Exhibit 10.8
SHARE PURCHASE AGREEMENT
BETWEEN:
▇▇▇▇ ▇▇▇▇▇▇ AND L & S ▇▇▇▇▇▇ ENTERPRISES INC.
(collectively called the "Vendors")
OF THE FIRST PART
- and -
CAPITAL ENVIRONMENTAL RESOURCE INC.
(hereinafter called the "Purchaser")
OF THE SECOND PART
- and -
WESTERN WASTE SERVICES INC.
(hereinafter called the "Corporation")
OF THE THIRD PART
TABLE OF ARTICLES
ARTICLE DESCRIPTION PAGE NO.
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RECITALS 1
ARTICLE I DEFINITIONS AND INTERPRETATIONS
1.01 Definitions 2
ARTICLE II PURCHASE OF SHARES
2.2. Agreement to Purchase 3
2.2 Amount of Purchase Price 4
2.3 Payment of Purchase Price 4
2.4 Advance to Vendor 4
2.5 Redemption of Class "C" Shares & Repayment
of Shareholders' Loan 5
2.6 Interest 5
ARTICLE III CLOSING ARRANGEMENTS
3.1 Closing 5
3.2 Interim Period 5
3.3 Closing Procedure 5
ARTICLE IV CONDITIONS OF CLOSING
4.1 Conditions For the Benefit of Purchaser 7
4.2 Conditions For the Benefit of the Vendors 8
ARTICLE V REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Vendors 10
5.2 Representations and Warranties of
the Purchaser 13
5.3 Limitations and Set Off 19
ARTICLE VI RIGHTS OF VENDORS FOLLOWING CLOSING 20
ARTICLE VII IDEMINIFICATION
7.1 Indemnification of Purchaser 22
7.2 Indemnification of Vendors 22
ARTICLE VIII GENERAL
8.1 Interpretation 23
6.2 Expenses 24
-2-
ARTICLE DESCRIPTION PAGE NO.
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8.3 Further Assurances 24
8.4 Entire Agreement 24
8.5 Non-Merger 24
8.6 Applicable Law 24
8.7 Notices 24
8.8 Successors and Assigns 25
8.9 Execution by Counterpart & Execution
by Counterpart and Facsimile 26
EXECUTION 25
Schedule "A" - Purchaser's Solicitors' Opinion
Schedule "B" - Vendor's solicitors' Opinion
Schedule "C" - Amended Articles of Purchaser
Schedule "D" - Unanimous Shareholders Agreement
Schedule "E" - Promissory Note
Schedule "F" - Employment Agreement
Schedule "G" - List of Encumbrances of the Corporation
Schedule "H" - List of Encumbrances of the Purchaser
Schedule "I" - List of Preference Shareholders
Schedule "J" - List of Law Suits involving the Corporation
THIS SHARE PURCHASE AGREEMENT, made as of the 1st day of November, 1997.
BETWEEN
▇▇▇▇ ▇▇▇▇▇▇, of the Hamlet of Sherwood Park, in the Province of Alberta
and L & S ▇▇▇▇▇▇ ENTERPRISES INC., a corporation incorporated pursuant to
the laws of Alberta
(collectively called the "Vendors")
OF THE FIRST PART
- and -
CAPITAL ENVIRONMENTAL RESOURCE INC.
a corporation incorporated pursuant to the laws of Ontario
(hereinafter called the "Purchaser")
OF THE SECOND PART
- and -
WESTERN WASTE SERVICES INC., a corporation incorporated pursuant to the
laws of the Province of Alberta, formerly known as Western Canadian Waste
Services Inc.
(hereinafter, called the "Corporation")
OF THE THIRD PART
WHEREAS L & S ▇▇▇▇▇▇ Enterprises Inc. owns 96 Class "A" Shares in the
capital of the Corporation;
AND WHEREAS ▇▇▇▇ ▇▇▇▇▇▇ owns 4 Class "A" Shares and 200 Class "C" Shares
in the capital of the Corporation;
AND WHEREAS the 200 Class "C" Shares have a redemption value of $833.33
per share for a total redemption value of $166,666.00;
AND WHEREAS a Shareholder's Loan in the amount of $250,000.00 is owing to
▇▇▇▇ ▇▇▇▇▇▇ by the Corporation;
AND WHEREAS the Purchaser owns 200 Class "A" Shares in the capital of the
Corporation;
AND WHEREAS there are no other shares of the Corporation that are issued
and outstanding;
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AND WHEREAS the Vendors have agreed to sell all their shares in the
capital of the Corporation to the Purchaser on the terms and at and for the
consideration herein stated and on condition that the Vendor's Class "C" Shares
be redeemed and the Vendor's Shareholder's Loan be repaid.
AND WHEREAS certain words and phrases with initial capitals are terms as
defined in this Agreement and are more particularly defined in Article 1.1
herein.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
mutual covenants and agreements contained herein, the parties hereto covenant
and agree each with the other as follows:
ARTICLE I - DEFINITIONS
1.0 DEFINITIONS:
(a) "AGREEMENT" means this Agreement and any instrument supplemental or
ancillary hereto;
(b) "ARTICLE", "Section" and "Subsection" followed by a number means and
refers to the specified Article, Section or Subsection of this
Agreement;
(c) "ASSETS" means the undertaking, property and assets of the
Corporation as a going concern, of every kind and description,
wheresoever situated;
(d) "BUSINESS" means the business carried on by the Corporation;
(e) "CLOSING" means the time of closing on the Closing Date provided for
in Section 3.1 hereof;
(f) "CLOSING DATE" means the 7th day of November, 1997, or such earlier
or later date as may be mutually acceptable to the parties hereto;
(g) "CORPORATION" has the meaning ascribed thereto in the first recital
of this Agreement;
(h) "EBITDA" means earnings before interest, taxes, depreciation and
amortization set forth in the Corporation's financial statements
calculated in accordance with Generally Accepted Accounting
Principles;
(i) "EFFECTIVE DATE" means November 1, 1997;
(j) "EMPLOYMENT AGREEMENT" means the agreement referred to in Section
4.1(e);
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(k) "INTERIM PERIOD" means the period of time from the Effective Date to
the Closing Date;
(l) "PERSON" means an individual, a corporation, a partnership, a
trustee or any unincorporated organization and words importing
persons have a similar meaning;
(m) "PREFERENCE SHAREHOLDERS" means those shareholders listed in the
attached Schedule "I";
(n) "PURCHASE PRICE" has the meaning ascribed thereto in Section 2.1
hereof;
(o) "PURCHASER'S ACCOUNTANTS" means BDO Dunwoody, Chartered Accountants;
(p) "PURCHASER'S CLOSING OPINION" means an opinion of the Purchaser's
solicitor substantially in the form attached hereto as Schedule "A",
with any changes of form and substance thereof being acceptable to
the Vendor's solicitors;
(q) "PURCHASER'S SOLICITOR" means Tukstra ▇▇▇▇▇ Associates, Barristers
and Solicitors;
(r) "SHARES" means the following outstanding Shares in the capital of
the Corporation being purchased by the Purchaser hereunder:
100 Class "A" Shares
(s) "VENDORS' ACCOUNTANTS" means Coopers & ▇▇▇▇▇▇▇, Chartered
Accountants;
(t) "VENDORS' SOLICITOR" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Barrister and Solicitor;
(u) "VENDORS' SOLICITORS' OPINION" means an opinion of the Vendor's
Solicitor substantially in the form attached hereto as Schedule "B",
with any changes in form and substance thereof being acceptable to
the Purchaser's Solicitor;
(v) "USA" means the Unanimous Shareholders Agreement referred to in
Section 2.3(b);
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ARTICLE II - PURCHASE OF SHARES
2.1 AGREEMENT TO PURCHASE:
Subject to the terms and conditions hereof, the Vendors agree to sell and
the Purchaser agrees to purchase the Shares as of the Effective Date.
2.2 AMOUNT OF PURCHASE PRICE:
The purchase price ("Purchase Price") payable by the Purchaser to the
Vendors for the Shares shall be $12,500,000.00.
2.3 PAYMENT OF PURCHASE PRICE:
The Purchase Price shall be paid at Closing by the Purchaser to the
Vendors and the Vendors agree to accept the following in full satisfaction of
the Purchase Price as follows:
(a) Cash on Closing - $500,000.00 payable to ▇▇▇▇ ▇▇▇▇▇▇ by certified
cheque or bank draft;
(b) Delivery of a Share Certificate in the name of L & S ▇▇▇▇▇▇
Enterprises Inc. representing 400,000 Class "B" Convertible Special
Shares of the Purchaser (the "Special Shares") which Special Shares
the parties agree have a redemption value of $12,000,000.00 prior to
payment of the dividend referred to in Section 2.3(c) and the
redemption value shall, after payment of the said dividend, be
$10,500,000.00. The Special Shares shall have the rights, privileges
and conditions as set out in the Amended Articles of Incorporation
of the Purchaser, a copy of which is attached as Schedule "C" (the
"Amended Articles") and a Unanimous Shareholders Agreement (the
"USA"), a copy of which is attached hereto as Schedule "D". The
Special Shares shall be converted into 350,000 Common Shares of the
Purchaser contemporaneously with the successful completion of an
initial public offering on the New York, NASDAQ, or Toronto stock
exchange, or any other recognized major stock exchange, by the
Purchaser for no less than Thirty ($30.00) Dollars per share (the
"IPO") or shall be fully paid for no later than three (3) years from
the Effective Date by redemption of the Special Shares as provided
for in Article VI herein; and
(c) Contemporaneously with the issuance of the 400,000 Special Shares of
the Purchaser to L & S ▇▇▇▇▇▇ Enterprises Inc., the Purchaser shall
declare a dividend of $1,500,000.00 on the Special Shares which
dividend shall be paid immediately prior to the Purchaser's
successful completion of the IPO. Except as provided for in this
Agreement, in the Amended Articles and in the USA
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the Vendor will have no other greater or lessor rights with respect
to dividends or division of assets on liquidation, than it would if
the Special Shares were converted to the 350,000 Common Shares.
2.4 ADVANCE TO VENDOR
Contemporaneously with the Closing, the Purchaser shall loan L & S ▇▇▇▇▇▇
Enterprises Inc. the sum of $1,500,000.00 to be repayable without interest and
as a set off against the declared but unpaid dividend referred to in Section
2.3(c) above just prior to the successful completion of the IPO. The said loan
shall be evidenced by a Promissory Note in the form set out in Schedule "E"
hereto (the "Promissory Note").
2.5 REDEMPTION OF CLASS "C" SHARES & REPAYMENT OF SHAREHOLDERS' LOAN
It shall be a condition precedent to this Agreement that on Closing the
Corporation shall redeem the 200 Class "C" Shares held by ▇▇▇▇ ▇▇▇▇▇▇ by way of
payment of the redemption value of $166,666.00 ($833.33 per share) and the
Corporation shall repay the shareholder's loan owing to the ▇▇▇▇ ▇▇▇▇▇▇ in the
approximate amount of $250,000.00.
2.6 INTEREST
Interest shall be payable by the Purchaser to the Vendor on the sum of
$2,000,000.00 from the Effective Date to the date of payment at the rate of
eight (8%) per cent per annum calculated daily not in advance.
ARTICLE III - CLOSING ARRANGEMENTS
3.1 CLOSING:
Time shall be of the essence of this Agreement. The Closing of this
transaction shall take place at 11:00 a.m. on the Closing Date at the offices of
the Corporation in Sherwood Park, Alberta or at such other place as may be
approved in writing by the parties hereto.
3.2 INTERIM PERIOD
During the Interim Period the Vendors and the Purchaser shall consult
about and jointly approve all material acts and decisions in respect of the
Corporation. Subject thereto the Vendors shall cause the business of the
Corporation (including its bank accounts and loans) to be carried on in the
normal course.
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3.3 CLOSING PROCEDURES:
At or before the Closing on the Closing Date, the Vendors and the
Purchaser shall take or cause to be taken all actions, steps and corporate
proceedings necessary or desirable to validly and effectively approve or
authorize the completion of the transactions herein provided for, and upon
fulfillment of all the conditions set out in Article 4 hereof which have not
been waived in writing as herein provided, the Vendors shall deliver to the
Purchaser:
(a) Certificates representing the Shares, in fully transferable form and
accompanied by resolutions authorizing the transfer thereof. (The
Vendors shall cause the transfers of the Shares to be fully entered
in the Registers of the Corporation at Closing);
(b) A Certificate of the Vendors dated as of the Effective Date, to the
effect that, the representations and warranties set forth in Section
5.1 hereof are true and correct;
(c) The Vendors' Solicitor's Closing Opinion;
(d) A Postponement Agreement in a form acceptable to the Third Party
Lender of the Security Agreement given by the Corporation, as
Debtor, in favour of ▇▇▇▇ ▇▇▇▇▇▇, as Secured Party, dated November
22, 1994 as amended by amendment dated November 8, 1995 (which
Security Agreement is hereinafter referred to as the "Western GSA");
(e) The executed Employment Agreement, a true copy of which is attached
as schedule "F";
(f) The executed Promissory Note;
(g) The Agreement of L & S ▇▇▇▇▇▇ Enterprises Inc. to postpone its
interest in the Purchaser in favour of a third party lender, on
notice in writing to the Vendor by the Purchaser in the form
attached as Schedule "K". L & S ▇▇▇▇▇▇ Enterprises Inc. agrees to
execute and deliver such documents as may be reasonably required by
the Purchaser or by the third party lender to evidence such
postponement;
(h) A Termination Agreement with respect to the Unanimous Shareholders
Agreement dated June 7, 1997 between ▇▇▇▇ ▇▇▇▇▇▇, the Purchaser and
the Corporation;
and upon fulfilment of the foregoing provisions of this Section 3.3, and upon
fulfilment of all the conditions set out in Section
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4.1 hereof which have not been waived in writing as herein provided, the
Purchaser shall deliver to the Vendors:
(a) The Cash on Closing of $500,000.00 described in Section 2.3(a)
hereof;
(b) The loan amount of $1,500,000.00 described in paragraph 2.4 hereof;
(c) The Share Certificate for the Special Shares described in section
2.3(b) hereof;
(d) A certified copy of the resolution declaring the dividend described
in Section 2.3(c) hereof;
(e) Proof of compliance with all Conditions Precedent to this Agreement
including redemption of ▇▇▇▇ ▇▇▇▇▇▇'▇ Class "C" Shares and repayment
of the ▇▇▇▇ ▇▇▇▇▇▇'▇ Shareholder Loan as described in Section 2.5;
(f) The executed USA;
(g) The Certificate of the Purchaser dated as of the effective dated as
of the Effective Date to the effect that the representations and
warranties set forth in Section 5.2 hereof are true and correct;
(h) The approval in writing of the Preference Shareholders described in
Section 4.1(e); and
(i) The Purchaser's Solicitor's Closing Opinion;
ARTICLE IV - CONDITIONS OF CLOSING
4.1 CONDITIONS FOR THE BENEFIT OF PURCHASER:
The Purchaser shall not be obliged to complete the purchase herein
provided for unless, on the Closing Date, each of the following conditions shall
have been, it being understood that the conditions are included for the
exclusive benefit of the Purchaser and may be waived in writing, in whole or in
part, by the Purchaser at any time, and the Vendors shall use their best efforts
to ensure that the conditions are fulfilled on or before the Closing Date.
(a) CORPORATE AND LEGAL PROCEEDINGS AND APPROVALS
All corporate and legal proceedings and approvals as considered
necessary by the Purchaser's Solicitor shall have been taken or
obtained to permit the Vendors to enter into this Agreement to sell
the Shares to the Purchaser.
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(b) REPRESENTATIONS AND WARRANTIES
The representations and warranties set forth in Section 5.1 hereof
shall be true and correct in all material respects as of the Closing
Date.
(c) COMPLIANCE WITH AGREEMENT
All of the terms, covenants and agreements set forth in this
Agreement to be complied with or performed by the Vendors at or
before the Closing Date shall have been complied with or performed
by the Vendors on or before the Closing Date.
(d) EMPLOYMENT AGREEMENT
▇▇▇▇ ▇▇▇▇▇▇ shall execute and deliver to the Purchaser the
Employment Agreement.
(e) APPROVAL OF THE PREFERENCE SHAREHOLDERS
The approval in writing of the Preference Shareholders to the
transactions evidenced by this Share Purchase Agreement shall have
been obtained.
(f) POSTPONEMENT
L & S ▇▇▇▇▇▇ Enterprises Inc. shall execute and deliver to the
Purchaser a Postponement Agreement in a form acceptable to the third
party lender subject only to payment of the dividend referred to in
paragraph 2.3(c).
(g) TERMINATION OF UNANIMOUS SHAREHOLDERS AGREEMENT
▇▇▇▇ ▇▇▇▇▇▇, the Purchaser and the Corporation shall execute a
Termination Agreement with respect to the Unanimous Shareholders
Agreement dated June 7, 1997 between ▇▇▇▇ ▇▇▇▇▇▇, the Purchaser and
the Corporation.
If any of the foregoing conditions shall not have been fulfilled on or
before the Closing Date, the Purchaser may terminate this Agreement by notice in
writing to the Vendor, in which event the Purchaser shall be released from all
obligations under this Agreement, and (unless the Purchaser can show that the
condition relied upon could reasonably have been performed by the Vendor) the
Vendor shall also be released from all obligations hereunder, but the Purchaser
shall be entitled to waive compliance with any such condition, in whole or in
part, if it shall see fit to do so, without prejudice to its rights of
termination in the event of non-fulfilment of any other condition, in whole or
in part.
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4.2 CONDITIONS FOR THE BENEFIT OF THE VENDORS
The Vendors shall not be obliged to consummate the transactions herein
provided for unless, on the Closing Date, each of the following conditions shall
have been satisfied, it being understood that the conditions are included for
the exclusive benefit of the Vendors and may be waived in writing, in whole or
in part, by the Vendors at any time, and the Purchaser shall use their best
efforts to ensure that the conditions are fulfilled on or before the Closing
Date:
(a) CORPORATE & LEGAL PROCEEDINGS AND APPROVALS
All corporate and legal proceedings and approvals as considered
necessary by the Vendors Solicitor shall have been taken or obtained
to permit the Purchaser to enter into this Agreement and to issue
the Special Shares to L & S ▇▇▇▇▇▇ Enterprises Inc. pursuant to this
Agreement.
(b) REPRESENTATIONS AND WARRANTIES
The representations and warranties set forth in Section 5.2 hereof
shall be true and correct in all material respects of the Closing
Date.
(c) COMPLIANCE WITH AGREEMENT
All of the terms, covenants and agreements set forth in this
Agreement to be complied with or performed by the Purchaser at or
before the Closing Date shall have been complied with or performed
by the Purchaser on or before the Closing Date.
(d) APPROVAL OF PREFERENCE SHAREHOLDERS
The approval in writing of the Preference Shareholders described in
Section 4.1(e) shall have been obtained.
(e) REDEMPTION AND REPAYMENT BY CORPORATION
The Corporation shall have redeemed the Vendors' Class "C" Shares in
the Corporation and repaid the Vendors' Shareholders Loan to the
Corporation.
In case any of the foregoing conditions shall not have been fulfilled on
or before the Closing Date, the Vendors may terminate this Agreement by notice
in writing to the Purchaser, in which event the Vendors shall be released from
all obligations under this Agreement, and (unless the Vendors can show that the
condition relied upon could reasonably have been performed by the Purchaser) the
Purchaser shall also be released from all obligations hereunder; but the Vendors
shall be entitled to waive compliance
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with any such condition, in whole or in part, if they shall see fit to do so,
without prejudice to its rights of termination in the event of non-fulfilment or
any other condition in whole or in part.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly and severally represent and warrant to the Purchaser
as follows:
(a) GOOD STANDING
The Corporation is now and, on the Closing Date will be, a
Corporation:
1. duly incorporated, organized and validly subsisting and in
good standing under the laws of Alberta, and
2. duly authorized and licensed to own its property and to carry
on its businesses, as presently owned and carried on by it.
(b) AUTHORIZED AND ISSUED CAPITAL OF THE CORPORATION
The authorized capital of the Corporation is now, and on the Closing
Date shall be, an unlimited number of Class "A", "B", "C", "D" and
"E" Shares of which on Closing 300 Class "A" Shares will validly be
issued and outstanding as fully paid and non-assessable, and will
be the only outstanding Shares of the Corporation.
(c) NO OPTIONS
There is not now, nor at Closing will there be, any agreement or
option existing pursuant to which the Corporation is or might be
required to issue any further shares of its capital.
(d) OWNERSHIP OF SHARES
The Vendors are now, and at Closing will be, the beneficial owners
of record of the Shares, with good and marketable title thereto,
free and clear of any pledge, lien, charge, encumbrance or security
interest of any kind and of any portion or other right thereto; and
has now, and at Closing will have, the power and authority and right
to sell the same in accordance with the terms of this Agreement. The
Vendors are residents of Canada within the meaning of the Income Tax
Act (Canada).
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(e) SUBSIDIARIES
The Corporation has now, and at Closing will have no wholly owned
subsidiaries except West Coast Waste Systems Inc. and Lacey Garbage
Disposal Ltd.
(f) RECORDS COMPLETE
All material financial transactions of the Corporation have now, and
at Closing will have been properly recorded in its books and
records.
(g) COLLECTIVE AGREEMENTS
Except as has been disclosed to the Purchaser, the Corporation is
Not now nor at Closing will be a party to any contract with or
commitment to, any labour union or employee association or
collective agreement.
(h) BENEFIT PLANS
Except as has been disclosed to the Purchaser, the Corporation at
Closing will not be a party to or operate any bonus, pension, profit
sharing, deferred compensation, retirement, hospitalization
insurance, medical insurance or similar plan or practice, formal and
informal, in effect with respect to any employees or others.
(i) EMPLOYMENT CONTRACTS
Except as has been disclosed to the Purchaser, the Corporation is
not now nor at Closing will be bound by any agreement whether
written or oral with any employee provided for a specified period of
notice of termination nor providing for any fixed term of employment
and as now and at Closing will have no employees which cannot be
dismissed upon such notice as common or statute law may prescribe.
(j) OTHER CONTRACTS
Except as has been disclosed to the Purchaser, the Corporation is
not now nor at Closing will be bound by any outstanding contract or
commitment except those entered into in the ordinary course of
business and having not more than twelve months to run; and is not
now nor at Closing will be material in default under any material
contract by which it is bound or under which it is entitled to the
benefits of and advantages thereof.
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(k) TITLE TO ASSETS
The Corporation now has, and at Closing will have, a good and
marketable title to all its assets, free and clear of any claim,
liens, encumbrances and security interests whatsoever except as
listed in Schedule "G" hereto.
(l) TAX MATTERS
Except for the "stub" filings for June 6, 1997 necessitated by the
change of control effected at that time, the Corporation is not now
and at Closing will not be in arrears or in default in respect of
the filing of any required federal, provincial or municipal tax or
other returns; and at each of such times:
1. All taxes, filing fees and other assessments due and payable
or collectible from the Corporation shall have been payed or
collected;
2. No claim for additional taxes, filing fees or other amounts
and assessments has been made which have not been paid; and
3. To the best of the Vendor's knowledge, no returns shall have
contained any misstatement or concealed any statement that
should have been included therein.
The Corporation has withheld and will withhold up to the Closing
Date from each payment made to any employee, the amount of all taxes
(included but not limited to income tax) and other deductions
required to be withheld therefrom and have been paid or will pay
such amount or other receiving authority.
(m) NO BREACH CAUSED BY THIS AGREEMENT
Neither the execution nor delivery of this Agreement, nor the
fulfilment or compliance with any of the terms hereof, will conflict
with or result in a breach of the terms, conditions or provisions
of, or constitute a default under the Articles and By-laws, as
amended, of the Corporation, or any material agreement or instrument
to which the Vendors or the Corporation or the Business is subject,
or will require any consent or other action by any administrative or
governmental body.
(n) LITIGATION
There are now, and at Closing will be, no actions, claims, demands
or other proceedings, pending or
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threatened before any court or administrative agency, which could
materially adversely affect the financial condition or overall
operations of the Corporation, and no judgment, order or decree,
enforceable against the Corporation which involves or may involve,
or restricts or may restrict, or requires or may require, the
expenditure of money as a condition to or a necessity for, the right
of ability of the Corporation to conduct its business in the manner
in which such business has been carried on prior to the date hereof
except as set out in Schedule "J" hereto.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS DURING INTERIM PERIOD
Except with the prior written consent of the Purchaser during
the Interim Period:
1. Business in Normal Course - the Business has and will have
been carried in the normal course of business, consistent with
previous fiscal periods;
2. No Dividends - no dividends, redemptions of shares, payments
or other distributions to the Vendor by the Corporation will
have been made, agreed to, be made or declared except as
provided for in Section 2.3(c); and
3. Articles - no amendments will have been made to the Articles
or By-laws of the Corporation.
5.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors as follows:
(a) GOOD STANDING AND CORPORATE AUTHORITY
The Purchaser is now, and on the Closing Date will be, a
Corporation:
1. duly incorporated, organized and validly subsisting and in
good standing under the laws of Ontario;
2. duly authorized and licensed to own its property and to carry
on its businesses, as presently owned and carried on by it;
and
3. with good right, full corporate power and absolute authority
to enter into this Agreement and to issue the Special Shares
in manner contemplated herein
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and to perform all of the Purchaser's obligations under this
Agreement.
(b) AUTHORIZED AND ISSUED CAPITAL OF THE PURCHASER
The authorized capital of the Purchaser on the Closing Date shall be
an unlimited number of Common Shares, an unlimited number of
Convertible Shares and 400,000 Class "B" Special Shares of which on
Closing 1,031,110 Common Shares, 88,889 warrants for Common Shares
And 8,000 Convertible Preference Shares will have been validly
issued and outstanding as fully paid and non-assessable, and will be
the only outstanding Shares of the Purchaser.
(c) NO OPTIONS
There is not now, or at Closing will there be, any agreement or
option existing pursuant to which the Purchaser is or might be
required to issue any further shares of its capital except those
options granted to ▇▇▇▇ Kingswood as previously disclosed to the
Vendors.
(d) AUTHORIZATION
The Purchaser and its shareholders and board of directors have taken
all necessary or desirable actions, steps and corporate and other
proceedings to approve or authorize validly and effectively, the
entering into, and the execution, delivery and performance of this
Agreement and the issuance of the Special Shares by the Purchaser to
the Vendors. This Agreement is a legal, valid and binding obligation
of the Purchaser, enforceable against it in accordance with its
terms.
(e) SUBSIDIARIES
Except as has been disclosed to the Vendors, the Purchaser has now,
and at Closing will have no wholly or partially owned subsidiaries.
(f) RECORDS COMPLETE
All material financial transactions of the Purchaser have now, and
at Closing will have been properly recorded in its books and
records.
(g) COLLECTIVE AGREEMENTS
Except as has been disclosed to the Vendors, the Purchaser is not
now nor at Closing will be a party to any contract with or
commitment to, any labour union or employee association or
collective agreement.
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(h) CONTRACTS AFFECTED BY ISSUANCE OF SPECIAL SHARES
The Purchaser is not now nor at Closing will be bound by any
outstanding contract or commitment which requires prior approval of
the issuance of the Special Shares to the Vendor by the Purchaser
except for the Preference Shareholders.
(i) NO OTHER CONTRACTS
Except as has been disclosed to the Vendor, the Purchaser is not now
nor at Closing will be bound by any outstanding contract or
commitment except those entered into in the ordinary course of
business and having not more than twelve months to run; and is not
now nor at Closing will be materially in default under any material
contract by which it is bound or under which it is entitled to the
benefits of and advantages thereof.
(j) TITLE TO ASSETS
The Purchaser now has, and at Closing will have, a good and
marketable title to all its assets, free and clear of any claim,
liens, encumbrances and security interests whatsoever except as
listed in Schedule "H" hereto.
(k) TAX MATTERS
The Purchaser is not now and at Closing will not be in arrears or in
default in respect of the filing of any required federal, provincial
or municipal tax or other returns; and at each of such times:
1. All taxes, filing fees and other assessments due and payable
or collectible from the Purchaser shall have been payed or
collected;
2. No claim for additional taxes, filing fees or other amounts
and assessments has been made which have not been paid; and
3. To the best of the Purchaser's knowledge, no returns shall
have contained any misstatement or concealed any statement
that should have been included therein.
The Purchaser has withheld and will withhold up to the Closing Date
from each payment made to any employee, the amount of all taxes
(included but not limited to income tax) and other deductions
required to be withheld therefrom and have been paid or will pay
such amount or other receiving authority.
16
(l) NO BREACH CAUSED BY THIS AGREEMENT
Neither the execution nor delivery of this Agreement, nor the
fulfilment or compliance with any of the terms hereof, will conflict
with or result in a breach of the terms, conditions or provisions
of, or constitute a default under the Articles and By-laws, as
amended, of the Purchaser, or any material agreement or instrument
to which the Vendor or the Purchaser or the Business is subject, or
will require any consent or other action by any administrative or
governmental body.
(m) LITIGATION
There are now, and at Closing will be, no actions, claims, demands
or other proceedings, pending or threatened before any court or
administrative agency, which could materially adversely affect the
financial condition or overall operations of the purchaser, and no
judgment, order or decree, enforceable against the Purchaser which
involves or may involve, or restricts or may restrict, or requires
or may require, the expenditure of money as a condition to or a
necessity for, the right of ability of the Purchaser to conduct its
business in the manner in which such business has been carried on
prior to the date hereof.
(n) CONTRACTUAL AND REGULATORY APPROVALS
The Purchaser is not under any obligation, contractual or otherwise,
to request or obtain the consent of any person, and no permits,
licenses, certifications, authorizations or approvals of, or
notifications to, any federal, provincial, municipal or local
government or governmental agency, board, commission or authority
are required to be obtained by the Purchaser;
(o) COMPLIANCE WITH CONSTATING DOCUMENTS, AGREEMENTS AND LAWS
The execution, delivery and performance of this Agreement and each
of the other agreements contemplated or referred to herein by the
Purchaser, and the completion of the transactions contemplated
hereby, will not constitute or result in a violation or breach or
default under, or cause the acceleration of any obligations of the
Purchaser under:
1. Any term or provision of any of the articles, by-laws or other
constating documents of the Purchaser;
17
2. Subject to obtaining the consents of the Preferred
Shareholders referred to in Section 4.1(f) hereof, the terms
of any agreement (written or oral), indenture, instrument or
understanding or other obligation or restriction to which the
Purchaser is a party or by which it is bound; or
3. Any term or provision of any of licenses or any order of any
court, governmental authority or regulatory body or any law or
regulation of any jurisdiction in which the Purchaser's
business is carried on.
(p) FINANCIAL RECORDS
All material financial transaction of the Purchaser have been
recorded in the financial books and records of the Purchaser in
accordance with good business practice, and such financial books and
records:
1. Accurately reflect in all material respects the bass for the
financial condition and the revenues, expenses and results of
operations of the Purchaser shown in the Purchaser's internal
monthly financial statements; and
2. Together with all disclosures made in this Agreement or in the
Schedules hereto, present fairly in all material respects the
financial condition and the revenues, expenses and results of
the operations of the Purchaser as of and to the date hereof.
(q) PARTNERSHIPS OR JOINT VENTURES
The Purchaser is not, and at Closing will not be, a partner or
participant in any partnership, joint venture, profit-sharing
arrangement or other association of any kind and is not party to any
agreement under which the Purchaser agrees to carry on any part of
the Purchaser's Business or any other activity in such manner or by
which the Purchaser agrees to share any revenue or profit with any
other person.
(r) RESTRICTIONS ON DOING BUSINESS
The Purchaser is not a party to nor will be at Closing or bound by
any agreement which would restrict or limit its right to carry on
any business or activity or to solicit business from any person or
in any geographical area or otherwise to conduct its business as the
Purchaser may determine. The Purchaser is not subject to any
18
legislation or any judgment, order or requirement of any court or
governmental authority which is not of general application to
persons carrying on a business similar to the Purchaser's business.
There are no facts or circumstances which could materially adversely
affect the ability of the Purchaser to continue to operate its
business as presently conducted following the completion of the
transactions contemplated by this Agreement.
(s) GUARANTEES, WARRANTIES AND DISCOUNTS
Except as has been disclosed to the Vendors, the Purchaser is not a
party to or bound by any material agreement of guarantee,
indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any person other than the guaranteed redemption
of the Vendors' Shares in the Purchaser;
(t) COMPLIANCE WITH LAWS
The Purchaser is not in violation of any federal, provincial,
municipal or other law, regulation or order of any government or
governmental or regulatory authority, domestic or foreign;
(u) DISCLOSURE
No representation or warranty contained in this section 5.02 and no
statement contained in any schedule, certificate, list, summary or
other disclosure document provided or to be provided to the Vendor
pursuant hereto or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact which is
necessary in order to make the statements contained therein not
misleading.
(v) OUTSTANDING AGREEMENTS
The Purchaser is not a party to or bound by any outstanding or
executory agreement, contract or commitment, whether written or oral
except for:
1. Any contract, lease or agreement described or referred to in
this Agreement or in the schedules hereto; and
2. Any contract, lease or agreement made in the ordinary course
of the routine daily affairs of the Purchaser.
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(w) GOOD STANDING OF AGREEMENTS
The Purchaser is not in default or breach of any of its obligations
under any one or more contracts, agreements (written or oral),
commitments, indentures or other instruments to which it is a party
or by which it is bound and there exists no state of facts which,
after notice or lapse of time or both, would constitute such a
default or breach. All such contracts, agreements, commitments,
indentures and other instruments are now in good standing and in
full force and effect without amendment thereto, the Purchaser is
entitled to all benefits thereunder and the other parties to such
contracts, agreements, commitments, indentures and other instruments
are not in default or breach or any of their obligations thereunder.
There are no contracts, agreements, commitments, indentures or
other instruments under which the Purchaser's rights or the
performance of its obligations are dependent upon or supported by
the guarantee of or any security provided by any other person.
5.3 LIMITATIONS AND SET OFF
(a) The representations and warranties of the Vendor contained herein
shall survive the Closing of the sale and the purchase of Shares
herein provided for and, notwithstanding such Closing, shall
continue in full force and effect for the benefit of the Purchaser
for a period of three (3) year following the Closing Date, after
which time the Vendor shall be released from all obligations and
liabilities hereunder in respect of such representations and
warranties except with respect to any claims made by the Purchaser
in writing prior to the expiration of such period.
(b) The representations and warranties of the Purchaser herein contained
shall survive the Closing of the sale and purchase of Shares herein
provided for and, notwithstanding such Closing, shall continue in
full force and effect for the benefit of the Vendor for a period of
three (3) year following the Closing Date, after which time the
Purchaser shall be released from all obligations and liabilities
hereunder in respect of such representations and warranties except
with respect to any claims made by the Vendor in writing prior to
the expiration of such period.
20
representations and warranties except with respect to any claims
made by the Vendor in writing prior to the expiration of such
period.
ARTICLE VI - RIGHTS OF VENDORS FOLLOWING CLOSING
6.1 The Vendors and the Purchaser agree that following Closing:
(a) ▇▇▇▇ ▇▇▇▇▇▇ shall sit on the Purchaser's Board of Directors (the
"Board") as a director of the Purchaser. The Board shall be enlarged
to four (4) directors, two of whom shall be nominees of Branard, one
shall be a nominee of the Preference Shareholders and one a nominee
of the Vendor. A Branard nominee shall be entitled to a casting or
deciding vote in the event of a tie. ▇▇▇▇ ▇▇▇▇▇▇ shall continue to
sit on the Board of Directors of the Corporation and have signing
authority for the Corporation to a maximum of $100,000.00 per
transaction without prior approval of the Board of Directors.
(b) In the event that the Purchaser does not complete the IPO of its
Common Shares at a share price of at least $30.00 per Share and/or
in the event at least 50% of the Common Shares of the Purchaser
which the Vendor receives on Closing are not sold for at least
$30.00 per share on a secondary offering of the said IPO within
three years of the Effective Date the Vendors are hereby entitled to
require the Purchaser to redeem the Vendor's Special Shares or any
Common Shares into which the Special Shares have been converted as
applicable at a price which is the greater of:
1. fair market value, or
2. a price to be calculated by multiplying the
Corporation's EBITDA for the six months prior to the
third year anniversary after the Effective Date, plus
its forecasted EBITDA for the next six months following
the third year anniversary after the Effective Date, by
six and by deducting from the product of that
calculation the sum of $22,000,000.00 and any debt
incurred by the Corporation or equity advances by the
Purchaser after Closing for the purpose of acquisitions
or internal growth, which sum shall then be divided by
three and deducting from the product of that calculation
the sum of $2,000,000.00, or
3. $10,500,000.00.
21
(which price is herein referred to as the "Redemption Price").
PROVIDED THAT in the event the Purchaser does complete the IPO but
at a share price of less than $30.00 per share the Purchaser shall
have the right to make up the difference between the initial
offering price per share and $30.00 per share by issuance of
additional Common Shares to the Vendors or by the payment of the
cash difference to the Vendors at the Purchaser's sole option and in
such event the parties hereto agree that the IPO shall be deemed for
the purposes of this Agreement to have been completed at $30.00 per
share.
(c) In the event the Purchaser successfully completes the IPO at a share
price of at least $30.00 per share within three (3) years of the
Effective Date then the Vendors shall have the option, upon written
notice to the Purchaser delivered at least thirty (30) days prior to
the initial filing of the registration statement for such IPO, to
require the Purchaser to include the Vendors' Common Shares of a
value up to $5,250,000.00 (which Common Shares were issued as a
result of the conversion of the Special Shares) as a secondary
offering in the IPO at not less than $30.00 per share. The Purchaser
shall have the option upon receipt of such written notice and prior
to the IPO, to fulfil such obligation by purchasing at a price of
$30.00 per share that number of Common Shares requested by the
Vendors to be included.
6.2 In order to exercise the entitlement referred to in Section 6.1(b) hereof
the Vendors shall:
1. Tender to the Purchaser at its registered office a
request in writing specifying:
A. that the Vendors desire to have the Special Shares
registered in the name of the Vendors redeemed by
the Corporation; and
B. the business day, which shall not be less than 30
days after the day on which the request in writing
is given to the Purchaser, on which the Vendors
desire to have the Purchaser redeem the Special
Shares (the "Redemption Date"), together with the
share certificates, representing the Special
Shares;
2. Upon receipt of such request and share certificates, the
Purchaser shall, on the
22
Redemption Date and thereafter such shares shall cease
to be entitled to dividends and the Vendors shall not be
entitled to exercise any of the rights of shareholders
in respect thereof, unless payment of the applicable
Redemption Price is not made on the Redemption Date, in
which case the rights of the Vendors shall remain
unaffected.
6.3 In consideration of the Vendors entering into this transaction for the sale
and purchase of the Shares, the Purchaser and the Corporation jointly and
severally hereby unconditionally guarantee prompt payment to the Vendor of the
Redemption Price on the terms stipulated in Section 6.1(b). The guarantee of
Western shall be supported by the Western GSA. It is understood and agreed by
the parties hereto that the Vendors would not have entered into this Agreement
if it were not for this guarantee.
ARTICLE VII - INDEMNIFICATION
7.1 INDEMNIFICATION OF PURCHASER
The Vendors agree to indemnify and save harmless the Purchaser from or
against any claims, demands, debts, actions, causes of action or other
proceedings, for a period of three (3) years from the Closing Date, arising from
or in respect of:
(a) Any non-performance or non-fulfilment of any covenant or agreement
on the part of the Vendors contained in this Agreement or in any
document given in order to carry out the transactions contemplated
hereby;
(b) Any misrepresentation, inaccuracy, incorrectness or breach of any
representation or warranty made by the Vendors contained in this
Agreement or contained in any document or certificate given in order
to carry out the transactions contemplated hereby;
(c) All costs and expenses including, without limitation, legal fees on
a solicitor-and-client basis, incidental to or in respect of the
foregoing;
The obligations of indemnification by the Vendors pursuant to paragraph
(a) of this section will be subject to the limitations referred to in section
5.3 hereof with respect to the survival of the representations and warranties by
the Vendors.
7.2 INDEMNIFICATION OF VENDORS
The Purchaser agrees to indemnify and save harmless the Vendors from or
against any claims, demands, debts, actions, causes
23
of action or other proceedings, for a period of three (3) years from the Closing
Date, arising from or in respect of:
(a) Any non-performance or non-fulfilment of any covenant or agreement
on the part of the Purchaser contained in this Agreement or in any
document given in order to carry out the transactions contemplated
hereby;
(b) Any misrepresentation, inaccuracy, incorrectness or breach of any
representation or warranty made by the Purchaser contained in this
Agreement or contained in any document or certificate given in order
to carry out the transactions contemplated hereby;
(c) All costs and expenses including, without limitation, legal fees on
a solicitor-and-client basis, incidental to or in respect of the
foregoing;
The obligations of indemnification by the Purchaser pursuant to paragraph
(a) of this section will be subject to the limitations referred to in section
5.3 hereof with respect to the survival of the representations and warranties by
the Purchaser.
ARTICLE VIII - GENERAL
8.1 INTERPRETATION:
(a) DEFINITIONS
Where used herein or in any amendment or supplement hereof, unless
the context otherwise requires, the words and phrases with initial
capitals set forth in Article 1.0 hereto will have the meanings so
set forth therein.
(b) SCHEDULES
Schedules and other documents attached or referred to in this
Agreement are an integral part of this Agreement.
(c) SECTIONS AND HEADINGS
The division of this Agreement into Articles, Section and
Subsections, and the insertion of headings, are for convenience of
reference only, and shall not affect the construction or
interpretation hereof.
(d) EXTENDED MEETINGS
Words importing the singular number include the plural and
vice-versa, words importing the masculine gender include the
feminine and neuter genders.
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(e) FUNDS
All dollar amounts referred to in this Agreement are in lawful money
of Canada.
8.2 EXPENSES
Each party shall be responsible for its own legal and audit fees and other
charges incurred in connection with the preparation of this Agreement, all
negotiations between the parties and the consummation of the transactions
contemplated hereby.
8.3 FURTHER ASSURANCES
Each of the parties hereto will, from time to time, at the other's request
and expense and without further consideration, execute and deliver such other
instruments of transfer, conveyance and assignment and take such further action
as the other may require to more effectively complete any matter provided
herein.
8.4 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties and,
except as herein stated and in the instruments and documents to be executed and
delivered pursuant hereto, contains all of the representations and warranties of
the respective parties. There are no oral representations and warranties among
the parties of any kind. This Agreement may not be amended or modified in any
respect except by written instrument signed by both parties.
8.5 NON-MERGER
Each party hereby agrees that all provisions of this Agreement, other than
the conditions in Article IV and (subject to the provisions of Article 5.4) the
warranties and representations contained in Article V, shall forever survive the
execution and delivery of this Agreement and any and all documents delivered in
connection herewith.
8.6 APPLICABLE LAW
This Agreement shall be interpreted in accordance with the laws of the
Province of Alberta.
8.7 NOTICES
Any notice required or permitted to be given hereunder shall be in writing
and shall be effectively given if (1) delivered personally, (2) sent by prepared
courier service or mail, or (3) sent prepaid by telecopier, telex or other
similar means of electronic communication (confined on the same or following day
by
25
prepaid mail) addressed, in the case of the notice to the Vendor, as follows:
▇▇▇▇ ▇▇▇▇▇▇/L & S ▇▇▇▇▇▇ Enterprises Inc.
206, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
and in the case of notice to the Purchaser, as follows:
Capital Environmental Resource Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Any notice so given shall be deemed conclusively to have been given and
received when so personally delivered or sent by telex, telecopier or other
electronic communications, or on the second day following the sending thereof by
private courier or mail. Any party hereto or others mentioned above may charge
any particulars of its address for notice by notice to the others in the manner
aforesaid.
8.8 SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the
parties hereto, their heirs, the executors, administrators, successors and
assigns.
*
*
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*
*
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8.9 EXECUTION BY COUNTERPART & EXECUTION BY COUNTERPART AND FACSIMILE
This Agreement, and any supplementary agreements or documents required by
the terms hereof, may be executed by counterpart and, provided all parties
execute one copy of the Agreement, each copy bearing an original signature of
one party shall be deemed to be an original. This Agreement may be executed by
facsimile machine and each facsimile signature shall be deemed to be an original
signature.
IN WITNESS WHEREOF the parties of the First and Third Parts have executed
this Agreement by the hand of their proper signing authorities under their
Corporate Seals, and the parties of the Second Part have hereunto signed and
sealed this Agreement.
L & S ▇▇▇▇▇▇ ENTERPRISES INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
[ILLEGIBLE] /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ---------------------------------------
Witness to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
CAPITAL ENVIRONMENTAL RESOURCE INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
WESTERN WASTE SERVICES INC.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇