EXHIBIT 10.5
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
This Amended and Restated Stock Purchase Agreement (this "AGREEMENT")
is dated this 11th day of March, 2004, by and among Capital Environmental
Resource Inc., an Ontario (Canada) corporation ("Buyer Parent"), Waste Services,
Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer Parent
("BUYER"), Waste Services of Florida, Inc., a Delaware corporation and a
wholly-owned subsidiary of Buyer ("BUYER SUB"), ▇▇▇▇▇ ▇▇▇▇, Sr., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, Jr. Irrevocable Trust, ▇▇▇▇▇▇ ▇▇▇▇ Irrevocable Trust, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Irrevocable Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Irrevocable Trust, ▇▇▇▇▇▇ ▇▇▇▇
Irrevocable Trust and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust (each a "SELLER" and
together, the "SELLER PARTIES"), and ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, Jr., ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (each a "TRUST
BENEFICIARY" and together, the "TRUST BENEFICIARIES"), and Florida Recycling
Services, Inc., an Illinois corporation ("FRS").
W I T N E S S E T H:
WHEREAS, the Seller Parties own all of the issued and outstanding
capital stock of FRS;
WHEREAS, the Trust Beneficiaries are the beneficiaries of each of their
respective Trusts (as defined herein) and will benefit directly from the
transactions contemplated hereby;
WHEREAS, FRS is engaged in the Solid Waste Business (as defined herein)
in the Subject Geographic Areas (as defined herein) (the "TARGET OPERATIONS");
WHEREAS, the Seller Parties wish to sell to Buyer Sub and Buyer Sub
wishes to purchase from the Seller Parties all of the issued and outstanding
capital stock of FRS and to enter into a number of ancillary agreements in
connection therewith;
WHEREAS, Buyer Parent, Buyer, Buyer Sub, the Seller Parties, the Trust
Beneficiaries and FRS (collectively, the "PARTIES") have entered into a Stock
Purchase Agreement dated November 21, 2003, which was amended by an Amendment
No. 1 dated as of January __, 2004 and an Amendment No. 2 dated as of February
__, 2004 (the "EXISTING AGREEMENT"); and
WHEREAS, the Parties wish to amend and restate the Existing Agreement
in its entirety to read as set forth herein.
NOW, THEREFORE, the Parties agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this Agreement:
"2003 FINANCIAL STATEMENTS" has the meaning set forth in Section 6.10
of this Agreement.
"ACQUIRED SHARES" means all of the issued and outstanding shares of
capital stock in FRS, all of which are owned by the Seller Parties and all of
which are to be acquired by Buyer Sub pursuant to this Agreement.
"ACQUISITION" means the purchase and sale of the Acquired Shares as
contemplated by this Agreement.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified Person
with the terms "CONTROL" and "CONTROLLED" meaning for purposes of this
definition, the power to direct the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities or
partnership or other ownership interests, or by contract or otherwise.
"AGREEMENT" has the meaning set forth in the introduction to this
Agreement.
"ALTAMONTE LEASE" has the meaning set forth in Section 3.4(e) of this
Agreement.
"ANCILLARY AGREEMENTS" means, collectively, the Escrow Agreement, the
Release, the Consulting Agreements, the Registration Rights Agreement, the
Container Services Agreement, the Altamonte Lease, the ▇▇▇▇▇▇▇ Lease Agreement,
the Transfer Station Disposal and Processing Agreement, the Referral Fee
Agreement, the RIP Option Agreement and any other agreements delivered pursuant
to this Agreement.
"ANTITRUST DIVISION" means the Antitrust Division of the United States
Department of Justice.
"AUDITED YEAR-END FINANCIAL STATEMENTS" means the audited consolidated
balance sheets of FRS and its Subsidiaries as of December 31, 2002 and the
related statements of operations, changes in stockholders' equity and cash flows
for the fiscal year then ended.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in New York, New York are authorized or obligated to close.
"BUYER" has the meaning set forth in the introduction to this
Agreement.
"BUYER INDEMNIFIED PARTIES" has the meaning set forth in Section 14.1
of this Agreement.
"BUYER PARENT" has the meaning set forth in the Recitals to this
Agreement.
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"BUYER PARENT COMMON STOCK" means the Common Stock, par value $0.01 per
share, of Buyer.
"BUYER SUB" has the meaning set forth in the introduction to this
Agreement.
"BUYER'S AUDITORS" means BDO ▇▇▇▇▇▇▇ LLP.
"CAP" has the meaning set forth in Section 14.5(b) of this Agreement.
"CASH CONSIDERATION" has the meaning set forth in Section 2.2 of this
Agreement.
"CASH DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended.
"CLAIM" has the meaning set forth in Section 14.4 of this Agreement.
"CLOSING" has the meaning set forth in Section 3.1 of this Agreement.
"CLOSING CASH CONSIDERATION" means the Estimated Cash Consideration,
less the Cash Deposit, less the Extension Payment (if applicable) less the May 1
Payment (if applicable).
"CLOSING DATE" means (a) the fifth (5th) Business Day immediately
following the earliest date upon or by which the conditions to the respective
obligations of the Parties set forth in Articles VIII, IX and X shall have been
satisfied or waived, or (b) such other date as Buyer and the Seller Parties may
mutually agree.
"CLOSING DATE CURRENT ASSETS" means the amount which would be reflected
as current assets on a combined balance sheet of FRS and its Subsidiaries dated
as of the Closing Date and prepared in accordance with U.S. GAAP on a consistent
basis with the Audited Year-End Financial Statements, giving effect to the
principles set forth in Sections 2.6(b)(i)(A) and (B).
"CLOSING DATE CURRENT LIABILITIES" means the amount which would be
reflected as current liabilities on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that current liabilities shall include a reserve for bad
debts calculated on a basis consistent with the bad debt reserve for the year
ended December 31, 2002, included within the Audited Year-End Financial
Statements.
"CLOSING DATE TOTAL INDEBTEDNESS" means the combined Indebtedness of
FRS and its Subsidiaries as of the Closing Date, as finally determined in
accordance with Section 2.6(a).
"CLOSING DATE WORKING CAPITAL" means the positive or negative amount
obtained by subtracting (a) the Closing Date Current Liabilities from (b) the
Closing Date Current Assets.
"CLOSING DATE WORKING CAPITAL BALANCE" means the amount, if any, by
which the Closing Date Current Assets exceed the Closing Date Current
Liabilities.
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"CLOSING DATE WORKING CAPITAL DEFICIT" means the amount, if any, by
which Closing Date Current Liabilities exceed the Closing Date Current Assets.
"CLOSING STOCK CONSIDERATION" means 9,250,000 shares of Buyer Parent
Common Stock, less 3,000,000 shares of Buyer Parent Common Stock to be deposited
with the Escrow Agent pursuant to the Escrow Agreement, less the Stock Deposit.
"CLOSING WORKSHEET" has the meaning set forth in Section 2.4 of this
Agreement.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1986.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"COLLECTION PERIOD" has the meaning set forth in Section 11.10 of this
Agreement.
"COMPANY EMPLOYEE PLANS" has the meaning set forth in Section 4.17(a)
of this Agreement.
"COMPANY FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.
"COMPANY PENSION PLANS" has the meaning set forth in Section 4.17(b) of
this Agreement.
"COMPANY PERMITS" means all Permits held by, or applicable to, FRS and
its Subsidiaries.
"COMPETING TRANSACTION" has the meaning set forth in Section 6.6(b) to
this Agreement.
"CONTAINER SERVICES AGREEMENT" has the meaning set forth in Section
3.4(d) of this Agreement.
"CONSULTING AGREEMENTS" has the meaning set forth in Section 3.4(b) of
this Agreement.
"CORPORATE RECORDS" means the corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders, and any other records of FRS and its Subsidiaries.
"COVERED PARTY ACCEPTANCE NOTICE" has the meaning set forth in Section
11.7 of this Agreement.
"DAMAGES" means all obligations, claims, liabilities, damages,
penalties, deficiencies, losses, investigations, proceedings, judgments, fines,
and reasonable costs and expenses (including, but not limited to, reasonable
costs and expenses incurred in connection with the performance of obligations,
interest, bonding and court costs and attorneys', accountants', engineers',
consultants' and investigators' fees and disbursements) and disbursements
incurred in connection with any investigation or defense of any of the
foregoing.
"DISPOSAL AGREEMENT" has the meaning set forth in Section 15.4(c) of
this Agreement.
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"ENVIRONMENTAL CLAIM" means any claim by a Person alleging or imposing
actual or potential liability (including potential liability for any
investigatory cost, containment or oversight cost, control cost, prevention
cost, remediation cost, cleanup cost, governmental response cost, natural
resources damage, toxic tort claim, property damage, personal injury, or
penalty) or use limitation arising out of, based on, resulting from or relating
to (a) the presence or potential presence, storage, transport, disposal, use,
discharge, release or threatened release of any Hazardous Substance at any
location, whether or not owned by the Person against which the claim is made, or
(b) circumstances actually or allegedly forming the basis for any liability or
use limitation under, or any violation or alleged violation of, any
Environmental Law.
"ENVIRONMENTAL CONSULTANT" has the meaning set forth in Section 6.5 of
this Agreement.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign Laws, including common Laws and administrative or judicial
interpretations of those Laws by any Governmental Entity, regulations,
directives, consent agreements, ordinances, orders and moratoria relating to the
preservation of natural resources, pollution, the protection of human health and
safety from the effects of pollution or protection of the environment (which
includes its ambient air, surface water, ground water, land surface or
subsurface strata), including Laws relating to emissions, discharges, releases
or threatened releases of Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, existence, treatment, storage,
disposal, transport, recycling, reporting or handling of Hazardous Substances,
but not including zoning and land use Laws.
"ENVIRONMENTAL PERMITS" means all Permits from any Governmental Entity
required under any Environmental Law for FRS and its Subsidiaries to conduct the
Target Operations as presently conducted.
"ENVIRONMENTAL REPORT" has the meaning set forth in Section 6.5 of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business, whether or not incorporated, which together with that Person would be
deemed a single employer within the meaning of Section 4001 of ERISA or Section
414 of the Code.
"ESCROW AGENT" has the meaning set forth in Section 2.7 of this
Agreement.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.7 of this
Agreement.
"ESCROW FUND" has the meaning set forth in Section 2.7 of this
Agreement.
"ESTIMATED CASH CONSIDERATION" has the meaning set forth in Section 2.4
of this Agreement.
"ESTIMATED CLOSING DATE TOTAL INDEBTEDNESS" has the meaning set forth
in Section 2.4 of this Agreement.
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"ESTIMATED CLOSING DATE WORKING CAPITAL" has the meaning set forth in
Section 2.4 of this Agreement.
"ESTIMATED CLOSING DATE WORKING CAPITAL BALANCE" has the meaning set
forth in Section 2.4 of this Agreement.
"ESTIMATED CLOSING DATE WORKING CAPITAL DEFICIT" has the meaning set
forth in Section 2.4 of this Agreement.
"EXCESS SECTION 338(H)(10) TAXES" has the meaning set forth in Section
12.1(d) of this Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated under such Act.
"EXCLUDED ACCOUNTS RECEIVABLE" has the meaning set forth in Section
2.6(b)(i) of this Agreement.
"EXCLUDED COUNTIES" has the meaning set forth in Section 11.7 of this
Agreement.
"EXISTING AGREEMENT" has the meaning set forth in the introduction to
this Agreement.
"EXTENSION PAYMENT" has the meaning set forth in Section 15.3(d) of
this Agreement.
"FINALLY DETERMINED CURRENT ASSETS" means the amount which would be
reflected as current assets on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that the calculation of Finally Determined Current Assets
shall exclude the effect of any Permitted Capital Expenditures.
"FINALLY DETERMINED CURRENT LIABILITIES" means the amount which would
be reflected as current liabilities on a combined balance sheet of FRS and its
Subsidiaries dated as of the Closing Date and prepared in accordance with U.S.
GAAP on a consistent basis with the Audited Year-End Financial Statements;
PROVIDED, HOWEVER, that current liabilities shall include a reserve for bad
debts calculated on a basis consistent with the bad debt reserve for the year
ended December 31, 2002, included within the Audited Year-End Financial
Statements; and PROVIDED, FURTHER that the calculation of Finally Determined
Current Liabilities shall exclude the effect of any Permitted Capital
Expenditures.
"FINALLY DETERMINED WORKING CAPITAL" means the positive or negative
amount obtained by subtracting (a) the Finally Determined Current Liabilities
from (b) the Finally Determined Current Assets.
"FINALLY DETERMINED WORKING CAPITAL BALANCE" means the amount, if any,
by which the Finally Determined Current Assets exceed the Finally Determined
Current Liabilities, as finally determined in accordance with Section 2.6(b).
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"FINALLY DETERMINED WORKING CAPITAL DEFICIT" means the amount, if any,
by which Finally Determined Current Liabilities exceed the Finally Determined
Current Assets, as finally determined in accordance with Section 2.6(b).
"FIRST OFFER ELECTION" has the meaning set forth in Section 11.7 of
this Agreement.
"FIRST OFFER NOTICE" has the meaning set forth in Section 11.7 of this
Agreement.
"FIRST OFFER TERMS" has the meaning set forth in Section 11.7 of this
Agreement.
"FRS" means Florida Recycling Services, Inc., an Illinois corporation.
"FTC" means the United States Federal Trade Commission.
"GOVERNMENTAL ENTITY" means any U.S., state, territorial, federal,
local or foreign court, executive office, legislature, governmental agency or
ministry, commission or administrative, regulatory or self-regulatory authority
or instrumentality.
"HAZARDOUS SUBSTANCES" means chemicals, pollutants, contaminants,
wastes (including ambient wastes, hazardous wastes and liquid industrial
wastes), or other substances (including toxic, deleterious or hazardous
substances), as defined, listed or regulated pursuant to Environmental Laws,
including, asbestos or asbestos-containing materials, polychlorinated biphenyls,
urea formaldehyde, toxic mold and fungus, radon, pesticides and oils, and
petroleum and petroleum products (as those exemplary terms are defined in or
regulated under the United States National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. Sections 300.1 et seq. and other
Environmental Laws).
"HOMOSASSA LANDFILL" has the meaning set forth in Section 11.7 of this
Agreement.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning set forth in Section 4.19(d) of this
Agreement.
"INDEBTEDNESS" means with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture, letter of credit or similar instrument, (c) all
obligations of such Person with respect to guarantees, (d) all obligations of
such Person under leases of property which are required to be capitalized under
U.S. GAAP, (e) all obligations of such Person in respect of acceptances issued
or created for the account of such Person (other than endorsements in the
ordinary course of business), (f) all obligations in respect of interest rate
swaps or other interest rate hedging products or foreign currency exchange
agreements or exchange rate hedging arrangements, (g) all obligations in respect
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of reimbursement obligations under letters of credit, and (h) all liabilities of
the type referred to in clauses (a) through (g) above that are secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
"INDEMNIFIED PARTY" has the meaning set forth in Sections 14.3 and 14.4
of this Agreement, as applicable.
"INDEMNIFYING PARTY" has the meaning set forth in Sections 14.3 and
14.4 of this Agreement, as applicable.
"INSURANCE" has the meaning set forth in Section 4.27 of this
Agreement.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 4.25 of
this Agreement.
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.
"IRS" means the Internal Revenue Service.
"LAND" means each parcel of real property owned or leased by FRS or any
of its Subsidiaries (including all structures, buildings, fixtures, personalty
and improvements located thereon, easements, interests, rights, tenements,
hereditaments, and appurtenances thereto that in any way benefit the Land or the
improvements thereon or relating to the Target Operations, all mineral, water,
and irrigation rights, and any interests in any roadway adjoining the Land and
any rights or interests that may accrue to the benefit of FRS or any of its
Subsidiaries or the Land as a result of the abandonment thereof or, if the Land
is leased, all of the leasehold interest of FRS and its Subsidiaries in and to
the Land and any structures, buildings or improvements thereon).
"LAW" means a law, statute, ordinance, rule, code or regulation enacted
or promulgated, or order, directive, instruction or other legally binding
guideline or policy issued or rendered by, any Governmental Entity.
"LIEN" means a lien, mortgage, encumbrance, deed of trust, deed to
secure debt, pledge, hypothecation, assignment, deposit arrangement, easement,
preference, priority, assessment, security interest, lease, sublease, charge,
claim, adverse claim, levy, interest of other Persons, or other encumbrance of
any kind (including any conditional sale or other title retention agreement
having the same economic effect as any of the foregoing).
"LOCK-UP PERIOD" shall have the meaning set forth in Section 2.8 of
this Agreement.
"MATERIAL ADVERSE EFFECT" means (a) when used with reference to FRS, a
material adverse effect on the financial condition, business, assets, or results
of operation of FRS and its Subsidiaries taken as a whole, (b) when used with
reference to a Seller, a material adverse effect on such Seller's ability to
perform its obligations under this Agreement or any Ancillary Agreement to which
it is a party, and (c) when used with reference to the Target Operations, a
material adverse effect on the financial condition, business, assets, or results
of operations of the Target Operations taken as a whole.
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"MATERIAL CONTRACTS" has the meaning set forth in Section 4.18 of this
Agreement.
"MAY 1 PAYMENT" has the meaning set forth in Section 15.3(d) of this
Agreement.
"NOTE" has the meaning set forth in Section 15.4(d) of this Agreement.
"NOTICE OF OBJECTION" has the meaning set forth in Section 2.6(a)(ii)
of this Agreement.
"OSHA" means the U.S. Occupational Safety & Health Administration.
"OUTSIDE DATE" has the meaning set forth in Section 15.3(d) of this
Agreement.
"PARTIES" has the meaning set forth in the introduction to this
Agreement.
"PERMITS" means all federal, state, local, or other governmental and
other third party permits (including occupancy permits), certificates, licenses,
franchises, concessions, consents, registrations, exemptions, approvals and
other authorizations.
"PERMITTED CAPITAL EXPENDITURES" means all capital expenditures of FRS
and its Subsidiaries set forth on EXHIBIT C and any other capital expenditures
made by FRS and its Subsidiaries from the date hereof through the Closing Date
which are approved in writing by Buyer before such capital expenditures are
incurred.
"PERMITTED LIENS" means (a) those Liens set forth in Section 4.10 of
the Seller Disclosure Schedule, (b) Liens for water and sewer charges and
current Taxes not yet due and payable or being contested in good faith but only
to the extent reserved on the Audited Year-End Financial Statements, and (c)
other Liens (including mechanics', couriers', workers', repairers',
materialmen's, warehousemen's and other similar Liens) arising in the ordinary
course of business as would not in the aggregate materially adversely affect the
value of, or materially adversely interfere with the use of, the property
subject thereto.
"PERSON" means an individual, corporation, partnership, association,
joint stock company, limited liability company, Governmental Entity, trust,
unincorporated organization or other legal entity.
"POST-SIGNING INTERIM FINANCIAL STATEMENTS" has the meaning set forth
in Section 6.4 of this Agreement.
"PRE-CLOSING SELLER INSURANCE CLAIMS" means any liability, personal
injury, property damage, workers compensation or other similar claim (other than
health and welfare insurance claims) made against FRS or any of its Subsidiaries
by any Person with respect to a loss, damage, claim, incident or occurrence
which occurred on or before the time of Closing and of which the Seller Parties
had knowledge, including any such matter which was incurred but not reported on
or before the time of Closing.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
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"PROPRIETARY INFORMATION" has the meaning set forth in Section 11.6 of
this Agreement.
"PURCHASE PRICE" has the meaning set forth in Section 2.2 of this
Agreement.
"REAL ESTATE LEASES" means all existing leases, occupancy agreements or
licenses or similar agreements of FRS and its Subsidiaries and any amendment
thereto in connection with the Land.
"REFERRAL FEE AGREEMENT" has the meaning set forth in Section 3.4(f) of
this Agreement.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in Section
3.4(c) of this Agreement.
"RELEASE" has the meaning set forth in Section 3.4(a) of this
Agreement.
"REPRESENTATIVES" has the meaning set forth in Section 6.6(a) of this
Agreement.
"RIGHT OF FIRST OFFER" has the meaning set forth in Section 11.7 of
this Agreement.
"RIP" means RIP, Inc., a Florida corporation.
"RIP OPTION AGREEMENT" has the meaning set forth in Section 3.4(g) of
this Agreement.
"▇▇▇▇▇▇▇ LEASE AGREEMENT" has the meaning set forth in Section 3.4(i)
of this Agreement.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SEC REPORTS" has the meaning set forth in Section 5.6 of this
Agreement.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"SECTION 338(H)(10) ELECTION" has the meaning set forth in Section
12.1(a) of this Agreement.
"SELLER" has the meaning set forth in the introduction to this
Agreement.
"SELLER DISCLOSURE SCHEDULE" means the Seller Disclosure Schedule,
signed for identification purposes only by each Seller, which the Seller Parties
have delivered to the Buyer on or before the date of this Agreement, and which
contains information relevant to the representations and warranties made by the
Seller Parties in Article IV.
"SELLER GUARANTY" means any guaranty, performance guaranty, bond,
performance bond, suretyship arrangement, surety bond, credit, letter of credit,
reimbursement agreement or other undertaking, deposit commitment or arrangement
by which any Seller is or may be primarily, secondarily, contingently or
conditionally liable for or in respect of (or which creates, constitutes or
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evidences a Lien on any of the assets or properties of any Seller which secures
the payment or performance of) any present or future liability or obligation of
FRS or any of its Subsidiaries as set forth in Section 4.18 of the Seller
Disclosure Schedule.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 14.2
of this Agreement.
"SELLER PARTIES" has the meaning set forth in the introduction to this
Agreement.
"SELLER REPRESENTATIVES" has the meaning set forth in Section 11.8 of
this Agreement.
"SIGNING DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.
"SOFTWARE" means all electronic data processing systems, information
systems, computer software programs, program specifications, charts, procedures,
source codes, object codes, input data, routines, data bases and report layouts
and formats, record file layouts, diagrams, functional specifications and
narrative descriptions, flow charts and other related material and documentation
and any and all licenses and copies thereof and rights thereto.
"SOLID WASTE" means any waste which can be lawfully disposed of in a
landfill regulated under Subtitle D of the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA").
"SOLID WASTE BUSINESS" means the collection, compaction,
transportation, resource recovery, storage, recycling or disposal of Solid
Waste.
"STOCK CONSIDERATION" has the meaning set forth in Section 2.2 of this
Agreement.
"STOCK DEPOSIT" has the meaning set forth in Section 2.9 of this
Agreement.
"SUBJECT GEOGRAPHIC AREAS" means the following counties in the State of
Florida: Volusia, Orange, ▇▇▇, Hillsborough, Citrus, Seminole, Lake, Highlands,
▇▇▇▇▇▇, Glades, Osceola and St. Lucie Counties.
"SUBJECT LAND" has the meaning set forth in Section 3.5(b) of this
Agreement.
"SUBSIDIARY" of a Party means an Affiliate of that Party more than
fifty percent (50%) of the aggregate voting power (or of any other form of
voting equity interest in the case of a Person that is not a corporation) of
which is beneficially owned by that Party directly or indirectly through one or
more other Persons.
"SURVEY" has the meaning set forth in Section 3.5(d) of this Agreement.
"TARGET OPERATIONS" has the meaning set forth in the introduction to
this Agreement.
"TAX" means any tax of any kind, however denominated, including any
interest, penalties, fines or other additions to tax that may become payable in
respect thereof or in respect of a failure to comply with any requirement
relating to any Tax Return, imposed by any federal, territorial, state, local or
foreign Governmental Entity, including all income, gross income, gross receipts,
profits, goods and services, social security, health, old age security, federal
pension plan, state pension plan, sales and use, ad valorem, excise, custom,
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franchise, business license, property, occupation, real property gains, payroll
and employee withholding, unemployment or employment insurance, real and
personal property, stamp, environmental, transfer, workers' compensation,
payroll, severance, alternative minimum, windfall, and capital gains taxes,
premiums, surtaxes, charges, levies, assessments, reassessments, and other
obligations of the same or a similar nature to any of the foregoing.
"TAX ALLOCATION AGREEMENTS" means all contracts, agreements, policies,
practices, intercompany procedures and understandings, whether written or oral,
between FRS or any of its Subsidiaries, and any other Person by which all or any
portion of any federal, state or local income Tax is allocated to or shared or
required to be paid by FRS or any of its Subsidiaries.
"TAX LIABILITY ISSUE" has the meaning set forth in Section 12.5 of this
Agreement.
"TAX PROCEEDING" has the meaning set forth in Section 12.3(d) of this
Agreement.
"TAX RETURNS" means all tax returns, declarations, reports, estimates,
information returns and statements required to be filed with any Taxing
Authority, or provided to any partner, stockholder, joint venturer or member
under federal, state, local or foreign Laws (including reports with respect to
backup withholding and payments to Persons other than Taxing Authorities), and
annual tax returns or information returns on behalf of employee benefit plans
sponsored by Buyer or FRS or any of its Subsidiaries, as the case may be, or any
of their respective ERISA Affiliates.
"TAXING AUTHORITY" means any Governmental Entity responsible for the
imposition, assessment, enforcement or collection of any Tax.
"TERMINATING BUYER BREACH" has the meaning set forth in Section 15.3(c)
of this Agreement.
"TERMINATING SELLER BREACH" has the meaning set forth in Section
15.3(b) of this Agreement.
"THIRD PARTY CLAIM" has the meaning set forth in Section 14.3 of this
Agreement.
"THRESHOLD" has the meaning set forth in Section 14.5(b) of this
Agreement.
"TITLE COMMITMENTS" has the meaning set forth in Section 3.5(b) of this
Agreement.
"TITLE COMPANY" has the meaning set forth in Section 3.5(b) of this
Agreement.
"TITLE POLICIES" has the meaning set forth in Section 3.5(b) of this
Agreement.
"TOTAL INDEBTEDNESS SETTLEMENT STATEMENT" has the meaning set forth in
Section 2.6(a)(i) of this Agreement.
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"TRANSFER STATION DISPOSAL AND PROCESSING AGREEMENT" has the meaning
set forth in Section 3.4(h) of this Agreement.
"TRANSFER TAXES" has the meaning set forth in Section 12.4 of this
Agreement.
"TRUST BENEFICIARY" and "TRUST BENEFICIARIES" has the meaning set forth
in the introduction to this Agreement.
"TRUSTS" means the ▇▇▇▇▇ ▇▇▇▇, Jr. Irrevocable Trust, ▇▇▇▇▇▇ ▇▇▇▇
Irrevocable Trust, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Irrevocable Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Irrevocable Trust, ▇▇▇▇▇▇ ▇▇▇▇ Irrevocable Trust and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Irrevocable Trust.
"$" or "U.S. DOLLARS" refers to lawful currency of the United States of
America.
"U.S." means the United States of America.
"U.S. GAAP" means United States of America generally accepted
accounting principles consistently applied throughout the specified period and
the immediately preceding comparable period.
"▇▇▇▇ GROUP" means ▇▇▇▇▇ ▇▇▇▇, Sr., the Trusts (other than the ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ Irrevocable Trust) and the Trust Beneficiaries (other than ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇).
"WARN ACT" means the United States Worker Adjustment and Retraining
Notification Act of 1988.
"WELFARE PLAN" has the meaning set forth in Section 4.17(g) of this
Agreement.
"WORKING CAPITAL SETTLEMENT STATEMENT" has the meaning set forth in
Section 2.6(b)(i) of this Agreement.
"YEAR-END FINANCIAL STATEMENTS" has the meaning set forth in Section
4.7(a) of this Agreement.
1.2 INTERPRETATION. Capitalized terms defined in this Agreement are
equally applicable to both their singular and plural forms. References to a
designated "Article" or "Section" refer to an Article or Section of this
Agreement, unless otherwise specifically indicated. In this Agreement,
"including" is used only to indicate examples, without limitation to the
indicated examples, and without limiting any generality which precedes or
follows it.
1.3 KNOWLEDGE. When a representation and warranty in Article IV or
Article V is made to the "knowledge" of a Person or a definition is qualified to
the "knowledge" of a Person, it means receipt of notice by, or actual knowledge
of, that Person if such Person is an individual, or receipt by, or actual
knowledge of, any officer or member of management of that Person, including,
without limitation, the Chief Executive Officer, Chief Financial Officer, and
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Chief Operating Officer if such Person is a corporation. The "knowledge" of FRS
shall include the "knowledge" of its Subsidiaries and shall also be deemed to
include such "knowledge" of the person(s) primarily responsible for
environmental matters and human resources of FRS and each of its Subsidiaries,
and the "knowledge" of the Seller Parties or each or any Seller shall be deemed
to include such "knowledge" of the Trust Beneficiaries. No representation or
warranty may be qualified or limited by reference to "knowledge" unless due
inquiry has actually been made by the above referenced Persons.
ARTICLE II
THE TRANSACTION
2.1 SALES AND PURCHASES OF STOCK. On the terms and subject to the
conditions of this Agreement, each Seller agrees to sell, grant, convey,
transfer and assign and deliver to Buyer Sub all of such Seller's issued and
outstanding shares of capital stock of FRS free and clear of all Liens and Buyer
Sub agrees to purchase such shares.
2.2 CONSIDERATION. Subject to adjustment as provided in this Article
II, the aggregate consideration payable by Buyer Sub for the Acquired Shares
shall be (a) nine million two hundred fifty thousand (9,250,000) shares of Buyer
Parent Common Stock (the "STOCK CONSIDERATION"), including the Stock Deposit,
and (b) ninety-eight million five hundred thousand dollars ($98,500,000) in cash
(the "CASH CONSIDERATION"), including the Extension Payment (if applicable), the
May 1 Payment (if applicable) and the Cash Deposit. The Stock Consideration and
the Cash Consideration are hereinafter referred to as the "PURCHASE PRICE".
2.3 CASH CONSIDERATION AND PURCHASE PRICE ADJUSTMENTS.
(a) The Cash Consideration shall be reduced by the amount of
Closing Date Total Indebtedness.
(b) The Cash Consideration shall be reduced by any Closing
Date Working Capital Deficit and increased by any Closing Date Working Capital
Balance, as the case may be.
(c) Any adjustments to the Cash Consideration pursuant to
Sections 2.3(a) or 2.3(b) shall result in corresponding adjustments to the
Purchase Price.
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2.4 CLOSING WORKSHEET.
At least ten (10) Business Days prior to the Closing Date, the
Seller Parties shall deliver to Buyer a worksheet (the "CLOSING WORKSHEET")
setting forth their good faith estimate of the Closing Date Total Indebtedness
(the "ESTIMATED CLOSING DATE TOTAL INDEBTEDNESS") and their good faith estimate
of the Closing Date Working Capital (the "ESTIMATED CLOSING DATE WORKING
CAPITAL"). The Closing Worksheet shall also set forth (a) the Seller Parties'
good faith estimate of the Purchase Price as adjusted pursuant to Section 2.3
above which shall be calculated by (i) deducting from the Purchase Price (A) the
Estimated Closing Date Total Indebtedness, and (B) the Seller Parties' good
faith estimate of any Closing Date Working Capital Deficit (the "ESTIMATED
CLOSING DATE WORKING CAPITAL DEFICIT"), and (ii) adding to the Purchase Price,
the Seller Parties' good faith estimate of any Closing Date Working Capital
Balance (the "ESTIMATED CLOSING DATE WORKING CAPITAL BALANCE") and (b) the
Seller Parties' good faith estimate of the Cash Consideration as adjusted
pursuant to Section 2.3(a) or (b) (the "ESTIMATED CASH CONSIDERATION").
2.5 [RESERVED].
2.6 INDEBTEDNESS AND WORKING CAPITAL TRUE-UP.
(a) INDEBTEDNESS ADJUSTMENT.
(i) On or before the one hundred twentieth (120th)
calendar day following the Closing, Buyer shall calculate and deliver to the
Seller Parties a written statement (the "TOTAL INDEBTEDNESS SETTLEMENT
STATEMENT") setting forth the amount of the Closing Date Total Indebtedness.
(ii) The Total Indebtedness Settlement Statement
shall be prepared by Buyer and certified in writing by the Chief Financial
Officer of Buyer. Buyer will grant to the Seller Parties reasonable access to
the books and records of FRS and its Subsidiaries after the Closing for the
purpose of confirming the Total Indebtedness Settlement Statement. The Total
Indebtedness Settlement Statement shall be final and binding on the Seller
Parties unless, within ten (10) Business Days following the date of delivery to
the Seller Parties of the Total Indebtedness Settlement Statement, the Seller
Parties notify Buyer in writing (a "NOTICE OF OBJECTION") that the Seller
Parties do not accept as correct the amount of any calculation reflected in the
Total Indebtedness Settlement Statement. If the Seller Parties timely deliver a
Notice of Objection to Buyer, then Buyer and the Seller Parties shall
respectively instruct Buyer's Auditors and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to attempt
to reach mutual agreement as to each disputed calculation made in the Total
Indebtedness Settlement Statement. If, within twenty (20) Business Days after
the matter has been referred to such accounting firms, they have not reached
agreement as to all disputed calculations, then Buyer's Auditors and ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall be promptly instructed by Buyer and the Seller Parties,
respectively, to designate a third accounting firm of internationally recognized
standing, which (acting as experts and not as arbitrators) shall be instructed
to make, as soon as practicable after the matter is referred to such firm, all
calculations which are in dispute, and the determination of such third
accounting firm in the matter shall be final and binding on all Parties.
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(iii) If the Closing Date Total Indebtedness exceeds
the Estimated Closing Date Total Indebtedness, then the amount of such excess
shall be paid to Buyer Sub in accordance with Section 2.6(d) and the Purchase
Price shall be deemed reduced by the amount of such excess. If the Closing Date
Total Indebtedness is less than the Estimated Closing Date Total Indebtedness,
then Buyer Sub shall pay to the Seller Parties the amount of such deficiency in
immediately available funds by wire transfer to accounts designated by the
Seller Parties in writing at least two (2) Business Days before the day on which
the transfer is required to be made. Any payments required to be made by Buyer
Sub to the Seller Parties pursuant to this Section 2.6(a)(iii) shall be
allocated among the Sellers in accordance with the percentages set forth on
EXHIBIT A and shall be made within five (5) Business Days after the Closing Date
Total Indebtedness has been finally determined as provided in this Section
2.6(a).
(b) WORKING CAPITAL ADJUSTMENT.
(i) On or before the one hundred twentieth (120th)
calendar day following the Closing, Buyer shall calculate and deliver to the
Seller Parties a written statement (the "WORKING CAPITAL SETTLEMENT STATEMENT")
setting forth the amount of the Finally Determined Working Capital Deficit or
the Finally Determined Working Capital Balance, as the case may be. For purposes
of calculating the Finally Determined Working Capital, the outstanding
individual accounts receivable of FRS and its Subsidiaries as of the Closing
Date shall be valued as follows:
(A) one hundred percent (100%) of the amount
of any undisputed account receivable shall be included in Finally Determined
Current Assets if the account receivable is aged ninety (90) or less days as of
the Closing Date; and
(B) no value shall be given to any account
receivable (or portion thereof) (1) that is aged more than ninety (90) days as
of the Closing Date, (2) that is otherwise owing by an account debtor that is
insolvent, or (3) that has been disputed in writing by the account debtor, which
dispute has not been resolved (the "EXCLUDED ACCOUNTS RECEIVABLE").
(ii) The Working Capital Settlement Statement shall
be calculated by Buyer and certified in writing by the Chief Financial Officer
of Buyer. Buyer will grant to the Seller Parties reasonable access to the books
and records of FRS and its Subsidiaries after the Closing for the purpose of
confirming the Working Capital Settlement Statement. The Working Capital
Settlement Statement shall be final and binding on the Seller Parties unless,
within ten (10) Business Days following the date of delivery to them of the
Working Capital Settlement Statement, the Seller Parties deliver to Buyer a
Notice of Objection that the Seller Parties do not accept as correct the amount
of any calculation reflected in the Working Capital Settlement Statement. If the
Seller Parties timely deliver a Notice of Objection to Buyer, then Buyer and the
Seller Parties shall respectively instruct Buyer's Auditors and ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to attempt to reach mutual agreement as to each disputed
calculation made in the Working Capital Settlement Statement. If within twenty
(20) Business Days after the matter has been referred to such accounting firms,
they have not reached agreement as to all disputed calculations, then Buyer's
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Auditors and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall be promptly instructed by Buyer
and the Seller Parties, respectively, to designate a third accounting firm of
internationally recognized standing, which (acting as experts and not as
arbitrators) shall be instructed to make, as soon as practicable after the
matter is referred to such firm, all calculations which are in dispute, and the
determination of such third accounting firm in the matter shall be final and
binding on all Parties.
(iii) If (A) the Finally Determined Working Capital
Deficit exceeds the Estimated Closing Date Working Capital Deficit or (B) the
Estimated Closing Date Working Capital Balance exceeds the Finally Determined
Working Capital Balance, the amount of such excess shall be paid to Buyer Sub in
accordance with Section 2.6(d) and the Purchase Price shall be deemed reduced by
the amount of such excess. If (1) the Finally Determined Working Capital Deficit
is less than the Estimated Closing Date Working Capital Deficit or (2) the
Estimated Closing Date Working Capital Balance is less than the Finally
Determined Working Capital Balance, Buyer Sub shall pay the amount of such
deficiency to the Seller Parties in immediately available funds by wire transfer
to accounts designated by the Seller Parties in writing at least two (2)
Business Days before the day on which the transfer is required to be made. Any
such payments required to be made by Buyer Sub to the Seller Parties pursuant to
this Section 2.6(b)(ii) shall be allocated among the Sellers in accordance with
the percentages set forth on EXHIBIT A and shall be made within five (5)
Business Days after the Closing Date Working Capital has been finally determined
as provided in this Section 2.6(b).
(c) ACCOUNTANT'S FEES. The fees of all accounting firms (other
than Buyer's Auditors and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇) engaged to make any
calculations under this Section 2.6 shall be paid by (i) Buyer if the effect of
all disputed calculations made by such accounting firms results in adjustments
in favor of the Seller Parties of $250,000 or more in comparison to the
adjustments which would have been made had the Seller Parties accepted the Total
Indebtedness Settlement Statement or the Working Capital Settlement Statement,
as the case may be and (ii) the Seller Parties in all other cases. The fees of
Buyer's Auditors with respect to any calculations under this Section 2.6 shall
be paid by Buyer and the fees of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall be paid by the
Seller Parties.
(d) PAYMENT OF ADJUSTMENT BY SELLER PARTIES AND TRUST
BENEFICIARIES. In the event of any reductions in the Purchase Price pursuant to
this Section 2.6, the Seller Parties and Trust Beneficiaries shall be jointly
and severally liable to Buyer Sub for the amount of such deficiency and shall
pay to Buyer Sub the amount of such deficiency within five (5) Business Days
after the Closing Date Total Indebtedness and/or the Closing Date Working
Capital, as the case may be, has been finally determined pursuant to this
Section 2.6.
2.7 ESCROW. At the Closing, 3,000,000 shares of Buyer Parent Common
Stock from the Stock Consideration shall be deposited with Bank One, National
Association (or such other institution selected by Buyer with the reasonable
consent of the Seller Parties) as escrow agent (the "ESCROW AGENT"), such
deposit to constitute the "ESCROW FUND" and to be governed by the terms set
forth herein and in the Escrow Agreement attached hereto as EXHIBIT B (the
"ESCROW AGREEMENT"). The Escrow Fund shall be available as a source of recovery
by Buyer Parent, Buyer and Buyer Sub with respect to the indemnification
obligations of the Seller Parties under Article XIV hereof.
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2.8 COMPLIANCE WITH SECURITIES LAWS; CONSENT TO U.S. REORGANIZATION
TRANSACTION.
(a) The shares of Buyer Parent Common Stock to be issued to
the Seller Parties pursuant to this Agreement shall be issued in a transaction
exempt from registration under the Securities Act (by reason of Section 4(2)
thereof and/or Regulation D promulgated thereunder) and otherwise in compliance
with such other federal and state securities laws of the U.S. as may be
applicable to the transactions contemplated hereby, and such shares may not be
re-offered, resold, distributed or otherwise transferred by the Seller Parties
other than in compliance with the applicable federal and state securities laws
of the U.S. Except with respect to a sale of shares of Buyer Parent Common Stock
pursuant to the Registration Rights Agreement, each Seller hereby agrees not to
sell, assign, dispose of or otherwise transfer any shares of Buyer Parent Common
Stock issued to Seller pursuant to this Agreement for a period of one year from
the Closing Date (the "LOCK-UP PERIOD"). The certificates issued by Buyer
representing the shares of Buyer Parent Common Stock issued hereunder shall be
legended to the effect described above and shall include such additional legends
as necessary to comply with applicable Laws.
(b) Each Seller Party agrees to vote all shares of Buyer
Parent Common Stock issued to such Seller Party pursuant to the Stock Purchase
Agreement, all shares of Buyer Parent Common Stock issued to such Seller Party
as (or issuable upon conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such shares of Buyer Parent Common
Stock, and any other shares of Buyer Parent Common Stock then owned by such
Seller Party in favor of any share exchange or other reorganization or
recapitalization transaction resulting in Buyer Parent becoming a direct or
indirect subsidiary of Buyer.
2.9 DEPOSIT AND OTHER PAYMENTS. The Parties acknowledge that (a) Buyer
has posted a deposit consisting of (i) an aggregate of $3,000,000 in cash (the
"CASH DEPOSIT") and (ii) an aggregate of 1,000,000 shares of Buyer Parent Common
Stock (the "STOCK DEPOSIT" and together with the Cash Deposit, the "SIGNING
DEPOSIT"), (b) the Cash Deposit was paid to FRS on behalf of the Seller Parties
and will be used by FRS for the purpose of funding capital expenditures required
in the continued operation of FRS' business, and (c) the Stock Deposit will be
allocated among the Seller Parties in accordance with the proceeds direction set
forth on EXHIBIT A attached to this Agreement. The Cash Deposit and the Stock
Deposit shall be applied toward payment of the Cash Consideration or the Stock
Consideration, as applicable, at Closing.
ARTICLE III
THE CLOSING AND RELATED MATTERS
3.1 THE CLOSING. The consummation of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇▇,
Will & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m. local time
on the Closing Date. At the Closing:
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(a) Each Seller shall deliver to Buyer Sub, free and clear of
any and all Liens, certificate(s) evidencing the Acquired Shares held by such
Seller, duly endorsed in blank or accompanied by duly executed stock powers or
other appropriate instruments of transfer, and in proper form for registration
in the name of Buyer Sub;
(b) Buyer shall issue and deliver to the Seller Parties, on
behalf of Buyer Sub and free and clear of any and all Liens, stock certificates
representing the Closing Stock Consideration, allocated among the Seller Parties
in accordance with the percentages set forth in EXHIBIT A;
(c) Buyer shall pay to the Seller Parties, on behalf of Buyer
Sub, the Closing Cash Consideration, allocated among the Seller Parties in
accordance with the percentages set forth in EXHIBIT A; and
(d) Buyer shall deliver to the Escrow Agent, on behalf of
Buyer Sub, 3,000,000 shares of the Stock Consideration in accordance with the
Escrow Agreement.
3.2 [RESERVED].
3.3 ACTIONS IN CONTEMPLATION OF CLOSING. On or before the Closing Date:
(a) The Seller Parties shall cause to be delivered to Buyer
the resignation of each of the officers and directors of FRS and its
Subsidiaries, and shall assume and perform in full all obligations, agreements
and commitments of any type relating to the resignation or the employment of
such officers and directors arising before the Closing; and
(b) The Seller Parties shall cause to be delivered to Buyer
all business records, copies of Tax returns, books, and other data relating to
FRS and its Subsidiaries (including the original Corporate Records as to which
only copies need be delivered), provided that the Seller Parties may retain
copies of each of the foregoing.
3.4 OTHER ACTIONS AT THE CLOSING. In addition to the consummation of
the Acquisition and the actions contemplated by Section 3.3 above, the following
actions shall take place at the Closing:
(a) Each of the Seller Parties and Trust Beneficiaries shall
execute and deliver a Release in substantially the form of EXHIBIT D attached to
this Agreement (the "RELEASE");
(b) Buyer and each of ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
Jr. and ▇▇▇▇▇▇ ▇▇▇▇ shall execute and deliver a Consulting Agreement
substantially in the form of EXHIBIT E attached to this Agreement (the
"CONSULTING AGREEMENTS");
(c) Buyer and each of the Sellers shall execute and deliver a
Registration Rights Agreement substantially in the form of EXHIBIT F attached to
this Agreement (the "REGISTRATION RIGHTS AGREEMENT");
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(d) FRS and Florida Container Services, Inc. shall execute and
deliver a Container Services Agreement substantially in the form of EXHIBIT G
attached to this Agreement (the "CONTAINER SERVICES AGREEMENT");
(e) FRS and Draw Enterprises Manufacturing, L.P. shall execute
and deliver a lease agreement for the Altamonte facility substantially in the
form of EXHIBIT H attached to this Agreement (the "ALTAMONTE LEASE");
(f) Buyer and each of ▇▇▇▇▇ ▇▇▇▇, Sr., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, Jr., ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall execute and deliver a Referral
Fee Agreement substantially in the form of EXHIBIT I attached to this Agreement
(the "REFERRAL FEE AGREEMENT");
(g) The Seller Parties and Buyer shall enter into an Option
Agreement substantially in the form of EXHIBIT J attached to this Agreement (the
"RIP OPTION AGREEMENT").
(h) FRS and ▇▇▇▇ Recycling, Inc. shall execute and deliver a
Transfer Station Disposal and Processing Agreement substantially in the form of
EXHIBIT K attached to this Agreement (the "TRANSFER STATION DISPOSAL AND
PROCESSING AGREEMENT");
(i) FRS and ▇▇▇▇▇▇▇ Recycling and Transfer, Inc. shall enter
into an agreement relating to the construction and lease of a recycling transfer
station in Sanford, Florida substantially in the form of EXHIBIT L attached to
this Agreement (the "SANFORD LEASE AGREEMENT"); and
3.5 REAL PROPERTY DELIVERIES BY THE SELLER PARTIES.
(a) At the Closing, the Seller Parties shall deliver to the
Buyer, a sworn affidavit stating, under penalty of perjury, that such applicable
Seller Party is not a "foreign person" as defined under the Code, or other
appropriate evidence that Buyer, Buyer Parent and Buyer Sub are not required to
withhold any portion of the Purchase Price under Section 1445(a) of the Code or
any other withholding provision of any other Tax law.
(b) Buyer has received a preliminary title commitment (the
"TITLE COMMITMENTS") in respect of each parcel of Land owned by FRS or any of
its Subsidiaries (the "SUBJECT LAND"), copies of which have been provided to the
Seller Parties. The Seller Parties shall deliver to Buyer copies of all
exception instruments referenced in such Title Commitments, and any unrecorded
leases, option agreements, contracts and any other items affecting title which
are in the possession of, or known to, the Seller Parties or the Trust
Beneficiaries at least fifteen (15) days before the Closing so that the Title
Policies can be issued simultaneously with the Closing. The Seller Parties shall
furnish to Buyer at the Closing at the Sellers Parties' cost and expense one or
more extended coverage policies of title insurance for the Subject Land from a
title company selected by Buyer (the "TITLE COMPANY") in an amount to be
reasonably determined by Buyer, with each of the Title Company's standard
printed exceptions deleted, and including such endorsements reasonably requested
by Buyer and that are available in the state where the Subject Land is located,
insuring fee simple title, to such Subject Land to be in FRS, subject only to
the exceptions permitted by Section 3.5(c) hereof (the "TITLE POLICIES").
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(c) The Title Policies shall insure FRS' interest in the
Subject Land to be free and clear of all Liens whatsoever except: (i) zoning
ordinances and regulations which do not, in Buyer's judgment, adversely affect
Buyer's or FRS' use of the Subject Land for its current uses after the Closing
Date; (ii) real estate taxes and assessments, both general and special, which
constitute a lien but are not yet due and payable at the Closing Date; and (iii)
easements, encumbrances, covenants, conditions, reservations and restrictions of
record, if any, as shown on the Title Commitment and as have been approved in
writing by Buyer prior to the Closing Date.
(d) At least twenty (20) days before the Closing Date, the
Seller Parties shall deliver to Buyer and the Title Company such affidavits or
certifications with respect to title to the Subject Land and any surveys
conducted thereon as may be requested by Buyer or the Title Company; PROVIDED,
HOWEVER, that if such affidavits or certifications are not sufficient to enable
Buyer or Buyer Parent to obtain financing for the Acquisition on terms and
conditions reasonably satisfactory to Buyer or to enable the Title Company to
delete its standard survey exceptions from the Title Policies, then the Seller
Parties shall obtain for Buyer's and Buyer Parent's use and for the use of the
Title Company in connection with the issuance of the Title Policies a current
and complete survey of the Subject Land (the "SURVEYS"). The Surveys shall be
made on the ground by a competent registered surveyor and shall show: (i) the
exact boundary lines of each parcel of Subject Land; (ii) the location thereon
of all, if any, buildings, improvements, roads, and easements now existing;
(iii) the number of acres in the Subject Land; (iv) the location of any
buildings, fences or other improvements which encroach on the Subject Land; (v)
the location of any improvements on the Subject Land which encroach on any
neighboring property; (vi) all building lines established in respect of the
Subject Land; (vii) all public access to the Subject Land; and (viii) all other
matters shown on the Title Commitments which can be shown on a Survey. The
Surveys shall contain a representation that the boundaries of the Subject Land
are contiguous with the boundaries of all adjoining parcels. A copy of the
Surveys complying with the above requirements shall be delivered to Buyer and
the Title Company at least twenty (20) days before the Closing Date, together
with certification to each of Buyer and the Title Company by the surveyor, and
also together with such additional supporting reports and other certificates as
the Title Company may require to enable the Title Company to delete its standard
survey exceptions from the Title Policies.
3.6 BULK SALES. Each Seller, Buyer Parent, Buyer and Buyer Sub hereby
waive compliance with their respective obligations under applicable bulk sales
laws of any states or jurisdictions in which compliance may be required. Each
Seller and Trust Beneficiary shall forever jointly and severally indemnify and
hold harmless Buyer Parent, Buyer and Buyer Sub against any loss which Buyer
Parent, Buyer or Buyer Sub may suffer as a result of claims asserted by third
parties against Buyer Parent, Buyer or Buyer Sub due to any non-compliance by
Seller, FRS, the Subsidiaries of FRS, Buyer Parent, Buyer or Buyer Sub with
applicable bulk sales Laws.
3.7 FURTHER ASSURANCES. Each Seller and Trust Beneficiary, from time to
time after the Closing, at the request of Buyer, and without further
consideration, shall execute and deliver further instruments of transfer and
assignment and take such other action as Buyer may reasonably require to more
effectively transfer and assign to, and vest in, Buyer Sub ownership of the
Acquired Shares.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES AND TRUST BENEFICIARIES
The Seller Parties and the Trust Beneficiaries jointly and severally
represent and warrant to Buyer Parent, Buyer and Buyer Sub, as of November 21,
2003, as of the date hereof and as of the Closing Date, that:
4.1 ORGANIZATION AND QUALIFICATION.
(a) Section 4.1 of the Seller Disclosure Schedule sets forth
with respect to FRS and each of its Subsidiaries (i) its jurisdiction of
incorporation, (ii) each jurisdiction in which it is qualified to do business as
a foreign corporation, (iii) its authorized, issued and outstanding shares of
capital stock, and (iv) the holder or holders of all of its issued and
outstanding shares of capital stock. FRS is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has full authority and power to conduct its business as it is
currently conducted. Each of FRS' Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has full authority and power to conduct its business as it is
currently being conducted. FRS and each of its Subsidiaries is duly qualified to
do business, and in good standing, in each jurisdiction where the nature of its
properties or business requires such qualification, except for failures to be so
qualified which could not, individually or in the aggregate, have a Material
Adverse Effect on FRS.
(b) The Acquired Shares represent all of the issued and
outstanding shares of capital stock of FRS and such shares are validly issued,
fully paid and nonassessable, are owned of record and beneficially, and free of
any Liens, by the Seller Parties and were not issued in violation of any
preemptive, subscription or other right of any Person to acquire securities of
FRS. Each Seller has good, marketable and indefeasible title to all of the
Acquired Shares, and the absolute right, power and capacity to sell, assign,
transfer and deliver all right, title and interest both legal and equitable, in
and to such Acquired Shares, registered in his, her or its name as set forth in
Section 4.1 of the Seller Disclosure Schedule, free and clear of all Liens and
any defects of title whatsoever. Upon delivery of payment for the Acquired
Shares as herein provided, Buyer Sub will acquire good and valid title to such
shares free and clear of all Liens and with no defects of title whatsoever. All
of the issued and outstanding shares of capital stock of each of FRS'
Subsidiaries are validly issued, fully paid and nonassessable, and are owned of
record and beneficially, and free of any Liens and with no defects of title
whatsoever, by FRS. There are no preemptive rights or outstanding subscriptions,
options, warrants, calls, rights, convertible securities, obligations to make
capital contributions or advances, voting or voting trust arrangements,
stockholders' agreements, restrictions on transfer or other agreements,
commitments or understandings relating to the capital stock of FRS or any of its
Subsidiaries. All shares of the capital stock of FRS, whether or not currently
outstanding, were issued in compliance (and if acquired or cancelled by FRS,
reacquired or cancelled in compliance) with all applicable Laws, including the
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Securities Act and any applicable state Laws. The Seller Parties have delivered
to the Buyer true, complete and correct copies of the charter and bylaws (or
similar organizational documents) of FRS and of each of its Subsidiaries.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. FRS and each Seller that is a
Trust has full power and authority to enter into and perform its obligations
under this Agreement and each Ancillary Agreement to which it will be a party.
Each Seller Party that is an individual and each Trust Beneficiary has the
requisite capacity to enter into and perform its obligations under this
Agreement and each Ancillary Agreement to which it will be a party. The
execution and delivery of this Agreement by FRS and each Trust and the
performance by FRS and each Trust of its obligations hereunder have been duly
authorized by the Board of Directors of FRS or the trustees of such Trust, as
the case may be, and no other corporate or other proceedings on the part of FRS
or Trust are necessary to authorize the execution and delivery of this Agreement
or the consummation of the Acquisition or the other transactions contemplated in
this Agreement, except as set forth in Section 4.2 of the Seller Disclosure
Schedule. The execution and delivery of each Ancillary Agreement to which FRS or
any Trust will be a party and the performance by FRS or Trust, as the case may
be, of its obligations thereunder have been duly authorized by the Board of
Directors of FRS or the trustees of such Trust, as the case may be, and no other
proceedings on the part of FRS or Trust are necessary to authorize the execution
and delivery of such Ancillary Agreement or the consummation of the transactions
contemplated thereby. This Agreement has been duly executed and delivered by
FRS, each Seller and each Trust Beneficiary. Each Ancillary Agreement required
to be executed and delivered by FRS, any Seller or any Trust Beneficiary at the
Closing will be, upon its execution and delivery, duly executed and delivered by
FRS, Seller or Trust Beneficiary, as the case may be. Assuming the valid
authorization, execution and delivery of this Agreement (and each Ancillary
Agreement to which Buyer Parent, Buyer or Buyer Sub will be a party) by Buyer
Parent, Buyer and/or Buyer Sub, as the case may be, this Agreement is, and each
Ancillary Agreement to which FRS, any Seller or any Trust Beneficiary is a party
will be, upon its execution and delivery, a valid and binding obligation of FRS,
Seller or Trust Beneficiary, enforceable in accordance with its terms.
4.3 NO VIOLATIONS. The execution, delivery and performance of this
Agreement by FRS, each Seller and each Trust Beneficiary, the execution,
delivery and performance of each Ancillary Agreement to which FRS, any Seller or
any Trust Beneficiary is a party, and the consummation of the Acquisition and
the other transactions contemplated in this Agreement and the Ancillary
Agreements will not:
(a) constitute a breach or violation of or default under the
charter, bylaws, or trust documents or agreements (or similar organizational
documents) of FRS or any of its Subsidiaries or any Trust or any Law applicable
to FRS or any of its Subsidiaries, any Seller or any Trust Beneficiary; or
(b) except as accurately reflected in Section 4.3 of the
Seller Disclosure Schedule, violate or conflict with, or result in a breach of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination
under, or result in the creation of any Lien upon the Acquired Shares or any of
the assets or properties of FRS or any of its Subsidiaries under, any contract,
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indenture, loan document, license, permit, order, agreement, decree or
instrument to which any Seller Party, any Trust Beneficiary, FRS or any of its
Subsidiaries is a party or by which any of them or their assets or properties
are bound.
4.4 CONSENTS AND APPROVALS. No consent, order, approval, waiver or
authorization of, or registration, application, declaration, notice or filing
with or to, any Governmental Entity or other Person is required with respect to
any Seller Party or Trust Beneficiary, FRS or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement, the consummation of the Acquisition, or the other transactions
contemplated in this Agreement and the Ancillary Agreements, except for:
(a) the HSR Act filings and approvals contemplated in this
Agreement; and
(b) the consents and approvals described on Section 4.4 of the
Seller Disclosure Schedule.
4.5 NO OTHER SUBSIDIARIES. Except as described in Section 4.5 of the
Seller Disclosure Schedule, neither FRS nor any Subsidiary of FRS has owned,
owns or is obligated to acquire any investment in any other corporation,
partnership, joint venture or other business entity.
4.6 CONDUCT OF TARGET OPERATIONS. The Target Operations are owned and
operated exclusively by FRS and its Subsidiaries, and, except as described in
Section 4.6 of the Seller Disclosure Schedule, no Person other than FRS and its
Subsidiaries conducts any operations associated with, or owns any assets or
properties used in, or holds any Permits used in, the Target Operations. Except
as described in Section 4.6 of the Seller Disclosure Schedule, none of FRS nor
any of its Subsidiaries is or has been engaged in any business other than the
Target Operations or owns or has owned any assets or properties which are used
in any business other than the Target Operations.
4.7 FINANCIAL STATEMENTS.
(a) The Seller Parties have delivered to Buyer (i) audited
consolidated balance sheets of FRS and its Subsidiaries as of December 31, 2000,
December 31, 2001 and December 31, 2002 and the related audited consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
fiscal years then ended (the "YEAR-END FINANCIAL STATEMENTS"), and (ii)
unaudited consolidated balance sheets of FRS and its Subsidiaries as of March
31, 2003, June 30, 2003, September 30, 2003, March 31, 2002, June 30, 2002 and
September 30, 2002 and the related unaudited consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the three, six and
nine month periods then ended (the "INTERIM FINANCIAL STATEMENTS" and together
with the Year-End Financial Statements, the "COMPANY FINANCIAL STATEMENTS"),
copies of which are included in Section 4.7 of the Seller Disclosure Schedule.
The Company Financial Statements have been prepared in accordance with U.S. GAAP
and fairly and accurately present in all respects the consolidated financial
position of FRS and its Subsidiaries at the respective dates thereof, and the
results of the consolidated operations, stockholders' equity and cash flows of
FRS and its Subsidiaries for the respective periods indicated therein.
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(b) To the knowledge of the Seller Parties, the Company
Financial Statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the Company Financial Statements
not misleading with respect to the periods covered by them.
(c) FRS maintains disclosure controls and procedures which
ensure that material information relating to FRS and its Subsidiaries is
communicated to management of FRS. The effectiveness of such disclosure controls
and procedures are evaluated by FRS management from time to time.
4.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.8 of
the Seller Disclosure Schedule, since December 31, 2002, the Target Operations
have been conducted only in the ordinary course, consistent with past practice,
and there has not occurred a Material Adverse Effect on FRS or any event that
could result in a Material Adverse Effect on FRS.
4.9 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Company
Financial Statements or as set forth in Section 4.9 of the Seller Disclosure
Schedule, neither FRS nor any of its Subsidiaries has any liabilities or
obligations, asserted or unasserted, known or unknown, fixed or contingent,
other than (a) those liabilities and obligations (other than for borrowed money)
arising since December 31, 2002 in the ordinary course of its business and
consistent with its past practice, and (b) liabilities and obligations (other
than for borrowed money) arising after the date of this Agreement without
violation of Sections 6.1 and 6.2, in each case which, individually or in the
aggregate, could not result in a Material Adverse Effect on FRS.
4.10 TARGET OPERATIONS; PROPERTIES. Except as set forth on Section 4.10
of the Seller Disclosure Schedule, FRS and its Subsidiaries have good and
marketable title to their respective properties and assets, including the Land
and those properties and assets reflected in the Company Financial Statements
and, when delivered in accordance with Section 6.10, the 2003 Financial
Statements (other than properties and assets disposed of in the ordinary course
of business after the date of such financial statements, which in the aggregate
are not material), free of all Liens except Permitted Liens. The properties and
assets of FRS and its Subsidiaries (a) constitute all of the assets and
properties used in connection with the Target Operations and (b) are sufficient
for FRS and its Subsidiaries to conduct the Target Operations as currently
conducted and as proposed to be conducted. To the knowledge of the Seller
Parties, all leasehold improvements, furnishings, machinery and equipment of FRS
and its Subsidiaries are in good condition and repair (ordinary wear and tear
excepted), and all such items, including such machinery and equipment, are
usable in the ordinary course of business.
4.11 LANDFILLS AND TRANSFER STATIONS. Except as set forth on Section
4.11 of the Seller Disclosure Schedule, neither FRS nor any of its Subsidiaries
now owns or operates or has ever owned or operated any landfill or transfer
station. Section 4.11 of the Seller Disclosure Schedule lists each landfill and
transfer station not owned or operated by FRS and its Subsidiaries, but to which
FRS or any of its Subsidiaries hauls or has hauled Solid Waste in connection
with the Target Operations.
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4.12 TAXES AND TAX RETURNS. Except as described in Section 4.12 of the
Seller Disclosure Schedule:
(a) all Tax Returns required to be filed with any Taxing
Authority with respect to any Pre-Closing Tax Period by or on behalf of FRS or
any of its Subsidiaries have been duly filed on a timely basis in accordance
with all applicable Laws, or will be timely filed in accordance with Section
12.2;
(b) at the time of their filings all such Tax Returns were or
will be complete and correct in all respects;
(c) there are no Liens for Taxes upon any assets of FRS or any
of its Subsidiaries, except Liens for Taxes not yet due for current Tax periods
ending on or after the Closing Date;
(d) there are no outstanding deficiencies, assessments or
written proposals for the assessment of Taxes proposed, asserted or assessed
against FRS or any of its Subsidiaries, or for which FRS or any of its
Subsidiaries could be directly or indirectly liable and there is no basis for
any additional assessment or reassessment for any Taxes for which adequate
provision has not been made in the books and records of FRS or such Subsidiary;
(e) no extension of the statute of limitations or waiver of
normal reassessment periods on the assessment of any Taxes has been granted to
or on behalf of FRS or any of its Subsidiaries;
(f) neither FRS nor any of its Subsidiaries is or has ever
been a controlled foreign corporation as defined by Code Section 957;
(g) neither FRS nor any of its Subsidiaries is, or during the
prior ten years has been, a member of an affiliated group of corporations within
the meaning of Code Section 1504;
(h) neither FRS nor any of its Subsidiaries, and no Seller, no
Trust Beneficiary nor any of their respective Affiliates, have ever owned and do
not now own any shares of Buyer or Buyer Sub, any of their respective Affiliates
or any predecessor thereof;
(i) neither FRS nor any of its Subsidiaries is a member of any
unitary or combined group for state tax purposes;
(j) FRS has timely and properly elected to be taxed as an "S
corporation" (within the meaning of Code Section 1361(a)(1)) effective as of the
date of its incorporation and at all times since that date has continuously
remained an S corporation;
(k) neither FRS nor any of its Subsidiaries has acquired
assets with a carryover basis from a C corporation during the prior ten years;
(l) neither FRS nor any of its Subsidiaries has liability for
any Taxes of any Person other than itself or is a party to a Tax Allocation
Agreement;
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(m) all Taxes required to be withheld, collected or deposited
by FRS or any Subsidiary of FRS (including amounts required to be withheld,
collected or deposited with respect to amounts paid or owing to any employee,
creditor, independent contractor or other Person) have been timely withheld,
collected or deposited and, to the extent required, have been timely paid to the
relevant Taxing Authority;
(n) no closing agreements or settlement agreements have been
entered into with any Taxing Authority by or with respect to FRS or any
Subsidiary of FRS which requires FRS or such Subsidiary to include any item of
income in, or exclude any item of deduction from, any Tax Return for any taxable
period ending after the Closing Date; and
(o) neither FRS nor any of its Subsidiaries will have any
liability for Taxes under Code Section 1374 (or any similar provision of another
jurisdiction) in connection with the deemed sale of assets caused by the Section
338(h)(10) Election (as hereinafter defined).
4.13 LITIGATION. Except as disclosed in Section 4.13 of the Seller
Disclosure Schedule, there is no suit, action, investigation or proceeding
pending or, to the knowledge of the Seller Parties or FRS, threatened against
FRS or any of its Subsidiaries at law or in equity before or by any Governmental
Entity or before any arbitrator or mediator of any kind, and there is no
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator or mediator to which FRS or any of its Subsidiaries (or any of their
assets or properties) are subject. Neither FRS nor the Seller Parties have
knowledge of any grounds on which any suit, action, investigation or proceeding
of the nature referred to in this Section 4.13 might be commenced with any
reasonable likelihood of success.
4.14 ENVIRONMENTAL MATTERS. Except as described in Section 4.14 of the
Seller Disclosure Schedule:
(a) FRS and its Subsidiaries hold, and are in compliance with
and have been in compliance with, all Environmental Permits, and are otherwise
in compliance and have been in compliance with, all applicable Environmental
Laws, and there is no condition of the Environmental Permits or of the
operations of FRS or any of its Subsidiaries that could prevent or interfere
with compliance by FRS or any of its Subsidiaries with all Environmental Laws;
(b) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by, or approval
of, any Governmental Entity or other Person of any Environmental Permit is
required in connection with the execution or delivery of this Agreement or any
Ancillary Agreement, the consummation of the Acquisition, or the operation of
the business of the Target Operations immediately after the Closing;
(c) neither FRS nor any of its Subsidiaries has received any
Environmental Claim, nor has any Environmental Claim been threatened, to the
knowledge of FRS or the Seller Parties, against FRS or any of its Subsidiaries;
(d) neither FRS nor any of its Subsidiaries has entered into,
agreed to or is subject to any outstanding judgment, decree, order or other
directive issued by, or consent arrangement with, any Governmental Entity under
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any Environmental Law, including, but not limited to, any such judgment, decree,
order or other directive relating to compliance with any Environmental Law or to
the investigation, clean-up, remediation or removal of Hazardous Substances;
(e) neither FRS nor any of its Subsidiaries has received
notice of noncompliance or of a proposed enforcement action by any Governmental
Entity under any Environmental Law;
(f) there are no circumstances that could give rise to
liability under any agreement with any Person or by operation of law which would
require FRS or any of its Subsidiaries to defend, indemnify, hold harmless, or
otherwise be responsible for any violation or alleged violation by another
Person or any liability or expense of another Person, arising under any
Environmental Law;
(g) there are no other circumstances or conditions that could
give rise to any liability or obligation of FRS or any of its Subsidiaries under
any Environmental Law;
(h) the liabilities and reserves reflected on the Company
Financial Statements adequately provide for, in accordance with U.S. GAAP (i)
all future claims and costs for closure, intermediate capping, post-closure
monitoring, investigation and maintenance, reclamation, remediation, restoration
and clean-up of all landfills, transfer stations or other facilities previously
owned, occupied, leased or operated by, or previously under the management or
control of, FRS or any of its Subsidiaries or to which FRS or any of its
Subsidiaries have transported waste, and (ii) all Environmental Claims against
FRS or any of its Subsidiaries;
(i) neither FRS nor any of its Subsidiaries, nor any of the
Sellers or Trust Beneficiaries have received a request for information pursuant
to an Environmental Law;
(j) there has not been, and is not now occurring, at any
facility, property or site currently owned or operated or previously owned or
operated, by FRS or any of its Subsidiaries, any release or threatened release
of any Hazardous Substance or petroleum, including crude oil or any fraction
thereof. Neither FRS nor any of its Subsidiaries have applied or disposed of any
Hazardous Substance or petroleum, including crude oil or any fraction thereof,
in any manner which may form the basis for any present or future Environmental
Claim at any facility, site, location or body of water, surface or subsurface;
(k) neither FRS nor any of its Subsidiaries have ever sent,
arranged for disposal or treatment, arranged with a transporter for transport
for disposal or treatment, transported, or accepted for transport any Hazardous
Substance, solid waste or petroleum, including crude oil or any fraction
thereof, to a facility, site or location, which, pursuant to CERCLA or any
similar state or local Law, (i) has been placed, or is proposed to be placed, on
the national priorities list or its state equivalent or (ii) is subject to a
claim, administrative order or other request to effect removal or take remedial
action;
(l) there has not been any contamination of groundwaters,
surface waters, soils or sediments, as a result of the manufacture, storage,
processing, loss, leak, escape, spillage, release, disposal or other handling or
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disposition by or on behalf of FRS or any of its Subsidiaries of any product or
substance on or prior to the Closing Date;
(m) Section 4.14 of the Seller Disclosure Schedule sets forth
a correct and complete list of all environmental audits or assessments or
occupational health studies undertaken by or on behalf of FRS or any of its
Subsidiaries, or any Governmental Entity with respect to FRS or any of its
Subsidiaries or their respective assets, employees, facilities, sites or other
properties, the results of any groundwater and soil testing undertaken by or on
behalf of FRS or any of its Subsidiaries, the results of any underground fuel,
water or waste tank tests and soil samples undertaken by or on behalf of FRS or
any of its Subsidiaries, any written communications by or on behalf of FRS or
any of its Subsidiaries with Federal, state or local governments on
environmental matters, and any OSHA citations issued to FRS or any of its
Subsidiaries; and
(n) no underground storage tanks are present on any property
operated by or on behalf of FRS or any of its Subsidiaries at any location and
no such tanks were previously abandoned or removed.
4.15 GOVERNMENTAL LICENSES AND PERMITS; COMPLIANCE WITH LAWS.
(a) Section 4.15 of the Seller Disclosure Schedule contains an
accurate, correct and complete list and summary description of each Permit
issued to FRS or any of its Subsidiaries and used in the Target Operations. Such
Permits are valid and in full force and effect and there are not pending, or, to
the knowledge of the Seller Parties or FRS, threatened, any proceedings which
could result in the termination, revocation, modification, limitation or
impairment of any such Permit. Except as described in Section 4.15 of the Seller
Disclosure Schedule, neither FRS nor any of its Subsidiaries has received any
notice of any revocation or modification of any Permit by any Governmental
Entity nor has FRS or any of its Subsidiaries received notice of any proposed or
intended revocation or modification of any Permit by any Governmental Entity.
The Permits listed in Section 4.15 of the Seller Disclosure Schedule constitute
all Permits that are necessary or appropriate to own and conduct the Target
Operations as presently conducted and to own, occupy and lease the Land. All
such Permits will continue to be in full force and effect after the consummation
of the transactions contemplated hereby.
(b) The Target Operations comply and have been conducted in
compliance with all applicable Laws. No notice from any Governmental Entity or
other person of any violation of any Law or requiring or calling attention to
the necessity of any repairs, installation or alteration in connection with the
Target Operations has been served.
4.16 LABOR MATTERS.
(a) Section 4.16 of the Seller Disclosure Schedule lists and
describes each collective bargaining agreement covering any employees of FRS or
any Subsidiary of FRS. Except as disclosed in Section 4.16 of the Seller
Disclosure Schedule, (i) neither FRS nor any of its Subsidiaries is a party to
or bound by any collective bargaining or similar agreement with any labor
organization applicable to any employees of FRS or any of its Subsidiaries, (ii)
there is no labor strike, dispute, slowdown, work stoppage, unresolved material
labor union grievance or labor arbitration proceedings pending or, to the
knowledge of FRS or the Seller Parties, threatened against FRS or any of its
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Subsidiaries, and (iii) to the knowledge of FRS and the Seller Parties, there
are no current union organizing activities among employees of FRS or any of its
Subsidiaries.
(b) Since the enactment of the WARN Act, neither FRS nor any
of its Subsidiaries has effectuated a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of FRS or any of its
Subsidiaries. Except as set forth in Section 4.16 of the Seller Disclosure
Schedule, no employees of FRS or any of its Subsidiaries have suffered an
"employment loss" (as defined in the WARN Act) since December 31, 2002. For each
such plant closing or employment loss identified on the Seller Disclosure
Schedule, the Seller Parties have identified the date(s) on which FRS issued
notices to the affected employees, as required under the WARN Act.
4.17 EMPLOYEE BENEFIT PLANS.
(a) Section 4.17 of the Seller Disclosure Schedule sets forth
each retirement, pension, bonus, stock purchase, profit sharing, stock option,
deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, accidental death
and dismemberment, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or other compensation plan or arrangement or other employee
benefit which is maintained, or otherwise contributed to or required to be
contributed to, by FRS or any of its Subsidiaries or any ERISA Affiliate of FRS
or any of its Subsidiaries for the benefit of employees or former employees and
directors or former directors of FRS or any of its Subsidiaries and, if
applicable, their spouses, dependents or beneficiaries (the "COMPANY EMPLOYEE
PLANS"). True and correct copies of each of the Company Employee Plans have been
delivered to Buyer, along with the three most recent annual reports for such
plans (including any actuarial report), any trust agreement relating to such
plans and the most recent summary plan description, as well as all determination
letters for Company Employee Plans intended to be qualified under Code Section
401(a).
(b) FRS and each of its Subsidiaries have at all times
complied with, both as to form and operation, and in all respects, the
applicable provisions of ERISA and the Code, and any underlying regulation or
guidance issued thereunder, and each other Law imposed or administered by any
Governmental Entity with respect to each of the Company Employee Plans. Each
Company Employee Plan has been administered in accordance with its terms. Except
as set forth in Section 4.17 of the Seller Disclosure Schedule, neither FRS nor
any of its Subsidiaries has at any time maintained, adopted, established,
contributed to or been required to contribute to, otherwise participated in or
been required to participate in, or had any liability with respect to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA. All Company
Employee Plans providing pension or retirement benefits or obligations to
current or former employees or their beneficiaries are referred to collectively
as "COMPANY PENSION PLANS" and are identified on Section 4.17 of the Seller
Disclosure Schedule.
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(c) Neither FRS, nor any of its Subsidiaries, nor any ERISA
Affiliate of FRS nor any of its Subsidiaries sponsors, maintains or contributes
to, or has ever sponsored, maintained or contributed to, or had any liability
with respect to, any employee benefit plan subject to Section 302 of ERISA,
Section 412 of the Code or Title IV of ERISA, nor does it have a current or
contingent obligation to contribute to, or ever had an obligation to contribute
to, or have any other liability with respect to, any multiemployer plan (as
defined in Section 3(37) of ERISA). Neither FRS nor any of its Subsidiaries has
any liability with respect to any benefit plan or arrangement other than with
respect to the Company Employee Plans.
(d) Except as set forth in Section 4.17 of the Seller
Disclosure Schedule, no provision concerning a Company Pension Plan is contained
in any collective bargaining agreement affecting any current or former employees
of FRS or any of its Subsidiaries. Each Company Pension Plan that is required to
be qualified under Section 401(a) and Section 501(a) of the Code has received a
determination letter to such effect. Any such determination letter that has been
obtained remains in effect and has not been revoked, and with respect to any
application that is pending, none of the Seller Parties, nor FRS nor any of FRS'
Subsidiaries has any reason to suspect that such application for a determination
will be denied. Nothing has occurred since the date of any such determination
letter that is reasonably likely to adversely affect such qualification or
exemption, or result in the imposition of excise taxes or income taxes on
unrelated business income under the Code or ERISA with respect to any such
Company Pension Plan.
(e) FRS and its Subsidiaries have paid all amounts required to
be paid as a contribution to each Company Employee Plan as of the last day of
the most recent fiscal year of such Company Employee Plan; all benefits accrued
under any funded or unfunded Company Employee Plan will have been paid, accrued,
or otherwise adequately reserved in accordance with U.S. GAAP as of the Closing
Date and all monies withheld from employee payroll with respect to any Company
Employee Plan have been transferred to the appropriate Company Employee Plan in
a timely manner as required by applicable Law.
(f) All reports, Tax Returns and similar documents with
respect to each Company Employee Plan required to be filed with any Governmental
Entity or distributed to any Company Employee Plan participant have been duly
filed on a timely basis or distributed. There are no pending investigations by
any Governmental Entity involving or relating to any Company Employee Plan, no
threatened or pending claims (except for claims for benefits payable in the
normal operation of the Company Employee Plans), suits or proceedings against
any Company Employee Plan or asserting any rights or claims to benefits under
any Company Employee Plan which could give rise to a liability nor, to the
knowledge of the Seller Parties, the Trust Beneficiaries or FRS, are there any
facts that could give rise to any liability in the event of any such
investigation, claim, suit or proceeding. No notice has been received by any
Seller, any Trust Beneficiary, FRS or any of its Subsidiaries of any complaints
or other proceedings of any kind involving FRS or any of its Subsidiaries or any
of the employees of FRS or any of its Subsidiaries or other potential claimants
before any Governmental Entity relating to any Company Employee Plan or to FRS
or any of its Subsidiaries and to the knowledge of the Seller Parties, the Trust
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Beneficiaries and FRS, there is no basis for any such claims. No excise tax
under Chapter 43 of the Code is payable with respect to any Company Employee
Plan, and no event has occurred that could result in any such tax being due.
(g) Neither FRS nor any of its Subsidiaries maintains any
welfare benefit fund within the meaning of Section 419 of the Code. With respect
to any Company Employee Plan that is an employee welfare benefit plan (within
the meaning of Section 3(1) of ERISA) (a "WELFARE PLAN"), except as specified in
Section 4.17 of the Seller Disclosure Schedule, (i) each Welfare Plan for which
contributions are claimed by FRS or any of its Subsidiaries as deductions under
any provision of the Code complies with all applicable requirements pertaining
to such deduction, (ii) with respect to any welfare benefit fund (within the
meaning of Section 419 of the Code) related to a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any Benefit Plan that is a group health plan (within the meaning of Section
4980B(g)(2) of the Code) complies, and in each and every case has complied, with
all of the applicable requirements of Section 4980B of the Code, ERISA, Title
XXII of the Public Health Service Act, the applicable provisions of the Social
Security Act, the Health Insurance Portability and Accountability Act of 1996,
the Women's Health and Cancer Rights Act of 1998 and other applicable Laws, and
(iv) all Welfare Plans may be amended or terminated at any time on or after the
Closing Date. Except as specified in Section 4.17 of the Seller Disclosure
Schedule, no Company Employee Plan provides any health, life or other welfare
coverage to employees of FRS or any of its Subsidiaries beyond termination of
their employment by reason of retirement or otherwise, other than coverage as
may be required under Section 4980B of the Code or under the continuation of
coverage provisions of the Laws of any state or locality.
(h) Except as otherwise set forth in Section 4.17 of the
Seller Disclosure Schedule, neither the execution and delivery of this Agreement
nor the consummation of this Agreement will (i) result in any payment to be made
by FRS or any of its Subsidiaries becoming due to any employee or former
employee, officer or director, or (ii) increase or vest any benefits payable
under any Company Employee Plan.
(i) Except as otherwise set forth in Section 4.17 of the
Seller Disclosure Schedule, any amount that could be received (whether in cash
or property or the vesting of property) as a result of the Acquisition by any
employee, officer or director of FRS or any of its Subsidiaries who is a
disqualified individual (as such term is defined in proposed Treasury
Regulations Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Employee Plan currently in
effect will not be characterized as an excess parachute payment (as such term is
defined in Section 280G(b)(1) of the Code). Except as described in Section 10.2,
neither FRS nor any of its Subsidiaries has declared or paid any bonus
compensation in contemplation of the Acquisition.
4.18 MATERIAL CONTRACTS . Section 4.18 of the Seller Disclosure
Schedule lists all of the following written or oral contracts, agreements and
commitments (collectively, the "MATERIAL CONTRACTS"):
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(a) all employment, consulting or personal services agreements
or contracts with any present or former officer, director or employee of FRS or
any of its Subsidiaries who has an annual salary of $100,000 or more;
(b) all Solid Waste management agreements and contracts
(including those relating to the receipt, transport, disposal or other
management of waste) between FRS or any of its Subsidiaries and any municipality
or other Governmental Entity or Person which call for annual payments to or by
FRS or any of its Subsidiaries of $100,000 or more, which list includes the term
of such agreements or contracts;
(c) all contracts, agreements, agreements in principle,
letters of intent and memoranda of understanding which call for or contemplate
the acquisition of (or right to acquire or right of first refusal or offer for)
any interest in any business enterprise, or any assets or properties outside the
ordinary course of business of FRS or any of its Subsidiaries, and all
contracts, agreements and commitments relating to the future disposition of a
material portion of the assets or properties of FRS or any of its Subsidiaries;
(d) all contracts, agreements with, or commitments to, any
Person containing any provision or covenant relating to the indemnification or
holding harmless by FRS or any of its Subsidiaries of any Person which could
result in a liability to FRS or any of its Subsidiaries of $100,000 or more;
(e) all leases or subleases of real property used in the
conduct of business of FRS or any of its Subsidiaries providing for annual
rental payments to be paid by or on behalf of FRS or such Subsidiary of more
than $100,000;
(f) all contracts or agreements committing FRS or any of its
Subsidiaries to make a capital expenditure in excess of $100,000;
(g) all guaranties or other commitments or undertakings under
which FRS or any of its Subsidiaries may be primarily, secondarily, contingently
or conditionally liable for or in respect of (or which creates, constitutes or
evidences a Lien on any of the assets or properties of FRS or such Subsidiary or
which secures the payment or performance of) any present or future liability or
obligation of or to any other Person;
(h) all contracts, agreements and undertakings with any
Governmental Entity or other Person which contain any provision or covenant
limiting (i) the ability of FRS or any of its Subsidiaries to engage in any line
of business, to compete with any Person, to do business with any Person or in
any location or to employ any Person or (ii) the ability of any Person to
compete with or obtain products or services from FRS or any of its Subsidiaries;
(i) all outstanding proxies, powers of attorney or similar
delegations of authority granted by FRS or any of its Subsidiaries or any Seller
or Trust Beneficiary or any other Person relating in any way to the Acquired
Shares, FRS or any of its Subsidiaries; and
(j) all other agreements which are material to FRS or any of
its Subsidiaries or the conduct of the Target Operations.
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The Seller Parties have delivered to the Buyer a true and correct copy
of each Material Contract. Each of the Material Contracts is in full force and
effect and constitutes a legal, valid and binding obligation of FRS or the
applicable Subsidiary which is a party to it, and, to the knowledge of FRS, the
Trust Beneficiaries and the Seller Parties, of each other Person that is a party
to it and each Material Contract will continue to be legal, valid, binding,
enforceable and in full force and effect on the same terms immediately after the
Closing. Except as set forth in Section 4.18 of the Seller Disclosure Schedule,
neither FRS nor any of its Subsidiaries is, and, to the knowledge of FRS, the
Trust Beneficiaries and the Seller Parties, no other party to any Material
Contract is, in violation, breach or default of such Material Contract or, with
or without notice or lapse of time or both, would be in violation, breach or
default of any such Material Contract. Except as set forth in Section 4.18 of
the Seller Disclosure Schedule, no Material Contract provides that any party
thereto may terminate such Material Contract by reason of the execution of this
Agreement or the consummation of the Acquisition and no Material Contract
requires the consent or approval of any Governmental Entity or other Person as a
result of or in connection with consummation of the Acquisition.
4.19 REAL PROPERTY INTERESTS.
(a) OWNED LAND. Section 4.19(a) of the Seller Disclosure
Schedule contains an accurate legal description of all Land owned by FRS or any
of its Subsidiaries and a complete description of existing surveys, abstracts
and title policies in the possession of the Seller Parties, the Trust
Beneficiaries, FRS or any of its Subsidiaries relating to the owned and leased
Land of FRS and its Subsidiaries. FRS and its Subsidiaries have good and
marketable fee simple title to all fee estates included in all owned Land, free
and clear of all Liens, except for Permitted Liens. The Seller Parties have
delivered to Buyer true and complete copies of all existing surveys, abstracts
and title policies listed in Section 4.19 of the Seller Disclosure Schedule.
(b) LEASED LAND. Section 4.19(b) of the Seller Disclosure
Schedule is a complete list of all Real Estate Leases to which FRS or any of its
Subsidiaries is a party or subject. Except as otherwise disclosed in Section
4.19(b) of the Seller Disclosure Schedule, (i) each Real Estate Lease is legal,
valid, binding, enforceable and in full force and effect; (ii) subject to
obtaining any consent described in Section 4.19(b) of the Seller Disclosure
Schedule, each Real Estate Lease will continue to be legal, valid, binding,
enforceable and in full force and effect on the same terms immediately after the
Closing; (iii) neither FRS nor any of its Subsidiaries is in breach or default
in any material respect under, and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration of, any Real Estate Lease; (iv) no other party to
any Real Estate Lease is in breach or default in any material respect under, and
no event has occurred which, with notice or lapse of time, would constitute such
a breach or default or permit termination, modification or acceleration of, such
Real Estate Lease; (v) no party to any Real Estate Lease has repudiated any
provision thereof; (vi) there are no disputes, oral agreements or forbearances
in effect as to any Real Estate Lease; (vii) no Real Estate Lease has been
modified in any respect, except to the extent that such modifications are
described in Section 4.19(b) of the Seller Disclosure Schedule; and (viii)
neither FRS nor any of its Subsidiaries, nor any Seller, nor any Trust
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Beneficiary has assigned, transferred, conveyed, mortgaged, deeded in trust or
caused any Lien to exist with respect to any interest of FRS or any of its
Subsidiaries in any Real Estate Lease.
(c) NO PROCEEDINGS. There is no proceeding in eminent domain
or any similar proceeding pending, or, to the knowledge of the Seller Parties or
FRS or its Subsidiaries, threatened, affecting the fee or the leasehold interest
of FRS or any of its Subsidiaries in any Land. There exists no writ, injunction,
decree, order or judgment outstanding, nor any litigation pending, or, to the
knowledge of FRS, the Trust Beneficiaries and the Seller Parties, threatened,
relating to the lease, use, occupancy or operation by FRS or any of its
Subsidiaries of any fee or leasehold interest in Land.
(d) CONDITION AND OPERATION OF IMPROVEMENTS. To the knowledge
of FRS, the Trust Beneficiaries and the Seller Parties, as to each parcel of
Land: (i) all components of all buildings, structures and other improvements
included upon or within such Land (the "IMPROVEMENTS"), including the roofs and
structural elements thereof, are in adequate condition to operate such
facilities as currently used, occupied or operated and comply with all
applicable zoning Laws and building codes, regulations, ordinances and
restrictions applicable thereto; (ii) there are no structural deficiencies in
any buildings located upon any Land; and (iii) no Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
improvement not included in any Land.
(e) MATERIAL VIOLATIONS. To the knowledge of FRS, the Trust
Beneficiaries and the Seller Parties, there are no material violations of any
orders of any Governmental Entity or court orders requiring repairs, alterations
or correction of existing conditions on the Improvements; there are no material
defects or deficiencies in any of the buildings, or any machinery, equipment,
fixtures, systems, appliances or other Improvements, including, without
limitation, any material leakage or seepage from roofs, walls, foundations or
underground storage tanks; and all buildings, structures and other Improvements
and all mechanical systems and fixtures including, without limitation, all
water, sewer, plumbing, heating, cooling, air conditioning, sprinkling, gas,
public sewer, communications and electrical systems and all other facilities of
whatever nature are in good working order.
(f) UTILITY SERVICE. To the knowledge of FRS, the Trust
Beneficiaries and the Seller Parties, (i) all gas, electric, water and other
utility lines, sewers and curbs which are required in connection with the
conduct of the Target Operations have been installed; (ii) all Improvements used
by FRS or any of its Subsidiaries, including, without limitation, any septic
tank, field or drain tiles servicing any buildings used by FRS or any of its
Subsidiaries, are in compliance in all material respects with all building,
zoning, air pollution, land use, health and other Laws and restrictions
applicable thereto, and there are no notices, suits or judgments relating to
violations of any building, zoning, air pollution, land use, health or other
Laws and restrictions, and there are no such violations which have not been
corrected; and (iii) no labor, material or services have been furnished by or at
the direction of FRS or any of its Subsidiaries in or about the Land used by FRS
or any of its Subsidiaries in connection with the Target Operations, or any part
thereof, as a result of which any mechanics', laborers' or materialmen's liens
or claims might arise.
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4.20 BANK ACCOUNTS. Section 4.20 of the Seller Disclosure Schedule
lists each bank, trust company or similar institution with which FRS or any of
its Subsidiaries maintains an account or safe deposit box, and accurately
identifies each such account or safe deposit box by its number or other
identification and the names of all individuals authorized to draw thereon or
have access thereto.
4.21 ACCOUNTS RECEIVABLE. Except as set forth in Section 4.21 of the
Seller Disclosure, all accounts receivable of FRS and its Subsidiaries reflected
in the Company Financial Statements are valid receivables, subject to no offsets
or counterclaims and are current and collectible, net of the applicable reserve
for bad debts contained in the Company Financial Statements.
4.22 OFFICERS AND DIRECTORS. Section 4.22 of the Seller Disclosure
Schedule accurately lists by name and title all officers and directors of FRS
and each of its Subsidiaries. None of the officers or directors of FRS or its
Subsidiaries during the previous five (5) years has been (a) subject to
voluntary or involuntary petition under the federal bankruptcy laws or any state
insolvency law or the appointment of a receiver, fiscal agent or similar officer
by a court for his business or property; (b) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (c) subject to any order, judgment, or
decree (not subsequently reversed, suspended or vacated) of any court of
competent jurisdiction permanently or temporarily enjoining him from engaging,
or otherwise imposing limits or conditions on his engagement in any securities,
investment advisory, banking, insurance or other type of business or acting as
an officer or director of a public company; or (d) found by a court of competent
jurisdiction in a civil action or by the SEC or the Commodity Futures Trading
Commission to have violated any federal or state securities, commodities or
unfair trade practices law, which judgment or finding has not been subsequently
reversed, suspended, or vacated.
4.23 BROKERS. Except as described in Section 4.23 of the Seller
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from Buyer Parent, Buyer, Buyer
Sub or FRS or any of its Subsidiaries in connection with this Agreement or the
Acquisition based upon arrangements made by or on behalf of any Seller or Trust
Beneficiary, or FRS or any of its Subsidiaries.
4.24 DISCLOSURE. The representations, warranties and statements
contained in this Agreement and in each Ancillary Agreement and in the
certificates, Exhibits, and Schedules delivered to Buyer by the Seller Parties
and the Trust Beneficiaries pursuant to this Agreement do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary to be stated therein in
order to make such representations, warranties or statements not misleading in
light of the circumstances under which they were made. There is no material fact
directly relating to the properties, assets, business, operations, condition
(financial or otherwise) or prospects of FRS or any of its Subsidiaries or the
Target Operations (including any competitive developments other than facts which
relate to general economic or industry trends or conditions) that has had or
could have a Material Adverse Effect on FRS or the Target Operations that has
not been set forth in this Agreement or in the Seller Disclosure Schedule.
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4.25 INTELLECTUAL PROPERTY. Section 4.25 of the Seller Disclosure
Schedule sets forth an accurate, correct and complete list and summary
description of all patents, trademarks, trademark rights, trade names, trade
styles, trade dress, product designations, service marks, copyright
registrations and applications for any of the foregoing utilized in the Target
Operations (the "INTELLECTUAL PROPERTY"). Section 4.25 of the Seller Disclosure
Schedule sets forth an accurate, correct and complete list and summary
description of all licenses and other agreements relating to any Intellectual
Property. None of the Intellectual Property is subject to any extensions,
renewals, Taxes or fees due within ninety (90) days after Closing. With respect
to the Intellectual Property, (a) FRS and/or its Subsidiaries are the sole and
exclusive owners or have the sole and exclusive right to use the Intellectual
Property; (b) no action, suit, proceeding or investigation is pending or, to the
knowledge of FRS, the Trust Beneficiaries and the Seller Parties, threatened
with respect to the Intellectual Property; (c) none of the Intellectual Property
interferes with, infringes upon, conflicts with or otherwise violates the rights
of others or, to the knowledge of FRS, the Trust Beneficiaries and the Seller
Parties, is being interfered with or infringed upon by others, and none is
subject to any outstanding order, decree, judgment, stipulation or charge; (d)
there are no royalty, commission or similar arrangements, and no licenses,
sublicenses or agreements, pertaining to any of the Intellectual Property; (e)
neither FRS nor any of its Subsidiaries have agreed to indemnify any Person for
or against any infringement of or by the Intellectual Property; (f) all items of
Intellectual Property are properly registered under applicable Law; and (g) the
Intellectual Property constitutes all such assets, properties and rights which
are used in or necessary for the conduct of the Target Operations as conducted
as of the date hereof.
4.26 SOFTWARE. Section 4.26 of the Seller Disclosure Schedule sets
forth an accurate and complete list and summary description of all the Software
owned, licensed or otherwise used by FRS or any of its Subsidiaries. Section
4.26 of the Seller Disclosure Schedule identifies or describes (A) all Software
of or relating primarily to the Target Operations which is owned by FRS and its
Subsidiaries; and (B) all Software of or relating primarily to the Target
Operations which is licensed to FRS and its Subsidiaries by third parties. With
respect to the Software:
(a) all documentation for Software licensed to FRS and/or its
Subsidiaries is current (to the extent any third party owner supplies updated
documentation to licensees), accurate and sufficient in detail and content to
identify and explain the nature thereof, and to allow its full and proper use by
Buyer Parent, Buyer, Buyer Sub, FRS and its Subsidiaries following the Closing
without reliance on the special knowledge or memory of others; and
(b) FRS and its Subsidiaries own all right, title and interest
in the Software that is not designated as licensed free and clear of any Liens
or legal or equitable claims of others.
4.27 INSURANCE. Section 4.27 of the Seller Disclosure Schedule sets
forth an accurate and complete list and summary description (including name of
the insurer, coverage, premium and expiration date) of all binders, policies of
insurance, self insurance programs or fidelity bonds related to the Target
Operations ("INSURANCE"). All insurance premiums with respect to the Insurance
have been paid in full. All Insurance has been issued by financially sound
insurance companies under valid and enforceable policies or binders for the
benefit of FRS and its Subsidiaries and all such policies or binders are in full
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force and effect and are in such types and amounts and insure against such
risks, casualties and contingencies as is customary for enterprises in
operations similar to the Target Operations. There are no pending or asserted
claims against any Insurance as to which any insurer has denied liability or
reserved rights, and there are no claims under any Insurance that have been
disallowed or improperly filed within the last three fiscal years. Section 4.27
of the Seller Disclosure Schedule sets forth the claims experience for the last
three full fiscal years and the interim period through the date hereof with
respect to the Target Operations (both insured and self-insured). Except as set
forth on Section 4.27 of the Seller Disclosure Schedule, no notice of
cancellation or nonrenewal with respect to, or material increase of premium for,
any Insurance has been received by FRS or any of its Subsidiaries within the
last three fiscal years.
4.28 COMPLIANCE WITH REGULATION D; STOCKHOLDERS. Each Seller and Trust
Beneficiary is aware that the Stock Consideration to be issued pursuant to the
Acquisition constitutes "restricted securities" within the meaning of the
Securities Act. Each Seller and Trust Beneficiary is an "accredited investor" as
defined in Regulation D under the Securities Act. Each Seller and Trust
Beneficiary acknowledges that the securities comprising the Stock Consideration
have not been registered under the Securities Act or the securities Laws of any
state or other jurisdiction and cannot be disposed of unless they are
subsequently registered under the Securities Act and any applicable state Laws
or unless an exemption from such registration is available. Each Seller and
Trust Beneficiary (a) has such knowledge and experience in financial and
business matters so as to be capable of evaluating and understanding the merits
and risks of an investment in Buyer Parent, (b) has received certain information
concerning Buyer Parent and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks of an
investment in Buyer Parent Common Stock, and (c) is able to bear the economic
risk of its investment in Buyer Parent and the Stock Consideration in that,
among other factors, such Seller and Trust Beneficiary can afford to hold the
shares of Buyer Parent Common Stock issued hereunder for an indefinite period
and can afford a complete loss of its investment in Buyer Parent.
4.29 CORRUPT PRACTICES. Except in compliance with all applicable Laws,
none of FRS nor any of its Subsidiaries, nor any Seller or Trust Beneficiary,
nor any of their respective officers, directors, employees or agents, have,
directly or indirectly, ever made, offered or agreed to offer anything of value
to (a) any employees, representatives or agents of any customers of FRS or any
of its Subsidiaries for the purpose of attracting business or (b) any domestic
governmental official, political party or candidate for government office or any
of their employees, representatives or agents.
4.30 AGGREGATION. The imperfections, defects, orders, actions,
defaults, liabilities, inaccuracies and other items omitted from disclosure in
connection with the representations and warranties made in Sections 4.1 through
4.29 on grounds of immateriality, lack of knowledge or failure to have a
Material Adverse Effect do not and could not, taken as a whole, constitute a
Material Adverse Effect on FRS or the Target Operations.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer Parent and Buyer represent and warrant to the Seller Parties,
as of November 21, 2003, as of the date hereof and as of the Closing Date, that:
5.1 ORGANIZATION. Each of Buyer and Buyer Sub is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. Buyer Parent is a corporation duly organized and validly existing
under the laws of Ontario. Each of Buyer Parent, Buyer and Buyer Sub has full
authority and corporate power to conduct its business as it is currently being
conducted.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Buyer Parent, Buyer
and Buyer Sub has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and each Ancillary Agreement to
which it will be a party. The execution and delivery of this Agreement and each
Ancillary Agreement to which Buyer Parent, Buyer or Buyer Sub, as the case may
be, will be party, and the consummation of the Acquisition and the other
transactions contemplated in this Agreement and the Ancillary Agreements have
been duly authorized by the Board of Directors of Buyer Parent, Buyer or Buyer
Sub, as the case may be, and, no other corporate proceedings on the part of
Buyer Parent, Buyer or Buyer Sub are necessary to authorize this Agreement, any
Ancillary Agreement to which Buyer Parent, Buyer or Buyer Sub, as the case may
be, will be a party, or the consummation of the Acquisition or the other
transactions contemplated in this Agreement and the Ancillary Agreements. This
Agreement has been duly executed and delivered by Buyer Parent, Buyer and Buyer
Sub. Assuming the valid authorization, execution and delivery of this Agreement
(and each Ancillary Agreement to which FRS, any Seller Party or any Trust
Beneficiary will be a party) by FRS, each Seller Party and each Trust
Beneficiary in the case of this Agreement (and each of FRS, each Seller Party
and each Trust Beneficiary, as applicable, in the case of the Ancillary
Agreements), this Agreement is, and upon its execution and delivery by Buyer
Parent, Buyer or Buyer Sub, as the case may be, each Ancillary Agreement to
which Buyer Parent, Buyer or Buyer Sub, as the case may be, is a party will be,
a valid and binding obligation of Buyer Parent, Buyer or Buyer Sub, as the case
may be, in each case enforceable in accordance with its respective terms.
5.3 NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the applicable Ancillary Agreements by Buyer Parent, Buyer and
Buyer Sub, and the consummation of the Acquisition and the other transactions
contemplated in this Agreement and the Ancillary Agreements will not constitute
a breach or violation of or default under the charter or bylaws (or similar
organizational documents) or internal rules or regulations governing the conduct
of corporate actions of Buyer Parent, Buyer or Buyer Sub or any Law applicable
to Buyer Parent, Buyer or Buyer Sub.
5.4 CONSENTS AND APPROVAL. Except as set forth in Section 5.4 of
Buyer's Disclosure Schedule, and except for HSR Act filings, no consent, order,
approval, waiver, authorization of, or registration, application, declaration or
filing with, any Person is required with respect to Buyer Parent, Buyer or Buyer
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Sub in connection with the execution and delivery of this Agreement and the
consummation of the Acquisition and the other transactions contemplated in this
Agreement and the Ancillary Agreements.
5.5 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Acquisition based upon arrangements made by or on behalf of Buyer Parent,
Buyer or Buyer Sub.
5.6 SEC REPORTS. Buyer Parent has filed all forms, reports, schedules,
statements and documents required to be filed by Buyer Parent with the SEC since
January 1, 2002 pursuant to the requirements of the Exchange Act, and all rules
and regulations promulgated thereunder. All forms, reports, schedules,
statements and documents filed by Buyer Parent with the SEC since January 1,
2002 (collectively, the "SEC REPORTS") have been filed on a timely basis in
accordance with the applicable requirements of the Exchange Act, and all rules
and regulations promulgated thereunder, and did not at the time they were filed
(or if amended or superseded by a filing prior to the date hereof, then on the
date of such filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE VI
SELLER AGREEMENTS PENDING CLOSING
The Seller Parties and Trust Beneficiaries, jointly and severally,
agree that, between the date hereof and the Closing Date, without the prior
written consent of Buyer:
6.1 CONDUCT OF BUSINESS. The Seller Parties and Trust Beneficiaries
shall cause FRS and each of its Subsidiaries to conduct its operations according
to its ordinary and usual course of business, comply with applicable Laws,
comply with the terms of the Company Employee Plans (including by making all
contributions required by the terms thereof, applicable actuarial
recommendations and applicable Law), and use its reasonable best efforts to
preserve intact its business organization, keep available the services of its
officers and employees and maintain normal business relationships with
customers, suppliers and others having business relationships with it. The
Seller Parties and Trust Beneficiaries shall confer on a regular and frequent
basis with one or more designated representatives of Buyer to report on
operational matters of materiality and to report the general status of on-going
operations of FRS and its Subsidiaries. The Seller Parties and Trust
Beneficiaries shall notify Buyer of:
(a) any unexpected material emergency or other material change
in the normal course of business of the Target Operations;
(b) the instigation of, or any significant development in, any
regulatory proceedings, governmental complaints, investigations or hearings (or
communications indicating that any may be contemplated) involving FRS or any of
its Subsidiaries, which instigation or development could have a Material Adverse
Effect on FRS or the Target Operations; and
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(c) any matter or event which comes to the knowledge of the
Seller Parties or the Trust Beneficiaries and which makes or could make any
representation or warranty made by the Seller Parties and Trust Beneficiaries in
Article IV untrue or inaccurate.
The Seller Parties and Trust Beneficiaries shall keep Buyer fully
informed of such events and permit Buyer's representatives access to all
materials prepared in connection with such events.
The Seller Parties and Trust Beneficiaries further agree to cause FRS
and its Subsidiaries to maintain and continue, between the date hereof and the
Closing Date, the customer billing, receivable collection and payables payment
practices of FRS and its Subsidiaries in a manner consistent with past practices
and in the ordinary course of business.
6.2 FORBEARANCE BY FRS. The Seller Parties and the Trust Beneficiaries
shall not cause or permit FRS or any of its Subsidiaries to:
(a) amend its charter, bylaws or operating agreement (or other
similar organizational documents);
(b) issue, sell, pledge, dispose of or encumber any shares of
its capital stock or equity interests or securities convertible into any such
shares or equity interests, or enter into any agreement or commitment with
respect to the issuance or purchase of any such shares, equity interests or
securities;
(c) pay any dividend or other distribution in respect of its
capital stock, or redeem, purchase or acquire any of its capital stock or equity
interests;
(d) make or commit to make any capital investment, capital
expenditure, capital addition or capital improvement, except for Permitted
Capital Expenditures;
(e) except in the ordinary course of business, and except for
settlements made by insurers, enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to FRS or any of
its Subsidiaries or their respective properties which requires FRS or any of its
Subsidiaries to make a payment in excess of $100,000 or which would result in
the imposition of any restriction upon the operations of FRS or any of its
Subsidiaries, or the disposition of any of their respective properties;
(f) sell real property or any interest in or improvement upon
real property or any other capital asset the book value or sales price of which
is more than $100,000;
(g) amend any Company Employee Plan or make any statement
relating to any anticipated or proposed increase in benefits under any Company
Employee Plan for current, future or former employees of FRS or any of its
Subsidiaries other than strictly in accordance with the terms of the Company
Employee Plans as constituted on the date hereof;
(h) transfer, license, lease, sell, dispose of, mortgage or
encumber any assets or properties other than in the ordinary course of business;
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(i) increase compensation, benefits or severance for employees
of FRS or any of its Subsidiaries, except as required by any collective
bargaining agreements entered into by FRS or such Subsidiary as in effect on the
date hereof; or
(j) enter into any agreement to acquire the stock, equity,
assets or business of any other Person.
6.3 ACCESS AND INFORMATION. The Seller Parties and Trust Beneficiaries
shall, and shall cause FRS and its Subsidiaries to, give to Buyer Parent, Buyer,
Buyer Sub and their representatives (including their lenders, investors and
other financing sources and their respective representatives) full access during
normal business hours to all the properties, books, contracts, commitments,
records, Tax Returns, personnel and advisors of each Seller, each Trust
Beneficiary, FRS and each of its Subsidiaries at a location designated by Seller
so that Buyer Parent, Buyer, Buyer Sub and their representatives may have full
opportunity to make such investigation of FRS and its Subsidiaries as they shall
reasonably request in advance. The Seller Parties and Trust Beneficiaries will
direct ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to permit Buyer's Auditors to review and
examine the work papers of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ relating to FRS and its
Subsidiaries and the Target Operations. The Seller Parties and Trust
Beneficiaries will, and will cause FRS and its Subsidiaries to (a) promptly
furnish to Buyer all information concerning FRS and its Subsidiaries and the
Target Operations, including without limitation audited and unaudited financial
statements and other financial information for FRS and its Subsidiaries,
required for inclusion in any application, filing, statement or notice to be
made by Buyer Parent, Buyer or Buyer Sub to, or filed or joined in by Buyer
Parent, Buyer or Buyer Sub with, any Governmental Entity, including, without
limitation, any registration statement, proxy statement or other statement or
notice, or in any offering memorandum, prospectus, bank book or other offering
document prepared in connection with Buyer Parent's, Buyer's or Buyer Sub's
financing of the transaction, and none of such information (including any
information provided to Buyer's Auditors by FRS, any of its Subsidiaries, the
Seller Parties, the Trust Beneficiaries or ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇) shall, at
the date furnished, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading; (b) cause counsel and independent accounts of FRS and
its Subsidiaries to cooperate with Buyer, Buyer Parent, Buyer Sub and their
respective affiliates and representatives (including investment bankers, counsel
and independent accountants) in the preparation of such applications, filings,
statements, notices, offering memoranda, bank books, prospectuses and other
offering documents; and (c) use their commercially reasonable efforts to obtain
consents and "comfort letters" from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ or any other
independent accountants of FRS and its Subsidiaries as required in connection
with any such filings, statements, notices, reports, offering memoranda, bank
books, prospectuses and other offering documents.
6.4 SUPPLEMENTAL INFORMATION. Between the date hereof and the Closing
or the earlier termination of this Agreement, the Seller Parties and Trust
Beneficiaries shall furnish Buyer with such additional financial and operating
data and other information as to FRS and its Subsidiaries and the Target
Operations as Buyer may from time to time request. Without limiting the
generality of the foregoing, as soon as practicable but in any event within
fifteen (15) days after the end of each month occurring between the date hereof
and the Closing Date, the Seller Parties shall furnish to Buyer the unaudited
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consolidated balance sheets of FRS and its Subsidiaries and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
fiscal month then ended (the "POST-SIGNING INTERIM FINANCIAL STATEMENTS"). The
Post-Signing Interim Financial Statements will be prepared in accordance with
U.S. GAAP, and will fairly present in all material respects in accordance with
such accounting principles the consolidated financial position of FRS and its
Subsidiaries at the respective dates thereof, and the consolidated results of
operations, stockholders' equity (deficit) and cash flows of FRS and its
Subsidiaries for the respective periods covered thereby, subject to year-end
adjustments (consisting of normal recurring accruals) and the omission of
explanatory footnote materials required by U.S. GAAP.
6.5 ACCESS FOR ENVIRONMENTAL REPORT. The Seller Parties and Trust
Beneficiaries shall cause FRS and its Subsidiaries to give to the independent
environmental consultants engaged by and at the expense of Buyer (the
"ENVIRONMENTAL CONSULTANT"), full access to the facilities, personnel and
records of FRS and its Subsidiaries as such consultants shall reasonably request
(including physical inspection of sites, drilling of ▇▇▇▇▇ and soil borings and
collection of samples and other Phase II investigatory activities and
techniques) in order to conduct Phase II environmental assessments of each
parcel of real property owned, or under the management or control of, or
operated, leased or occupied by, FRS or any of its Subsidiaries, and to prepare
a report reflecting the findings and recommendations of such consultants
concerning such Phase II environmental assessments (the "ENVIRONMENTAL REPORT").
The Seller Parties and Trust Beneficiaries shall use their reasonable best
efforts to ensure that all information provided to Environmental Consultant in
the course of its conduct of such environmental assessments is accurate,
complete and not misleading (including by omissions). The Seller Parties and
Trust Beneficiaries will provide, and will cause FRS and its Subsidiaries to
provide, upon written request therefor, all consents, approvals and directions
(and waivers of privacy, freedom of information and similar Laws) so as to
permit the Environmental Consultant to have prompt and unrestricted access to
all relevant information in the possession or under the control of Governmental
Entities. Any and all environmental reports prepared by Buyer prior to Closing
with respect to the Land shall be delivered to the Seller Parties upon their
request.
6.6 NO SOLICITATION OF TRANSACTIONS.
(a) Unless and until this agreement is terminated pursuant to
Section 15.3(a), (c) or (d), none of the Seller Parties, the Trust
Beneficiaries, FRS nor any of its Subsidiaries will, directly or indirectly, and
the Seller Parties, the Trust Beneficiaries, FRS and its Subsidiaries will
instruct their respective officers, directors, employees, agents, advisors or
other representatives (including, without limitation, any investment banker,
attorney or accountant retained by it) (collectively, the "REPRESENTATIVES"),
not to, directly or indirectly, solicit, initiate, seek, entertain or encourage
(including by way of furnishing nonpublic information), or take any other action
to facilitate or support, any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions, negotiate with or furnish any information to, any Person in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to
or endorse any Competing Transaction. The Seller Parties and the Trust
Beneficiaries will notify Buyer immediately after receipt by any of the Seller
Parties, the Trust Beneficiaries, or FRS or any of its Subsidiaries (or their
respective Representatives) of any proposal for, or inquiry respecting, any
Competing Transaction, or any request for nonpublic information in connection
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with such proposal or inquiry or for access to the properties, books or records
of FRS or any of its Subsidiaries by any Person that informs or has informed any
of the Seller Parties, the Trust Beneficiaries or FRS or any of its Subsidiaries
(or their respective Representatives) that it is considering making or has made
such a proposal or inquiry. Such notice to Buyer shall indicate in reasonable
detail the identity of the Person making such proposal or inquiry and the terms
and conditions of such proposal or inquiry. The Seller Parties, the Trust
Beneficiaries and FRS and its Subsidiaries immediately shall cease and cause to
be terminated (and shall instruct their respective Representatives to
immediately cease and terminate) all existing discussions or negotiations with
any parties conducted heretofore with respect to a Competing Transaction.
(b) A "COMPETING TRANSACTION" means any of the following
(other than the transactions contemplated by this Agreement): (i) a merger,
consolidation, share exchange, tender offer, sale of stock, business combination
or other similar transaction involving FRS or any of its Subsidiaries; or (ii)
any sale, lease, exchange, transfer or other disposition of assets or properties
used or useable in connection with the Target Operations other than in the
ordinary course of business consistent with past practice.
6.7 CONSUMMATION OF ACQUISITION. The Seller Parties and the Trust
Beneficiaries shall use their reasonable best efforts to perform and fulfill,
and shall use their reasonable best efforts to cause FRS and its Subsidiaries to
perform and fulfill, all conditions and obligations on their part to be
performed and fulfilled under this Agreement, to the end that the Acquisition
shall be consummated. Without limiting the generality of the foregoing, and
notwithstanding anything in this Agreement to the contrary, the Seller Parties
and the Trust Beneficiaries shall use their reasonable best efforts to take or
cause to be taken all reasonable action to do or cause to be done, and to assist
and cooperate with, and to cause FRS and its Subsidiaries to assist and
cooperate with, the Buyer in doing, all things necessary, proper or advisable to
obtain all consents, amendments, waivers or authorizations under the terms of
all Material Contracts and under all Company Permits required as a result of or
in connection with the transactions contemplated hereby and to obtain all
necessary consents, approvals and authorizations of Governmental Entities as are
required to be obtained under applicable Law as a result of or in connection
with the transactions contemplated hereby.
6.8 EMPLOYEE PLANS.
(a) Effective as of the date prior to the Closing Date, FRS
and its Subsidiaries shall terminate, or terminate their participation in, the
Company Employee Plans; PROVIDED that if, on or before the Closing Date, FRS and
its Subsidiaries shall have established a group medical and dental benefit plan
with CIGNA and such plan remains in effect on the Closing Date, such plan shall
not be so terminated. Buyer shall offer all employees of FRS or its Subsidiaries
who continue their employment with FRS or any of its Subsidiaries following the
Closing coverage with immediate eligibility under Buyer's group medical plan and
group dental plan, covering claims incurred on or after the Closing Date,
without a pre-existing condition limitation.
(b) If FRS obtains a favorable determination letter from the
IRS, Buyer shall take any and all necessary action to cause the trustee of a
defined contribution plan of Buyer or one of its ERISA Affiliates, to accept a
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direct rollover of all or a portion of any employee distributions from FRS'
401(k) plan (including plan loans) that constitute an eligible rollover
distribution pursuant to Code Section 402(c)(4).
(c) Buyer shall be responsible for all COBRA obligations that
arise with respect to all employees and former employees (and their dependents)
of FRS and its Subsidiaries who have experienced a COBRA qualifying event, as
defined in Code Section 4980B(f) or ERISA Section 603, on or prior to the
Closing Date.
6.9 CERTAIN ASSETS. As of the Closing, the assets of FRS and its
Subsidiaries shall consist of all assets necessary or appropriate for the
conduct of the Target Operations, but excluding (a) the Altamonte facility in
Orlando, Florida currently leased by FRS, and (b) the lease agreement relating
to the premises currently used by FRS and its Subsidiaries to provide
compactor/container repair and refurbishment services and all assets currently
used to perform such services, which assets are listed on EXHIBIT M attached
hereto.
6.10 AUDITED 2003 FINANCIAL STATEMENTS. On or before March 18, 2003,
the Seller Parties and the Trust Beneficiaries shall deliver to Buyer the
audited consolidated balance sheet of FRS and its Subsidiaries as of December
31, 2003 and the related audited consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the fiscal year then ended
(the "2003 FINANCIAL STATEMENTS"). Upon delivery, the 2003 Financial Statements
shall be considered "Year-End Financial Statements" solely for the purpose of
the representation and warranty set forth in Section 4.7.
ARTICLE VII
BUYER COVENANTS PENDING CLOSING
Buyer agrees that, between the date hereof and the Closing Date:
7.1 CERTAIN INFORMATION. Buyer will furnish to each Seller Party all
information concerning Buyer Parent, Buyer, Buyer Sub and their respective
Subsidiaries required for inclusion in any application, filing, statement or
notice to be made by any Seller Party to, or filed or joined in by any Seller
Party with, any Governmental Entity in connection with this Agreement or the
Acquisition, and none of such information shall, at the date furnished, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
7.2 FINANCING. Buyer Parent shall use commercially reasonable efforts
to obtain the financing necessary to consummate the Acquisition.
7.3 CONSUMMATION OF ACQUISITION. Buyer shall use its commercially
reasonable efforts to perform and fulfill all conditions and obligations on its
part to be performed and fulfilled under this Agreement, to the end that the
Acquisition shall be consummated.
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ARTICLE VIII
MUTUAL CONDITIONS
The respective obligations of all Parties to consummate the Acquisition
and to take the other actions called for under this Agreement and the Ancillary
Agreements are subject to the fulfillment of each of the following conditions:
8.1 NO ADVERSE PROCEEDINGS. No order entered or Law promulgated or
enacted by any Governmental Entity shall be in effect which would prevent
consummation of the Acquisition, and no proceeding brought by a Governmental
Entity or any other Person shall have been commenced and be pending which seeks
to restrain, enjoin, prevent or materially delay or restructure the transactions
contemplated hereby.
8.2 HSR WAITING PERIOD. The waiting period under the HSR Act shall have
expired or otherwise been terminated.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer Parent, Buyer and Buyer Sub to consummate the
Acquisition and to take the other actions called for under this Agreement and
the Ancillary Agreements is subject to the fulfillment of each of the following
conditions:
9.1 REPRESENTATIONS TRUE AT CLOSING. The Seller Parties, the Trust
Beneficiaries, FRS and its Subsidiaries shall have performed and complied in all
material respects with all obligations and agreements required to be performed
or complied with by them under this Agreement and the Ancillary Agreements at or
prior to the Closing, and the representations and warranties of the Seller
Parties and the Trust Beneficiaries contained in this Agreement shall be true
and correct when made and at and as of the Closing as if made at and as of such
date and time; and Buyer shall have received certificates, each dated the
Closing Date, of each of the Sellers and the Trust Beneficiaries and of the
President of FRS, to the effect set forth in this Section 9.1.
9.2 THIRD PARTY CONSENTS. All consents, approvals or authorizations
required to be obtained pursuant to the Material Contracts and Company Permits
set forth on Section 9.2 of the Seller Disclosure Schedule shall have been
obtained.
9.3 NO ADVERSE CHANGES. Since the date of this Agreement, no event or
series of events taken in the aggregate shall have occurred which could have a
Material Adverse Effect on FRS or the Target Operations.
9.4 FINANCING. Buyer or Buyer Parent shall have received financing for
the Acquisition on terms and conditions reasonably satisfactory to Buyer and
Buyer Parent.
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9.5 RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER. Allied Waste
Industries, Inc. ("ALLIED") and BFI Waste Systems of North America, Inc. ("BFI")
shall have waived in writing all of their respective rights and interests under
that certain Right of First Refusal Agreement dated as of September 20, 1999
among FRS, BFI and Allied (the "ROFR AGREEMENT") with respect to the Acquisition
and a copy of such written waiver shall have been delivered to Buyer or all of
Allied's and BFI's rights and interests under the ROFR Agreement with respect to
the Acquisition shall have expired or terminated without having been exercised
by Allied and Buyer shall have received a certificate dated as of the Closing
Date, of the President of FRS to such effect.
9.6 ▇▇▇▇▇▇▇ RECYCLING TRANSFER STATION. FRS and ▇▇▇▇▇▇▇ Recycling and
Transfer, Inc. shall have executed and delivered the ▇▇▇▇▇▇▇ Lease Agreement.
9.7 BANK CONSENT. Buyer Parent shall have received the consent of its
lenders under its Credit Agreement dated as of December 31, 2003, as amended, to
the consummation of the Acquisition and the other transactions contemplated
hereby.
9.8 CLOSING DOCUMENTS AND DELIVERIES. The Seller Parties and the Trust
Beneficiaries, FRS and its Subsidiaries shall have executed and delivered to
Buyer all documents required to be executed and delivered by them and shall have
taken all other actions required to be taken by them at or prior to Closing as
contemplated by Article III hereof.
ARTICLE X
CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS
The respective obligations of the Seller Parties to consummate the
Acquisition and to take the other actions called for under this Agreement and
the Ancillary Agreements are subject to the fulfillment of each of the following
conditions:
10.1 REPRESENTATIONS TRUE AT CLOSING. Buyer Parent, Buyer and Buyer Sub
shall have performed and complied in all material respects with all obligations
and agreements required to be performed or complied with by them under this
Agreement and the Ancillary Agreements at or prior to the Closing and the
representations and warranties of Buyer contained in this Agreement shall be
true and correct when made and at and as of the Closing as if made at and as of
such date; and Seller Parties shall have received a certificate, dated the
Closing Date, of the President of Buyer to the effect set forth in this Section
10.1.
10.2 RETENTION AND TRANSACTION BONUS AGREEMENTS. Buyer shall have
executed retention and transaction bonus agreements in substantially the form of
EXHIBIT N for each of the persons listed on EXHIBIT O.
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ARTICLE XI
ADDITIONAL AGREEMENTS
11.1 HSR ACT FILINGS. As soon as practicable after the date of this
Agreement, Buyer and each Seller shall file notification and report forms under
the HSR Act with the FTC and the Antitrust Division, and shall use their
reasonable best efforts to respond as promptly as practicable to all requests
received from the FTC or the Antitrust Division for additional information or
documentation.
11.2 PUBLICITY. Neither Buyer, Buyer Parent, nor Buyer Sub nor any
Seller, any Trust Beneficiary, FRS or any Subsidiary of FRS shall issue any
press release, public announcement or public filing pertaining to this
Agreement, the Acquisition, any Ancillary Agreement or the transactions
contemplated hereby or thereby without the prior written consent of the other
Parties; PROVIDED HOWEVER, that such prior consent shall not be required in
cases where the Party proposing to disseminate such release, announcement or
filing believes in good faith that such release, announcement or filing is
required by Law, the rules of any national securities exchange or automated
quotation system on which the Buyer Parent Common Stock is then traded, and it
is impracticable to consult with the other Parties or, after such consultation,
the Parties cannot agree on the content of such release, announcement or filing.
11.3 EXPENSES. Each Party shall pay its own costs and expenses incurred
in connection with the Acquisition and the transactions contemplated hereby
(including any brokerage or finder's fees), whether or not the Acquisition is
consummated, provided, however, that no such costs or expenses of the Seller
Parties, the Trust Beneficiaries, FRS or any of its Subsidiaries shall be paid
by or charged to FRS or any of its Subsidiaries and any costs or expenses
previously incurred and paid by FRS or any of its Subsidiaries shall be
reimbursed by the Selling Parties and Trust Beneficiaries prior to Closing.
11.4 USE OF COMPANY NAMES. As soon as practicable, and in any event
within thirty (30) days after the Closing Date, the Seller Parties and Trust
Beneficiaries shall cease to use the name "Florida Recycling Services" in
connection with the conduct of any of their respective businesses or other
operations.
11.5 SELLER GUARANTIES. Buyer agrees to use all commercially reasonable
efforts to cause each Seller to be fully and finally released and discharged
from all further liability or obligation in respect of all Seller Guaranties in
respect of which such Seller is an obligated party, effective as of the Closing
Date.
11.6 CONFIDENTIALITY. All confidential information about Buyer, Buyer
Parent, Buyer Sub and their respective Affiliates is referred to herein as
"PROPRIETARY INFORMATION." Proprietary Information shall not include, however,
information which is or becomes generally available to the public other than as
a result of a disclosure by any Seller, any Trust Beneficiary, FRS or any of its
Subsidiaries or their respective Representatives. Unless otherwise agreed to in
writing by Buyer, the Seller Parties, the Trust Beneficiaries, FRS and its
Subsidiaries shall keep all Proprietary Information confidential, shall not
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disclose or reveal any Proprietary Information to any Person and shall not use
any Proprietary Information for any purpose other than for purposes of
consummating the Acquisition and the other transactions contemplated by this
Agreement. The Seller Parties, the Trust Beneficiaries, FRS and its Subsidiaries
shall be responsible for any breach of the terms of this provision by their
Representatives. The provisions of this Section 11.6 shall survive the Closing
indefinitely.
11.7 COVENANTS NOT TO COMPETE AND SOLICIT.
(a) Each Seller and Trust Beneficiary hereby severally and not
jointly agrees that, for the period of five (5) years commencing on the date
hereof, it shall not induce or encourage, or assist others to induce or
encourage, any employee of FRS or any of its Subsidiaries to decline to continue
an employment arrangement with Buyer, Buyer Parent, Buyer Sub, FRS or any of its
Subsidiaries after the Closing, or interfere in any manner with the relationship
between such employee and any such entity. Each Seller and Trust Beneficiary
hereby agrees that, for a period of five (5) years from the Closing Date, he,
she or it shall not induce or encourage, or assist others to induce or
encourage, any employee of Buyer, Buyer Sub, FRS or any of its Subsidiaries to
leave the employ of such entity after the Closing, whether to accept a position
with any Seller or Trust Beneficiary or an entity related to or affiliated with
any Seller or Trust Beneficiary or otherwise. Notwithstanding anything contained
in this Section 11.7(a), it shall not be deemed to be a violation hereof for any
Seller or Trust Beneficiary to employ any of the employees of the FRS Container
Yard listed on Schedule 11.7(a) attached hereto or publish a mass media or
general advertisement consistent with its hiring practices that is not directed
at the employees of Buyer Parent, Buyer, Buyer Sub or FRS or any of its
Subsidiaries. The provisions of this Section 11.7(a) shall not survive
termination of this Agreement but shall survive the Closing for a period of five
(5) years.
(b) Each Seller and each Trust Beneficiary hereby severally
and not jointly agrees that, for the period commencing on the date hereof and
ending on the fifth anniversary of the Closing, it shall not induce or assist
others to induce any supplier of Buyer Parent, Buyer, Buyer Sub, FRS or any of
its Subsidiaries to terminate its association with Buyer Parent, Buyer, Buyer
Sub, FRS or any of its Subsidiaries or do anything to interfere with the
business relationship between any such entity and any of its suppliers. The
provisions of this Section 11.7(b) shall not survive termination of this
Agreement but shall survive the Closing for a period of five (5) years.
(c) In furtherance of the Acquisition and more effectively to
protect the business and goodwill of FRS and its Subsidiaries, upon the
consummation of the Acquisition, each Seller and Trust Beneficiary agrees that,
for the period commencing on the Closing Date and ending on the fifth
anniversary thereof, it will not directly or indirectly (whether as an employer,
employee, agent, consultant, advisor, independent contractor, general partner,
officer, director, stockholder, investor, lender or guarantor of any
corporation, partnership or other entity, or in any other capacity), own,
manage, operate, control or be employed by, participate in, consult with, or be
otherwise connected in any manner with the ownership, management or operation of
any Solid Waste Business in the State of Florida; PROVIDED, HOWEVER, that (i)
nothing in this Section 11.7(c) shall restrict a Seller or Trust Beneficiary
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from engaging in the business of recycling Solid Waste as long as such activity
is limited to (A) performing services pursuant to, and in accordance with, the
Ancillary Agreements or (B) operating recycling facilities and recycling
collection activities that (1) do not utilize any standard refuse collection
equipment including, without limitation, rear loaders, front loaders, side
loaders and roll off trucks and (2) do not compete with Buyer Parent, Buyer,
Buyer Sub, FRS or any of their respective Subsidiaries or Affiliates with
respect to the provision or potential provision of recycling collection services
to current or future customers of Buyer Parent, Buyer, Buyer Sub, FRS or any of
their respective Subsidiaries or Affiliates; (ii) nothing in this Section
11.7(c) shall restrict a Seller or Trust Beneficiary from constructing and
operating one Class I and Class III recycling and transfer facility in Volusia
County, Florida as long as such operation complies with the conditions set forth
in Section 11.7(c)(i) above; (iii) nothing in this Section 11.7(c) shall
restrict a Seller or a Trust Beneficiary from owning, solely for investment
purposes, up to one percent (1%) of any class of publicly traded securities of
any Person engaged in the Solid Waste Business, as long as such Seller or Trust
Beneficiary does not manage, operate, control or be employed by, participate in,
consult with, or otherwise be connected in any manner with the management or
operation of any such company; (iv) nothing in this Section 11.7(c) shall
restrict a Seller or Trust Beneficiary from owning or operating (A) the landfill
presently owned and operated by RIP, Inc. in Citrus County Florida (the
"HOMOSASSA LANDFILL") and (B) a Solid Waste Business operating exclusively
within a 150 mile radius of the Homosassa Landfill; PROVIDED that Solid Waste
collected by such Solid Waste Business is disposed of exclusively at the
Homosassa Landfill; and (v) nothing in this Section 11.7(c) shall restrict a
Seller or Trust Beneficiary, or any of their respective Affiliates, from
operating a Solid Waste Business in the Florida counties listed on Schedule
11.7(c) attached hereto (the "EXCLUDED COUNTIES"). If a Seller or Trust
Beneficiary, or any of their respective Affiliates, operates a Solid Waste
Business in one or more Excluded Counties within ten (10) years following the
Closing Date, Buyer shall have a right of first offer with respect to such Solid
Waste Business expiring on the tenth (10th) anniversary of the Closing Date on
the following terms (the "RIGHT OF FIRST OFFER"):
(i) If a Seller or Trust Beneficiary of any of their
respective Affiliates (a "COVERED PARTY") desires to sell such operations, then
the Covered Party shall give notice thereof to Buyer (a "FIRST OFFER NOTICE").
The First Offer Notice shall include a description of the Solid Waste Business
that is proposed to be sold and the desired purchase price and intended timing
of such sale.
(ii) Buyer shall have the right, but not the
obligation, exercisable at any time within thirty (30) days following delivery
of the First Offer Notice, to deliver to the Covered Party an offer to purchase
such Solid Waste Business (the "FIRST OFFER ELECTION") setting forth the
material terms and conditions on which it proposes to acquire such Solid Waste
Business (the "FIRST OFFER TERMS").
(iii) The Covered Party shall have a period of ten
(10) days after delivery of the First Offer Election in which to accept or
reject the offer by the Buyer on the First Offer Terms. Notice of such
acceptance shall be referred to as the "COVERED PARTY ACCEPTANCE NOTICE".
(iv) Upon the acceptance of any such offer pursuant
to (iii) above, the Covered Party shall designate a date to purchase the Solid
Waste Business to be acquired, which date shall be not less than five (5) days
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following the date on which the Covered Party notifies the Buyer thereof and not
more than thirty (30) days following delivery of the Covered Party Acceptance
Notice, at which time Buyer shall deliver payment in the appropriate amount to
the Covered Party and the parties shall execute and deliver all documentation
necessary to consummate the sale on the First Offer Terms. All relevant terms
and conditions of this Agreement regarding title matters, the transfer of good
and marketable title to Buyer Parent, allocation of liabilities (including
environmental liabilities), risk of loss, representations, warranties, covenants
and agreements, and survival of representations, warranties, covenants and
agreements shall apply to the transfer of the operations as if fully set forth
herein and shall be complied with by the parties as a condition to closing for
the operations. Notwithstanding the foregoing, however, the terms and conditions
of this Agreement shall be modified as necessary to give effect to the terms,
conditions and provisions of the First Offer Terms.
(v) If Buyer does not make a First Offer Election or
if the Covered Party has not accepted the offer embodied in the First Offer
Notice within the ten (10) day period set forth in subparagraph (iii) above, the
Covered Party shall have the unlimited right at its option, at any time within
the one hundred eighty (180) days following the date of the First Offer Notice
to sell the Solid Waste Business that was the subject of the First Offer Notice
free of any obligation to sell such Solid Waste Business to Buyer; PROVIDED,
however, that if Buyer shall have made a First Offer Election but the Covered
Party did not accept such offer as aforesaid, the total consideration in such
sale shall not be less than the total consideration contained in the First Offer
Terms. Any subsequent or other proposed sale of such Solid Waste Business shall
be subject to the rights of first offer set forth herein.
(d) The parties agree and acknowledge that the duration, scope
and geographic areas applicable to the covenant not to compete described in this
Section 11.7 are fair, reasonable and necessary, that adequate compensation has
been received by each Seller and Trust Beneficiary for such obligations, and
that these obligations do not prevent any Seller or Trust Beneficiary from
earning a livelihood. Without limiting the right of Buyer, Buyer Parent or Buyer
Sub to pursue all other legal and equitable rights available to it for violation
of this Section 11.7 by any Seller or Trust Beneficiary, it is agreed that other
remedies cannot fully compensate Buyer, Buyer Parent or Buyer Sub for such a
violation and that Buyer, Buyer Parent and Buyer Sub shall be entitled to
injunctive relief to prevent the violation or the continuing violation thereof.
It is the intent and understanding of each party hereto that if, in any action
before any Governmental Entity legally empowered to enforce Section 11.7, any
term, restriction, covenant or promise in this Section 11.7 is found to be
unreasonable, or it is determined that the consideration therefore was
inadequate or that any Seller or Trust Beneficiary has been prevented from
earning a livelihood and therefore such term, restriction, covenant or promise
is determined to be unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to make it enforceable
by such Governmental Entity.
11.8 APPOINTMENT OF SELLER REPRESENTATIVE. Each Seller and Trust
Beneficiary hereby appoints ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, acting jointly
(the "SELLER REPRESENTATIVES"), the attorneys-in-fact of such Seller or Trust
Beneficiary, as the case may be, with full power and authority, including power
of substitution, acting in the name of and for and on behalf of such Seller or
Trust Beneficiary, as the case may be, (i) to amend or waive any provision of
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this Agreement or any Ancillary Agreement, (ii) to terminate this Agreement or
any Ancillary Agreement pursuant to the provisions hereof or thereof, (iii) to
do all other things and to take all other action under or related to this
Agreement or any Ancillary Agreement that the Seller Representatives may
consider necessary or proper to effectuate the transactions contemplated hereby
and thereby, (iv) to resolve any dispute with Buyer Parent, Buyer or Buyer Sub
over any aspect of this Agreement or any Ancillary Agreement, and (v) on behalf
of such Seller or Trust Beneficiary, as the case may be, to enter into any
agreement to effectuate any of the foregoing which shall have the effect of
binding such Seller or Trust Beneficiary, as the case may be, as if such Seller
or Trust Beneficiary had personally entered into such an agreement. The Seller
Representatives shall have the exclusive right, power and authority, on behalf
of all Sellers and Trust Beneficiaries, to pursue, defend, and settle any
indemnification claims pursuant to Article XIV and to do all things and to take
all other actions the Seller Representatives may consider necessary or proper to
resolve any indemnification claims after the Closing. This appointment and power
of attorney shall be deemed as coupled with an interest and all authority
conferred hereby shall be irrevocable and shall not be subject to termination by
operation of law, whether by the death or incapacity or liquidation or
dissolution of any Seller or Trust Beneficiary or the occurrence of any other
event or events and the Seller Representatives may not terminate this power of
attorney with respect to any Seller or Trust Beneficiary or such Seller's or
Trust Beneficiary's successors or assigns without the consent of Buyer. Upon the
death, disability or resignation of a Seller Representative, such Person's
successor shall be appointed by the surviving or remaining Seller
Representative. Any notice given to the Seller Representatives pursuant to this
Agreement or any other agreements contemplated hereby shall constitute effective
notice to all Sellers and Trust Beneficiaries, and any other Party to this
Agreement or any other Person may rely on any notice, consent, document,
election or other communication received from the Seller Representatives as if
such notice, consent, document, election or other communication had been
received from all the Sellers and Trust Beneficiaries. Each Seller and Trust
Beneficiary agrees to hold the Seller Representatives harmless from any and all
loss, damage, liability or expense (including legal fees) which such Seller
Representatives may sustain as a result of any action taken in good faith by the
Seller Representatives.
11.9 POST-CLOSING SECURITIES FILINGS. The Seller Parties and Trust
Beneficiaries understand that Buyer Parent, Buyer or Buyer Sub or one or more of
their respective Affiliates may in the future prepare offering memoranda, bank
books, prospectuses and other offering documents and/or file registration
statements, proxy statements and other documents with the SEC under the
Securities Act or the Exchange Act, and such offering memoranda, bank books,
prospectuses, offering documents, registration statements, proxy statements and
other documents may be required to contain financial statements and other
financial information of Buyer Parent, Buyer, Buyer Sub, FRS and its
Subsidiaries suitable for filing with the SEC and prepared in accordance with
Regulation S-X of the Securities Act. Accordingly, the Seller Parties and Trust
Beneficiaries agree to furnish to Buyer any information or documents necessary
for completion of such offering memoranda, bank books, prospectuses, offering
documents, registration statements, proxy statements and other documents and the
Seller Parties and Trust Beneficiaries agree to cause the appropriate officers
of FRS and its Subsidiaries to execute any necessary management representation
letters to permit Buyer's or Buyer Parent's independent accountants to issue
unqualified reports with respect to such financial statements.
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11.10 COLLECTION OF RECEIVABLES. For a period of 360 days following the
Closing Date (the "COLLECTION Period"), Buyer shall use reasonable efforts to
collect the Excluded Accounts Receivable (other than any Excluded Accounts
Receivable relating to FRS' municipal contracts with the City of St. Lucie and
the City of South Bay) using an attorney selected by Buyer with the approval of
the Seller Parties (which approval shall not be unreasonably withheld). Buyer
shall have no obligation to undertake any collection efforts with respect to any
Excluded Accounts Receivable following the Collection Period. Buyer shall remit
to the Seller Parties, ratably in accordance with the percentages set forth in
EXHIBIT A, any and all amounts received by Buyer within the Collection Period in
respect of any Excluded Accounts Receivable, net of any out-of-pocket collection
costs incurred by Buyer or its Affiliates in connection therewith. Buyer shall
be entitled to retain any and all amounts received by Buyer after the expiration
of the Collection Period with respect to the Excluded Accounts Receivable. For
purposes of this Section, "reasonable efforts" shall mean the same level of
effort and diligence Buyer employs in the collection of its own accounts
receivable. From and after the Closing Date, the Seller Parties agree to keep
Buyer informed of the status of FRS' collection activities with respect to its
municipal contracts with the City of St. Lucie and the City of South Bay.
ARTICLE XII
TAX MATTERS
12.1 SECTION 338(H)(10) ELECTIONS.
(a) At Buyer's request made to Seller Representatives prior to
June 30, 2004 or ninety (90) days after the Closing Date, whichever is later
(which request may or may not be made in Buyer's sole discretion), each Seller
and Trust Beneficiary shall join Buyer Parent, Buyer and Buyer Sub in an
election to have the provisions of Section 338(h)(10) of the Code and similar
provisions of other applicable Laws (where permissible) ("SECTION 338(H)(10)
ELECTION") apply to the Acquisition whereby FRS and each of its Subsidiaries
will be treated as having sold all of its assets in a single transaction as of
the close of business on the Closing Date. The election will include the
execution and subsequent filing of IRS Forms 8023 pursuant to the requirements
stated therein. Buyer shall, at the time of making a request to the Seller
Representatives to have the Sellers and Trust Beneficiaries join in a Section
338(h)(10) Election, provide to each Seller an allocation of the deemed purchase
price among the assets of FRS and each of its Subsidiaries in accordance with
Code Section 338 and any comparable provisions of other applicable Laws, as
appropriate (including copies of detailed workpapers and proposed attachments to
Form 8023). Such allocation shall be deemed acceptable to each Seller and Trust
Beneficiary unless any Seller or Trust Beneficiary notifies Buyer of any
objections within sixty (60) days after receipt of such allocation. If Buyer and
such Seller or Trust Beneficiary, as the case may be, are unable to agree on
such allocation within two hundred ten (210) days after the Closing Date, then
Buyer's Auditor shall, prior to the due date of the Forms 8023, make a binding
determination with respect to such allocation, the fees and expenses of which
shall be paid equally by Buyer and such Seller or Trust Beneficiary, as the case
may be.
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(b) Within sixty (60) days after delivery to the Seller
Parties of the allocation schedule described in Section 12.1(a) above, each
Seller and Trust Beneficiary shall properly execute and deliver to Buyer the
Forms 8023 (together with attachments) and other forms that are required to be
submitted to any federal, state, county, or local taxing authority in connection
with the Section 338(h)(10) Elections. In the event the parties have not yet
agreed on the allocation described in Section 12.1(a), such forms shall still be
delivered to Buyer, and all Tax Returns filed on a basis consistent with the
binding determination of the accounting firm described in Section 12.1(a).
(c) After the date of this Agreement, none of FRS, any of its
respective Subsidiaries, nor any Seller or Trust Beneficiary shall take, or fail
to take, any action which may cause the Acquisition to not be eligible for a
Section 338(h)(10) Election if requested by Buyer pursuant to Section 12.1(a)
above.
(d) If a Section 338(h)(10) Election is made pursuant to the
provisions of this Section 12.1, Buyer will reimburse each Seller for any
additional Taxes incurred by such Seller which would not have been incurred had
the sale of the Acquired Shares to Buyer Sub occurred pursuant to the terms of
this Agreement but no Section 338(h)(10) Election had been made (the "EXCESS
SECTION 338(H)(10) TAXES"). For purposes of this Section 12.1(d), the
calculation of each Seller's Excess Section 338(h)(10) Taxes shall consist of:
(A) such Seller's incremental federal income Taxes attributable to the
difference between such Seller's marginal rate of tax on ordinary income and
such Seller's marginal tax rate on long-term capital gains multiplied by the
excess of (x) any ordinary income recognized by such Seller as a result of the
sale of the Acquired Shares, which ordinary income would have been long-term
capital gain but for the Section 338(h)(10) Election, over (y) any ordinary
deductions allocable to such Seller (including the deduction for any Taxes of
FRS or any of its Subsidiaries paid by Buyer or FRS) which deductions result
from or are attributable to the Section 338(h)(10) Election; (B) such Seller's
incremental state income Taxes attributable to the difference, if any, between
such Seller's effective state and local tax rate on income and gain recognized
by such Seller as a result of the sale of the Acquired Shares as compared to
what such Seller's effective state and local income tax rate would have been
with respect to such income and gain but for the Section 338(h)(10) Election;
and (C) any additional federal, state and local income Taxes incurred by such
Seller attributable to the payment made to such Seller pursuant to this Section
12.1(d). The amount of each Seller's Excess Section 338(h)(10) Taxes, if any,
shall be determined by such Seller's tax accountants, subject to approval by
Buyer's tax accountants which, in the event of a dispute, shall be finally
determined by an independent tax accounting expert mutually agreeable to Buyer
and Sellers.
(e) The payment of Excess Section 338(h)(10) Taxes shall be
made by Buyer by June 30, 2004 or ninety days after the Closing Date, whichever
is later. If the payment is not made to the Seller Parties by such date, then
interest shall be charged on the outstanding amount until paid to the Seller
Parties at the Prime Rate as in effect from time to time (where "Prime Rate"
means the prime commercial lending rate from time to time published in The Wall
Street Journal (United States edition)) plus 1%. If the payment is not made to
the Seller Parties by the deadline by which the Seller Parties are required to
pay their taxes for the year in which the Closing occurs, then Buyer shall
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reimburse the Seller Parties for any fines or penalties assessed by the Internal
Revenue Service and paid by the Seller Parties as a result of Buyer failing to
timely pay the Excess Section 338(h)(10) Taxes.
12.2 FUTURE TAX RETURNS.
(a) FRS and its Subsidiaries shall prepare and file in a
timely fashion, federal, state and local corporate income Tax Returns for all
taxable periods ending on or before the Closing Date. The Tax Returns for the
period ending on the Closing Date shall include the results of operations of FRS
and its Subsidiaries for the Pre-Closing Tax Period beginning January 1 of the
year in which the Closing occurs, and ending on the Closing Date, and all income
recognized as a result of any Section 338(h)(10) Election. FRS and its
Subsidiaries shall pay or discharge any and all Taxes reflected on such Tax
Returns for which FRS or any of its Subsidiaries is or may be held liable. Each
such payment shall be made on or before the date any such payment is due. The
Seller Parties shall receive any tax refunds reflected on such returns. FRS and
its Subsidiaries will promptly provide the information to the Seller Parties
necessary to prepare such returns. All Tax Returns that are required to be filed
pursuant to this Section 12.2(a) shall not be filed without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
(b) Buyer shall timely prepare and file, or cause FRS and its
Subsidiaries to timely prepare and file, all other applicable Tax Returns for
the taxable period beginning on the Closing Date and ending on December 31 of
the year in which the Closing occurs. FRS and its Subsidiaries shall pay or
cause to be paid any and all Taxes (and applicable penalties and interest, if
any) due as a result of the Tax Returns required to be filed pursuant to the
preceding clause.
12.3 TAX COVENANTS.
(a) Without the prior written consent of Buyer, no Seller nor
any Affiliate of any Seller, including any Trust Beneficiary, nor FRS or any of
its Subsidiaries shall, to the extent it may affect or relate to FRS or any of
its Subsidiaries, make or change any tax election, change any annual tax
accounting period, adopt or change any method of tax accounting, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim,
assessment or proposed assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would have the effect of increasing any post-Closing Tax
liability of FRS or any of its Subsidiaries, Buyer, Buyer Sub, Buyer Parent or
any of their respective Affiliates.
(b) Without the prior written consent of the Seller Parties,
neither Buyer nor any of its Affiliates shall, to the extent it may affect or
relate to FRS or any of its Subsidiaries, make or change any tax election, file
any amended Tax Return, enter into any closing agreement, settle any Tax claim,
assessment or proposed assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission would affect a Pre-Closing Tax Period for FRS or any of its
Subsidiaries.
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(c) Buyer, each Seller and each Trust Beneficiary agree that
so long as any books, records and files retained by Buyer, such Seller, or Trust
Beneficiary or their Affiliates relating to FRS or any of its Subsidiaries or
the Target Operations, or the books, records and files delivered to the control
of Buyer pursuant to this Agreement to the extent they relate to FRS or any of
its Subsidiaries or the Target Operations prior to the Closing Date, remain in
existence and available, each Party (at its own expense) shall have the right
upon prior notice to inspect and to make copies of the same at any time during
business hours for any proper purpose. Buyer, each Seller and each Trust
Beneficiary shall use reasonable efforts not to destroy or allow the destruction
of any such books, records and files for a period of seven (7) years from the
Closing Date without first providing sixty (60) days' written notice of
intention to destroy to the other, and allowing such other Party to take
possession of such records.
(d) Buyer, FRS and each of its Subsidiaries will make their
personnel available to the Seller Parties to answer requests related to any Tax
controversy including, without limitation, an audit, a protest to the appeals
division of the IRS, or similar state or local appellate division, and
litigation in the U.S. Tax Court, or any other court of competent jurisdiction
(a "TAX PROCEEDING"). Buyer will either provide documents needed to respond to
federal and state information requests or queries for such proceedings within
thirty (30) days after such request or allow the Seller Parties to take
possession of records necessary to answer such requests.
12.4 TRANSFER TAX MATTERS. All transfer, documentary, sales, use,
stamp, registration, goods and services, value added and other such Taxes and
fees (including any penalties and interest) incurred in connection with the
Acquisition, or otherwise in connection with the transactions effected pursuant
to this Agreement, including without limitation all Transfer Taxes related to
the transfer of the Subject Land contemplated by this Agreement (collectively,
the "TRANSFER TAXES"), shall be borne and paid by the Seller Parties.
12.5 TAX CONTROVERSIES. Buyer and the Seller Parties and Trust
Beneficiaries shall each use reasonable efforts to keep the other advised as to
the status of any Tax Proceeding involving any direct, indirect or contingent
Taxes which could give rise to a liability of the Seller Parties or the Trust
Beneficiaries to Buyer, Buyer Parent or Buyer Sub under this Agreement for any
Pre-Closing Tax Period (a "TAX LIABILITY ISSUE"). Such efforts shall include
attorney comfort letters provided to Buyer's independent auditors and
discussions with attorneys representing the Seller Parties, the Trust
Beneficiaries, and/or FRS and its Subsidiaries as requested by Buyer. Each
Seller and each Trust Beneficiary agrees to timely notify Buyer regarding any
proposed written communication (i.e., communications not responding to inquiries
or requests for information) by such Seller or Trust Beneficiary to any such
Taxing Authority with respect to a Tax Liability Issue to the extent that the
issue would impact a post-Closing period of Buyer, Buyer Parent, Buyer Sub or
FRS or any of its Subsidiaries. Buyer shall have the right to consult with each
Seller and each Trust Beneficiary regarding any such communications.
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ARTICLE XIII
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
13.1 NATURE OF STATEMENTS. All, but only those, statements contained in
this Agreement, any Ancillary Agreement or any disclosure schedule or
certificate delivered by or on behalf of a Party under this Agreement shall be
deemed representations and warranties made by that Party in connection with the
transactions contemplated by this Agreement.
13.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties contained in this
Agreement shall not be affected by any investigation made at any time by or on
behalf of any Party or of any information any Party may have as a result of any
such investigation. All representations, warranties, covenants, obligations and
agreements made in or pursuant to this Agreement or any Ancillary Agreement
(including any disclosure schedule or certificate delivered under this Agreement
or any Ancillary Agreement) shall, except as otherwise provided in this Section
13.2, survive the Closing and shall continue in effect indefinitely thereafter.
(b) The representations and warranties made by the Seller
Parties and Trust Beneficiaries (other than in Sections 4.1, 4.2, 4.3, 4.4, 4.5,
4.7, 4.9, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.19(a), 4.19(c), 4.21,
4.24, 4.25, 4.26, 4.27, 4.28 and 4.29) and Buyer (other than in Sections 5.1,
5.2, 5.3 and 5.4) in this Agreement shall terminate on the date which is six (6)
months following the Closing Date. The representations and warranties made by
the Seller Parties and Trust Beneficiaries in Sections 4.7, 4.9, 4.11, 4.15,
4.16, 4.21, 4.24, 4.25, 4.26, 4.27 and 4.29 of this Agreement shall terminate on
a date which is twelve (12) months following the Closing Date. The
representations and warranties made by the Seller Parties and Trust
Beneficiaries in Sections 4.12, 4.14, 4.17 and 4.28 of this Agreement and the
covenants, obligations and agreements set forth in Article XII shall terminate
in accordance with the applicable statute of limitations. All claims for
indemnification must be asserted in writing within the applicable survival
period.
ARTICLE XIV
INDEMNIFICATION
The respective indemnification obligations of the Buyer, the Seller
Parties and the Trust Beneficiaries are as follows:
14.1 INDEMNIFICATION BY THE SELLER PARTIES AND THE TRUST BENEFICIARIES.
The ▇▇▇▇ Group, jointly and severally, and ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust severally up to the amount of the Purchase
Price received by ▇▇. ▇▇▇▇ and the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust
respectively, agree to pay and to indemnify and hold harmless Buyer, Buyer Sub,
Buyer Parent, FRS, the Subsidiaries of FRS and each of their respective
Affiliates, and the stockholders and persons serving as officers, directors,
partners, employees or agents thereof, and their respective successors and
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assigns ("BUYER INDEMNIFIED PARTIES") from and against any and all Damages
suffered by such Persons which are caused by, or arise out of or in respect of,
or result from:
(a) all Taxes of FRS or any of its Subsidiaries attributable
to any Pre-Closing Tax Period (including any transaction consummated in such
Pre-Closing Tax Period);
(b) any Tax on or attributable to the elimination, reversal,
release, satisfaction, distribution, or discharge of intercompany Indebtedness
or intercompany investments of FRS and its Subsidiaries (including any
intercompany items solely between FRS and its Subsidiaries, as well as items
between any Seller or Trust Beneficiary and other Sellers and Trust
Beneficiaries or their Affiliates and between any Seller or Trust Beneficiary
and FRS or any Subsidiary of FRS), and any other reorganization steps or other
actions taken by any Seller, any Trust Beneficiary, FRS or any of its
Subsidiaries or Affiliates in placing FRS and its Subsidiaries in the condition
required for Closing;
(c) any Pre-Closing Seller Insurance Claims;
(d) any claim by any Seller or Trust Beneficiary against FRS
or any of its Subsidiaries based on any event occurring or condition existing on
or before the Closing Date;
(e) any breach or default in the performance by any Seller or
Trust Beneficiary of any covenant or agreement made by such Seller or Trust
Beneficiary in this Agreement or in any Ancillary Agreement to which such Seller
or Trust Beneficiary is a party; and
(f) any breach of representation or warranty or inaccurate or
erroneous representation or warranty made by any Seller or Trust Beneficiary
contained in this Agreement or any Ancillary Agreement to which such Seller or
Trust Beneficiary is a party or in the Seller Disclosure Schedule or in any
certificate delivered by or on behalf of any Seller or Trust Beneficiary under
this Agreement.
14.2 INDEMNIFICATION BY BUYER. Buyer agrees to pay and to indemnify and
hold harmless and defend each Seller and its Affiliates, and their respective
successors and assigns (the "SELLER INDEMNIFIED PARTIES") from and against any
and all Damages suffered by such Persons which are caused by or arise out of or
in respect of, or result from:
(a) any breach or default in the performance by Buyer, Buyer
Parent or Buyer Sub of any covenant or agreement of Buyer, Buyer Parent or buyer
Sub contained in this Agreement or any Ancillary Agreement to which Buyer, Buyer
Parent or Buyer Sub is a party; and
(b) any breach of representation or warranty or inaccurate or
erroneous representation or warranty made by Buyer contained in this Agreement
or any Ancillary Agreement to which Buyer is a party.
14.3 THIRD PARTY CLAIMS. If any Buyer Indemnified Party or Seller
Indemnified Party (for purposes of this Section 14.3, an "INDEMNIFIED PARTY")
becomes aware of a fact, circumstance, claim, situation, demand or other matter
which has resulted or could result in a liability owed by the Indemnified Party
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to a third party or a claim otherwise advanced by a third party against the
Indemnified Party (any such item being herein called a "THIRD PARTY CLAIM"), the
Indemnified Party shall give prompt written notice of the Third Party Claim to
the Party obligated to provide indemnity with respect to such Third Party Claim
(for purposes of this Section 14.3, the "INDEMNIFYING PARTY"), requesting
indemnification therefore, specifying the nature of and specific basis for the
Third Party Claim and the amount or estimated amount thereof to the extent then
feasible; PROVIDED, HOWEVER, a failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually materially prejudiced by such failure. The
Indemnifying Party shall have the right to assume the defense or investigation
of such Third Party Claim and to retain counsel and other experts to represent
the Indemnified Party and shall pay the fees and disbursements of such counsel
and other experts. If within thirty (30) days after receipt of the request (or
five (5) days if litigation is pending) the Indemnifying Party fails to give
notice to the Indemnified Party that the Indemnifying Party assumes the defense
or investigation of the Third Party Claim, such Indemnified Party may retain
counsel and other experts (whose fees and disbursements shall be at the expense
of the Indemnifying Party) to file any motion, answer or other pleading and take
such other action which the Indemnified Party reasonably deems necessary to
protect its interests or those of the Indemnifying Party until the date on which
the Indemnified Party receives such notice from the Indemnifying Party. If an
Indemnifying Party assumes the defense or investigation and retains such counsel
and other experts, any Indemnified Party shall have the right to retain its own
counsel and other experts, but the fees and expenses of such counsel and other
experts shall be at the expense of the Indemnified Party unless (a) the
Indemnifying Party and the Indemnified Party mutually agree to the retention of
such counsel and other experts or (b) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would,
in the opinion of counsel retained by the Indemnifying Party, be inappropriate
due to actual or potential differing interests between them. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim which the
Indemnifying Party defends, or, if appropriate and related to the Third Party
Claim in question, in making any counterclaim against the Person asserting the
Third Party Claim, or any cross-complaint against any Person. No Third Party
Claim may be settled by the Indemnified Party without the consent of the
Indemnifying Party, which consent will not be unreasonably withheld. Unless the
Indemnifying Party agrees in writing that the Damages to the Indemnified Party
resulting from such settlement are fully covered by the indemnities provided
herein and that such Damages are fully compensable in money, no Third Party
Claim may be settled without the consent of the Indemnified Party, which consent
will not be unreasonably withheld. Except with respect to settlements entered
without the Indemnified Party's consent pursuant to the immediately preceding
sentence, to the extent it is determined that the Indemnified Party has no right
under this Article XIV to be indemnified by the Indemnifying Party, the
Indemnified Party shall promptly pay to the Indemnifying Party any amounts
previously paid or advanced by the Indemnifying Party with respect to such
matters pursuant to this Article XIV. After the delivery of a notice of a Third
Party Claim hereunder, at the reasonable request of the Indemnifying Party, the
Indemnified Party shall grant the Indemnifying Party and its representatives
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full and complete access to the books, records and properties of the Indemnified
Party to the extent reasonably related to the matters to which the notice
relates. The Indemnifying Party will not disclose, and shall instruct its
representatives not to disclose, to any third Person (except its
representatives) any information obtained pursuant to the preceding sentence
which is designated as confidential by the Indemnified Party and which is not
otherwise generally available to the public, except as may be required by
applicable Law.
14.4 CLAIMS BETWEEN THE PARTIES. If any Party (for purposes of this
Section 14.4, an "INDEMNIFIED PARTY") becomes aware of a fact, circumstance,
claim, situation, demand or other matter (other than a Third Party Claim) which
has resulted or could result in a liability (any such items being herein called
a "CLAIM") being owed to the Indemnified Party by another Party (for purposes of
this Section 14.4, the "INDEMNIFYING PARTY"), the Indemnified Party shall give
prompt written notice to the Indemnifying Party of the Claim, stating the nature
and basis of the Claim and the amount claimed thereunder, together with
supporting information to the Claim, if any. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days from the date such Claim
notice is given that it disputes the Claim, the amount of the Claim shall
conclusively be deemed to be a liability of the Indemnifying Party hereunder.
14.5 GENERAL.
(a) For purposes of determining the obligations of the Seller
Parties and Trust Beneficiaries to indemnify the Buyer Indemnified Parties under
Section 14.1(f) all materiality qualifications and all references to a Material
Adverse Effect included in the representation and warranties contained in
Article IV shall be disregarded, and for purposes of determining the obligation
of Buyer to indemnify the Seller Indemnified Parties under Section 14.2(b), all
materiality qualifications and all references to a Material Adverse Effect
included in the representations and warranties contained in Article V shall be
disregarded.
(b) The ▇▇▇▇ Group, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust shall not be liable to the Buyer
Indemnified Parties for indemnification for breaches of representations or
warranties pursuant to Section 14.1(f): (i) to the extent the aggregate Damages
suffered by the Buyer Indemnified Parties by reason of any single breach do not
exceed a $200,000 minimum value per claim and (ii) until the aggregate amount of
all claims meeting the minimum threshold provided in clause (i) exceeds
$1,000,000 (the "THRESHOLD"), in which event the Buyer Indemnified Parties shall
be entitled to recover the amount of all such claims in excess of the Threshold.
The maximum aggregate amount recoverable by the Buyer Indemnified Parties from
the ▇▇▇▇ Group, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Irrevocable Trust pursuant to Sections 14.1(f), whether satisfied out of the
Escrow Fund or otherwise, shall not exceed $20,000,000 (the "CAP").
Notwithstanding anything herein to the contrary, the Threshold and the Cap shall
not apply with respect to a breach of any of the representations and warranties
contained in Sections 4.1, 4.2, 4.3, 4.4 and 4.5.
(c) Buyer shall not be liable to the Seller Indemnified
Parties for indemnification for breaches of representations or warranties
pursuant to Section 14.2(b): (i) to the extent the aggregate Damages suffered by
the Seller Indemnified Parties by reason of any single breach do not exceed a
$200,000 minimum value per claim and (ii) until the aggregate amount of all
claims meeting the minimum threshold provided in clause (i) exceeds the
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Threshold, in which event the Seller Indemnified Parties shall be entitled to
recover the amount of all such claims in excess of the Threshold. The maximum
aggregate amount recoverable from the Buyer pursuant to Section 14.2(b) shall
not exceed the Cap.
(d) The amount of any Damages suffered by an Indemnified Party
shall be reduced by any insurance proceeds or other amounts actually recovered
by such Indemnified Party (other than from an Indemnifying Party) as a result of
claims against third parties, in each case in respect of or as a result of such
Damages or the facts or circumstances relating thereto, with respect to
insurance proceeds, net of any insurance premiums, recovery costs and increased
insurance premiums for subsequent years due to such claims relating thereto and,
with respect to any claims against third parties, net of any recovery costs
relating thereto.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT. This Agreement may be amended only by a written
instrument executed by all of the Parties; PROVIDED, HOWEVER, that the Seller
Representatives shall have the authority to execute any amendment on behalf of
each Seller and Trust Beneficiary pursuant to Section 11.8 hereof.
15.2 WAIVER. Any provision of this Agreement may be waived on or prior
to the Closing Date if, and only if, such waiver is in writing and signed by the
Party giving such waiver; PROVIDED, HOWEVER, that the Seller Representatives
shall have the authority to execute any waiver on behalf of each Seller and
Trust Beneficiary pursuant to Section 11.8 hereof.
15.3 TERMINATION. This Agreement may be terminated at any time before
the Closing by:
(a) the mutual consent of Buyer, Buyer Sub, Buyer Parent and
each Seller and Trust Beneficiary;
(b) Buyer upon a material breach of any representation,
warranty, covenant or agreement of any Seller, any Trust Beneficiary, FRS or any
Subsidiary of FRS or if any such representation or warranty shall have become
untrue in any material respect (a "TERMINATING SELLER BREACH"); PROVIDED,
HOWEVER, that if such Terminating Seller Breach is curable by such Seller, such
Trust Beneficiary, FRS or such Subsidiary through the exercise of reasonable
best efforts and for so long as such Seller, such Trust Beneficiary, FRS or such
Subsidiary continues to exercise such efforts (but not beyond the date set forth
in Section 15.3(d) below), Buyer may not terminate this Agreement pursuant to
this Section 15.3(b);
(c) the Seller Parties upon a material breach by Buyer of any
representation, warranty, covenant or agreement of Buyer set forth in this
Agreement or if any such representation or warranty shall have become untrue in
any material respect (a "TERMINATING BUYER BREACH"); PROVIDED, HOWEVER, that if
such Terminating Buyer Breach is curable by Buyer through the exercise of
reasonable best efforts and for so long as Buyer continues to exercise such
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efforts (but not beyond the date set forth in Section 15.3(d) below) the Seller
Parties may not terminate this Agreement pursuant to this Section 15.3(c); or
(d) either the Seller Parties or Buyer if the Closing has not
occurred on or before March 15, 2004 (such date, the "OUTSIDE DATE"); PROVIDED,
HOWEVER, that such right to terminate this Agreement shall not be available to
any Party that has breached in any material respect its obligations under this
Agreement in any manner that has proximately caused the failure of the
Acquisition to occur on or before such date; and PROVIDED FURTHER that if the
Closing has not occurred on or prior to March 15, 2004, Buyer may, in its sole
discretion, elect to extend the Outside Date to May 1, 2004 by making a cash
payment to Sellers (allocated among the Sellers in accordance with the
percentages set forth on EXHIBIT A hereto) of $750,000 in the form of an
additional deposit on or before March 18, 2004 (the "EXTENSION PAYMENT"); and
PROVIDED FURTHER that if Buyer has made the Extension Payment and the Closing
has not occurred on or prior to May 1, 2004, Buyer shall make an additional cash
payment to Sellers (allocated among the Sellers in accordance with the
percentages set forth on EXHIBIT A hereto) of $1,000,000 (the "MAY 1 PAYMENT").
The Parties acknowledge that a payment of $500,000 was made by Buyer to the
Sellers on or about February 18, 2004 and shall not be refundable to Buyer
pursuant to Section 15.4(d) or considered in the calculation of the Purchase
Price pursuant to Section 2.2.
15.4 CONSEQUENCES OF TERMINATION.
(a) If this Agreement is terminated as provided in Section
15.3, it shall forthwith become void and there shall be no further obligation on
the part of any Party or their respective officers or directors and all rights
and obligations of each Party shall cease, subject to the remedies set forth in
subsections 15.4(b), 15.4(c) and 15.4(d); PROVIDED, HOWEVER, that (i) nothing in
this Section 15.4 shall relieve any Party from any liability for any willful or
intentional breach of any covenant or agreement of such Party contained in this
Agreement prior to its termination; and (ii) Sections 11.2, 11.3 and 11.6 shall
survive any such termination in accordance with their respective terms.
(b) If this Agreement is terminated by the Seller Parties (i)
as a result of a Terminating Buyer Breach pursuant to Section 15.3(c), or (ii)
pursuant to Section 15.3(d) and the sole reason that the Closing has not
occurred by the Outside Date is that one or more of the conditions to closing
set forth in Article X have not been met, the Seller Parties shall be entitled
to retain the Signing Deposit, the Extension Payment (if applicable) and the May
1 Payment (if applicable) and such Signing Deposit, Extension Payment (if
applicable) and May 1 Payment (if applicable) shall constitute the sole and
exclusive remedy of the Seller Parties and the Trust Beneficiaries in the event
of such termination.
(c) If this Agreement is terminated by the Seller Parties
pursuant to Section 15.3(d) and the sole reason that the Closing has not
occurred by the Outside Date is that the condition to closing set forth in
Section 9.4 has not been met, the Seller Parties shall be entitled to retain the
Signing Deposit, the Extension Payment (if applicable) and the May 1 Payment (if
applicable) and Buyer shall cause Omni Waste of Osceola County, LLC, an Ohio
limited liability company, to execute and deliver to FRS, on the Business Day
following the termination date, a disposal agreement (the "DISPOSAL AGREEMENT")
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substantially in the form of EXHIBIT P attached to this Agreement. The Signing
Deposit, the Extension Payment (if applicable), the May 1 Payment (if
applicable) and the Disposal Agreement shall constitute the sole and exclusive
remedy of the Seller Parties and the Trust Beneficiaries in the event of such
termination.
(d) If Buyer terminates this Agreement (i) pursuant to Section
15.3(b), or (ii) pursuant to Section 15.3(d) and the reason that the Closing has
not occurred by the Outside Date is that one or more of the conditions to
Closing set forth in Article VIII or Article IX (other than the condition to
closing set forth Section 9.4) have not been met, the Seller Parties shall
refund the Signing Deposit, the Extension Payment (if applicable) and the May 1
Payment (if applicable) to Buyer within five (5) Business Days after such
termination. In the event this Section 15.4(d) is enforceable for the benefit of
Buyer, Buyer shall be entitled to enforce the Promissory Note attached hereto as
EXHIBIT Q (the "NOTE") against any or all of FRS, ▇▇▇▇▇ ▇▇▇▇, Sr., ▇▇▇▇▇▇ ▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇, Jr. pursuant to, and in accordance with, the terms of the Note.
ARTICLE XVI
GENERAL PROVISIONS
16.1 NON-BUSINESS DAYS. If the date on which any action (including the
delivery of notices) to be taken under this Agreement is to occur falls on a day
which is not a Business Day, such action will be deemed timely taken if taken on
the first Business Day following such day.
16.2 NOTICES. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by facsimile (with
receipt confirmed) or one Business Day after being sent by overnight courier
(subject to signature verification) to a Party at the address or facsimile
number, as applicable, set forth below (as any such address or facsimile number
may be changed from time to time by notice similarly given):
(1) if to Buyer, to:
Waste Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if to any Seller Party or Trust Beneficiary, to:
Florida Recycling Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇, Sr.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ltd.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
16.3 ENTIRE AGREEMENT. This Agreement, its Exhibits, the Seller
Disclosure Schedule, and all documents delivered under this Agreement and the
Ancillary Agreements constitute the entire agreement, and supersede the Existing
Agreement, its Exhibits and its Seller Disclosure Schedule and all other prior
agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter of this Agreement. The Parties hereby
agree to terminate that certain letter dated December 10, 2002 and amended from
time to time thereafter from Buyer to the Seller Parties effective as of the
date hereof.
16.4 ASSIGNMENT; BINDING EFFECT. This Agreement and the rights of the
Parties hereunder may not be assigned (except by operation of law) by any of the
Parties without the written consent of the other Parties; PROVIDED that Buyer
Parent, Buyer and Buyer Sub may assign their respective rights and obligations
hereunder to a direct or indirect Subsidiary or Affiliate thereof, whereupon any
and all references to "Buyer Parent," "Buyer" or "Buyer Sub", as the case may
be, hereunder shall refer to such assignee; and PROVIDED FURTHER that Buyer
Parent, Buyer and Buyer Sub may assign any and all of their rights, interests
and obligations hereunder as security for obligations to their lenders,
investors and other financing sources. This Agreement shall be binding upon the
Parties and their respective successors and permitted assigns.
16.5 COUNTERPARTS. This Agreement may be executed in counterparts which
together shall constitute a single agreement.
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16.6 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the internal substantive laws of the State of
Illinois without regard to any conflict or choice of law rules of the State of
Illinois or any other jurisdiction. The parties agree that all disputes, legal
actions, suits and proceedings arising out of or relating to this Agreement must
be brought exclusively in a federal district court located in the Northern
District of Illinois or the Illinois state court in ▇▇▇▇ County, Illinois. Each
party hereby irrevocably consents and submits to the exclusive jurisdiction of
the federal district court in the Northern District of Illinois or the Illinois
state court in ▇▇▇▇ County, Illinois. No legal action, suit or proceeding with
respect to this Agreement may be brought in any other forum. Each party hereby
irrevocably waives all claims of immunity from jurisdiction and any right to
object on the basis that any dispute, action, suit or proceeding brought in the
federal district court located in the Northern District of Illinois or the
Illinois state court in ▇▇▇▇ County, Illinois has been brought in an improper or
inconvenient forum or venue.
16.7 SEVERABILITY OF PROVISIONS. Subject to Section 11.7, if a
provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceable in any jurisdiction, to the extent permitted by
law, such provision or the application of such provision to Persons or
circumstances other than those as to which it is held invalid or unenforceable
and in other jurisdictions, and the remaining provisions of this Agreement,
shall not be affected.
16.8 SPECIFIC PERFORMANCE. Except as otherwise provided in Section 15.4
above, each Party agrees that one or more other Parties would be irreparably
damaged if any provision of this Agreement were not performed in accordance with
its specific terms or was otherwise breached. Therefore, subject to Section 15.4
above, the Parties agree that each Party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or any of its provisions and
to specifically enforce this Agreement or any of its terms and provisions in any
action instituted in any court in the State of Illinois having subject matter
jurisdiction, in addition to any other remedy to which a Party may be entitled,
at law or in equity.
16.9 JOINT DRAFTING. This Agreement and its Exhibits have been jointly
drafted by the Parties and their counsel. Neither this Agreement nor any of its
Exhibits shall be construed against any Party based on its authorship.
16.10 CAPTIONS. The article and section headings in this Agreement are
for convenience only, and shall not affect the meaning or interpretation of this
Agreement.
16.11 NO THIRD-PARTY BENEFICIARIES. There are no third-party
beneficiaries of this Agreement, except as provided in Section 11.8 and Article
XIV hereof.
16.12 WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default occurring before or after that waiver.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement, all
as of the date first written above.
BUYER PARENT:
CAPITAL ENVIRONMENTAL
RESOURCE INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and General Counsel
BUYER:
WASTE SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and General Counsel
BUYER SUB:
WASTE SERVICES OF FLORIDA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
and Secretary
SELLER PARTIES:
/s/ ▇▇▇▇▇ ▇▇▇▇, Sr.
----------------------------------------
▇▇▇▇▇ ▇▇▇▇, SR.
/s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, JR. IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇▇▇▇ IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇ IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇▇▇▇ IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ IRREVOCABLE TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name:
Title:
SELLER REPRESENTATIVES FOR
TRUST BENEFICIARIES:
/s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇, JR.
/s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
FRS:
FLORIDA RECYCLING SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary and Treasurer
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