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EXHIBIT 10.24
STOCK PURCHASE AGREEMENT
Dated as of May 8, 1998, by and among
Waste Connections, Inc.
Sunshine Sanitation, Incorporated
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 8, 1998, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), Sunshine
Sanitation, Incorporated, a South Dakota corporation (the "CORPORATION"), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (collectively, the "SHAREHOLDER").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste and recyclables in the Cities of Spearfish, Lead, Belle Fourche,
Deadwood, ▇▇▇▇▇▇ and Whitewood, South Dakota, and the unincorporated areas of
▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇ County and Butte County, South Dakota, and ▇▇▇▇▇ County,
Wyoming and other related activities;
WHEREAS, the Shareholder owns all of the issued and outstanding
capital stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, WCI wishes to acquire from the Shareholder all of the
Corporation's Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
1.1 SHARES TO BE PURCHASED. At the Closing (as defined in Section
2), the Shareholder shall sell and deliver to WCI all of the issued and
outstanding shares of the Corporation's Stock, being the number of shares of
the Corporation set forth on Schedule 3.2 opposite the Shareholder's name. At
the Closing, WCI shall purchase the Corporation's Stock and in exchange
therefor shall deliver to the Shareholder at the Closing or thereafter as
provided by this Agreement the purchase price described in Section 1.2 (the
"PURCHASE PRICE").
1.2 PURCHASE PRICE. The Purchase Price is composed of the
following:
(a) One million twenty-nine thousand dollars ($1,029,000)
(i) minus the Closing Date Debt (as defined in Section 3.22(a)), and
(ii) plus or minus, as the case may be, the amount by which the
Closing Date Current Assets (as defined in Section 3.22(b)) are
greater or less than the Closing Date Current Liabilities (as defined
in Section 3.22(b)). The $1,029,000 minus the Closing Date Debt shall
be payable to the Shareholder at Closing in cash by wire transfer or
check payable in clearinghouse funds. Within 120 days after the
Closing Date, WCI shall perform all necessary calculations,
adjustments and other acts necessary to convert the Corporation from a
cash to accrual basis of financial reporting, and then, based on such
accrual method, WCI shall determine the actual Closing Date Debt. If
the difference between the actual amount and the
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estimated amount provided at the Closing Date of Closing Date Debt
results in an increase in the amount that should have been paid at the
Closing over the amount that was so paid, WCI shall promptly pay such
amount to the Shareholder; if the result is a decrease in the amount
that should have been paid at the Closing from the amount that was so
paid, the Shareholder shall promptly pay such amount to WCI. In
addition, within 120 days after the Closing Date, WCI shall determine
the actual Closing Date Current Assets and Closing Date Current
Liabilities. If the Closing Date Current Assets are greater than the
Closing Date Current Liabilities, WCI shall promptly pay the
difference between the two amounts to the Shareholder; if the Closing
Date Current Liabilities are greater than the Closing Date Current
Assets, the Shareholder shall promptly the difference between the two
amounts to WCI;
(b) At the Closing, WCI shall deliver to the Shareholder
a Promissory Note (the "NOTE") in the aggregate principal amount of
two hundred thousand dollars ($200,000), which Note shall be payable
in five equal annual installments of forty thousand dollars ($40,000)
each. These annual installments shall be paid on the first, second,
third, fourth and fifth anniversaries of the Closing Date. The Note
shall be non-interest bearing and shall be secured by a lien on all of
the assets of the Corporation; and
(c) If the Shareholder owes the Corporation money
("SHAREHOLDER DEBT") and the Corporation owes the Shareholder money
("CORPORATION DEBT"), the amount by which the Shareholder Debt exceeds
the Corporation Debt will be deducted from the Purchase Price payable
to that Shareholder or the amount by which the Corporation Debt
exceeds the Shareholder Debt will be added to the Purchase Price
payable to that Shareholder and the remaining Corporation's Debt and
Shareholder Debt shall be cancelled.
1.3 ALLOCATION OF THE PURCHASE PRICE. Ten thousand dollars
($10,000) of the Purchase Price shall be allocated to the covenant not to
compete as described in Section 8.1(a) hereof, and the balance of the Purchase
Price shall be allocated to the Corporation's Stock.
1.4 EXCLUDED ASSETS. The Assets of the Corporation listed on
Schedule 1.4 (the "EXCLUDED ASSETS") shall be distributed to the Shareholder
prior to the Closing, and WCI shall acquire no interest in or claim to any of
the Excluded Assets.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "CLOSING") shall take place
concurrent with the execution of this Agreement or on such date as WCI and the
Shareholder's Representative shall agree (the "CLOSING DATE"). The Closing
shall take place at the Law Offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or through an
exchange of consideration and signed documents using overnight courier service.
At the Closing, WCI, the Corporation and the Shareholder shall deliver to each
other the documents, instruments and
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other items described in Section 5 of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDER
The Corporation and the Shareholder, jointly and severally, (i)
represent and warrant that each of the following representations and warranties
is true as of the Closing Date, and (ii) agree that such representations and
warranties shall survive the Closing.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is
duly organized, validly existing and in good standing under the laws of the
State of South Dakota. The Corporation has full corporate power and authority
to own and lease its properties and to carry on its business as now conducted.
The Corporation is registered as a foreign corporation in the State of Wyoming.
Registration in any other jurisdiction is either immaterial or not required.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Closing
Date, the authorized and outstanding capital of the Corporation, the names,
address and social security numbers of the record and beneficial owner thereof,
the number of shares so owned and wire transfer instructions for the
Shareholder relating to the bank account to which the Purchase Price should be
sent. On the Closing Date, all of the issued and outstanding shares of the
capital stock of the Corporation are owned of record and beneficially by the
Shareholder, as set forth in Schedule 3.2, and are free and clear of all liens,
security interests, encumbrances and claims of every kind except as set forth
in Schedule 3.2. Each share of the capital stock of the Corporation is duly
and validly authorized and issued, fully paid and nonassessable, and was not
issued in violation of any preemptive rights of any past or present shareholder
of the Corporation. No option, warrant, call, conversion right or commitment
of any kind (including any of the foregoing created in connection with any
indebtedness of the Corporation) exists which obligates the Corporation to
issue any of its authorized but unissued capital stock or other equity interest
or which obligates the Shareholder to transfer the Corporation's Stock to any
person.
3.3 ALL STOCK BEING ACQUIRED. The Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporation.
3.4 AUTHORITY FOR AGREEMENT. The Corporation and the Shareholder
have full right, power and authority to enter into this Agreement and to
perform its or his obligations hereunder. The execution and delivery of this
Agreement by the Corporation and the consummation of the transactions
contemplated hereby by the Corporation have been duly authorized by its Board
of Directors. This Agreement has been duly and validly executed and delivered
by the Corporation and the Shareholder and, subject to the due authorization,
execution and delivery by WCI, constitutes the legal, valid and binding
obligation of the Corporation and the Shareholder enforceable against each of
them in accordance with its terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporation and the Shareholder of this
Agreement, and the consummation by the
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Shareholder of the transactions contemplated hereby, will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party
from any obligation under, any mortgage, lease, note, bond, indenture,
or material contract, agreement, license or other instrument or
obligation of any kind or nature to which the Corporation or the
Shareholder is a party, or by which the Corporation or the
Shareholder, or any of its or his assets, is or may be bound or
affected; or
(b) violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental authority,
or require the approval, consent or permission of any governmental or
regulatory authority; or
(c) violate the Articles of Incorporation or Bylaws of
the Corporation.
3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Closing Date any
and all subsidiaries of the Corporation and any securities of any other
corporation or any securities or other interest in any other business entity
owned by the Corporation or any of its subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporation has delivered to WCI,
as Schedule 3.7, copies of financial statements ("FINANCIAL STATEMENTS") for
its three most recent fiscal years, compiled by ▇▇▇▇ ▇▇▇▇▇▇, C.P.A. and
unaudited interim financial statements for the Corporation for the period ended
April 30, 1998 (the "BALANCE SHEET DATE"). The Financial Statements are true
and correct and fairly present (i) the financial position of the Corporation as
of the respective dates of the balance sheets included in said statements, and
(ii) the results of operations for the respective periods indicated. The
Financial Statements have been prepared consistently with prior periods.
Except to the extent reflected or reserved against in the Corporation's balance
sheet as of the Balance Sheet Date, or as disclosed on Schedule 3.7 or Schedule
3.8, the Corporation had as of the Balance Sheet Date, and has as of the
Closing Date, no liabilities of any nature, whether accrued, absolute,
contingent or otherwise, including, without limitation, tax liabilities due or
to become due.
3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of the Corporation required
to be described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Closing Date,
other than with respect to trade payables and as of the end of the month prior
to the Closing Date with respect to trade payables, all indebtedness for money
borrowed and all other fixed and uncontested liabilities of any kind, character
and description (excluding all real and personal property leasehold interests
included in Part IV of Schedule 3.8), whether reflected or not reflected on the
Financial Statements and whether accrued or absolute, and states as to each
such liability the amount of such liability and to whom payable. From the date
as of which information is provided with
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respect to trade payables, trade payables have been incurred only in the
ordinary course of business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the Closing
Date, all claims, suits and proceedings which are pending against the
Corporation, all contingent liabilities, and, to the knowledge of the
Corporation and the Shareholder, all contingent liabilities and all claims,
suits and proceedings threatened or anticipated against the Corporation. Part
II of Schedule 3.8 includes a summary description of each such liability,
including, without limitation, (A) the name of each court, agency, bureau,
board or body before which any such claim, suit or proceeding is pending, (B)
the date such claim, suit or proceeding was instituted, (C) the parties to such
claim, suit or proceeding, (D) a brief description of the factual basis alleged
to underlie such claim, suit or proceeding, including the date or dates of all
material occurrences, and (E) the amount claimed and other relief sought,
together with copies of all material documents, reports and other records
relating thereto to the extent that they are in the Corporation's or the
Shareholder's possession or control.
(c) Part III of Schedule 3.8 list, as of the Closing Date
and to the extent not otherwise included in Part I of Schedule 3.8, all liens,
claims and encumbrances secured by or otherwise affecting any asset of the
Corporation (including any Corporate Property, as hereafter defined), including
a description of the nature of such lien, claim or encumbrance, the amount
secured if it secures a liability, the nature of the obligation secured, and
the party holding such lien, claim or encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the Closing Date
and to the extent not otherwise included in Part I or Part III of Schedule 3.8,
all real and personal property leasehold interests to which the Corporation is
a party as lessor or lessee or, to the knowledge of the Corporation or the
Shareholder, affecting or relating to any Corporate Property, and includes a
description of the nature and principal terms of such leasehold interest,
including, without limitation, the identity of the other party thereto, the
term of such leasehold interest (including renewal options), the base rent and
any additional rent owing thereunder (including any adjustments thereto),
security deposits, rights of first offer or first refusal, purchase options,
and restrictions on transfer.
Except as described on the applicable part of Schedule 3.8,
neither the Corporation nor the Shareholder has made any payment or committed
to make any payment since the Balance Sheet Date on or with respect to any of
the liabilities or obligations listed on Schedule 3.8 except, in the case of
liabilities and obligations listed on Parts I, III and IV of Schedule 3.8,
periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in the ordinary
course of business. Between the Balance Sheet Date and the Closing Date, trade
payables have been incurred only in the ordinary course of business consistent
with comparable prior periods.
3.9 CONDUCT OF BUSINESS. Except as set forth on Schedule 3.21,
since the Balance Sheet Date:
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(a) The business of the Corporation has been conducted
only in the ordinary course; and
(b) There has been no change in the condition (financial
or otherwise) of the assets, liabilities or operations of the
Corporation other than changes in the ordinary course of business,
none of which either singly or in the aggregate has been materially
adverse.
3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, and service
agreements pursuant to which the Corporation is authorized to collect and haul
industrial, commercial and residential solid waste (the "COLLECTION
FRANCHISES"), and of all other material permits, licenses, titles (including
motor vehicle titles and current registrations), fuel permits, zoning and land
use approvals and authorizations, including, without limitation, any
conditional or special use approvals or zoning variances, occupancy permits,
and any other similar documents constituting a material authorization or
entitlement or otherwise material to the operation of the business of the
Corporation (collectively the "GOVERNMENTAL PERMITS") owned by, issued to, held
by or otherwise benefitting the Corporation or the Shareholder as of the
Closing Date. The status of the Governmental Permits related to the disposal
areas owned or used by the Corporation, including, without limitation, any
conditions thereto and, if applicable, the expiration dates thereof, are also
described in Schedule 3.10(a). Schedule 3.10(a) also sets forth the name of
any governmental agency or other third party from whom the Shareholder, the
Corporation or WCI must obtain consent (the "REQUIRED GOVERNMENTAL CONSENTS")
in order to effect a direct or indirect transfer of the Collection Franchises
or other Governmental Permits required as a result of the consummation of the
transactions contemplated by this Agreement. All such consents have been
obtained. Except as set forth on Schedule 3.10(a), all of the Collection
Franchises and other Governmental Permits enumerated and listed on Schedule
3.10(a) are adequate for the operation of the business of the Corporation and
of each Corporate Property as presently operated and are valid and in full
force and effect. All of said Collection Franchises and other Governmental
Permits and agreements have been duly obtained and are in full force and
effect, and there are no proceedings pending or, to the actual knowledge of the
Corporation or the Shareholder, threatened which may result in the revocation,
cancellation, suspension or adverse modification of any of the same. Neither
the Corporation nor the Shareholder has any actual knowledge of any reason why
all such Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
(b) Schedule 3.10(b) includes: (i) all records,
notifications, reports, permit and license applications, engineering and
geologic studies, and environmental impact reports, tests or assessments
(collectively, "RECORDS, NOTIFICATIONS AND REPORTS") that (A) are material to
the operation of the business of the Corporation, or (B) relate to the
discharge or release of materials into the environment and/or the handling or
transportation of waste materials or
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hazardous or toxic substances or otherwise relate to the protection of the
public health or the environment, or (C) were filed with or submitted to
appropriate governmental agencies during the past 24 months by the Corporation
or the Shareholder or their agents with respect to the business of the
Corporation, and (ii) all material notifications from such governmental
agencies to the Corporation, the Shareholder or their agents in response to or
relating to any of such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists, as of the Closing Date, each
facility owned, leased, operated or otherwise used by the Corporation, the
ownership, lease, operation or use of which is being transferred to, assumed by
or otherwise acquired directly or indirectly by WCI pursuant to this Agreement
or the Real Estate Agreement (each, a "FACILITY" and collectively, the
"FACILITIES"). Except as otherwise disclosed on Schedule 3.10(c):
(i) Each Facility is fully licensed, permitted
and authorized to carry on its current business under all applicable
federal, state and local statutes, orders, approvals, zoning or land
use requirements, rules and regulations, and no Facility or the
current use thereof constitutes a non-conforming use or is otherwise
subject to any restrictions regarding the operation, renovation or
reconstruction thereof.
(ii) All activities and operations at each
Facility are being and have been conducted in compliance in all
material respects with the requirements, criteria, standards and
conditions set forth in all applicable federal, state and local
statutes, orders, approvals, permits, zoning or land use requirements
and restrictions, variances, licenses, rules and regulations.
(iii) Each Facility is located on real property
owned or leased by the Corporation (each a "FACILITY PROPERTY") and
each Facility Property owned by the Corporation is legally described
on the preliminary title reports, surveys or site plans attached to
Schedule 3.10(c) (the "FACILITY SURVEYS/SITE PLANS"), which accurately
depict the respective Facility Property.
(iv) There are no circumstances, conditions or
reasons which are likely to be the basis for revocation or suspension
of any Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or approvals
relating to any Facility owned by the Corporation or owned by the
Shareholder or an Affiliate (as hereinafter defined) of the
Shareholder and leased to the Corporation, and to the knowledge of the
Corporation and the Shareholder there are no circumstances, conditions
or reasons which are likely to be the basis for revocation or
suspension of any site assessment, permits, licenses, consents,
authorizations, zoning or land use permits, variances or approvals
relating to any Facility.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as of
the Closing Date of the accounts and notes receivable of the Corporation from
and advances to employees, former employees, officers, directors, the
Shareholder and Affiliates of the foregoing which have not
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been repaid. For purposes of this Agreement, the term "AFFILIATE" means, with
respect to any person, any person that directly or indirectly through one or
more intermediaries controls or has an ownership interest in, or is controlled
or owned in whole or in part by, or is under common control or ownership in
whole or in part with such person, and in the case of the Corporation includes
directors and officers, in the case of individuals includes the individual's
spouse, father, mother, grandfather, grandmother, brothers, sisters, children
and grandchildren and in the case of a trust includes the grantors, trustees
and beneficiaries of the trust.
3.12 FIXED ASSETS AND REAL PROPERTY.
(a) Schedule 3.12(a) lists, as of the Closing Date,
substantially all the fixed assets (other than real estate) of the Corporation,
including, without limitation, identification of each vehicle by description
and serial number, identification of machinery, equipment and general
descriptions of parts, supplies and inventory. Except as described on Schedule
3.12(a), all of the Corporation's containers, vehicles, machinery and equipment
necessary for the operation of its business are in operable condition, and all
of the motor vehicles and other rolling stock of the Corporation are in
material compliance with all applicable laws, rules and regulations. All such
containers, vehicles, machinery and equipment are substantially free of known
defects that would cause them to fail, except as noted on Schedule 3.12(a).
All leases of fixed assets are in full force and effect and binding upon the
parties thereto; neither the Corporation nor, to the knowledge of the
Corporation or the Shareholder, any other party to such leases is in breach of
any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Closing Date (the "CORPORATE PROPERTY"),
including the street address and, in the case of Corporate Property owned or
being purchased, the legal description thereof, is listed on Schedule 3.12(b) -
Part I, and attached to said Schedule 3.12(b) - Part I are copies of all
leases, deeds, outstanding mortgages, other encumbrances and any existing title
insurance policies or lawyer's title opinions relating to each Corporate
Property, as well as a current commitment for title insurance issued by a title
insurance company satisfactory to WCI with respect to each Corporate Property
owned or being purchased by the Corporation, together with copies of all of the
title exceptions referred to in each such commitment. All leases listed on
Schedule 3.12(b) - Part I are in full force and effect and binding on the
parties thereto; neither the Corporation nor, to the knowledge of the
Corporation and the Shareholder, any other party to any such lease is in breach
of any of the material provisions thereof; the landlord's interest in any such
lease has not been assigned to any third party nor has any such interest been
mortgaged, pledged or hypothecated; and the Corporation has not assigned any
such lease or sublet all or any part of the Corporate Property which is the
subject of any such lease. Except as described on Schedule 3.12(b) - Part II,
to the actual knowledge of the Corporation and the Shareholder, there are no
material physical or mechanical defects in any Facility located on any
Corporate Property and each such Facility is in good condition and repair.
(c) The Corporation has good, valid and marketable title
to all properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the
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conduct of its business, free of any encumbrance or charge of any kind except:
(i) liens for current taxes not yet due; (ii) minor imperfections of title and
encumbrances, if any, that are not substantial in amount, do not materially
reduce the value or impair the use of the property subject thereto, do not
materially impair the value of the Corporation, and have arisen only in the
ordinary course of business and consistent with past practice; and (iii) the
liens identified on Part III of Schedule 3.8 (collectively, the "PERMITTED
LIENS"). Except as described on Schedule 3.12(b) - Part I, there are no
leases, occupancy agreements, options, rights of first refusal or any other
agreements or arrangements, either oral or written, that create or confer in
any person or entity the right to acquire, occupy or possess, now or in the
future, any Facility, any Corporate Property, or any portion thereof, or create
in or confer on any person or entity any right, title or interest therein or in
any portion thereof.
3.13 ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on
Schedule 3.13, since the Balance Sheet Date, the Corporation has not acquired
or sold or otherwise disposed of any properties or assets which, singly or in
the aggregate, have a value in excess of $10,000, or which are material to the
operation of the Corporation's business as presently conducted, without the
prior written consent of WCI.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Closing Date, and
includes copies of, all material contracts and agreements (other than leases
and documents included with Schedule 3.12(b)) to which the Corporation is a
party or by which it or any of its property is bound (including, but not
limited to, joint venture or partnership agreements, contracts with any labor
organizations, promissory notes, loan agreements, bonds, mortgages, deeds of
trust, liens, pledges, conditional sales contracts or other security
agreements). Except as disclosed on Schedule 3.14(a), all such contracts and
agreements included in Schedule 3.14(a) are in full force and effect and
binding upon the parties thereto. Except as described or cross referenced on
Schedule 3.14(a), neither the Corporation nor, to the Corporation's or the
Shareholder's knowledge, any other parties to such contracts and agreements is
in breach thereof, and none of the parties has threatened to breach any of the
material provisions thereof or notified the Corporation or the Shareholder of a
default thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate Properties, nor has the
Corporation been notified that any such judgment, order, writ, injunction or
decree has been requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes
copies, as of the Closing Date, of all insurance policies in effect on the
Closing Date or, with respect to "occurrence" policies that were in effect,
carried by the Corporation in respect of the Corporate Properties or any other
property used by the Corporation specifying, for each policy, the name of the
insurer, the type of risks insured, the deductible and limits of coverage, and
the annual premium therefor.
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The Corporation currently carries insurance in the type and amount ordinarily
carried by owners or corporations in similar circumstances, in respect to the
Corporation' properties, assets and business. During the last five years,
there has been no lapse in any material insurance coverage of the Corporation.
For each insurer providing coverage for any of the contingent or other
liabilities listed on Schedule 3.8, except to the extent otherwise set forth in
Part II of Schedule 3.8, each such insurer, if required, has been properly and
timely notified of such liability, no reservation of rights letters have been
received by the Corporation and the insurer has assumed defense of each suit or
legal proceeding. All such proceedings are fully covered by insurance, subject
to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the
Closing Date, of all officers, directors and employees (by type or
classification) of the Corporation and their respective rates of compensation,
including (i) the portions thereof attributable to bonuses, (ii) any other
salary, bonus, stock option, equity participation, or other compensation
arrangement made with or promised to any of them, and (iii) copies of all
employment agreements with non-union officers, directors and employees.
Schedule 3.16 also lists the driver's license number for each driver of the
Corporation's motor vehicles.
3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the Closing
Date, and includes complete copies (or, in the case of oral arrangements,
descriptions), of all employee benefit plans and agreements (written or oral)
currently maintained or contributed to by the Corporation, including employment
agreements and any other agreements containing "golden parachute" provisions,
retirement plans, welfare benefit plans and deferred compensation agreements,
together with copies of such plans, agreements and any trusts related thereto,
and classifications of employees covered thereby as of the Closing Date.
Except for the employee benefit plans described on Schedule 3.17(a), the
Corporation has no other pension, retirement, welfare, profit sharing, deferred
compensation, stock option, employee stock purchase or other employee benefit
plans or arrangements with any party. Except as disclosed on Schedule 3.17(a),
all employee benefit plans listed on Schedule 3.17(a) are fully funded and in
substantial compliance with all applicable federal, state and local statutes,
ordinances and regulations. All such plans that are intended to qualify under
Section 401(a) of the Internal Revenue Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of Schedule 3.17(a). Except as disclosed on
Schedule 3.17(a), all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
Schedule 3.17(a). All employee benefit plans listed on such Schedule have been
operated in accordance with the terms and provisions of the plan documents and
all related documents and policies. The Corporation has not incurred any
liability for excise tax or penalty due to the Internal Revenue Service or U.S.
Department of Labor nor any liability to the Pension Benefit Guaranty
Corporation for any employee benefit plan, nor has the Corporation, nor
party-in-interest or disqualified person, engaged in any transaction or other
activity which would give rise to such
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liability. The Corporation has not participated in or made contributions to
any "multi-employer plan" as defined in the Employee Retirement Income Security
Act of 1974 ("ERISA"), nor would the Corporation or any affiliate be subject to
any withdrawal liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Closing Date. No employee
pension benefit plan is under funded on a termination basis as of the date of
this Agreement.
(b) Schedule 3.17(b) is a complete list, as of the
Closing Date, and includes complete copies of all union contracts and
agreements between the Corporation and any collective bargaining group. The
Corporation is in compliance in all material respects with all applicable
federal and state laws respecting employment and employment practices, terms
and conditions of employment, wages and hours, and nondiscrimination in
employment, and is not engaged in any unfair labor practice. There is no
charge pending or, to the Corporation's or the Shareholder's knowledge,
threatened, against the Corporation before any court or agency and alleging
unlawful discrimination in employment practices and there is no charge of or
proceeding with regard to any unfair labor practice against it pending before
the National Labor Relations Board. There is no labor strike, dispute, slow
down or stoppage as of the Closing Date, existing or threatened against the
Corporation; no union organizational activity exists respecting employees of
the Corporation not currently subject to a collective bargaining agreement; the
union contracts or other agreements delivered as part of Schedule 3.17(b)
constitute all agreements with the unions or other collective bargaining
groups, and there are no other arrangements or established practices relating
to the employees covered by any collective bargaining agreement; and Schedule
3.17(b) contains as of the date it is delivered a list of all arbitration or
grievance proceedings that have occurred since the Balance Sheet Date. No one
has petitioned within the last five years, and no one is now petitioning, for
union representation of any employees of the Corporation. The Corporation has
not experienced any labor strike, slow-down, work stoppage, labor difficulty or
other job action during the last five years.
(c) No payment made to any employee, officer, director or
independent contractor of the Corporation (the "RECIPIENT") pursuant to any
employment contract, severance agreement or other arrangement (the "Golden
Parachute Payment") will be nondeductible by the Corporation because of the
application of Sections 280G and 4999 of the Code to the Golden Parachute
Payment, nor will the Corporation be required to compensate any Recipient
because of the imposition of an excise tax (including any interest or penalties
related thereto) on the Recipient by reason of Sections 280G and 4999 of the
Code.
3.18 TAXES.
(a) The Corporation has timely filed all requisite
federal, state, local and other tax and information returns due for all fiscal
periods ended on or before the Closing Date. All such returns are accurate and
complete. Except as set forth on Schedule 3.18, there are no open years (other
than those within the statute of limitations), examinations in progress,
extensions of any statute of limitations or claims against the Corporation
relating to federal, state, local or other taxes (including penalties and
interest) for any period or periods prior to and including the
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Closing Date and no notice of any claim for taxes has been received. Copies of
(i) any tax examinations, (ii) extensions of statutory limitations and (iii)
the federal income, and state franchise, income and sales tax returns of the
Corporation for its last three fiscal years are attached as part of Schedule
3.18. Copies of all other federal, state, local and other tax and information
returns for all prior years of the Corporation's existence have been made
available to WCI and are among the records of the Corporation which will accrue
to WCI at the Closing. The Corporation has not been contacted by any federal,
state or local taxing authority regarding a prospective examination.
(b) Except as set forth on Schedule 3.18 (which schedule
also includes the amount due with respect to the Corporation) the Corporation
has duly paid all taxes and other related charges required to be paid prior to
the Closing Date.
(c) The Corporation has withheld all required amounts
from its employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to income tax
withholding, social security, and unemployment taxes have been duly filed by
the Corporation for all periods for which returns are due, and the amounts
shown on all such returns to be due and payable have been paid in full.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on
Schedule 3.19, the certified copies of the Articles of Incorporation and Bylaws
of the Corporation, both as amended to the Closing Date, and the copies of all
leases, instruments, agreements, licenses, permits, certificates or other
documents that have been delivered to WCI in connection with the transactions
contemplated hereby are complete and accurate as of the Closing Date and are
true and correct copies of the originals thereof. Except as specifically
disclosed on Schedule 3.19, the rights and benefits of the Corporation will not
be adversely affected by the transactions contemplated hereby, and the
execution of this Agreement and the performance of the obligations hereunder
will not violate or result in a breach or constitute a default under any of the
terms or provisions thereof. None of such leases, instruments, agreements,
licenses, permits, site assessments, certificates or other documents requires
notice to, or consent or approval of, any governmental agency or other third
party to any of the transactions contemplated hereby, except the Required
Governmental Consents, such consents and approvals as are listed on Schedule
3.19; all of which will have been given or obtained prior to the Closing.
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES.
Schedule 3.20 is a current, accurate and complete list of, and includes:
(a) the customers the Corporation serves on an ongoing
basis, including name, location and current billing rate, as of the Closing
Date;
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month preceding the
month in which such Schedule is delivered, showing amounts due in 30-day aging
categories; and
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(c) the average monthly revenues of the Corporation
derived from ▇▇▇▇▇▇▇▇ to its customers for each of the twelve months preceding
the Closing Date. Except as set forth on Schedule 3.20, the Corporation and
the Shareholder have no knowledge of any reason why the Corporation's average
monthly revenues derived from ▇▇▇▇▇▇▇▇ to its customers after the Closing Date
should not continue at approximately the same rate as before the Closing Date.
3.21 NO CHANGE WITH RESPECT TO THE CORPORATION. Except as set
forth on Schedule 3.21, since the Balance Sheet Date, the business of the
corporation has been conducted only in the ordinary course and there has been
no change in the condition (financial or otherwise) of the assets, liabilities
or operations of the Corporation other than changes in the ordinary course of
business, none of which either singly or in the aggregate has been materially
adverse. Specifically, and without limiting the generality of the foregoing,
except as set forth on Schedule 3.21, with respect to the Corporation, since
the Balance Sheet Date, there has not been:
(a) any material change in its financial condition,
assets, liabilities (contingent or otherwise), income, operations or
business which would have a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), income,
operations or business of the Corporation, taken as a whole;
(b) any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion of
its properties or business;
(c) any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or outstanding
securities, or (iii) its securities;
(d) any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of its capital
stock or any direct or indirect redemption, purchase or other
acquisition of any of its capital stock;
(e) any material increase or bonus or promised increase
or bonus in the compensation payable or to become payable by it, in
excess of usual and customary practices, to any of its directors,
officers, employees or agents, or any accrual or arrangement for or
payment of any bonus or other special compensation to any employee or
any severance or termination pay paid to any of its present or former
officers or other key employees;
(f) any labor dispute or any other event or condition of
any character with respect to the Corporation's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any other
person, including, without limitation, the Shareholder and his
Affiliates, other than in the ordinary course of business;
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(h) any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to it,
including, without limitation, any indebtedness or obligation of the
Shareholder or any of his Affiliates;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement,
plan or arrangement to purchase or acquire, any of its property,
rights or assets outside the ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any
existing material contract, agreement, license, permit or other right
to which it is a party;
(m) any other material transaction outside the ordinary
course of its business.
3.22 CLOSING DATE DEBT; CLOSING DATE CURRENT ASSETS AND CLOSING
DATE CURRENT LIABILITIES.
(a) Schedule 3.22(a) is an estimate based on the
Corporation's balance sheet for the period ending on the Balance Sheet Date of
(i) the amount of the aggregate debt (excluding trade payables) of the
Corporation outstanding on the Closing Date required to be repaid by WCI at or
immediately after the Closing Date and all prepayment penalties incurred or to
be incurred by WCI or the Corporation in connection with the repayment of any
such debt, (ii) the amount of the aggregate debt (excluding trade payables) of
the Corporation outstanding on the Closing Date which will remain outstanding
obligations of the Corporation after the Closing Date, and all prepayment
penalties applicable to such debt if repaid prior to maturity, including in
each case all interest accrued through and including the Closing Date, (iii)
the aggregate amount of the present value, discounted at the lease rate factor,
if known, inherent in the lease or, if the lease rate factor is not known, at
the rate charged to the Corporation by a third party lender in connection with
its most recent borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations and (iv) the aggregate
amount of the present value of all capitalized lease obligations (determined in
accordance with generally accepted accounting principles) of the Corporation
(the "CLOSING DATE DEBT"). Schedule 3.22(a) includes wire transfer
instructions for creditors whose Closing Date Debt WCI has designated for
payment, and attached to Schedule 3.22(a) are pay-off letters or instructions
from such creditors in the form provided by WCI's bank.
(b) Schedule 3.22(b) is an estimate based on the
Corporation's balance sheet for the period ending on the Closing Date of the
amount of the aggregate current liabilities
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(including any reserve for unpaid taxes and excluding the current portion of
long-term debt to the extent such current portion is included in Closing Date
Debt) and trade payables of the Corporation (including billed trade payables
and trade payables incurred but not yet billed) as of the Closing Date (the
"CLOSING DATE CURRENT LIABILITIES") and the amount of the aggregate cash and
other current assets of the Corporation as of the Closing Date, including
prepaid expenses the benefit of which survives the Closing Date and the billed
and unbilled accounts receivable of the Corporation earned prior to the Closing
Date, and collectible on or after the Closing Date (the "CLOSING DATE CURRENT
ASSETS"). The Corporation and the Shareholder expressly acknowledge that in
arriving at the Closing Date Current Assets, accounts receivable owed to the
Corporation that are outstanding sixty (60) days or less prior to the Closing
Date are valued at one hundred percent (100%) of their amount, accounts
receivable outstanding sixty-one (61) to ninety (90) days prior to the Closing
Date are valued at forty percent (40%) of their amount, and that any amounts
outstanding more than ninety (90) days prior to the Closing Date are valued at
zero.
3.23 BANK ACCOUNTS.
(a) Schedule 3.23(a) is a complete and accurate list, as
of the Closing Date, of:
(i) the name of each bank in which the
Corporation has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes
are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw
thereon or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate list, as
of the Closing Date, of:
(i) each credit card or other charge account
issued to the Corporation; and
(ii) the name of each person to whom such credit
cards or other charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24,
the Corporation, has complied with, and the Corporation is presently in
compliance with, federal, state and local laws, ordinances, codes, rules,
regulations, Governmental Permits, orders, judgments, awards, decrees, consent
judgments, consent orders and requirements applicable to it (collectively
"LAWS"), including, but not limited to, the Americans with Disabilities Act,
the Federal Occupational Safety and Health Act, and Laws relating to the public
health, safety or protection
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of the environment (collectively, "ENVIRONMENTAL LAWS"). Except as disclosed
on Schedule 3.24, there has been no assertion by any party that the Corporation
is in violation of any Laws. Specifically and without limiting the generality
of the foregoing, except as disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the
Corporation has not accepted, processed, handled, transferred,
generated, treated, stored or disposed of any Hazardous Material (as
defined in Section 3.24(e) below) nor has it accepted, processed,
handled, transferred, generated, treated, stored or disposed of
asbestos, medical waste, radioactive waste or municipal waste, except
in compliance with Environmental Laws.
(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholder, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other
than that allowed under Environmental Laws, including, without
limitation, RCRA, has been disposed of, or otherwise released on any
Corporate Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholder, prior to the Corporation's ownership
or leasing of such Corporate Property, no Corporate Property has ever
been subject to or received any notice of any private, administrative
or judicial action, or notice of any intended private, administrative
or judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Corporate
Property or any real property now or previously owned or leased by the
Corporation. There are no pending and, to the Corporation's and
Shareholder's knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of the Corporate Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Corporation has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL" means
the substances (i) defined as "HAZARDOUS WASTE" in 40 CFR 261, and
substances defined in any comparable South Dakota statute or
regulation; (ii) any substance the presence of which requires
remediation pursuant to any Environmental Laws; and (iii) any
substance disposed of in a manner not in compliance with Environmental
Laws.
3.25 POWERS OF ATTORNEY. The Corporation has not granted any power
of attorney (except routine powers of attorney relating to representation
before governmental agencies) or
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entered into any agency or similar agreement whereby a third party may bind or
commit the Corporation in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule
3.26, no underground storage tanks containing petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 or Environmental Laws are
currently or have been located on any Corporate Property. Except as set forth
on Schedule 3.26, the Corporation has never owned or leased any real property
not included in the Corporate Property having any underground storage tanks
containing petroleum products or wastes or other hazardous substances regulated
by 40 CFR 280. As to each such underground storage tank ("UST") identified on
Schedule 3.26, the Corporation has provided to WCI, on Schedule 3.26:
(a) the location of the UST, information and material,
including any available drawings and photographs, showing the
location, and whether the Corporation currently owns or leases the
property on which the UST is located (and if the Corporation does not
currently own or lease such property, the dates on which it did and
the current owner or lessee of such property);
(b) the date of installation and specific use or uses of
the UST;
(c) copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body
or agency relating to the UST;
(e) other material records with regard to the UST,
including, without limitation, repair records, financial assurance
compliance records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the
above, a summary description of instances, past or present, in which,
to the Corporation's, or the Shareholder's knowledge, the UST failed
to meet applicable standards and regulations for tightness or
otherwise and the extent of such failure, and any other operational or
environmental problems with regard to the UST, including, without
limitation, spills, including spills in connection with delivery of
materials to the UST, releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation has
complied with Environmental Laws regarding the installation, use, testing,
monitoring, operation and closure of each UST described on Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists
all patents, tradenames, fictitious business names, trademarks, service marks,
and copyrights owned by the
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Corporation or which it is licensed to use (other than licenses to use software
for personal computer operating systems that were provided when the computer
was purchased and licenses to use software for personal computers that are
granted to retail purchasers of such software). No patents, trade secrets,
know-how, intellectual property, trademarks, trade names, assumed names,
copyrights, or designations used by the Corporation in its business infringe on
any patents, trademarks, or copyrights, or any other rights of any person.
Neither the Corporation nor the Shareholder knows or has any reason to believe
that there are any claims of third parties to the use of any such names or any
similar name, or knows of or has any reason to believe that there exists any
basis for any such claim or claims. WCI gives its consent to the Shareholder
to form a corporation by the name of Sunshine, Inc.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. The Corporation owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.5, 3.10(a), 3.10(c),
3.14(a) and 3.19, is a party to all Collection Franchises and Governmental
Permits and other agreements necessary to permit it to carry on its business as
presently conducted. All of said Collection Franchises and Governmental
Permits and agreements have been duly obtained and, except as disclosed on
Schedules 3.5, 3.8-Part II, 3.10(a), 3.10(c) 3.14(a) and 3.19, are in full
force and effect and there are no proceedings pending or threatened which may
result in the revocation, cancellation, suspension or adverse modification of
any of the same. Neither the Corporation nor the Shareholder has any knowledge
of any reason why all such Collection Franchises and Governmental Permits and
agreements will not remain in effect after consummation of the transactions
contemplated hereby.
3.29 CONDEMNATION. No Corporate Property owned or leased by the
Corporation is the subject of, or would be affected by, any pending
condemnation or eminent domain proceedings, and, to the knowledge of the
Corporation and the Shareholder, no such proceedings are threatened.
3.30 SUPPLIERS AND CUSTOMERS. The relations between the
Corporation and its customers are good. Neither the Corporation nor the
Shareholder has knowledge of any fact (other than general economic and industry
conditions) which indicates that any of the suppliers supplying products,
components, materials or providing use of, or access to, landfills or disposal
sites to the Corporation intends to cease providing such items to the
Corporation, nor does the Corporation or the Shareholder have knowledge of any
fact (other than general economic and industry conditions) which indicates that
any of the customers of the Corporation intends to terminate, limit or reduce
its business relations with the Corporation.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the
Corporation nor the Shareholder has directly or indirectly within the past five
years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of the Corporation in connection with any actual
or proposed transaction which (a) might subject the Corporation to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (b)
if not given in the past, might have had an adverse effect on the financial
condition, business or results of operations of the
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Corporation, or (c) if not continued in the future, might adversely affect the
financial condition, business or operations of the Corporation or which might
subject the Corporation to suit or penalty in any private or governmental
litigation or proceeding.
3.32 RELATED PARTY TRANSACTIONS. Neither the Shareholder nor any
of his Affiliates has entered into any transaction with or is a party to any
agreement, lease or other instrument, or as of the date of this Agreement is
indebted to or is owed money by, the Corporation not disclosed on the Financial
Statements delivered to WCI prior to the date of this Agreement. Except as
disclosed in the Financial Statements, neither the Shareholder or his
Affiliates owns any direct or indirect interest of any kind in, or controls or
is a director, officer, employee, shareholder or partner of, or consultant or
lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Corporation.
3.33 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature of the
matter disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
3.34 NO MISLEADING STATEMENTS. The representations and warranties
of the Corporation and the Shareholder contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to WCI and its representatives pursuant hereto are complete and accurate in all
material respects and do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made and to be
made not misleading.
3.35 ACCURATE AND COMPLETE RECORDS. The corporate minute books,
stock ledgers, books, ledgers, financial records and other records of the
Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material
corporate transactions required to be authorized by the Boards of
Directors and/or shareholders of the Corporation and do not contain or
reflect any material discrepancies.
3.36 KNOWLEDGE. Wherever reference is made in this Agreement to
the "KNOWLEDGE" of the Shareholder, such term means the actual knowledge of the
Shareholder or any knowledge which should have been obtained by the Shareholder
upon reasonable inquiry by a reasonable business person. Wherever reference is
made in this Agreement to the "knowledge" of the Corporation, such term means
the actual knowledge of any management employee, officer or
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director of the Corporation or any knowledge which should have been obtained by
any such person upon reasonable inquiry by a reasonable business person.
3.37 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for the Corporation or the Shareholder
in connection with the transactions contemplated by this Agreement and no
person is entitled to any broker's, finder's, financial advisory or similar fee
or payment in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of the Corporation or the Shareholder.
3.38 S CORPORATION. The Corporation has elected to be taxed as an
S Corporation under the Internal Revenue Code of 1986, as amended, for all the
years listed on Schedule 3.39.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholder that each of the
following representations and warranties is true as of the date of this
Agreement and will be true as of the Closing Date, and agrees that such
representations and warranties shall survive the Closing:
4.1 EXISTENCE AND GOOD STANDING. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WCI has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. WCI is not required
to be qualified or licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a material adverse
effect on its financial condition.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any
article, document or instrument to which WCI is a party or by which it is bound
which would be violated by consummation of the transactions contemplated by
this Agreement.
4.3 AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due
authorization, execution and delivery by the Corporation and the Shareholder,
constitutes a legal, valid and binding obligation of WCI. WCI has full
corporate power, legal right and corporate authority to enter into and perform
its obligations under this Agreement and to carry on its business as presently
conducted. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and the fulfillment of and compliance
with the terms and conditions hereof do not and will not, after the giving of
notice, or the lapse of time or otherwise: (a) violate any provisions of any
judicial or administrative order, award, judgment or decree applicable to WCI;
(b) conflict with any of the provisions of the Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws of WCI; or (c) conflict with,
result in a breach of or constitute a default under any material agreement or
instrument to which WCI is a party or by which it is bound.
4.4 NO MISLEADING STATEMENTS. The representations and warranties
of WCI contained in this Agreement, the Exhibits and Schedules hereto and all
other documents and
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information furnished to the Shareholder pursuant hereto are materially
complete and accurate, and do not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
and to be made not misleading as of the Closing Date.
4.5 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for WCI in connection with the
transactions contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of WCI.
4.6 DISCLOSURE SCHEDULES. Any matter disclosed by WCI on any
Schedule to this Agreement shall be deemed to have been disclosed on every
other Schedule that refers to such Schedule by cross reference so long as the
nature disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
5. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
5.1 WCI DELIVERIES.
(a) WCI shall deliver the cash portion of the Purchase
Price required to be delivered on the Closing Date pursuant to Section 1.2(a).
(b) WCI shall execute and deliver a Consulting Agreement
with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ substantially in the form of the draft included in Exhibit
5.1(d).
5.2 SHAREHOLDER DELIVERIES.
(a) The Shareholder shall deliver to WCI the certificates
representing the outstanding Corporation's Stock free and clear of all liens,
security interests, claims and encumbrances, accompanied by a stock power duly
executed in blank.
(b) The Shareholder shall deliver to WCI an opinion of
counsel for the Shareholder, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit 5.2(c).
(c) The Shareholder shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the transactions
contemplated hereby, including without limitation all Required Governmental
Consents and all required consents of the landlords under all real estate
leases to which the Corporation is a party, were obtained and the Shareholder
shall deliver an estoppel certificate from the landlords under all real estate
leases to which the Corporation is a party confirming the terms thereof and the
rental amount owing thereunder, certifying that such lease is in full force and
effect, that the Corporation is not in default under
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any of the terms or conditions thereof, that there have been no amendments or
modifications to any such lease (or specifying the same), and otherwise
containing such statements and certifications as the Corporation may require.
(d) The Corporation shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts and all oral
employment contracts other than those that are terminable "at will" without
payment of severance (other than normal severance benefits approved by WCI) or
other benefits with non-union employees of the Corporation (including, without
limitation, stock options or other rights to obtain equity in the Corporation)
have been terminated, effective on or before the Closing Date.
(e) The Shareholder shall execute and deliver the
Consulting Agreement in the form of Exhibit 5.1(d).
(f) The Shareholder shall cause each officer and director
of the Corporation to deliver to WCI a resignation as an officer and/or
director of the Corporation together with a general release releasing the
Corporation from all obligations under any indemnification agreements, the
charter documents of the Corporation, or otherwise, arising out of or relating
to this Agreement or the consummation of the transactions contemplated thereby,
other than obligations arising after the Closing Date under this Agreement,
except to the extent there exists insurance coverage.
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDER
6.1 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to
obtain the termination and release promptly after the Closing Date of the
personal guaranties of the Shareholder listed on Schedule 6.1 (including
application and notice to the Secretary of State of South Dakota for change of
registered agent and address), all of which relate to indebtedness of the
Corporation included in the Financial Statements as of the Balance Sheet Date
or WCI shall indemnify the Shareholder and hold him harmless from and against
all losses, expenses or claims by third parties to enforce or collect
indebtedness owed by the Corporation as of the Closing Date which is personally
guaranteed by the Shareholder pursuant to such guaranties. The Shareholder may
notify the obligees under such guaranties that he has terminated his
obligations under such guaranties. The Shareholder shall cooperate with WCI in
obtaining such releases.
6.2 RELEASE OF SECURITY INTERESTS. On or after the Closing Date,
the Shareholder and his respective Affiliates shall cause those security
interests in the assets of the Corporation that have been created in favor of
financial institutions or other lenders to secure indebtedness (other than
indebtedness of the Corporation) of the Shareholder or his respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholder to be released to the reasonable satisfaction of WCI.
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6.3 CONFIDENTIALITY. Neither the Corporation nor the Shareholder
shall disclose or make any public announcements of the transactions
contemplated by this Agreement without the prior written consent of WCI, unless
required to make such disclosure or announcement by law, in which event the
party making the disclosure or announcement shall notify WCI at least 24 hours
before such disclosure or announcement is expected to be made. WCI shall not
disclose or make any public announcement of the transactions contemplated by
this Agreement without the prior written consent of the Shareholder, unless in
connection with the initial public offering of WCI's Common Stock or otherwise
required to make such disclosure or announcement by law, in which event WCI
shall notify the Shareholder at least 24 hours before such disclosure or
announcement is expected to be made.
6.4 BROKERS AND FINDERS FEES. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee incurred by
such party in connection with the transactions contemplated by this Agreement.
6.5 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholder, with the Shareholder with respect to any matters involving the
Shareholder arising out of the Shareholder's ownership of the Corporation prior
to the Closing, including matters relating to tax returns and any tax audits,
appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall safely
store, protect and make available to the Shareholder such files, documents,
books and records of the Corporation for inspection and copying as may be
reasonably requested by the Shareholder and shall cooperate with the
Shareholder with respect to retaining information and documents which relate to
such matters.
6.6 SHORT YEAR TAX RETURNS. After the Closing Date, the
Shareholder shall prepare at his sole cost and expense, all short year federal,
state, county, local and foreign tax returns required by law for the period
beginning with the first day of the Corporation's fiscal year in which the
Closing occurs and ending with the Closing Date. Each such return shall be
prepared in a financially responsible and conservative manner and shall be
delivered to WCI together with all necessary supporting schedules within 120
days following the Closing Date for its approval (but such approval shall not
relieve the Shareholder of his responsibility for the taxes assessed under
these returns). The Shareholder shall be responsible for the payment of all
taxes shown to be due or that may come to be due on such returns or otherwise
relating to the period prior to the Closing Date in excess of the amount of any
reserve for taxes included in Effective Date Current Liabilities. The
Shareholder shall also be responsible for all taxes arising from the conversion
of the Corporation from a cash to accrual basis of reporting whether or not due
on such returns or on the first return filed by the Corporation for the period
commencing after the Closing Date. At the time of the delivery of the returns,
shall contemporaneously deliver to WCI checks payable to the respective taxing
authorities in amounts equal to the amount due. WCI shall sign tax returns and
cause such returns to be timely filed with the appropriate authorities. The
Shareholder shall be entitled to receive all refunds shown on said returns and
any such refunds received by the Corporation or WCI shall be remitted to the
Shareholder.
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6.7 CERTAIN TAX MATTERS. The Shareholders acknowledge that WCI
may make an election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended. The Shareholders agree that WCI, in its discretion, may make
such election; provided, however, that such election shall be made no later
than the due date for such election. If such election is made by WCI:
(a) WCI shall be authorized to complete Form 8023-A;
(b) The Shareholders shall sign such completed Form
8023-A at the Closing; and
(c) WCI and the Shareholders shall agree upon the
allocation of the Purchase Price among the assets (including
intangible assets) of the Corporation.
(d) If WCI does make its election under Section
338(h)(10) of the Internal Revenue Code of 1986, as amended, WCI shall
reimburse the Shareholders and the Corporation for any additional
taxes, penalties, interest and costs of preparation of amended income
tax returns incurred due to such election resulting from the recapture
of depreciation previously taken on various assets of the Corporation
at ordinary income instead of capital gain rates. Such reimbursement
shall be in a sum computed by a simultaneous equation computing the
additional tax owed by stockholders, as well as the tax on the payment
of that sum.
6.8 RESERVED.
6.9 TITLE INSURANCE. The Shareholder shall arrange for an
irrevocable commitment from a title insurance company reasonably acceptable to
WCI to issue, within three business days after the Closing Date, a CLTA Owner's
Policy of title insurance for the Corporate Property, in an amount as shall be
reasonably agreed upon by the Shareholder and WCI, insuring fee simple title to
the Corporate Property in the Corporation, subject only to current real
property taxes and assessments, standard printed conditions and exceptions, and
such title exceptions as shall have been accepted in writing by WCI, and
containing such endorsements as WCI may reasonably require. The cost of such
title insurance shall be paid one-half by the Shareholder and one-half by WCI.
6.10 GENERAL RELEASE BY SHAREHOLDER. The Shareholder hereby fully
releases and discharges the Corporation and its directors, officers, agents and
employees from all rights, claims and actions, known or unknown, of any kind
whatsoever, which the Shareholder now has or may hereafter have against the
Corporation and its directors, officers, agents and employees, arising out of
or relating to events arising prior to or on the Closing Date, except (a) as
may be described in written contracts disclosed in Schedule 6.10 and expressly
described and specifically excepted from this release in Schedule 6.10, (b)
compensation as an employee of the Corporation for current periods expressly
described and excepted from such release on schedule 6.10, and (c) for the
obligations of the Corporation arising after the Closing Date under this
Agreement.
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Specifically, but not by way of limitation, the Shareholder waives any right of
indemnification, contribution or other recourse against the Corporation which
he now has or may hereafter have against the Corporation with respect to
representations, warranties or covenants made in this Agreement by the
Corporation.
The Shareholder hereby waives and relinquishes all rights and
benefits afforded by South Dakota Codified Laws ("SDCL") 20-7- 11, which states
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS TO WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
The Shareholder understands and acknowledges the significance and consequence
of this waiver of SDCL 20-7-11 and nevertheless elects to, and does, release
those claims described in this Section 6.10, known or unknown, that he may have
now or in the future arising out of or relating to any event arising on or
prior to the date of this Agreement, except to the extent there exists
insurance coverage.
7. INDEMNIFICATION
7.1 INDEMNITY BY THE SHAREHOLDER. The Shareholder, subject to the
limitations set forth in Section 7.2, covenants and agrees that he and she will
indemnify and hold harmless WCI, the Corporation and their respective
directors, officers and agents and their respective successors and assigns
(collectively the "WCI INDEMNITEES"), from and after the date of this
Agreement, against any and all losses, damages, assessments, fines, penalties,
adjustments, liabilities, claims, deficiencies, costs, expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses
of investigation), expenditures, including, without limitation, any
"Environmental Site Losses" (as such term is hereinafter defined) identified by
a WCI Indemnitee in a Claims Notice (as defined in Section 7.4(a)), or asserted
by a WCI Indemnitee in litigation commenced against the Shareholder provided
that in either case any such Claims Notice shall be given or the litigation
commenced prior to the expiration of the applicable statute of limitations
(irrespective of the date of discovery), with respect to each of the following
contingencies (all, the "7.1 INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the
Shareholder or the Corporation pursuant to the terms of this Agreement
or any misrepresentation in or omission from any Exhibit, Schedule,
list, certificate, or other instrument furnished or to be furnished to
WCI pursuant to the terms of this Agreement, regardless of whether, in
the case of a breach of a representation or a warranty, WCI relied on
the truth of such representation or warranty or had any knowledge of
any breach thereof.
(b) The design, development, construction or operation
of any Facility or any
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other "Environmental Site" as hereinafter defined, or the installation
or operation of a UST during any period on or prior to the Closing
Date, in excess of the amount of liability with respect thereto, if
any, set forth on Part II of Schedule 3.8. As used in this Agreement,
"ENVIRONMENTAL SITE" shall mean any Facility, any UST and any other
waste storage, processing, treatment or disposal facility, and any
other business site or any other real property owned, leased,
controlled or operated by the Corporation or by any predecessor
thereof on or prior to the Closing Date. As used in this Agreement,
"ENVIRONMENTAL SITE LOSSES" shall mean any and all losses, damages
(including exemplary damages and penalties), liabilities, claims,
deficiencies, costs, expenses, and expenditures (including, without
limitation, expenses in connection with site evaluations, risk
assessments and feasibility studies) arising out of or required by an
interim or final judicial or administrative decree, judgment,
injunction, mandate, interim or final permit condition or restriction,
cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any
other remedial action that is required to be undertaken under federal,
state or local law in respect of operating activities on or affecting
any Facility, any UST or any other Environmental Site, including, but
not limited to (x) any actual or alleged violation of any law or
regulation respecting the protection of the environment, including,
but not limited to, RCRA and CERCLA or any other law or regulation
respecting the protection of the air, water and land and (y) any
remedies or violations, whether by a private or public action, alleged
or sought to be assessed as a consequence, directly or indirectly, of
any "Release" (as defined below) of pollutants (including odors) or
Hazardous Substances from any Facility, any UST or any other
Environmental Site resulting from activities thereat, whether such
Release is into the air, water (including groundwater) or land and
whether such Release arose before, during or after the Closing Date.
The term "RELEASE" as used herein means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the ambient environment.
Notwithstanding anything in this paragraph to the contrary, it is
specifically understood and agreed that a Release composed solely of
Hazardous Substances contained in household waste lawfully disposed of
in a landfill during the time the Corporation owned and/or operated
such landfill does not constitute an Environmental Site Loss.
(c) All matters on Schedule 3.8 - Part II.
(d) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
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7.2 LIMITATIONS ON SHAREHOLDER'S INDEMNITIES.
(a) Subject to the provisions of 7.2(b) hereof, the
obligations of the Shareholder to indemnify the WCI Indemnitees as provided in
Section 7.1 shall be equal to the amount by which the cumulative amount of all
such liabilities, claims, damages deficiencies, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses, expenditures and
Environmental Site Losses with respect to any or all 7.1 Indemnity Events
exceed $50,000 (the "GENERAL DEDUCTIBLE AMOUNT"); provided, that the amount of
any obligation of indemnity arising pursuant to Section 7.1(a) with respect to
any representation, warranty or covenant contained in Sections 3.1 through 3.5,
3.12(c), 3.18, 3.22 and 6.6 hereof and pursuant to Section 7.1(c) shall not be
subject to the General Deductible Amount.
(b) The maximum amount which WCI can recover as a result
of one or more 7.1 Indemnity Events shall not exceed:
(i) seventy-five percent (75%) of the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof) if the 7.1
Indemnity Event occurs during the time period from the Closing Date
to, and including, the first anniversary of the Closing Date;
(ii) sixty-five percent (65%) of the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof) if the 7.1
Indemnity Event occurs during the time period from the first
anniversary of the Closing Date to, and including, the second
anniversary of the Closing Date; and
(iii) sixty percent (60%) of the Purchase Price (as
adjusted pursuant to Section 1.2(a) hereof) if the Indemnity Event
occurs during the time period from the second anniversary of the
Closing Date to the third anniversary of the Closing Date.
(c) WCI shall use reasonable efforts to pursue any
insurance coverage it may have with respect to any matter resulting in a 7.1
Indemnity Event and shall apply any insurance recoveries it receives in
connection with any 7.1 Indemnity Event towards its recovery from the
Shareholder for such 7.1 Indemnity Event. Nothing herein shall require WCI
from pursuing any such insurance coverage prior to pursuing any claim against
the Shareholder.
7.3 INDEMNITY BY WCI. WCI, subject to the limitations set forth
in Section 7.4, covenants and agrees that it will indemnify and hold harmless
the Shareholder and their respective successors and assigns (collectively the
"SHAREHOLDER INDEMNITEES"), from and after the date of this Agreement, against
any and all losses, damages, assessments, fines, penalties, adjustments,
liabilities, claims, deficiencies, costs, expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation),
expenditures, including, without limitation, any Environmental Site Losses
identified by a Shareholder Indemnitee in a Claims Notice, or asserted by a
Shareholder Indemnitee in litigation commenced against WCI provided that in
either case any such Claims Notice shall be given or the litigation commenced
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prior to the expiration of the applicable statute of limitations (irrespective
of the date of discovery), with respect to each of the following contingencies
(all, the "7.3 INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of WCI
pursuant to the terms of this Agreement or any misrepresentation in or
omission from any Exhibit, Schedule, list, certificate, or other
instrument furnished or to be furnished to the Shareholder pursuant to
the terms of this Agreement, regardless of whether, in the case of a
breach of a representation or a warranty, the Shareholder relied on
the truth of such representation or warranty or had any knowledge of
any breach thereof.
(b) The design, development, construction or operation of
any Facility or any other Environmental Site, or the installation or
operation of a UST during any period after the Closing Date, in excess
of the amount of liability with respect thereto, if any, set forth on
Part II of Schedule 3.8; provided, however, that WCI shall have no
obligation to indemnify any Shareholder Indemnitee under this section
7.3 if a 7.3 Indemnity Event is caused in whole or in part by a 7.1
Indemnity Event.
(c) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
7.4 LIMITATIONS ON WCI'S INDEMNITIES.
(a) Subject to the provisions of 7.4(b) hereof, the
obligations of WCI to indemnify the Shareholder Indemnitees as provided in
Section 7.3 shall be equal to the amount by which the cumulative amount of all
such liabilities, claims, damages deficiencies, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses, expenditures and
Environmental Site Losses with respect to any or all 7.1 Indemnity Events
exceed the General Deductible Amount.
(b) The maximum amount which the Shareholder can recover
as a result of one or more 7.3 Indemnity Events shall not exceed:
(i) eighty percent (80%) of the Purchase Price
(as adjusted pursuant to Section 1.2(a) hereof) if the 7.3 Indemnity
Event occurs during the time period from the Closing Date to, and
including, the first anniversary of the Closing Date;
(ii) seventy percent (70%) of the Purchase Price
(as adjusted pursuant to Section 1.2(a) hereof) if the 7.3 Indemnity
Event occurs during the time period from the first anniversary of the
Closing Date to, and including, the second anniversary of the Closing
Date; and
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(iii) sixty-five percent (65%) of the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof) if the Indemnity
Event occurs during the time period from the second anniversary of the
Closing Date to the third anniversary of the Closing Date.
7.5 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any WCI or Shareholder Indemnitee
(as applicable, an "Indemnitee") as to which such Indemnitee may be entitled to
indemnification hereunder, the Indemnitee shall notify the Shareholder (as
applicable collectively, the "INDEMNIFYING PARTY") in writing thereof (the
"CLAIMS NOTICE") within 20 days after (i) receipt of written notice of
commencement of any third party litigation against such Indemnitee, (ii)
receipt by such Indemnitee of written notice of any third party claim pursuant
to an invoice, notice of claim or assessment, against such Indemnitee, or (iii)
such Indemnitee becomes aware of the existence of any other event in respect of
which indemnification may be sought from the Indemnifying Party (including,
without limitation, any inaccuracy of any representation or warranty or breach
of any covenant). The Claims Notice shall describe the Claim and the specific
facts and circumstances in reasonable detail, and shall indicate the amount, if
known, or an estimate, if possible, of the losses that have been or may be
incurred or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including such
Claims) do not exceed the limit set forth in Section 7.2 at the time the Claim
is made, by the Indemnifying Party's own counsel; provided, however, the
Indemnifying Party may assume and undertake the defense of such a third party
Claim only upon written agreement by the Indemnifying Party that the
Indemnifying Party is obligated to fully indemnify the Indemnitee with respect
to such action. The Indemnitee may participate, at the Indemnitee's own
expense, in the defense of any Claim assumed by the Indemnifying Party.
Without the written approval of the Indemnitee, which approval shall not be
unreasonably withheld, the Indemnifying Party shall not agree to any compromise
of a Claim defended by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 7.3(b) and elected to defend
the Claim, the Indemnitee shall have the right to assume control of the defense
and/or compromise of such Claim, and the costs and expenses of such defense,
including reasonable attorneys' fees, shall be added to the Claim. The
Indemnifying Party shall promptly, and in any event within thirty (30) days
after demand therefor, reimburse the Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall
keep the other party reasonably informed at all times of the progress and
development of its or his defense of and compromise efforts with respect to
such Claim and shall furnish the other party with copies of all relevant
pleadings, correspondence and other papers. In addition, the parties to this
Agreement
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shall cooperate with each other and make available to each other and their
representatives all available relevant records or other materials required by
them for their use in defending, compromising or contesting any Claim. The
failure to timely deliver a Claims Notice or otherwise notify the Indemnifying
Party of the commencement of such actions in accordance with this Section 7.3
shall not relieve the Indemnifying Party from the obligation to indemnify
hereunder but only to the extent that the Indemnifying Party establishes by
competent evidence that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the Indemnifying
Party are named as defendants in an action or proceeding initiated by a third
party, they shall both be represented by the same counsel (on whom they shall
agree), unless such counsel the Indemnitee, or the Indemnifying Party shall
determine that such counsel has a conflict of interest in representing both the
Indemnitee and the Indemnifying Party in the same action or proceeding and the
Indemnitee and the Indemnifying Party do not waive such conflict to the
satisfaction of such counsel.
7.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement and
in any certificate, Exhibit or Schedule delivered pursuant hereto, or in any
other writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any persons other than as specifically set forth herein or
therein, including WCI's reliance on its knowledge of events pursuant to its
due diligence review of the Corporation.
7.7 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF.
The Shareholder waives any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due the
Shareholder any amount to which any WCI Indemnitee is entitled to be
indemnified hereunder with respect to any 7.1 Indemnity Event. Such right of
set off shall be separate and apart from any and all other rights and remedies
that the Indemnities may have against Shareholder or his successors.
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDER AND WCI
8.1 RESTRICTIVE COVENANTS. As to the Corporation, the Shareholder
and his Affiliates acknowledge that (i) WCI, as the purchaser of the
Corporation's Stock, is and will be engaged in the same business as the
Corporation (the "BUSINESS"); (ii) the Shareholder and his Affiliates are
intimately familiar with the Business; (iii) the Business is currently
conducted in the States of
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South Dakota, Wyoming and Montana and WCI intends to continue the Business in
South Dakota and Washington and intends, by acquisition or otherwise, to expand
the Business into other geographic areas of South Dakota, Wyoming and Montana
where it is not presently conducted; (iv) the Shareholder and his Affiliates
have had access to trade secrets of, and confidential information concerning,
the Business; (v) the agreements and covenants contained in this Section 8.1
are essential to protect the Business and the goodwill being acquired; and (vi)
the Shareholder and his Affiliates have the means to support themselves and
their dependents other than by engaging in a business substantially similar to
the Business and the provisions of this Section 8 will not impair such ability.
The Shareholder covenants and agrees as set forth in (a), (b) and (c) below
with respect to the Corporation:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating five years thereafter (the "RESTRICTED PERIOD"),
neither the Shareholder nor any of his Affiliates shall, anywhere in
the Cities of Spearfish, Lead, Belle Fourche, Deadwood, ▇▇▇▇▇▇ and
Whitewood, South Dakota; the Counties of ▇▇▇▇▇▇▇▇, Perkins, Meade,
Butte, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and Custer, South Dakota, the Counties of
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and Westin, Wyoming, or ▇▇▇▇▇▇ County, Montana, where
WCI or one of its subsidiaries owns or operates a business similar to
the Business (the "RESTRICTED COUNTIES"), directly or indirectly,
acting individually or as the owner, shareholder, partner, or employee
of any entity, (i) engage in the operation of a solid waste
collection, transporting, disposal and/or composting business,
transfer facility, recycling facility, materials recovery facility or
solid waste landfill; (ii) enter the employ of, or render any personal
services to or for the benefit of, or assist in or facilitate the
solicitation of customers for, or receive remuneration in the form of
salary, commissions or otherwise from, any business engaged in such
activities; (iii) as owner or lessor of real estate or personal
property, rent to lease any facility, equipment or other assets to any
business engaged in the same business as the Corporation; or (iv)
receive or purchase a financial interest in, make a loan to, or make a
gift in support of, any such business in any capacity, including,
without limitation, as a sole proprietor, partner, shareholder,
officer, director, principal, agent, trustee or lender; provided,
however, that the Shareholder may (x) retain all salvage rights
currently possessed by the Corporation in connection with the
operation of any rubble site; and (y) own, directly or indirectly,
solely as an investment, securities of any business traded on any
national securities exchange or NASDAQ, provided none of the
Shareholder is a controlling person of, or a member of a group which
controls, such business and further provided that the Shareholder does
not, in the aggregate, directly or indirectly, own 2% or more of any
class of securities of such business.
(b) CONFIDENTIAL INFORMATION. During the Restricted
Period and thereafter, the Shareholder and his Affiliates shall keep
secret and retain in strictest confidence, and shall not use for the
benefit of themselves or others, all data and information relating to
the Business ("CONFIDENTIAL INFORMATION"), including without
limitation, know-how, trade secrets, customer lists, supplier lists,
details of contracts, pricing policies, operational methods, marketing
plans or strategies, bidding information, practices,
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policies or procedures, product development techniques or plans, and
technical processes; provided, however, that the term "Confidential
Information" shall not include information that (i) is or becomes
generally available to the public other than as a result of disclosure
by the Shareholder or (ii) is general knowledge in the solid waste
handling and landfill business and not specifically related to the
Business.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or
on behalf of the Shareholder or the Corporation or made available to
them relating to the Business, but excluding any materials (other than
the minute books of the Corporation) maintained by any attorneys for
the Corporation or the Shareholder prior to the Closing, are and shall
be the property of WCI and have been delivered or will be delivered or
made available to WCI at the Closing. The Shareholder has the right
on reasonable request to inspect and copy during normal business hours
any of such property relating to the Business.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the Shareholder
and his Affiliates shall not solicit any employees of the Corporation
to leave the employ of the Corporation and join the Shareholder or any
Affiliate in any business endeavor owned or pursued by the
Shareholder.
(e) NO DISPARAGEMENT. From and after the Closing Date,
the Shareholder shall not, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate WCI
or any of its subsidiaries, or any officer, director or employee, or
any product or service or procedure of any such company whether or not
such denigrating or derogatory statements shall be true and are based
on acts or omissions which are learned by the Shareholder from and
after the date hereof or on acts or omissions which occur from and
after the date hereof, or otherwise. A statement shall be deemed
denigrating or derogatory to any person or entity if it adversely
affects the regard or esteem in which such person or entity is held by
investors, lenders or licensing, rating, or regulatory entities.
Without limiting the generality of the foregoing, the Shareholder
shall not, directly or indirectly in any way in respect of any such
company or any such directors or officers, communicate with, or take
any action which is adverse to the position of any such company with
any person, entity or governmental or regulatory body or agency who or
which has dealings or prospective dealings with any such company or
jurisdiction or prospective jurisdiction over any such company. This
paragraph does not apply to the extent that testimony is required by
legal process, provided that WCI has received not less than five days'
prior written notice of such proposed testimony.
8.2 RIGHTS AND REMEDIES UPON BREACH. If the Shareholder or any
Affiliate breaches, or threatens to commit a breach of, any of the provisions
of Section 8.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have the
following rights and remedies, each of which
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rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to WCI at law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to
WCI and that money damages would not provide an adequate remedy to
WCI. Accordingly, in addition to any other rights or remedies, WCI
shall be entitled to injunctive relief to enforce the terms of the
Restrictive Covenants and to restrain the Shareholder from any
violation thereof.
(b) ACCOUNTING. The right and remedy to require the
Shareholder to account for and pay over to WCI all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Shareholder as the result of any transactions
constituting a breach of the Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholder
acknowledges and agrees that the Restrictive Covenants are reasonable
and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect, without regard to the invalid
portions.
(d) BLUE-PENCILING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall reduce the duration or scope of such provision, as the
case may be, to the extent necessary to render it enforceable and, in
its reduced form, such provision shall then be enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI and the
Shareholder intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographic scope of the Restrictive Covenants. If the courts of any
one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of WCI and the Shareholder that such determination
not bar or in any way affect WCI's right to the relief provided above
in the courts of any other jurisdiction within the geographic scope of
the Restrictive Covenants as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
9. GENERAL
9.1 ADDITIONAL CONVEYANCES. Following the Closing, the
Shareholder and WCI shall
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each deliver or cause to be delivered at such times and places as shall be
reasonably agreed upon such additional instruments as WCI or the Shareholder
may reasonably request for the purpose of carrying out this Agreement. The
Shareholder and WCI and/or the Corporation will cooperate with one another on
and after the Closing Date in furnishing information, evidence, testimony and
other assistance in connection with any actions, proceedings or disputes of any
nature with respect to matters pertaining to all periods prior to the date of
this Agreement.
9.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI
and the heirs, legal representatives or assigns of the Shareholder; provided,
however, that any such assignment shall be subject to the terms of this
Agreement and shall not relieve the assignor of its or his responsibilities
under this Agreement.
9.3 PUBLIC ANNOUNCEMENTS. Except as required by law, no party
shall make any public announcement or filing with respect to the transactions
provided for herein prior to the Closing Date without the prior consent of the
other parties hereto.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.5 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage prepaid registered or certified U.S.
mail, return receipt requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given hereunder, and shall
be effective upon personal delivery or facsimile transmission thereof or upon
delivery by registered or certified U.S. mail or one business day following
deposit with an air courier service:
If to the Shareholder: at his address set forth on Schedule 3.2
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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One ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.6 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporation or the Shareholder on the other
hand relating to the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees and expenses incurred by the prevailing
party. Such award shall include post-judgment attorney's fees and costs.
9.7 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of South Dakota without
regard to its conflict of laws provisions.
9.8 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the
Shareholder, any such fees, expenses and disbursements paid or accrued by, or
charged to, the Corporation).
9.9 INCORPORATION BY REFERENCE. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
9.10 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.11 NUMBER AND GENDER OF WORDS; CORPORATION. Whenever the
singular number is used herein, the same shall include the plural where
appropriate, and shall apply to all of such number, and to each of them,
jointly and severally, and words of any gender shall include each other gender
where appropriate.
9.12 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, the Shareholder
and WCI and supersedes any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement may be modified or amended
only by a written instrument executed by the Corporation, the Shareholder and
WCI acting through its officers, thereunto duly authorized by its Board of
Directors.
9.13 WAIVER. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other
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party hereto may be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time.
9.14 CONSTRUCTION. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning. Unless
expressly set forth otherwise, all references herein to a "day" are deemed to
be a reference to a calendar day. All references to "BUSINESS DAY" mean any
day of the year other than a Saturday, Sunday or a public or bank holiday in
South Dakota or California. Unless expressly stated otherwise,
cross-references herein refer to provisions within this Agreement and are not
references to the overall transaction or to any other document.
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10. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Affiliate Section 3.11
Balance Sheet Date Section 3.7
Business Section 8.1
business day Section 9.14
Claim Section 7.3
Claims Notice Section 7.3(a)
Closing Section 2
Closing Date Section 2
Closing Date Debt Section 3.22(a)
Closing Date Current Assets Section 3.22(b)
Closing Date Current Liabilities Section 3.22(b)
Collection Franchises Section 3.10(a)
Confidential Information Section 8.1(b)
Corporate Property Section 3.12(b)
Corporation Parties
Corporation Debt Section 1.2(c)
Corporation's Stock Second Recital
Environmental Laws Section 3.24
Environmental Site Section 7.1(b)
Environmental Site Losses Section 7.1
Environmental Site Losses Section 7.1(b)
▇▇▇▇▇ Parties
ERISA Section 3.17(a)
Excluded Assets Section 1.5
Facility Section 3.10(c)
Facilities Section 3.10(c)
Facility Property Section 3.10(c)(iii)
Facility Surveys/Site Plans Section 3.10(c)(iii)
Financial Statements Section 3.7
General Deductible Amount Section 7.2(a)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24(e)
Hazardous Waste Section 3.24(e)
Indemnifying Party Section 7.3(a)
7.1 Indemnity Events Section 7.1
7.3 Indemnity Events Section 7.3
knowledge Section 3.36
Laws
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Note Section 1.2(b)
Permitted Liens Section 3.12(c)
Purchase Price Section 1.1
RCRA Section 3.24(a)
Recipient Section 3.17(c)
Records, Notifications and Reports Section 3.10(b)
Release Section 7.1(b)
Representations and Warranties Section 7.4
Restricted Counties Section 8.1(a)
Restricted Period Section 8.1(a)
Restrictive Covenants Section 8.2
Required Governmental Consents Section 3.10(a)
SEC Section 3.38(g)
Shareholder Parties
Shareholder Debt Section 1.2(c)
Shareholder Indemnitees Section 7.3
UST Section 3.26
WCI Indemnitees Section 7.1
WCI Parties
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
WCI: WASTE CONNECTIONS, INC.
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
THE CORPORATION: SUNSHINE SANITATION, INCORPORATED
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
THE SHAREHOLDER:
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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TABLE OF CONTENTS
Page
----
1. PURCHASE OF CORPORATION'S STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Shares to be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Allocation of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. CLOSING TIME AND PLACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDER . . . . . . . . . . . . . 3
3.1 Organization, Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 All Stock Being Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Authority for Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 No Breach or Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Certain Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Fixed Assets and Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Acquisition/Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Contracts and Agreements; Adverse Restrictions . . . . . . . . . . . . . . . . . . . . . 9
3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Benefit Plans and Union Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.19 Copies Complete; Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Customers, Billings, Current Receipts and Receivables . . . . . . . . . . . . . . . . . 12
3.21 No Change With Respect to the Corporation . . . . . . . . . . . . . . . . . . . . . . . 12
3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current Liabilities . . 14
3.23 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.24 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.25 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.26 Underground Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.27 Patents, Trademarks, Trade Names, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.28 Assets, etc., Necessary to Business . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.29 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.30 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.31 Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.32 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.33 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.34 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.35 Accurate and Complete Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.36 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.37 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4. REPRESENTATIONS AND WARRANTIES OF WCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 No Contractual Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 WCI Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Shareholder Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDER . . . . . . . . . . . . . . . . 21
6.1 Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Release of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Brokers and Finders Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Short Year Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 General Release by Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Indemnity by the Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Limitations on Shareholder's Indemnities . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Indemnity by WCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Limitations on WCI's Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Notice of Indemnity Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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7.6 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . 29
7.7 No Exhaustion of Remedies or Subrogation; Right of Set Off . . . . . . . . . . . . . . . 29
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDER AND WCI . . . . . . . . . . . . . . . . . . . . 29
8.1 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Rights and Remedies Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Additional Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.8 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.11 Number and Gender of Words; Corporation . . . . . . . . . . . . . . . . . . . . . . . . 34
9.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.13 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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