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Exhibit 10.44
AGREEMENT AND PLAN OF MERGER
Dated as of September 21, 1998, by and among
Waste Connections, Inc.
WCI Acquisition Corporation
Evergreen Waste Systems Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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TABLE OF CONTENTS
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1. MERGER............................................................................. 1
1.1 The Merger.................................................................. 1
1.2 Effective Time.............................................................. 1
1.3 Effects of the Merger....................................................... 2
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation........... 2
1.5 Directors................................................................... 2
1.6 Officers.................................................................... 2
1.7 Closing Time and Place...................................................... 2
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES;
DISSENTING SHARES.................................................................. 3
2.1 Merger Consideration........................................................ 3
2.2 Additional Contingent Merger Consideration.................................. 3
2.3 Conversion of Capital Stock................................................. 5
2.4 Exchange of Certificates.................................................... 6
2.5 [INTENTIONALLY OMITTED]..................................................... 6
2.6 No Further Ownership Rights in Any Corporation's Stock...................... 6
2.7 Lost Certificates........................................................... 6
2.8 Allocation of the Merger Consideration...................................... 6
2.9 Excluded Assets............................................................. 7
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND
THE SHAREHOLDERS................................................................... 7
3.1 Organization, Standing and Qualification.................................... 7
3.2 Capitalization.............................................................. 7
3.3 All Stock Being Acquired.................................................... 7
3.4 Authority for Agreement and Merger Documents................................ 7
3.5 No Breach or Default........................................................ 8
3.6 Subsidiaries................................................................ 8
3.7 Financial Statements........................................................ 8
3.8 Liabilities................................................................. 8
3.9 [INTENTIONALLY OMITTED]..................................................... 10
3.10 Permits and Licenses........................................................ 10
3.11 Certain Receivables......................................................... 11
3.12 Fixed Assets and Real Property.............................................. 12
3.13 [INTENTIONALLY OMITTED]..................................................... 13
3.14 Contracts and Agreements; Adverse Restrictions.............................. 13
3.15 Insurance................................................................... 13
3.16 Personnel................................................................... 14
3.17 Benefit Plans and Union Contracts........................................... 14
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3.18 Taxes....................................................................... 15
3.19 Copies Complete; Required Consents.......................................... 16
3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables....................... 16
3.21 No Change With Respect to the Corporation................................... 17
3.22 Closing Date Debt; Effective Date Current Assets and Effective Date
Current Liabilities......................................................... 18
3.23 Bank Accounts............................................................... 19
3.24 Compliance With Laws........................................................ 19
3.25 Powers of Attorney.......................................................... 20
3.26 Underground Storage Tanks................................................... 20
3.27 Patents, Trademarks, Trade Names, etc....................................... 21
3.28 Assets, etc., Necessary to Business......................................... 21
3.29 Condemnation................................................................ 22
3.30 Suppliers and Customers..................................................... 22
3.31 Absence of Certain Business Practices....................................... 22
3.32 Related Party Transactions.................................................. 22
3.33 Disclosure Schedules........................................................ 22
3.34 No Misleading Statements.................................................... 23
3.35 Accurate and Complete Records............................................... 23
3.36 Knowledge................................................................... 23
3.37 Brokers; Finders............................................................ 23
3.38 [INTENTIONALLY OMITTED]..................................................... 23
3.39 No Dissenting Shares........................................................ 23
4. REPRESENTATIONS AND WARRANTIES OF WCI AND ACQUISITION
CO................................................................................. 24
4.1 Existence and Good Standing................................................. 24
4.2 No Contractual Restrictions................................................. 24
4.3 Authorization of Agreement.................................................. 24
4.4 Status of Shares............................................................ 24
4.5 No Misleading Statements.................................................... 25
4.6 Brokers; Finders............................................................ 25
4.7 Disclosure Schedules........................................................ 25
5. CLOSING DELIVERIES................................................................. 25
5.1 WCI Deliveries.............................................................. 25
5.2 Shareholders Deliveries..................................................... 25
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE
SHAREHOLDERS....................................................................... 26
6.1 Release of Guaranties....................................................... 26
6.2 Release of Security Interests............................................... 27
6.3 Confidentiality............................................................. 27
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6.4 Brokers and Finders Fees.................................................... 27
6.5 Taxes....................................................................... 27
6.6 Short Year Tax Returns...................................................... 27
6.7 WCI Deliveries.............................................................. 28
6.8 Shareholders' Representative................................................ 28
6.9 General Release by Shareholders............................................. 29
6.10 Certain Tax Matters......................................................... 29
7. INDEMNIFICATION.................................................................... 30
7.1 Indemnity by the Shareholders............................................... 30
7.2 Limitations on Shareholders' Indemnities.................................... 31
7.3 Notice of Indemnity Claim................................................... 32
7.4 Liability for Breaches of Representations and Warranties.................... 33
7.5 No Exhaustion of Remedies or Subrogation; Right of Set Off.................. 33
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND
WCI................................................................................ 33
8.1 Restrictive Covenants....................................................... 33
8.2 Rights and Remedies Upon Breach............................................. 35
9. GENERAL............................................................................ 36
9.1 Additional Conveyances...................................................... 36
9.2 Assignment.................................................................. 36
9.3 Public Announcements........................................................ 37
9.4 Counterparts................................................................ 37
9.5 Notices..................................................................... 37
9.6 Attorneys' Fees............................................................. 37
9.7 Applicable Law.............................................................. 38
9.8 Payment of Fees and Expenses................................................ 38
9.9 Incorporation by Reference.................................................. 38
9.10 Captions.................................................................... 38
9.11 Number and Gender of Words; Corporation..................................... 38
9.12 Entire Agreement............................................................ 38
9.13 Waiver...................................................................... 38
9.14 Construction................................................................ 38
10. ARBITRATION AND DISPUTE RESOLUTION................................................. 39
11. GLOSSARY........................................................................... 39
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1998, is entered
into by and among Waste Connections, Inc., a Delaware corporation ("WCI"), WCI
Acquisition Corporation, an Oregon corporation ("ACQUISITION CO."), Evergreen
Waste Systems Inc., an Oregon corporation (the "CORPORATION"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (collectively, the "SHAREHOLDERS").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste and recyclables in the Cities of Battleground, Washougal, Camas and
Vancouver, Washington and the City of Portland, Oregon, and the unincorporated
areas of ▇▇▇▇▇ County, Washington and Multnomah County, Oregon, and other
related activities;
WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, at the Closing on the Closing Date (as defined below), WCI will
contribute as a capital contribution to Acquisition Co. sufficient cash and
shares of WCI Common Stock, $.01 par value (the "WCI STOCK"), to consummate the
transactions contemplated by this Agreement in exchange for all of the
outstanding capital stock of Acquisition Co.;
WHEREAS, Acquisition Co. will use such cash and shares of WCI Stock to
effect the merger of Acquisition Co. into the Corporation, in accordance with
the terms and subject to the conditions of this Agreement (the "MERGER");
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. MERGER
1.1 The Merger. In accordance with the Oregon General Corporation Law
(the "OREGON LAW"), at the Effective Time (as defined in Section 1.2),
Acquisition Co. shall be merged with and into the Corporation. Immediately
following the Merger, the separate corporate existence of Acquisition Co. shall
cease and the Corporation as the surviving corporation (the "SURVIVING
CORPORATION"), shall continue to exist under and be governed by the Oregon Law
as a direct, wholly-owned subsidiary of WCI.
1.2 Effective Time. As soon as practicable after the execution of this
Agreement and the satisfaction or waiver of all of the conditions to the Merger,
at the Closing (as defined in Section 1.7), the parties shall cause the Merger
to be consummated by causing a separate Articles of Merger, together with a Plan
of Merger (the "MERGER DOCUMENTS") substantially in the form of Exhibit 1.2, to
be executed and filed in accordance with the relevant provisions of the Oregon
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Law. The Merger shall become effective at the time of the filing with the
Secretary of State of the State of Oregon of the Merger Documents relating
thereto in accordance with the relevant provisions of the Oregon Law or at such
later time as is specified in the Merger Documents (the "EFFECTIVE TIME").
1.3 Effects of the Merger. The Merger shall have the effect set forth in
Section 60.497 of the Oregon Law. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights, privileges, powers
and franchises of Acquisition Co. shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Corporation and the Acquisition Co.
shall become the debts, liabilities and duties of the Surviving Corporation in
the same manner as if the Surviving Corporation had itself incurred them. All
rights of creditors and all liens upon the property of Acquisition Co. shall
thereafter be preserved unimpaired.
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation.
The Articles of Incorporation of the Corporation, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law. The Bylaws of the Corporation in effect at the Effective
Time shall be the Bylaws of the respective Surviving Corporation until amended
in accordance with the provisions thereof and applicable law.
1.5 Directors. The directors of Acquisition Co. immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and shall
hold office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
1.6 Officers. The officers of Acquisition Co. immediately prior to the
Effective Time shall be the officers of the Surviving Corporation and shall hold
office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
1.7 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
other date as WCI and the Shareholders' Representative shall agree (the "CLOSING
DATE"). The Closing shall take place at the Law Offices of Shartsis, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
At the Closing, WCI, the Corporation and the Shareholders shall deliver to each
other the documents, instruments and other items described in Section 5 of this
Agreement. At the election of WCI and the Corporation, the Closing of this
transaction may take place through an exchange of consideration and documents
using overnight courier service or facsimile. For tax and financial reporting
purposes, the Closing will be deemed effective September 1, 1998 (the "EFFECTIVE
DATE").
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2. MERGER CONSIDERATION; CONVERSION OF SECURITIES; DISSENTING
SHARES
2.1 Merger Consideration. The merger consideration (the "MERGER
CONSIDERATION") is:
(a) one million six hundred thousand dollars ($1,600,000), (i)
minus the Closing Date Debt (as defined in Section 3.22(a)), and (ii)
plus or minus, as the case may be, the amount by which the Effective
Date Current Assets (as defined in Section 3.22(b)) are greater or less
than the Effective Date Current Liabilities (as defined in Section
3.22(b)), payable in cash (the "CASH"). The Cash shall be paid to the
Shareholders on conversion of their shares of the Corporation at the
Effective Time by wire transfer or check payable in clearinghouse funds.
The adjustment to the Cash based on the Closing Date Debt, the Effective
Date Current Assets and the Effective Date Current Liabilities shall be
based on estimates of such amounts pursuant to Section 3.22(b). Within
120 days after the Closing, WCI and the Shareholders' Representative (as
defined in Section 6.8) shall determine the actual Closing Date Debt,
Effective Date Current Assets and Effective Date Current Liabilities. If
the difference between the actual amounts of such items and the
estimated amounts provided at the Closing results in an increase in the
amount of Cash that should have been paid at the Effective Time over the
amount of Cash that was so paid, WCI shall promptly pay such amount to
the Shareholders; if the result is a decrease in the amount of Cash that
should have been paid at the Effective Time from the amount of Cash that
was so paid, the Shareholders shall promptly pay such amount to WCI, WCI
shall deduct such amount from the Cash; and
(b) for ▇▇▇▇▇ only, a non-interest bearing promissory Note of WCI
(the "Note") in the principal amount of Sixty-Five Thousand Dollars
($65,000), which Note shall be unsecured and paid to ▇▇▇▇▇ in six (6)
equal monthly installments of Ten Thousand Eight Hundred Thirty-Three
Dollars and Thirty-Three Cents ($10,833.33) and shall be substantially
in the form of Exhibit 2.1(c) attached hereto. Each of the Shareholders
hereby acknowledges and consents that, because not every Shareholder
will receive a Note, each share of the Corporation will not be treated
equally with respect to distributions of consideration paid in
connection with the Merger.
2.2 Additional Contingent Merger Consideration. The Merger Consideration
shall be increased by the additional contingent consideration (the "CONTINGENT
MERGER CONSIDERATION") described in this section.
(a) If the City of Washougal Solid Waste Collection Contract
(the "WASHOUGAL CONTRACT") is renegotiated to have a ten (10) year term
beginning on the date of execution of the new contract and five (5) five
(5) year extension periods, WCI shall deliver to the Shareholders a
number of Shares (the "WASHOUGAL SHARES") of WCI Common Stock determined
as follows: The number of Shares shall be an amount equal to one million
eight hundred twenty thousand dollars ($1,820,000) divided by the
average of the closing price of WCI Stock as quoted on the NASDAQ Stock
Market for the five (5) successive
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trading days for which a closing price (the "WASHOUGAL PRICE") is quoted
ending on the tenth trading day prior to the execution date of the
Washougal City Council resolution approving of the new Washougal
Contract (the "APPROVAL DATE"). The Washougal Price and the number of
shares of WCI Stock to be delivered shall be appropriately adjusted in
the event of any change in WCI Stock between the first day for which a
closing price is quoted in determining the Washougal Price and the
Approval Date, including without limitation any stock dividend, stock
split, reverse stock split, recapitalization, reorganization, merger or
consolidation. WCI shall not be obligated to issue any fractional shares
of WCI Stock, but shall instead pay the Shareholders cash in lieu of any
fractional share equal to the Washougal Price multiplied by the fraction
of a share of WCI Stock that would otherwise have been issued to such
Shareholders. The Shares shall be covered by WCI's shelf registration
statement on Form S-4, which has been filed and declared effective under
the Securities Act of 1933 (the "ACT").
(b) WCI shall deliver to the Shareholders a number of Shares
equal to one hundred eighty thousand dollars ($180,000) divided by the
average of the closing price of WCI Stock (the "CAMAS PRICE") as quoted
on the NASDAQ Stock Market for the five (5) successive trading days for
which a closing price is quoted ending on the tenth trading day prior to
the earlier of (A) the later of the termination dates of the City of
Camas Drop Box Collection Contract (the "CAMAS CONTRACT") and the
recycling contract between the Corporation and the City of Camas; or (B)
the removal of the termination without cause provisions in such
contracts (the earlier date being the "TERMINATION DATE"). The Camas
Price and the number of shares of WCI Stock to be delivered shall be
appropriately adjusted in the event of any change in WCI Stock between
the first day for which a closing price is quoted in determining the
Camas Price and the Termination Date, including without limitation any
stock dividend, stock split, reverse stock split, recapitalization,
reorganization, merger or consolidation. WCI shall not be obligated to
issue any fractional shares of WCI Stock, but shall instead pay the
Shareholders cash in lieu of any fractional share equal to the Camas
Price multiplied by the fraction of a share of WCI Stock that would
otherwise have been issued to such Shareholders. The Shares shall be
covered by WCI's shelf registration statement on Form S-4, which has
been filed and declared effective under the Act.
(c) If, prior to the date that is eighteen (18) months after the
Closing Date (as defined in Section 2), the Shareholders assist the
Surviving Corporation in successfully obtaining a minimum five year
extension to the Washougal Contract or the Camas Contract on terms and
conditions acceptable to WCI (including the removal of the termination
without cause provision from the Camas Contract), WCI shall pay the
Shareholders as additional Contingent Merger Consideration a cash amount
equal to seventy-five thousand dollars ($75,000) per extension.
(d) If, after the Closing Date, the Shareholders assist the
Surviving Corporation in successfully obtaining a final and unappealable
permit to operate a municipal solid waste transfer station (the
"TRANSFER STATION") within ▇▇▇▇▇ County, Washington and the Surviving
Corporation operates the Transfer Station, WCI shall pay to the
Shareholders
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on a quarterly basis as additional Contingent Merger Consideration a
cash amount equal to one dollar ($1.00) per ton of waste received at the
Transfer Station for a period equal to the greater of the initial term
of the Transfer Station contract and ten (10) years. Any actions of the
Shareholders in connection with obtaining such permit will not violate
the Consulting Agreement referred to in Section 5.1(c).
(e) If, prior to the date that is 18 months after the Closing
Date, the Shareholders, through a personal introduction, make a good
faith and substantial effort to successfully assist WCI or any of its
subsidiaries in acquiring directly or indirectly (through asset
purchase, stock purchase, merger or otherwise) the waste collection
operations of any other company providing such services in the states of
Oregon or Washington, WCI shall pay the Shareholders as additional
Contingent Merger Consideration a cash amount equal to two percent (2%)
of the pro forma net revenue with respect to such operations during the
first year after they are acquired by WCI, which amount shall be paid on
the Closing Date (as defined in Section 2) if such acquisition is
consummated on or prior to the Closing Date or thirty (30) days after
the date any such acquisition is consummated if consummated after the
Closing Date. For purposes of determination of the Contingent Merger
Consideration, "pro forma net revenue" shall be defined as actual gross
revenues for the twelve-month period prior to the date of payment of the
Contingent Merger Consideration less the sum of disposal, transfer and
transportation costs and associated fees. WCI shall have sole discretion
in determining whether and on what terms it will consummate any such
acquisition, and WCI shall not be liable to any of the Shareholders for
any decision not to pursue any such acquisition or its failure to
consummate any such acquisition, without regard to the reason therefor.
2.3 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) All of the shares of common stock of Acquisition Co. (the
"ACQUISITION CO. COMMON STOCK") issued and outstanding immediately prior
to the Effective Time shall be converted into and become the number of
fully-paid and nonassessable shares of common stock of the Corporation
as shall equal the number of shares of the common stock of the
Corporation issued and outstanding immediately prior to the Effective
Time.
(b) Subject to Section 2.7, the aggregate shares of the
Corporation's Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the Cash. The amount of Cash
issued in respect of each share of the Corporation's Stock shall be
determined by dividing the Cash by the number of shares of the
Corporation's Stock outstanding immediately prior to the Effective Date.
In addition, the shares of the Corporation's Stock held by ▇▇▇▇▇ shall
be converted into the Note. The Note shall be delivered to ▇▇▇▇▇ without
regard to the number of shares of the Corporation's Stock owned by him.
The other Shareholder shall not be entitled to receive a Note.
(c) Any Contingent Merger Consideration due the Shareholders in
respect of the Merger shall be delivered in accordance with the
provisions of Section 2.2. The
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amount of Contingent Merger Consideration due the Shareholders in
respect of each share of the Corporation's Stock shall be determined by
dividing such Contingent Merger Consideration by the number of shares of
the Corporation's Stock outstanding immediately prior to the Effective
Time.
2.4 Exchange of Certificates.
(a) At the Closing, each Shareholder shall deliver to WCI
certificates evidencing the shares of the Corporation's Stock owned by
such Shareholder that are to be converted pursuant to Section 2.3(b)
into the right to receive the Cash (the "CORPORATION'S CERTIFICATES").
Promptly after the Effective Time, each Shareholder who has surrendered
a Corporation's Certificate to WCI, together with such documents as WCI
shall reasonably request, shall be entitled to receive in exchange
therefor the Cash pursuant to Section 2.3(b). Each Corporation's
Certificate so surrendered shall forthwith be cancelled. Until
surrendered as contemplated by this Section 2.4, each Corporation's
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the payment of
Cash attributable to the shares of Corporation's stock evidenced by such
a certificate.
2.5 [INTENTIONALLY OMITTED]
2.6 No Further Ownership Rights in Any Corporation's Stock. All Cash
issued upon the surrender for exchange of shares of the Corporation's Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.5 or 2.1(a), shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of such Corporation's Stock, and, at and after
the Effective Time, there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of the
Corporation's Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, the Corporation's Certificates are presented
to the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Section 2.
2.7 Lost Certificates. In the event any Corporation's Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Shareholder claiming such certificate to be lost, stolen or
destroyed, WCI will issue in exchange for such lost, stolen or destroyed
certificate any Cash pursuant to Section 2.3(b) deliverable in respect thereof
as determined in accordance with Section 2.4. When authorizing such payment in
exchange for any lost, stolen or destroyed Corporation's Certificate, the
Shareholder to whom the Cash is to be paid shall, as a condition precedent to
the payment thereof, indemnify WCI in a manner reasonably satisfactory to WCI
against any claim that may be made against WCI or the Surviving Corporation with
respect to the Corporation's Certificate alleged to have been lost, stolen or
destroyed.
2.8 Allocation of the Merger Consideration. Twenty thousand dollars
($20,000) of the Merger Consideration shall be allocated to the covenant not to
compete as described in Section 8.1(a) hereof, and the balance of the Merger
Consideration shall be allocated to the Corporation's Stock.
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2.9 Excluded Assets. The Assets of the Corporation listed on Schedule
2.9 (the "EXCLUDED ASSETS") shall be distributed to the Shareholders prior to
the Closing, and WCI shall acquire no interest in or claim to any of the
Excluded Assets.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE
SHAREHOLDERS
The Corporation and the Shareholders, jointly and severally, represent
and warrant that each of the following representations and warranties is true as
of the Closing Date.
3.1 Organization, Standing and Qualification. The Corporation is duly
organized, validly existing and in good standing under the laws of the State of
Oregon. 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
not required to be qualified or licensed to conduct business as a foreign
corporation in any other jurisdiction.
3.2 Capitalization. Schedule 3.2 sets forth, as of the Closing Date, the
authorized and outstanding capital of the Corporation, the names, addresses and
social security numbers or taxpayer identification numbers of the record and
beneficial owners thereof, the number of shares so owned, the allocation of the
Cash, the Shares and the Contingent Shares (if any) among the Shareholders as
agreed to among themselves, and wire transfer instructions for each Shareholder
relating to the bank account to which the Cash should be sent. All of the issued
and outstanding shares of the capital stock of the Corporation are and as of the
Effective Time will be owned of record and beneficially by the Shareholders, as
set forth in Schedule 3.2, and are and as of the Effective Time will be 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 Shareholders to transfer
any Corporation's Stock to any person.
3.3 All Stock Being Acquired. The Corporation's Stock being acquired by
WCI hereunder pursuant to the Merger constitutes all of the outstanding capital
stock of the Corporation.
3.4 Authority for Agreement and Merger Documents. The Corporation and
the Shareholders have full right, power and authority to enter into this
Agreement and the Merger Documents and to perform its, his or her obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Merger Documents by the Corporation and the consummation of the transactions
contemplated hereby by the Corporation have been duly authorized by the
Corporation's Board of Directors and the Shareholders. This Agreement and Merger
Documents have been duly and validly executed and delivered by the Corporation
and the Shareholders and, subject to the due authorization, execution and
delivery by WCI and Acquisition
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Co., constitute the legal, valid and binding obligations of the Corporation and
the Shareholders enforceable against the Corporation and the Shareholders in
accordance with their respective terms.
3.5 No Breach or Default. Except as disclosed on Schedule 3.5, the
execution and delivery by the Corporation and the Shareholders of this Agreement
and the Merger Documents, and the consummation by the Shareholders of the
transactions contemplated hereby and thereby, will not:
(a) result in the breach of any of the terms or conditions of,
or constitute a default under, or allow for the acceleration or
termination of, or in any manner release any party from any obligation
under, any mortgage, lease, note, bond, indenture, or material contract,
agreement, license or other instrument or obligation of any kind or
nature to which the Corporation or any of the Shareholders is a party,
or by which the Corporation or any of the Shareholders, or any of the
Corporation's or the Shareholders' 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 the Corporation's 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 ▇▇▇▇▇ & Associates for the period
ended August 31, 1998 (the "BALANCE SHEET DATE"). The Financial Statements are
true and correct and fairly present (i) the financial position of the
Corporation in accordance with generally accepted accounting principles, applied
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 in accordance with generally accepted
accounting principles, applied 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 did not have as of the Balance Sheet Date, nor will the Corporation
have as of the Closing Date, any 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.
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(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 end of the month
prior to the Closing Date through the Closing Date, 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
and, to the knowledge of the Corporation and the Shareholders, all
contingent liabilities and all claims, suits and proceedings threatened
or anticipated against the Corporation. Part II of Schedule 3.8 includes
a summary description of each such liability, including, without
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 a Shareholder's possession or control.
(c) Part III of Schedule 3.8 lists, 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 a 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 any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or with respect to
any of the liabilities or obligations listed on Schedule 3.8 except, in the case
of liabilities and obligations listed on Parts I, III and IV of Schedule 3.8,
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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.
3.9 [INTENTIONALLY OMITTED]
3.10 Permits and Licenses.
(a) Schedule 3.10(a) is a full and complete list, and includes
copies, of all material permits, licenses, franchises, and service
agreements pursuant to which the Corporation is authorized to collect
and haul industrial, commercial and residential solid waste (the
"COLLECTION FRANCHISES"), and of all other material permits, licenses,
titles (including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents
constituting a material authorization or entitlement or otherwise
material to the operation of the business of the Corporation
(collectively the "GOVERNMENTAL PERMITS") owned by, issued to, held by
or otherwise benefitting the Corporation or the Shareholders as of the
Closing Date. The status of the Governmental Permits related to the
disposal areas owned or used by the Corporation, including, without
limitation, any conditions thereto and, if applicable, the expiration
dates thereof, are also described in Schedule 3.10(a). Schedule 3.10(a)
also sets forth the name of any governmental agency or other third party
from whom the Shareholders, the Corporation or WCI must obtain consent
(the "REQUIRED GOVERNMENTAL CONSENTS") in order to effect a direct or
indirect transfer of the Collection Franchises or other Governmental
Permits required as a result of the consummation of the transactions
contemplated by this Agreement. All such consents have been obtained.
Except as set forth on Schedule 3.10(a), all of the Collection
Franchises and other Governmental Permits enumerated and listed on
Schedule 3.10(a) are adequate for the operation of the business of the
Corporation and of each Corporate Property as presently operated and are
valid and in full force and effect. All of said Collection Franchises
and other Governmental Permits and agreements have been duly obtained
and are in full force and effect, and there are no proceedings pending
or, to the knowledge of the Corporation or the Shareholders, threatened
which may result in the revocation, cancellation, suspension or adverse
modification of any of the same. Neither the Corporation nor any of the
Shareholders has any knowledge of any reason why all such Governmental
Permits and agreements will not remain in effect for the period or term
stated therein, subject to WCI's full compliance therewith, after
consummation of the transactions contemplated hereby.
(b) Schedule 3.10(b) includes: (i) all records, notifications,
reports, permit and license applications, engineering and geologic
studies, and environmental impact reports, tests or assessments
(collectively, "RECORDS, NOTIFICATIONS AND REPORTS") that (A) are
material to the operation of the business of the Corporation, or (B)
relate to the discharge or release of materials into the environment
and/or the handling or transportation of waste materials or hazardous or
toxic substances or otherwise relate to the protection of the public
health or the environment, or (C) were filed with or submitted to
appropriate
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governmental agencies during the past 24 months by the Corporation or
the Shareholders or their agents with respect to the business of the
Corporation, and (ii) all material notifications from such governmental
agencies to the Corporation, the Shareholders or their agents in
response to or relating to any of such Records, Notifications and
Reports.
(c) Schedule 3.10(c) lists each facility owned, leased, operated
or otherwise used by the Corporation, the ownership, lease, operation or
use of which is being transferred to, assumed by or otherwise acquired
directly or indirectly by WCI pursuant to this Agreement (each, a
"FACILITY" and collectively, the "FACILITIES"). Except as otherwise
disclosed on Schedule 3.10(c):
(i) Each Facility owned by the Corporation or owned by
any of the Shareholders or an Affiliate (as hereinafter defined)
of any of the Shareholders and leased to the Corporation 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, none of such Facilities or the current use
thereof constitutes a non-conforming use or is otherwise subject
to any restrictions regarding the operation, renovation or
reconstruction thereof. To the knowledge of the Corporation and
the Shareholders, no Facility that is leased by the Corporation
from a non-Affiliate or the current use thereof constitutes a
material non-conforming use or is otherwise subject to any
material restrictions regarding the operation, renovation or
reconstruction thereof.
(ii) There are no circumstances, conditions or reasons
which are likely to be the basis for revocation or suspension of
any Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility owned by the Corporation or
owned by any of the Shareholders or an Affiliate (as hereinafter
defined) of any of the Shareholders and leased to the
Corporation, and to the knowledge of the Corporation and the
Shareholders there are no circumstances, conditions or reasons
which are likely to be the basis for revocation or suspension of
any site assessment, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility leased by the Corporation
from a third party who is not an Affiliate (as hereinafter
defined) of the Shareholders.
3.11 Certain Receivables. Schedule 3.11 is an accurate list as of the
Closing Date of the accounts and notes receivable of the Corporation from and
advances to employees, former employees, officers, directors, the Shareholders
and Affiliates of the foregoing which have not been repaid. For purposes of this
Agreement, the term "AFFILIATE" means, with respect to any person, any person
that directly or indirectly through one or more intermediaries controls or has
an ownership interest in, or is controlled or owned in whole or in part by, or
is under common control or ownership in whole or in part with such person, and
in the case of the Corporation 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.
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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 the Corporation's business are in operable condition, and
all of the motor vehicles and other rolling stock of the Corporation are
in compliance with all applicable laws, rules and regulations. All such
containers, vehicles, machinery and equipment are substantially free of
known defects that would cause them to fail. All leases of fixed assets
are in full force and effect and binding upon the parties thereto;
neither the Corporation nor, to the knowledge of the Corporation or the
Shareholders, any other party to such leases is in breach of any of the
material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Closing Date (the "CORPORATE
PROPERTY"), including the street address and, in the case of Corporate
Property owned or being purchased, the legal description thereof, is
listed on Schedule 3.12(b), and attached to said Schedule 3.12(b), 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) are in full force and effect and binding on the parties thereto;
neither the Corporation nor any other party to any such lease is in
breach of any of the material provisions thereof; to the knowledge of
the Corporation and the Shareholders, the landlord's interest in each
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), there are no material physical or
mechanical defects in any Facility located on any Corporate Property and
each such Facility is in good condition and repair.
(c) The Corporation has good, valid and marketable title to all
properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the conduct of its business,
free of any encumbrance or charge of any kind except: (i) liens for
current taxes not yet due; (ii) minor imperfections of title and
encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the 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 Parts I and III of Schedule
3.8 (collectively, the "PERMITTED LIENS"). Except as described on
Schedule 3.12(b), there are no leases, occupancy agreements, options,
rights of first refusal or any other agreements or arrangements, either
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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 [INTENTIONALLY OMITTED]
3.14 Contracts and Agreements; Adverse Restrictions.
(a) Schedule 3.14(a) lists, as of the Closing Date, and includes
copies of, all material contracts and agreements (other than leases and
documents included with Schedule 3.12(b)) to which the Corporation is a
party or by which it or any of its property is bound (including, but not
limited to, joint venture or partnership agreements, contracts with any
labor organizations, promissory notes, loan agreements, bonds,
mortgages, deeds of trust, liens, pledges, conditional sales contracts
or other security agreements). Except as disclosed on Schedule 3.14(a),
all such contracts and agreements included in Schedule 3.14(a) are in
full force and effect and binding upon the parties thereto. Except as
described or cross referenced on Schedule 3.14(a), neither the
Corporation nor, to the Corporation's or any Shareholder's knowledge,
any other parties to such contracts and agreements is in breach thereof,
and none of the parties has threatened to breach any of the material
provisions thereof or notified the Corporation or any of the
Shareholders of a default thereunder, or exercised any options
thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate Properties, nor has
the Corporation been notified that any such judgment, order, writ,
injunction or decree has been requested.
3.15 Insurance. Schedule 3.15 is a complete list and includes copies, as
of the Closing Date, of all insurance policies in effect on the Closing Date or,
with respect to "OCCURRENCE" policies that were in effect, carried by the
Corporation in respect of the Corporate Properties or any other property used by
the Corporation specifying, for each policy, the name of the insurer, the type
of risks insured, the deductible and limits of coverage, and the annual premium
therefor. The Corporation currently carries insurance in the type and amount
ordinarily carried by owners or corporations in similar circumstances, in
respect to the Corporation's 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.
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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, and neither the Corporation, nor a party-in-interest or
disqualified person, has engaged in any transaction or other activity
which would give rise to such liability. The Corporation has not
participated in or made contributions to any "MULTI-EMPLOYER PLAN" as
defined in the Employee Retirement Income Security Act of 1974
("ERISA"), nor would the Corporation or any affiliate be subject to any
withdrawal liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Closing Date. No
employee pension benefit plan is under funded on a termination basis as
of the date of this Agreement.
(b) Schedule 3.17(b) is a complete list, as of the Closing Date,
and includes complete copies of all union contracts and agreements
between the Corporation and any
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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 any 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 or will timely file all
requisite federal, state, local and other tax and information returns
due for all fiscal periods ended on or before the Closing Date. All such
returns are accurate and complete. Except as set forth on Schedule 3.18,
there are no open years (other than those within the statute of
limitations), examinations in progress, extensions of any statute of
limitations or claims against the Corporation relating to federal,
state, local or other taxes (including penalties and interest) for any
period or periods prior to and including the Closing Date and no notice
of any claim for taxes has been received. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the
federal income, and state franchise, income and sales tax returns of the
Corporation for its last three fiscal years are attached as part of
Schedule 3.18. Copies of all other federal, state, local and other tax
and information returns for all prior years of the Corporation's
existence have been made available to WCI and are among the records of
the Corporation that will accrue to WCI at the Closing. The
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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 date of this Agreement. The reserves for taxes contained in
the Financial Statements of the Corporation are adequate to cover its
tax liability as of the Closing Date.
(c) The Corporation has withheld all required amounts from its
employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes have
been duly filed by the Corporation for all periods for which returns are
due, and the amounts shown on all such returns to be due and payable
have been paid in full.
3.19 Copies Complete; Required Consents. Except as disclosed on Schedule
3.19, the certified copies of the Articles of Incorporation and Bylaws of the
Corporation, 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 have
been given or obtained.
3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables. Schedule
3.20 is a current, accurate and complete list of, and includes:
(a) the customers that the Corporation serves on an ongoing
basis, including name, location and current billing rate, as of the
Closing Date;
(b) an accurate and complete aging of all accounts and notes
receivable from customers as of the last day of the month preceding the
month in which such Schedule is delivered, showing amounts due in 30-day
aging categories. Except to the extent of the allowance for bad debts
reflected on the Financial Statements or otherwise disclosed on
Schedules 3.11 and 3.20, the Corporation's accounts and notes receivable
are collectible in the amounts shown on Schedules 3.11 and 3.20; and
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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, neither the
Corporation nor any Shareholder has any 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 increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or
other special compensation to any employee or any severance or
termination pay paid to any of its present or former officers or other
key employees;
(f) any labor dispute or any other event or condition of any
character with respect to the Corporation's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or transfer,
any of its material assets, property or rights to any other person,
including, without limitation, the Shareholders and their Affiliates,
other than in the ordinary course of business;
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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 any of the
Shareholders or any Affiliate thereof;
(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; or
(m) any other material transaction outside the ordinary course
of its business.
3.22 Closing Date Debt; Effective Date Current Assets and Effective
Date Current Liabilities.
(a) Schedule 3.22(a) lists (i) the amount of the aggregate debt
(excluding trade payables) of the Corporation outstanding on the Closing
Date required to be repaid by WCI or the Surviving Corporation at or
immediately after the Closing Date and all prepayment penalties incurred
or to be incurred by WCI or the Surviving 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 Surviving
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 as of the Closing Date,
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 as of the Closing Date 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 or acceptable to WCI.
(b) Schedule 3.22(b) is an estimate as of the Effective Date of
the amount of the aggregate current liabilities (including any reserve
for unpaid taxes and excluding the current portion of long-term debt to
the extent such current portion is included in Closing
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Date Debt) and trade payables of the Corporation as of the Effective
Date (the "EFFECTIVE DATE CURRENT LIABILITIES") and the amount of the
aggregate cash and other current assets of the Corporation as of the
Effective Date, including prepaid expenses the benefit of which survives
the Effective Date and the accounts receivable of the Corporation earned
prior to the Effective Date, and collectible (less an allowance for
doubtful accounts) on or after the Effective Date (the "EFFECTIVE DATE
CURRENT ASSETS").
3.23 Bank Accounts.
(a) Schedule 3.23(a) is a complete and accurate list, as of the
Closing Date, of:
(i) the name of each bank in which the Corporation has
accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are
held;
(iii) the type of account; and
(iv) the name of each person authorized to draw thereon
or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate list, as of the
Closing Date, of:
(i) each credit card or other charge account issued to
the Corporation; and
(ii) the name of each person to whom such credit cards
or other charge accounts have been issued.
3.24 Compliance With Laws. Except as disclosed on Schedule 3.24, the
Corporation has complied with, and the Corporation is presently in compliance
with, federal, state and local laws, ordinances, codes, rules, regulations,
Governmental Permits, orders, judgments, awards, decrees, consent judgments,
consent orders and requirements applicable to it (collectively "LAWS"),
including, but not limited to, the Americans with Disabilities Act, the Federal
Occupational Safety and Health Act, and Laws relating to the public health,
safety or protection of the environment (collectively, "ENVIRONMENTAL LAWS").
Except as disclosed on Schedule 3.24, there has been no assertion by any party
that the Corporation is in violation of any Laws. Specifically and without
limiting the generality of the foregoing, except as disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and regulations,
including, without limitation, the federal Resource Conservation
Recovery Act, 42 U.S.C. 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 the Corporation accepted, processed, handled,
transferred,
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generated, treated, stored or disposed of asbestos, medical waste,
radioactive waste or municipal waste, except in compliance with
Environmental Laws.
(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other than
that allowed under Environmental Laws, including, without limitation,
RCRA, has been disposed of, or otherwise released on any Corporate
Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Corporate Property has ever
been subject to or received any notice of any private, administrative or
judicial action, or notice of any intended private, administrative or
judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Corporate
Property or any real property now or previously owned or leased by the
Corporation. There are no pending and, to the Corporation's and
Shareholders' knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of the Corporate Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the Corporation
has not knowingly sent, transported or arranged for the transportation
or disposal of any Hazardous Material, to any site, location or
facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL" means the
substances (i) defined as "HAZARDOUS WASTE" in 40 CFR 261, and
substances defined in any comparable Washington statute or regulation;
(ii) any substance the presence of which requires remediation pursuant
to any Environmental Laws; and (iii) any substance disposed of in a
manner not in compliance with Environmental Laws.
3.25 Powers of Attorney. The Corporation has not granted any power of
attorney (except routine powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar agreement whereby a
third party may bind or commit the Corporation in any manner.
3.26 Underground Storage Tanks. Except as set forth on Schedule 3.26, no
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 not 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:
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(a) the location of the UST, information and material, including
any available drawings and photographs, showing the location, and
whether the Corporation currently owns or leases the property on which
the UST is located (and if the Corporation does not currently own or
lease such property, the dates on which it did and the current owner or
lessee of such property);
(b) the date of installation and specific use or uses of the
UST;
(c) copies of tank and piping tightness tests and cathodic
protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body or
agency relating to the UST;
(e) other material records with regard to the UST, including,
without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the above,
a summary description of instances, past or present, in which, to the
Corporation's, or the Shareholders' knowledge, the UST failed to meet
applicable standards and regulations for tightness or otherwise and the
extent of such failure, and any other operational or environmental
problems with regard to the UST, including, without limitation, spills,
including spills in connection with delivery of materials to the UST,
releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation
has complied with Environmental Laws regarding the installation, use, testing,
monitoring, operation and closure of each UST described on Schedule 3.26.
3.27 Patents, Trademarks, Trade Names, etc. Schedule 3.27 lists all
patents, tradenames, fictitious business names, trademarks, service marks, and
copyrights owned by the Corporation or which it is licensed to use (other than
licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). No
patents, trade secrets, know-how, intellectual property, trademarks, trade
names, assumed names, copyrights, or designations used by the Corporation in its
business infringe on any patents, trademarks, or copyrights, or any other rights
of any person. Neither the Corporation nor any of the Shareholders knows or has
any reason to believe that there are any claims of third parties to the use of
any such names or any similar name, or knows of or has any reason to believe
that there exists any basis for any such claim or claims.
3.28 Assets, etc., Necessary to Business. The Corporation owns or leases
all properties and assets, real, personal, and mixed, tangible and intangible,
and, except as disclosed on Schedules 3.5, 3.10(a), 3.10(c), 3.14(a) and 3.19,
is a party to all Collection Franchises and Governmental Permits and other
agreements necessary to permit it to carry on its business as
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presently conducted. All of said Collection Franchises and Governmental Permits
and agreements have been duly obtained and, except as disclosed on Schedules
3.5, 3.8-Part II, 3.10(a), 3.10(c) 3.14(a) and 3.19, are in full force and
effect and there are no proceedings pending or threatened which may result in
the revocation, cancellation, suspension or adverse modification of any of the
same. Neither the Corporation nor any of the Shareholders has any knowledge of
any reason why all such Collection Franchises and Governmental Permits and
agreements will not remain in effect after consummation of the transactions
contemplated hereby.
3.29 Condemnation. No Corporate Property owned or leased by the
Corporation is the subject of, or would be affected by, any pending condemnation
or eminent domain proceedings, and, to the knowledge of the Corporation and the
Shareholders, no such proceedings are threatened.
3.30 Suppliers and Customers. The relations between the Corporation and
its customers are good. Neither the Corporation nor any of the Shareholders has
knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the suppliers supplying products, components,
materials or providing use of, or access to, landfills or disposal sites to the
Corporation intends to cease providing such items to the Corporation, nor does
the Corporation or any of the Shareholders have knowledge of any fact (other
than general economic and industry conditions) which indicates that any of the
customers of the Corporation intends to terminate, limit or reduce its business
relations with the Corporation.
3.31 Absence of Certain Business Practices. Neither the Corporation nor
any of the Shareholders has directly or indirectly within the past five years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of the Corporation in connection with any actual or proposed
transaction which (a) might subject the Corporation to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (b) if not given
in the past, might have had an adverse effect on the financial condition,
business or results of operations of the Corporation, or (c) if not continued in
the future, might adversely affect the financial condition, business or
operations of the Corporation or which might subject the Corporation to suit or
penalty in any private or governmental litigation or proceeding.
3.32 Related Party Transactions. None of the Shareholders or their
respective 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 or on Schedule
3.32. Except as disclosed in the Financial Statements or on Schedule 3.32, none
of the Shareholders or their Affiliates owns any direct or indirect interest of
any kind in, or controls or is a director, officer, employee, shareholder or
partner of, or consultant or lender to or borrower from or has the right to
participate in the profits of, any Person which is a competitor, supplier,
customer, landlord, tenant, creditor or debtor of the Corporation.
3.33 Disclosure Schedules. Any matter disclosed on any Schedule to this
Agreement shall be deemed to have been disclosed on every other Schedule that
refers to such Schedule by
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cross reference so long as the nature of the matter disclosed is obvious from a
fair reading of the Schedule on which the matter is disclosed.
3.34 No Misleading Statements. The representations and warranties of the
Corporation and the Shareholders contained in this Agreement, the Exhibits and
Schedules hereto and all other documents and information furnished to WCI and
its representatives pursuant hereto are complete and accurate in all material
respects and do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made and to be made not
misleading.
3.35 Accurate and Complete Records. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of the Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material corporate
transactions required to be authorized by the Board of Directors and/or
shareholders of the Corporation and do not contain or reflect any
material discrepancies.
3.36 Knowledge. Wherever reference is made in this Agreement to the
"KNOWLEDGE" of the Shareholders, such term means the actual knowledge of the
Shareholders or any knowledge which should have been obtained by the
Shareholders upon reasonable inquiry by a reasonable business person. In the
case of a Shareholder that is a trust, the term "knowledge" means the actual
knowledge of the trustee or trustees of the trust or any knowledge which should
have been obtained by the trustee or trustees upon reasonable inquiry by a
reasonable business person. Wherever reference is made in this Agreement to the
"knowledge" of the Corporation, such term means the actual knowledge of any
management employee, officer or director of the Corporation or any knowledge
which should have been obtained by any such person upon reasonable inquiry by a
reasonable business person.
3.37 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Corporation or a 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 a Shareholder.
3.38 [INTENTIONALLY OMITTED]
3.39 No Dissenting Shares. No Shareholders have exercised appraisal
rights with respect to any Corporation's Stock in accordance with Section 60.554
of the Oregon Law.
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4. REPRESENTATIONS AND WARRANTIES OF WCI AND ACQUISITION CO.
WCI and Acquisition Co., jointly and severally, represent and warrant to
the Shareholders that each of the following representations and warranties is
true as of the Closing Date:
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. Acquisition Co. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon. Acquisition
Co. has full corporate power and authority to own and lease its properties and
to carry on its business as now conducted. Acquisition Co. 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 or the Merger Documents. No provisions exist in any article, document
or instrument to which Acquisition Co. is a party or by which it is bound which
would be violated by consummation of the transactions contemplated by this
Agreement or the Merger Documents.
4.3 Authorization of Agreement. This Agreement and the Merger Documents
have been duly authorized, executed and delivered by WCI and Acquisition Co.,
and, subject to the due authorization, execution and delivery by the Corporation
and the Shareholders, constitutes a legal, valid and binding obligation of WCI
and Acquisition Co. Each of WCI and Acquisition Co. has full corporate power,
legal right and corporate authority to enter into and perform its obligations
under this Agreement and the Merger Documents and to carry on its business as
presently conducted. The execution and delivery of this Agreement and the Merger
Documents and the consummation of the transactions contemplated hereby and
thereby and the fulfillment of and compliance with the terms and conditions
hereof and thereof 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 or Acquisition
Co.; (b) conflict with any of the provisions of the Amended and Restated
Certificate of Incorporation or Amended and Restated Bylaws of WCI; (c) conflict
with any of the provisions of the Articles of Incorporation or Bylaws of
Acquisition Co.; or (d) conflict with, result in a breach of or constitute a
default under any material agreement or instrument to which either WCI or
Acquisition Co. is a party or by which it is bound.
4.4 Status of Shares. When delivered to the Shareholders after the
Effective Time in accordance with the terms and conditions of this Agreement,
the Shares and the Contingent Shares shall have been duly authorized and
delivered shares of WCI, shall be fully paid and nonassessable, and shall have
been registered under the Act.
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4.5 No Misleading Statements. The representations and warranties of WCI
and Acquisition Co. contained in this Agreement, the Exhibits and Schedules
hereto and all other documents and information furnished to the Shareholders
pursuant hereto are accurate and complete 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 not misleading.
4.6 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI and Acquisition Co. 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 and Acquisition Co.
4.7 Disclosure Schedules. Any matter disclosed by WCI or Acquisition Co.
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 or the Effective Time, as the case may be, the respective
parties shall make the deliveries indicated:
5.1 WCI Deliveries.
(a) WCI shall deliver the Cash required to be delivered at the
Effective Time.
(b) WCI shall deliver to ▇▇▇▇▇ the Note at the Effective Time.
(c) WCI shall execute and deliver a Consulting Agreement with
▇▇▇▇▇ substantially in the form of the draft included in Exhibit 5.1(c).
(d) WCI shall execute and deliver an Equipment Offer Agreement
with American Products Enterprises, Inc. ("APE") substantially in the
form of the draft included in Exhibit 5.1(d).
(e) WCI shall deliver to the Shareholders a certificate of good
standing from the Secretary of State of Washington.
5.2 Shareholders Deliveries.
(a) At the Effective, Time, the Shareholders shall deliver to
WCI the certificates representing the outstanding Corporation's Stock
free and clear of all liens, security interests, claims and
encumbrances, accompanied by a stock power duly executed in blank.
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(b) At the Closing, the Shareholders shall deliver to WCI an
opinion of counsel for the Shareholders, dated as of the Closing Date,
in substantially the form attached hereto as Exhibit 5.2(b).
(c) The Shareholders shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby, including without limitation all
Required Governmental Consents and all required consents of the
landlords under all real estate leases to which the Corporation is a
party, were obtained and the Shareholders shall deliver an estoppel
certificate from the landlords under all real estate leases to which the
Corporation is a party confirming the terms thereof and the rental
amount owing thereunder, certifying that such lease is in full force and
effect, that the Corporation is not in default under any of the terms or
conditions thereof, that there have been no amendments or modifications
to any such lease (or specifying the same), and otherwise containing
such statements and certifications as WCI may require.
(d) The Corporation shall deliver to WCI evidence satisfactory
to WCI showing that all written employment contracts and all oral
employment contracts other than those that are terminable "at will"
without payment of severance (other than normal severance benefits
approved by WCI) or other benefits with non-union employees of the
Corporation (including, without limitation, stock options or other
rights to obtain equity in the Corporation) have been terminated,
effective on or before the Closing Date.
(e) ▇▇▇▇▇ shall execute and deliver the Consulting Agreement in
the form of Exhibit 5.1(c).
(f) APE shall execute and deliver the Equipment Offer Agreement
in the form of Exhibit 5.1(d).
(g) The Shareholders shall cause each officer and director of
the Corporation to deliver a resignation as an officer and/or director
of the Corporation 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.
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS
6.1 Release of Guaranties. WCI shall use reasonable efforts to obtain
the termination and release promptly after the Effective Time of the personal
guaranties of the Shareholders listed on Schedule 6.1, all of which relate to
indebtedness of the Corporation included in the Financial Statements as of the
Balance Sheet Date or WCI shall indemnify the Shareholders and hold them
harmless from and against all losses, expenses or claims by third parties to
enforce or collect indebtedness owed by the Corporation as of the Effective Time
which is personally guaranteed by the Shareholders pursuant to such guaranties.
The Shareholders may notify the obligees under
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such guaranties that they have terminated their obligations under such
guaranties. The Shareholders shall cooperate with WCI in obtaining such
releases.
6.2 Release of Security Interests. After the Effective Time, the
Shareholders and their respective Affiliates shall cause those security
interests in the assets of the Corporation that have been created in favor of
financial institutions or other lenders to secure indebtedness (other than
indebtedness of that Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
6.3 Confidentiality. Neither the Corporation nor any of the Shareholders
shall disclose or make any public announcements of the transactions contemplated
by this Agreement without the prior written consent of WCI, unless required to
make such disclosure or announcement by law, in which event the party making the
disclosure or announcement shall notify WCI at least 24 hours before such
disclosure or announcement is expected to be made.
6.4 Brokers and Finders Fees. Each party shall pay and be responsible
for any broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
6.5 Taxes. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters involving the
Shareholders arising out of the Shareholders' ownership of the Corporation prior
to the Effective Time, including matters relating to tax returns and any tax
audits, appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
Corporation for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to retaining
information and documents which relate to such matters.
6.6 Short Year Tax Returns. After the Effective Time, the Shareholders
shall prepare at their sole cost and expense, all short year federal, state,
county, local and foreign tax returns required by law for the period beginning
with the first day of the Corporation's fiscal year in which the Closing occurs
and ending with the Effective Time. 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
Effective Time for its approval (but such approval shall not relieve the
Shareholders of their responsibility for the taxes assessed under these
returns). The Shareholders shall be responsible for the payment of all taxes
shown to be due or that may come to be due on such returns or otherwise relating
to the period prior to the Effective Time in excess of the amount of any reserve
for taxes included in Effective Time Current Liabilities. The Shareholders shall
also be responsible for all taxes arising from the conversion of the Corporation
from a cash to accrual basis of reporting whether or not due on such returns or
on the first return filed by that Corporation for the period commencing after
the Effective Time. At the time of the delivery of the returns, the Shareholders
shall contemporaneously deliver to WCI checks payable to the respective taxing
authorities in amounts
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equal to the amount due. WCI shall sign tax returns and cause such returns to be
timely filed with the appropriate authorities. The Shareholders shall be
entitled to receive all refunds shown on said returns and any such refunds
received by the Corporation or WCI shall be remitted to the Shareholders. The
Shareholders shall also be entitled to report on their financial statements any
and all loss attributed to any short year tax return filing.
6.7 WCI Deliveries. After the Closing Date, WCI shall deliver to the
Shareholders the following documents: (i) amended annual reports for the States
of Oregon and Washington; and (ii) amended business license applications for the
jurisdictions listed on Schedule 6.7.
6.8 Shareholders' Representative.
(a) In order to administer efficiently the rights and
obligations of the Shareholders under this Agreement, the Shareholders
hereby designate and appoint ▇▇▇▇▇ as the Shareholders' Representative,
to serve as the Shareholders' agent, proxy and attorney-in-fact for the
limited purposes set forth in this Agreement.
(b) Each of the Shareholders hereby appoints the Shareholders'
Representative as such Shareholder's agent, proxy and attorney-in-fact,
with full power of substitution, for all purposes set forth in this
Agreement, including, without limitation, the full power and authority
on such Shareholder's behalf (i) to consummate the transactions
contemplated by this Agreement, (ii) to disburse any funds received
hereunder to the Shareholders, (iii) to execute and deliver on behalf of
each Shareholder any amendment or waiver under this Agreement, to agree
to the amount of the actual Closing Date Debt, Effective Date Current
Assets and Effective Date Current Liabilities pursuant to Section
1.2(a), and to agree to resolution of all Claims hereunder, (iv) to
retain legal counsel and other professional services, at the expense of
the Shareholders, in connection with the performance by the
Shareholders' Representative of this Agreement, and (v) to do each and
every act and exercise any and all rights which such Shareholder or
Shareholders are permitted or required to do or exercise under this
Agreement and the other agreements, documents and certificates executed
in connection herewith. Each of the Shareholders agrees that such agency
and proxy are coupled with an interest, are therefore irrevocable
without the consent of the Shareholders' Representative and shall
survive the death, bankruptcy or other incapacity of any Shareholder.
(c) Each of the Shareholders hereby agrees that any amendment or
waiver under this Agreement, and any action taken on behalf of the
Shareholders to enforce the rights of the Shareholders under this
Agreement, and any action taken with respect to any adjustment or Claim
(including any action taken to object to, defend, compromise or agree to
the payment of such adjustment or Claim), shall be effective if approved
in writing by persons who were the holders of a majority of the
Corporation's Stock immediately prior to the Closing, and that each and
every action so taken shall be binding and conclusive on every
Shareholder, whether or not such Shareholder had notice of, or approved,
such amendment or waiver.
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(d) ▇▇▇▇▇ shall serve as the Shareholders' Representative until
he resigns or is otherwise unable or unwilling to serve. In the event
that a Shareholders' Representative resigns from such position or is
otherwise unable or unwilling to serve, the remaining Shareholders shall
select, by the vote of the holders of a majority of the Corporation's
Stock immediately prior to the Closing, a successor representative to
fill such vacancy, shall provide prompt written notice to WCI of such
change and such substituted representative shall then be deemed to be
the Shareholders' Representative for all purposes of this Agreement.
6.9 General Release by Shareholders. Each of the Shareholders hereby
fully releases and discharges the Corporation and its directors, officers,
agents and employees from all rights, claims and actions, known or unknown, of
any kind whatsoever, which any of such Shareholders now has or may hereafter
have against the Corporation and its directors, officers, agents and employees,
arising out of or relating to events arising prior to or on the Effective Time,
except (a) as may be described in written contracts disclosed in Schedule 6.9
and expressly described and specifically excepted from this release in Schedule
6.9, (b) compensation as an employee of the Corporation for current periods
expressly described and excepted from such release on Schedule 6.9, and (c) for
the obligations of the Corporation arising after the Effective Time under this
Agreement. Specifically, but not by way of limitation, each of the Shareholders
waives any right of indemnification, contribution or other recourse against the
Corporation which he now has or may hereafter have against the Corporation with
respect to representations, warranties or covenants made in this Agreement by
the Corporation, except (a) as may be described in written contracts disclosed
in Schedule 6.9 and expressly described and specifically excepted from this
release in Schedule 6.9, (b) compensation as an employee of the Corporation for
current periods expressly described and excepted from such release on Schedule
6.9, and (c) for the obligations of the Corporation arising after the Effective
Time under this Agreement.
6.10 Certain Tax Matters. WCI, Acquisition Co., the Corporation and the
Shareholders agree that the Merger is not intended to qualify as a tax free
reorganization under Section 368 of the Code. 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;
(c) WCI and the Shareholders shall agree upon the allocation of
the Merger Consideration among the assets (including intangible assets)
of the Corporation; and
(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 solely from the
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recapture of depreciation previously taken on various assets of the
Corporation at ordinary income instead of capital gain rates.
7. INDEMNIFICATION
7.1 Indemnity by the Shareholders. The Shareholders, jointly and
severally, subject to the limitations set forth in Section 7.2, covenant and
agree that they will indemnify and hold harmless WCI, the Surviving Corporation
and their respective directors, officers and agents and their respective
successors and assigns (collectively the "WCI INDEMNITEES"), from and after the
date of this Agreement against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation), expenditures, including, without limitation, any
"ENVIRONMENTAL SITE LOSSES" (as such term is hereinafter defined) identified by
a WCI Indemnitee in a Claims Notice (as defined in Section 7.3(a)), or asserted
by a WCI Indemnitee in litigation commenced against the Shareholders provided
that in either case any such Claims Notice shall be given or the litigation
commenced prior to the third anniversary of this Agreement (irrespective of the
date of discovery), with respect to each of the following contingencies (all,
the "7.1 INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant on the part of the Shareholders or the
Corporation pursuant to the terms of this Agreement or any
misrepresentation in or omission from any Exhibit, Schedule, list,
certificate, or other instrument furnished or to be furnished to WCI
pursuant to the terms of this Agreement, regardless of whether, in the
case of a breach of a representation or a warranty, WCI relied on the
truth of such representation or warranty or had any knowledge of any
breach thereof.
(b) The design, development, construction or operation of any
Facility or any other "ENVIRONMENTAL SITE" as hereinafter defined, or
the installation or operation of a UST during any period on or prior to
the Closing Date, in excess of the amount of liability with respect
thereto, if any, set forth on Part II of Schedule 3.8. As used in this
Agreement, "ENVIRONMENTAL SITE" shall mean any Facility, any UST and any
other waste storage, processing, treatment or disposal facility, and any
other business site or any other real property owned, leased, controlled
or operated by the Corporation or by any predecessor thereof on or prior
to the Closing Date. As used in this Agreement, "ENVIRONMENTAL SITE
LOSSES" shall mean any and all losses, damages (including exemplary
damages and penalties), liabilities, claims, deficiencies, costs,
expenses, and expenditures (including, without limitation, expenses in
connection with site evaluations, risk assessments and feasibility
studies) arising out of or required by an interim or final judicial or
administrative decree, judgment, injunction, mandate, interim or final
permit condition or restriction, cease and desist order, abatement
order, compliance order, consent order, clean-up order, exhumation
order, reclamation order or any other remedial action that is required
to be undertaken under federal, state or local law in respect of
operating activities on or affecting any Facility, any UST or any other
Environmental Site, including, but not limited to (x) any actual or
alleged violation of any law or regulation respecting the
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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, or required to be
described on Schedule 3.8, Part II, of which the Corporation or the
Shareholders have knowledge on the Closing Date and which are not so
described.
(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incident to any of the foregoing.
7.2 Limitations on Shareholders' Indemnities.
(a) Subject to the provisions of 7.2(b) hereof, the obligations
of the Shareholders to indemnify the WCI Indemnitees as provided in
Section 7.1 shall be equal to the amount by which the cumulative amount
of all such liabilities, claims, damages deficiencies, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses,
expenditures and Environmental Site Losses with respect to any or all
7.1 Indemnity Events exceed $25,000 (the "GENERAL DEDUCTIBLE AMOUNT");
provided, that the amount of any obligation of indemnity arising
pursuant to Section 7.1(a) with respect to any representation, warranty
or covenant contained in Sections 3.1 through 3.5, 3.12(c), 3.18, 3.22
and 6.6 hereof and pursuant to Section 7.1(c) shall not be subject to
the General Deductible Amount.
(b) The maximum amount which WCI can recover as a result of one
or more 7.1 Indemnity Events shall not exceed the Merger Consideration
(as adjusted pursuant to Section 1.2(a) hereof, plus any portion of the
Contingent Merger Consideration paid or payable.
For this purpose, the Shares shall be valued at the Average Closing Price.
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7.3 Notice of Indemnity Claim.
(a) In the event that any claim ("CLAIM") is hereafter asserted
against or arises with respect to any WCI Indemnitee as to which such
Indemnitee may be entitled to indemnification hereunder, the WCI
Indemnitee shall notify the Shareholders (as applicable collectively,
the "INDEMNIFYING PARTY") in writing thereof (the "CLAIMS NOTICE")
within 60 days after (i) receipt of written notice of commencement of
any third party litigation against such WCI Indemnitee, (ii) receipt by
such WCI Indemnitee of written notice of any third party claim pursuant
to an invoice, notice of claim or assessment, against such WCI
Indemnitee, or (iii) such WCI Indemnitee becomes aware of the existence
of any other event in respect of which indemnification may be sought
from the Indemnifying Party (including, without limitation, any
inaccuracy of any representation or warranty or breach of any covenant).
The Claims Notice shall describe the Claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount, if
known, or an estimate, if possible, of the losses that have been or may
be incurred or suffered by the WCI Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim for
money damages where the cumulative total of all Claims (including such
Claims) do not exceed the limit set forth in Section 7.2 at the time the
Claim is made, by the Indemnifying Party's own counsel; provided,
however, the Indemnifying Party may assume and undertake the defense of
such a third party Claim only upon written agreement by the Indemnifying
Party that the Indemnifying Party is obligated to fully indemnify the
WCI Indemnitee with respect to such action. The WCI Indemnitee may
participate, at the WCI Indemnitee's own expense, in the defense of any
Claim assumed by the Indemnifying Party. Without the written approval of
the WCI Indemnitee, which approval shall not be unreasonably withheld,
the Indemnifying Party shall not agree to any compromise of a Claim
defended by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying Party's
receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 7.3(b) and elected to
defend the Claim, the WCI Indemnitee shall have the right to assume
control of the defense and/or compromise of such Claim, and the costs
and expenses of such defense, including reasonable attorneys' fees,
shall be added to the Claim. The Indemnifying Party shall promptly, and
in any event within thirty (30) days after demand therefor, reimburse
the WCI Indemnitee for the costs of defending the Claim, including
attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall keep the
other party reasonably informed at all times of the progress and
development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the parties to this Agreement shall cooperate with each other and make
available to each other and 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
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deliver a Claims Notice or otherwise notify the Indemnifying Party of
the commencement of such actions in accordance with this Section 7.3
shall not relieve the Indemnifying Party from the obligation to
indemnify hereunder but only to the extent that the Indemnifying Party
establishes by competent evidence that it has been prejudiced thereby.
(e) In the event both the WCI Indemnitee and the Indemnifying
Party are named as defendants in an action or proceeding initiated by a
third party, they shall both be represented by the same counsel (on whom
they shall agree), unless such counsel the WCI Indemnitee, or the
Indemnifying Party shall determine that such counsel has a conflict of
interest in representing both the WCI Indemnitee and the Indemnifying
Party in the same action or proceeding and the WCI Indemnitee and the
Indemnifying Party do not waive such conflict to the satisfaction of
such counsel.
7.4 Liability for Breaches of Representations and Warranties. The
liability of a party making the representations and warranties 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") for a breach thereof shall survive the
consummation of the transactions contemplated hereby.
7.5 No Exhaustion of Remedies or Subrogation; Right of Set Off. The
Shareholders waive any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due any
Shareholder any amount to which any WCI Indemnitee is entitled to be indemnified
hereunder with respect to any 7.1 Indemnity Event. Such right of set off shall
be separate and apart from any and all other rights and remedies that the
Indemnities may have against Shareholders or their successors. This Section
shall not preclude the Shareholders from pursuing remedies against third parties
in the event of a Claim against the Shareholders by WCI.
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
8.1 Restrictive Covenants. As to the Surviving Corporation, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the purchaser of
the Corporation's Stock, is and will be engaged in the same business as the
Surviving Corporation (the "BUSINESS"); (ii) the Shareholders and their
Affiliates are intimately familiar with the Business; (iii) the Business is
currently conducted in the States of Oregon and Washington, and WCI intends to
continue the Business in Oregon and Washington and intends, by acquisition or
otherwise, to expand the Business into other geographic areas of Oregon and
Washington where it is not presently conducted; (iv) the Shareholders and their
Affiliates have had access to trade secrets of, and confidential information
concerning, the Business; (v) the agreements and covenants contained in this
Section 8.1 are essential to protect the Business and the goodwill being
acquired; and (vi) the Shareholders and their Affiliates have the means to
support themselves and their dependents other than by engaging in a business
substantially similar to the Business and the provisions of this Section 8 will
not impair such ability. The Shareholders covenant and agree as set forth in
(a), (b) and (c) below with respect to the Corporation:
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(a) Non-Compete. For a period commencing on the Closing Date and
terminating five years thereafter (the "RESTRICTED PERIOD"), neither the
Shareholders nor any of their Affiliates shall, anywhere in the Cities
of Battleground, Washougal, Camas or Vancouver, Washington, the City of
Portland, Oregon, or in ▇▇▇▇▇ County, Washington or Multnomah County,
Oregon; where WCI or one of its subsidiaries owns or operates a business
similar to the Business (the "RESTRICTED AREA"), directly or indirectly,
acting individually or as the owner, shareholder, partner, or employee
of any entity, other than WCI or one of its subsidiaries, (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 or lease any facility, equipment or other assets to any
business engaged in the same business as the Surviving Corporation; or
(iv) receive or purchase a financial interest in, make a loan to, or
make a gift in support of, any such business in any capacity, including,
without limitation, as a sole proprietor, partner, shareholder, officer,
director, principal, agent, trustee or lender; provided, however, that
any of the Shareholders may own, directly or indirectly, solely as an
investment, securities of any business traded on any national securities
exchange or NASDAQ, provided none of the Shareholders is a controlling
person of, or a member of a group which controls, such business and
further provided that the Shareholders do not, in the aggregate,
directly or indirectly, own 2% or more of any class of securities of
such business.
(b) Confidential Information. During the Restricted Period and
thereafter, the Shareholders and their Affiliates shall keep secret and
retain in strictest confidence, and shall not use for the benefit of
themselves or others, all data and information relating to the Business
("CONFIDENTIAL INFORMATION"), including without limitation, know-how,
trade secrets, customer lists, supplier lists, details of contracts,
pricing policies, operational methods, marketing plans or strategies,
bidding information, practices, policies or procedures, product
development techniques or plans, and technical processes; provided,
however, that the term "Confidential Information" shall not include
information that (i) is or becomes generally available to the public
other than as a result of disclosure by the Shareholders or (ii) is
general knowledge in the solid waste handling and landfill business and
not specifically related to the Business. Notwithstanding the foregoing,
Shareholders may disclose and discuss confidential information with
their legal and tax advisors, and as is required in connection with any
legal proceedings, and the Shareholders shall give WCI prior written
notice of such disclosure at least forty-eight (48) hours before such
disclosure is made, if possible.
(c) Property of the Business. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof) relating
to the Business, including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of
the Shareholders or the Corporation or made available to them relating
to the Business, but excluding any materials (other than the minute
books of the Corporation)
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maintained by any attorneys for the Corporation or the Shareholders
prior to the Closing, are and shall be the property of WCI and have been
delivered or will be delivered or made available to WCI at the Closing.
(d) Non-Solicitation. Without the consent of WCI, which may be
granted or withheld by WCI in its discretion, the Shareholders and their
Affiliates shall not solicit any employees of the Surviving Corporation
to leave the employ of the Surviving Corporation and join the
Shareholders or any Affiliate in any business endeavor owned or pursued
by the Shareholders.
(e) No Disparagement. From and after the Closing Date, none of
the Shareholders shall, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate WCI or
any of its subsidiaries, or any officer, director or employee, or any
product or service or procedure of any such company whether or not such
denigrating or derogatory statements shall be true and are based on acts
or omissions which are learned by the Shareholders from and after the
date hereof or on acts or omissions which occur from and after the date
hereof, or otherwise. A statement shall be deemed denigrating or
derogatory to any person or entity if it adversely affects the regard or
esteem in which such person or entity is held by investors, lenders or
licensing, rating, or regulatory entities. Without limiting the
generality of the foregoing, none of the Shareholders shall, directly or
indirectly in any way in respect of any such company or any such
directors or officers, communicate with, or take any action which is
adverse to the position of any such company with any person, entity or
governmental or regulatory body or agency who or which has dealings or
prospective dealings with any such company or jurisdiction or
prospective jurisdiction over any such company. This paragraph does not
apply to the extent that testimony is required by legal process,
provided that WCI has received not less than five days' prior written
notice of such proposed testimony.
8.2 Rights and Remedies Upon Breach. If any of the Shareholders or any
Affiliate breaches, or threatens to commit a breach of, any of the provisions of
Section 8.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have the following
rights and remedies, each of which rights and remedies shall be independent of
the others and severally enforceable, and each of which is in addition to, and
not in lieu of, any other rights and remedies available to WCI at law or in
equity:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to WCI and that
money damages would not provide an adequate remedy to WCI. Accordingly,
in addition to any other rights or remedies, WCI shall be entitled to
injunctive relief to enforce the terms of the Restrictive Covenants and
to restrain the Shareholders from any violation thereof.
(b) Accounting. The right and remedy to require the Shareholders
to account for and pay over to WCI all compensation, profits, monies,
accruals, increments or other
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benefits derived or received by the Shareholders as the result of any
transactions constituting a breach of the Restrictive Covenants.
(c) Severability of Covenants. The Shareholders acknowledge and
agree that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof,
is invalid or unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Shareholders
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic
scope of the Restrictive Covenants. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of
WCI and the Shareholders that such determination not bar or in any way
affect WCI's right to the relief provided above in the courts of any
other jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
9. GENERAL
9.1 Additional Conveyances. Following the Closing, the Shareholders and
WCI shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon such additional instruments as WCI, the
Surviving Corporation or the Shareholders may reasonably request for the purpose
of carrying out this Agreement. The Shareholders will cooperate with WCI and/or
the Surviving Corporation on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings or disputes of any nature with 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, the
Surviving Corporation and the heirs, legal representatives or assigns of the
Shareholders; provided, however, that any such assignment shall be subject to
the terms of this Agreement and shall not relieve the assignor of its or his
responsibilities under this Agreement.
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9.3 Public Announcements. Except as required by law, no party shall make
any public announcement or filing with respect to the transactions provided for
herein prior to the Closing Date without the prior consent of the other parties
hereto.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or upon delivery by
registered or certified U.S. mail or one business day following deposit with an
air courier service:
If to the Shareholders: at their respective addresses set forth on
Schedule 3.2
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Post ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.6 Attorneys' Fees. In the event of any dispute or controversy between
WCI on the one hand and the Corporation or the Shareholders on the other hand
relating to the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees and expenses incurred by the prevailing
party, as awarded by the court. Such award shall include post-judgment
attorney's fees and costs.
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9.7 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington without regard to its
conflict of laws provisions. Any action to enforce any of the terms or
conditions contained in this Agreement (including the Schedules and Exhibits
hereto) shall be brought in ▇▇▇▇▇ County, Washington.
9.8 Payment of Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, each party hereto will pay its own fees,
expenses and disbursements incurred in connection herewith and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed hereunder (including, in the case of the Shareholders, any such
fees, expenses and disbursements paid or accrued by, or charged to, the
Corporation).
9.9 Incorporation by Reference. All Schedules and Exhibits attached
hereto are incorporated herein by reference as though fully set forth at each
point referred to in this Agreement.
9.10 Captions. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.11 Number and Gender of Words; Corporation. Whenever the singular
number is used herein, the same shall include the plural where appropriate, and
shall apply to all of such number, and to each of them, jointly and severally,
and words of any gender shall include each other gender where appropriate.
9.12 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, the Shareholders
and WCI and supersedes any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement may be modified or amended only
by a written instrument executed by the Corporation, the Shareholders (or the
Shareholders' Representative on their behalf) and WCI acting through its
officers, thereunto duly authorized by its Board of Directors.
9.13 Waiver. No waiver by any party hereto at any time of any breach of,
or compliance with, any condition or provision of this Agreement to be performed
by any other party hereto may be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or at any prior or subsequent time.
9.14 Construction. The language in all parts of this Agreement must be
in all cases construed simply according to its fair meaning and not strictly for
or against any party. Unless expressly set forth otherwise, all references
herein to a "day" are deemed to be a reference to a calendar day. All references
to "BUSINESS DAY" mean any day of the year other than a Saturday, Sunday or a
public or bank holiday in Oregon, Washington 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. ARBITRATION AND DISPUTE RESOLUTION
THE PARTIES WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING ANY
RIGHT TO A JURY TRIAL, WITH RESPECT TO ANY DISPUTE CONCERNING DETERMINATION OF
THE ADJUSTMENTS TO THE MERGER CONSIDERATION UNDER SECTIONS 2.1(a) ONLY. The
parties agree that in the event Buyer and the Shareholders' Representative are
unable to resolve a dispute concerning determination of the Adjustments to the
Merger Consideration, such dispute shall be resolved exclusively by arbitration
in accordance with the provisions of Washington statutes for arbitration of
civil disputes. Either party may appoint an arbitrator and give notice to the
other party. Within ten (10) days of receipt of such notice the other party
shall appoint an arbitrator and the two arbitrators so appointed shall, within
ten (10) days of appointment of the second arbitrator, appoint a third
arbitrator. All three arbitrators shall be attorneys or certified public
accountants with at least ten (10) years experience in the handling of business
sales and acquisitions of a similar nature to the present transaction.
The three arbitrators shall conduct a hearing and shall issue an award
which shall be final and binding on the parties, and judgment may be entered on
it in any court of competent jurisdiction as otherwise provided by law. In no
event shall the arbitrators award punitive damages. The preceding portion of
this Section does not apply to any dispute relating to any other provision of
the Agreement, or to any other aspect of the transactions contemplated herein,
and such other disputes may be resolved by the parties by any means available,
including without limitation court action and a jury trial. The parties
expressly do not waive any right to pursue any remedy available with respect to
any dispute other than one concerning determination of the adjustments to the
Merger Consideration under Section 2.1(a), and expressly do not waive the right
to trial with respect any other dispute.
11. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Act Section 1.6
Affiliate Section 3.11
Average Closing Price Section 1.2(b)
APE Section 5.1(d)
Balance Sheet Date Section 3.7
Business Section 8.1
business day Section 9.14
Claim Section 7.3(a)
Claims Notice Section 7.3(a)
Closing Section 2
Closing Date Section 2
Closing Date Debt Section 3.22(a)
Effective Date Current Assets Section 3.22(b)
Effective Date Current Liabilities Section 3.22(b)
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Collection Franchises Section 3.10(a)
Confidential Information Section 8.1(b)
Corporate Property Section 3.12(b)
Corporation Parties
Corporation's Stock Second Recital
Environmental Laws Section 3.24
Environmental Site Section 7.1(b)
Environmental Site Losses Section 7.1(b)
ERISA Section 3.17(a)
Excluded Assets Section 1.5
Facility Section 3.10(c)
Facilities Section 3.10(c)
Facility Property Section 3.10(c)(iii)
Facility Surveys/Site Plans Section 3.10(c)(iii)
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 7.3(a)
Indemnifying Party Section 7.3(a)
7.1 Indemnity Events Section 7.1
IPO Section 1.6
IPO Price Section 1.6
▇▇▇▇▇ Parties
knowledge Section 3.36
Laws Section 3.24
Lease Fourth Recital
Lessor Fourth Recital
Permitted Liens Section 3.12(c)
Merger Consideration 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 Area Section 8.1(a)
Restricted Covenants Section 8.2
Restricted Period Section 8.1(a)
Required Governmental Consents Section 3.10(a)
SEC Section 3.38(g)
Shareholders Parties
Shares Section 1.2(b)
Transfer Station Section 1.3(b)
UST Section 3.26
WCI Indemnitees Section 7.1
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WCI Parties
WCI Stock Section 1.2(b)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
CORPORATION: EVERGREEN WASTE SYSTEMS INC.
By:_____________________________________
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President
WCI: WASTE CONNECTIONS, INC.
By:_____________________________________
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Chief Executive Officer and President
SHAREHOLDERS:
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________________________________________
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