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STOCK PURCHASE AGREEMENT
By and Among
IESI NY CORPORATION
AS BUYER
▇▇▇▇▇ ▇▇▇▇▇▇
AS SELLER
SENECA ▇▇▇▇▇▇▇, INC.
and
MACEDON HOMES INCORPORATED
Dated May 22, 2003
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS..................................................1
ARTICLE 2 THE TRANSACTION..............................................9
2.1. Sale and Purchase of the Shares; Transfer of Landfill
Interests; Purchase Price; Closing...........................9
2.2. Payment of Purchase Price...................................10
2.3. Additional Payments.........................................10
2.4. Additional Contingent Payment...............................12
2.5. Deposit.....................................................13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER....................13
3.1. Capacity, Organization, Standing and Qualification..........13
3.2. Capitalization and Ownership................................13
3.3. Authority...................................................14
3.4. Execution and Delivery......................................14
3.5. No Conflicts; Consents......................................14
3.6. Minute Book, Records, Officers; Bank Accounts;
Powers of Attorney, Etc.....................................15
3.7. Financial Statements; Accounts Receivable...................15
3.8. Taxes.......................................................16
3.9. Contracts...................................................16
3.10. Personal Property...........................................18
3.11. Owned Real Property; Leased Real Property...................18
3.12. Compliance with Law.........................................20
3.13. Environmental, Health, and Safety Matters...................20
3.14. Permits.....................................................23
3.15. Landfill Capacity...........................................23
3.16. Ordinary Course.............................................23
3.17. No Adverse Changes..........................................23
3.18. Litigation..................................................25
3.19. Insurance...................................................25
3.20. Intellectual Property.......................................26
3.21. Transactions with Affiliates................................26
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TABLE OF CONTENTS
(continued)
Page
3.22. Labor Matters...............................................26
3.23. Employee Benefit Plans......................................27
3.24. Operation of the Business; Landfill.........................28
3.25. Undisclosed Liabilities.....................................28
3.26. Customers...................................................28
3.27. Brokers.....................................................29
3.28. Condition of Assets.........................................29
3.29. Miscellaneous...............................................29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.....................30
4.1. Organization................................................30
4.2. Authority...................................................30
4.3. Execution and Delivery......................................30
4.4. No Conflicts; Consents......................................30
4.5. Brokers.....................................................31
ARTICLE 5 COVENANTS OF SELLER, MACEDON AND THE COMPANY................31
5.1. Conduct of Business Pending Closing.........................31
5.2. Ordinary Course.............................................32
5.3. Required Consents...........................................32
5.4. Survey......................................................33
5.5. Delivery of Real Property Documentation.....................33
5.6. Review and Status of Title..................................34
5.7. Title to the Property.......................................34
5.8. Transfer Tax Forms..........................................35
5.9. Access, Information, and Documents..........................35
5.10. Acquisition Proposals.......................................36
5.11. Preparation of Certain Schedules............................36
5.12. Audit.......................................................36
5.13. Benefit Plans...............................................37
ARTICLE 6 CONDITIONS TO CLOSING.......................................37
6.1. Conditions Precedent to Obligations of Buyer................37
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TABLE OF CONTENTS
(continued)
Page
6.2. Conditions Precedent to the Obligations of
Seller and Macedon..........................................39
ARTICLE 7 DELIVERIES AND PROCEEDINGS AT CLOSING.......................40
7.1. Closing Deliveries by Seller................................40
7.2. Deliveries by Macedon.......................................41
7.3. Deliveries By Buyer.........................................41
7.4. Other Documents.............................................42
ARTICLE 8 TERMINATION.................................................42
8.1. Termination.................................................42
8.2. Effect of Termination.......................................43
ARTICLE 9 CERTAIN ADDITIONAL COVENANTS................................43
9.1. Costs and Expenses..........................................43
9.2. Non-Competition; Non-Raid...................................43
9.3. Rochester Transfer Station..................................44
9.4. Public Announcements........................................44
9.5. Covenants of Buyer..........................................45
9.6. Participation in Negotiations...............................45
9.7. Certain Relationships.......................................45
9.8. Specified Plot Easement.....................................45
9.9. Equipment Purchases.........................................46
ARTICLE 10 TAXES.......................................................46
10.1. Taxes.......................................................46
10.2. Cooperation on Tax Matters..................................46
ARTICLE 11 INDEMNIFICATION.............................................47
11.1. Survival....................................................47
11.2. Indemnification by Seller and Macedon.......................48
11.3. Indemnification by Buyer....................................48
11.4. Notice and Opportunity to Defend............................48
11.5. Reimbursement...............................................49
11.6. Adjustments to Indemnification Payments.....................49
11.7. No Other Representations....................................50
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TABLE OF CONTENTS
(continued)
Page
11.8. Specific Performance........................................50
11.9. Purchase Price Adjustment...................................51
11.10. Survival of Indemnification Obligations.....................51
ARTICLE 12 MISCELLANEOUS...............................................51
12.1. Notices.....................................................51
12.2. Successors and Assigns......................................52
12.3. Construction................................................52
12.4. Governing Law; Jurisdiction.................................53
12.5. Headings....................................................53
12.6. Counterparts................................................53
12.7. Further Assurances..........................................53
12.8. Course of Dealing...........................................53
12.9. Severability................................................53
12.10. Entire Agreement............................................54
12.11. Amendments and Waivers......................................54
Exhibits
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A Plat For Landfill
B Form of Note
C Form of Working Capital Statement
D Form of Non-Competition Agreement
E Form of Disposal Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made and
entered into this 22nd day of May, 2003, by and among IESI NY Corporation, a
Delaware corporation ("Buyer"), Seneca ▇▇▇▇▇▇▇, Inc., a New York corporation
(the "Company"), Macedon Homes Inc., a New York corporation ("Macedon"), and
▇▇▇▇▇ ▇▇▇▇▇▇, an individual, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Seller").
WITNESSETH
WHEREAS, Seller is the sole stockholder of the Company;
WHEREAS, the Company operates and, together with Seller and
Macedon, owns a municipal solid waste landfill (the "Business");
WHEREAS, upon the terms and conditions set forth in this
Agreement, Buyer desires to purchase, and Seller desire to sell, assign and
transfer to Buyer all outstanding capital stock of the Company; and
NOW, THEREFORE, in consideration of the foregoing, the
respective representations, warranties and covenants set forth herein, and for
good and valuable consideration, the sufficiency of which is hereby
acknowledged, Buyer, Seller and Macedon hereby agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement (including the Schedules and Exhibits
annexed hereto), the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Accounts Receivable" has the meaning specified in Section
2.3(a).
"Accounts Receivable Statement" has the meaning specified in
Section 2.3(f).
"Acquisition Financing" has the meaning specified in Section
6.1(h).
"Affiliate" means, when used with respect to any Person, (a)
if such Person is a corporation, any officer or director thereof and any Person
which is, directly or indirectly, the beneficial owner (by itself or as part of
any group) of more than twenty-five percent (25%) of any class of any voting
security thereof, (b) if such Person is an LLC, any officer or manager thereof
and any Person which is, directly or indirectly, the beneficial owner (by itself
or as part of any group) of more than twenty-five percent (25%) of any class of
any voting interest therein, (c) if such Person is a partnership, any general
partner thereof and any Person which is, directly
or indirectly, the beneficial owner (by itself or as part of any group) of more
than twenty-five percent (25%) of any limited partnership interest thereof, and
(d) any other Person which directly or indirectly, through one or more
intermediaries controls, is controlled by, or is under common control with, such
Person. For purposes of this definition: (i) any "beneficial owner" that is a
partnership shall be deemed to include any general or limited partner thereof;
any "beneficial owner" that is an LLC shall be deemed to include any Person
controlling, controlled by or under common control with such beneficial owner,
or any officer, manager or member of such beneficial owner or of any LLC
occupying any such control relationship; and any "beneficial owner" that is a
corporation shall be deemed to include any Person controlling, controlled by or
under common control with such beneficial owner, or any officer or director of
such beneficial owner or of any corporation occupying any such control
relationship; and (ii) "control" (including the correlative terms "controlling,"
"controlled by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" has the meaning specified in the Introduction
hereto.
"Allocation" has the meaning specified in Section 10.2(b).
"Ancillary Documents" has the meaning specified in Section
3.3.
"Antitrust Division" has the meaning specified in Section
5.3(b)
"Benefit Plans" has the meaning specified in Section 3.23.
"Board Approval" has the meaning specified in Section 4.4.
"Books and Records" includes the original and all copies of
reports, books, manuals, financial statements, or reports, price books,
confirmations, telegrams, receipts, inventory books, contracts, printed matters,
computer printouts, teletypes, invoices, transcripts, analyses, Tax Returns,
minutes, accounts, estimates, projections, comparisons, press releases, reviews,
opinions, studies and investigations, graphic representations of any kind
(including photographs, charts, graphs, videotape and motion pictures,
electronic and mechanical records, tapes, cassettes, discs, and recordings,
whether preserved in writing, phono record, film, tape, videotape, or computer
record).
"Business" has the meaning specified in the Recitals hereto.
"Business Day" means any day other than Saturday, Sunday or
other days on which commercial banks in New York City are authorized or
permitted by law to close.
"Buyer" has the meaning specified in the Introduction hereto.
"Bylaws" means the bylaws of any corporation organized under
the laws of any State of the United States of America, as amended or restated
through the date hereof or the Closing Date, as the case may be.
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"CERCLA" has the meaning specified in Section 3.13(c).
"CERCLIS" has the meaning specified in Section 3.13(d).
"Charter" means the Certificate of Incorporation or Formation,
Articles of Incorporation or Organization or other organizational document of a
corporation or an LLC organized under the laws of any State of the United States
of America, as amended or restated through the date hereof or the Closing Date,
as the case may be.
"City" has the meaning specified in Section 9.4(b).
"Claims" means, whether or not formally asserted, all demands,
claims, actions or causes of action, assessments, suits, proceedings, hearings,
arbitrations, litigations, charges, complaints, disputes, investigations,
Losses, damages, costs, expenses, liabilities, judgments, awards, fines,
sanctions, penalties, charges, and/or amounts paid in settlement, including
costs, fees and expenses of attorneys, court costs, experts, accountants,
appraisers, consultants, witnesses, investigators and/or any other Persons
employed or retained in connection with any of the foregoing.
"Closing" has the meaning specified in Section 2.1(d).
"Closing Date" has the meaning specified in Section 2.1(d).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collectible" has the meaning specified in Section 3.7(b).
"Company" has the meaning specified in the Introduction
hereto.
"Company Employees" has the meaning specified in Section
5.13(c).
"Company Retirement Plans" has the meaning specified in
Section 5.13(b).
"Contracts" has the meaning specified in Section 3.9(a).
"Contaminant" means any pollutant, hazardous substance,
radioactive substance, toxic substance, hazardous waste, medical waste,
radioactive waste, special waste, acid or other toxic drainage, petroleum or
petroleum-derived substance or waste, asbestos, polychlorinated biphenyls, or
any hazardous or toxic constituent thereof and includes, but is not limited to,
any substance defined in or regulated under any Environmental Law.
"Contingent Payment" shall have the meaning specified in
Section 2.4.
"CPA" has the meaning specified in Section 2.3(e).
"DEC" means the New York State Department of Environmental
Conservation.
"Deposit" has the meaning specified in Section 2.5.
3
"Disapproved Exceptions" has the meaning specified in Section
5.6.
"Disposal Agreement" has the meaning specified in Section 9.3.
"Dove Property" has the meaning specified in Section 9.8.
"Election" has the meaning specified in Section 10.2(b).
"Election Date" has the meaning specified in Section 3.8(b).
"Employee Policies and Procedures" has the meaning specified
in Section 3.22(c).
"Employment and Labor Agreements" has the meaning specified in
Section 3.22(a).
"Encumbrance" means restrictions, covenants, conditions,
easements, rights of way, and other encumbrances that adversely affect the use,
utility or value of real property.
"Environmental Claim" means any Claim, or written notice by
any Person, including without limitation any Governmental Authority, alleging
potential liability (including potential liability for investigatory tests,
cleanup costs, governmental response costs, natural resource damages, property
damages, personal injuries and penalties) arising out of, based on or resulting
from (i) the presence or Release of any Contaminant at any location, (ii) any
Environmental Condition, or (iii) any other circumstance forming the basis of
any violation, or alleged violation, of any Environmental Law.
"Environmental Condition" means a condition of the soil,
surface waters, groundwater, stream sediments, air and other environmental
media, including the presence or Release of a Contaminant, at, under, or
migrating from a property that, by virtue of Environmental Laws, (i) requires
investigatory, corrective or remedial measures, and/or (ii) comprises a basis
for Claims against, demands of and/or liabilities of Seller, Macedon, the
Company or Buyer. "Environmental Condition" shall include those conditions
identified or discovered before or after the Closing Date resulting from any
activity, inactivity or operations of Macedon, Seller or the Company whatsoever
before the Closing Date.
"Environmental Law" means any Law, which relates to or
otherwise imposes Liability or standards of conduct concerning discharges,
emissions, releases or threatened releases of noises, odors or any pollutants,
contaminants or hazardous or toxic waste, substances or materials, whether or
not as matter or energy, into ambient air, water, or land, or otherwise relating
to the manufacture, processing, generation, distribution, use, treatment,
storage, disposal, clean-up, transport or handling of pollutants, Contaminants,
or hazardous waste, substances or materials, including (but not limited to)
CERCLA, the Resource Conservation and Recovery Act ("RCRA"), as amended, the
Federal Water Pollution Control Act, as amended, the Toxic Substances Control
Act, as amended, the Clean Air Act, as amended, any so-called "Super Lien" law,
the Occupational Safety and Health Act, as amended, the Safe Drinking Water Act
and any other similar federal, state or local statutes and regulations and
written guidance promulgated pursuant to the above statutes.
4
"Environmental Lien" means any lien in favor of any
Governmental Authority for any liability under any Environmental Law, or damages
arising from, or costs incurred by such Governmental Authority in response to a
Release or threatened Release of a Contaminant into the environment.
"Environmental Permit" means any permit, license, franchise,
certificate, bond, surety deposit, approval, consent or other authorization
required by, or pursuant to, any applicable Environmental Law.
"ERISA" means Employment Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning specified in Section
3.23(d).
"Excess Section 338 (h)(10) Taxes" has the meaning specified
in Section 10.2(b).
"Exclusivity Agreement" has the meaning specified in Section
2.5.
"Escrow Amount" has the meaning specified in Section 6.1(i).
"Expansion Permits" has the meaning specified in Section 2.4.
"Final Adjustments Report" has the meaning specified in
Section 2.3(c).
"Financial Statements" has the meaning specified in Section
3.7.
"Former Property" has the meaning specified in Section
3.13(a).
"FTC" has the meaning specified in Section 5.3(b).
"GAAP" means the generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Financial
Statements were prepared.
"Governmental Authority" means all agencies,
instrumentalities, departments, commissions, courts, tribunals, or boards of any
government, whether foreign, federal, state, or local.
"HSR Act" has the meaning specified in Section 3.5.
"Indemnifiable Loss" has the meaning specified in Section
11.5.
"Indemnified Party" has the meaning specified in Section 11.4.
"Indemnifying Party" has the meaning specified in Section
11.4.
"Indemnity Fund" has the meaning specified in Section 11.6(b).
"Intellectual Property" has the meaning specified in Section
3.20.
5
"IRS" means the Internal Revenue Service and any similar or
successor agency of the federal government of the United States of America
administering the Code.
"Landfill" means the municipal solid waste landfill business
located on approximately 1,500 acres in the Towns of Seneca Falls and Waterloo,
Seneca County, New York, generally indicated on the plat map attached hereto as
Exhibit A and operated under permit #▇-▇▇▇▇-▇▇▇▇▇/00001-0 Expiration date April
13, 2009.
"Law" means any law, statute, ordinance, regulation, rule,
order, permit, court or administrative order, decree or process, settlement
agreement or principal of common law.
"Leased Real Property" has the meaning set forth in Section
3.11(c).
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including those arising under any law,
action or governmental order and those arising under any contract, agreement,
arrangement commitment or undertaking or otherwise in respect of Seller, the
Company, the Landfill or the Business.
"Lien" means, with respect to any asset or right, any
mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien, charge, restriction, adverse claim or right whatsoever, title defect or
Encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any assignment or other conveyance
of any right to receive income and any assignment of receivables with recourse
against assignor), any filing of any financing statement as debtor under the
Uniform Commercial Code or comparable law of any jurisdiction and any agreement
to give or make any of the foregoing except with respect to securities
restrictions on transferability imposed by federal and state securities laws.
"LLC" means a limited liability company.
"Losses" has the meaning specified in Section 11.2.
"Macedon" has the meaning specified in the Introduction
hereto.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), of Seller, the Business, the
Landfill or the prospects, operations, results of operations or Liabilities of
the Company, other than changes or effects resulting from entering into this
Agreement or the consummation of the transactions contemplated by this Agreement
or (ii) the validity or enforceability of this Agreement or the ability of
Macedon, the Company or Seller to perform their respective obligations under
this Agreement.
"NLRB" has the meaning specified in Section 3.22(b).
"Note" has the meaning specified in Section 2.2.
"Notice of Dispute" has the meaning specified in Section
2.3(e).
6
"Owned Real Property" has the meaning specified in Section
3.11(a).
"PCBs" has the meaning specified in Section 3.13(o).
"Permits" has the meaning specified in Section 3.14.
"Permitted Encumbrances" has the meaning specified in Section
3.11(a)(i).
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for Taxes, not yet due and payable; (b) purchase money
Liens upon or in equipment acquired or held by Seller in the ordinary course of
business to secure the purchase price of such equipment or to secure debt
incurred solely for the purpose of financing the acquisition of any such
equipment to be subject to such Liens, or Liens existing on any such equipment
at the time of acquisition; and (c) Permitted Encumbrances.
"Person" means any natural person, corporation, business
trust, trust, estate, partnership, limited partnership, LLC, limited liability
partnership, association, joint venture, or other entity.
"Policies" has the meaning specified in Section 3.19.
"Principal Landfill Property" means all real property owned by
the Company and/or Macedon as identified by the following tax accounts: 27-1-01;
27-1-23.2; 27-1-23.1; 27-1-27.11; 27-1-27.12;.......27-1-02;.27-1-31;
27-1-28;33-1-72; 33-1-16.21; 30-1-01; 30-1-17.112; 30-1-03; 30-1-02; and
30-1-04.2. All located west of Rt. 414 in the towns of Waterloo and Seneca
Falls, New York
"Purchase Price" has the meaning specified in Section 2.1(c).
"Real Property Leases" has the meaning specified in Section
3.11(c).
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water, groundwater at, under or about any
of the Owned Real Property or any Former Property.
"Remedial Action" means actions requested or required to (A)
clean up, remove, treat or in any other way address Contaminants in the
environment; (B) prevent the Release or threat of Release or minimize the
further Release of any Contaminant; (C) perform pre-remedial studies and
investigations and post-remedial monitoring care; or (D) correct any violation
of any Environmental Law.
"Required Consents" has the meaning specified in Section 3.5.
"Rochester Transfer Station" has the meaning specified in
Section 9.3.
"S Final Year" has the meaning specified in Section 10.2(c).
7
"Schedule" has the meaning specified at the beginning of
Article 3.
"Seller" has the meaning specified in the Introduction hereto.
"Senior Lender's Approval" has the meaning specified in
Section 4.4.
"Shares" has the meaning specified in Section 3.2 hereto.
"SM 11 Consent Order" has the meaning specified in Section
6.1(l).
"Specified Plot" means that plot land represented by tax
account Nos. 27-1-05.2 and 27-1-26.2.
"Stock Certificates" has the meaning specified in Section
7.1(b).
"Surveys" has the meaning specified in Section 5.4.
"Tantello Consent Order" has the meaning specified in Section
6.1(l).
"Taxes" or "Tax" means (i) any federal, state, local, foreign,
or other tax of any kind whatsoever (together with any interest, penalties, or
additions imposed with respect thereto), including, without limitation, income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, service, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
sales, use, transfer, recording, registration, value added, alternative or
add-on minimum, estimated, rental, lease, ad valorem, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not and (ii) any Liability or obligation for the payment of any
amount described in clause (i) as a result of being a member of any "affiliated
group" (as defined in Section 1504(a) of the Code) or as a transferee or
successor, pursuant to a Tax sharing or indemnification agreement, by contract
or otherwise.
"Tax Return" or "Tax Returns" means returns, reports,
information statements, and other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or maintained,
in connection with the calculation, determination, assessment, or collection of
any Tax.
"Taxing Authority" means any governmental authority, domestic
or foreign, having jurisdiction over the assessment, determination, collection,
or other imposition of any Tax.
"Third Party" has the meaning specified in Section 5.10.
"Title Commitments" has the meaning specified in Section 5.6.
"Title Company" has the meaning specified in Section 5.6.
"Title Policies" has the meaning specified in Section 5.7(b).
8
"Transfer Taxes" has the meaning specified in Section 10.1.
"Treasury Regulations" means valid regulations issued by the
United States Treasury Department pursuant to the Code and shall include
temporary regulations. Any reference to a provision of temporary Treasury
Regulations shall, if such provision is modified or renumbered, be deemed to
refer to the successor provision as so modified or renumbered, but only to the
extent that such successor provision applies to Seller under the effective date
rules applicable to such successor provision.
"Worker Health and Safety Laws" shall mean all federal, state
or local laws, including ordinances, requirements, rules, regulations, licenses,
permits, orders, injunctions, judgments or decrees relating to or addressing
workplace or worker safety and health.
"Working Capital" has the meaning specified in Section 2.3(a).
"Working Capital Adjustment" has the meaning specified in
Section 2.3(b).
"Working Capital Statement" has the meaning specified in
Section 2.3(a).
ARTICLE 2
THE TRANSACTION
2.1. Sale and Purchase of the Shares; Transfer of Landfill
Interests; Purchase Price; Closing
(a) Upon the terms and subject to the conditions contained
herein, Seller shall sell, transfer, assign and deliver to Buyer, and Buyer
shall purchase and accept from Seller, all right, title and interest in and to
the Shares.
(b) In connection with the sale and transfer of the Shares,
each of Macedon and Seller shall, prior to the Closing, transfer to the Company
all of its right, title and interest in and to the Landfill free and clear of
all Claims, Liens and objections or equities of any kind, and the Company
thereafter shall own good, indefeasible and marketable fee simple title to the
Landfill that a licensed insurance company acceptable to Buyer would be willing
to insure on commercially reasonable terms.
(c) Purchase Price. The purchase price (the "Purchase Price")
for the Shares shall be (i) One Hundred and Seventy Nine Million Dollars
($179,000,000) plus (ii) the Escrow Amount, plus or minus (iii) any additional
amounts payable to, or owing from, Seller in respect of Working Capital
Adjustments pursuant to Section 2.3(b) below (as such amount may be adjusted
pursuant to Section 2.3(d) below), plus (iv) Fifteen Million Dollars
($15,000,000) payable, if and only if, the Buyer receives the Expansion Permits
and the Landfill has certain average daily volumes, all as more fully described
in Section 2.4 below, plus (v) Four Hundred One Thousand Five Hundred Eleven and
Ninety-Eight Hundredths Dollars ($401,511.98) for the ▇▇▇▇▇ Road Gravel Pit
purchased by the Company, plus (vi) Four Hundred Eighty Four Thousand Nine
Hundred Ninety Four and Fifty Two Hundredths Dollars ($484,994.52) due for a
9
2003 Aljohn compactor, Serial No. 13938, which has been received by Seller, plus
(vii) any amounts due pursuant to Section 9.9 hereof.
(d) Closing Time and Place. Subject to the terms and
conditions of this Agreement, the closing of the transactions contemplated under
this Agreement (the "Closing") shall take place at the offices of counsel to
Seller at 10:00 A.M., Eastern Standard Time as promptly as practicable following
satisfaction or waiver of the conditions set forth in Article 6 hereof or at
such other place or such other time as the parties hereto shall mutually agree,
provided that, notwithstanding the satisfaction or waiver of such conditions,
unless the Seller shall otherwise agree, the Closing shall not take place
between November 30, 2003 and January 4, 2004. The date on which Closing
actually occurs is hereinafter referred to as the closing date (the "Closing
Date"). Notwithstanding the Closing, Seller and Macedon shall deliver the Stock
Certificates representing the Shares to Buyer only upon receipt of payment of
all amounts due under the Note (provided that, if requested by Buyer, Seller and
Macedon shall, upon the Closing, deliver such Stock Certificates to a mutually
acceptable agent to hold such certificates in escrow until receipt by Seller of
the payment under the Note), and upon such payment, the Note shall be cancelled
and returned to Buyer.
2.2. Payment of Purchase Price. At the Closing, and subject to
the terms of this Agreement, Buyer shall pay to Seller, a portion of the
Purchase Price described in Section 2.1(c) above by delivery of a note (the
principal amount of which shall be the aggregate Purchase Price, excluding the
amount referred to in Section 2.1(c)(iv) above and any Purchase Price
adjustments under Section 2.3(d) below), less the amount of the Deposit. A form
of such note is set forth in Exhibit B attached hereto (the "Note"). The portion
of the Purchase Price referenced in to Section 2.1(c)(iv) above shall be payable
by Buyer within 30 Business Days of the satisfaction of the conditions set forth
in Section 2.4 below, so long as the account to which such funds are to be
transferred are specified to Buyer by Seller at least two (2) Business Days
prior to the date of transfer.
2.3. Additional Payments. Pursuant to Section 2.1(c)(iii)
above, Buyer will pay Seller the amounts indicated below as follows:
(a) At least three (3) Business Days prior to the Closing
Date, Seller shall deliver to Buyer a schedule of the Working Capital (as such
term is hereinafter defined) as of the last day of the calendar month preceding
the Closing Date (the "Working Capital Statement"), in form and substance
substantially equivalent to that working capital statement for the Company based
on the year ended December 31, 2001 attached hereto as Exhibit C.
As used herein, "Working Capital" shall be defined as cash and
cash equivalents, accounts receivable ("Accounts Receivable"), other receivables
and prepaid assets, LESS current and non-current portions of debt, accounts
payable, accrued payroll withholdings (including payroll taxes), customer
deposits and other accrued expenses. Notwithstanding anything contained herein
to the contrary, Working Capital does not include the landfill
closure/post-closure reserve or any leases or rental purchase agreement
liabilities relating to equipment set forth on Schedule 3.10 used solely to
construct landfill cells or any amounts due from, or owing to, affiliates of the
Company. Seller and the Company agree that any amounts due from or owing to
Affiliates of the Company shall be settled prior to the Closing.
10
(b) Based on the Working Capital Statement, the Purchase Price
paid at Closing in accordance with Section 2.1 shall be adjusted on the Closing
Date in accordance with this Section 2.3(b) (the "Working Capital Adjustment").
If the Working Capital is less than zero, then for each full dollar that the
Working Capital is less than zero, the Purchase Price shall be decreased by an
amount equal to One Dollar ($1.00). If the Working Capital is greater than zero,
then for each full dollar that the Working Capital is greater than zero, the
Purchase Price shall be increased by an amount equal to One Dollar ($1.00).
(c) Within thirty (30) days after the Closing, Seller shall
deliver to Buyer a report (the "Final Adjustments Report"), prepared by Seller
in good faith and on a reasonable basis, setting forth in reasonable detail the
final determination of the Working Capital through the end of the close of
business on the Closing Date.
(d) Within fifteen (15) days after Buyer's receipt of the
Final Adjustments Report, Buyer shall review the Final Adjustments Report and
notify Seller in writing whether or not Buyer accepts all or any of the
adjustments set forth on the Final Adjustments Report. If Buyer accepts the
Final Adjustments Report with respect to all adjustments contained therein,
Buyer or Seller, as appropriate, shall make any payment required under this
Section 2.3(d). If the amount of Working Capital set forth on the Final
Adjustments Report is greater than the amount of Working Capital set forth on
the Working Capital Statement, Buyer shall pay Seller the amount of such
difference within twenty (20) days after Buyer's receipt of the Final
Adjustments Report. If the amount of Working Capital set forth on the Final
Adjustments Report is less than the amount of Working Capital set forth the
Working Capital Statement, Seller shall pay Buyer the amount of such difference
within twenty (20) days after Buyer's receipt of the Final Adjustments Report.
(e) If Buyer in good faith objects to any adjustments set
forth on the Final Adjustments Report, Buyer shall give notice (the "Notice of
Dispute") thereof to Seller in writing within ten (10) days after receipt of the
Final Adjustments Report, specifying in reasonable detail the nature and extent
of such disagreement and Buyer and Seller shall have a period of fifteen (15)
days from Seller's receipt of such notice in which to resolve such disagreement.
Buyer shall pay Seller in accordance with this Section 2.3(e) any amount not
disputed as set forth in the Notice of Dispute. If such Notice of Dispute is not
received by Seller within ten (10) days after receipt of the Final Adjustments
Report, it shall be deemed that Buyer has accepted the Final Adjustments Report
with respect to all items set forth therein and Buyer or Seller, as appropriate,
shall make any payment described in this Section 2.3(e). Any disputed amounts
which cannot be agreed to by the parties within fifteen (15) days from Seller's
receipt of Buyer's Notice of Dispute to any of the adjustments set forth in the
Final Adjustments Report shall be determined by a nationally recognized
accounting firm mutually acceptable to Buyer and Seller (the "CPA"). The
engagement of and the determination by the CPA (or any other accounting firm
designated by the CPA as set forth below) shall be completed within forty-five
(45) days after such assignment is given to the CPA and shall be binding on and
shall be nonappealable by Seller and Buyer. If for any reason the CPA is unable
to act in such capacity, such determination will be made by any other nationally
recognized accounting firm selected by the CPA. The fees and expenses payable to
the CPA (or any other accounting firm designated by the CPA) in connection with
such determination will be borne fifty percent (50%) by Seller and fifty percent
(50%) by Buyer, unless (i) the determination of the CPA (or any other accounting
11
firm designated by the CPA) with respect to the disputed amounts results in a
payment by Seller in an amount which exceeds by more than Twenty-Five Thousand
Dollars ($25,000) the amount Seller shall have claimed they owe hereunder in
which case the fees and expenses payable to the CPA (or any other accounting
firm designated by the CPA) shall be paid by Seller, or (ii) the determination
of the CPA (or any other accounting firm designated by the CPA) with respect to
the disputed amounts results in a payment by Buyer in an amount which exceeds by
more than Twenty-Five Thousand Dollars ($25,000) the amount Buyer shall have
claimed it owed hereunder, in which case the fees and expenses payable to the
CPA (or any other accounting firm designated by the CPA) shall be paid by Buyer.
Any amounts due and owing to any party under this Section 2.3(e) shall be paid
to such party within -60- Business Days of the date that all items of dispute
are settled between the parties.
(f) Seller shall prepare and deliver to Buyer a schedule of
the estimated Accounts Receivable as of the Closing Date (the "Accounts
Receivable Statement") in accordance with the procedures, policies and methods
set forth in Section 3.7(b) hereof. The Accounts Receivable Statement shall
represent a good faith estimate of all Accounts Receivable payable to the
Company as of the Closing Date, excluding those more than ninety (90) days in
arrears, which shall be deemed uncollectible by the Company. At the Closing,
such Accounts Receivable more than ninety (90) days in arrears shall be assigned
by the Company to Seller. For a period of ninety (90) days following the
Closing, Buyer shall use the customary collection efforts as in practice on the
Closing Date to collect all amounts owed on Accounts Receivable existing on the
Closing Date and reflected in the Accounts Receivable Statement. Any amount
collected with respect to any particular customer shall be applied first to the
oldest Account Receivable reflected in the Accounts Receivable Statement for
such customer. In the event all such amounts owed on Accounts Receivable
existing on the Closing Date are not collected by the 90th day following the
Closing, Seller shall pay to Buyer the amount owed on Accounts Receivable
existing on the Closing Date that has not been collected by the 90th day
following the Closing in immediately available funds, within fifteen (15) days
of the end of such ninety (90) day period. Those Accounts Receivable that remain
uncollected at the end of such ninety (90) day period shall be reassigned to
Seller upon Buyer's receipt of payment from Seller. Thereafter, Buyer shall
promptly remit to Seller any amount received by Buyer as payment for an Account
Receivable transferred back to Seller.
2.4. Additional Contingent Payment. After the Closing, Buyer
shall, subject to Section 11.2 below, pay to Seller, in addition to the Purchase
Price, $15,000,000 (the "Contingent Payment"), so long as the following
conditions are satisfied: (1) Buyer shall have received all necessary permits,
including permit modifications, to increase the Landfill's permitted disposal
capacity to a minimum of Nine Thousand (9,000) tons per day, which permits shall
be final and nonappealable and otherwise acceptable to Buyer in Buyer's
commercially reasonable discretion (the "Expansion Permits"), and (2) after the
Expansion Permits are issued and become effective, the Landfill shall have
received Eight Thousand Seven Hundred Fifty (8,750) tons per day of municipal
solid waste, as determined on an average daily basis for a period of sixty (60)
consecutive Business Days, based on a five and one-half day week. Buyer will
commence development of an application for the Expansion Permits promptly after
the Closing. The parties acknowledge that the issuance of the Expansion Permits
depends on the approval of the DEC, which such approval can not be guaranteed by
the parties. Promptly following the issuance of the Expansion Permits, or at
such earlier time as determined by Buyer
12
in its sole discretion, Buyer shall use reasonable commercial efforts to pursue
waste volumes from New York City and other sources for delivery to the Landfill
to meet the contingency payment requirements of this Section 2.4. The covenants
contained in this Section 2.4 shall survive the Closing. Buyer shall supply to
Seller a copy of all quarterly volume reports within thirty (30) days after the
submission to the DEC, commencing with the first report due following the
receipt of Expansion Permits and ceasing on the date Buyer pays Seller the
additional contingent payment of $15,000,000 (subject to Section 11.2 below).
2.5. Deposit. The Seller acknowledges that the Buyer has
deposited, with Seller, One Hundred Thousand Dollars ($100,000.00) (the
"Deposit") pursuant to the terms of the exclusivity agreement ("Exclusivity
Agreement") executed by the Buyer and Seller on January 15, 2003.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to and except as disclosed on a schedule or exceptions
(a "Schedule") attached hereto and referred to herein (which schedule of
exceptions shall be organized so that disclosure therein will refer specifically
to the section of this Agreement to which it relates and disclosure in one
portion or section shall not be deemed to constitute disclosure in any other
portion or section unless an explicit cross reference is provided), Seller and
Macedon (when applicable) hereby represent and warrant, to Buyer, as of the date
hereof and as of the Closing Date, as follows:
3.1. Capacity, Organization, Standing and Qualification. (a)
Seller is at least twenty-one years of age and has the capacity to enter into
contracts.
(b) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. The
Company (i) has full right, power and authority to carry on the Business as now
being conducted, and to own or lease and operate its properties as and in the
places where the Business is now conducted and where such properties are now
owned or leased and operated, and (ii) is duly qualified, licensed or authorized
to do business and, if applicable, in good standing in each jurisdiction listed
on Schedule 3.1, which jurisdictions are the only jurisdictions wherein the
characters of the properties owned or leased or the nature of the activities
conducted by it make such qualifications necessary.
3.2. Capitalization and Ownership. The authorized capital
stock of the Company consists of Six Million Two Hundred (6,000,200) shares of
common stock, par value $0.001 per share, of which 26,821 shares are issued and
outstanding (the "Shares"). Seller is the sole record and beneficial owner of
all the Shares issued and outstanding. All of the Shares have been duly
authorized, validly issued, and are fully paid and non-assessable. Except for
the Shares, there are no other equity securities of any class issued, reserved
for issuance or outstanding. There are no outstanding securities, options,
warrants, rights, agreements, calls, subscription commitments, demands, or
understandings of any character whatsoever, fixed or contingent, that directly
or indirectly (a) call for the issuance, sale or other disposition of any
capital stock of the Company and there are no securities convertible into or
exchangeable for any
13
capital stock of the Company or (b) obligate Seller or the Company to grant,
offer or enter into any of the foregoing or (c) relate to the voting or control
of any capital stock of the Company. At the Closing, Seller shall transfer to
Buyer good and valid title to the Shares, free and clear of all Claims and Liens
of whatever nature.
3.3. Authority. Each of the Company and Macedon has full
corporate power and authority to enter into this Agreement and each of the other
agreements, certificates, instruments and documents contemplated hereby
(collectively, the "Ancillary Documents") to which it is a party, and to carry
out the transactions contemplated hereby and thereby. Each of the Company and
Macedon has properly taken all corporate action required to be taken by it with
respect to the execution and delivery of this Agreement and each of the
Ancillary Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby.
3.4. Execution and Delivery. This Agreement has been (i)
executed and delivered by each of Seller, Macedon and the Company and (ii)
constitutes a legal, valid and binding obligation of each of Seller, Macedon and
the Company, enforceable against each of Seller, Macedon and the Company in
accordance with its terms and conditions, except as enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
Laws affecting creditors' rights generally or by general principles of equity.
Each Ancillary Document to which Seller, Macedon or the Company is a party will
have been duly authorized, executed and delivered by Seller, Macedon and the
Company, as applicable, upon the Closing and, upon the execution and delivery
thereof, will constitute a legal, valid and binding obligation of Seller,
Macedon and the Company, as applicable, enforceable against Seller, Macedon and
the Company, as applicable, in accordance with its terms and conditions, except
as enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar Laws affecting creditors' rights generally or by
general principles of equity.
3.5. No Conflicts; Consents. Subject to obtaining the consents
and approvals listed on Schedule 3.5 and Schedule 3.11(c), and except as
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and under applicable DEC rules, regulations, and laws
and regulations and laws of governmental authorities where the landfill
properties are located, (all such consents and approvals being referred to in
this Agreement as the "Required Consents"), the execution, delivery and
performance by Seller, Macedon and the Company of this Agreement and each of the
Ancillary Documents and the consummation of the transactions contemplated hereby
and thereby do not and will not violate, conflict with or result in the breach
of any term, condition or provision of (or constitute an event which might, with
or without the passage of time or the giving of notice or both, constitute or
result in a breach, default or violation of), or require the authorization,
approval or consent of any Governmental Authority or any other Person under, or
result in the acceleration of any Liability or obligation of Seller, Macedon or
the Company (or give others the right to cause such acceleration), or result in
the creation or imposition or right to create or impose any Lien upon Seller,
Macedon or the Company, under:
(a) the Charter or Bylaws of the Company;
(b) any Law to which Seller, Macedon or the Company is
subject;
14
(c) any judgment, order, writ, injunction, decree or award of
any Governmental Authority to which Seller, Macedon or the Company is
subject;
(d) any contract or agreement by which Seller, Macedon or the
Company is subject;
(e) any Permit.
3.6. Minute Book, Records, Officers; Bank Accounts; Powers of
Attorney, Etc. (a) The minute book, stock certificate book and stock record book
of the Company is complete and the signatures therein are the true signatures of
the persons purporting to have signed the documents contained therein. The copy
of the Company's minute book that has been provided to Buyer is complete and
correct in all respects. Such minute book contains accurate and complete minutes
of all meetings or written consents to action of the Company's board of
directors and stockholder(s). The Books and Records of the Company have been
maintained in accordance with good business practice on a consistent basis and
accurately reflect the Company's condition, financial or otherwise.
(b) The officers and directors of the Company are as set forth
in Schedule 3.6. Schedule 3.6 also sets forth (i) the name of each bank, savings
institution or other person with which the Company has an account or safe
deposit box and the names and identification of all Persons authorized to draw
thereon or to have access thereto, and (ii) the names of all Persons, if any,
holding powers of attorney from the Company and a summary statement of the terms
thereof.
3.7. Financial Statements; Accounts Receivable. (a) Attached
hereto as Schedule 3.7 is a true and correct copy of the unaudited trial balance
sheet of the Company and related statements of profits and loss as of and for
the twelve (12) month period ended December 31, 2002 and the unaudited balance
sheet of the Company and related statements of profits and loss for the years
ended December 31, 2001, 2000 and 1999 (collectively, the "Financial
Statements"). The Financial Statements (i) were prepared from the Books and
Records of the Company, which Books and Records have been maintained in
accordance with all legal and accounting requirements and completely and
accurately reflect all financial transactions of the Company, (ii) were prepared
in accordance with accounting principles generally accepted in the United States
of America, except as set forth on Schedule 3.7, and (iii) present fairly the
financial condition of the Company and the results of its operations for the
periods covered by, and at the dates of, each of the Financial Statements. The
statements of profit and loss included in the Financial Statements do not
contain any material items of special or non-recurring income or other income
not earned in the ordinary course of business, except as expressly specified
therein.
(b) All Accounts Receivable (i) are reflected on the Accounts
Receivable Statement, (ii) were legally and validly incurred pursuant to bona
fide transactions in the ordinary course of business, (iii) are (or will be)
current and Collectible (as defined below) in amounts not less than the
aggregate amount thereof, and (iv) are not subject to any counterclaims or
set-offs. The term "Collectible" shall mean that not less than 100% of the face
amount of such Accounts Receivable shall be paid within ninety (90) days after
the Closing Date. No fact
15
or circumstance (other than general economic conditions) exists which would
result in any material increase in the uncollectability of Accounts Receivable
as a class. The Accounts Receivable Statement sets forth (A) all Accounts
Receivable, (B) the amount owing and the aging of such receivables, (C) the name
and last known address of the party from whom such receivables are owing, and
(D) any security in favor of the Company for the repayment of such receivables
which the Company purports to have.
3.8. Taxes. (a) (i) The Company has filed when due (taking
into account permitted extensions) with the appropriate Taxing Authorities all
Tax Returns, required to be filed by it on or prior to the date hereof, all of
which Tax Returns are true, correct and complete in all material respects, (ii)
the Company or Seller has paid in a timely manner all Taxes of the Company (or
for which the Company could be liable) which have become due and payable, and
(iii) the Company has withheld and paid over all Taxes which the Company is
obligated to withhold from amounts paid or owing to any employee, independent
contractor, stockholder or other third party. There is no basis for any Taxing
Authority to assess any additional Tax assessment against the Company for any
period for which Tax Returns have been filed. Seller has provided Buyer with
true and complete copies of all Tax Returns filed by or on behalf of the
Company, and all examination reports and statements of deficiencies assessed
against or agreed to by the Company for taxable periods ended after December 31,
1995. The Company is not a party to any agreement with respect to the sharing or
allocation of Taxes. No claim has ever been made by a Taxing Authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. The Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(b) The Company has timely and properly elected to be an S
corporation (within the meaning of Section 1361(a)(1) of the Code) effective
January 1, 1987 (the "Election Date"), and at all times since that date has
continuously remained an S corporation. The Company has timely and properly
elected to be an S corporation in every state and local taxing jurisdiction that
recognizes S corporations and where the Company is subject to Tax, and at all
times since then has continuously remained an S corporation in such
jurisdictions. Neither the Company nor the Seller has taken any action or made
any filing that would terminate the Company's status as an S corporation for
federal, state or local income Tax purposes. Since the Election Date, the
Company has not acquired assets with a carryover basis from a C corporation.
3.9. Contracts. (a) Schedule 3.9 sets forth a true, complete
and correct list of all instruments, agreements, indentures, mortgages,
guarantees, notes, commitments, accommodations, letters of credit or other
arrangements or understandings to which the Company is a party or by which the
Company, the Business, or the Landfill are bound or affected (collectively, the
"Contracts"). In addition, Schedule 3.9 indicates whether any Contract with any
Governmental Authority contains a renegotiation provision. The Company is not
party to or subject to, and no portion of the Landfill is subject to, any
material oral Contracts.
Notwithstanding the foregoing, Schedules 3.9, 3.11(c) and 3.22
list, and the term "Contracts" shall include, each of the following to which
Seller, Macedon, or the Company is a party:
16
(i) each agreement relating to providing solid waste
collection, transportation or disposal services to any Person;
(ii) each agreement under which the Company has advanced or
loaned any other Person amounts in the aggregate exceeding $10,000;
(iii) each agreement or indenture relating to borrowed money
or other Indebtedness or the mortgaging, pledging or otherwise placing
a Lien on any portion of the Landfill or any assets of the Company;
(iv) each guaranty of any obligation or debt of the Company
and each guaranty made by Seller;
(v) each lease or agreement under which Seller, Macedon or the
Company is lessor of, or permits any third party to hold, occupy or
operate, any portion of the Landfill or other applicable assets of the
Company providing for annual rental payments in excess of $50,000;
(vi) each agreement prohibiting the Company from freely
engaging in any business or competing anywhere in the world; and
(vii) any other agreements that are material to the Company,
the Landfill or the Business.
(viii) The Contracts constitute all of the material contracts,
agreements, understandings and arrangements required for the operation
of the Landfill and the Business, or which have a material effect
thereon. True and complete copies of all written Contracts have
previously been delivered or otherwise made available to Buyer.
(b) Except as disclosed in Schedule 3.9, none of Seller,
Macedon or the Company, nor, to the best knowledge of Seller, any other Person,
is in breach in any material respect of, or in default in any material respect
under, any Contract and no event or action has occurred, is pending or is
threatened, which, after the giving of notice, passage of time or otherwise,
would constitute or result in such a material breach or material default of the
Company, Seller or Macedon or, to the best knowledge of Seller, any other
Person. None of Seller, Macedon or the Company has received any notice of
default under any Contract, which default has not been cured to the satisfaction
of, or duly waived by, the party claiming such default on or before the date
hereof. All of the Contracts listed in Schedule 3.9 are valid, binding and
enforceable in accordance with their respective terms. None of the Seller,
Macedon or the Company has any present expectation or intention of not fully
performing its obligations under any Contract; and, none of them has knowledge
of any anticipated breach by the other parties to any Contract.
3.10. Personal Property. Except as set forth in Schedule 3.10,
the Company has good and marketable title to all of the Personal Property, free
and clear of all Liens, except for Permitted Liens.
17
3.11. Owned Real Property; Leased Real Property. (a) Schedule
3.11(a) sets forth a complete and accurate description of the Principal Landfill
Property and all other real property owned by the Company (collectively, the
"Owned Real Property"). Seller, Macedon and the Company has good, indefeasible
and marketable fee simple title to the Owned Real Property.
(i) Except for the matters set forth on Schedule 3.11(a)(i) as
"Permitted Encumbrances" or Encumbrances set forth in the Title
Policies provided for in Section 5.7(b) accepted by Buyer
(collectively, the "Permitted Encumbrances"), the Owned Real Property
is not subject to any Liens (other than Liens for current property
taxes and assessments, which are not yet due and payable). All Liens
listed on Schedule 3.11(a)(i), shall be satisfied and discharged on or
prior to the Closing Date unless otherwise indicated on Schedule
3.11(a)(i). Except as set forth on Schedule 3.11(a)(i), all building,
structures and improvements on the Principal Landfill Property and the
operations therein conducted conform in all material respects to all
applicable zoning and building Laws, and none of Seller, Company or
Macedon has received any notice of violation of the foregoing from any
Governmental Authority, and all such buildings, structures,
improvements and fixtures are in good order, condition and repair.
(ii) None of Macedon, Seller or the Company has received any
notice nor has any knowledge that any operations on or uses of the
Owned Real Property constitute non-conforming uses under any applicable
building, zoning, land use or other similar Laws. None of Macedon,
Seller or the Company has knowledge of nor has received any notice of
any pending or contemplated rezoning proceeding affecting the Owned
Real Property.
(iii) The Principal Landfill Property has access to public
roads, streets or the like or valid easements over private streets,
roads or other private property providing ingress to and egress from
such Principal Landfill Property sufficient for the conduct of the
Company's Business.
(iv) None of Macedon, Seller or the Company has received any
notice from any utility company or municipality of any fact or
condition which could result in the discontinuation of presently
available or otherwise necessary sewer, water, electric, gas, telephone
or other utilities or services necessary for the conduct of the
Business. The Principal Landfill Property has adequate rights of access
to all water, sewer, sanitary sewer and storm drain facilities and
community services necessary for the conduct of the Business. All
public utilities necessary or convenient to the full use, occupancy,
disposition and enjoyment of the Principal Landfill Property and the
Business conducted thereon are located in the public right-of-way
abutting the Principal Landfill Property and all such utilities are
connected so as to serve the Principal Landfill Property without
passing over other property.
18
(v) None of Macedon, Seller or the Company has knowledge of
any proposed reassessment of the Owned Real Property by the local
taxing agencies, and there is no pending or threatened special
assessment, Tax reduction proceeding or other action which could
increase or decrease real property Taxes against the Owned Real
Property.
(b) The Owned Real Property is not subject to any rights of
first refusal or other right or option of any other Person to purchase or lease
or otherwise obtain title to an interest in the Owned Real Property or any
portion thereof. Except as set forth on Schedule 3.11(b), no Person other than
Seller has any right to use, occupy or lease any of the Owned Real Property.
(c) A list of all of the leases, subleases, licenses or other
occupancy agreements (and all amendments or supplements thereto) (the "Real
Property Leases") affecting any real property with respect to which the Company
is a lessee or occupant, whether now or in the future, is set forth on Schedule
3.11(c) (the land, buildings and other improvements covered by the Real Property
Leases being herein called the "Leased Real Property"). Schedule 3.11(c) sets
forth the lessor, lessee, commencement date, termination date, renewal or
expansion options (if any), options to purchase such Leased Real Property and
annual rents for each Real Property Lease and the amount of any security deposit
delivered pursuant to such Real Property Lease. Each of the Real Property Leases
is valid and enforceable in accordance with its terms and is in full force and
effect. Seller and the Company have delivered to Buyer true and complete copies
of each Real Property Lease and all documents relating to such Real Property
Leases including, without limitation, any non-disturbance and recognition
agreements, subordination agreements, attornment agreements and agreements
regarding the term or rental of any of the Leased Real Property. None of Seller,
the Company or Macedon, nor any other party to any Real Property Lease, is in
default of its obligations thereunder or has delivered or received any notice of
default under any Real Property Lease, nor has any event occurred which, with
the giving of notice, the passage of time or both, would constitute a default
under any Real Property Lease. Except as described in Schedule 3.11(c), no
consent, waiver, approval or authorization is required from the landlord under
any Real Property Lease as a result of the execution of this Agreement and the
Ancillary Documents or the consummation of the transactions contemplated hereby
and thereby.
(d) The plumbing, electrical, heating, air conditioning,
ventilating and all other mechanical or structural systems of all buildings and
structures located on the Principal Landfill Property are in good order,
condition and repair, and are sufficient and appropriate for the conduct of the
Company's business. The roof, basement and foundation walls of all buildings and
structures located on the Principal Landfill Property are free of leaks and
other defects that would have an adverse effect on their use and are suitable
for their actual and intended use. To the extent required by any state or local
Governmental Authority, the Company is in possession of valid certificates of
occupancy, (other than in such circumstances where the Company and the parcel of
Principal Landfill Property meets all requirements for, and is eligible in all
respects for, receipt of a certificate of occupancy, but the municipality has
failed to so issue the certificate) with respect to all buildings and structures
located on the Principal Landfill Property, and any alterations thereto.
(e) There are no proceedings in eminent domain or other
similar proceedings pending which affect any of the Owned Real Property nor is
any such matter threatened. Except
19
as disclosed on Schedule 3.11(e), there exists no writ, injunction, decree,
order or judgment outstanding relating to the ownership, lease, use, occupancy
or operation of any Real Property, nor is any such matter threatened.
(f) Except as set forth on Schedule 3.11(f), none of Macedon,
Seller or the Company has received notice of any violation of any Laws,
ordinances, regulations, permits or other requirements of any government, or any
agency, body or subdivision thereof, pertaining to the use, operation, or
construction of the Owned Real Property (including, without limitation, those
relating to zoning, building, fire, health and safety, environmental control and
safety, or the Americans with Disabilities Act or other similar state,
provincial, local or foreign legislation) and, to the knowledge of Macedon,
Seller and the Company, no such violations exist.
(g) None of Macedon, Seller or the Company has received notice
from any of its insurance carriers of any defects or inadequacies in any Owned
Real Property which, if not corrected, would result in termination of any Policy
or insurance coverage therefor or an increase in the cost thereof.
(h) Except as set forth on Schedule 3.11(h) and, except as set
forth and shown on the instrument survey maps that have been prepared for the
transactions contemplated by this Agreement, the buildings, driveways and all
other structures and improvements upon the Owned Real Property are within the
boundary lines of such property and there are no encroachments thereon that
would adversely affect the use thereof.
(i) There are no material violations of any covenant,
condition, restriction, easement or order affecting any portion of the Principal
Landfill Property.
3.12. Compliance with Law. To the best of the Seller's knowledge,
each of Seller, Macedon and the Company is and at all times
has been in material compliance with all federal, state and
local Laws applicable to it and the Business, including the
Landfill. None of Seller, Macedon or the Company, or any of
the Company's officers or directors, has received any notice
of any violation or claimed violation, which have not been
corrected, of any such Law and no event has occurred or
circumstances exist which, with or without notice or lapse of
time or both, would constitute a material violation under any
such Law.
3.13. Environmental, Health, and Safety Matters. To the best
of the Seller's knowledge, since January 1983 (which qualifications apply to all
subsections of this Section 3.13), except as set forth in Schedule 3.13:
(a) Without limiting the generality of Section 3.12, each of
the Company, Seller and Macedon is in compliance in all material respects with
all Environmental Laws applicable to the operations associated with the
Business, the Landfill, the "Principal Landfill Property", and each of the
properties formerly owned, operated and/or leased by the Company (each a "Former
Property").
(b) Without limiting the generality of Section 3.12, the
Company has obtained and complied in all material respects, and is in compliance
in all material respects, with all Environmental Permits that are required for
the occupancy of its facilities and the operation of the Business, including the
Landfill; all such Environmental Permits are in the name of the
20
Company, and a list of all such Environmental Permits is set forth in Schedule
3.13. All such Environmental Permits are final, and the time period during which
such permits may be appealed has elapsed. No material change in the facts or
circumstances reported or assumed in the applications for or the granting of the
Environmental Permits exists. There are not any proceedings pending or
threatened which would jeopardize the validity of any of the Environmental
Permits.
(c) The Company has not performed or suffered any act which
could give rise to, or has otherwise incurred, liability to any Person,
including itself, under the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended ("CERCLA"), or any
other Environmental Law, nor has the Company, Seller or Macedon received any
notice of any such liability or any Claim therefor or submitted notice pursuant
to Section 103 of CERCLA to any governmental agency nor provided information in
response to a request for information pursuant to Section 104(e) of CERCLA or
any analogous state or local information gathering authority.
(d) None of the Landfill, the Owned Real Property or any
Former Property is identified or proposed for listing on the National Priorities
List under 40 C.F.R. ss.300 Appendix B, the Comprehensive Environmental Response
Compensation and Liability Inventory System, as amended ("CERCLIS"), or any
analogous list of any Government Authority, and none of the Company, Seller or
Macedon is aware of any conditions on such properties which, if known to a
Governmental Authority, would qualify such properties for inclusion on any such
list.
(e) The Company and Seller will make available to Buyer copies
of all current environmental studies, assessments or reports, which are filed
with the DEC, known to Macedon, Seller of the Company relating to any of the
Company, the Business, the Landfill, the Owned Real Property and the Former
Properties.
(f) None of the Company, Macedon or the Seller has received
notice that the Landfill, the Owned Real Property or the Former Properties or
any current or previous business operations conducted by Macedon, the Seller or
the Company is the subject of any pending or threatened investigation or
judicial or administrative proceeding, notice, decree or settlement respecting
any actual, potential or alleged violation of any Environmental Law, or any
Release of any Contaminant into any surface water, ground water, drinking water
supply, soil, land surface or subsurface strata, or ambient air, other than in
connection with matters that have been corrected or remediated. None of the
Company, Seller or Macedon has received from any Governmental Authority,
insurance company or other Person, any request for information, notice that the
Company, the Landfill or any Owned Real Property or Former Real Property is the
subject of an investigation under Environmental Laws, notice of any potential or
alleged violations of any Environmental Laws or of any proposed order under any
Environmental Laws or any order or proposed order requiring the Company or
anyone else to prepare studies, action plans, or clean-up strategies in respect
of an Environmental Condition on any Owned Real Property, any Former Property,
or the Landfill.
(g) The Company has no obligation to report any violation of
any applicable Environmental Law to any Governmental Authority, other than those
as have been so reported or which violations have been corrected. No Releases
have occurred on or at the Landfill, any
21
Owned Real Property any Former Property which required reporting to any
appropriate Governmental Authority under applicable Environmental Laws other
than those as have been dutifully reported in compliance with such applicable
Environmental Laws.
(h) None of the Company, Seller or Macedon has owned or
operated any property or facility so as to give rise to any liability (whether
accrued, contingent, known, unknown, unliquidated, or otherwise) under any
Environmental Law, including any liability for any cost relating to Remedial
Action, personal injury, property damage, natural resources damages or attorney
fees.
(i) The Company has not assumed or undertaken any liability
including, without limitation, any obligation for material corrective or
Remedial Action of any other Person relating to Environmental Laws.
(j) No facts, events or conditions relating to the Landfill,
the Owned Real Property, the Company or the facilities or operations of the
Company will prevent, hinder or limit continued compliance with Environmental
Laws, give rise to any Remedial Action obligations pursuant to Environmental
Laws, or give rise to any other material Liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental Laws, including
any relating to any Release or threatened Release of any Contaminant, personal
injury, property damage or natural resources damage.
(k) None of the Company, the Seller, or Macedon has ever
caused or allowed any (i) Contaminant, (ii) polychlorinated biphenyls ("PCBs")
or transformers, capacitors, ballasts, or other equipment which contain
dielectric fluid containing PCBs, (iii) asbestos, or (iv) insulating material
containing urea formaldehydes to be constructed, Released, stored, disposed, or
▇▇▇▇▇ onto or underneath any of the Landfill, the Owned Real Property or Former
Property, or any other properties from any of the Landfill, Real Property or any
Former Property, nor has any Contaminant migrated or threatened to migrate from
other properties upon, about or beneath any of the Owned Real Property or Former
Property, other than (A) those non-material, small quantities of such materials
that may be included in municipal solid and other waste which is disposed of in
the Landfill, and (B) the acceptance by the Company of asbestos and insulating
materials containing urea formaldehydes as special waste at the Landfill in
accordance with Environmental Laws and the Company's Permits.
(l) No Environmental Lien has attached to the Landfill, the
Owned Real Property or any Former Property.
(m) No aboveground storage tanks or underground improvements,
including but not limited to storage tanks, sumps, or water, gas or oil ▇▇▇▇▇,
or associated piping, are or have ever been located on the Principal Landfill
Property nor has the Company owned or operated any aboveground or underground
storage tank at, under or about any Principal Landfill Property, except for
tanks, gas and ▇▇▇▇▇ lines and items set forth in Schedules attached hereto.
3.14. Permits. Schedule 3.14 lists all permits, licenses,
franchises, certificates, bonds, surety deposits, approvals, consents, orders,
registrations, zoning variances and other authorizations granted by or filed
with any Governmental Authority, other than the
22
Environmental Permits listed in Schedule 3.13, and necessary or appropriate for
the operation of the Business, including the Landfill (the items listed on
Schedule 3.14 together with the Environmental Permits listed in Schedule 3.13
being the "Permits"). Seller will provide to Buyer with true, complete and
correct copies of all the Permits. To the best of the Seller's knowledge, except
as set forth in Schedules 3.13 and 3.14, the Permits constitute all the permits,
licenses, franchises, certificates, bonds, surety deposits, approvals, consents
and other authorizations required by applicable laws to operate the Business,
and to own, lease, use, operate and occupy the Landfill (including without
limitation the Principle Landfill Property), at the places and in the manner now
conducted and operated, except those the absence of which would not have a
Material Adverse Effect. To the best knowledge of the Seller, except as set
forth in Schedules 3.13 and 3.14, all of the Permits are in full force and
effect, none of the Permits have been violated and, as of the date hereof, none
of Seller, Macedon or the Company has received any written or oral notice or
claim pertaining to the failure to obtain, or the violation of, any material
Permit, required by any Law and there is no basis for any of the foregoing.
3.15. Landfill Capacity. The current Permits allow for
disposal at the Landfill up to of Six Thousand (6,000) tons of municipal solid
waste per day. The Landfill's remaining permitted disposal capacity as of
December 31, 2002, is estimated to be Fifteen Million One Hundred Seventy One
Thousand (15,171,000) of cubic yards of municipal solid waste, as reported to
the DEC on the Company's Annual Report.
3.16. Ordinary Course. Except as set forth in the financial
statements for the period ending December 31, 2002, the Company has conducted
the Business and Seller, the Company and Macedon have maintained and kept the
Landfill substantially in the same manner as previously conducted, maintained or
kept and solely in the ordinary course since December 31, 2001.
3.17. No Adverse Changes. Except as set forth in the financial
statements for the period ending December 31, 2002 and as disclosed on Schedule
3.17, without limiting the generality of Section 3.16 above, since December 31,
2001, there has not been:
(a) any material adverse change in the Company, the Business
or the Landfill or the operations, prospects, or financial or other
condition thereof;
(b) any loss sustained by the Company, including any loss on
account of theft, fire, flood, explosion, accident or other calamity,
whether or not insured, which has materially and adversely interfered,
or may materially and adversely interfere, with the Company's operation
of the Business or the Landfill;
(c) any loss of the employment, benefit or services of any key
employee of the Company;
(d) any adverse change or any threat of any adverse change in
Seller's or the Company's relations with, or any loss or threat of loss
of, suppliers or customers which, individually or in the aggregate, had
or is likely to have a Material Adverse Effect;
23
(e) any event, condition or state of facts, including, without
limitation, the enactment, adoption or promulgation of any Law, known
by the Seller, the occurrence of which would have a Material Adverse
Effect;
(f) any write-offs as uncollectible of any notes or accounts
receivable of the Company or write-downs of the value of any assets or
inventory by the Company, other than immaterial amounts or in the
ordinary course of business consistent with past practice;
(g) any cancellation or waiver of any right material to the
operation of the Business or the Landfill;
(h) any sale, transfer, lease or other disposition of any
asset material to the Business or the Landfill;
(i) any termination or amendment to or suspension or
termination of, or receipt by the Company of any notice of breach or
default of any material lease, contract or other agreement to which the
Company is a party or from which the Company, directly or indirectly,
derives rights;
(j) any payment, discharge or satisfaction of any Liability or
obligation (whether accrued, absolute, contingent or otherwise) by the
Company, other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, of
Liabilities or obligations shown or reflected on the Financial
Statements or incurred in the ordinary course of business since
December 31, 2001;
(k) any material change by the Company in any method of
accounting or keeping its Books and Records;
(l) any payment, loan or advance of any material amount to, or
in respect of, or the sale, transfer or lease of any material asset of
the Company (whether real, personal or mixed, tangible or intangible);
(m) any disclosure to any Person that is not an employee of
the Company or other disposal of any of the Company's Intellectual
Property;
(n) any other transaction, agreement or event outside the
ordinary course of the Company's business or inconsistent with past
practice;
(o) any obligation or liability (fixed or contingent), except
those incurred in the normal trade or business obligations incurred in
the ordinary course of business and consistent with past practice, none
of which is materially adverse, and except in connection with this
Agreement and the transactions contemplated hereby;
24
(p) any discharge or satisfaction of any Lien, or payment of
any obligation or liability (fixed or contingent), other than in the
ordinary course of business and consistent with past practice;
(q) any Lien on any of the Company's assets or properties
(including the Landfill) (other than mechanic's, materialman's and
similar statutory liens arising in the ordinary course of business and
purchase money security interests arising as a matter of law between
the date of delivery and payment);
(r) any transfer, lease or other disposition of any of the
Company's assets or properties, except for fair consideration in the
ordinary course of business and consistent with past practice or,
except in the ordinary course of business and consistent with past
practice, the acquisition of any assets or properties;
(s) the declaration of any dividends or bonuses, except
regular distributions to the Seller, or any amendment or restatement of
the Company's certificate of incorporation or bylaws (or any
authorization related thereto), or any steps looking toward dissolution
or liquidation of the Company; or
(t) any agreement or commitment to take or do any of the
actions described in subsections (g) through (s) above.
3.18. Litigation. (a) Except as set forth on Schedule 3.18,
there are no Claims pending, threatened against, or affecting Macedon, Seller,
the Company, the Business, or the Landfill, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or before any Governmental Authority or arbitrator, nor has any such
Claim been pending or threatened during the 24-month period preceding the date
hereof;
(b) There is no outstanding judgment, order, writ, ruling,
injunction, stipulation or decree of any Governmental Authority or arbitrator,
against or materially affecting the Company, the Business or the Landfill;
(c) The Company is not subject to any arbitration proceedings
under collective bargaining agreements or otherwise or, to the Company's
knowledge, any governmental investigations or inquiries (including inquiries as
to the qualification to hold or receive any Permit) and there is no basis for
any of the foregoing; and
(d) None of Seller, the Company or Macedon has received any
written or verbal inquiry from any Governmental Authority concerning the
possible violation of any Law, or any matter disclosed in respect of Seller, the
Business, the Company or the Landfill.
3.19. Insurance. Seller will make available to Buyer true and
complete copies of all policies of insurance and bonds to which the Company is
currently a party or under which the Company, the Landfill, or the Business and
any of the Company's directors, or agents are covered (the "Policies"). The
insurance coverage provided by the Policies is customary for companies of
similar size engaged in similar lines of business. The Company is not in default
with respect to its obligations under any of the Policies, and has not within
the past twelve
25
months been denied insurance coverage. There is no claim by Seller, the Company,
Macedon or any other Person pending under any of the Policies as to which
coverage has been questioned, denied or disputed by the underwriters of such
Policies or in respect of which such underwriters have reserved their rights.
All premiums payable under the Policies have been paid timely, and the Company
has complied with all the terms and conditions of the Policies. The Company does
not have or participate in any self-insurance or co-insurance programs, except
for the Workmen's Compensation Policy carried by the Company.
3.20. Intellectual Property. Except as set forth on Schedule
3.20, the Company owns or possesses sufficient legal rights to all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, trade secrets, licenses, information, proprietary rights and
processes ("Intellectual Property") necessary to conduct the Business as now
conducted without any conflict with or infringement of the Intellectual Property
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the Intellectual Property, and neither Seller nor the
Company is bound by, or a party to, any options, licenses or agreements of any
kind with respect to the Intellectual Property of any other Person or entity.
3.21. Transactions with Affiliates. (a) Except for Employment
and Labor Agreements (as defined in Section 3.22(a)), no officer, director,
employee, stockholder or Affiliate of the Company, the Seller or any individual
related by blood, marriage or adoption to any such individual or any entity in
which any such Person or individual owns any beneficial interest, is a party to
any agreement, contract, commitment or transaction with the Company or has any
interest in the Landfill.
(b) Except as set forth on Schedule 3.21, all transactions
between Seller and the Company or any of their Affiliates have been concluded on
an arm's length basis.
3.22. Labor Matters. (a) Except as set forth in Schedule 3.22:
(i) the Company is not a party to any employment agreements with employees that
are not terminable at will, or that provide for the payment of any bonus or
commission, (ii) the Company is not a party to any agreement, policy or practice
that requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law), (iii) the Company is not a
party to any collective bargaining agreement or other labor union contract
applicable to employees nor does it know of any activities or proceedings of any
labor union to organize any such employees, and (iv) the Company is not a party
to or subject to any conciliation agreements consent decrees or settlements with
respect to the Business or its employees. The Company furnished to Buyer
complete and correct copies of all such agreements and any other agreements
relating to employment (the "Employment and Labor Agreements"). The Company has
not breached or otherwise failed to comply with any provisions of the Employment
and Labor Agreements, there are no grievances outstanding thereunder and all of
such agreements are assignable to Buyer.
(b) Except as set forth in Schedule 3.22: (i) the Company is
in compliance with all applicable laws relating to employment and employment
practices, wages, hours, and terms and conditions of employment in each case
relating to the Business, (ii) there is no unfair labor practice charge or
complaint pending before the National Labor Relations Board ("NLRB")
26
relating to the Business, or threatened against the Business, (iii) there is no
labor strike, material slowdown or material work stoppage or lockout pending or
threatened against or affecting the Business, and the Company has not
experienced any strike, material slowdown or material work stoppage, lockout or
other collective labor action by or with respect to employees of the Business,
(iv) there is no representation, Claim or petition pending before the NLRB or
any similar Governmental Authority and no question concerning representation
exists relating to the Company's employees, (v) there are no charges with
respect to or relating to the Business pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and (vi) neither the Company nor
Seller received any notice from any national, state or local Governmental
Authority responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of it and no such investigation is in
progress.
(c) The Company has furnished Buyer with a complete and
accurate list of all its employee manuals, policies, procedures and work-related
rules that apply to its employees ("Employee Policies and Procedures"). The
Company has provided Buyer with a copy of all the written Employee Policies and
Procedures and a written description of all unwritten Employee Policies and
Procedures. Each of the Employee Policies and Procedures can be amended or
terminated at will by it.
3.23. Employee Benefit Plans. (a) Schedule 3.23 sets forth a
complete and correct list of all employee benefit plans, as defined in Section
3(3) of ERISA, and all employment, compensation, bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, split dollar insurance, supplemental retirement, severance,
change of control, loans or other benefit plans, programs, arrangements or
fringe benefits, in each case, which are provided, maintained, contributed to or
sponsored by the Company on behalf of current or former directors, officers or
employees of the Company, or for which the Company has any liability, contingent
or otherwise (collectively, the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has
furnished Buyer with a complete and accurate copy of (i) the plan document or
other governing contract, as amended, and a summary of any unwritten Benefit
Plans, (ii) the most recently distributed summary plan description and summary
of material modifications, (iii) each trust or other funding agreement, (iv) the
most recently filed IRS Form 5500 (including schedules and attachments), (v) the
most recently received IRS determination letter and application therefor, and
(vi) the most recently prepared actuarial report and financial statements.
(c) The Benefit Plans have been operated and administered in
accordance with their terms and the applicable requirements of the Code and
applicable law. All contributions and all payments required to have been made to
or under any Benefit Plan have been timely and properly made, and nothing has
occurred with respect to the operation of the Benefit Plans that would cause the
imposition of any liability, penalty or tax under ERISA or the Code.
(d) No Benefit Plan is subject to Title IV of ERISA, or a
multiemployer plan within the meaning of Section 3(37)(A) of ERISA. Neither the
Company nor any trade or business (whether or not incorporated) which is or has
ever been treated as a single employer with the Company under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliates"), has
27
incurred any liability under title IV of ERISA or Section 412 of the Code,
except for such liability that has been paid in full.
(e) There are no pending or, to knowledge of the Company,
threatened suits, actions, litigation or claims (excluding claims for benefits
incurred in the ordinary course) with respect to any of the Benefit Plans.
(f) Each of the Benefit Plans which is intended to be
"qualified" within the meaning of Section 401 of the Code has received a
favorable determination letter from the IRS and no event has occurred and no
condition exists which would result in the revocation of any such determination
letter. Any voluntary employee benefit association which provides benefits to
current or former employees of the Company, or their beneficiaries, is and has
been qualified under Section 501(c)(9) of the Code.
(g) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any current or former employee or director of the
Company, (ii) increase any benefits under any Benefit Plan, or (iii) result in
the acceleration of the time of payment, vesting or other rights with respect to
any such benefits.
(h) The Company does not maintain or have an obligation to
contribute to, or provide coverage under, any retiree life or retiree health
plans or arrangements which provide for continuing benefits or coverage for
current or former officers, directors or employees of the Company, except (i) as
may be required under part 6 of Title I of ERISA and at the sole expense of the
participant or the participant's beneficiary, or (ii) pursuant to a medical
expense reimbursement account described in Section 125 of the Code.
(i) None of the assets of any Benefit Plan is stock of the
Company or any of its affiliates, or property leased to or jointly owned by the
Company or any of its affiliates.
3.24. Operation of the Business; Landfill. No part of the
Business is operated by or through any Person other than the Company. The
Company, Seller and Macedon collectively have good and marketable title to the
Landfill and, upon consummation of the transactions contemplated by this
Agreement, the Company will acquire good and marketable title to the Landfill,
free and clear of all Claims, Liens and objections or equities of any kind.
3.25. Undisclosed Liabilities. The Company and the Landfill
have no liabilities or obligations whatsoever, whether accrued, absolute,
contingent or otherwise, which are not reflected or provided in the Financial
Statements except (i) those arising in the course of ordinary business after
December 31, 2002, in each case in normal amounts and none of which is
materially adverse, and (ii) as and to the extent specifically described in
Schedule 3.25 attached hereto.
3.26. Customers. Schedule 3.26 sets forth a true, accurate and
complete list of all customers of the Company and the Landfill. Except as set
forth in Schedule 3.26:
(i) none of the Company, Seller or Macedon has received notice
that, nor do any of the Company, Seller or Macedon have any knowledge
28
that, any material customer of the Company or the Landfill has, will or
plans to discontinue doing business with the Company or the Landfill;
(ii) none the Company, the Seller or Macedon (with respect to
the Landfill) has any outstanding contracts or commitments which are in
excess of the normal, ordinary and usual requirements;
(iii) no supplier or subcontractor to the Company or has
reduced its shipments of orders issued by the Company or threatened to
discontinue supplying such items or services to the Company on
reasonable terms;
(iv) none of the Seller, Macedon or the Company has received
notice that, nor do any of them have knowledge that, any such supplier
or subcontractor has, will or plans to discontinue doing business with
the Company or the Landfill on substantially the same terms as are
consistent with its past practices; and
(v) none of the Seller, Macedon or the Company has received
notice that, nor do any of them have knowledge that, any such supplier
or subcontractor has, will or plans to add any additional distributors
of such suppliers' or subcontractors' products or services relating to
the Company.
3.27. Brokers. The parties represent to each other that all
negotiations relative hereto and the transactions contemplated hereby have been
carried on without the intervention of any entity or person, or as the result of
any act of any entity or person other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, that would
give rise to any claim against any party for any brokerage commission, finders
fee, or other like payments. Buyer acknowledges and accepts full responsibility
for ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP's fees in connection with the transactions
contemplated hereby, pursuant to a letter agreement in effect between IESI and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, dated January 4, 2002.
3.28. Condition of Assets. Schedule 3.28 lists all of the
Company's fixed assets including, but not limited to, all motor vehicles,
machinery, equipment, furniture, fixtures, inventory and other tangible personal
property owned, leased or used by the Company. Except as set forth on Schedule
3.28, all of the fixed assets are sufficient and adequate to carry on the
Company's business as presently conducted and are in good operating condition
and repair (normal "wear and tear" excepted), are not causing or contributing to
a violation of any law or ordinance, regulation or order of a local, state or
federal governmental or regulatory authority that would result in a Material
Adverse Effect, and are substantially suitable for the purposes for which they
are used.
3.29. Miscellaneous. (a) The representations and warranties
made by Seller, Macedon and the Company in this Agreement and the statements
made by Seller, Macedon and the Company in any Ancillary Document, furnished in
connection with the transactions contemplated hereby or thereby, when taken
together (without giving effect to the Schedules delivered to Buyer by Seller
after the date hereof), do not as of the date hereof and will not as of the
Closing Date contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make such representations or warranties
or other such
29
statements, in light of the circumstances under, and at the time at, which they
were made, not false or misleading,
(b) All information relating to the Company, its assets, the
Shares, the Landfill or the Business that is known or would on reasonable
inquiry be known to Seller, Macedon or the Company and that may be material has
been disclosed in writing to Buyer and any such information arising after the
date hereof will be disclosed in writing to Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as of the date
hereof and as of the Closing Date, as follows:
4.1. Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
4.2. Authority. Buyer has full corporate power and authority
to enter into this Agreement and each of the Ancillary Documents to which Buyer
is a party, and to carry out the transactions contemplated hereby and thereby.
Buyer has properly taken all corporate action required to be taken by Buyer with
respect to the execution and delivery of this Agreement and each of the
Ancillary Documents to which Buyer is a party, and the consummation of the
transactions contemplated hereby and thereby.
4.3. Execution and Delivery. This Agreement has been duly
authorized, executed and delivered by Buyer and constitutes a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms and conditions, except as enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar Laws
affecting creditors' rights generally or by general principles of equity. Each
Ancillary Document to which Buyer is a party will have been duly authorized,
executed and delivered by Buyer upon the Closing and, upon the execution and
delivery thereof, will constitute a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms and conditions,
except as enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar Laws affecting creditors' rights
generally or by general principles of equity.
4.4. No Conflicts; Consents. Except for the approval of
Buyer's board of directors ("Board Approval"), approval of Buyer's Senior
Lenders for whom Fleet Bank acts as Administrative Agent ("Senior Lender's
Approval"), and as required under the HSR Act, the execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary Documents to
which Buyer is a party, and the consummation of the transactions contemplated
hereby and thereby, do not, and will not violate, conflict with or result in a
breach of any term, condition or provision of, or require the consent of any
Governmental Authority or any other Person, under:
(a) the Charter or Bylaws of Buyer;
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(b) any Law to which Buyer is subject;
(c) any judgment order writ, injunction, decree or award of
any Governmental Authority to which Buyer is subject; or
(d) any license, agreement, commitment or other instrument or
document to which Buyer is a party or by which Buyer is otherwise
bound.
4.5. Brokers. Except for ▇▇▇▇▇▇▇ & Parruello, LLP, neither
Buyer nor any Person acting on its behalf has engaged, retained or incurred any
Liability to any broker, investment banker, finder or agent, made any agreement
or taken any other action which might cause anyone to become entitled to a
broker's fee or commission or agreed to pay any brokerage fees, commissions,
finder's fees or other fees with respect to the transactions contemplated
hereby.
ARTICLE 5
COVENANTS OF SELLER, MACEDON AND THE COMPANY
5.1. Conduct of Business Pending Closing. From and after the
date hereof and until the Closing, the Company covenants that, except as
contemplated by this Agreement and the Ancillary Documents, it will not, and
Seller covenants that it will not permit the Company to, take any of the below
listed actions without Buyer's prior written consent:
(a) amend its Charter or Bylaws;
(b) change its authorized or issued capital stock, or issue
any rights or options to acquire such stock;
(c) incur, create, assume, or suffer to exist any Lien
affecting the Landfill or any other assets of the Company;
(d) incur any debt or other obligation for money borrowed,
except in the ordinary course of business;
(e) make or authorize capital expenditures in excess of
$100,000 or enter into any contract or make any commitment involving
any expenditure in excess of $100,000 (in each case, other than those
as will be fully paid as of the Closing);
(f) sell, transfer, lease or otherwise dispose of any of the
assets of the Company (including the Landfill), other than sales of
equipment and machinery with a book value of not more than $100,000 in
the aggregate;
(g) establish or increase the benefits payable under any
Benefit Plans, or otherwise increase materially the compensation
payable or to become payable to any personnel, except as may be
required by Law or existing Contracts;
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(h) acquire by merger or consolidation with, or merge or
consolidate with, or purchase all or substantially all of the assets
of, or otherwise acquire any material assets or business of, any Person
or any other business organization or division thereof;
(i) make any loan, advance or capital contribution to, or
investment in, any Person, except for extensions of trade credit in the
ordinary course consistent with past practice;
(j) effect any recapitalization, reclassification, membership
interest or stock split or similar change in the capitalization of the
Company or revalue any assets of the Company;
(k) do or omit to be done any act or thing that would result
(or be likely to result) in a breach of any of the representations,
warranties and covenants contained in this Agreement (including under
Section 3.17); and
(l) enter into any agreement or otherwise become obligated to
do any of the foregoing.
5.2. Ordinary Course. Except as required by this Agreement,
the Company, the Business and the Landfill will be conducted only in the
ordinary course, including billing, and collection practices, and payment of
accounts payable. Seller will use its best efforts to maintain customary
practices (including expenditures) with respect to the Company, the Landfill and
Business. Seller will maintain insurance coverage under the Policies in full
force and effect up to the Closing Date.
5.3. Required Consents. (a) Seller, Macedon, the Company and
Buyer, shall each use commercially reasonable efforts (and to cooperate with one
another) so as to obtain all the Required Consents, provided that in no event
shall Buyer incur any liability to any other party for (i) the failure to obtain
any such Required Consent, or (ii) any adverse impact on the business of the
Company as a result of such efforts. Notwithstanding the foregoing, the parties
hereto agree that, to the extent practicable, Buyer shall lead all efforts to
obtain Required Consents. All Required Consents shall be obtained on terms and
conditions satisfactory to Buyer, at Buyer's sole cost and expense.
(b) Without limitation of the foregoing, each of Seller, the
Company, Macedon and Buyer undertakes and agrees to file as soon as practicable
a Notification and Report Form under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division"). Each of Seller, the Company and Buyer shall respond
as promptly as practicable to any inquiries received from the FTC or the
Antitrust Division for additional information or documentation and to all
inquiries and requests received from any State Attorney General or other
Governmental Authority in connection with antitrust matters. Each of Seller, the
Company and Buyer shall promptly take or cause to be taken all actions as
reasonably appropriate in order to avoid the commencement of a proceeding by any
Governmental Authority to restrain, enjoin or to otherwise prohibit consummation
of the transactions contemplated by this Agreement.
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5.4. Survey. Seller and Macedon shall cause to be secured as
promptly as possible after the execution of this Agreement one or more current
as built, survey pursuant to the rules and regulations established by the Monroe
County Bar Association (collectively, the "Surveys") for each parcel of Owned
Real Property and shall obtain the legal description for each such parcel. The
Surveys shall be prepared, and certified to Buyer and the Title Company, by a
registered land surveyor acceptable to Buyer, and shall contain such
information, documentation and certifications as Buyer or the Title Company may
require. The Surveys shall, among other things, show the locations of all
boundary lines, improvements, easements, roadways, rights-of-way (public or
private), railroad rights-of-way, officially designated flood plain areas,
floodway fringe areas and wetland areas, and any other matters affecting each
parcel of Owned Real Property in a manner required by Buyer or the Title
Company. The cost of the Surveys shall be borne by Seller. Seller and the
Company have provided to Buyer copies of any and all surveys concerning the
Owned Real Property in the possession of Seller or the Company. In the event
that the Surveys or any other instrument reveal anything that has a Material
Adverse Effect on the Principal Landfill Property or the use or value thereof,
Buyer shall give notice to Seller and the Company of those matters objected to
by Buyer no later than the later of (i) ten (10) Business Days after receipt of
notice thereof by Buyer, and (ii) five (5) Business Days prior to the proposed
Closing Date. After Seller and the Company's receipt of such notice, Seller
shall then have a period of thirty (30) days to cure, or cause to be cured, any
such defects or objectionable matters specified by Buyer, at Seller's sole cost
and expense. In the event that Seller fails or is unwilling to cure, or caused
to be cured, such defects or objections by the end of that thirty (30) day
period to the reasonable satisfaction of Buyer's counsel, then Buyer may proceed
to Closing subject to the defect but with a credit (not to exceed $10,000) to
the Purchase Price of the amount required to cure the defect or by written
notice to Seller to terminate this Agreement pursuant to Section 8.1(b)(iv)
without liability by Buyer to Seller, Macedon or the Company.
5.5. Delivery of Real Property Documentation. Each of Seller
and Macedon has provided, or as promptly as possible after the execution of this
Agreement, shall provide, to Buyer the following:
(a) all title information relating to the Owned Real Property
and the Leased Real Property in the possession of Seller, Macedon or
the Company, including, but not limited to, existing title insurance
policies, reports, or commitments together with all attachments thereto
and copies of the deeds, rights of way, easements and all other
instruments of record with respect to the Owned Real Property;
(b) copies of any plans (original or otherwise),
specifications, drawings, studies and programs for upgrading and
improving the Owned Real Property and the Leased Real Property in their
possession or under their control;
(c) all engineering, building inspection or similar reports
relating to the Owned Real Property and the Leased Real Property,
including, without limitation, any prior environmental assessments;
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(d) copies of all notices of any violation relating to the
Owned Real Property and the Leased Real Property which is uncorrected,
if any, and a description of any such violation;
(e) copies of all certificates of occupancy (or similar
instruments) for all Owned Real Property and all Leased Real Property;
(f) copies of the Permits;
(g) all other information or documents relating to the Owned
Real Property or Leased Real Property that Buyer or the Title Company
may request; and
(h) all contracts or other agreements relating to or affecting
the Owned Real Property or Leased Real Property.
5.6. Review and Status of Title. Each of Seller and Macedon
has obtained and delivered, or within thirty (30) days after the date hereof
shall obtain and deliver, to Buyer at Seller's sole cost and expense,
commitments for title insurance and any updates thereto or supplements (the
"Title Commitments") to be issued by a title insurance company of Buyer's
choosing (the "Title Company") showing the condition of title for the Principal
Landfill Property. Prior to the Closing Date, Buyer may provide written notice
of Buyer's disapproval of any matter or Lien shown in the Title Commitments
(those disapproved matters or Liens as so identified by Buyer and that do not
constitute Permitted Encumbrances being hereinafter called the "Disapproved
Exceptions"), whereupon Seller and Macedon shall cure or remove, or caused to be
cured or removed, such Disapproved Exceptions prior to or as of the Closing
Date, at Seller's and Macedon's sole cost and expense. In the event that Seller
and Macedon fail to cure, or cause to be cured, a Disapproved Exception, then
Buyer may proceed to Closing subject to the Disapproved Exceptions but with a
credit to the Purchase Price of the amount required to cure such Disapproved
Exceptions, or by written notice to Seller terminate this Agreement pursuant to
Section 8.1(b)(iv) without liability by Buyer to Seller, Macedon or the Company.
5.7. Title to the Property. (a) At the Closing, all the Owned
Real Property and its appurtenances shall be free and clear of all Liens,
Claims, rights-of-way and leases, other than the Permitted Encumbrances and the
following:
(i) rights-of-way of streets, so long as they do not prevent,
interfere or adversely affect the use of the property for the same
purposes as used and operated as of the Closing Date;
(ii) public utility easements, easements with respect to gas
or oil transmission lines and rights-of-way and oil and gas leases,
each in customary form, so long as they do not prevent, interfere or
adversely affect the use of the property for the same purposes as used
and operated as of the Closing Date;
(iii) ad valorem or real property taxes not yet due and
payable; and
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(iv) zoning and building laws and ordinances of the city,
town, county, village, state or municipality in which the Owned Real
Property lies which are not violated by existing structures and which
are not violated by or do not prevent, interfere with or adversely
affect the continued use and operation of the Owned Real Property for
the same purposes as used and operated as of the Closing Date.
(b) Prior to the Closing, if, in the opinion of Buyer's
counsel, after Seller's and Macedon's opportunity to cure provided in Section
5.6, Buyer is not able to obtain title insurance acceptable to Buyer (including
any endorsements required by Buyer from the Title Company with respect to the
Owned Real Property) (collectively, the "Title Policies"), the cost of which
shall be paid by Buyer, Buyer shall have the option of (i) accepting the
condition of the Owned Real Property title "AS IS", and consummating the Closing
without waiving any rights of Buyer under Article 11, or (ii) terminating this
Agreement pursuant to Section 8.1(b)(iv) without liability by Buyer to Seller,
Macedon or the Company. Notwithstanding any other provision contained herein to
the contrary, if any exception to title disclosed in any Title Commitment which
may include, without limitation, a Disapproved Exception (other than a Permitted
Encumbrance), can be cured by a monetary payment, Buyer shall have the right, in
addition to any other rights of adjustment hereunder, of reducing by a like
amount the Purchase Price due to Seller at the Closing, provided that, without
the prior consent of Seller, Buyer shall not make any such monetary payment in
excess of $10,000.
5.8. Transfer Tax Forms. At the Closing, Seller and Macedon
shall deliver to Buyer duly executed transfer tax forms and any other documents
required by Federal, state, local or foreign Law with respect to the Owned Real
Property together with any amounts owed or due thereunder, including, without
limitation, transfer taxes and recording fees.
5.9. Access, Information, and Documents. Subject to reasonable
advance notice, Buyer and Buyer's counsel, accountants, lenders, and other
representatives, shall have full and complete access during normal business
hours to the Landfill and all of the Company's other Real Property, Personal
Property, Books and Records, Tax Returns, contracts, commitments, officers,
personnel, and accountants, provided that such rights shall be exercised so as
not to cause unreasonable disruption to Seller's business. Seller and Macedon
shall (i) cause the Company's officers, employees, consultants, accountants,
counsel and other authorized representatives to furnish to Buyer and to its
authorized representatives such additional financial and operating data and
other information regarding the Company, the Business, and the Landfill, as
Buyer or its duly authorized representatives may from time to time request or
deem necessary or appropriate; and (ii) afford Buyer and its representatives
full and complete access to the Company's present and potential customers,
suppliers and consultants, which Buyer and its authorized representatives may
contact to inquire about such parties' relations with the Company and the
Landfill. Seller and Macedon hereby release, discharge and hold harmless Buyer,
any Affiliate of Buyer, and any officer, director, stockholder, employee, agent,
attorney, joint venturer, partner, servant, representative, trustee, successor
or assign of Buyer or of any of its Affiliates, from all liability or claims by
reason of any such access or contact referred to above.
5.10. Acquisition Proposals. Each of Seller, Macedon and the
Company represent and warrant to Buyer that (i) it is not, directly or
indirectly through any officer, director, agent, representative (including,
without limitation, investment bankers, brokers,
35
attorneys and accountants) or otherwise, currently participating in discussions
or negotiations with any person, corporation, partnership or other entity or
group (a "Third Party") other than Buyer relating to any direct or indirect
acquisition or purchase of the Shares, the Landfill or the Business, (ii) it is
not prohibited, contractually or otherwise, from entering into discussion with
Buyer relating to the acquisition or purchase of the Shares, the Landfill or the
Business, and (iii) except for regulatory approvals, it is not prohibited,
contractually or otherwise, from consummating a transaction or series of
transactions whereby Buyer purchases or acquires the Shares, the Landfill or the
Business. From the date hereof through the Closing, none of Seller, Macedon or
the Company shall directly or indirectly, through any officer, director, agent,
representative (including, without limitation, investment bankers, brokers,
attorneys and accountants) or otherwise, (i) solicit, initiate or encourage
submission of inquiries, proposals or offers from any Third Party relating to
any acquisition or purchase of all or a portion of the Shares, the Landfill or
the Business; or (ii) participate in any discussion or negotiations regarding,
or furnish to any Third Party any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party to do or seek any of the foregoing.
Seller, Macedon and the Company shall promptly notify Buyer if any such proposal
or offer, or any inquiry or contact with any Third Party with respect thereto,
is made, and shall in any such notice set forth in reasonable detail the
identity of the Third Party and the terms and conditions of such inquiry,
proposal or offer.
5.11. Preparation of Certain Schedules. Within forty five (45)
Business Days after the date of this Agreement and in all events within thirty
(30) Business Days prior to the Closing, Seller and Macedon shall prepare and
deliver to Buyer for its review complete and accurate Schedules to this
Agreement, which Schedules shall contain any and all exceptions to, or
information required by, the representations and warranties of Seller and
Macedon contained herein that have not theretofore been provided in Schedules
delivered to Buyer.
5.12. Audit. Notwithstanding any other provision contained in
this Agreement, prior to Closing, at Buyer's expense, Seller, Macedon and the
Company shall assist and fully cooperate with Buyer, its Affiliates, their
representatives and their independent public accountants in preparing a GAAP
audit of the Business and the operations of the Company for the fiscal years
ending December 31, 2002, 2001 and 2000, and, in the event the Closing occurs
prior to December 31, 2003, an audit of the Company's financial records for the
period beginning on January 1, 2003 and ending on the Closing Date. In
connection therewith, Seller, Macedon and the Company shall provide to Buyer,
its Affiliates, their representatives and their independent public accountants,
any Tax or financial records reasonably requested including, without limitation,
all such tax and/or financial records for the Company's three (3) fiscal years
immediately preceding the Closing, and, if necessary, Seller, Macedon and the
Company shall also provide Buyer with access to the Company's officers and
directors.
5.13. Benefit Plans. (a) At the election of the Buyer and as
determined by Buyer in its sole discretion, the Company shall take all
appropriate and necessary action to terminate some or all of the Benefit Plans
(including without limitation all pension and 401(k) plans) immediately prior to
the Closing, such that neither the Company nor the Buyer shall have any
liabilities or obligations under such Benefit Plans on and after the Closing.
36
(b) As soon as practicable, but in any event prior to the
Closing Date, Seller shall cause an amendment to be made to each Benefit Plan
sponsored by the Company as a "qualified" plan with the meaning of Section 401
of the Code (together, the "Company Retirement Plans") to: (1) terminate the
Company Retirement Plans immediately prior to the Closing Date and (2) allow for
employer contributions to the Company Retirement Plans for compensation paid to
participants on or prior to the Closing Date. Seller shall also cause the
Company to deliver any notices required under Section 204(h) of ERISA with
respect to a money purchase or other pension plan at least forty five (45) days
prior to the Closing Date and after adoption of the amendments described herein.
Seller shall remain responsible for, and shall indemnify and hold the Buyer and
the Company harmless from (subject to Article 11 of this Agreement), any and all
liabilities and obligations arising with respect to the Company Retirement
Plans, and Seller shall remain or become the Trustee of the Company Retirement
Plans and shall remain or become the Plan Administrator of the Company
Retirement Plans from and after the Closing Date. Without limiting the
foregoing, Seller shall cause the Company Retirement Plans to obtain favorable
IRS determination letters with respect to their termination, and Seller shall
remain responsible for all required reports and filings with respect to the
Company Retirement Plans.
(c) All employees of the Company as of the Closing Date
("Company Employees") shall be offered coverage under employee benefit plans of
Buyer or one of its Affiliates. Except with respect to any 401(k) plans, the
Company Employees shall receive credit as employees of the Company and its
Affiliates for service with the Company and its Affiliates prior to the Closing
Date to the same extent such service was counted under similar Benefit Plans for
purposes of eligibility and vesting (and benefit accrual with respect to
vacation).
ARTICLE 6
CONDITIONS TO CLOSING
6.1. Conditions Precedent to Obligations of Buyer. The
obligations of Buyer to proceed with the Closing under this Agreement are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in writing in whole or in part by Buyer
in Buyer's sole discretion):
(a) Representations and Warranties. All representations and
warranties of the Company, Seller and Macedon made in this Agreement as
of the date hereof (without giving effect to Schedules delivered by the
Company, Seller or Macedon to Buyer after the date hereof in accordance
with Section 5.11) shall be true and correct in all material respects
on the Closing Date as if made as of such date (other than those
representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time,
which need only be true and accurate as of such date or with respect to
such period).
(b) Performance and Compliance. Seller, Macedon and the
Company shall have performed all of the covenants, and complied with
all of the provisions required by this Agreement to be performed or
complied with by them on or before the Closing, including the
provisions of Section 7.1 and 7.2 regarding deliveries to be made at
Closing.
37
(c) HSR Clearance. All applicable waiting periods or
pre-closing approvals required under the HSR Act shall have expired,
been terminated or been received.
(d) Litigation. No order of any Governmental Authority shall
be in effect which restrains or prohibits the transactions contemplated
hereby. There shall not be threatened, nor shall there be pending, any
Claim challenging any of the transactions contemplated by this
Agreement or seeking monetary relief by reason of the consummation of
such transactions.
(e) Satisfactory Instruments. All instruments and documents
required of Seller and Macedon to effectuate and consummate the
transactions contemplated hereby shall be in form and substance
reasonably satisfactory to Buyer and its counsel.
(f) Board Approval. Buyer shall have obtained the Board
Approval.
(g) Senior Lender's Approval. Buyer shall have obtained the
Senior Lender's Approval.
(h) Acquisition Financing. Buyer shall have obtained financing
for the Purchase Price on terms and conditions reasonably satisfactory
to Buyer ("Acquisition Financing").
(i) Company's Post-Closing Funding; Buyer's Post-Closure
Assurances. Buyer shall have (i) caused the aggregate amount of the
Company's funds escrowed with the DEC to satisfy the closure and
post-closure obligations of the Business prior to the Closing Date (the
"Escrow Amount") to be replaced with letters of credit, bonds, and/or
other forms of financial assurance acceptable to the DEC, and (ii)
caused the DEC to instruct the Trustee to release to the Company or
Seller the Escrow Amount.
(j) Required Consents. Seller and the Company shall have
obtained all Required Consents pursuant to Section 5.3 and delivered
evidence of the Required Consents to Buyer.
(k) No Liens. There shall not be any Liens on any portion of
the Landfill.
(l) Consent Orders. Buyer shall have reviewed each of the
draft Consent Order relating to the Tantello site (the "Tantello
Consent Order") and the Consent Order relating to the SM 11 groundwater
monitoring well (the "SM 11 Consent Order") and all matters directly
and indirectly relating thereto and shall have determined in its sole
discretion that each such order and such related matters are acceptable
to it.
(m) Geneva Landfill. Buyer shall have reviewed the fifty acre
closed municipal solid waste landfill in Geneva, New York described on
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Schedule 3.11(a) hereto and shall that determined in its sole
discretion that such landfill is acceptable to it.
(n) Due Diligence Investigation. Buyer shall have determined
in its sole discretion that its due diligence investigation of the
Company, the Business and the Landfill has revealed no fact
circumstance or information that would have a material adverse impact
on the value of the Company, the Business or the Landfill, excluding
facts, circumstances or information provided in the Schedules hereto as
of the date hereof.
(o) Equipment. The assets of the Company shall include at
least each of those items of equipment and machinery as are set forth
on Schedule 6.1(o) or, in any case a replacement for any such item of
equal or greater functionality, or equal or lesser age and in equal or
better condition of each such item as of the date hereof. Each such
item of equipment on such schedule (or replacement therefor) shall be
in good operating condition and in good repair.
(p) Environmental Liabilities. Neither the execution nor the
delivery of this Agreement shall result in any obligations for site
investigation or cleanup, or notification to or consent of Governmental
Authorities or third parties, pursuant to any Environmental Law, that
will cost in excess of $1,000,000.
(q) Indemnity Arrangements. Buyer shall have obtained
environmental liability insurance, at Buyer's cost, covering such
matters related to the operations of the Seller prior to the Closing
and the condition of (and any Environmental Conditions present on) the
Owned Real Property as Buyer shall reasonably request, on terms and in
amounts that are substantially within the range of market terms for
such insurance, and without exceptions that are not acceptable to
Buyer.
6.2. Conditions Precedent to the Obligations of Seller and
Macedon. The obligations of Seller and Macedon to proceed with the Closing is
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Seller in
Seller's sole discretion):
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and
correct in all material respects on the Closing Date as if made as of
such date (other than those representations and warranties that address
matters only as of a particular date or only with respect to a specific
period of time, which need only be true and accurate as of such date or
with respect to such period).
(b) Performance and Compliance. Buyer shall have performed all
of the covenants and complied with all the provisions required by this
Agreement to be performed or complied with by Buyer on or before the
Closing, including the provisions of Section 7.3 regarding deliveries
to be made at Closing.
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(c) HSR Clearance. All applicable waiting periods or
pre-closing approvals required under the HSR Act shall have expired,
been terminated or been received.
(d) Litigation. No order of any Governmental Authority shall
be in effect which restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be
pending, any Claim challenging any of the transactions contemplated by
this Agreement or seeking monetary relief by reason of the consummation
of such transactions.
(e) Satisfactory Instruments. All instruments and documents
required of Buyer to effectuate and consummate the transactions
contemplated hereby shall be in form and substance reasonably
satisfactory to Seller and its counsel.
(f) Required Consents. All Required Consents shall have been
obtained.
(g) Closure and Post-Closure Funding. Buyer shall have caused
(i) the Escrow Amount to be replaced with letters of credit, bonds
and/or other forms of financial assurance acceptable to the DEC, and
(ii) the DEC to release to the Company the Escrow Amount.
ARTICLE 7
DELIVERIES AND PROCEEDINGS AT CLOSING
7.1. Closing Deliveries by Seller. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall deliver or cause to
be delivered to Buyer the following documents, all in form and content
reasonably satisfactory to Buyer:
(a) a certificate of Seller certifying that the
representations and warranties by it, Macedon and/or the Company
contained herein are true and correct in all material respects as of
the Closing Date and that each of Seller, Macedon and the Company has
performed all of his or its obligations under this Agreement and any
Ancillary Document to which Seller, Macedon or the Company is a party;
(b) Shares. Certificates representing the Shares accompanied
by stock powers duly endorsed in blank by Seller or accompanied by duly
executed instruments of transfer, with any requisite documentary or
stock transfer taxes affixed thereto (the "Stock Certificates");
(c) Surveys and Title Commitments. The Surveys, Title
Commitments and Title Policies required by Sections 5.4, 5.6 and 5.7;
(d) FIRPTA. Certification of the non-foreign status of Seller
required to be delivered under Treasury Regulation Section 1.1445-2 in
order to relieve Buyer of the requirements to withhold taxes under
Section 1445 of the Code;
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(e) IRS Form 8023 (Election under Section 338 for Corporations
making Qualified Stock Purchase) signed by the Seller; and
(f) Evidence of the transfer by each of Seller and Macedon to
the Company of any and all right title and interest in and to the
Landfill owned by each of them and not owned by the Company as of the
date hereof.
7.2. Deliveries by Macedon. Subject to the terms and
conditions of this Agreement, at the Closing, Macedon shall deliver or cause to
be delivered to Buyer the following documents all in form and content reasonably
satisfactory to Buyer:
(a) an Officer's certificate of Macedon certifying (A) the
incumbency and genuineness of signature of all Macedon's officers
executing this Agreement or any Ancillary Document, and (B) the
genuineness of Macedon's corporate resolutions authorizing this
Agreement, the Ancillary Documents to which Macedon is a party and the
transactions contemplated hereby;
(b) an Officer's certificate of Macedon certifying that the
representations and warranties contained herein by or with respect to
it, Seller and/or the Company are true and correct in all material
respects as of the Closing Date and that each of Seller, Macedon and
the Company has performed all of its or his obligations under this
Agreement and any Ancillary Document to which Macedon, the Seller or
the Company is a party; and
(c) certificates of corporate good standing or legal existence
of Macedon as of a date no earlier than ten (10) days prior to the
Closing.
7.3. Deliveries By Buyer. Subject to the terms and conditions
of this Agreement, at the Closing, Buyer shall deliver or cause to be delivered
to Seller the following documents, all in form and content reasonably
satisfactory to Seller:
(a) Corporate Documents.
(i) an Officer's certificate of Buyer certifying (A)
the incumbency and genuineness of signature of all Buyer's
officers executing this Agreement or any Ancillary Document,
and (B) the genuineness of Buyer's corporate resolutions
authorizing this Agreement, the Ancillary Documents to which
Buyer is a party and the transactions contemplated hereby;
(ii) an Officer's certificate of Buyer certifying
that the representations and warranties by it contained herein
are true and correct in all material respects as of the
Closing Date and that Buyer has performed all of its
obligations under this Agreement and any Ancillary document to
which Buyer is a party; and
(iii) certificates of corporate good standing or
legal existence of Buyer as of a date no earlier than ten (10)
days prior to the Closing; and
41
(b) Purchase Price Payment. The portion of the Purchase Price
payable at Closing in accordance with Sections 2.1 and 2.2.
7.4. Other Documents. The parties agree to execute and deliver
at the Closing all other documents that are necessary or advisable in order to
consummate the transactions contemplated hereby or in connection herewith.
ARTICLE 8
TERMINATION
8.1. Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) Mutual Consent. By mutual written consent of Buyer and
Seller;
(b) Termination by Buyer. By Buyer upon notice to Seller (i)
if there has been a material misrepresentation or a material breach by
Seller or Macedon of their respective representations and warranties
made as of the date hereof (without giving effect to any Schedules
provided to Buyer after the date hereof) or covenants contained in this
Agreement, or (ii) if any of the conditions specified in Section 6.1
hereof shall not have been substantially fulfilled by September 30,
2003 or extended pursuant to Section 8.1(d), and such conditions shall
not have been waived by Buyer, or (iii) if there has been a Material
Adverse Effect after the date hereof or (iv) if any investigation of
the Company or any Schedule hereto of any other document delivered to
Buyer as contemplated hereby shall have revealed any fact, circumstance
or information which would have a negative impact on the value of the
Company.
(c) Termination by Seller. By Seller upon notice to Buyer (a)
if there has been a material misrepresentation or material breach by
Buyer of any of its representations and warranties or covenants
contained in this Agreement, or (b) if any of the conditions specified
in Section 6.2 hereof shall not have been substantially fulfilled by
September 30, 2003 or extended pursuant to Section 8.1(d), and such
conditions shall not have been waived by Seller.
(d) Termination by Seller or Buyer. By Seller or Buyer if
Buyer has not been able to obtain by September 30, 2003 a commitment
from a financial institution for the financing of the transactions
contemplated hereby acceptable to Buyer in Buyer's commercially
reasonable judgment. Buyer and Seller agree that in the event the
Closing contemplated by the Agreement has not occurred on or before
September 30, 2003 due to Buyer not obtaining a commitment from a
financial institution for the financing of this transaction, then Buyer
may, at its sole option, deposit an additional Two Hundred Fifty
Thousand Dollars ($250,000) with the Seller under the same terms and
conditions set forth in the Exclusivity Agreement and Seller agrees to
accept this additional deposit and extend the termination pursuant to
this Section 8.1(d) until January 31, 2004.
42
Buyer and Seller agree that in the event the Closing contemplated
hereunder has not occurred on or before September 30, 2003 for any
reason other the failure to obtain financing either may terminate this
Agreement, so long as such terminating party is not in breach of this
Agreement and such breach shall be the direct or indirect cause of the
failure of the conditions to Closing to be satisfied. The parties
hereto that, with respect to the applicability of the January 31, 2004
date above, time shall be of the essence.
8.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1 hereof, all obligations of the parties
hereunder shall terminate, except for the obligations set forth in Sections 9.1,
Costs and Expenses and 9.4, Public Announcements. In the event of the
termination of this Agreement pursuant to Section 8.1(a) or 8.1(b), the Deposit
paid pursuant to Section 2.5 hereof shall be nonrefunable to Buyer in accordance
with the terms of the Exclusivity Agreement. Upon any termination of this
Agreement by Buyer prior to the Closing due to a failure of a representation or
warranty of the Company, Seller or Macedon to be true and accurate, the Seller's
sole liability to Buyer shall be for a return of the Deposit referred to in
Section 2.5 previously paid by Buyer to Seller.
ARTICLE 9
CERTAIN ADDITIONAL COVENANTS
9.1. Costs and Expenses. Each party hereto will pay its own
costs and expenses, including legal and accounting fees, in connection with the
negotiation, execution, performance of, and compliance with this Agreement;
provided, however, Buyer shall pay all expenses required to obtain the Required
Consents including all expenses and the filing fee for the filing under the HSR
Act.
9.2. Non-Competition; Non-Raid. (a) Seller and Macedon each
agree that, without the prior written consent of Buyer, for a period of five (5)
years after the Closing Date, none of Seller, Macedon, any subsidiary of Macedon
or any Affiliate of Seller or Macedon, shall, directly or indirectly own,
manage, operate, advise or participate in any manner in the ownership,
operation, revenues, profits, management or control of a municipal solid waste
landfill within the Commonwealth of Pennsylvania or the States of New Jersey and
New York.
(b) Each of Seller and Macedon covenants and agrees that he or
it shall not, and shall cause his or its Affiliates not to, for a period of five
(5) years from and after the Closing Date, working alone or in conjunction with
one or more other persons or entities, whether or not for compensation (i)
recruit or otherwise solicit or induce any person (except for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇▇ ) or entity who is, on the Closing Date or thereafter, an
employee, customer or vendor of the Company to terminate their employment with,
or otherwise cease their relationship with, the Company, or Buyer or any of
their respective subsidiaries or Affiliates, or (ii) hire, recruit or otherwise
solicit any person (except for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ) who, within
the six (6) months immediately preceding the Closing Date, had been an employee,
customer or vendor of the Company; provided, however, the hiring, recruitment or
solicitation of a vendor shall not be deemed in violation of this Section 9.2(b)
unless such action materially
43
adversely impacts the Company. The terms of this provision shall be set forth in
a definitive Non-Competition Agreement substantially in the form of Exhibit D
attached hereto.
9.3. Rochester Transfer Station. The parties acknowledge that
the transfer station located in Rochester, New York (the "Rochester Transfer
Station") that is owned by Seller as of the date hereof is not being transferred
to Buyer hereunder. For a period of five (5) years from and after the Closing
Date, to the extent that the Rochester Transfer Station is used to accept or
receive municipal solid waste, Seller covenants and agrees that he shall, and
shall cause his Affiliates to, cause such waste to be disposed of at the
Landfill pursuant to a Disposal Agreement, substantially in the form of Exhibit
E attached hereto (the "Disposal Agreement"). During such five (5) year period,
Buyer shall provide its landfill services to the Rochester Transfer Station at a
rate of not less than 10% below the lowest rate then offered to other users of
the Landfill in connection with the disposal of municipal solid waste generated
in Monroe County, New York. During such five (5) year period, Seller may
transfer his ownership interest in the Rochester Transfer Station only so long
as the third-party transferee agrees in writing to be bound by the terms of the
Disposal Agreement.
9.4. Public Announcements. (a) Prior to the Closing Date, none
of Buyer, Seller, Macedon or the Company shall furnish any written communication
to any third party (other than to its or his respective advisors or Buyer's
lenders or stockholders) or to the public generally if the subject matter
thereof relates to the existence of this Agreement or any party's involvement
herein or to the transactions contemplated hereby, without the prior written
approval of the other parties as to the content thereof, which approval may be
granted or withheld in each party's sole discretion; provided, however, that the
foregoing shall not be deemed to prohibit any disclosure required by any
applicable Law or by any Governmental Authority having jurisdiction over such
matters.
(b) Notwithstanding anything stated to the contrary in Section
9.4(a), the parties acknowledge from and after the date of the execution of this
Agreement, Buyer, or a designee thereof, shall have the right, with the prior
written consent of Seller, Macedon or the Company, which shall not be
unreasonably withheld, (i) to meet and discuss with the City of New York (the
"City") the solid waste disposal options made available to the City by the
Company, (ii) to attend any such meeting or discussion held by the Company or
Seller and the City, (iii) to meet with the DEC regarding permitting issues
relating to the Landfill, and (iv) to hold meetings and discussions regarding
the Company with such other third parties involved in regulating or monitoring
the Landfill and the Business as Buyer reasonably determines is necessary or
advisable. The Company or Seller shall notify Buyer in advance of any meeting or
discussion between the Company and/or Seller and the City, the DEC or any other
third parties. In the event Buyer meets with the City, the DEC or any other
third parties prior to Closing pursuant to its rights under this Section 9.4(b),
Buyer shall notify the Company and/or Seller in advance of such meeting and the
Company and Seller or a designee thereof shall have the right to attend such
meeting.
(c) Buyer, Seller and their respective designees shall have
the right to discuss with, or provide to, antitrust officials at the Antitrust
Division or the FTC information regarding the parties hereto and the
transactions contemplated hereunder and under the Acquisition Agreement.
44
9.5. Covenants of Buyer. Buyer hereby covenants to use good
faith efforts to obtain:
(a) the Senior Lender's Approval;
(b) Board Approval; and
(c) Acquisition Financing.
9.6. Participation in Negotiations. The Company shall, and the
Seller shall cause the Company to, cause its officers, employees, consultants,
accountants, counsel and other authorized representatives to furnish to the
Buyer and its authorized representatives documents and other information
relating to the Tantello Consent Order and/or SM 11 Consent Order as Buyer or
its authorized representatives may from time to time request or deem necessary
or appropriate. Neither the Company, nor Seller shall, without the prior written
consent of Buyer, file with any court or other Governmental Authority, or agree
to the terms of, the Tantello Consent Order for a period of not less than sixty
(60) days following the date hereof. During such sixty (60)-day period, Seller,
Macedon and the Company shall provide Buyer the opportunity to review the draft
of the Tantello Consent Order and all matters directly and indirectly relating
thereto and shall reflect therein all reasonable comments and request of Buyer.
Prior to agreeing to any changes to any draft of the Tantello Consent Order
provided to, or approved by, Buyer, Seller, Macedon and the Company shall
provide Buyer with a copy of all such proposed changes and an opportunity to
review and comment on the same.
9.7. Certain Relationships. Buyer hereby acknowledges the
relationship of Seller and the Company with Bank of Geneva and ▇▇▇▇▇▇ Harbor
Engineering and agrees to use good faith efforts to maintain such relationships
on substantially the same terms and conditions disclosed to Buyer prior to the
date hereof.
9.8. Specified Plot Easement. Prior to the Closing Date, Buyer
shall grant a non-exclusive, 60 foot-wide access easement to Seller with respect
to the Specified Plot to allow for the construction of a future road connecting
Highway 414 with that certain property located to the East (the "Dove Property")
with terms and conditions reasonably acceptable to Buyer. Seller shall be
responsible for all costs associated with the easement, including costs for
reasonable maintenance, repairs and insurance.
9.9. Equipment Purchases. Buyer and Seller acknowledge that
leases with respect to certain equipment set forth on Schedule 3.10 related to
the Business and owned by the Company may expire prior to the Closing. Seller
shall provide at least fourteen (14) days notice of such expiration to Buyer. At
Buyer's option, Buyer may deliver prompt written notice to Seller of its desire
to have the Company purchase such equipment. Upon receipt of Buyer's notice,
Seller shall cause the Company to purchase such equipment, keep such equipment
in good working condition and not permit any Liens to placed upon such
equipment. At the Closing, Buyer shall pay an additional amount to Seller equal
to the aggregate purchase price paid by Seller for such equipment at lease
expiration. Any replacement equipment purchased by the Seller or the Company
will not be reimbursed by the Buyer.
45
ARTICLE 10
TAXES
10.1. Taxes. Seller shall timely pay any and all sales, use,
transfer, transfer gains or similar Taxes ("Transfer Taxes") which result from
the transfer of the Shares, the Business or the Landfill pursuant to this
Agreement and shall prepare and file any related Tax Returns required to be
filed in connection with the payment of such Transfer Taxes on a timely basis.
After the Closing Date, each party shall, upon the request of the other party,
promptly reimburse the other party for any Transfer Taxes or related expenses
for which such party is responsible under this Agreement but which have been
paid by the other party.
10.2. Cooperation on Tax Matters. (a) Buyer and Seller agree
to furnish or cause to be furnished to each other, as promptly as practicable,
such information and assistance relating to the Company, as is reasonably
necessary for the preparation and filing of any Tax Return, Claim for refund or
other required or optional filings relating to Tax matters, for the preparation
of and proof of facts during any Tax Audit, for the preparation of any Tax
protest, for the prosecution or defense of any suit or other proceeding relating
to Tax matters and for the answer to any governmental or regulatory inquiry
relating to Tax matters.
(b) Section 338(h)(10) Election. (i) At Buyer's request,
Seller shall join with Buyer in timely making a joint election pursuant to
Section 338(h)(10) of the Code (the "Election") to treat the transaction
hereunder as the deemed sale of the assets of the Company for federal and state
income tax purposes. Buyer will be responsible for preparing and timely filing
any forms used to make the Election. Seller shall sign at Closing all federal
and state forms used to make the Election. Seller and Buyer will act together in
good faith to determine the deemed sale price of the assets of the Company
pursuant to the applicable Treasury Regulations under Section 338 of the Code
and based upon the agreed fair market values of the assets of the Company (the
"Allocation") and will use the Allocation in reporting the deemed purchase and
sale of the assets of the Company for federal and state income tax purposes,
(ii) if the Election is made, Buyer will reimburse Seller for any additional
Taxes incurred by Seller which would not have been incurred had the sale of the
Shares to the Buyer occurred pursuant to the terms of this Agreement but no
Election had been made (the "Excess Section 338(h)(10) Taxes"). For purposes of
this Section 10.2(b)(ii), the calculation of the Excess Section 338(h)(10) Taxes
shall consist of: (A) Seller's incremental federal income Taxes attributable to
the difference between the Seller's marginal rate of tax on ordinary income and
the Seller's marginal tax rate on long-term capital gains multiplied by the
excess of (x) any ordinary income recognized by the Seller as a result of the
sale of the Shares, which ordinary income would have been long-term capital gain
but for the Section 338(h)(10) Election, over (y) any ordinary deductions
allocable to the Seller (including the deduction for any Company taxes paid by
Buyer or the Company) which deductions result from or are attributable to the
Section 338(h)(10) Election; (B) the Seller's incremental state income Taxes
attributable to the difference, if any, between the Seller's effective state and
local tax rate on income and gain recognized by the Seller as a result of the
sale of the Shares as compared to what the Seller's effective state and local
income tax rate would have been with respect to such income and gain but for the
Section 338(h)(10) Election; and (C) any additional federal, state and local
income Taxes incurred by Seller attributable to the payment made to Seller
pursuant to this Section 10.2(b)(ii). The amount of Seller's Excess
46
Section 338(h)(10) Taxes, if any, shall be determined by Seller's tax
accountants, subject to approval by Buyer's tax accountants which, in the event
of a dispute, shall be finally determined by an independent tax accounting
expert mutually agreeable to Buyer and Seller.
(c) Return Filing, Refunds, Credits and Transfer Taxes. Seller
shall be responsible for correctly preparing all federal, state and local income
Tax Returns for the Company for all taxable periods through the Closing Date.
The cost of the preparation of such Tax Returns shall be paid by Seller. In
preparing such Tax Returns for the taxable periods through the Closing Date,
Seller shall not deviate from the manner in which any item of income or expense
of the Company was reported in prior years, except as required by law. Such Tax
Returns shall be submitted to Buyer for review at least forty-five (45) Business
Days prior to the filing date for any such Tax Return. All Tax Returns that are
required to be filed pursuant to this Section 10.2(c) shall not be filed without
prior consultation with Buyer and if the Company has any tax liability with
respect thereto, the prior approval of Buyer. Seller shall file such Tax Returns
on or before the due dates thereof. To the extent permitted by applicable law,
Seller shall (i) duly include in his federal and state income tax returns all
items of income, gain, loss, deduction or credit attributable to the S Final
Year of the Company in a manner consistent with Form 1120S and schedules thereto
(and the corresponding state income tax forms and schedules) to be filed by
Seller for the Company with respect to such period; and (ii) subject to Section
10.2(b), pay any and all Taxes required to be paid for all taxable years of
Seller, including the taxable year that includes the S Final Year, that are
attributable to Seller's stock ownership in the Company (it being understood
that Section 10.2(b) requires Buyer to pay taxes attributable to the Section
338(h)(10) Election, including with respect to the New York State S Corporation
Franchise tax). For purposes of this provision, the "S Final Year" means the
taxable year of the Company that ends on the Closing Date.
ARTICLE 11
INDEMNIFICATION
11.1. Survival. The representations and warranties of Seller,
Macedon, the Company and Buyer contained herein shall survive only until the
Closing Date; provided, however, that such time limitation shall not apply to
the representations and warranties set forth in (a) Sections 3.1 Capacity,
Organization, Standing and Qualification; 3.2 Capitalization and Ownership; 3.3
Authority; and 3.4 Execution and Delivery (each of which representations and
warranties shall survive indefinitely) and (b) Section 3.8 Taxes (which
representations and warranties shall survive until ninety (90) days after the
expiration of the applicable statute of limitations with respect to the relevant
Tax).
11.2. Indemnification by Seller and Macedon. Seller and
Macedon shall jointly and severally indemnify, defend and hold harmless Buyer,
its officers, directors, employees, consultants, owners, agents and Affiliates,
regardless of any investigation made by Buyer or on its behalf (or the waiver or
satisfaction of the condition contained in Section 6.1(n)), for, against, from
and in respect of any and all losses, damages, costs and expenses of any kind
and nature whatsoever (including interest and penalties, reasonable expenses of
investigation and court costs, reasonable attorneys' fees and disbursements and
the reasonable fees and disbursements of other professionals incurred in the
investigation or defense of any of the same
47
or in asserting any of their respective rights hereunder) (collectively,
"Losses") which may be sustained or suffered by any of them arising out of,
resulting from or pertaining to:
(a) any breach or inaccuracy of any representation or warranty
made by Seller, Macedon or the Company herein (to the extent that such
representation or warranty is still surviving pursuant to Section 11.1
as of the date a claim for indemnification is made hereunder) as of the
date hereof or as of the Closing (without giving effect to any
Schedules provided by Seller to Buyer after the date hereof); and
(b) any failure of Seller, Macedon or the Company to perform
any covenant or agreement hereunder or fulfill any other obligation in
respect hereof.
11.3. Indemnification by Buyer. Buyer shall indemnify, defend
and hold harmless Seller, the Company and Macedon, Seller's and Macedon's
officers, directors, employees, consultants, owners, agents and Affiliates, for,
against, from and in respect of any and all Losses which may be sustained or
suffered by any of them arising out of, resulting from or pertaining to:
(a) any breach or inaccuracy of any representation or warranty
made by Buyer herein; and
(b) any failure of Buyer to perform any covenant or agreement
hereunder or fulfill any other obligation in respect hereof.
11.4. Notice and Opportunity to Defend. Each Person seeking
indemnification under this Article 11 (the "Indemnified Party") shall promptly
notify the other party obligated to provide indemnification (the "Indemnifying
Party") of any Claim as to which indemnity may be sought; provided, however,
that the failure to provide prompt notice shall relieve the Indemnifying Party
of its obligations hereunder only to the extent that such failure prejudices the
Indemnifying Party hereunder. The Indemnified Party shall have the right to
control the defense of such Claim and the Indemnifying Party shall indemnify the
Indemnified Party for its costs in connection therewith and shall be entitled to
participate in the defense of such Claim at its own expense. In no event shall
an Indemnifying Party be liable for any settlement or compromise effected
without its prior consent and the Indemnifying Party, in the defense of any such
Claim, shall not, except with the prior consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term a release of the Indemnified Party from all
Liability in respect to such Claim by the claimant or plaintiff or which
provides for any form of injunctive relief or other non-monetary relief which
affects the Indemnified Party.
11.5. Reimbursement. (a) At the time that the Indemnified
Party shall suffer a Loss in respect of which it is entitled to indemnification
under this Article 11 or at the time the amount of any Liability on the part of
the Indemnifying Party under this Article 11 is otherwise determined, which in
the case of payment to third Persons covered by the provisions of this Article
11 shall be the earlier of (i) the date of such payments or (ii) the date that a
court of competent jurisdiction shall enter a final judgment, order or decree
(after exhaustion of appeal
48
rights) establishing such Liability (such loss or amount being hereinafter
referred to as the "Indemnifiable Loss"), the Indemnifying Party shall
forthwith, upon notice from the Indemnified Party pay to the Indemnified Party
the amount of the Indemnifiable Loss. If such amount is not paid forthwith, then
the Indemnified Party may, at its option, take legal action against the
Indemnifying Party for reimbursement in the amount of its Indemnifiable Loss.
For purposes hereof, the Indemnifiable Loss shall include the amounts so paid,
or determined to be owing, by the Indemnified Party together with costs and
reasonable attorneys' fees and interest on the foregoing items at the rate of
ten percent (10%) per annum from the later of (A) the date the Indemnified Party
suffers the Indemnifiable Loss, and (B) the date that the Indemnified Party
provides to the Indemnifying Party notice that the Indemnifiable Loss is due as
hereinabove provided, until the Indemnifiable Loss shall be paid. If such
Indemnified Party does not prevail in its enforcement action hereunder, it shall
reimburse the Indemnifying Party's costs in such action.
(b) The foregoing provisions of this Article 11
notwithstanding, if, prior to the termination of any obligation to indemnify,
the Indemnified Party files a suit or action based upon an indemnifiable Claim
of Seller or Macedon or an Indemnifiable Claim of Buyer, as the case may be,
against Indemnifying Party, the Indemnified Party shall not be precluded from
pursuing such claim, breach, occurrence, other matter, or suit or action, or
from recovering from the Indemnifying Party (whether through the courts or
otherwise) on the Seller Indemnifiable Claim or the Buyer Indemnifiable Claim,
as the case may be, by reason of the termination otherwise provided for above in
this Article 11, if any.
11.6. Adjustments to Indemnification Payments. (a) If the
amount of any Indemnifiable Loss, at any time subsequent to the making of an
indemnity payment by the Indemnifying Party, is reduced by recovery, settlement
or otherwise under or pursuant to any insurance coverage, or pursuant to any
Claim, recovery, settlement or payment by or against any third Person, the
amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the rate of ten percent (10%) per annum), will promptly be repaid by
the Indemnified Party to the Indemnifying Party. Upon making any indemnity
payment the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnified Party against any third Person that
is not an Affiliate of the Indemnified Party in respect of the Indemnifiable
Loss to which the indemnity payment relates; provided, however, that (i) the
Indemnifying Party shall then be in compliance with its obligations under this
Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnified
Party recovers full payment of its Indemnifiable Loss, any and all Claims of the
Indemnifying Party against any such third Person on account of said indemnity
payment will be subrogated and subordinated in right of payment to the rights of
the Indemnified Party against such third Person. Without limiting the generality
or effect of any other provision hereof, each such Indemnified Party and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights. The Indemnified Party shall use its reasonable efforts to
make insurance Claims relating to any Claim for which it is seeking
indemnification pursuant to this Article 11; provided that the Indemnified Party
shall not be obligated to make such an insurance Claim if the Indemnified Party
in its reasonable judgment believes that the cost of pursuing such an insurance
Claim together with any corresponding increase in insurance premiums or other
chargebacks to the Indemnified Party would exceed the
49
value of the insurance Claim relating to any Claim for which the Indemnified
Party is seeking indemnification.
(b) In addition to any other rights of the Buyer hereunder, if
an Indemnifiable Loss has been asserted in writing by Buyer and remains
unresolved as among Buyer, Seller and/or Macedon on any date on which any
payment of any amount is otherwise due and payable by Buyer hereunder, then
Buyer shall be entitled to withhold payment of any amount that is otherwise due
and payable hereunder up to an aggregate amount equal to the lesser of (i) the
estimated Losses and the payment(s) due (such amount, the "Indemnity Fund") with
respect to all such unresolved Indemnifiable Loses until the earliest of (i)
such time as Seller and/or Macedon has paid all such unresolved Indemnifiable
Losses in full or otherwise corrected or remedied all such unresolved
Indemnifiable Losses to the reasonable satisfaction of Buyer, (ii) as to such
Indemnifiable Loss, final adjudication (including appeals) by a court of
competent jurisdiction or final, binding determination by a duly appointed
arbitrator, or (iii) dismissal of any action relating to such Indemnifiable
Loss. Notwithstanding the provisions otherwise contained in this Section 11.6,
Buyer shall, subject to Section 11.6(c) below, pay to Seller and/or Macedon the
portion of the Indemnity Fund related to a particular Indemnifiable Loss that
meets the requirements of clause (i), (ii) or (iii) above.
(c) Upon a final determination (by a court of competent
jurisdiction, by a final, binding determination by a duly appointed arbitrator,
or otherwise by agreement of Buyer and Seller) of the value of an Indemnifiable
Loss, Buyer shall be entitled to an offset and credit against the unpaid
payments hereunder in an aggregate amount equal to the value of such
Indemnifiable Loss.
11.7. No Other Representations. Except as set forth in this
Agreement, no party makes any representation, warranty, covenant or agreement
with respect to the matters contained herein.
11.8. Specific Performance. Seller, the Company and Macedon
acknowledge that a refusal by them to consummate the transactions contemplated
by this Agreement will cause irreparable harm to Buyer for which there may be no
adequate remedy at law and for which the ascertainment of damages would be
difficult. Therefore, Buyer shall be entitled to specific performance of this
Agreement (in addition to, and without having to prove the inadequacy of, other
remedies at law) and appropriate injunctive relief (without being required to
post bond or other security).
11.9. Purchase Price Adjustment. Buyer and Seller shall treat
any payments under this Article 11 as an adjustment to the Purchase Price for
all federal, state, and local income Tax purposes.
11.10. Survival of Indemnification Obligations. The
indemnification and other obligations of Seller and Buyer under this Article 11
shall survive for the same period of time set forth in Section 11.1, and shall
terminate with the expiration of such survival period. Claims or demands
asserted prior to the expiration of such period shall survive until final
resolution thereof.
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ARTICLE 12
MISCELLANEOUS
12.1. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered by courier, or if mailed, when mailed by
United States first-class, certified or registered mail, postage prepaid, to the
other party at the following addresses or by telescope, receipt confirmed (or at
such other address as shall be given in writing by any party to the other):
If to Buyer, to:
IESI NY Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
IESI NY Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller, to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇:
51
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.2. Successors and Assigns. This Agreement, and all rights
and powers granted hereby, will bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto, except that Buyer shall be entitled to assign all or part of its rights
and obligations under this Agreement to IESI Corporation, a Delaware
corporation, or to a direct wholly-owned subsidiary of Buyer or IESI
Corporation; provided, however, that Buyer shall remain fully responsible for
the performance of its obligations hereunder.
12.3. Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement including all Schedules hereto.
In the event an ambiguity or question of intent or interpretation arises, this
Agreement and the Schedules shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or the Schedules. Any reference to any federal, state, local, or
foreign Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the identity of the Person or Persons may require.
12.4. Governing Law; Jurisdiction. With respect to corporate
governance matters concerning a corporation of any jurisdiction, this Agreement
shall be governed by and construed in accordance with the Laws of such
jurisdiction. With respect to all other matters, this Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without regard to the conflicts of Law provisions thereof. The parties hereto
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent to the
jurisdiction of, the courts of the Western District of New York.
52
12.5. Headings. The headings preceding the text of the
sections and subsections hereof are inserted solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction, or effect.
12.6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
12.7. Further Assurances. Both before and after Closing
hereunder, each party shall cooperate and take such action as may be reasonably
requested by another party in order to more fully carry out the provisions and
purposes of this Agreement and the transactions contemplated hereby, including
the transfer from Macedon to the Company of all of Macedon's obligations and
liability under that certain Guarantee of Supply of Final Cover Soil for Closure
of Seneca ▇▇▇▇▇▇▇ Landfill, dated January 2003, made by Macedon in favor of the
New York State Department of Environmental Conservation.
12.8. Course of Dealing. No course of dealing and no delay on
the part of any party hereto in exercising any right, power, or remedy conferred
by this Agreement shall operate as a waiver thereof or otherwise prejudice such
party's rights, powers and remedies. The failure of any of the parties to this
Agreement to require the performance of a term or obligation under this
Agreement or the waiver by any of the parties to this Agreement of any breach
hereunder shall not prevent subsequent enforcement of such term or obligation or
be deemed a waiver of a subsequent breach hereunder. No single or partial
exercise of any rights, powers or remedies conferred by this Agreement shall
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
12.9. Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be valid and enforceable, so as to effect the original intent
of the parties to the greatest extent possible.
12.10. Entire Agreement. This Agreement, the Exclusivity
Agreement and the Schedules, exhibits and certificates hereto, each of which is
hereby incorporated herein, set forth all of the promises, covenants,
agreements, conditions, and undertakings between the parties hereto with respect
to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, inducements, or conditions, express or implied,
oral or written. This Agreement may not be amended except by an instrument in
writing signed by the party sought to be charged with effect of such amendment.
12.11. Amendments and Waivers. Any provision of this Agreement
maybe amended or waived if, but only if, such amendment or waiver is in writing
and is signed by Buyer, Seller, the Company and, when applicable, Macedon.
53
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
IESI NY CORPORATION
By:
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and
President
SENECA ▇▇▇▇▇▇▇, INC.
By:
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
MACEDON HOMES INC.
By:
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
EXHIBIT B
PROMISSORY NOTE
$[__________] As of _____, 2003
For value received, the undersigned, IESI NY Corporation, a
Delaware corporation ("Maker"), agrees and promises to pay to ▇▇▇▇▇ ▇▇▇▇▇▇
("Payee"), by wire transfer of immediately available funds, to such account as
designated by Payee to Maker, the principal sum of ________ Dollars ($_______),
plus interest thereon as set forth below. This Note has been executed and
delivered pursuant to and in accordance with the terms of that certain Stock
Purchase Agreement, dated May 22, 2003, by and among Maker, Payee and the other
parties listed on the signature pages thereto (the "Agreement"). Capitalized
terms used in this Note without definition shall have the respective meanings
set forth in the Agreement.
The outstanding principal balance of this Note shall be due
and payable on ______ [One day after the Closing Date], 2003 (the "Payment
Date"). To the extent any principal balance of this Note remains outstanding
after the Payment date, interest at a rate of equal to 6% per annum shall accrue
on such outstanding principal balance. Interest shall be calculated based upon a
365-day year and charged for the actual number of days elapsed from and
including the Payment Date (to the extent any principal balance remains
outstanding on such date) and through but excluding the date on which the entire
principal amount hereof has been paid. The interest rate shall not exceed the
maximum rate permitted by law.
In addition to the principal amount and interest, in the event
Payee must undertake any action or proceeding to collect under this Note, Maker
hereby agrees to pay all costs and expenses of collection, including reasonable
attorneys' fees. Such additional costs and expenses shall be added to and become
part of the sums due hereunder.
All payments hereunder shall be applied as follows: first, on
account of any collection costs and expenses; second, on account of interest
accrued; third, on account of the principal.
Upon a failure by Maker to pay all amounts due hereunder by
the seventh day following the date hereof, Payee shall have the right (which
shall be Payee's sole remedy in respect of Maker's failure to pay amounts due
under this Note) to terminate and/or unwind the transactions contemplated by the
Agreement and retain the Shares (or, to the extent that the Shares have been
delivered to a third party, to have the Shares returned to Payee).
This Note shall be construed in accordance with the laws of
the State of New York. No delay or failure on the part of the holder hereof to
exercise any power or right shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right preclude other or further
exercise thereof, or the exercise of any other power or right hereunder or
otherwise. No waiver whatsoever or modification of the terms hereof shall be
valid unless signed by the holder of this Note and then only to the extent
therein set forth.
2
Neither the Payee nor the Maker may assign, delegate, sell,
transfer or otherwise dispose of any of its rights and obligations hereunder
without the express written consent of the other party. Any attempted
assignment, delegation, sale, transfer or other disposition in violation of the
foregoing sentence shall be void.
IN WITNESS WHEREOF, the Maker has caused this Note to be
executed as of the date above written.
IESI NY CORPORATION
By: __________________
Title: __________________
3