.11
Balance Sheet Date Section 3.7
Business Section 8.1
Business Day Section 9.14
Claim Section 7.3
Claims Notice Section 7.3(a)
▇▇▇▇▇ Parties
▇▇▇▇▇ Note Section 1.2(d)
Closing Section 2
Closing Date Section 2
Closing Date Debt Section 3.22(a)
Closing Date Current Assets Section 3.22(b)
Closing Date Current Liabilities Section 3.22(b)
Collection Franchises Section 3.10(a)
Confidential Information Section 8.1(b)
Corporate Property Section 3.12(b)
Corporation Parties
Corporation Debt Section 1.2(c)
Corporation's Stock Second Recital
Environmental Laws Section 3.24
Environmental Site Section 7.1(b)
Environmental Site Losses Section 7.1
Environmental Site Losses Section 7.1(b)
ERISA Section 3.17(a)
Excluded Assets Section 1.5
Facility Section 3.10(c)
Facilities Section 3.10(c)
Facility Property Section 3.10(c)(iii)
Facility Surveys/Site Plans Section 3.10(c)(iii)
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41
Financial Statements Section 3.7
General Deductible Amount Section 7.2(a)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24(e)
Hazardous Waste Section 3.24(e)
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42
Indemnifying Party Section 7.3(a)
7.1 Indemnity Events Section 7.1
IPO Section 1.6
IPO Price Section 1.6
Knowledge Section 3.36
Laws Section 3.24
Lease Fourth Recital
Lessor Fourth Recital
Permitted Liens Section 3.12(c)
Purchase Price Section 1.1
RCRA Section 3.24(a)
Recipient Section 3.17(c)
Records, Notifications and Reports Section 3.10(b)
Release Section 7.1(b)
Representations and Warranties Section 7.4
Restricted Counties Section 8.1(a)
Restricted Period Section 8.1(a)
Restrictive Covenants Section 8.2
Required Governmental Consents Section 3.10(a)
SEC Section 3.38(g)
Shareholder Debt Section 1.2(e)
Shareholder Note Section 1.2(c)
Shareholders Parties
Shares Section 1.2(b)
UST Section 3.26
WCI Indemnitees Section 7.1
WCI Parties
WCI Stock Section 1.2(b)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
THE CORPORATION: ▇▇▇▇▇▇' SANITATION, INC.
By: ____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
WCI: WASTE CONNECTIONS, INC.
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
THE SHAREHOLDERS:
________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
----
1. PURCHASE OF CORPORATION'S STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Shares to be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Price Protection for Shares of the WCI Stock . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Allocation of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. CLOSING TIME AND PLACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDERS . . . . . . . . . . . . . . 3
3.1 Organization, Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 All Stock Being Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Authority for Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 No Breach or Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.9 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Certain Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Fixed Assets and Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Acquisition/Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Contracts and Agreements; Adverse Restrictions . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.16 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Benefit Plans and Union Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Copies Complete; Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables . . . . . . . . . . . . . . . . . . 13
3.21 No Change With Respect to the Corporation . . . . . . . . . . . . . . . . . . . . . . . . 13
3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current Liabilities . . . 15
3.23 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.25 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.26 Underground Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.27 Patents, Trademarks, Trade Names, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.28 Assets, etc., Necessary to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Page
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3.29 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.30 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.31 Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.32 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.33 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.34 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.35 Accurate and Complete Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.36 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.37 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.38 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4. REPRESENTATIONS AND WARRANTIES OF WCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 No Contractual Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Status of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 WCI Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Shareholders Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . 24
6.1 Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Release of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Brokers and Finders Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Short Year Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Shareholders' Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 General Release by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10 Continuing Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Indemnity by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Limitations on Shareholders' Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Notice of Indemnity Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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7.4 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . 31
7.5 No Exhaustion of Remedies or Subrogation; Right of Set Off . . . . . . . . . . . . . . . . 31
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI . . . . . . . . . . . . . . . . . . . . . 31
8.1 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Rights and Remedies Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Additional Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.8 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.9 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.11 Number and Gender of Words; Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.13 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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