Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WASTE INDUSTRIES, INC.,
TWS MERGER CORPORATION,
TRANS WASTE SERVICES, INC.,
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇,
MML LIMITED PARTNERSHIP,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DATED AS OF
September 9, 1998
TABLE OF CONTENTS
Page No.
ARTICLE I THE MERGER.........................................................2
1.1 Merger.................................................................2
1.2 Closing................................................................2
1.3 Effect of the Merger...................................................2
1.4 Tax-Free Reorganization................................................3
1.5 Further Actions........................................................3
ARTICLE II CONSIDERATION; EFFECT OF MERGER; EXCHANGE OF CERTIFICATES........3
2.1 Consideration..........................................................3
2.2 Surrender of Trans Waste Common Stock Certificates
and Delivery of Waste Industries Common Stock..........................5
2.3 Restricted Securities..................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................6
3.1 Corporate Existence, Good Standing and Authority.......................7
3.2 Capitalization.........................................................7
3.3 Assets.................................................................8
3.4 Subsidiaries...........................................................8
3.5 Financial Statements...................................................9
3.6 Average Monthly Service Revenue........................................9
3.7 Absence of Certain Changes.............................................9
3.8 Real Property.........................................................10
3.9 Inventories...........................................................11
3.10 Accounts Receivable.................................................11
3.11 Indebtedness and Payables...........................................11
3.12 Litigation..........................................................11
3.13 Compliance with Law.................................................11
3.14 No Breach...........................................................12
3.15 Employee Contracts and Benefits.....................................12
3.16 Insurance...........................................................13
3.17 Contracts and Permits...............................................14
3.18 Charter Documents...................................................15
3.19 Directors, Officers, and Employees..................................16
3.20 Powers of Attorney; Bank Accounts...................................16
3.21 Environmental Matters...............................................16
3.22 Affiliate Relationships.............................................17
3.23 Intangible Property.................................................18
3.24 Employee Agreements.................................................18
3.25 Financial Advisors, Brokers or Finders..............................18
3.26 Taxes...............................................................19
3.27 Absence of Certain Business Practices...............................19
3.28 Absence of Undisclosed Liabilities..................................20
3.29 Disclosure Complete.................................................20
ARTICLE III-A GENERAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS....20
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................21
4.1 Organization; Authority...............................................21
4.2 Validity of Agreement.................................................22
4.3 Effect of Agreement...................................................22
4.4 Issuance of Waste Industries Common Stock.............................22
4.5 Disclosure Complete...................................................22
4.6 Litigation............................................................23
4.7 No Breach.............................................................23
4.8 Financial Advisors, Brokers or Finders................................23
4.9 Securities Laws.......................................................23
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO THE MERGER....................24
5.1 Conduct of Business of Trans Waste....................................24
5.2 Access to Information.................................................26
5.3 Exclusivity; Acquisition Proposals....................................26
5.4 Breach of Representations and Warranties..............................27
5.5 Consents..............................................................27
5.6 Legal Conditions to the Merger........................................27
5.7 Preparation of Financial Statements...................................28
5.8 Commercially Reasonable Efforts.......................................28
ARTICLE VI CONDITIONS PRECEDENT............................................28
6.1 Conditions to Each Party's Obligation to Effect the Merger............28
6.2 Conditions to Obligation of Waste Industries and Subsidiary...........29
6.3 Conditions to Obligations of Transwaste...............................30
ARTICLE VII ADDITIONAL AGREEMENTS...........................................31
7.1 Termination...........................................................31
7.2 Fees and Expenses.....................................................32
7.3 Fairness Hearing......................................................32
7.4 Public Announcements..................................................33
7.5 Employment............................................................33
7.6 Transition............................................................33
7.7 Release and Acknowledgment by the Shareholders........................34
7.8 1997 Year-to-Date Financial Statements; 1997 Audited Financial
Statements............................................................34
7.9 Transition Services..................................................34
7.10 Termination of Insurance............................................34
7.11 Coffee County Landfill..............................................34
7.12 Accrued Income Taxes................................................36
ARTICLE VIII INDEMNIFICATION...............................................36
8.1 Indemnity by Cannon, Taylor and the Shareholders......................36
8.2 Indemnity by Waste Industries.........................................37
8.3 General...............................................................38
8.4 Notice of Indemnity Claim.............................................38
8.5 Waiver of Contribution................................................39
8.6 Limit to Indemnification..............................................39
8.7 Threshold for Indemnification.........................................39
ARTICLE IX HOLDBACK AMOUNT................................................39
9.1 Purpose...............................................................39
9.2 Adjustment............................................................40
9.3 Voting and Dividends..................................................43
9.4 Termination of Holdback...............................................43
9.5 Escrow Agreement......................................................43
ARTICLE X GENERAL PROVISIONS..............................................44
10.1 Survival of Representations, Warranties and Agreements..............44
10.2 Amendment...........................................................44
10.3 Extension; Waiver...................................................44
10.4 Notices and Consents................................................44
10.5 Nondisclosure.......................................................46
10.6 Interpretation......................................................46
10.7 Counterparts........................................................46
10.8 Entire Agreement....................................................46
10.9 No Transfer.........................................................47
10.10 Severability........................................................47
10.11 Other Remedies......................................................47
10.12 Further Assurances..................................................47
10.13 Absence of Third-Party Beneficiary Rights...........................47
10.14 Rules of Construction...............................................48
10.15 Governing Law.......................................................48
10.16 Resolution of Disputes..............................................48
EXHIBITS
Exhibit A Articles of Merger
Exhibit B-1 Form of Noncompetition Agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit B-2 Form of Noncompetition Agreement for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and each MML Limited Partnership partner
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Employment Agreement
Exhibit E Escrow Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of September
9, 1998, among Waste Industries, Inc., a North Carolina corporation ("Waste
Industries"), TWS Merger Corporation, a Georgia corporation and a wholly-owned
subsidiary of Waste Industries ("Subsidiary"), Trans Waste Services, Inc., a
Georgia corporation ("Trans Waste"), the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ (the "▇▇▇") and
MML Limited Partnership, a Georgia limited partnership ("MML"), as the sole
shareholders of Trans Waste (together, the "Shareholders"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, an individual and beneficiary of the ▇▇▇ ("▇▇▇▇▇▇"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, an individual and general partner of MML ("▇▇▇▇▇▇").
RECITALS
A. The Shareholders and the Board of Directors of Trans Waste, and the Boards of
Directors of Waste Industries and Subsidiary, believe it is in the best
interests of their respective corporations that Trans Waste and Subsidiary
combine into a single company through the statutory merger of Trans Waste with
and into Subsidiary (the "Merger") and, in furtherance thereof, have approved
the Merger.
B. Upon the Merger, among other things, the outstanding shares of Trans Waste's
common stock will be exchanged for the right to receive cash and shares of Waste
Industries' common stock as set forth herein.
C. Trans Waste, Waste Industries, Subsidiary, the Shareholders, ▇▇▇▇▇▇, as the
beneficiary of the ▇▇▇ and as President of Trans Waste, and ▇▇▇▇▇▇, as the
general partner of MML and Secretary and Treasurer of Trans Waste, desire to
make certain representations and warranties and other agreements in connection
with the Merger.
D. The parties intend to effect the transactions in such a manner that the
Merger will constitute a tax-free reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended
(the "Code"), whereby the Shareholders will receive cash and shares of Waste
Industries' stock and the stock of Trans Waste will be cancelled.
E. In conjunction with the Merger, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ will enter noncompetition
agreements and other agreements or arrangements as set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the recitals and mutual covenants and
agreements contained herein, Waste Industries, Subsidiary, Trans Waste, the
Shareholders, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 Merger
Upon the terms and subject to the conditions hereinafter set forth and in
accordance with the Georgia Business Corporation Code (the "GBCC"), on the
Closing Date (as defined below) Trans Waste will be merged with and into
Subsidiary (the "Merger") and thereupon the separate corporate existence of
Trans Waste will cease, and Subsidiary, as the Surviving Corporation (as defined
below), will continue to exist under and be governed by the GBCC.
1.2 Closing
The closing of the Merger (the "Closing") will take place at Chorey,
Taylor & ▇▇▇▇, P.C., The Lenox Building, Suite 1700, 3399 Peachtree Road, N.E.,
Atlanta, Georgia, as promptly as practicable, but in no event later than October
31, 1998, after satisfaction or waiver of the conditions set forth in Article
VI, or at such other location, time or date as may be agreed to in writing by
the parties hereto. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
If all the conditions to the Merger set forth in Article VI will have been
satisfied or waived in accordance herewith and this Agreement will not have been
terminated as provided herein, the parties hereto will cause Articles of Merger
meeting the requirements of the GBCC, substantially in the form attached hereto
as Exhibit A (the "Articles of Merger"), to be properly executed and filed in
accordance with the GBCC on the Closing Date. The parties intend that the
Articles of Merger -- and thereby the Merger -- shall be effective upon filing
on and as of the Closing Date; hence all references to the Closing Date herein
shall mean the effective time of the Merger under the GBCC.
1.3 Effect of the Merger
Upon the terms and subject to the conditions of this Agreement, upon the
Merger (i) the separate corporate existence of Trans Waste will cease and Trans
Waste will be merged with and into Subsidiary (Subsidiary after the Merger is
sometimes referred to herein as the "Surviving Corporation"), (ii) the articles
of incorporation of Subsidiary will be the articles of incorporation of the
Surviving Corporation, (iii) the bylaws of Subsidiary will be the bylaws of the
Surviving Corporation, (iv) the directors of Subsidiary will be the directors of
the Surviving Corporation and the officers of the Surviving Corporation will be
appointed by the directors of the Surviving Corporation, (v) all the property,
rights, privileges, powers and franchises of Trans Waste and Subsidiary will
vest in the Surviving Corporation and all debts, liabilities and duties of Trans
Waste and Subsidiary will become the debts, liabilities and duties of the
Surviving Corporation, (vi) the name of the Surviving Corporation shall be
"Trans Waste Services, Inc.", and (vii) the Merger will have all the effects
provided by applicable law.
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1.4 Tax-Free Reorganization
The parties intend that, for federal income tax purposes, the Merger will
constitute a tax-free reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Code, except to the extent of any "boot" received, and
the parties will not take any actions that disqualify the Merger for such
treatment.
1.5 Further Actions
If, at any time after the Closing Date, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Trans Waste and Subsidiary, the
officers and directors of Trans Waste and Subsidiary are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
ARTICLE II
CONSIDERATION; EFFECT OF MERGER; EXCHANGE OF CERTIFICATES
2.1 Consideration
At the Closing, in consideration for the Merger and subject to the terms
and conditions of this Agreement, Waste Industries will pay to the Shareholders
at the Closing:
(a) Equity Consideration. Waste Industries will issue to the Shareholders
the number of shares of its common stock (the "Waste Industries Common Stock")
equal to the quotient of Fourteen Million Seven Hundred Thousand Dollars
($14,700,000) divided by the Closing Price, as defined in Schedule 2.1(a);
provided, however, that the number of shares of Waste Industries Common Stock
equal to One Million Twenty Nine Thousand Dollars ($1,029,000) divided by the
Closing Price (the "Equity Holdback Amount") will be held back pursuant to
Article IX. The number of shares of Waste Industries Common Stock issued to the
Shareholders pursuant to this Section 2.1(a) and the Equity Holdback Amount, as
adjusted pursuant to this Agreement, will hereinafter be referred to as the
"Equity Consideration". The Equity Consideration shall be divided between the
Shareholders based on their respective ownership interests in Trans Waste at
Closing.
(b) Cash Consideration. In addition, Subsidiary will pay to the
Shareholders, based on their respective ownership interests in Trans Waste at
Closing, Ten Million Dollars ($10,000,000) plus:
(i) an amount equal to all cash on hand, bank balances, money
market accounts, certificates of deposit and other liquid assets of Trans Waste
as of close of business on August 31, 1998 (collectively, the "Cash"); plus
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(ii) an amount equal to the face value of the accounts receivable
of Trans Waste as of close of business on August 31, 1998 (the "Accounts
Receivable"); plus
(iii) Trans Waste's proportionate share of its prepaid expenses set
forth on Schedule 2.1(b)(iii), determined as of close of business on August 31,
1998, based on a 365-day year; plus
(iv) an amount equal to the cost of assets purchased by Trans Waste
to pursue the "roll off" business as reflected on Schedule 2.1(b)(iv); plus
(v) an amount equal to the purchase price for the Optioned Acres
adjoining the New Coffee County Landfill site pursuant to Section 7.11, hereof,
if purchased by Trans Waste prior to Closing; plus
(vi) an amount equal to Trans Waste's legal fees and costs paid for
preparation of the HSR Filing (as defined below), as set forth on Schedule
2.1(b)(vi), less
(vii) an amount equal to (A) any prepayments received by Trans Waste
on or prior to August 31, 1998 for services to be performed after the Closing
Date, (B) Trans Waste's share of all unpaid 1998 personal property and ad
valorem taxes with respect to the Assets, prorated between Trans Waste and the
Surviving Corporation as of close of business on August 31, 1998 based on a
365-day year; (C) Balance Sheet Liabilities outstanding as of close of business
on August 31, 1998, as set forth on Schedule 2.1(b)(vii), (D) Trans Waste's
share of the Fairness Hearing costs pursuant to Section 7.3 hereof, and (E) the
Cash Holdback Amount (as defined below);
in cash payable by certified check or wire transfer of funds (the "Cash
Payment"). Seven Hundred Thousand Dollars ($700,000) (the "Cash Holdback
Amount"), plus an amount estimated by Trans Waste to be equal to all accrued and
unpaid federal and state income taxes arising out of Trans Waste's operations
through August 31, 1998, as set forth on the Schedule 2.1(b)(vii) (the "Tax
Holdback Amount"), will be held back pursuant to Article IX. The amounts
represented by Sections 2.1(b)(i) - (vii) shall be calculated and paid at
Closing per a statement of such amounts and calculations prepared by Trans Waste
as of July 31, 1998 (the "July 31, 1998 Adjustment Statement"), which shall be
delivered to Waste Industries prior to Closing. Following Closing, the
Shareholders, at their expense, shall cause there to be prepared a statement of
amounts represented by Section 2.1(b)(i) - (vii) and calculations as of August
31, 1998, and a statement of all nonrecurring expenses of Trans Waste arising
from the transactions contemplated herein (e.g., Trans Waste's attorneys' and
accountants' fees and costs, et cetera) that have not been paid or accrued by
Trans Waste by August 31, 1998, which will be accrued as of August 31, 1998 and
deemed to be a Balance Sheet Liability for purposes of Section 2.1(b)(vii)
(together, the "Closing Adjustment Statement"). The Closing Adjustment Statement
will be reviewed by Waste Industries and the Surviving Corporation pursuant to
Section 9.2(f) within one hundred twenty (120) days after Closing and any
deficits in the amounts paid by Waste Industries and the Subsidiary at Closing
pursuant to the July 31, 1998 Adjustment Statement shall be promptly paid to the
Shareholders by Waste Industries and any surplus paid by Waste Industries or the
Subsidiary at Closing pursuant thereto shall be deducted from the Holdback
Amount. The Cash
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Payment and the Cash Holdback Amount, as adjusted pursuant to this Agreement,
will hereinafter be referred to together as the "Cash Consideration".
The term "Balance Sheet Liabilities" as used herein shall mean the liabilities
of Trans Waste existing on the Closing Date, which are of the same nature as
those which appear on Trans Waste's March 31, 1998 balance sheet which has
previously been provided by Trans Waste to Waste Industries. Trans Waste shall
use commercially reasonable efforts to pay off its Balance Sheet Liabilities on
or before the Closing.
(c) Fractional Shares. No fraction of a share of Waste Industries Common
Stock will be issued by virtue of the Merger, but in lieu thereof the
Shareholders who would otherwise be entitled to a fraction of a share of Waste
Industries Common Stock pursuant to the Merger (after aggregating all fractional
shares of Waste Industries Common Stock to be received by such holders) will
receive at Closing from Waste Industries an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the Closing Price.
(d) Securities Laws. The parties acknowledge and agree that the Waste
Industries Common Stock and the transaction contemplated under this Agreement
are and will be subject to applicable federal and state securities laws and
regulations.
(e) Capital Stock of Subsidiary. The Merger will effect no change in any
of the shares of capital stock of Subsidiary which will continue to be issued
and outstanding and will not be converted as a result of the Merger. Each stock
certificate of Subsidiary evidencing ownership of such certificates will
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
2.2 Surrender of Trans Waste Common Stock Certificates and Delivery of
Waste Industries Common Stock
(a) Transfer Agent. Prior to the Closing Date, Waste Industries will
appoint Continental Stock Transfer & Trust, Co. to act as the transfer agent
(the "Transfer Agent") in the Merger.
(b) Surrender of Trans Waste Stock Certificates. At the Closing, the
Shareholders will surrender all of their certificate(s) which, on the Closing
Date, will represent all of the authorized, issued and outstanding common stock
of Trans Waste (the "Trans Waste Certificates"), duly endorsed with appropriate
stock powers.
(c) Issuance of Waste Industries Common Stock Certificates. Within five
(5) business days after the Closing Date, provided that the Shareholders will
have surrendered all of their Trans Waste Certificates pursuant to Section
2.2(b), Waste Industries will deliver to the Shareholders in accordance with
this Article II, through the Transfer Agent's customary procedures, one or more
stock certificates representing the Equity Consideration less the Equity
Holdback Amount (the "Waste Industries Common Stock Certificates") and the
surrendered Trans Waste Certificates will forthwith be cancelled. Regardless of
the date of delivery of the Waste Industries Common Stock Certificates to the
5
Shareholders, the Equity Consideration will be deemed issued to the Shareholders
at Closing, subject to Article IX hereof.
2.3 Restricted Securities
The shares of Waste Industries Common Stock issued in connection with the
Merger will be "restricted securities" as defined under the Securities Act of
1933, as amended (the " 1933 Act"), and Rule 144 promulgated thereunder and may
only be sold or otherwise transferred pursuant to an effective registration
statement under the 1933 Act or an exemption from the registration requirements
of the 1933 Act, or unless a favorable order is issued in connection with a
"fairness hearing" held pursuant to Section 3(a)(10) of the 1933 Act. It is
understood that the certificates evidencing the shares of Waste Industries
Common Stock issued in connection with the Merger will bear the following
legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
Notwithstanding anything to the contrary herein, Waste Industries will remove
all restrictive securities law legends from certificates evidencing the shares
of Waste Industries Common Stock issued in connection with the Merger during any
period in which the resale of such shares is covered by an effective
registration statement under the 1933 Act. The Shareholders agree that any
resale of their Waste Industries Common Stock will be effected through one of
Waste Industries' market makers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS REGARDING TRANS WASTE
Subject to the disclosure schedules that have been delivered to Waste
Industries, initialed and attached hereto (the "Trans Waste Disclosure
Schedules"), each of the Shareholders and ▇▇▇▇▇▇ and ▇▇▇▇▇▇, jointly and
severally, represent and warrant to Waste Industries and Subsidiary as set forth
below. The following representations and warranties will be deemed given as of
the Closing Date. As used in this Agreement, the terms "knowledge", "best of
knowledge" or similar phrases refer to the actual knowledge of Cannon, Taylor,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇ (each, a "Key Person"), with respect
to the matter in question, unless otherwise noted herein.
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3.1 Corporate Existence, Good Standing and Authority
Trans Waste is a corporation duly organized, validly existing and in good
standing under the laws of Georgia. Trans Waste is a "C corporation" under
Subchapter C of the Code. Trans Waste has full corporate power and authority to
carry on its businesses as now being conducted and is entitled to own, lease, or
operate the property and assets now owned, leased, or operated by it and has no
offices outside of the State of Georgia. Trans Waste is qualified to do
business, is in good standing and, to the knowledge of each Key Person, has all
required and appropriate licenses in each jurisdiction in which failure to
obtain or maintain such qualification, good standing, or licensing (i) would,
individually or in the aggregate, have or reasonably could be expected to have a
material adverse effect on the assets, liabilities, business, financial
condition, results of operations, or prospects (a "Material Adverse Effect") of
Trans Waste taken as a whole or (ii) would result in a material breach of any of
the other representations, warranties, or covenants set forth in this Agreement.
Trans Waste has all requisite corporate power and authority to enter into this
Agreement and all agreements and other documents to be entered into in
connection herewith and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate actions of Trans Waste. This Agreement has been duly executed and
delivered by Trans Waste and constitutes the valid and binding obligation of
Trans Waste, enforceable in accordance with its terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors, and rules of law governing specific performance, injunctive relief,
or other equitable remedies.
To each Key Person's knowledge, except as set forth on Schedule 3.14, no
consent, waiver, approval, order, or authorization of, or registration,
declaration, or filing with, any court, administrative agency, or commission or
other governmental authority or instrumentality ("Governmental Entity"), or any
third party, is required to be made or obtained by Trans Waste in connection
with the execution and delivery of this Agreement by Trans Waste or the
consummation by Trans Waste of the transactions contemplated hereby, except for
(i) the filing of the Articles of Merger with the Georgia Secretary of State
and, if applicable, appropriate documents with the relevant authorities of other
states in which Trans Waste is qualified to do business, (ii) approval of the
Federal Trade Commission and the U.S. Department of Justice of the Merger in
response to filing by the parties of ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Notification and Report
Forms (the "HSR Filing"), (iii) procurement of EPD Permits as required under
Section 7.11 hereof, and (iv) such other consents, authorizations, filings,
approvals and registrations that, if not obtained or made, would not have a
Material Adverse Effect on Trans Waste.
3.2 Capitalization
The authorized capital stock of Trans Waste consists of Ten Thousand
(10,000) shares of Common Stock, no par value, all of which are issued and
outstanding and owned by the Shareholders as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇....6,000 shares
MML Limited Partnership.4,000 shares
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All of the above shares of Trans Waste's Common Stock ("Trans Waste Common
Stock") are duly authorized, validly issued, fully paid and nonassessable, and
constitute all of the issued and outstanding capital stock of Trans Waste;
provided, however, that approximately three percent (3%) of the shares of Trans
Waste Common Stock shall be redeemed by Trans Waste prior to Closing (the
"Redemption Shares") as consideration for the distribution by Trans Waste to the
Shareholders of Trans Waste's ownership interest in ▇▇▇▇▇▇ Petroleum Equipment
Company, Inc., Pyramid Environmental Group, Inc., Central Georgia Waste
Services, Inc. and those assets listed on Schedule 3.7(b) hereto. Any tax
liability to Trans Waste resulting from such redemption shall be included in the
Balance Sheet Liabilities and deducted from the Cash Consideration at Closing
pursuant to Section 2.1(b)(vii) hereof. Except as reflected in the Balance Sheet
Liabilities, the redemption shall have no adverse tax effect on Waste Industries
or the Surviving Corporation. None of the Trans Waste Certificates have been
lost, stolen or destroyed and all of the Trans Waste Certificates representing
all of the Trans Waste Common Stock are available for surrender at Closing
pursuant to Section 2.2(b) hereof. Except as set forth in Schedule 3.2, there
are no options, warrants, conversion rights, rights of exchange, or other
rights, plans, agreements, or commitments of any nature whatsoever (including,
without limitation, conversion or preemptive rights) providing for the purchase
by or from Trans Waste, issuance by Trans Waste, or sale by Trans Waste of any
shares of its capital stock or any securities convertible into or exchangeable
for any shares of capital stock of Trans Waste. The Trans Waste Common Stock is
free and clear of all liens, mortgages, pledges, security interests, charges,
encumbrances, and other adverse claims or interest of any kind.
3.3 Assets
The assets of Trans Waste to be transferred to Subsidiary at the Closing
as a result of the Merger (the "Assets") will include, without limitation, those
containers, compactors, equipment, tools, vehicles, records, documents, data and
other personal property set forth on Schedule 3.3A, the Accounts Receivable set
forth on Schedule 3.10, the Contracts set forth on Schedule 3.17, and leasehold
interests set forth on Schedules 3.8A and 3.8B. Except as identified on Schedule
3.3B, Trans Waste has good and marketable title to all of its Assets, free and
clear of all liens, mortgages, pledges, security interests, conditional sales
agreements, charges, encumbrances, and other adverse claims or interest of any
kind, and except for liens for taxes not yet due and payable, and mechanics'
liens, materialmen's liens, and other liens arising by operations of law, which
liens do not in any case materially and adversely affect Trans Waste's title to
the Assets, Trans Waste's use of the Assets or the value of such Assets. Each of
the Assets will be transferred to Subsidiary at the Closing in reasonably good
and serviceable operating condition, normal wear and tear excepted. Trans
Waste's interest in the buildings, plants, structures, and equipment of Trans
Waste to be acquired by Subsidiary by means of the Merger are sufficient for the
continued conduct of Trans Waste's business after the Closing in substantially
the same manner as conducted prior to the Closing.
3.4 Subsidiaries
At Closing, Trans Waste will not own, directly or indirectly, any stock or
other interests in any other entity.
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3.5 Financial Statements
Trans Waste has delivered to Waste Industries prior to the execution of
this Agreement the consolidated balance sheets and income statements for the
periods ended September 30, 1995, 1996 and 1997 (the "Trans Waste Consolidated
Financial Statements") and the unconsolidated balance sheets and income
statements for the periods ended September 30, 1995, 1996 and 1997 and interim
statements through July 31, 1998 (the "Trans Waste Unconsolidated Financial
Statements"), copies of which are attached hereto as Schedule 3.5. (Together,
the Trans Waste Consolidated Financial Statements and the Trans Waste
Unconsolidated Financial Statements are referred to herein as the "Trans Waste
Financial Statements".) The Trans Waste Consolidated Financial Statements are
reviewed and include a review report. The Trans Waste Unconsolidated Financial
Statements have been prepared by the internal accounting staff of Trans Waste
from the books and records of Trans Waste and (a) include all normal and
recurring adjustments except that an accrual for income tax has been omitted,
(b) are in conformity with accrual basis of accounting principles, except for
income tax accruals, applied on a basis consistent with preceding years and
throughout the periods involved, and (c) present fairly the financial position
and results of operations of Trans Waste on the basis of accounting referred to
herein as of the dates of such statements and for the periods covered thereby in
all material respects. The books of account of Trans Waste have been kept
accurately in all material respects in the ordinary course of Trans Waste's
business as has normally been conducted (the "Ordinary Course of Business"), the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
3.6 Average Monthly Service Revenue
Trans Waste's combined average monthly service revenue for the months of
January, February, March and April 1998, will be at least One Million
Twenty-Three Thousand Eight Hundred Forty-Six Dollars ($1,023,846) per month
("Average Monthly Revenue").
3.7 Absence of Certain Changes
Except as set forth on Schedule 3.7, since December 31, 1997:
(a) Compensation and Benefits. There has been no increase in the
compensation or benefits paid or payable by Trans Waste, other than in the
Ordinary Course of Business, to any of its officers, directors, employees,
agents, consultants or shareholders, including any grant of severance or
termination pay to any director, officer or employee of Trans Waste, or any
deferred compensation or similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of Trans Waste.
(b) Dividends and Distributions. There has been no declaration, setting
aside or payment of dividends or distributions in respect of the capital stock
of Trans Waste, any split-up or other recapitalization in respect of the capital
stock of Trans Waste, except (i) dividends declared and paid prior to the
Closing Date to the Shareholders, and (ii) certain assets to be retained by, or
sold at fair market value to, the Shareholders as listed on Schedule 3.7(b).
9
(c) Material Adverse Effect. There has been no Material Adverse
Effect on Trans Waste.
(d) Capital Stock. There has been no issuance, transfer, sale, or pledge
by Trans Waste of any shares of its capital stock or other securities or any
commitment, option, right, or privilege under which Trans Waste is or may become
obligated to issue any shares of its capital stock or other securities.
(e) Loans. No loan has been made or agreed to be made by Trans Waste
other than in the Ordinary Course of Business, nor has Trans Waste become liable
or agreed to become liable as a guarantor with respect to any loan or other
indebtedness of Trans Waste, Cannon, Taylor or either of the Shareholders, or
any third party.
(f) Waiver of Rights. To each Key Person's knowledge, Trans Waste has
not waived or compromised any right of material value or any payment, direct or
indirect, of any material debt, liability, or other obligation.
(g) Accounting. Trans Waste has not changed any of its accounting
methods, practices, or policies (including any change in revenue recognition,
depreciation or amortization policies or rates) or revalued any of its assets.
(h) Intangible Assets. There has been no sale, assignment, or transfer
of, or royalty arrangement with respect to any of Trans Waste's trade names,
trade marks, service marks or logos of material value.
(i) Property Transactions. Other than in the Ordinary Course of
Business, there has been no sale, lease or disposition of, any property or
asset, tangible or intangible, of Trans Waste.
(j) Amendments. There has been no change in or amendment to the
articles or bylaws of Trans Waste, except as contemplated by this Agreement.
(k) Commitments. There has been no agreement or commitment by Trans
Waste, Cannon, Taylor or either of the Shareholders to do any of the things
described in this Section 3.7.
(l) Employees. There has been no resignation or termination of
employment of any key officer or employee of Trans Waste or, to the knowledge of
any Key Person, any impending resignation or termination of employment of any
such officer or employee.
3.8 Real Property
Except as set forth on Schedule 3.8A, Trans Waste does not own any real
property or improvements. Set forth on Schedule 3.8B is a description of all
leases (written or oral) of all real property leased or used by Trans Waste (the
"Real Property"), or any portion thereof. The New Coffee County Landfill, if
permitted by applicable Governmental Entities and constructed as set forth under
Section 7.11 hereof, will have the waste disposal volume availability indicated
in the
10
Trans Waste Services, Inc. Financial Projections Fiscal Years Ending September
30, 1998 - 2002, previously delivered to Waste Industries (the "Trans Waste Pro
Forma").
3.9 Inventories
All inventory of Trans Waste consists, and at the Closing Date will
consist, solely of inventory of the kind, quality and quantity regularly and
currently used in its business.
3.10 Accounts Receivable
Schedule 3.10 contains (i) a complete and accurate list of Trans Waste's
accounts and notes receivable as of the date indicated thereon, which Schedule
will be updated as of the Closing Date, and (ii) a complete and accurate
schedule showing the aging of such accounts and notes receivable (other than
loans by Trans Waste to its employees, which are set forth on Schedule 3.7).
Such accounts and notes receivable arose in bona fide arm's-length transactions
in the normal course of business, and are valid and binding obligations of the
account debtors without, to each Key Person's knowledge, counterclaims, setoffs,
or other defenses thereto, and are collectible in the Ordinary Course of
Business. The values at which accounts and notes receivable are carried on Trans
Waste's books and records reflect the receivables valuation policy of Trans
Waste, which is consistent with its past practice.
3.11 Indebtedness and Payables
Schedule 3.11 lists every contract, agreement, franchise, mortgage,
indenture, bond, security agreement, or other instrument under or pursuant to
which Trans Waste has outstanding indebtedness for borrowed money or the
extension of credit, or any payables or accrued expenses, including all
interest, fees and penalties payable thereunder.
3.12 Litigation
Except as provided for on Schedule 3.12 attached hereto, no investigation,
claim, litigation, arbitration or other proceeding is pending or, to each Key
Person's knowledge, threatened by or against Trans Waste, its properties or
assets, the Trans Waste Common Stock or the officers or directors of Trans Waste
before any court or government agency, and to each Key Person's knowledge, no
facts exist that could reasonably be expected to result in any such litigation,
arbitration, or proceeding.
3.13 Compliance with Law
To the best of each Key Person's knowledge, Trans Waste is not in
violation of, or the subject of any investigation for violation of, any laws,
regulations, or administrative orders applicable to its business. To each Key
Person's knowledge, there is no judgment, writ, decree, injunction, rule, or
order of any court, governmental department, commission, agency,
instrumentality, or arbitrator outstanding against Trans Waste, its properties
or assets, or the Trans Waste Common Stock, or that would prevent, enjoin, alter
or delay any of the transactions contemplated by this Agreement or which would
have the effect of prohibiting or materially impairing any current or future
business practice of
11
Trans Waste, any acquisition of property of Trans Waste, or the conduct of
business by Trans Waste as currently conducted.
3.14 No Breach
Except as set forth on Schedule 3.14, subject to the satisfaction of the
conditions set forth in Article VI, the consummation of the transactions
contemplated hereby will not result in or constitute any of the following: (i) a
conflict with, violation or default of, or an event that, with notice or lapse
of time or both, would be a default, breach, or violation of, the articles or
bylaws of Trans Waste, any Permits (as defined below) or any Contract (as
defined below); (ii) an event that would permit any party to terminate any
material Contract or to accelerate the maturity of or permit the subordination
of any indebtedness or other material obligation of Trans Waste; (iii) the
creation or imposition of any material lien, charge, or encumbrance on any of
the assets of Trans Waste or the Trans Waste Common Stock; or (iv) a conflict
with, or a violation or breach of, any material law, rule, or regulation of any
Governmental Entity, or any judgment, order, injunction, or decree applicable to
Trans Waste, its assets or the Trans Waste Common Stock.
3.15 Employee Contracts and Benefits
(a) Except as set forth on Schedule 3.15, Trans Waste is not a party to
or bound by any employment, consulting or severance agreement, or any profit
sharing, stock option, stock purchase or stock appreciation plan. Trans Waste is
not a party to or bound by any collective bargaining agreement nor is Trans
Waste involved in any labor discussion with any unit or group seeking to become
the bargaining unit for any of Trans Waste's employees, nor is any Key Person
aware of any intention by any such unit or group to commence any organizational
activities among Trans Waste's employees. Trans Waste has previously provided
Waste Industries copies of (i) each written (and a written summary thereof if
unwritten) deferred compensation, bonus, pension, and any other employee benefit
plan, contract, agreement, or other arrangement providing for compensation or
other benefits to employees (including officers) or independent contractors,
individually or as a group, to which Trans Waste is a party or by which it is
bound; (ii) each "employee pension benefit plan," as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974 ("ERISA") maintained by
Trans Waste or to which Trans Waste contributes or is required to contribute,
including any multiemployer pension plan; (iii) each "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, maintained by Trans Waste or to
which Trans Waste contributes or is required to contribute, including any
multiemployer welfare plan, and each other plan under which "fringe benefits"
(including, without limitation, vacation plans or programs, severance benefits,
supplemental retirement, sabbatical, sick leave plans or programs, dental,
vision, or medical plans or programs, disability, employee relocation, cafeteria
benefit (Code Section 125) or dependent care (Code Section 129), life insurance
or accident insurance plans, programs or arrangements, and related or similar
benefits) are afforded to employees of, or otherwise required to be provided by,
Trans Waste and (iv) other fringe or employee benefit plans, programs, or
arrangements.
(b) With respect to each benefit plan that is subject to Title IV of
ERISA, to each Key Person's knowledge there is no unfunded accrued liability,
all minimum funding standards have been satisfied, and all insurance premiums
payable with respect to periods up to and including the Closing
12
Date have been or will be timely paid by Trans Waste; and no material amount is,
and as of the Closing Date no amount will be, due or owing from Trans Waste to
any "multiemployer plan" (as defined in Section 3(37) of ERISA) on account of
any withdrawal therefrom. There has been no prohibited transaction as described
in Section 406 of ERISA and Section 4975 of the Code with respect to any
employee benefit plan maintained by Trans Waste. Each Trans Waste employee
benefit plan intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service (the
"IRS") stating that it is so qualified and to each Key Person's knowledge,
nothing has occurred since the date of the letter that could reasonably be
expected to affect the qualified status of such plan. No employee benefit plan
provides medical benefits to any former employees (including retirees) of Trans
Waste, other than benefits required to be provided under applicable law,
including Section 4980B of the Code. With respect to each employee benefit plan,
Trans Waste has complied in all material respects with (i) the applicable health
care continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the proposed regulations thereunder and
(ii) the applicable requirements of the Family Leave Act of 1993 and the
regulations thereunder.
(c) Trans Waste has complied in all material respects with all
applicable laws, rules, and regulations relating to employment, including those
relating to wages, hours, collective bargaining, discrimination in employment,
terms and conditions of employment, occupational safety and health and
employment practices, unfair labor practices, and the payment and withholding of
taxes and other sums as required by appropriate governmental authorities. Except
as set forth in Schedule 3.15, all employee benefit plans, as defined in Section
3(3) of ERISA, of Trans Waste in effect at any time since Trans Waste's
inception are now, to each Key Person's knowledge, and have always been,
established, maintained, and operated in accordance, in all material respects,
with all applicable laws (including, without limitation, ERISA and the Code) and
all regulations thereunder and in accordance, in all material respects, with
their plan documents. To each Key Person's knowledge, there is no unfunded
liability for accrued benefits, whether or not vested, under any funded employee
benefit plan, and all contributions required to be made to or with respect to
each employee benefit plan and all costs of administering each employee benefit
plan have been completely and timely made or paid.
(d) Trans Waste maintains and conducts a comprehensive employee drug
testing program in accordance with federal Department of Transportation
standards.
3.16 Insurance
Set forth on Schedule 3.16 are copies of all policies of insurance of any
nature whatsoever maintained by Trans Waste pertaining to Trans Waste's
business, showing, among other things, the amount of coverage, the company
issuing the policy, and the expiration date of each policy. Such policies are in
full force and effect, and such policies, or other policies covering
substantially the same risks, have been in full force and effect continuously
for the past three (3) years. Copies of all current insurance policies of Trans
Waste have been made available to Waste Industries for inspection. Trans Waste
is not materially in default under any of such policies, and Trans Waste has not
failed to give any notice or to present any claim under any such policy in a due
and timely fashion. Set forth also on Schedule 3.16 is a list of all claims made
under such policies in the last three (3) years.
13
3.17 Contracts and Permits
Set forth on Schedule 3.17 is a complete and accurate list of:
(a) Each contract and account, whether written or oral, between Trans
Waste and any party to whom and pursuant to which Trans Waste provides or will
provide products or services which provide for the receipt by Trans Waste of
more than One Thousand Dollars ($1,000) annually;
(b) Each contract (except for real property leases, evidence of
indebtedness, and insurance contracts), whether written or oral, between Trans
Waste and any party to whom Trans Waste paid, or is obligated to pay, more than
Five Thousand Dollars ($5,000) for the twelve (12) month period ended June 30,
1998, or any subsequent twelve (12) month period;
(c) Each material permit, license, franchise, and other material
certificate or authorization issued to Trans Waste by any Governmental Entity
having jurisdiction in any area in which Trans Waste provides products or
services (a "Permit" or "Permits");
(d) Each agreement, contract, or commitment containing any covenant
limiting the freedom of Trans Waste, Cannon, Taylor or either of the
Shareholders to engage in any line of business or compete with any person;
(e) Each joint venture or partnership agreement to which Trans Waste
is involved;
(f) Each agreement, contract or commitment relating to capital
expenditures (including, without limitation, capitalized leases and plant or
equipment leases) involving future obligations of Trans Waste in excess of One
Thousand Dollars ($1,000) and not cancelable without penalty;
(g) Each agreement or plan to which Trans Waste is a party or by which
it is bound, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
(h) Each agreement of indemnification or guaranty to which Trans Waste
is a party or by which it is bound other than indemnification provisions in
Trans Waste's articles of incorporation or bylaws; and
(i) Each agreement, contract, or commitment to which Trans Waste is a
party or by which it is bound relating to the disposition or acquisition of
assets not in the Ordinary Course of Business or any ownership interest in any
corporation, partnership, joint venture, or other business enterprise.
The contracts and agreements (other than the Permits) that are required to be
identified above are hereinafter referred to as the "Contracts". True and
complete copies of each written Contract and true and complete written summaries
of each oral Contract have been made available to Waste Industries by Trans
Waste. Except as set forth in Schedule 3.17:
14
(i) Each of the Contracts is a valid, binding and enforceable
agreement of Trans Waste and will continue to be valid, binding and enforceable
after the Closing except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and rules of law governing
specific performance, injunctive relief, or other equitable remedies;
(ii) As of the date hereof, no Key Person has any reason to believe
that Trans Waste will not be able to fulfill all of its material obligations
under the Contracts that remain to be performed after the date hereof, and Trans
Waste has not been notified by any governmental or other party that such party
intends to cancel, terminate or modify any of such Contracts, and no Key Person
knows of any grounds for any such cancellation, termination, or modification;
(iii) There has not occurred any continuing material default (or
event that, upon the provision of notice or lapse of time or both, would become
a material default) under any of the Contracts on the part of Trans Waste;
(iv) The Permits are the only governmental and other permits,
licenses, franchises, and other certificates and authorizations that are
required for and are material to the operation of Trans Waste's business in the
manner conducted prior to Closing;
(v) The Permits are in full force and effect, are assignable to and
assumable by Subsidiary by operation of law and without penalty as of the
Closing Date, and the continuing validity and effectiveness of such Permits will
not be affected by the transactions contemplated by this Agreement; and
(vi) Trans Waste is in compliance in all material respects with all
material conditions or requirements of the Permits applicable thereto and has
not been notified by any Governmental Entity that such entity intends to cancel,
terminate, or modify any such Permits, and no Key Person knows of any valid
grounds for any such cancellation, termination, or modification.
Trans Waste has provided Waste Industries with true, correct and complete
copies of each Permit listed on Schedule 3.17.
3.18 Charter Documents
Trans Waste has provided to Waste Industries for its examination complete
and accurate copies of its articles and bylaws, both as amended to the date
hereof (and there will be no further amendments except as contemplated by this
Agreement); (ii) its minute books and (iii) its stock transfer books. Trans
Waste is not in violation of any term of its articles, bylaws or other
organizational documents.
15
3.19 Directors, Officers and Employees
Schedule 3.19 sets forth a true and complete list of the names and current
salaries of all directors, officers and employees of Trans Waste.
3.20 Powers of Attorney; Bank Accounts
Schedule 3.20 sets forth (i) the names and addresses of all persons
holding a power of attorney on behalf of Trans Waste and (ii) the names and
addresses of all banks or other financial institutions in which Trans Waste has
an account, deposit, or safe-deposit box, with the number and a description of
the account and the names of all persons authorized to draw on such accounts or
deposits or to have access to such boxes.
3.21 Environmental Matters
Except as set forth on Schedule 3.21:
(a) To each Key Person's knowledge, Trans Waste is not in violation of
or default under any law or regulation, or any order of any court or federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over Trans Waste.
(b) To each Key Person's knowledge, Trans Waste has, at all times,
complied in all material respects and is in compliance in all material respects
with all local, state and federal laws, statutes, ordinances, rules and
regulations dealing with the protection of the environment or public health and
safety, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act (codified as amended, 42 U.S.C. ▇▇.▇▇. 9601 et
seq.) ("CERCLA"), the Resource Conservation and Recovery Act (codified as
amended, 42 U.S.C. ▇▇.▇▇. 6901 et seq.) ("RCRA"), and equivalent Georgia laws
including, without limitation, Chapters 13 and 14 of Title 12 of the Official
Code of Georgia Annotated, as amended. (collectively, "Environmental Laws").
(c) With respect to Trans Waste's business, to each Key Person's
knowledge, Trans Waste has obtained all required local, state and federal
permits, licenses, certificates and approvals, if any, relating to: (i) air
emissions; (ii) discharges to surface water or groundwater; (iii) noise
emissions; (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or wastes
(intended hereby and hereafter to include any and all such materials listed in
any local, state or federal statute, ordinance or regulation); (vi) the use,
storage, transportation or disposal of petroleum or petroleum products; or (vii)
other environmental, health and safety matters.
(d) With respect to Trans Waste's business, Trans Waste has not caused,
suffered, permitted or sustained any emission, spill, release or discharge of
any toxic or hazardous substances or wastes, or any petroleum products, in any
reportable quantities, into or upon: (i) the air; (ii) soils or any improvements
located thereon, whether on the Real Property or elsewhere;
16
(iii) surface water or groundwater; or (iv) a sewer, septic system or waste
treatment, storage or disposal system except in accordance with applicable law
or a valid government permit, license, certificate or approval.
(e) To each Key Person's knowledge, there are no actual or potential
claims, orders, directives, citations or causes of action based on a violation
of any local, state or federal statutes, ordinances or regulations dealing with
the protection of the environment or public health and safety, including, but
not limited to, Environmental Laws or common law claims or causes of action
based upon Trans Waste's involvement with or use of any substance regulated by
local, state or federal statutes, ordinances or regulations dealing with the
protection of the environment or public health and safety.
(f) With respect to Trans Waste's business, none of the officers,
directors or shareholders (including employees responsible for environmental
matters) of Trans Waste has received oral or written notice of any actual or
potential claims, orders, directives, citations or causes of action under any
local, state or federal statutes, ordinances or regulations dealing with the
protection of the environment or public health and safety, including, but not
limited to, Environmental Laws, based upon or arising out of its actual or
alleged disposal of hazardous wastes or substances, whether on or off real
property being operated by Trans Waste.
(g) To each Key Person's knowledge, there are no conditions on any of
the Real Property which may reasonably be expected to give rise to any claim,
order, directive, citation or cause of action based on any local, state or
federal statute, ordinance or regulation dealing with protection of the
environment or public health and safety, including, but not limited to,
Environmental Laws.
(h) Set forth on Schedule 3.21(h) is a complete and accurate list of
locations (identified by address, type of facility and type of waste) to which
Trans Waste has, in connection with Trans Waste's business, transported, or
caused to be transported or arranged for any third party to transport any type
of waste material for storage, treatment, burning or disposal activities.
(i) Set forth on Schedule 3.21(i) is a complete and accurate list of
underground storage tanks owned and/or operated by Trans Waste, whether on the
Real Property or otherwise.
(j) Trans Waste has not released any person from any claim under any of
the Environmental Laws or expressly waived any rights or defenses concerning any
environmental conditions.
3.22 Affiliate Relationships
Except as set forth on Schedule 3.22, neither Trans Waste, Cannon, Taylor
nor either of the Shareholders has any material financial interest, direct or
indirect, in any supplier or service provider to, customer of, or any other
party to any contract or other arrangement that is material to Trans Waste.
Neither Trans Waste, Cannon, Taylor, any Shareholder, officer, director of Trans
Waste or partner of MML (or any spouse of any of such persons or any trust,
partnership or corporation in which any of
17
such persons has or has had a material economic interest) has or has had,
directly or indirectly, (i) an interest in any entity that furnishes or sells a
material amount of services or products that Trans Waste also furnishes or
sells, or proposes to furnish or sell, (ii) any interest in any entity that
purchases from or sells or furnishes to Trans Waste any material amount of
products or services, or (iii) a beneficial interest in any Contract, Real
Property, Intangible Property Right, or in any Asset to which Trans Waste does
not have title; provided, however, that ownership of no more than one percent
(1%) of the outstanding voting stock of a publicly traded corporation will not
be deemed an "interest in any entity" for purposes of this Section 3.22.
3.23 Intangible Property
Trans Waste owns exclusively or has sufficient rights to use all
trademarks, service marks, logos, trade names, copyrights, licenses, and rights
necessary to its business as now conducted or as currently proposed by Trans
Waste to be conducted ("Intangible Property Rights"). To each Key Person's
knowledge the Intangible Property Rights are free and clear of all liens,
charges, claims, and restrictions and Trans Waste is not infringing upon the
right or claimed right of any person under or with respect to any of the
foregoing. There are no outstanding agreements of any kind relating to the
foregoing between Trans Waste and any third party, nor is Trans Waste bound by
or a party to any agreements of any kind with respect to the trademarks, service
marks, logos, trade names, copyrights, licenses, information or proprietary
rights of any other person or entity. Trans Waste has not received any
communications alleging that it has violated or, by conducting its business as
proposed, would violate any trademark, service ▇▇▇▇, logo, trade name,
copyright, or other proprietary right of any other person or entity. To each Key
Person's knowledge, there is no infringement by any other person or entity of
any of the Intangible Property Rights. No director, shareholder, officer or
current or past employee of Trans Waste owns, directly or indirectly, in whole
or in part, any of the Intangible Property Rights.
3.24 Employee Agreements
(a) Trans Waste's employees are employed "at will", and except as
provided under Section 7.5 hereof, no person is party to any agreement, written
or oral, that provides for such person's continued or future engagement or
employment by Trans Waste or, to each Key Person's knowledge, by the Surviving
Corporation.
(b) To each Key Person's knowledge, neither the execution or the
delivery of this Agreement, the carrying on of Trans Waste's business by Trans
Waste's employees, nor the conduct of Trans Waste's business as currently
conducted, will conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, or a violation of, any fiduciary
duty, contract, covenant, or instrument under which any of such employees is now
obligated.
3.25 Financial Advisors, Brokers or Finders
Neither Trans Waste, Cannon, Taylor, nor either of the Shareholders has
incurred, or will incur, directly or indirectly, any liability for financial
advisors', brokerage or finders' fees or agents'
18
commissions or any similar charges in connection with this Agreement or the
transactions contemplated hereby.
3.26 Taxes
Except as set forth on Schedule 3.26:
All tax returns, statements, reports, and forms (including estimated tax
returns and reports and information returns and reports) required to be filed
with any taxing authority with respect to any taxable period ending on or before
August 31, 1998, by or on behalf of Trans Waste (collectively, the "Trans Waste
Returns"), have been or will be filed when due (including any extensions of such
due date), and all amounts shown due thereon on or before August 31, 1998 have
been accrued or paid, or will be paid, on or before such date. The Trans Waste
Consolidated Financial Statements (i) make adequate provision for all actual and
contingent liabilities for taxes with respect to all periods through July 31,
1998, and Trans Waste has not and will not incur any material tax liability in
excess of the amount reflected on the Trans Waste Financial Statements with
respect to such periods (or if it does incur such liability, it has adequate
reserves to cover such liability) and (ii) properly accrue in accordance with
income tax accounting principles all liabilities for taxes payable after January
1, 1994, with respect to all transactions and events occurring on or prior to
such date. No material tax liability since January 1, 1994, has been incurred
other than in the Ordinary Course of Business, and adequate provision has been
made for all taxes since that date in accordance with income tax accounting
principles on at least a quarterly basis. Trans Waste has withheld and paid to
the applicable financial institution or taxing authority all amounts required to
be withheld. The applicable period for assessment under applicable law for each
Trans Waste Return filed with respect to taxable years up through the taxable
year ended September 30, 1994, has expired, after giving effect to extensions or
waivers. No audit or examination is currently being conducted by any tax
authority with respect to any Trans Waste Return. Neither Trans Waste nor any
member of any affiliated or combined group of which Trans Waste has been a
member has been granted any extension or waiver of the limitation period
applicable to any Trans Waste Return. There is no material claim, audit, action,
suit, proceeding, or investigation now pending or, to each Key Person's
knowledge, threatened against or with respect to Trans Waste in respect of any
tax or assessment. No notice of deficiency or similar document of any tax
authority has been received by Trans Waste, and there are no liabilities for
taxes (including liabilities for interest, additions to tax, penalties thereon
and related expenses) with respect to the issues that have been raised (and are
currently pending) by any tax authority with Trans Waste that could, if
determined adversely to Trans Waste, materially and adversely affect Trans
Waste. Trans Waste has not made any payments, is not obligated to make any
payments, and is not a party to any agreement (including without limitation this
Agreement) that could obligate it to make any payments that will not be
deductible under Section 280G of the Code. Trans Waste has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(2)(i)
of the Code.
3.27 Absence of Certain Business Practices
Neither Trans Waste, Cannon, Taylor nor either of the Shareholders has
given or offered to give anything of value to any governmental official,
political party or candidate for government office
19
or taken any other action which, assuming such action was directed to a foreign
official, would constitute a violation of the Foreign Corrupt Practices Act of
1977, as amended, or any similar law. The foregoing is not intended to refer to
lawful campaign contributions made to incumbent and non-incumbent candidates for
public office.
3.28 Absence of Undisclosed Liabilities
To each Key Person's knowledge, except as set forth on Schedule 3.28 or
other Trans Waste Disclosure Schedules, Trans Waste does not have any material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Trans Waste Financial Statements, (ii) those incurred in the Ordinary Course of
Business since September 30, 1997, and consistent with past practice, which in
the aggregate do not exceed One Thousand Dollars ($1,000); and (iii) those
incurred pursuant to this Agreement.
3.29 Disclosure Complete
None of the statements by Trans Waste, Cannon, Taylor or either of the
Shareholders contained in this Agreement and the schedules and exhibits attached
hereto nor any written statement or certificate furnished or to be furnished to
Waste Industries or Subsidiary pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which it was made.
ARTICLE III-A
GENERAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally represents to Waste Industries and
Subsidiary that (i) MML is the beneficial and legal owner of the Trans Waste
Common Stock set forth opposite MML's name in Section 3.2 hereof and the ▇▇▇ is
the legal owner and ▇▇▇▇▇▇ is the beneficial owner of the Trans Waste Common
Stock set forth opposite the IRA's name in Section 3.2 hereof, in both cases
free and clear of all liens, encumbrances and restrictions other than
restrictions on transfer imposed under the applicable securities laws and those
set forth on Schedule 3.2, (ii) such Trans Waste Common Stock may be sold,
transferred, assigned and conveyed by such Shareholder to Waste Industries as
called for in this Agreement without such sale, transfer, assignment and
conveyance constituting a breach or default by Shareholder of any provision of
any agreement or covenant by which such Shareholder is bound and (iii) such
Shareholder has all requisite legal power and authority, and has taken any and
all steps necessary, to sell such Trans Waste Common Stock to Waste Industries
as called for in this Agreement. Furthermore, each Shareholder hereby severally
represents to Waste Industries that the Trans Waste Common Stock identified
opposite such Shareholder's name in Section 3.2 hereof are all of the shares of
capital stock of Trans Waste owned of record or beneficially by such
Shareholder. EACH SHAREHOLDER HEREBY SEVERALLY REPRESENTS AND WARRANTS THAT SUCH
SHAREHOLDER IS NOT RELYING ON WASTE INDUSTRIES, SUBSIDIARY, OR ANY LEGAL OR
FINANCIAL ADVISORS TO WASTE INDUSTRIES OR SUBSIDIARY FOR
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ADVICE ON THE TAX CONSEQUENCES OR FINANCIAL TERMS OF THE MERGER, ANY NONCOMPETE
ARRANGEMENTS OR ANY OTHER ASPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND
THAT SUCH SHAREHOLDER HAS SOUGHT INDEPENDENT LEGAL AND FINANCIAL ADVICE BEFORE
ENTERING INTO THIS AGREEMENT AND CONSUMMATING THE TRANSACTIONS CONTEMPLATED
HEREBY.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WASTE INDUSTRIES AND SUBSIDIARY
Waste Industries and Subsidiary represent and warrant to Trans Waste and
the Shareholders that:
4.1 Organization; Authority
(a) Waste Industries is a corporation duly organized, validly existing
and in good standing under the laws of the State of North Carolina. Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia. Each corporation has full corporate power and
authority to carry on its business as now being conducted and is entitled to
own, lease or operate the property and assets now owned, leased or operated by
it. Each of Waste Industries and Subsidiary is qualified to do business, is in
good standing, and has all required and appropriate licenses in each
jurisdiction in which its failure to obtain or maintain such qualification, good
standing or licensure (i) would, individually or in the aggregate, have or
reasonably could be expected to have a Material Adverse Effect on Waste
Industries or (ii) would result in a material breach of any of its other
representations, warranties or covenants set forth in this Agreement.
(b) No consent, waiver, approval, order, or authorization of, or
registration, declaration, or filing with, any court, administrative agency, or
commission or other governmental authority or instrumentality ("Governmental
Entity"), or any third party, is required to be made or obtained by Waste
Industries or Subsidiary in connection with the execution and delivery of this
Agreement by Waste Industries and Subsidiary or the consummation by Waste
Industries and Subsidiary of the transactions contemplated hereby, except for
(i) the filing of the Articles of Merger with the Georgia Secretary of State
and, if applicable, appropriate documents with the relevant authorities of other
states in which Waste Industries is qualified to do business, (ii) approval of
the Federal Trade Commission and the U.S. Department of Justice of the Merger in
response to the HSR Filing, (iii) requisite notices and filings with the U.S.
Securities and Exchange Commission, and (ii) such other consents,
authorizations, filings, approvals and registrations that, if not obtained or
made, would not have a Material Adverse Effect on Waste Industries or
Subsidiary.
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4.2 Validity of Agreement
Waste Industries and Subsidiary each have all requisite corporate power
and authority to execute and deliver this Agreement and all agreements and other
documents to be entered into in connection herewith and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Waste Industries and Subsidiary and constitutes the valid and
binding obligation of Waste Industries and Subsidiary, enforceable in accordance
with its terms, except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and rules of law governing
specific performance, injunctive relief, or other equitable remedies. The
execution and delivery of this Agreement by Waste Industries and Subsidiary, and
the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action, and , except as otherwise provided
herein, such execution and delivery do not require the consent, approval or
authorization of any person, public authority or other entity.
4.3 Effect of Agreement
The execution, delivery and performance by Waste Industries and Subsidiary
of this Agreement, and the consummation of the transactions herein contemplated,
will not conflict with, or result in a breach of the terms of, or constitute a
default under or violation of, any law or regulation of any governmental
authority or any provision of the Articles of Incorporation or Bylaws of Waste
Industries or Subsidiary, or any agreement or instrument to which Waste
Industries or Subsidiary is a party or by which they are bound or to which they
are subject. Except as otherwise provided herein, no consent of any person not a
party to this Agreement and no consent of any governmental authority is required
to be obtained on the part of Waste Industries or Subsidiary to permit the
consummation of the transactions contemplated by this Agreement which consent
will not have been received before the Closing Date.
4.4 Issuance of Waste Industries Common Stock
The shares of Waste Industries Common Stock will, when issued and
delivered in accordance with this Agreement, be duly and validly authorized and
issued, fully paid and nonassessable.
4.5 Disclosure Complete
None of the statements by Subsidiary or Waste Industries contained in this
Agreement and the schedules and exhibits attached hereto nor any written
statement or certificate furnished or to be furnished to Trans Waste or the
Shareholders pursuant hereto or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which it was made.
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4.6 Litigation
Except as set forth in Waste Industries' filings with the Securities and
Exchange Commission (the "SEC") required by the Securities and Exchange Act of
1934 (the "Exchange Act"), no investigation, claim, litigation, arbitration or
other proceeding is pending or, to Waste Industries' knowledge, threatened by or
against Waste Industries or Subsidiary, its properties or assets, the Waste
Industries Common Stock, or the officers or directors of Waste Industries before
any court or government agency that would be required to be included in such
filings.
4.7 No Breach
Subject to the satisfaction of the conditions set forth in Article VI, the
consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a conflict with, violation or default of,
or an event that, with notice or lapse of time or both, would be a default,
breach, or violation of, the articles or bylaws of Waste Industries or
Subsidiary; (ii) an event that would permit any party to terminate any material
contract or to accelerate the maturity of or permit the subordination of any
indebtedness or other material obligation of Waste Industries; (iii) the
creation or imposition of any material lien, charge, or encumbrance on any of
the assets of Waste Industries or the Waste Industries Common Stock; or (iv) a
conflict with, or a violation or breach of, any material law, rule, or
regulation of any Governmental Entity, or any judgment, order, injunction, or
decree applicable to Waste Industries, its assets or the Waste Industries Common
Stock.
4.8 Financial Advisors, Brokers or Finders
Neither Waste Industries nor Subsidiary has incurred, or will incur,
directly or indirectly, any liability for financial advisors', brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or the transactions contemplated hereby, except for fees to be
paid by Waste Industries to Consolidated Waste Holdings, Inc. and to Marketing
Resources Group, Inc. at or following the Closing.
4.9 Securities Laws.
Waste Industries has made all filings with the SEC required by the
Exchange Act. The financial statements and other disclosures filed by Waste
Industries with the SEC as required by the Exchange Act met the applicable
disclosure requirements under the Exchange Act at the time of filing. Except for
the Merger, no event has occurred since the date of filing of Waste Industries'
latest Form 10-K (March 30, 1998) that would require Waste Industries to file
with the SEC an additional Current Report on Form 8-K.
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ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO THE MERGER
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement and the Closing Date (except as
otherwise provided herein), the parties hereto agree (except to the extent that
the other parties hereto will otherwise consent in writing) that:
5.1 Conduct of Business of Trans Waste
Trans Waste will carry on its business in the usual, regular, and ordinary
course in substantially the same manner as heretofore conducted and, to the
extent consistent with such businesses, use all commercially reasonable efforts
consistent with past practice and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees, and preserve its relationships with customers, suppliers and
others having business dealings with it (except as specifically disclosed in the
Trans Waste Disclosure Schedules with respect to relationships that are likely
to change as a result of the Merger). Trans Waste will promptly notify Waste
Industries of any material event or occurrence not in the Ordinary Course of
Business, and any event of which Cannon, Taylor or either of the Shareholders is
aware that reasonably would be expected to have a Material Adverse Effect on
Trans Waste (even if the likelihood of such event has previously been disclosed
in the Trans Waste Disclosure Schedules). Except as expressly contemplated by
this Agreement or disclosed in the Trans Waste Disclosure Schedules or Schedule
5.1, Trans Waste will not, without the prior written consent of Waste Industries
not to be unreasonably withheld or delayed:
(a) (i) Enter into any commitment or transaction not in the Ordinary
Course of Business to be performed over a period longer than thirty (30) days in
duration, or purchase or sell any fixed assets, or (ii) commit to provide any
services (A) if the expected profit margins are lower than those customarily
obtained for provision of similar services by Trans Waste in the past or (B) to
any customer with existing accounts receivable more than forty-five (45) days
past due (excluding any receivables relating to sales returns) or where Waste
Industries has notified ▇▇▇▇▇▇ or ▇▇▇▇▇▇ or Trans Waste in writing that it is
reasonably concerned about the creditworthiness of the customer;
(b) Violate or, except in the Ordinary Course of Business, amend or
otherwise modify the terms of any of the Contracts or Permits set forth on the
Trans Waste Disclosure Schedules;
(c) Grant any severance or termination pay to any director, officer,
employee, or consultant, except mandatory payments made pursuant to standard
written agreements outstanding on the date hereof (any such agreement or
arrangement is to be disclosed in the Trans Waste Disclosure Schedules);
(d) Adopt or amend any employee benefit plans, programs, policies, or
other arrangements, or enter into any employment contract, pay any special bonus
or special remuneration to any director, employee, or consultant, or increase
the salaries or wage rates of its employees other than pursuant to scheduled
employee reviews under Trans Waste's normal employee review cycle or in
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connection with the hiring of employees other than officers in the Ordinary
Course of Business, in all cases consistent with past practice;
(e) Transfer to any third party any rights to Trans Waste's
Intangible Property Rights;
(f) Commence a lawsuit other than for (i) the routine collection of
bills, or (ii) in such cases where it in good faith determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with Waste Industries prior to the
filing of such a suit;
(g) Declare or pay any dividends on or make any other distributions
(whether in cash, stock, or property) in respect of any of its capital stock, or
split, combine, or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, except as expressly permitted under
this Agreement;
(h) Issue, deliver, or sell, authorize or propose the issuance,
delivery, or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into, or subscriptions, rights,
warrants, or options to acquire, or other agreements or commitments of any
character obligating Trans Waste to issue, any such shares or other convertible
securities;
(i) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
corporation, partnership, association, or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets that are
material, individually or in the aggregate, to Trans Waste's financial
condition, results of operations, business, or properties taken as a whole;
(j) Sell, lease, license, or otherwise dispose of any properties or
assets of Trans Waste except in the Ordinary Course of Business and consistent
with past practices;
(k) Issue or sell any debt securities or guarantee any debt securities
of others or, except in the Ordinary Course of Business, incur any indebtedness
for borrowed money or guarantee any such indebtedness;
(l) Make any capital expenditures, capital additions or capital
improvements except in the Ordinary Course of Business consistent with past
practice;
(m) Revalue any of its assets, including, without limitation, writing
down the value of inventory or writing off notes or accounts receivable;
(n) Except as provided in Section 5.1(r) hereof, pay, discharge, or
satisfy in an amount in excess of Five Hundred Dollars ($500) in any one case
any claim, liability, or obligation (absolute, accrued, asserted or unasserted,
contingent, or otherwise), other than the payment, discharge or satisfaction of
Trans Waste's Balance Sheet Liabilities;
25
(o) Waive or commit to waive any rights with a value individually or
in the aggregate in excess of Five Hundred Dollars ($500);
(p) Make any material tax election other than in the Ordinary Course of
Business and consistent with past practice, change any material tax election,
adopt any material tax accounting method other than in the Ordinary Course of
Business and consistent with past practice, change any material tax accounting
method, file any material tax return (other than any tax returns, estimated tax
returns, payroll tax returns, or sales tax returns prepared and filed in the
Ordinary Course of Business) or any amendment to a material tax return, enter
into any closing agreement, settle any tax claim or assessment, or consent to
any extension or waiver of the limitation period applicable to any tax claim or
assessment;
(q) Engage in any activities or transactions that are outside the
Ordinary Course of Business;
(r) Fail to pay or otherwise satisfy its monetary obligations in the
Ordinary Course of Business as they become due, including taxes, except such as
are being contested in good faith;
(s) Cancel or materially amend any insurance policy other than in the
Ordinary Course of Business;
(t) Cause or permit any amendments to its Articles or Bylaws, except
as contemplated by this Agreement; or
(u) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.l (a) through (t).
5.2 Access to Information
Trans Waste will afford Waste Industries and its accountants, counsel and
other representatives reasonable access during normal business hours during the
period prior to the Closing Date to (i) all of their respective properties,
books, contracts, commitments, and records and (ii) all other information
concerning the business, properties and personnel of Trans Waste as Waste
Industries may reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 5.2 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.3 Exclusivity; Acquisition Proposals
Unless and until this Agreement will have been terminated by Waste
Industries or the Shareholders pursuant to Section 7.1, Trans Waste will not,
directly or indirectly, through any officer, director, agent, or otherwise, (i)
solicit, initiate or encourage submission of proposals or offers from any person
relating to (A) any acquisition or purchase of all or substantially all of the
assets of, or any equity interest in, Trans Waste or any merger, consolidation,
business combination, or similar transaction with Trans Waste or (B) any other
material transaction incompatible with the Merger
26
(including, without limitation, a joint venture or other similar transaction) or
(ii) participate in any discussions or negotiations regarding, or furnish to any
other person any confidential information with respect to, any of the foregoing,
except as contemplated herein with respect to the HSR Filing and the Fairness
Hearing (as defined below).
5.4 Breach of Representations and Warranties
Each party will give detailed notice to the other in the event of and
promptly after becoming aware of the occurrence or pending or threatened
occurrence of any event that would cause any of its respective representations
and warranties contained herein not to be true and correct.
5.5 Consents
Waste Industries, Subsidiary, Trans Waste, Cannon, Taylor and the
Shareholders will each promptly apply for or otherwise seek, and use its
commercially reasonable efforts to obtain, all consents and approvals required
to be obtained by it for the consummation of the Merger. Cannon, Taylor, the
Shareholders and Trans Waste will use commercially reasonable efforts to obtain
all necessary consents, waivers and approvals under any Contracts and Permits in
connection with the Merger, except such consents and approvals as Waste
Industries and Trans Waste mutually agree that Trans Waste will not seek to
obtain. Pursuant to the requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, and the rules promulgated thereunder, Trans Waste and
Waste Industries will cause there to be timely filed ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Notification and Report Forms with the U.S. Federal Trade Commission (FTC) and
the U.S. Department of Justice (DOJ) with regard to the Merger (the "HSR
Filing"). The costs and fees incurred and paid by Trans Waste in connection with
the HSR Filing (including reasonable attorneys fees and costs) will be added to
the Cash Payment pursuant to Section 2.1(b)(vi) hereof; provided, however, if
the Merger is not consummated, such costs will be borne one-half (1/2) by Waste
Industries and one-half (1/2) by Trans Waste.
5.6 Legal Conditions to the Merger
(a) Trans Waste will take all reasonable actions necessary to comply
promptly with all legal requirements that may be imposed on Trans Waste with
respect to the Merger and will promptly cooperate with and furnish information
to Waste Industries in connection with any such requirements imposed on Waste
Industries or Subsidiary in connection with the Merger. Trans Waste will take
all reasonable actions to (i) obtain (and to cooperate with Waste Industries and
Subsidiary in obtaining) any consent, authorization, order, or approval of, or
any exemption by, any Governmental Entity required to be obtained or made by
Trans Waste (or by Waste Industries or Subsidiary) in connection with the Merger
or the taking of any action contemplated by this Agreement including, without
limitation, the HSR Filing, (ii) defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, (iii) lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby, (iv) effect all necessary registrations and filings and
submissions of information requested or required by any Governmental Entity,
including, without limitation, the HSR Filing, and (v) fulfill all conditions to
this Agreement.
27
(b) Each of Waste Industries and Subsidiary will take all reasonable
actions necessary to comply promptly with all legal requirements that may be
imposed on them with respect to the Merger and will promptly cooperate with and
furnish information to Trans Waste in connection with any such requirements
imposed on Trans Waste in connection with the Merger. Waste Industries and
Subsidiary will take all reasonable actions to (i) obtain (and to cooperate with
Trans Waste in obtaining) any consent, authorization, order, or approval of, or
exemption by, any Governmental Entity required to be obtained or made by Waste
Industries or Subsidiary (or by Trans Waste) in connection with the Merger or
the taking of any action contemplated by this Agreement, (ii) defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iii) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, (iv) effect
all necessary registrations and filings and submissions of information requested
or required by any Governmental Entity, including, without limitation, the HSR
Filing, and (v) fulfill all conditions to this Agreement.
5.7 Preparation of Financial Statements
Trans Waste and the Shareholders will use commercially reasonable efforts
to cause their respective management and independent certified public
accountants to facilitate on a timely basis the preparation of financial
statements (including the 1997 Audited Financial Statements (as defined below)
and pro forma financial statements, if required) as required by Waste Industries
to comply with applicable SEC regulations. Such preparation shall be at the cost
and expense of Waste Industries, except for those financial statements otherwise
required to be produced by Trans Waste or the Shareholders under this Agreement,
which include the Trans Waste Financial Statements, the July 31, 1998 Adjustment
Statement and the Closing Adjustment Statement.
5.8 Commercially Reasonable Efforts
The parties hereto will each use commercially reasonable efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to Closing.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger
The respective obligation of each party to effect the Merger will be
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Legal Action. No temporary restraining order, preliminary
injunction, or permanent injunction or other order preventing the consummation
of the Merger will have been issued by any court or other Governmental Entity
and will remain in effect, and no litigation by any third party seeking the
issuance of such order or injunction, or seeking relief against Trans Waste, the
Surviving
28
Corporation, or Waste Industries if the Merger is consummated, will be pending
that, in the good-faith judgment of Trans Waste's or Waste Industries' Boards of
Directors, has a reasonable probability of resulting in such order, injunction,
or relief and which would have a Material Adverse Effect on such party. In the
event any such order or injunction will have been issued, each party agrees to
use commercially reasonable efforts to have any such injunction lifted.
(b) Statutes. No action will have been taken, and no statute, rule,
regulation, or order will have been enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, that would (i) make the
consummation of the Merger illegal, (ii) prohibit Waste Industries' or the
Surviving Corporation's ownership or operation of all or a material portion of
the business or assets of Trans Waste (except as contemplated under Section 7.11
hereof), or compel Waste Industries or the Surviving Corporation to dispose of
or hold separate all or a material portion of the business or assets of
Subsidiary or Waste Industries or Trans Waste as a result of the Merger, or
(iii) render Waste Industries, Subsidiary, or Trans Waste unable to consummate
the Merger, except for any waiting period provisions.
(c) Consents. Except as set forth on Schedule 3.14, no consent,
approval, order, or authorization of, or registration, declaration, or filing
with, any Governmental Entity or any third party will be required to be made or
obtained by any of the parties hereto in connection with the execution and
delivery of this Agreement by them or the consummation by them of the
transactions contemplated hereby, except for (i) the HSR Filing, (ii) the filing
of the Articles of Merger with the Georgia Secretary of State and appropriate
documents with the relevant authorities of other states in which any of the
parties is qualified to do business, if any, (iii) any filings as may be
required under applicable state and federal securities laws, and (iv) such other
consents, authorizations, filings, approvals and registrations that, if not
obtained or made, would not have a Material Adverse Effect on Waste Industries.
(d) Employment Agreement. ▇▇▇▇▇▇ and Subsidiary will enter into an
Employment Agreement pursuant to Section 7.5 hereof.
(e) Noncompetition Agreements. ▇▇▇▇▇▇ and each of the partners of MML
(including ▇▇▇▇▇▇) will have executed and delivered to Subsidiary Noncompetition
Agreements in the forms attached hereto as Exhibits B-1 and B-2, respectively.
(f) Registration Rights Agreement. Waste Industries and the Shareholders
will enter into a registration rights agreement substantially similar in form to
Exhibit C attached hereto (the "Registration Rights Agreement") with respect to
the Waste Industries Common Stock received by the Shareholders pursuant to the
Merger.
6.2 Conditions to Obligation of Waste Industries and Subsidiary
The obligation of Waste Industries and Subsidiary to effect the Merger is
subject to the satisfaction of the following conditions at or prior to Closing,
unless waived by Waste Industries and Subsidiary:
29
(a) Representations and Warranties. The representations and warranties
of Trans Waste, Cannon, Taylor and the Shareholders set forth in this Agreement
will be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality, which representations and warranties as so qualified will be
true in all respects) as of the date of this Agreement and as of the Closing
Date, as though made on and as of each such date, and Subsidiary will have
received a certificate signed by the president of Trans Waste to such effect on
the Closing Date. Any additional Trans Waste Disclosure Schedules or amendments
or revisions to existing Trans Waste Disclosure Schedules that Trans Waste,
Cannon, Taylor and/or the Shareholders wish to deliver after the date hereof in
order to make their representations and warranties true and correct as of the
Closing Date must be acceptable to Waste Industries and Subsidiary, which
acceptance shall not be unreasonably denied.
(b) No Material Adverse Effect. From January 1, 1998, to the Closing,
there will have been no Material Adverse Effect relating to Trans Waste, and
Trans Waste's operations will be consistent with prior practices.
(c) Performance of Obligations of Trans Waste. Trans Waste will have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement prior to the Closing Date, and Waste
Industries will have received a certificate signed by the president of Trans
Waste to such effect on the Closing Date.
(d) Trans Waste Certificates. The Shareholders will have surrendered
to Trans Waste their certificates representing all of the issued and
outstanding Trans Waste Common Stock.
(e) Resignation of Directors and Officers. The officers and directors of
Trans Waste in office immediately prior to the Closing will have resigned as
officers and directors of Trans Waste effective as of the Closing Date.
(f) Approvals. All authorizations, consents, orders, or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement, including the Permits, will have been filed,
occurred, or obtained.
(g) Maple Hill Landfill. At or prior to Closing, Trans Waste will enter
into an agreement with Maple Hill Landfill, Inc. providing Trans Waste (and
Waste Industries as its assignee) a guaranteed tipping fee of $17.50 per ton for
disposal of C&D material at the existing Maple Hill landfill located at ▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("Maple Hill") for the period beginning at the
Closing and ending the earlier of (a) three (3) years from the Closing Date or
(b) the date when there is no longer any capacity for disposal of C&D material
at Maple Hill.
6.3 Conditions to Obligations of Trans Waste
The obligation of Trans Waste to effect the Merger is subject to the
satisfaction of the following conditions at or prior to Closing, unless waived
by Trans Waste:
30
(a) Representations and Warranties. The representations and warranties
of Waste Industries and Subsidiary set forth in this Agreement will be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified will be true in all respects) as
of the date of this Agreement and as of the Closing Date, as though made on and
as of each such date, and Trans Waste will have received a certificate signed by
the president of Waste Industries to such effect on the Closing Date.
(b) Performance of Obligations of Waste Industries and Subsidiary. Waste
Industries and Subsidiary will have performed all obligations and covenants
required to be performed by them under this Agreement prior to the Closing Date,
and Trans Waste will have received a certificate signed by the president of
Waste Industries to such effect on the Closing Date.
(c) Consideration. Waste Industries shall pay the Cash Payment, shall
deliver the Holdback Amounts to the Escrow Agent, and shall notify the Transfer
Agent to deliver certificates representing the Equity Consideration to the
Shareholders and to the Escrow Agent as provided herein.
(d) No Material Adverse Effect. From the date of filing of Waste
Industries' Form 10-Q for the quarter ended June 30, 1998, with the SEC, to the
Closing, there will have been no Material Adverse Effect relating to Waste
Industries, and Waste Industries' operations will be consistent with prior
practices.
(e) Fairness Hearing. A favorable decision shall have been issued by the
North Carolina Securities Commissioner in connection with the Fairness Hearing,
as defined under Section 7.3 hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Termination
(a) This Agreement may be terminated at any time prior to the Closing,
whether before or after approval of the Merger by the Shareholders:
(i) by mutual agreement of the Boards of Directors of Waste
Industries and Trans Waste;
(ii) by Waste Industries if there has been a breach by Trans Waste,
Cannon, Taylor or either of the Shareholders of any representation, warranty,
covenant, or agreement set forth in this Agreement on the part of Trans Waste,
Cannon, Taylor or either Shareholder that is material and that Trans Waste,
Cannon, Taylor or such Shareholder fails to cure within ten (10) business days
after notice thereof is given by Waste Industries (except that no cure period
will be provided for a breach by
31
Trans Waste, Cannon, Taylor or a Shareholder that by its nature cannot be cured)
or there occurs a failure of a condition precedent set forth in Section 6.1 or
6.2 that by its nature cannot reasonably be cured;
(iii) by the Shareholders if there has been a breach by Waste
Industries or Subsidiary of any representation, warranty, covenant, or agreement
set forth in this Agreement on the part of Waste Industries or Subsidiary that
is material and that Waste Industries or Subsidiary, as the case may be, fails
to cure within ten (10) business days after notice thereof is given by the
Shareholders (except that no cure period will be provided for a breach by Waste
Industries or Subsidiary that by its nature cannot be cured) or there occurs a
failure of a condition precedent set forth in Section 6.1 or 6.3 that by its
nature cannot reasonably be cured;
(iv) by Waste Industries or the Shareholders if the Closing will not
have occurred before October 31, 1998, or
(v) by Waste Industries or the Shareholders if any permanent
injunction or other order of a court or other competent authority preventing the
Merger will have become final and nonappealable.
(b) Where action is taken by Waste Industries to terminate this
Agreement pursuant to this Section 7.1, it will be sufficient for such action to
be authorized by its president.
(c) In the event of termination of this Agreement as provided in this
Section 7.1, this Agreement will forthwith become null and void and all
obligations of the parties hereunder will terminate without liability of any
party to any other party (except for breach of this Agreement); provided,
however, that the agreements contained in Section 7.2 will survive, and Waste
Industries will remain obligated to restore and repair any damage done to Trans
Waste and any of the Assets or any of the Real Property as a result of any due
diligence activity (including any environmental test conducted by or on behalf
of Waste Industries).
7.2 Fees and Expenses
Except as otherwise provided in Sections 5.5 and 7.3, all fees and
expenses incurred in connection with the negotiation, execution and consummation
of this Agreement and the transactions contemplated hereby will be paid by the
party incurring such expenses, whether or not the Merger is consummated. The
Shareholders will be responsible for all such fees and expenses of Trans Waste
if not paid by Trans Waste prior to Closing.
7.3 Fairness Hearing
In an effort to attempt to provide the Shareholders with an exemption from
registration and from the holding period required by Rule 144 promulgated under
the 1933 Act with respect to the resale of the unregistered Waste Industries
Common Stock received by the Shareholders pursuant to the Merger, Waste
Industries and the Shareholders, at the Shareholders election, will seek and
participate in a "fairness hearing" before the North Carolina Securities
Commissioner
32
pursuant to N.C.G.S. ss. 78A-30 and Section 3(a)(10) of the 1933 Act (the
"Fairness Hearing"). The costs of the Fairness Hearing, including reasonable
attorneys' fees and costs and regardless of the outcome, will be borne one-half
(1/2) by Waste Industries and one-half (1/2) by Trans Waste. Trans Waste's share
of the costs of the Fairness Hearing will be deducted from the Cash Payment
pursuant to Section 2.1(b)(vii) hereof. The parties understand that a favorable
decision by the North Carolina Securities Commissioner is not assured and that,
without such a favorable decision, the Shareholders must rely on the provisions
of the Registration Rights Agreement attached hereto in order to resell the
Waste Industries Common Stock received by the Shareholders pursuant to the
Merger prior to the holding period required by Rule 144 promulgated under the
1933 Act.
7.4 Public Announcements
Each party will consult in advance with the others concerning the timing
and content of any announcements, press releases, and public statements
concerning the Merger and will not make any such announcement, press release, or
statement without the others' prior written consent; provided, however, that
Waste Industries may make any public statement concerning the Merger without
Trans Waste's prior written consent if, in the opinion of counsel for Waste
Industries, such statement or announcement is required to comply with applicable
securities laws and Waste Industries has provided to Trans Waste a copy of any
such written statement or announcement that it proposes to make reasonably in
advance of making such announcement.
7.5 Employment
(a) ▇▇▇▇▇▇. At Closing, ▇▇▇▇▇▇ and Subsidiary will enter an Employment
Agreement substantially similar in form to Exhibit D attached hereto whereby
▇▇▇▇▇▇ will be employed by Subsidiary for a period of not less than two (2)
years to manage the orderly transition of Trans Waste's operations into those of
Subsidiary and Waste Industries, and to manage the day-to-day operations of
Subsidiary.
(b) Key Employees. At or immediately following the Closing, Subsidiary
will offer to employ ▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ under terms commensurate with
such employees' current salaries and responsibilities (including salary level
and incentive packages).
(c) Offers of Employment. Following the Closing, Subsidiary will offer
full-time employment to Trans Waste's hourly employees, effective upon the
Closing, at salaries comparable to Waste Industries' employees with comparable
industry experience, subject to Waste Industries' normal pre-hiring requirements
including, without limitation, drug screening. If hired, such employees will be
eligible for Waste Industries' benefits normally available to its hourly
employees.
7.6 Transition
▇▇▇▇▇▇ and ▇▇▇▇▇▇ will use all commercially reasonable efforts to assist
Subsidiary in the orderly transition of Trans Waste's customers and business to
Subsidiary and Waste Industries.
33
7.7 Release and Acknowledgment by the Shareholders
Effective as of the Closing, each Shareholder releases Trans Waste from
any claims which such Shareholder may have by virtue of its ownership of Trans
Waste Common Stock prior to the Closing (other than their respective rights
explicitly set forth in this Agreement). Each Shareholder acknowledges that to
the extent such Shareholder otherwise has any such claims, such claims will at
the Closing inure to Waste Industries as the purchaser of all of the Trans Waste
Common Stock.
7.8 1998 Year-to-Date Financial Statements; 1997 Audited Financial
Statements
Within sixty (60) days after the Closing, the Shareholders will provide
Waste Industries and Subsidiary an unconsolidated balance sheet and an income
statement of Trans Waste for the period beginning October 1, 1997 and ending on
the Closing Date, which will be prepared from the books and records of Trans
Waste and will (a) include all normal and recurring adjustments except for
accrual for income tax, (b) be in conformity with accrual basis of accounting
principles, except for income tax accruals, applied on a basis consistent with
preceding years and throughout the periods involved, and (c) present fairly the
financial position and results of operations of Trans Waste on the basis of
accounting referred to herein as of the date of such statements and for the
period covered thereby in all material respects. In addition, within sixty (60)
days after the Closing, the Shareholders will provide Waste Industries and
Subsidiary, at Waste Industries' expense, audited financial statements and an
audited balance sheet of Trans Waste for its fiscal year ended September 30,
1997 (the "1997 Audited Financial Statements").
7.9 Transition Services
During the 30-day period immediately following the Closing Date, ▇▇▇▇▇▇
will make himself reasonably available to Waste Industries during normal
business hours to assist Waste Industries in transitioning the operations of
Trans Waste and to otherwise consult with Waste Industries relating to Trans
Waste, its employees, customers, operations and prospects. After the initial
30-day period, ▇▇▇▇▇▇ will make himself reasonably available for a total of
thirty (30) additional days over the following 365-day period by telephone as
needed for consultation with Waste Industries.
7.10 Termination of Insurance
Except as may be prohibited by any Contract, Subsidiary may cancel any or
all of Trans Waste's insurance policies as of the Closing Date and any refunds
resulting from Subsidiary's cancellation of Trans Waste's insurance, the
premiums of which were prepaid by Trans Waste, will be promptly credited or paid
to the Shareholders upon receipt, except as paid for by Subsidiary under Section
2.1(b)(iii) hereof.
7.11 Coffee County Landfill
(a) Trans Waste will use commercially reasonable efforts to obtain an
Environmental Protection Department of Natural Resources permit (the "EPD
Permit") for the new Coffee County landfill site located at the Coffee County
landfill property in Douglas, Georgia (the "New
34
Coffee County Landfill") prior to Closing. The New Coffee County Landfill will
have the waste disposal volume availability indicated in the Trans Waste Pro
Forma and upon obtaining the EPD Permit, Trans Waste will provide Waste
Industries prior to Closing sufficient data to verify the existence of the waste
disposal volume availability indicated in the Trans Waste Pro Forma. In
conjunction therewith and prior to Closing, Trans Waste will use its
commercially reasonable efforts to acquire (i) the approximately 58 acres of
land from Coffee County for the New Coffee County Landfill (identified on
Schedule 7.11 as ▇▇▇▇▇ #▇ (▇▇▇▇ ▇▇▇▇▇▇▇▇) ▇▇▇ ▇▇▇▇▇ #▇, hereinafter, the "58
Acres") for approximately One Thousand Four Hundred Dollars ($1,400) per acre
(the "58-Acre Purchase Price") and (ii) an option (assignable to Waste
Industries or its assignee) to purchase approximately 43 acres adjoining the New
Coffee County Landfill site (identified on Schedule 7.11 as Tract #3,
hereinafter, the "Optioned Acres") for approximately One Thousand Four Hundred
Dollars ($1,400) per acre (the "43-Acre Option"), for future expansion. If the
58 Acres are not purchased prior to Closing, Trans Waste will provide that the
58 Acres will be purchased by Waste Industries or its assignee for the 58-Acre
Purchase Price, and an amount equal to the purchase price paid by Waste
Industries or its assignee for the 58 Acres will be paid to Waste Industries
from the Holdback Amount pursuant to Article IX hereof. The 43-Acre Option will
be assigned to Waste Industries or its assignee at Closing with purchase price
to be paid by and title to Waste Industries or its assignee upon exercise. If
the Optioned Acres are purchased by Trans Waste or its assignee prior to
Closing, an amount equal to the purchase price therefor will be paid to the
Shareholders at Closing, as provided under Section 2.1(b)(v) hereof.
(b) Trans Waste estimates that the EPD Permit will be issued in August
1998. Upon obtaining the EPD Permit, Trans Waste will use commercially
reasonable efforts to construct the New Coffee County Landfill prior to Closing.
If the EPD Permit is not obtained and the New Coffee County Landfill is not in
operation by Closing, Subsidiary will use commercially reasonable efforts to
obtain such permit and to construct the New Coffee County Landfill by October 1,
1998. If the EPD Permit is not obtained and the New Coffee County Landfill is
not in operation by October 1, 1998, at Waste Industries' election $5,000 shall
be deducted from the Holdback Amount as provided under Article IX as liquidated
damages for each month from October 1, 1998 through January 31, 1999 that the
New Coffee County Landfill is not permitted and in operation. If the EPD Permit
is not obtained and the New Coffee County Landfill is not in operation by
January 31, 1999, Waste Industries may extend such period beyond January 31,
1999, at its sole discretion; provided, however, that no further liquidated
damages will be incurred during the extension period. If Waste Industries elects
not to extend such period beyond January 31, 1999, or elects to terminate any
such extension period at any time after January 31, 1999 and before the New
Coffee County Landfill is permitted and in operation, which it may do at its
sole discretion, Five Hundred Seventeen Thousand Four Hundred Dollars ($517,400)
shall be deducted from the Holdback Amount pursuant to Article IX hereof (and no
further adjustment will be made under Section 9.2(d)). Notwithstanding the
foregoing, if the EPD Permit is not otained and the New Coffee County Landfill
is not in operation by December 31, 1999, Five Hundred Seventeen Thousand Four
Hundred Dollars ($517,400) shall be deducted from the Holdback Amount pursuant
to Article IX hereof (and no further adjustment will be made under Section
9.2(d)).
35
Any deductions from the Holdback Amount under this Section 7.11(b) are
conditioned on ▇▇▇▇▇▇ having control, authority and resources with regard to the
New Coffee County Landfill's permitting process and operations consistent with
▇▇▇▇▇▇'▇ past business practices as an owner and operator of Trans Waste;
provided, however, that ▇▇▇▇▇▇'▇ employment has not been terminated for Cause,
as defined under the Employment Agreement between Subsidiary and ▇▇▇▇▇▇.
(c) If the Optioned Acres are not purchased prior to Closing by Trans
Waste or its assignee and the 43-Acre Option is assigned to Waste Industries or
its assignee at Closing but Waste Industries or its assignee does not exercise
the 43-Acre Option, then (and only then) if Cannon, Taylor, any of the
Shareholders or any MML partners later purchase the Optioned Acres, the Optioned
Acres may be utilized in any manner not in violation of the Noncompetition
Agreements entered into pursuant to Section 6.2(d) hereof during the term
thereof or may be operated as a C&D landfill with such operation excepted from
the Noncompetition Agreements.
7.12 Accrued Income Taxes
The Shareholders will timely file all tax returns, statements, reports,
and forms (including estimated tax returns and reports and information returns
and reports) required to be filed with any taxing authority with respect to, and
will therewith timely pay from the Tax Holdback Amount, all accrued and unpaid
federal and state income taxes arising out of Trans Waste's operations through
August 31, 1998 ("Accrued Income Taxes") as provided under Section 9.2(g)
hereof. The Surviving Corporation will be responsible for and shall timely pay
all federal and state income taxes arising out of the Trans Waste's operations
after August 31, 1998. The Shareholders and the Surviving Corporation shall
cooperate to pay such taxes that are applicable to Trans Waste's operations
during its fiscal year ending September 31, 1998, to the extent they are
respectively responsible therefor, as provided above, when such returns, etc.
are filed by the Shareholders.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnity by Cannon, Taylor and the Shareholders
(a) Indemnity for Shareholder Representations, Warranties and Covenants.
Cannon, Taylor and the Shareholders will jointly and severally indemnify, defend
and hold harmless Waste Industries, its subsidiaries and their respective
officers, directors, employees and agents (collectively, the "WI Indemnified
Persons") for and against all claims, losses, liabilities, damages,
deficiencies, costs and expenses, including without limitation, reasonable
attorneys', accountants' and expert witness' fees, reasonable costs and expenses
of investigation, and the reasonable costs and expenses of enforcing the
indemnification (hereinafter individually a "Loss" and collectively "Losses")
incurred by the WI Indemnified Persons arising out of or related to (i) any
breach by either one or both of the Shareholders of any representation or
warranty set forth in Article III-A and/or any agreement made by either one or
both of the Shareholders in this Agreement or in any document delivered to Waste
Industries pursuant hereto, and (ii) any nonfulfillment of any agreement or
covenant to be performed by either one or both
36
of the Shareholders under this Agreement or in any writing delivered to Waste
Industries pursuant to the provisions of this Agreement
(b) Indemnity for Representation and Warranties regarding Trans Waste,
and Trans Waste's Covenants. Cannon, Taylor and each of the Shareholders,
jointly and severally, shall indemnify, defend and hold harmless the WI
Indemnified Persons for and against all Losses incurred by the WI Indemnified
Persons arising out of or related to the following:
(i) any federal, state or local tax liability of Trans Waste
arising out of any event occurring during, or attributable to, any period ended
on or before the Closing Date;
(ii) any misrepresentation or breach of warranty regarding Trans
Waste, ▇▇▇▇▇▇ or ▇▇▇▇▇▇, or nonfulfillment of any agreement or covenant to be
performed by Trans Waste, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ under this Agreement or in any
writing delivered pursuant to the provisions of this Agreement;
(iii) any and all actions, suits, claims or legal, administrative,
arbitration, governmental or other proceedings or investigations against any WI
Indemnified Person that relate to Trans Waste in which the principal event
giving rise thereto occurred on or prior to the Closing Date or which result
from or arise out of any action or inaction on or prior to the Closing Date of
Trans Waste or any director, officer, employee, agent, representative or
subcontractor of Trans Waste, except to the extent such Losses are covered by
Trans Waste's insurance; and
(iv) the operation of Trans Waste's business prior to the Merger
and not disclosed herein or in the schedules attached hereto.
(c) Exclusive Remedy. Except in the case of fraud, the indemnification
provided by Cannon, Taylor and the Shareholders under this Section 8.1 shall be
the WI Indemnified Persons' sole and exclusive means of remedy for Losses
arising from or related to breaches, nonfullfillments, misrepresentations,
nondisclosures, actions, suits, claims, proceedings, investigations, operations
and other acts and omissions for which indemnification is provided under this
Section 8.1.
8.2 Indemnity by Waste Industries and Subsidiary
Each of Waste Industries and Subsidiary covenants and agrees that it will
jointly and severally indemnify, defend and hold harmless the Shareholders and
their respective partners, employees and agents (collectively, the "Shareholder
Indemnified Persons") after the Closing Date, for and against any and all Losses
arising with respect to each of the following:
(a) any misrepresentation, breach of warranty, or nonfulfillment of any
agreement or covenant to be performed by Waste Industries and Subsidiary under
this Agreement or in any writing delivered to Trans Waste or the Shareholders at
or prior to Closing pursuant to the provisions of this Agreement;
37
(b) any and all actions, suits, claims or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Shareholder Indemnified Persons that relates to Waste Industries or Subsidiary
in which the principal event giving rise thereto occurs after the Closing Date
or which result from or arise out of any action or inaction after the Closing
Date of Waste Industries or Subsidiary, or any director, officer, employee,
agent, representative or subcontractor of Waste Industries or Subsidiary; and
(c) the operation of Subsidiary's business after the Merger.
8.3 General
Solely for the purposes of this Article VIII, whether a representation,
warranty or covenant has been breached will be determined without regard to any
knowledge or materiality qualifiers contained in such representation, warranty
or covenant.
8.4 Notice of Indemnity Claim
(a) A party seeking indemnity hereunder ("Indemnified Party") will
notify the other party ("Indemnifying Party") of the Loss in question within a
reasonable time after the Indemnified Party becomes aware of the existence of
such Loss, but in no event more than thirty (30) days thereafter; provided, that
the failure so to timely notify will relieve the Indemnifying Party from the
obligation to indemnify against the liability respecting such Loss only to the
extent the Indemnifying Party establishes by competent evidence that it is
prejudiced thereby. In any case, if a claim or action arising from or giving
rise to a Loss is initiated or threatened, the Indemnified Party will notify the
Indemnifying Party thereof, and such Indemnified Party will be entitled to
participate in the defense thereof at its own expense; provided, however, that
the Indemnifying Party will have sole discretion to determine whether to
contest, compromise, enter pleas, or settle any such claim or action brought
against the Indemnified Party. In the event that the Indemnifying Party shall be
obligated to indemnify the Indemnified Party pursuant to this Section 8.4(a)
with respect to a Loss caused by or due to a third party, the Indemnifying Party
shall, upon payment of such indemnity in full, be subrogated to all rights of
the Indemnified Party against such third party with respect to the Loss to which
such indemnification relates.
(b) A claim for indemnification for any Loss not involving a third-party
claim shall be asserted by written notice to the Indemnifying Party within a
reasonable time after the Indemnified Party becomes aware of the existence of
such Loss, but in no event more than thirty (30) days thereafter; provided, that
the failure so to timely notify will relieve the Indemnifying Party from the
obligation to indemnify against the liability respecting such Loss only to the
extent the Indemnifying Party establishes by competent evidence that it is
prejudiced thereby. The existence of the threshold amount under Section 8.7
hereof shall not, in and of itself, be deemed to prejudice an Indemnifying
Party. If the Indemnifying Party, in good faith, disputes such claim of
indemnification, it shall give the Indemnified Party notice of its good faith
objection within ten (10) days after notice is given of such claim of
indemnification and, if the parties are unable to resolve the dispute regarding
indemnification within ten (10) days after notice is given of the Indemnifying
Party's objection, either party may seek resolution of the dispute pursuant to
Section
38
10.16. Otherwise, the Indemnifying Party shall provide the indemnification
requested as soon as reasonably possible.
8.5 Waiver of Contribution
The Shareholders, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ jointly and severally waive any and
all rights of contribution against Trans Waste with respect to any amounts for
which they may be jointly or severally liable under this Agreement; provided,
however, that to the extent that any liability of any of the Shareholders or
▇▇▇▇▇▇ or ▇▇▇▇▇▇ for indemnification is recoverable by any of the Shareholders
or ▇▇▇▇▇▇ or ▇▇▇▇▇▇, as the case may be, through directors and officers
liability insurance maintained by Trans Waste prior to the Closing Date, without
adverse effect on Subsidiary or Waste Industries under their respective
insurance policies, any such recovery shall be turned over to such
Shareholder(s), ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇, as appropriate, as reimbursement to the
extent that they have paid or satisfied their indemnification obligations to the
WI Indemnified Persons with respect thereto.
8.6 Limit to Indemnification
(a) No Indemnified Party shall be indemnified pursuant to this Agreement
to the extent that such Indemnified Party's Losses are increased or extended by
the gross negligence, willful misconduct, violation of law or bad faith of such
Indemnified Party.
(b) The obligations of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and the Shareholders under Section
8.1 shall not exceed Five Million Dollars ($5,000,000), except in the case of
fraud.
8.7 Threshold for Indemnification
▇▇▇▇▇▇ and the Shareholders shall have no indemnification obligation for
Losses under this Article VIII until and only to the extent that aggregate and
accumulated Losses exceed One Hundred Thousand Dollars ($100,000), except in the
case of fraud.
ARTICLE IX
HOLDBACK AMOUNT
9.1 Purpose
The Holdback Amount will be available for any adjustments under Section
9.2 hereof and for any Loss incurred by Waste Industries and/or Subsidiary by
reason of such adjustments (collectively, "Damages") and, after such
adjustments, to compensate Waste Industries and Subsidiary for any other Loss
pursuant to Article VIII to the extent any such Holdback Amount remains
available. Subsidiary and the Shareholders each acknowledge that such
adjustments, if any, would relate to unresolved contingencies existing at the
Closing, which if resolved at the Closing would have led to a reduction in the
Cash Consideration and Equity Consideration that Waste Industries would have
agreed to pay in
39
connection with the Merger. Nothing contained herein will limit or affect the
liability of the parties hereto under Article VIII.
9.2 Adjustment
(a) Asset Deficit. Waste Industries and representatives of the
Shareholders will perform a physical inventory of the vehicles described on
Schedule 3.3A (the "Vehicles") prior to the Closing Date, and the value (as set
forth on Schedule 9.2) of any Vehicles listed on Schedule 3.3A that is missing
therefrom or inoperative and not reasonably repairable (taking into account
replacements and substitutions in the Ordinary Course of Business), will be
subtracted from the Holdback Amount. If the Holdback Amount is exhausted or
insufficient to cover such deficit, the Shareholders shall reimburse (or ▇▇▇▇▇▇
and ▇▇▇▇▇▇ shall cause the Shareholders to reimburse) Waste Industries
immediately in cash for any deficit over and above the available Holdback
Amount.
(b) Average Monthly Service Revenue. If the Average Monthly Revenue
under Section 3.6 hereof is less than One Million Twenty-Three Thousand Eight
Hundred Forty-Six Dollars ($1,023,846), the difference will be multiplied by ten
(10) and the resulting amount will be subtracted from the Holdback Amount. If
the Holdback Amount is exhausted or insufficient to cover such resulting amount,
the Shareholders shall reimburse (or ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall cause the
Shareholders to reimburse) Waste Industries immediately in cash for any deficit
over and above the available Holdback Amount.
(c) Accounts Receivable. If any Accounts Receivable remain uncollected
at the end of the 90-day period following the Closing Date (the "Delinquent
Accounts"), such Delinquent Accounts will be assigned to the Shareholders and an
amount equal to the face value of such Delinquent Accounts will be deducted from
the Holdback Amount. If the Holdback Amount is exhausted or insufficient to
cover such Delinquent Accounts, the Shareholders shall reimburse (or ▇▇▇▇▇▇ and
▇▇▇▇▇▇ shall cause the Shareholders to reimburse) Waste Industries immediately
in cash for any deficit over and above the available Holdback Amount.
(d) Coffee County Landfill Revenue. If annual revenue for the New Coffee
County Landfill, after obtaining the EPD Permit, does not average Fifty-One
Thousand Seven Hundred Forty Dollars ($51,740) per month (the "Average Expected
Monthly Revenue") for the second, third and fourth months of operation (allowing
the first month of operation after permitting to ramp up), the shortfall from
such Average Expected Monthly Revenue will be multiplied by ten (10) and the
resulting amount will be subtracted from the Holdback Amount. If the Holdback
Amount is exhausted or insufficient to cover such resulting amount, the
Shareholders shall reimburse (or ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall cause the Shareholders
to reimburse) Waste Industries immediately in cash for any deficit over and
above the available Holdback Amount. Any adjustments to the Holdback Amount
under this Section 9.2(d) are subject to ▇▇▇▇▇▇ having control, authority and
resources with regard to the New Coffee County Landfill's operations consistent
with ▇▇▇▇▇▇'▇ past business practices as an owner and operator of Trans Waste;
provided, however, that ▇▇▇▇▇▇'▇ employment has not been terminated for Cause,
as defined under the Employment Agreement between Subsidiary and ▇▇▇▇▇▇.
40
(e) Coffee County Landfill Operation.
(i) As provided under Section 7.11 hereof, if the 58 Acres are not
purchased by Trans Waste prior to Closing but are purchased by Waste Industries
after the Closing, an amount equal to the purchase price paid by Waste
Industries for the 58 Acres will be paid to Waste Industries from the Holdback
Amount.
(ii) As provided under Section 7.11 hereof, if the EPD Permit is
not obtained and the New Coffee County Landfill is not in operation by October
1, 1998, $5,000 shall be deducted from the Holdback Amount for each month from
October 1, 1998 through January 31, 1999 that the New Coffee County Landfill is
not permitted and in operation.
(iii) If Waste Industries elects not to extend such period beyond
January 31, 1999, or elects to terminate any such extension period at any time
after January 31, 1999 and before the New Coffee County Landfill is permitted
and in operation, or if the New Coffee County Landfill is not permitted and in
operation by December 31, 1999, as provided under Section 7.11 hereof, Five
Hundred Seventeen Thousand Four Hundred Dollars ($517,400) shall be deducted
from the Holdback Amount, and no adjustment shall be made under Section 9.2(d)
hereof.
(iv) If the Holdback Amount is exhausted or insufficient to cover
any of the amounts deductible from the Holdback Amount under Sections 9.2(e)(i)
- (iii), the Shareholders shall reimburse (or ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall cause the
Shareholders to reimburse) Waste Industries immediately in cash for any such
amount over and above the available Holdback Amount. Any adjustments to the
Holdback Amount under Sections 9.2(e)(ii) and (iii) are subject to ▇▇▇▇▇▇ having
control, authority and resources with regard to the New Coffee County Landfill
and its operations consistent with ▇▇▇▇▇▇'▇ past business practices as an owner
and operator of Trans Waste; provided, however, that ▇▇▇▇▇▇'▇ employment has not
been terminated for Cause, as defined under the Employment Agreement between
Subsidiary and ▇▇▇▇▇▇.
(f) Closing Adjustment Statement. Within thirty (30) days after the
Closing, the Shareholders shall deliver to Waste Industries the Closing
Adjustment Statement and Waste Industries shall review the Closing Adjustment
Statement, the Trans Waste Financial Statements and the 1997 Audited Financial
Statements, as available.
(i) If Waste Industries determines that the Closing Adjustment
Statement is materially incorrect, Waste Industries will deliver to the
Shareholders, within one hundred twenty (120) days after the Closing Date, a
statement as of the Closing Date indicating discrepancies (the "Counter
Adjustment Statement"). For purposes of this Section 9.2(f)(i), the term
"materially" shall mean in excess of $20,000. If no Counter Adjustment Statement
is delivered within such 120-day period, the Closing Adjustment Statement will
be deemed accepted and shall be used in computing any adjustment to the July 31,
1998 Adjustment Statement and any deficits in the amounts paid by Waste
Industries at Closing shall be promptly paid to the Shareholders by Waste
Industries and any surplus paid by Waste Industries at Closing shall be deducted
from the Holdback Amount.
41
(ii) If the Counter Adjustment Statement is delivered within such
120-day period and within thirty (30) days following delivery of the Counter
Adjustment Statement the Shareholders have not given Waste Industries written
notice of objection thereto (including a detailed statement of the basis of the
Shareholders' objection), then the Counter Adjustment Statement will be deemed
accepted and shall be used in computing any adjustment to the July 31, 1998
Adjustment Statement and any deficits in the amounts paid by Waste Industries at
Closing shall be promptly paid to the Shareholders by Waste Industries and any
surplus paid by Waste Industries at Closing shall be deducted from the Holdback
Amount.
(iii) If the Shareholders give Waste Industries written notice of
objection to the Counter Adjustment Statement within the 30-day period following
delivery thereof, then the issues in dispute shall be submitted for resolution
to a "big five" accounting firm (other than Deloitte & Touche) (the
"Accountants") to be agreed upon by Waste Industries and the Shareholders. If
issues in dispute are submitted to the Accountants for resolution, (A) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants or the other
party may request and are available to the furnishing party (or its independent
public accountants), and will be afforded the opportunity to present to the
Accountants any material relating to the determination and to discuss the
determination with the Accountants; (B) the determination by the Accountants, as
set forth in a notice delivered to both parties by the Accountants, will be
binding and conclusive on the parties; (C) any deficits in the amounts paid by
Waste Industries at Closing shall be promptly paid to the Shareholders by Waste
Industries and any surplus paid by Waste Industries at Closing shall be deducted
from the Holdback Amount; and (D) Waste Industries and the Shareholders will
each bear fifty percent (50%) of the fees of the Accountants for such
determination. If the Holdback Amount is exhausted or insufficient to cover any
surplus paid by Waste Industries at Closing as provided under this Section
9.2(f), the Shareholders shall reimburse (or ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall cause the
Shareholders to reimburse) Waste Industries immediately in cash for any deficit
over and above the available Holdback Amount.
(g) Accrued Income Taxes. Amounts equal to the Accrued Income Taxes will
be released from the Tax Holdback Amount for payment to the appropriate taxing
authorities by the Shareholders. If the Tax Holdback Amount is exhausted or
insufficient to cover such resulting amount, any Accrued Income Taxes over and
above the available Tax Holdback Amount shall be subtracted from the Holdback
Amount and paid to the appropriate taxing authorities. If the Holdback Amount is
exhausted or insufficient to cover such resulting amount, the Shareholders shall
pay (or ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall cause the Shareholders to pay) Waste Industries
immediately in cash for any such taxes over and above the available Holdback
Amount, and Waste Industries shall pay the same to the appropriate taxing
authorities. If the Shareholders fail to timely file and pay any Accrued Income
Taxes, an amount equal to the unpaid portion of the Accrued Income Taxes, plus
any penalties, fines or interest levied by any taxing authority in connection
therewith, will be subtracted from the Tax Holdback Amount and paid to the
appropriate taxing authority by Waste Industries or Subsidiary, with any Accrued
Income Taxes in excess of the available Tax Holdback Amount being subtracted
from the Holdback Amount and, to the extent the Holdback Amount is insufficient
for that purpose, paid by the Shareholders, as provided above. If any amount of
the Tax Holdback Amount remains upon release of
42
the Tax Holdback Amount for full payment of the Accrued Income Taxes, such
remaining amount will be released to the Shareholders in proportion to their
respective ownership interests in Trans Waste at Closing.
9.3 Voting and Dividends
(a) The Shareholders shall be entitled to vote the Waste Industries
Common Stock held as the Equity Holdback Amount as of the record date for
determining those Waste Industries shareholders eligible to vote on the
matter(s) presented for such shareholders' approval.
(b) Any dividends on the shares of Waste Industries Common Stock held in
the Equity Holdback Amount, whether such dividends are granted in the form of
cash, shares of Waste Industries stock or some other form, shall be held as part
of the Equity Holdback Amount and shall be released or deducted, as the case may
be, in proportion to the number of shares of Waste Industries Common Stock
released or deducted from the Equity Holdback Amount pursuant to the terms and
conditions of this Agreement.
9.4 Termination of Holdback
The Holdback Amount, minus adjustments under Sections 9.1 and 9.2, will be
paid to the Shareholders based on their respective ownership interests in Trans
Waste at Closing no later than one (1) year following the Closing Date;
provided, however, that, of the Equity Holdback Amount, the number of shares of
Waste Industries Common Stock equal to up to Five Hundred Seventeen Thousand
Four Hundred Dollars ($517,400) divided by the Closing Price, will be held until
the earlier of (a) December 31, 1999 or (b) the later of (i) up to one (1) year
after the Closing Date, or (ii) after the fourth month of EPD permitted
operations as specified under (and subject to adjustment pursuant to) Section
9.2(d) hereof.
9.5 Escrow Agreement
The Holdback Amount and the Tax Holdback Amount shall be held, subject to
the terms and conditions of this Agreement, pursuant to an escrow agreement
substantially similar to Exhibit E attached hereto and incorporated herein by
this reference (the "Escrow Agreement"), by and among the parties hereto and
Synovus Trust Company (the "Escrow Agent"). All deductions from the Holdback
Amount shall be equally cash and stock; provided, however, that, except as
provided below, as to any revenue shortfall of the New Coffee County Landfill
under Sections 7.11(b) and 9.2(d), deductions shall be made fully from the
Equity Holdback Amount; and provided further that the Shareholders shall have
the option of having any deductions from the Holdback Amount taken from the Cash
Holdback Amount instead of the Equity Holdback Amount so long as there exists
any cash available under the Cash Holdback Amount. Notwithstanding the
foregoing, in the event that either the Cash Holdback Amount or the Equity
Holdback Amount is depleted, any further deductions shall be taken from whatever
Holdback Amount remains. All Waste Industries Common Stock deducted from the
Equity Holdback Amount shall be valued at the Closing Price; in the event that
any deductions from (or release of shares at the termination of) the Equity
Holdback Amount include fractional shares, such
43
fractional shares shall be paid in cash in the manner provided under Section
2.1(c) hereof. The Cash Holdback Amount, and any cash dividends added thereto
pursuant to Section 9.3(b) hereof, and the Tax Holdback Amount, shall be held in
an interest-bearing account as provided under the Escrow Agreement, and interest
accrued shall be released or deducted, as the case may be, in proportion to the
cash released or deducted from the Tax Holdback Amount and the Cash Holdback
Amount (or the Equity Holdback Amount in the case of cash dividends) pursuant to
the terms and conditions of this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations, Warranties and Agreements
All representations, warranties, covenants, and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement will
survive the consummation of the Merger and will terminate December 31, 1999,
except for Sections 3.15, 3.21 and 3.26, which will survive until the expiration
of the applicable statutes of limitation.
10.2 Amendment
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
10.3 Extension; Waiver
At any time prior to the Closing Date, each of Trans Waste and Waste
Industries, by action taken by its respective Board of Directors, may, to the
extent legally allowed, (i) extend the time for performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties made to it contained herein or in any document
delivered pursuant hereto, and (iii) waive compliance with any of the agreements
or conditions for the benefit of it contained herein. Any agreement on the part
of a party hereto to any such extension or waiver will be valid only if set
forth in an instrument in writing signed on behalf of such party.
10.4 Notices and Consents
All notices and other communications hereunder will be in writing and may
be given by personal delivery, express courier doing business throughout the
United States, registered or certified mail (return receipt requested), or
facsimile (receipt confirmed). Such notice will be deemed effective when
received if it is given by personal delivery, express courier doing business
throughout the United States, or facsimile, and will be effective three (3) days
after mailing by registered or certified mail, so long as it is actually
received within five (5) days (and, if not so received within five (5) days, is
effective when actually received) by the parties at the following addresses (or
at such other address for a party as will be specified by like notice):
44
(a) if to Waste Industries or Subsidiary, to:
Waste Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Shareholders, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
MML Limited Partnership
▇/▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
45
if to ▇▇▇▇▇▇, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy in each case to:
Chorey, Taylor & ▇▇▇▇, a Professional Corporation
The Lenox Building, Suite 1700
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.5 Nondisclosure
All communications and information regarding this Agreement and the
transactions contemplated hereby will remain confidential, and none of the
parties will disclose the terms of this Agreement to any third party or, except
as provided under Section 7.4 hereof, make any public announcement concerning
the Merger without the prior express consent of Waste Industries and the
Shareholders, unless required by law.
10.6 Interpretation
When a reference is made in this Agreement to Sections, Schedules or
Exhibits, such reference will be to a Section of or Schedule or Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including," when used herein, will be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.
10.7 Counterparts
This Agreement may be executed in one or more counterparts, all of which
will be considered one and the same agreement and will become effective when one
or more counterparts have been signed by each of the parties and delivered to
the other parties.
10.8 Entire Agreement
This Agreement and the schedules, exhibits, documents, instruments, and
other agreements among the parties delivered pursuant hereto and in connection
herewith, including but not limited to the Trans Waste Disclosure Schedules,
Employment Agreement, the Noncompetition Agreements, and the Registration Rights
Agreements, constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral,
46
among the parties with respect to the Subject matter hereof and are not intended
to confer upon any other person any rights or remedies hereunder except as
otherwise expressly provided herein or therein. All schedules and exhibits to
this Agreement are incorporated herein by reference as if fully set forth
herein.
10.9 No Transfer
This Agreement and the rights and obligations set forth herein may not be
transferred or assigned by operation of law or otherwise without the consent of
each party hereto. This Agreement is binding upon and will inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
10.10 Severability
If any provision of this Agreement, or the application thereof, will for
any reason and to any extent be invalid or unenforceable, the remainder of this
Agreement and application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such invalid or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business, and other purposes of the invalid or
unenforceable provision.
10.11 Other Remedies
Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby or by law or equity on such party, and the
exercise of any one remedy will not preclude the exercise of any other.
10.12 Further Assurances
Each party agrees to cooperate fully with the other parties and to execute
such further instruments, documents, and agreements and to give such further
written assurances as may be reasonably requested by any other party to evidence
and reflect the transactions described herein and contemplated hereby and to
effect the intents and purposes of this Agreement.
10.13 Absence of Third-Party Beneficiary Rights
No provision of this Agreement is intended, nor will it be interpreted, to
provide or create any third-party beneficiary rights or any other rights of any
kind in any client, customer, affiliate, shareholder, employee or partner of any
party hereto or any other person or entity unless specifically provided
otherwise herein.
47
10.14 Rules of Construction
The parties hereto agree that they have been represented by counsel during
the negotiation, preparation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
10.15 Governing Law
This Agreement will be governed in all respects, including validity,
interpretation, and effect, by the laws of Georgia (without giving effect to its
choice of law principles).
10.16 Resolution of Disputes
(a) All disputes between Taylor, Cannon, and/or any Shareholder
Indemnified Person, on the one hand, and Waste Industries, Subsidiary or any WI
Indemnified Person, on the other hand, arising under this Agreement, including
any agreement which is an exhibit hereto or executed in connection herewith
which does not explicitly contain a dispute resolution provision, or in relation
to the matters contemplated hereby, will be resolved by binding arbitration in
accordance with the then-current rules and regulations of the American
Arbitration Association.
(b) The arbitrators will be selected as follows: In the event the
parties involved in such dispute agree on one arbitrator, the arbitration will
be conducted by such arbitrator. In the event the parties involved in such
dispute do not so agree, they will each select one independent, qualified
arbitrator and the two arbitrators so selected will select the third arbitrator.
In the event that there are three arbitrators conducting the arbitration, such
arbitrators will act by majority vote.
(c) Arbitration will take place at Charlotte, North Carolina, or any
other location mutually agreeable to the parties involved in such dispute. At
the request of any party involved in such dispute, arbitration proceedings will
be conducted on a confidential basis; in such case all documents, testimony and
records will be received, heard and maintained by the arbitrators in secrecy
under seal, available for the inspection only of the parties involved in such
dispute and their respective attorneys and their respective experts who will
agree in advance and in writing to receive all such information confidentially
and to maintain such information in secrecy until such information becomes
generally known. The arbitrator(s) will be able to decree any and all relief of
an equitable nature, including but not limited to such relief as a temporary
restraining order, a temporary or a permanent injunction, and will also be able
to award damages. The decree or judgment of an award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. Except as the
arbitrator(s) will otherwise decide is fair and reasonable, each party will bear
its own attorneys' fees and expenses in connection with such proceeding and will
bear one-half of the fees and expenses of the arbitrator(s) relating to such
proceeding.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized,
all as of the date first written above.
WASTE INDUSTRIES, INC. TRANS WASTE SERVICES, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- ----------------------------
Its: President Its: President
-------------------------- ----------------------------
TWS MERGER CORPORATION THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Agent by
Its: President Power of Attorney, dated July
-------------------------- 27, 1998, for ▇▇▇▇▇ ▇▇▇▇▇▇,
Inc., Custodian of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
MML LIMITED PARTNERSHIP
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Its: General Partner
--------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
49