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EXHIBIT 10.49
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 22, 1998, BY AND AMONG
WASTE CONNECTIONS, INC.
WCI ACQUISITION CORPORATION I
WCI ACQUISITION CORPORATION II
WCI ACQUISITION CORPORATION III
WCI ACQUISITION CORPORATION IV
▇▇▇▇▇▇'▇ DISPOSAL COMPANY, INC.
AMERICAN DISPOSAL COMPANY, INC.
▇. ▇. DISPOSAL CO., INC.
TACOMA RECYCLING COMPANY, INC.
THE ▇▇▇▇▇▇ TRUST
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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TABLE OF CONTENTS
1. MERGERS.............................................................................2
1.1 The Mergers..................................................................2
1.2 Effective Time...............................................................2
1.3 Effects of the Mergers.......................................................2
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation............2
1.5 Directors....................................................................3
1.6 Officers.....................................................................3
1.7 Closing Time and Place.......................................................3
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES; DISSENTING SHARES...................3
2.1 Merger Consideration.........................................................3
2.2 Allocation of Aggregate WCI Stock............................................4
2.3 Conversion of Capital Stock..................................................4
2.4 Exchange of Certificates.....................................................5
2.5 Distributions; Right to Vote.................................................5
2.6 No Further Ownership Rights in Any Corporations' Stock.......................6
2.7 Lost Certificates............................................................6
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS AND THE SHAREHOLDERS.............6
3.1 Organization, Standing and Qualification.....................................6
3.2 Capitalization...............................................................7
3.3 No Change in Stock Ownership and Other Pooling Representations...............7
3.4 Authority for Agreement and Filed Plans......................................7
3.5 No Breach or Default.........................................................8
3.6 Subsidiaries.................................................................9
3.7 Financial Statements.........................................................9
3.8 Liabilities..................................................................9
3.9 Accurate and Complete Records...............................................10
3.10 Permits and Licenses........................................................11
3.11 Certain Receivables.........................................................13
3.12 Fixed Assets and Real Property..............................................13
3.13 Related Party Transactions..................................................14
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3.14 Contracts and Agreements; Adverse Restrictions..............................15
3.15 Insurance...................................................................15
3.16 Personnel...................................................................16
3.17 Benefit Plans and Union Contracts...........................................16
3.18 Taxes.......................................................................18
3.19 Copies Complete; Required Consents..........................................18
3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables.......................19
3.21 No Change With Respect to the Corporations..................................19
3.22 Balance Sheet Date Debt; Balance Sheet Date Current Assets and Balance
Sheet Date Current Liabilities..............................................21
3.23 Bank Accounts...............................................................22
3.24 Compliance With Laws........................................................22
3.25 Powers of Attorney..........................................................24
3.26 Underground Storage Tanks...................................................24
3.27 Patents, Trademarks, Trade Names, etc.......................................25
3.28 Assets, etc. Necessary to Business..........................................26
3.29 Condemnation................................................................26
3.30 Suppliers and Customers.....................................................26
3.31 Absence of Certain Business Practices.......................................26
3.32 No Misleading Statements....................................................27
3.33 Brokers; Finders............................................................27
3.34 S Corporation Matters.......................................................27
3.35 Registration Statements.....................................................27
3.36 Accredited Investors........................................................27
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER SUBS..........................27
4.1 Existence and Good Standing.................................................28
4.2 No Contractual Restrictions.................................................28
4.3 Authorization of Agreement..................................................28
4.4 Status of Shares............................................................28
4.5 Governmental Authorities; Consents..........................................29
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4.6 SEC Documents...............................................................29
4.7 Capital Stock...............................................................30
4.8 No Misleading Statements....................................................30
4.9 Brokers; Finders............................................................30
4.10 Disclosure Schedules........................................................30
5. COVENANTS OF THE CORPORATIONS AND THE SHAREHOLDERS PRIOR TO EFFECTIVE TIME.........30
5.1 Access; Confidential Information............................................30
5.2 Operations..................................................................31
5.3 No Change...................................................................32
5.4 Obtain Consents.............................................................34
5.5 No Change in Relative Ownership.............................................34
5.6 Control of the Corporations' Operations.....................................34
5.7 Acquisition Transactions....................................................34
5.8 ▇▇▇▇▇▇ Trust Approval.......................................................34
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI AND THE MERGER SUBS. TO CLOSE............35
6.1 Representations and Warranties..............................................35
6.2 Conditions..................................................................35
6.3 No Material Adverse Change..................................................35
6.4 Certificates................................................................35
6.5 No Litigation...............................................................35
6.6 Other Deliveries............................................................35
6.7 Governmental Approvals......................................................35
6.8 Consents to Transfer........................................................36
6.9 Opinion of Independent Public Accountants...................................36
6.10 WCI Shareholders Approval...................................................36
6.11 NASDAQ Listing..............................................................36
6.12 HSR Waiting Period..........................................................36
6.13 Registration Statements.....................................................36
6.14 Dissenting Shares...........................................................36
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6.15 Title Insurance.............................................................36
6.16 Termination of Employment Agreements........................................37
6.17 LeMay Agreement.............................................................37
6.18 All Mergers to Occur........................................................37
6.19 Disposal Arrangements.......................................................37
6.20 ▇▇▇▇▇▇ Trust Approval.......................................................37
6.21 Real Estate Due Diligence...................................................37
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE CORPORATIONS AND THE SHAREHOLDERS TO
CLOSE..............................................................................37
7.1 Representations and Warranties..............................................37
7.2 Conditions..................................................................38
7.3 No Material Adverse Change..................................................38
7.4 Certificate.................................................................38
7.5 No Litigation...............................................................38
7.6 Other Deliveries............................................................38
7.7 Consents to Transfer........................................................38
7.8 NASDAQ Listing..............................................................38
7.9 HSR Waiting Period..........................................................38
7.10 Registration Statements.....................................................38
7.11 Governmental Approvals......................................................39
7.12 Opinion of Independent Public Accountants...................................39
7.13 LeMay Agreement.............................................................39
7.14 All Mergers to Occur........................................................39
7.15 Tax Matters.................................................................39
7.16 Disposal Arrangements.......................................................39
7.17 ▇▇▇▇▇▇ Trust Approval.......................................................39
8. CLOSING DELIVERIES.................................................................40
8.1 WCI Deliveries..............................................................40
8.2 Shareholders' Deliveries....................................................40
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS AND THE SHAREHOLDERS.................41
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9.1 Release of Guaranties.......................................................41
9.2 Release of Security Interests...............................................42
9.3 Confidentiality.............................................................42
9.4 Brokers and Finders Fees....................................................42
9.5 Taxes.......................................................................42
9.6 Short Year Tax Returns......................................................42
9.7 Matters Related to Pooling..................................................43
9.8 Representation Letter.......................................................43
9.9 WCI Shareholders' Approval..................................................43
9.10 Nasdaq Listing..............................................................44
9.11 Agreement to Cooperate......................................................44
9.12 Notification of Certain Matters.............................................45
9.13 Corrections to Registration Statements and Proxy Statement..................45
10. INDEMNIFICATION....................................................................45
10.1 Indemnification Covenants...................................................45
10.2 Limitations on Indemnities..................................................47
10.3 Notice of Indemnity Claim...................................................49
10.4 Survival of Representations and Warranties..................................51
10.5 No Exhaustion of Remedies or Subrogation; Right of Set Off..................51
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI...........................51
11.1 Restrictive Covenants.......................................................51
11.2 Rights and Remedies Upon Breach.............................................53
11.3 Termination Date............................................................55
11.4 Effect of Termination.......................................................56
11.5 Corrections to Schedules....................................................56
12. GENERAL............................................................................57
12.1 Additional Conveyances......................................................57
12.2 Assignment..................................................................57
12.3 No Waiver Relating to Claims for Fraud......................................57
12.4 Counterparts................................................................58
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12.5 Notices.....................................................................58
12.6 Disclosure Schedules........................................................58
12.7 Knowledge...................................................................58
12.8 Attorneys' Fees.............................................................59
12.9 Applicable Law..............................................................59
12.10 Payment of Fees and Expenses................................................59
12.11 Incorporation by Reference..................................................59
12.12 Captions....................................................................59
12.13 Number and Gender of Words..................................................60
12.14 Entire Agreement............................................................60
12.15 Waiver......................................................................60
12.16 Construction................................................................60
13. GLOSSARY...........................................................................60
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EXHIBIT AND SCHEDULE LIST
Exhibit 1.2 Filed Plan
Exhibit 6.19 Disposal Agreement
Exhibit 8.1(b) Employment Agreements
Exhibit 8.1(c) Opinion of Counsel for WCI
Exhibit 8.1(f) Common Stock Agreement
Exhibit 8.2(b) Opinion of Counsel for Shareholders
Exhibit 8.2(g) Affiliate Letter
Schedule 3.2 Authorized Capital of Corporations
Schedule 3.3 Pooling Affiliates of the Corporations
Schedule 3.5 No Breach or Default
Schedule 3.6 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8 Liabilities
Schedule 3.10(a) Permits and Licenses
Schedule 3.10(b) Records, Notifications and Reports
Schedule 3.10(c) Facilities
Schedule 3.11 Certain Receivables
Schedule 3.12(a) Fixed Assets
Schedule 3.12(b) Corporate Property
Schedule 3.13 Related Party Transactions
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Schedule 3.14(a) Material Contracts and Agreements
Schedule 3.14(b) Adverse Judicial Restrictions
Schedule 3.14(c) Adverse Contractual Restrictions
Schedule 3.15 Insurance
Schedule 3.16 Personnel
Schedule 3.17(a) Benefit Plans
Schedule 3.17(b) Union Contracts, Agreements and Labor Disputes
Schedule 3.17(c) Golden Parachute Payments
Schedule 3.18 Taxes
Schedule 3.19 Copies Complete
Schedule 3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and
Receivables
Schedule 3.21 No Change
Schedule 3.22(a) Balance Sheet Date Debt
Schedule 3.22(b) Balance Sheet Date Current Assets and
Liabilities
Schedule 3.23(a) Bank Accounts
Schedule 3.23(b) Credit Card Accounts
Schedule 3.24 Compliance with Laws
Schedule 3.26 Underground Storage Tanks
Schedule 3.27 Patents, Trademarks, Trade Names, Etc.
Schedule 3.29 Condemnation Proceedings
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Schedule 3.30 Suppliers and Customers
Schedule 3.34 S Corporation Matters
Schedule 5.3 Changes in Compensation
Schedule 9.1 Release of Guaranties
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 22, 1998, is entered
into by and among Waste Connections, Inc., a Delaware corporation ("WCI"), WCI
Acquisition Corporation I, a Washington corporation ("MERGER SUB. I"), WCI
Acquisition Corporation II, a Washington corporation ("MERGER SUB. II"), WCI
Acquisition Corporation III, a Washington corporation ("MERGER SUB. III"), WCI
Acquisition Corporation IV, a Washington corporation ("MERGER SUB. IV" and
collectively with Merger Sub. I, Merger Sub II. and Merger Sub. III, the "MERGER
SUBS." and individually without designation a "MERGER SUB."), ▇▇▇▇▇▇'▇ Disposal
Company, Inc., a Washington corporation ("MDC"), American Disposal Company,
Inc., a Washington corporation ("AD"), ▇. ▇. Disposal Co., Inc., a Washington
corporation ("DM"), Tacoma Recycling Company, Inc. ("TR" and collectively with
MDC, AD and DM, the "Corporations" and individually without designation a
"CORPORATION"), The ▇▇▇▇▇▇ Trust UTA August 5, 1993, as amended (the "▇▇▇▇▇▇
TRUST"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and
collectively with the ▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇ and, on compliance with Section 5.8
of this Agreement, the ▇▇▇▇▇▇ Trust (as defined below), the "SHAREHOLDERS" and
individually without designation a "SHAREHOLDER").
WHEREAS, MDC, AD and DM are engaged in the collection and transport of
solid waste and recyclables in State of Washington, and TR is engaged in the
recycling business in the State of Washington;
WHEREAS, the ▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ own all of the issued and
outstanding capital stock of MDC and AD , and the ▇▇▇▇▇▇ Trust, the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ Revocable Trust UTA August 5, 1993, as amended (the "▇▇▇▇▇▇ TRUST"),
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ own all of the issued and outstanding capital stock of DM and
TR, all as set forth on Schedule 3.2;
WHEREAS, at the Closing on the Closing Date (as defined below), WCI will
contribute as a capital contribution to Merger Sub. I, Merger Sub. II, Merger
Sub. III and Merger Sub. IV sufficient shares of WCI Common Stock, $0.01 par
value (the "WCI STOCK"), to consummate the transactions contemplated by this
Agreement in exchange for all of the outstanding capital stock of Merger Sub. I,
Merger Sub. II, Merger Sub. III and Merger Sub. IV;
WHEREAS, Merger Sub. I, Merger Sub. II, Merger Sub. III and Merger Sub.
IV will use such shares of WCI Stock to effect the merger of Merger Sub. I into
MDC, the merger of Merger Sub. II into AD, the merger of Merger Sub. III into
DM, and the merger of Merger Sub. IV into TR in accordance with the terms and
subject to the conditions of this Agreement (individually, a "MERGER" and
collectively, the "MERGERS") in a transaction that qualifies as a pooling of
interests under generally accepted accounting principles and as a tax-free
reorganization under section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
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1. MERGERS
1.1 THE MERGERS. In accordance with the Washington Business
Corporation Act (the "Washington Law"), at the Effective Time (as defined in
Section 1.2), Merger Sub. I shall be merged with and into MDC, Merger Sub. II
shall be merged with and into AD, Merger Sub. III shall be merged with and into
DM and Merger Sub. IV shall be merged with and into TR, in a transaction
intended to qualify as tax-free reorganizations under Section 368(a) of the Code
and a "pooling of interests" under generally accepted accounting principles.
Immediately following each Merger, the separate existence of each of the
applicable Merger Subs. shall cease and the applicable Corporation into which
such Merger Sub. (each, a "SURVIVING CORPORATION" and collectively the
"SURVIVING CORPORATIONS") merged shall continue to exist under and be governed
by the Washington Law as a direct, wholly-owned subsidiary of WCI.
1.2 EFFECTIVE TIME. As soon as practicable after the date of this
Agreement (the "SIGNING DATE") and the satisfaction or waiver of all of the
conditions to the Mergers, at the Closing (as defined in Section 1.7), the
parties shall cause the Mergers to be consummated by causing separate Plans of
Merger (the "FILED PLANS") substantially in the form of Exhibit 1.2 to be
executed and filed in accordance with the relevant provisions of the Washington
Law. Each Merger shall become effective at the time specified in the Filed Plans
related to such Merger, which specified time shall be the same in each of the
Filed Plans (the "EFFECTIVE TIME").
1.3 EFFECTS OF THE MERGERS. The Mergers shall have the effect set
forth in Section 23B.11.060 of the Washington Law. Without limiting the
generality of the foregoing, at the Effective Time, all the properties, rights,
privileges, powers and franchises of each Merger Sub. shall vest in the
respective Surviving Corporation into which it is merged, and all debts,
liabilities and duties of each Corporation and each Merger Sub. shall become the
debts, liabilities
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and duties of the respective Surviving Corporation in the same manner as if the
applicable Surviving Corporation had itself incurred them. All rights of
creditors and all liens upon the property of each Merger Sub. shall thereafter
be preserved unimpaired.
1.4 ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. The Articles of Incorporation of each of the Corporations, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the respective Surviving Corporations, until thereafter amended
in accordance with the provisions thereof and applicable law. The Bylaws of each
of the Corporations in effect at the Effective Time shall be the Bylaws of the
respective Surviving Corporations until amended in accordance with the
provisions thereof and applicable law.
1.5 DIRECTORS. The directors of the Merger Subs. immediately
prior to the Effective Time shall be the directors of the respective Surviving
Corporations and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal. The Board
of Directors of WCI shall take such action as may be necessary to cause a
nominee of the Shareholders to be elected to WCI's Board of Directors effective
as of the Effective Time with a term of office expiring at WCI's annual meeting
of stockholders in 2001.
1.6 OFFICERS. The officers of Merger Subs. immediately prior to
the Effective Time of each Merger shall be the officers of the respective
Surviving Corporations and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
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1.7 CLOSING TIME AND PLACE. Subject to the terms and conditions
of this Agreement, the closing of the transactions contemplated herein (the
"CLOSING") shall take place as promptly as practicable (but in any event within
five business days) following the date on which the last of the conditions set
forth in Sections 6 and 7 is fulfilled or waived, or on such other date as WCI
and the Corporations shall agree (the "CLOSING DATE"). The Closing shall take
place at the law offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Suite 500, ▇▇▇▇ ▇▇▇
▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At the Closing, WCI, the Merger Subs., the
Corporations and the Shareholders shall deliver to each other the documents,
instruments and other items described in Section 8 of this Agreement. At the
election of WCI and the Corporations, the Closing may take place through an
exchange of consideration and documents using overnight courier service or
facsimile.
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES; DISSENTING
SHARES
2.1 MERGER CONSIDERATION. The aggregate merger consideration (the
"AGGREGATE MERGER CONSIDERATION") is two million seven hundred fifty thousand
(2,750,000) shares of WCI Stock (the "AGGREGATE WCI STOCK"), subject to
adjustment as follows: (i) the number of shares of Aggregate WCI Stock issued in
the Mergers shall be reduced by one share for each $20.50 by which the Balance
Sheet Date Debt (as hereinafter defined) exceeds six million dollars
($6,000,000); and (ii) if the closing price of WCI Stock as quoted on the NASDAQ
Stock Market on the last trading day before the Closing Date (the "CLOSING
PRICE") is less than $20.50, then as of the Effective Time the number of shares
of Aggregate WCI Stock to be issued in the Mergers shall be increased by fifty
five thousand five hundred fifty five (55,555) shares for each whole dollar by
which the Closing Price is less than $20.50 but more than $15.99 and by eighty
three thousand three hundred thirty three and one-third (83,333 1/3) shares for
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each whole dollar by which the Closing Price is less than $13.00 but more than
$9.99, and shall be proportionately increased for any such amount less than one
whole dollar, provided that no more than two hundred fifty thousand (250,000)
additional shares shall be issued if the Closing Price is less than $16.00 but
more than $13.00 and provided further in no event shall the number of Aggregate
WCI Shares to be issued in the Mergers exceed three million two hundred fifty
thousand (3,250,000) shares. The Closing Price and the number of shares of WCI
Stock to be delivered after the Effective Time shall be appropriately adjusted
in the event of any change in WCI Stock between the Signing Date and the
Effective Time, including without limitation any stock dividend, stock split,
reverse stock split, recapitalization, reorganization, merger or consolidation.
WCI shall not be obligated to issue any fractional shares of WCI Stock, but
instead the Shareholders shall be paid cash in lieu of any fractional share
equal to the Closing Price multiplied by the fraction of a share of WCI Stock
that would otherwise have been issued to such Shareholder. The Shares shall be
covered by one or more Registration Statements on Form S-4 (the "REGISTRATION
STATEMENTS"), each of which is effective under the Securities Act of 1933 (the
"ACT") as of the Signing Date. The shares of Aggregate WCI Stock shall be freely
tradable, subject to the restrictions set forth in Section 9.7 and in the
Affiliate Letter (as hereinafter defined). WCI shall maintain the Registration
Statements effective for resales of the WCI Stock received by the Shareholders
for a period of one year after the Effective Time pursuant to the terms of the
Common Stock Agreement (as hereinafter defined).
2.2 ALLOCATION OF AGGREGATE WCI STOCK. The percentage of the
Aggregate WCI Stock to be received by the Shareholders of each Corporation upon
conversion of the Corporations' Stock shall be as follows: 42% to MDC, 13% to
AD, 28% to DM and 17% to TR.
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2.3 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Mergers and without any action on the part of the holder thereof:
(a) All of the shares of common stock of each Merger Sub.
issued and outstanding immediately prior to the Effective Time shall be
converted into and become the number of fully-paid and nonassessable shares of
common stock of the Surviving Corporation into which the Merger Sub. is merging
as shall equal the number of shares of the common stock of such Corporation
(individually, the "CORPORATION'S STOCK" and collectively the "CORPORATIONS'
STOCK") issued and outstanding immediately prior to the Effective Time.
(b) Subject to Section 2.7, the aggregate shares of each
Corporation's Stock issued and outstanding immediately prior to the Effective
Time shall be converted into a portion of the Aggregate WCI Stock. The actual
conversion ratio for each Merger shall be set forth in the Filed Plans for that
Merger.
2.4 EXCHANGE OF CERTIFICATES.
(a) After the Effective Time, WCI shall deliver to the
Shareholders in accordance with this Section 2 certificates representing the
Shares of WCI Stock issuable pursuant to Section 2.3(b) in exchange for issued
and outstanding shares of each Corporation's Stock as contemplated by that
Section. The WCI Stock into which each Corporation's Stock shall be converted
pursuant to each Merger shall be deemed to have been issued at the Effective
Time.
(b) At the Closing, each Shareholder shall deliver to WCI
certificates evidencing the shares of Corporations' Stock owned by such
Shareholder that are to be converted
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pursuant to Section 2.3(b) into the right to receive WCI Stock (for each
Corporation, the "CORPORATION'S CERTIFICATES" and collectively for all
Corporations, the "CORPORATIONS' CERTIFICATES"). Promptly after the Effective
Time, each Shareholder who has surrendered the Corporation's Certificates
registered in the name of such Shareholder to WCI, together with such documents
as WCI shall reasonably request, shall be entitled to receive in exchange
therefor certificates representing that number of shares (rounded down to the
nearest whole number) of WCI Stock which such Shareholder has the right to
receive as a result of such Merger pursuant to this Section 2 (together with any
cash in lieu of fractional shares of WCI Stock pursuant to Section 2.7). Each of
the Corporation's Certificates so surrendered shall be canceled immediately
after the Effective Time. Until surrendered as contemplated by this Section 2.4,
each of the Corporations' Certificates shall be deemed canceled as of the
Effective Time and at any time after the Effective Time shall be deemed to
represent only the right to receive upon such surrender (i) the certificates
representing shares of WCI Stock as contemplated by this Section 2.4, (ii) a
cash payment in lieu of any fractional shares of WCI Stock as contemplated by
Section 2.1 and (iii) any dividends or distributions with a record date after
the Effective Time theretofore paid or payable with respect to WCI Stock as
contemplated by Section 2.5.
2.5 DISTRIBUTIONS; RIGHT TO VOTE. Dividends and other
distributions declared or made after the Effective Time with respect to WCI
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Corporations' Certificates with respect to the WCI Stock
represented thereby. Further, the holder of any unsurrendered Corporations'
Certificates shall have the right to vote with respect to the WCI Stock
represented thereby on all matters on which the shareholders of WCI vote after
the Effective Time.
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2.6 NO FURTHER OWNERSHIP RIGHTS IN ANY CORPORATIONS' STOCK. All
shares of WCI Stock issued upon the surrender for exchange of shares of the
Corporations' Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.5 or 2.1) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of such Corporations'
Stock, and, at and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporations of shares of the Corporation's Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any of
the Corporation's Certificates are presented to the applicable Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 2.
2.7 LOST CERTIFICATES. In the event any of the Corporations'
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Shareholder claiming such certificate to be lost,
stolen or destroyed, WCI will issue in exchange for such lost, stolen or
destroyed certificate the shares of WCI Stock (and any dividends or
distributions with respect thereto pursuant to Section 2.5 and any cash pursuant
to Section 2.1) deliverable in respect thereof as determined in accordance with
Section 2.4. When authorizing such payment in exchange for any lost, stolen or
destroyed Corporations' Certificate, the Shareholder to whom the WCI Stock is to
be issued shall, as a condition precedent to the issuance thereof, give WCI a
bond satisfactory to WCI in such sum as it may direct or otherwise indemnify WCI
in a manner reasonably satisfactory to WCI against any claim that may be made
against WCI or the Surviving Corporation with respect to the Certificate alleged
to have been lost, stolen or destroyed.
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3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS AND THE
SHAREHOLDERS
Each Corporation, severally as to itself, and the Shareholders, jointly
and severally as to each Corporation of which they are shareholders, represent
and warrant that each of the following representations and warranties is true as
of the Signing Date and will be true as of the Closing Date.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. Each of the
Corporations is duly organized, validly existing and in good standing under the
laws of the State of Washington. Each of the Corporations has full corporate
power and authority to own and lease its properties and to carry on its business
as now conducted. None of the Corporations is required to be qualified or
licensed to conduct business as a foreign corporation in any other jurisdiction.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Signing
Date, the authorized and outstanding capital of each of the Corporations, the
names, addresses and social security numbers or taxpayer identification numbers
of the record and beneficial owners thereof, the number of shares so owned, and
the allocation of the Aggregate Merger Consideration and the shares of the
Aggregate WCI Stock among the Shareholders. All of the issued and outstanding
shares of the capital stock of each Corporation are as of the Signing Date, and
will be as of the Effective Time, owned of record and beneficially by the
Shareholders, as set forth in Schedule 3.2, and are as of the Signing Date, and
will be as of the Effective Time, free and clear of all liens, security
interests, encumbrances and claims of every kind except as set forth in Schedule
3.2. Each share of the capital stock of each of the Corporations is duly and
validly authorized and issued, fully paid and nonassessable, and was not issued
in violation of any preemptive rights of any past or present shareholder of any
of the Corporations. No option, warrant, call, conversion right or commitment of
any kind (including any of the foregoing created in connection with any
indebtedness of any of the Corporations) exists which obligates
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any of the Corporations to issue any of its authorized but unissued capital
stock or other equity interest or which obligates any Shareholder to transfer
any Corporations' Stock to any person, except as set forth on Schedule 3.2.
3.3 NO CHANGE IN STOCK OWNERSHIP AND OTHER POOLING
REPRESENTATIONS. Since January 1, 1996, no Corporation has acquired any of its
own stock. Neither the voting stock structure of any Corporation, nor the
relative ownership of shares among any of their respective Shareholders has been
altered or changed within two years preceding the Signing Date. No Corporation
has ever been a subsidiary or division of another corporation nor been a part of
an acquisition that was later rescinded. No Corporation has any treasury stock.
The statements relating to the Corporations in the representation letter to be
delivered to Ernst & Young LLP pursuant to Section 9.8 will be true and correct
as of the date such letter is executed and delivered by the Corporations and the
Shareholders. Upon consummation of the Mergers, WCI will acquire or have the
right to lease all of the assets of the Corporations necessary to the conduct of
the business of the Corporations as conducted on the Signing Date and all assets
owned, directly or indirectly, by the Shareholders and used or involved in the
business of collecting and transporting solid waste, operating the solid waste
transfer stations owned by the Corporations, and recycling. None of the
Corporations nor any of their Affiliates has taken or agreed or intends to take
any action or has any knowledge of any fact or circumstance that is reasonably
likely to prevent any Merger from qualifying as a reorganization within the
meaning of section 368(a) of the Code or would prevent any Merger from being
treated for financial accounting purposes as a pooling of interests. Schedule
3.3 identifies all persons who, to the knowledge of the Corporations and the
Shareholders, may be deemed to be
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"affiliates" ("POOLING AFFILIATES") of the Corporations, as that term is used in
Accounting Series Releases No. 130 and No. 135 of the Securities and Exchange
Commission ("SEC").
3.4 AUTHORITY FOR AGREEMENT AND FILED PLANS. MDC and AD have
obtained, and on approval of this Agreement solely by the ▇▇▇▇▇▇ Trust (the
"▇▇▇▇▇▇ TRUST APPROVAL") DM and TR will have obtained, the approval of the
percentage of the holders of the outstanding Corporation's Stock of each
Corporation required by Section 23B.11.030 of the Washington Law (the
"CORPORATIONS' SHAREHOLDERS APPROVAL"). Subject, in the case of DM and TR, to
obtaining the ▇▇▇▇▇▇ Trust Approval, the Corporations and the Shareholders have
full right, power and authority to enter into this Agreement and to perform its,
his or her obligations hereunder. Subject, in the case of DM and TR, to
obtaining the ▇▇▇▇▇▇ Trust Approval, the Corporations have full right, power and
authority to enter into the Filed Plans and to perform their respective
obligations thereunder. The execution and delivery of this Agreement and the
Filed Plans by the Corporations and the consummation of the transactions
contemplated hereby by the Corporations have been duly authorized by each of the
Corporations' Board of Directors. This Agreement has been duly and validly
executed and delivered by the Corporations and the Shareholders other than the
▇▇▇▇▇▇ Trust and, subject to the due authorization, execution and delivery by
WCI, the Merger Subs. and the ▇▇▇▇▇▇ Trust, constitutes the legal, valid and
binding obligations of the Corporations and the Shareholders, other than the
▇▇▇▇▇▇ Trust, enforceable against the Corporations and such Shareholders in
accordance with its terms. Subject, in the case of DM and TR, to obtaining the
▇▇▇▇▇▇ Trust Approval, when executed and delivered by the ▇▇▇▇▇▇ Trust, this
Agreement will have been duly and validly executed and delivered by the ▇▇▇▇▇▇
Trust and, subject to the due authorization, execution and delivery by WCI and
the Merger Subs., will constitute the legal, valid and binding obligation of the
▇▇▇▇▇▇ Trust,
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enforceable against the ▇▇▇▇▇▇ Trust in accordance with its terms. When executed
and delivered by the Corporations, the Filed Plans will have been duly and
validly executed and delivered by the Shareholders and, subject to the due
authorization, execution and delivery by WCI and the Merger Subs., will
constitute the legal, valid and binding obligation of the Corporations,
enforceable against the Corporations in accordance with their respective terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporations and the Shareholders of this
Agreement and the Filed Plans, and the consummation by the Corporations and the
Shareholders of the transactions contemplated hereby and thereby, will not:
(a) Result in the breach of any of the terms or conditions
of, or constitute a default under, or allow for the acceleration or termination
of, or in any manner release any party from any obligation under, any mortgage,
lease, note, bond, indenture, or material contract, agreement, license or other
instrument or obligation of any kind or nature to which any of the Corporations
or any of the Shareholders is a party, or by which any of the Corporations or
any of the Shareholders, or any of the Corporations' or the Shareholders'
assets, is or may be bound or affected; or
(b) Violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental authority, or require
the approval, consent or permission of any governmental or regulatory authority
applicable to the Corporations or the Shareholders; or
(c) Violate the Articles of Incorporation or Bylaws of any
of the Corporations.
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3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Signing Date any
and all subsidiaries of the Corporations and any securities of any other
corporation or any securities or other interest in any other business entity
owned by the Corporations or any of the Corporations' subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporations have delivered to WCI,
as Schedule 3.7, copies of combined financial statements ("FINANCIAL
STATEMENTS") for the Corporations' three most recent fiscal years and interim
financial statements for the Corporations for the period ended September 30,
1998 (the "BALANCE SHEET DATE"). Such financial combined statements (other than
the interim financial statements) have been audited by Ernst & Young LLP. In the
opinion of Ernst & Young LLP, the Financial Statements for the three most recent
fiscal years present fairly, in all material respects, the financial positions
of the respective Corporations as at the end of such fiscal years and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles, and neither the
Corporations nor the Shareholders have any knowledge that such opinion is
incorrect. The interim Financial Statements are correct and complete and fairly
present the financial position of each of the Corporations as of Balance Sheet
Date, and the results of operations for the period then ended, subject to normal
year-end adjustments. Except to the extent reflected or reserved against in any
of the Corporations' balance sheets as of the Balance Sheet Date, or as
disclosed on Schedule 3.7 or Schedule 3.8, none of the Corporations had as of
the Balance Sheet Date, nor will any of the Corporations have as of the Closing
Date, any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due
other than liabilities incurred in the ordinary course of business since the
Balance Sheet Date.
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3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of each of the Corporations
required to be described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Balance Sheet
Date, all indebtedness for money borrowed and all other fixed and uncontested
liabilities of any kind, character and description (excluding Balance Sheet Date
Debt (as defined in Section 3.22(a)) and all real and personal property
leasehold interests included in Part IV of Schedule 3.8), whether reflected or
not reflected on the Financial Statements and whether accrued or absolute, and
states as to each such liability the amount of such liability and to whom
payable. From the Balance Sheet Date through the Signing Date, trade payables
have been incurred only in the ordinary course of business consistent with
comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the Signing Date,
all claims, suits and proceedings which are pending against any of the
Corporations and, to the knowledge of the Corporations and the Shareholders, all
contingent liabilities and all claims, suits and proceedings threatened or
anticipated against any of the Corporations. Part II of Schedule 3.8 includes a
summary description of each such liability, including, without limitation, (A)
the name of each court, agency, bureau, board or body before which any such
claim, suit or proceeding is pending, (B) the parties to such claim, suit or
proceeding, (C) the amount claimed and other relief sought, and (D) whether such
claims are covered by insurance and whether any insurance carrier has undertaken
defense of such claims subject to a reservation of rights, together with copies
of all material documents, reports and other records relating thereto to the
extent that they are in any of the Corporations' or a Shareholder's possession
or control.
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(c) Part III of Schedule 3.8 lists, as of the Signing Date
and to the extent not otherwise included in Part I of Schedule 3.8 or Schedule
3.22(a), all liens, claims and encumbrances secured by or otherwise affecting
any asset of any of the Corporations (including any Corporate Property, as
hereafter defined), including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature of the
obligation secured, and the party holding such lien, claim or encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the Signing Date
and to the extent not otherwise included in Part I or Part III of Schedule 3.8
or Schedule 3.22(a), all real and material personal property leasehold interests
to which any of the Corporations is a party as lessor or lessee or, to the
knowledge of any of the Corporations or a Shareholder, affecting or relating to
any Corporate Property, and includes a description of the nature and principal
terms of such leasehold interest, including, without limitation, the identity of
the other party thereto, the term of such leasehold interest (including renewal
options), the base rent and any additional rent owing thereunder (including any
adjustments thereto), security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule 3.8,
neither any of the Corporations nor any of the Shareholders has made any payment
or committed to make any payment since the Balance Sheet Date on or with respect
to any of the liabilities or obligations listed on Schedule 3.8 or Schedule
3.22(a) except, in the case of liabilities and obligations listed on Parts I,
III and IV of Schedule 3.8 and Balance Sheet Date Debt, periodic payments
required to be made under the terms of the agreements or instruments governing
such obligations or liabilities or made in the ordinary course of business.
3.9 ACCURATE AND COMPLETE RECORDS. The corporate minute books,
stock ledgers, books, ledgers, financial records and other records of the
Corporations:
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(a) Have been made available to WCI and its agents (which
for this purpose includes Ernst & Young LLP) at the respective Corporations'
offices or at the offices of WCI's attorneys or the respective Corporations'
attorneys;
(b) Have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations, except that annual
meetings of shareholders and directors were not held in each year of the
existence of each of the Corporations; and
(c) Are accurate and complete and reflect either by
general or specific resolution all material corporate transactions authorized by
the Board of Directors and/or shareholders of the Corporations.
3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises and service
agreements pursuant to which each of the Corporations is authorized to collect
and haul industrial, commercial and residential solid waste (the "COLLECTION
FRANCHISES"), and of all other material permits, licenses, titles (excluding
motor vehicle titles and current registrations), fuel permits, zoning and land
use approvals and authorizations, including, without limitation, any conditional
or special use approvals or zoning variances, occupancy permits, and any other
similar documents constituting a material authorization or entitlement or
otherwise material to the operation of the business of each of the Corporations
(collectively the "GOVERNMENTAL Permits") owned by, issued to, held by or
otherwise benefiting one or more of the Corporations or the Shareholders as of
the Signing Date. The status of the Governmental Permits related to the disposal
areas owned or operated by the Corporations, including, without limitation, any
conditions thereto and, if applicable, the
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expiration dates thereof, are also described in Schedule 3.10(a). Schedule
3.10(a) also sets forth the name of any governmental agency or other third party
from whom the Shareholders, the Corporations or WCI must obtain consent (the
"REQUIRED GOVERNMENTAL CONSENTS") in order to effect a direct or indirect
transfer of the Collection Franchises or other Governmental Permits required as
a result of the consummation of the transactions contemplated by this Agreement.
Except for any filings by the Corporations required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), the filing of the Filed
Plans with the Secretary of State of Washington in connection with the Mergers
and the Required Governmental Consents, no declaration, filing or registration
with, or notice to, or authorization, consent or approval or permit of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement or the Filed Plans by any Corporation or the
consummation by any Corporation of the transactions contemplated hereby or
thereby. Except as set forth on Schedule 3.10(a), all of the Collection
Franchises and other Governmental Permits enumerated and listed on Schedule
3.10(a) are valid and in full force and effect and have been duly obtained, no
other Collection Franchises or Governmental Permits or other agreements are
required to operate the business of any of the Corporations or any Corporate
Property as presently operated, and there are no proceedings pending or, to the
knowledge of the Corporations or the Shareholders, threatened which may result
in the revocation, cancellation, suspension or adverse modification of any of
the same. Neither any of the Corporations nor any of the Shareholders has any
knowledge of any reason why all such Collection Franchises and Governmental
Permits will not remain in effect for the period or term stated therein, subject
to WCI's full compliance therewith, after consummation of the transactions
contemplated hereby.
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(b) Schedule 3.10(b) includes (i) all notifications,
reports, permit and license applications (other than items included in Schedule
3.10(a)), engineering and geologic studies, and environmental impact reports,
tests or assessments applicable to Corporate Property (collectively, "RECORDS,
NOTIFICATIONS AND REPORTS") that are material to the operation of the business
of each of the Corporations, and (A) relate to the discharge or release of
materials into the environment and/or the handling or transportation of waste
materials or hazardous or toxic substances or otherwise relate to the protection
of the public health or the environment, or (B) were filed with or submitted to
appropriate governmental agencies during the 24 months prior to the Signing Date
by any of the Corporations or the Shareholders or their agents with respect to
the business of any of the Corporations, and (ii) all material notifications
from such governmental agencies to the Corporations, the Shareholders or their
agents in response to or relating to any of such Records, Notifications and
Reports.
(c) Schedule 3.10(c) lists each facility owned, leased,
operated or otherwise used by the Corporations, the ownership, lease, operation
or use of which is being transferred to, assumed by or otherwise acquired
directly or indirectly by WCI pursuant to this Agreement (each, a "FACILITY" and
collectively, the "FACILITIES"). Except as otherwise disclosed on Schedule
3.10(c):
(i) Each Facility owned by any of the Corporations
or owned by any of the Shareholders or an Affiliate (as hereinafter defined) of
any of the Shareholders and leased to one of the Corporations is fully licensed,
permitted and authorized to carry on its current business under all applicable
federal, state and local statutes, orders, approvals, zoning or land use
requirements, rules and regulations, and, none of such Facilities or the current
use thereof constitutes a non-conforming use or is otherwise subject to any
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restrictions regarding the operation, renovation or reconstruction thereof,
except for restrictions of general application under applicable laws, rules and
regulations. To the knowledge of the Corporations and the Shareholders, no
Facility that is leased by any of the Corporations from a non-Affiliate or the
current use thereof constitutes a material non-conforming use or is otherwise
subject to any material restrictions regarding the operation, renovation or
reconstruction thereof, except for restrictions of general application under
applicable laws, rules and regulations.
(ii) To the knowledge of the Corporations and the
Shareholders, there are no circumstances, conditions or reasons which will cause
the revocation or suspension of any Facility's site assessments, permits,
licenses, consents, authorizations, zoning or land use permits, variances or
approvals relating to any Facility owned by any of the Corporations or owned by
any of the Shareholders or an Affiliate of any of the Shareholders and leased to
any of the Corporations, and to the knowledge of the Corporations and the
Shareholders there are no circumstances, conditions or reasons which will cause
the revocation or suspension of any site assessment, permits, licenses,
consents, authorizations, zoning or land use permits, variances or approvals
relating to any Facility leased by any of the Corporations from a third party
who is not an Affiliate of the Shareholders.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as of
the Signing Date of the accounts and notes receivable of the Corporations from
and advances to employees, former employees, officers, directors, the
Shareholders and Affiliates of the foregoing which have not been repaid. For
purposes of this Agreement, the term "AFFILIATE" means, with respect to any
person, any person that directly or indirectly through one or more
intermediaries controls or has an ownership interest in, or is controlled or
owned in whole or in part by, or is under common control or ownership in whole
or in part with such person, and in
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the case of a corporation includes its directors and officers, in the case of
individuals includes the individual's spouse, father, mother, grandfather,
grandmother, brothers, sisters, children and grandchildren and in the case of a
trust includes the grantors, trustees and beneficiaries of the trust.
3.12 FIXED ASSETS AND REAL PROPERTY.
(a) Schedule 3.12(a) lists, as of the Signing Date,
substantially all the fixed assets (other than real estate included in Corporate
Property (as defined below)) of the Corporations, including, without limitation,
identification of each vehicle by description and serial number, identification
of machinery, equipment and general descriptions of parts, supplies and
inventory. Except as described on Schedule 3.12(a), all of the Corporations'
containers, vehicles, machinery and equipment necessary for the operation of the
Corporations' businesses are in operable condition, ordinary wear and tear
excepted, and all of the motor vehicles and other rolling stock of the
Corporations are in material compliance with all applicable laws, rules and
regulations. All leases of such fixed assets are in full force and effect and
binding upon the parties thereto; neither any of the Corporations nor, to the
knowledge of the Corporations or any of the Shareholders, any other party to
such leases is in breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by any of the Corporations as of the Signing Date (the "CORPORATE
PROPERTY"), including the street address thereof, is listed on Schedule 3.12(b),
and attached to said Schedule 3.12(b) are copies of all leases, deeds,
outstanding mortgages, other encumbrances and any existing title insurance
policies or lawyer's title opinions relating to each Corporate Property. At
least twenty (20) days
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prior to the Closing Date, the Corporations shall deliver to WCI a current
commitment for title insurance issued by a title insurance company satisfactory
to WCI (the "TITLE REPORTS") with respect to each Corporate Property owned or
being purchased by any of the Corporations or leased by the Corporations at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, together with copies of all of the title
exceptions referred to in each such commitment. All leases listed on Schedule
3.12(b) are in full force and effect and binding on the parties thereto; neither
any of the Corporations nor any other party to any such lease that is an
Affiliate of any of the Corporations or any of the Shareholders, nor, to the
knowledge of the Corporations and the Shareholders, any other party to any such
lease is in breach of any of the material provisions thereof; to the knowledge
of the Corporations and the Shareholders, the landlord's interest in each such
lease has not been assigned to any third party nor, except as provided in
Schedule 3.12(b), has any such interest been mortgaged, pledged or hypothecated;
and none of the Corporations has assigned any such lease or sublet all or any
part of the Corporate Property which is the subject of any such lease. Except as
described on Schedule 3.12(b), to the knowledge of the Corporations and the
Shareholders, there are no material physical or mechanical latent defects not
apparent on visual inspection in any Facility located on any Corporate Property.
(c) Each of the Corporations has or prior to the Closing
will have good, valid and marketable title to, or the right to lease, all of its
properties and assets, real, personal, and mixed, tangible and intangible,
actually used or necessary for the conduct of its business, free of any
encumbrance or charge of any kind except: (i) liens for current taxes not yet
due; (ii) minor imperfections of title and encumbrances, if any, that are not
substantial in amount, do not materially reduce the value or impair the use of
the property subject thereto, and do not materially impair the value of the
Corporations; (iii) the liens identified on Parts I and III of
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Schedule 3.8 and Schedule 3.22(a); and (iv) such other covenants, conditions,
easements, reservations and restrictions of record as appear on the Title
Reports (collectively, the "Permitted Liens"). Except as described on Schedule
3.12(b), there are no leases, occupancy agreements, options, rights of first
refusal or any other agreements or arrangements, either oral or written, that
create or confer in any person or entity the right to acquire, occupy or
possess, now or in the future, any Facility, any Corporate Property, or any
portion thereof, or create in or confer on any person or entity any right, title
or interest therein or in any portion thereof.
3.13 RELATED PARTY TRANSACTIONS. Except as disclosed on Schedule
3.13, none of the Shareholders or their respective Affiliates has entered into
any transaction with or is a party to any agreement, lease or other instrument,
or as of the date of this Agreement is indebted to or is owed money by, any of
the Corporations not disclosed or reflected in the Financial Statements. Except
as disclosed on Schedule 3.13, none of the Shareholders or their Affiliates owns
any direct or indirect interest of any kind in, or controls or is a director,
officer, employee, shareholder or partner of, or consultant or lender to or
borrower from or has the right to participate in the profits of, any Person
which is a competitor, supplier, customer, landlord, tenant, creditor or debtor
of the Corporations, other than interests as a record or beneficial owner of
less than five percent (5%) of a class of capital stock of a corporation listed
on a national securities exchange or on the NASDAQ Stock Market.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Signing Date, and
includes copies of, all material contracts and agreements (other than leases and
documents included with Schedule 3.12(b) and contracts and agreements that are
listed on other Schedules to this
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Agreement) to which each of the Corporations is a party or by which it or any of
its property is bound. Except as disclosed on Schedule 3.14(a) or such other
Schedules, all such contracts and agreements included in Schedule 3.14(a) or
such other Schedules are in full force and effect and binding upon the parties
thereto. Except as described or cross referenced on Schedule 3.14(a) or such
other Schedules, none of the Corporations nor, to the Corporations' or any
Shareholder's knowledge, any other parties to such contracts and agreements is
in breach thereof; and to the Corporation's or any Shareholder's knowledge none
of the parties has threatened to breach any of the material provisions thereof
or notified the Corporations or any of the Shareholders of a default thereunder,
or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against any of the
Corporations, the result of which could materially adversely affect any of the
Corporations or its business or any of the Corporate Properties, nor has any of
the Corporations been notified that any such judgment, order, writ, injunction
or decree has been requested.
(c) Except as set forth on Schedule 3.14(c), none of the
Corporations is a party to any agreement which (i) purports to restrict or
prohibit in any material respect any of them or any Affiliate corporation from,
directly or indirectly, engaging in any business currently engaged in by the
Corporations or any Affiliate corporation or (ii) would restrict or prohibit WCI
or any subsidiary of WCI from engaging in such business. None of the
Corporations' officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with any Corporation, restricts
in any material respect any Corporation or any Affiliate of any Corporation
from, directly or indirectly, engaging in any such business.
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3.15 INSURANCE. Schedule 3.15 is a complete list, and includes
copies, as of the Signing Date, of all insurance policies in effect on the
Signing Date or, with respect to "occurrence" policies that were in effect,
carried by any of the Corporations in respect of the Corporate Properties or any
other property used by the Corporations specifying, for each policy, the name of
the insurer, the type of risks insured, the deductible and limits of coverage,
and the annual premium therefor. During the last five years, there has been no
lapse in any material insurance coverage of any of the Corporations. For each
insurer providing coverage for any of the contingent or other liabilities listed
on Schedule 3.8, except to the extent otherwise set forth in Part II of Schedule
3.8, each such insurer, if required, has been properly and timely notified of
such liability, no reservation of rights letters have been received by any of
the Corporations and the insurer has assumed defense of each suit or legal
proceeding. To the knowledge of the Corporations and the Shareholders, all such
proceedings are fully covered by insurance, subject to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the
Signing Date, of all officers, directors and employees (by type or
classification) of each of the Corporations and their respective rates of
compensation, including (i) the portions thereof attributable to bonuses, (ii)
any other salary, bonus, stock option, equity participation, or other
compensation arrangement made with or promised to any of them, and (iii) copies
of all employment agreements with non-union officers, directors and employees.
Schedule 3.16 also lists the driver's license number for each driver of each of
the Corporations' motor vehicles. Except as set forth on Schedule 3.16, all
written or oral employment contracts with employees of the Corporations are
terminable "at will" without payment of severance or other benefits (including,
without limitation, stock options or other rights to obtain equity in the
Corporations).
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3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the Signing
Date, and includes copies (or, in the case of oral arrangements, descriptions)
of, all employee benefit plans and agreements (written or oral) currently
maintained or contributed to by each of the Corporations (other than union
contracts and agreements between a Corporation and any collective bargaining
group ("UNION CONTRACTS")), including employment agreements and any other
agreements containing "GOLDEN PARACHUTE" provisions, retirement and welfare
benefit plans (including those provided for in or pursuant to all Union
Contracts) and deferred compensation agreements, together with copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Signing Date. Except for the employee
benefit plans described on Schedule 3.17(a), none of the Corporations has any
other pension, retirement, welfare, profit sharing, deferred compensation, stock
option, employee stock purchase or other employee benefit plans or arrangements
with any party other than those arising under a Union Contract. Except as
disclosed on Schedule 3.17(a), all employee benefit plans listed on Schedule
3.17(a) are fully funded and in substantial compliance with all applicable
federal, state and local statutes, ordinances and regulations. Except as
disclosed on Schedule 3.17(a), all such plans that are intended to qualify under
Section 401(a) of the Code have been determined by the Internal Revenue Service
to be so qualified, and copies of such determination letters are included as
part of Schedule 3.17(a). Except as disclosed on Schedule 3.17(a), all reports
and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) under such plans (other than plans
provided for in or pursuant to all Union Contracts) have been timely filed or
distributed, and copies thereof for the period from January 1, 1996, to
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the Signing Date, are included as part of Schedule 3.17(a). All employee benefit
plans listed on such Schedule other than those provided for in or pursuant to
Union Contracts have been operated substantially in accordance with the terms
and provisions of the plan documents and all related documents and policies.
None of the Corporations has incurred any liability for excise tax or penalty
due to the Internal Revenue Service or U.S. Department of Labor nor any
liability to the Pension Benefit Guaranty Corporation for any employee benefit
plan, and none of the Corporations and, to the knowledge of the Corporations and
the Shareholders, no party-in-interest or disqualified person, has engaged in
any transaction or other activity which would give rise to such liability. None
of the Corporations has participated in or made contributions to any
"multi-employer plan" as defined in the Employee Retirement Income Security Act
of 1974 ("ERISA"), nor would any of the Corporations or any Affiliate be subject
to any withdrawal liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Effective Time. No employee
pension benefit plan listed on Schedule 3.17 is under funded on a termination
basis as of the date of this Agreement.
(b) Schedule 3.17(b) is a complete list, and includes copies, of all Union
Contracts. Except as set forth on Schedule 3.17(b), each of the Corporations is
in compliance in all material respects with all Union Contracts and all
applicable federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and none of the Corporations is engaged in any
unfair labor practice. Except as set forth on Schedule 3.17(b), there is no
charge pending or, to any of the Corporations' or any Shareholder's knowledge,
threatened, against any of the Corporations before any court or agency and
alleging unlawful discrimination in employment practices and there is no charge
of or proceeding with regard to any unfair labor
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practice against any of the Corporations pending before the National Labor
Relations Board. There is no labor strike, dispute, slow down or stoppage as of
the Signing Date, existing or to the knowledge of the Corporations or the
Shareholders threatened, against any of the Corporations; no union
organizational activity exists respecting employees of any of the Corporations
who are not currently subject to a Union Contract, and Schedule 3.17(b) contains
a list of all arbitration or grievance proceedings that have occurred since the
Balance Sheet Date. No one is now petitioning for union representation of any
employees of any of the Corporations who are not currently subject to a Union
Contract. Except as set forth on Schedule 3.17(b), none of the Corporations has
experienced any labor strike, slow-down, work stoppage or labor difficulty
during the last five years.
(c) Except as set forth on Schedule 3.17(c), no payment
made to any employee, officer, director or independent contractor of any of the
Corporations (the "RECIPIENT") pursuant to any employment contract, severance
agreement or other arrangement (the "GOLDEN PARACHUTE PAYMENT") will be
nondeductible by any of the Corporations because of the application of Sections
280G and 4999 of the Code to the Golden Parachute Payment, nor will any of the
Corporations be required to compensate any Recipient because of the imposition
of an excise tax (including any interest or penalties related thereto) on the
Recipient by reason of Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) Each of the Corporations has timely filed or will
timely file all requisite federal, state, local and other tax and information
returns due for all fiscal periods ended on or before the Closing Date. All such
returns are accurate and complete. Except as set
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forth on Schedule 3.18, there are no open years (other than those within the
statute of limitations), examinations in progress, extensions of any statute of
limitations or claims against any of the Corporations relating to federal,
state, local or other taxes (including penalties and interest) for any period or
periods prior to and including the Signing Date and no notice of any claim for
taxes has been received that remains open. Copies of (i) any tax examinations,
(ii) extensions of statutory limitations, and (iii) the federal income tax
returns of each of the Corporations for its last three fiscal years, are
attached as part of Schedule 3.18. The Corporations are not required to file
state income tax returns or to pay state income tax. Copies of all other
federal, state, local and other tax and information returns for all prior years
of each of the Corporations' existence have been made available to WCI and are
among the records of each of the Corporations that will accrue to WCI at the
Closing. Except as set forth in Schedule 3.18, none of the Corporations has been
contacted by any federal, state or local taxing authority regarding a
prospective examination.
(b) Except as set forth on Schedule 3.18 (which schedule
also includes the amount due with respect to each of the Corporations) each of
the Corporations has duly paid all taxes and other related charges required to
be paid prior to the Signing Date. The reserves for taxes contained in the
Financial Statements of each of the Corporations are adequate to cover its tax
liability as of the Signing Date.
(c) Each of the Corporations has withheld all required
amounts from its employees for all pay periods in full and complete compliance
with the withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to income tax
withholding, social security, and unemployment taxes
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have been duly filed by the Corporations for all periods for which returns are
due, and the amounts shown on all such returns to be due and payable have been
paid in full.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on
Schedule 3.19, the certified copies of the Articles of Incorporation and Bylaws
of the Corporations, as amended to the Signing Date, and the copies of all
leases, instruments, agreements, licenses, permits, certificates or other
documents that have been delivered to WCI in connection with the transactions
contemplated hereby are complete and accurate as of the Signing Date and are
true and correct copies of the originals thereof. Except as specifically
disclosed on Schedule 3.19, the rights and benefits of the Corporations under
such leases, instruments, agreements, licenses, permits, certificates or other
documents will not be materially adversely affected by the transactions
contemplated hereby. None of such leases, instruments, agreements, licenses,
permits, site assessments, certificates or other documents requires notice to,
or consent or approval of, any governmental agency or other third party to any
of the transactions contemplated hereby, except the Required Governmental
Consents and such consents and approvals as are listed on Schedule 3.19.
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES. The
Corporations have made available to WCI a current, accurate and complete list,
or computer disk listing, customers that each of the Corporations serves on an
ongoing basis, including name, location and current billing rate, as of the
Balance Sheet Date and an accurate and complete aging of all accounts and notes
receivable from customers as of the Balance Sheet Date, showing amounts due in
30-day aging categories. Except to the extent of the allowance for bad debts
reflected on the Financial Statements or otherwise disclosed on Schedules 3.11
and 3.20, to the knowledge of the Corporations and the Shareholders, each of the
Corporations' accounts and
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notes receivable are collectible in the amounts shown on Schedules 3.11 and
3.20. Schedule 3.20 includes the average monthly revenues of each of the
Corporations derived from ▇▇▇▇▇▇▇▇ to its customers for the twelve months
preceding the Signing Date. Except as set forth on Schedule 3.20, none of the
Corporations nor any of the Shareholders has knowledge of any fact (other than
general economic and industry conditions) which indicates that any of the
Corporations' average monthly revenues derived from ▇▇▇▇▇▇▇▇ to its customers
after the Closing Date should not continue at approximately the same rate as
before the Closing Date.
3.21 NO CHANGE WITH RESPECT TO THE CORPORATIONS. Except as set
forth on Schedule 3.21, since the Balance Sheet Date, the business of each of
the Corporations has been conducted only in the ordinary course and there has
been no change in the condition (financial or otherwise) of the assets,
liabilities or operations of the Corporations other than changes in the ordinary
course of business, none of which either singly or in the aggregate has been
materially adverse. Specifically, and without limiting the generality of the
foregoing, except as set forth on Schedule 3.21, with respect to each of the
Corporations, since the Balance Sheet Date, there has not been:
(a) Any material change in its financial condition,
assets, liabilities (contingent or otherwise), income, operations or business
which would have a material adverse effect on the financial condition, assets,
liabilities (contingent or otherwise), income, operations or business of such
Corporation, taken as a whole (a "MATERIAL ADVERSE EFFECT");
(b) Any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion of its
properties or business;
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(c) Any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or outstanding
securities, or (iii) its securities;
(d) Any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of its capital stock or
any direct or indirect redemption, purchase or other acquisition of any of its
capital stock;
(e) Any increase or bonus or promised increase or bonus in
the compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or agents, or
any accrual or arrangement for or payment of any bonus or other special
compensation to any employee or any severance or termination pay paid to any of
its present or former officers or other key employees;
(f) Any labor dispute or any other event or condition of
any character (other than general economic conditions) with respect to any of
its employees which could have a Material Adverse Effect;
(g) Any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any other person,
including, without limitation, the Shareholders and their Affiliates, other than
in the ordinary course of business;
(h) Any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including, without
limitation, any indebtedness or obligation of any of the Shareholders or any
Affiliate thereof;
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(i) Any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) Any purchase or acquisition of, or any agreement, plan
or arrangement to purchase or acquire, any of its property, rights or assets
outside the ordinary course of its business;
(k) Any waiver of any of its material rights or claims;
(l) Any new or any amendment or termination of any
existing material contract, agreement, license, permit or other right to which
it is a party; or
(m) Any other material transaction outside the ordinary
course of business.
3.22 BALANCE SHEET DATE DEBT; BALANCE SHEET DATE CURRENT ASSETS
AND BALANCE SHEET DATE CURRENT LIABILITIES.
(a) Schedule 3.22(a) lists, and includes copies of the
related notes, loan agreements, security agreements, pledge agreements,
mortgages and other instruments giving rise to any lien on any Corporation's
assets, leases and other instruments, (i) the amount of the aggregate debt
(other than trade payables) of each of the Corporations outstanding on the
Balance Sheet Date to be repaid by WCI or one of the Surviving Corporations at
or immediately after the Effective Time and all prepayment penalties incurred or
to be incurred by WCI or one of the Surviving Corporations in connection with
the repayment of any such debt, (ii) the amount of the aggregate debt (other
than trade payables) of the Corporations outstanding on the Balance
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Sheet Date which will remain outstanding obligations of one of the Surviving
Corporations after the Effective Time, and all prepayment penalties applicable
to such debt if repaid prior to maturity, including in each case all interest
accrued through and including the Balance Sheet Date, (iii) the aggregate amount
of the present value as of the Balance Sheet Date, discounted at the lease rate
factor, if known, inherent in the lease or, if the lease rate factor is not
known, at the rate charged to each of the Corporations by a third party lender
in connection with its most recent borrowing to finance equipment, of all
equipment lease obligations of the Corporations that are not capitalized lease
obligations, and (iv) the aggregate amount of the present value as of the
Balance Sheet Date of all capitalized equipment lease obligations (determined in
accordance with generally accepted accounting principles) of each of the
Corporations (the "BALANCE SHEET DATE DEBT").
(b) Schedule 3.22(b) sets forth the amount of the
aggregate current liabilities (including any reserve for unpaid taxes and
excluding the current and other portions of long-term and other debt to the
extent such portions are included in Balance Sheet Date Debt) and trade payables
of each of the Corporations as of the Balance Sheet Date (the "BALANCE SHEET
DATE CURRENT LIABILITIES") and the amount of the aggregate cash and other
current assets of each of the Corporations as of the Balance Sheet Date,
including prepaid expenses the benefit of which will survive the Effective Time
and the accounts receivable of the Corporations earned prior to the Balance
Sheet Date, and collectible (less an allowance for doubtful accounts) on or
after the Balance Sheet Date (the "BALANCE SHEET DATE CURRENT ASSETS").
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3.23 BANK ACCOUNTS.
(a) Schedule 3.23(a) is a complete and accurate list, as
of the Signing Date, of:
(i) the name of each bank in which each of the
Corporations has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are
held;
(iii) the type of account; and
(iv) the name of each person authorized to draw
thereon or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate list, as
of the Signing Date, of:
(i) each credit card or other charge account issued
to each of the Corporations; and
(ii) the name of each person to whom such credit
cards or other charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24,
each of the Corporations has complied with, and each of the Corporations is
presently in compliance with, federal, state and local laws, ordinances, codes,
rules, regulations, Governmental Permits, orders, judgments, awards, decrees,
consent judgments, consent orders
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and requirements applicable to it (collectively "LAWS"), including, but not
limited to, the Americans with Disabilities Act, the Federal Occupational Safety
and Health Act, and Environmental Laws (as defined below). Except as disclosed
on Schedule 3.24, there has been no assertion to the knowledge of the
Corporations or the Shareholders by any party that any of the Corporations is in
violation of any Laws. Specifically and without limiting the generality of the
foregoing, except as disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, Environmental Laws, none of the
Corporations has accepted, processed, handled, transferred, generated, treated,
stored or disposed of any Hazardous Substances (as defined below) nor has any of
the Corporations accepted, processed, handled, transferred, generated, treated,
stored or disposed of asbestos, medical waste, radioactive waste or municipal
waste, except in compliance with Environmental Laws.
(b) During each of the Corporations' ownership or leasing
of the Corporate Property owned or leased by it and, to the knowledge of the
Corporations and the Shareholders, prior to the Corporations' ownership or
leasing of such Corporate Property, no Hazardous Substances, other than that
allowed under Environmental Laws, has been disposed of, or otherwise released on
any Corporate Property.
(c) During each of the Corporations' ownership or leasing
of the Corporate Property owned or leased by it and, to the knowledge of the
Corporations and the Shareholders, prior to each of the Corporations' ownership
or leasing of such Corporate Property, no Corporate Property has ever been
subject to or received any notice of any private, administrative or judicial
action, or notice of any intended private, administrative or judicial
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action relating to the presence or alleged presence of any Hazardous Substance
in, under, upon or emanating from any Corporate Property or any real property
now or previously owned or leased by any of the Corporations. There are no
pending and, to the Corporations' and Shareholders' knowledge, no threatened
actions or proceedings from any governmental agency or any other entity
involving remediation of any condition of the Corporate Property, including,
without limitation, petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, none of
the Corporations has knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Substance, to any site, location or
facility.
(e) As used herein, "ENVIRONMENTAL LAW" means any federal,
state, local or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any governmental
entity applicable to the Corporations relating to (x) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource) or
to human health or safety or (y) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
"ENVIRONMENTAL LAW" includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto (the "RCRA")), the Federal Solid Waste
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Disposal Act and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Occupational Safety
and Health Act of 1970, each as amended, and (ii) any common law or equitable
doctrine applicable to the Corporations (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of, effects of or
exposure to any Hazardous Substance.
(f) As used herein, "HAZARDOUS SUBSTANCE" means any
substance presently listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
(g) With respect to the disclosure on Schedule 3.24 that
the Hidden Valley Landfill is a federal Superfund site, to the knowledge of the
Corporations and the Shareholders ▇▇▇▇▇▇ County is responsible for closure and
post-closure costs relating to the closure of such landfill and such costs have
been fully funded. None of the Corporations has been notified that it is a
potentially responsible party under Environmental Laws with respect to any
clean-up, closure or post-closure costs relating to such landfill, and none of
the Corporations has entered into any written or oral agreement or understanding
to bear any portion of such costs.
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3.25 POWERS OF ATTORNEY. None of the Corporations has granted any
power of attorney (except routine powers of attorney relating to representation
before governmental agencies) or entered into any agency or similar agreement
whereby a third party may bind or commit any of the Corporations in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule
3.26, no underground storage tanks containing petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 or other Environmental Laws
have been put on or under any Corporate Property by the Corporations or the
Shareholders or, to the knowledge of the Corporations or the Shareholders, any
other party, and are currently or have been located on any Corporate Property.
Except as set forth on Schedule 3.26, none of the Corporations has owned or
leased any real property not included in the Corporate Property having any
underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or other Environmental Laws that
were put on or under any such real property by the Corporations or the
Shareholders, or, to the knowledge of the Corporations or the Shareholders, any
other party and are currently on such real property. As to each such underground
storage tank ("UST") identified on Schedule 3.26, each of the Corporations has
provided to WCI, on Schedule 3.26:
(a) The location of the UST, information and material,
including any available drawings and photographs, showing the location, and
whether any of the Corporations currently owns or leases the property on which
the UST is located (and if one of the Corporations does not currently own or
lease such property but did own or lease such property at some time, the dates
on which it did and the current owner or lessee of such property);
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(b) The date of installation and specific use or uses of
the UST;
(c) Copies of tank and piping tightness tests and cathodic
protection tests and similar studies or reports for each UST;
(d) A copy of each notice to or from a governmental body
or agency relating to the UST;
(e) Other material records with regard to the UST,
including, without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f) To the extent not otherwise set forth pursuant to the
above, a summary description of instances, past or present, in which, to any of
the Corporations' or the Shareholders' knowledge, the UST failed to meet
applicable standards and regulations for tightness or otherwise and the extent
of such failure, and any other operational or environmental problems with regard
to the UST, including, without limitation, spills, including spills in
connection with delivery of materials to the UST, releases from the UST and soil
contamination. Except to the extent set forth on Schedule 3.26, each of the
Corporations has complied with Environmental Laws regarding the installation,
use, testing, monitoring, operation and closure of each UST described on
Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists
all patents, trade names, fictitious business names, trademarks, service marks,
and copyrights owned by each of the Corporations or which it is licensed to use
(other than licenses to use software for personal computer operating systems
that were provided when the computer was purchased and licenses to use software
for personal computers that are granted to retail purchasers of such
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software). Except as set forth on Schedule 3.27, to the knowledge of each of the
Corporations and each of the Shareholders, no trade secrets, know-how,
intellectual property, trademarks, trade names, assumed names, copyrights, or
designations used by any of the Corporations in its business infringe on any
patents, trademarks, or copyrights, or any other rights of any person. Except as
set forth on Schedule 3.27, none of the Corporations nor any of the Shareholders
knows or has any reason to believe that there are any claims of third parties to
the use of any such names or any similar name, or knows of or has any reason to
believe that there exists any basis for any such claim or claims.
3.28 ASSETS, ETC. NECESSARY TO BUSINESS. Each of the Corporations
owns or leases all properties and assets, real, personal, and mixed, tangible
and intangible, that are necessary for it to carry on its business as presently
conducted.
3.29 CONDEMNATION. Except as set forth on Schedule 3.29, no
Corporate Property owned or leased by any of the Corporations is the subject of,
or to the knowledge of the Corporations and the Shareholders would be affected
by, any pending condemnation or eminent domain proceedings, and, to the
knowledge of the Corporations and the Shareholders, no such proceedings are
threatened.
3.30 SUPPLIERS AND CUSTOMERS. Except as set forth on Schedule
3.30, none of the Corporations nor any of the Shareholders has knowledge of any
fact (other than general economic and industry conditions) which indicates that
any of the suppliers supplying products, components, materials or providing use
of, or access to, landfills or disposal sites to any of the Corporations intends
to cease providing such items, use or access to any of the Corporations, nor
does any of the Corporations or any of the Shareholders have knowledge of
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any fact (other than general economic and industry conditions) which indicates
that any of the customers of any of the Corporations intends to terminate, limit
or reduce its business relations with any of the Corporations.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Other than lobbying
activities permitted under applicable law and except for gifts of nominal value
to public officials during the holiday season, none of the Corporations nor any
of the Shareholders has directly or indirectly within the past five years given
or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of any of the Corporations in connection with any actual or
proposed transaction which (a) might subject any of the Corporations to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (b) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of any of the
Corporations, or (c) if not continued in the future, might adversely affect the
financial condition, business or operations of any of the Corporations or which
might subject any of the Corporations to suit or penalty in any private or
governmental litigation or proceeding.
3.32 NO MISLEADING STATEMENTS. The representations and warranties
of the Corporations and the Shareholders contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to WCI and its representatives pursuant hereto are complete and accurate in all
material respects and do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made not
misleading.
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3.33 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for any of the Corporations or a
Shareholder in connection with the transactions contemplated by this Agreement
and no person is entitled to any broker's, finder's, financial advisory or
similar fee or payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of any of the Corporations or
a Shareholder.
3.34 S CORPORATION MATTERS. Each of the Corporations listed on
Schedule 3.34 has elected to be treated as an S Corporations within the meaning
of the Code for the years listed on Schedule 3.34. Schedule 3.34 includes an
accurate disclosure of taxable income reported by each of the Corporations and
of all distributions made by each of the Corporations from January 1, 1993,
through the Signing Date.
3.35 REGISTRATION STATEMENTS. None of the information to be
supplied by the Corporations or the Shareholders for inclusion in the
Registration Statements or the Proxy Statement (the "PROXY STATEMENT") of WCI
prepared in connection with the WCI Shareholders Approval (as defined below)
when used in a manner approved in writing by the Shareholders will, at the time
of the filing of the Registration Statements or Proxy Statement and any
amendments or supplements thereto, and at the time of the meeting of
stockholders of WCI and the Shareholders of the Corporations to be held in
connection with the transactions contemplated by this Agreement, 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 therein, in
the light of the circumstances under which they are made, not misleading.
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3.36 ACCREDITED INVESTORS. Each of the Shareholders is an
"accredited investor" as defined in Rule 501(a) under the Act.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER SUBS.
WCI and the Merger Subs, jointly and severally, represent and warrant to
the Corporations and the Shareholders that each of the following representations
and warranties is true as of the Signing Date and will be true as of the Closing
Date:
4.1 EXISTENCE AND GOOD STANDING. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WCI has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. WCI is not required to
be qualified or licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect. Each Merger Sub. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Washington. Each Merger Sub. has
full corporate power and authority to own and lease its properties and to carry
on its business as now conducted. No Merger Sub. is required to be qualified or
licensed to conduct business as a foreign corporation in any jurisdiction where
the failure to be so qualified would have a Material Adverse Effect.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any
article, document or instrument to which WCI is a party or by which it is bound
that would be violated by consummation of the transactions contemplated by this
Agreement or the Filed Plans, other than provisions in WCI's Credit Agreement
with its banks, which have been complied with prior to the Signing Date. No
provisions exist in any article, document or instrument to which any Merger Sub.
is a party or by which any of them is bound that would be violated by
consummation of the transactions contemplated by this Agreement or the Filed
Plans.
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4.3 AUTHORIZATION OF AGREEMENT. Subject to obtaining the approval
of the percentage of holders of the outstanding Shares of WCI required by NASDAQ
Rule 4310(c)(25)(H)C.2 the ("WCI SHAREHOLDERS APPROVAL"), this Agreement and the
Filed Plans have been duly authorized, executed and delivered by WCI and each
Merger Sub., and, subject to the due authorization, execution and delivery by
the Corporations and the Shareholders, constitutes a legal, valid and binding
obligation of WCI and each Merger Sub. Each of WCI and the Merger Subs. has full
corporate power, legal right and corporate authority to enter into and perform
its obligations under this Agreement and the Filed Plans and to carry on its
business as presently conducted. The execution and delivery of this Agreement
and the Filed Plans and the consummation of the transactions contemplated hereby
and thereby and the fulfillment of and compliance with the terms and conditions
hereof and thereof do not and will not, after the giving of notice, or the lapse
of time or otherwise: (a) violate any provisions of any law, regulation,
judicial or administrative order, writ, award, judgment or decree applicable to
WCI or any Merger Sub.; (b) conflict with any of the provisions of the Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws of WCI;
(c) conflict with any of the provisions of the Articles of Incorporation or
Bylaws of any Merger Sub.; or (d) conflict with, result in a breach of or
constitute a default under any material agreement or instrument to which either
WCI or any Merger Sub. is a party or by which it is bound.
4.4 STATUS OF SHARES. When delivered to the Shareholders after
the Effective Time in accordance with the terms and conditions of this
Agreement, the Aggregate WCI Stock shall have been duly authorized and delivered
shares of WCI, shall be fully paid and nonassessable, and shall have been
registered under the Act.
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4.5 GOVERNMENTAL AUTHORITIES; CONSENTS. Except for (i) the filing
of the Filed Plans with the Secretary of State of the State of Washington, (ii)
any filings by WCI and the Merger Subs. required by the HSR Act, (iii) the
filing of the Proxy Statement with the SEC pursuant to the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT") and any necessary filings with
various state securities commissions, (iv) any required filings with or
approvals from The Nasdaq Stock Market, Inc. ("Nasdaq"), and (v) any required
filings with applicable state regulatory authorities, neither WCI nor any Merger
Sub. is required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by it of
this Agreement, the Filed Plans or the consummation of the transactions
contemplated hereby or thereby, and no consent, approval or authorization of any
governmental or regulatory authority or any other party or person is required to
be obtained by either WCI or any Merger Sub. in connection with its execution,
delivery and performance of this Agreement and the Filed Plans or the
transactions contemplated hereby or thereby, except such as shall have been
obtained by the Closing Date.
4.6 SEC DOCUMENTS. WCI has filed all required reports, schedules,
forms, statements, and other documents with the Securities and Exchange
Commission ("SEC") since May 22, 1998, has filed the Registration Statements and
will file the Proxy Statement (together with later filed documents that revise
or supersede earlier filed documents, the "WCI SEC DOCUMENTS"). As of their
respective dates, the WCI SEC Documents complied or will comply in all material
respects with the requirements of the Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such WCI SEC Documents. None of the WCI SEC Documents contained or will
contain any untrue statement of a material fact or omitted or will omit to state
a material fact required to be stated therein or
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necessary in order to make the statements therein, in light of the circumstances
under which they were or are made, not misleading. The financial statements of
WCI included in the WCI SEC Documents complied or will comply as of their
respective dates of filing with the SEC in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Regulation S-X promulgated by the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto), and are
correct and complete and fairly present the consolidated financial position of
WCI and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
4.7 CAPITAL STOCK.
(a) The WCI SEC Documents set forth WCI's capitalization
in all material respects. All outstanding shares of WCI Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable. WCI
issued all such shares in compliance with applicable federal and state
securities laws. The WCI Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and has been approved for listing on the Nasdaq National
Market, and the Aggregate WCI Stock will, upon issuance, be registered under the
Exchange Act and listed on the NASDAQ Stock Market.
(b) WCI owns, beneficially and of record, all issued and
outstanding shares of the Merger Subs., which shares are validly issued, fully
paid, and non-assessable, and
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free and clear of all liens, other than liens in favor of WCI's banks pursuant
to the terms of its Credit Agreement.
4.8 NO MISLEADING STATEMENTS. The representations and warranties
of WCI and the Merger Subs. contained in this Agreement, the Exhibits and
Schedules hereto and all other documents and information furnished to the
Corporations, the Shareholders or their representatives pursuant hereto are
accurate and complete in all material respects, and do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made not misleading.
4.9 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for WCI or any Merger Sub. in
connection with the transactions contemplated by this Agreement and no person is
entitled to any broker's, finder's, financial advisory or similar fee or payment
in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of WCI or any Merger Sub.
4.10 DISCLOSURE SCHEDULES. Any matter disclosed by WCI or any
Merger Sub. on any Schedule to this Agreement shall be deemed to have been
disclosed on every other Schedule that refers to such Schedule by cross
reference so long as the nature of the matter disclosed is obvious from a fair
reading of the Schedule on which the matter is disclosed.
5. COVENANTS OF THE CORPORATIONS AND THE SHAREHOLDERS PRIOR TO
EFFECTIVE TIME
5.1 ACCESS; CONFIDENTIAL INFORMATION. Between the Signing Date
and the Effective Time, each Corporation will afford to the officers and
authorized representatives of WCI, including, without limitation, its engineers,
counsel, independent auditors and investment
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bankers, access to the Facilities, plants, Corporate Properties and other
properties, books and records of such Corporation and will furnish WCI with such
additional financial and operating data and other information as to the business
and properties of such Corporation as WCI may from time to time reasonably
request. The Shareholders and each Corporation will cooperate with WCI, its
representatives and counsel in the preparation of any documents or other
material which may be required by any governmental agency without undo expense
to any of the Corporations or the Shareholders. WCI will cause all information
obtained from the Shareholders and the Corporations in connection with the
negotiation and performance of this Agreement to be treated as confidential
(except such information which is in the public domain or which WCI may be
required to disclose in the Registration Statements, the Proxy Statement, under
the Act or the Exchange Act, to any governmental agency, or pursuant to any
court or regulatory agency order) and will not use, and will not knowingly
permit others to use, any such confidential information in a manner detrimental
to any Corporation or the Shareholders. Other than to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
certain key employees of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Enterprises, Inc., the Corporations and
the Shareholders covenant and agree not to disclose to any third persons other
than their accountants, brokers, bankers, investment advisers or legal counsel
any of the terms or provisions of this Agreement prior to the date the Proxy
Statement is filed with the SEC without the prior written consent of WCI.
5.2 OPERATIONS. Between the Signing Date and the Effective Time,
each Corporation will:
(a) carry on its business in substantially the same manner
as it has heretofore and not introduce any material new method, or discontinue
any existing material method, of operation or accounting;
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(b) maintain its equipment, assets, Corporate Properties
and Facilities, including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all of its material obligations under
agreements relating to or affecting its assets, Corporate Properties,
Facilities, business operations and rights;
(d) keep in full force and effect present insurance
policies or other comparable insurance coverage;
(e) use commercially reasonable efforts to maintain and
preserve its business organization intact, retain its present employees and
maintain its relationship with suppliers, customers and others having business
relations with it;
(f) file on a timely basis all notices, reports or other
filings required to be filed with or reported to any federal, state, municipal
or other governmental department, commission, board, bureau, agency or any
instrumentality of any of the foregoing wherever located with respect to the
continuing operations of such Corporation;
(g) maintain material compliance with all Governmental
Permits and all laws, rules, regulations and consent orders;
(h) file on a timely basis all complete and correct
applications or other documents necessary to maintain, renew or extend any site
assessment, permit, license, variance or any other approval required by any
governmental authority necessary and/or required for the continuing operation of
each Corporation's business operations, whether or not such approval would
expire before or after the Effective Time; and
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(i) advise WCI promptly in writing of any material change
in any document, Schedule, Exhibit, or other information delivered pursuant to
this Agreement.
5.3 NO CHANGE. Between the Signing Date and the Effective Time,
no Corporation and, in the case of paragraphs (m), (n) and (o) below, none of
the Shareholders will, without the prior written consent of WCI:
(a) make any change in its Articles of Incorporation or
Bylaws;
(b) authorize, issue, transfer or distribute any of its
securities (including issuance of any option, warrant or right with respect
thereto);
(c) declare or pay any dividend or make any distribution
in respect of its capital stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its or
any other Corporation's capital stock;
(d) except in accordance with any contracts or commitments
entered into prior to the Signing Date or in the ordinary course of business
after the Signing Date, enter into any contract or commitment or incur or agree
to incur any liability other than in the ordinary course of business other than
the transactions contemplated by this Agreement, borrow funds, or make any
single capital expenditure in excess of $10,000 or in excess of $25,000 in the
aggregate during any consecutive thirty day period without regard to whether
such capital expenditure is in the ordinary course of business;
(e) except as set forth on Schedule 5.3, change or promise
to change the compensation payable or to become payable to any director,
officer, employee or agent, or make or promise to make any bonus payment to any
such person;
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(f) create, assume or otherwise permit the imposition of
any mortgage, pledge or other lien (except for current property taxes) or
encumbrance upon or grant any option or right of first refusal with respect to
any assets or properties whether now owned or hereafter acquired;
(g) sell, assign, lease or otherwise transfer or dispose
of any property or equipment other than in the ordinary course of business;
(h) merge or consolidate or agree to merge or consolidate
with or into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend or terminate any material agreement or any site
assessment, permit, license or other right;
(k) enter into any other transaction outside the ordinary
course of such Corporation's business or prohibited hereunder;
(l) revoke any S corporation election by any of the
Corporations;
(m) take any action or suffer or permit any event to occur
that would cause any representation or warranty of any Corporation or any
Shareholder to become untrue as of the Closing Date;
(n) take any action that would jeopardize the treatment of
the Mergers as a pooling of interests under Opinion No. 16 of the Accounting
Principles Board ("APB NO. 16"); or
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(o) take or fail to take any action which action or
failure to take action is reasonably likely to cause the Corporations or the
Shareholders (except to the extent of stockholders in special circumstances) to
recognize gain or loss for federal income tax purposes as a result of the
consummation of the Mergers or otherwise is reasonably likely to cause the
Mergers not to qualify as a reorganization under Section 368(a) of the Code.
5.4 OBTAIN CONSENTS. Promptly after the Signing Date, the
Corporations shall make all filings and take all steps reasonably necessary to
obtain all approvals and consents required to be obtained by the Corporations or
the Shareholders to consummate the transactions contemplated by this Agreement
and otherwise to satisfy the conditions of Sections 6.7 and 6.8.
5.5 NO CHANGE IN RELATIVE OWNERSHIP. Between the Signing Date and
the Effective Time, there will be no change in voting structure or relative
ownership of any Corporation without the prior consent of WCI.
5.6 CONTROL OF THE CORPORATIONS' OPERATIONS. Nothing contained in
this Agreement shall give to WCI, directly or indirectly, rights to control or
direct any Corporation's operations prior to the Effective Time. Prior to the
Effective Time, each Corporation shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
5.7 ACQUISITION TRANSACTIONS. From the Signing Date to the
Effective Time, or earlier termination of this Agreement, no Corporation nor any
Shareholder shall initiate, solicit, negotiate, encourage or provide information
to facilitate, and each of the Corporations and the Shareholders shall not, and
shall use his, her or its reasonable efforts to cause any officer, director or
employee of each Corporation, or any attorney, accountant, investment banker,
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financial advisor or other agent retained by him, her or it not to, initiate,
solicit, negotiate, encourage or provide information to facilitate, any proposal
or offer to acquire all or any substantial part of the business or properties of
any Corporation or any capital stock (including without limitation the
Corporation's Stock) of any Corporation, whether by merger, purchase of assets
or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"ACQUISITION TRANSACTION"). Each Corporation and Shareholder shall immediately
notify WCI after receipt of any proposal for an Acquisition Transaction,
indication of interest or request for information relating to any Corporation in
connection with an Acquisition Transaction or for access to the properties,
books or records of any Corporation by any person or entity that informs the
Board of Directors of any Corporation that it is considering making, or has
made, a proposal for an Acquisition Transaction. Such notice to WCI shall be
made orally and in writing.
5.8 ▇▇▇▇▇▇ TRUST APPROVAL. The Corporations shall seek to obtain
the ▇▇▇▇▇▇ Trust Approval prior to the Closing Date. Upon execution of a
counterpart of the signature page of this Agreement in the space provided
thereon or a separate instrument agreeing to be bound to the terms and
conditions of this Agreement, the ▇▇▇▇▇▇ Trust shall be bound by such terms and
conditions and shall be deemed a Shareholder for all purposes of this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI AND THE MERGER SUBS.
TO CLOSE The obligations of WCI and the Merger Subs. under this Agreement are
subject to the satisfaction, at or before Closing, of all of the following
conditions precedent, unless waived in writing by WCI:
6.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Corporations and the Shareholders contained in this Agreement
or in any Exhibit, Schedule, certificate or document delivered by the
Corporations and the Shareholders under this Agreement
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shall be true, correct and complete on and as of the date when made and at all
times prior to the Closing Date, shall be deemed to be made again on the Closing
Date, and shall then be true, correct and complete as of the Closing Date.
6.2 CONDITIONS. The Corporations and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE. Since the Signing Date, there
shall not have been any material adverse change in the financial condition,
business, properties or assets of any Corporation.
6.4 CERTIFICATES. The President and Chief Financial Officer of
each Corporation shall have delivered to WCI a certificate, dated as of the
Closing Date, in form and substance satisfactory to WCI, certifying to the
fulfillment of the conditions set forth in Sections 6.1, 6.2 and 6.3, and the
Shareholders shall have delivered to WCI a certificate dated as of the Closing
Date, in form and substance satisfactory to WCI, certifying to the fulfillment
of the conditions set forth in Section 6.1 and 6.2 applicable to the
Shareholders.
6.5 NO LITIGATION. None of the transactions contemplated hereby
shall have been enjoined by any court or by any federal or state governmental
branch, agency, commission or regulatory authority and no suit or other
proceeding challenging the transactions contemplated hereby shall have been
threatened or instituted and no investigative or other demand shall have been
made by any federal or state governmental branch, agency, commission or
regulatory authority concerning the transactions contemplated hereby.
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6.6 OTHER DELIVERIES. The Corporations and Shareholders shall
have delivered the items which they are required to deliver under Section 8.2 of
this Agreement.
6.7 GOVERNMENTAL APPROVALS. All governmental consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement, including without limitation those contemplated
by Sections 6.12 and 6.13, shall have been received.
6.8 CONSENTS TO TRANSFER. Each party whose consent is required to
the transactions contemplated by this Agreement, including without limitation
each party to any contract with any Corporation and each Required Governmental
Consent shall have been obtained.
6.9 OPINION OF INDEPENDENT PUBLIC ACCOUNTANTS. WCI shall have
received a letter from Ernst & Young LLP, its independent auditors, regarding
that firm's concurrence with WCI's management's conclusions as to the
appropriateness of pooling of interests accounting for the Mergers under ▇▇▇ ▇▇.
▇▇ if closed and consummated in accordance with this Agreement.
6.10 WCI SHAREHOLDERS APPROVAL. The WCI Shareholders Approval by
the requisite vote of the Shareholders of WCI under applicable law and
applicable NASDAQ requirements shall have been obtained.
6.11 NASDAQ LISTING. An additional listing application shall have
been filed with NASDAQ with respect to the shares of Aggregate WCI Stock.
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6.12 HSR WAITING PERIOD. The waiting period applicable to the
consummation of the Mergers under the HSR Act, if any, shall have expired or
been terminated.
6.13 REGISTRATION STATEMENTS. The Registration Statements shall
then be effective under the Act.
6.14 DISSENTING SHARES. No Shareholder shall have exercised
appraisal rights in accordance with Section 23B.13.010 et seq. of the Washington
Law with respect to any shares of any Corporation's Stock.
6.15 TITLE INSURANCE. First American Title Insurance Company
shall be irrevocably committed to issue, within three business days after the
Effective Time, at WCI's cost and expense, an ALTA Owner's Standard Policy of
title insurance for each Corporate Property owned by any of the Corporations
insuring fee simple title to such Corporate Property in the Surviving
Corporation succeeding to such Corporate Property, subject only to current real
property taxes and assessments, standard printed conditions and exceptions, and
such title exceptions as shall have been accepted in writing by WCI, containing
such endorsements as WCI may reasonably require.
6.16 TERMINATION OF EMPLOYMENT AGREEMENTS. The current employment
agreements between MDC, on the one hand, and ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, on the other
hand, shall have been terminated effective as of the Closing Date.
6.17 LEMAY AGREEMENT. Should the Corporations determine that any
additional waiver is required from ▇▇▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc., relating to
that certain
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Agreement dated December 11, 1974, MDC, AD and certain other persons, such
waiver shall have been obtained.
6.18 ALL MERGERS TO OCCUR. All of the Mergers shall occur at
substantially the same time and no Merger shall be deemed closed unless all have
closed.
6.19 DISPOSAL ARRANGEMENTS. The Corporation's shall have entered
into the Agreement Regarding Future Disposal (the "DISPOSAL AGREEMENT")
substantially in the form of Exhibit 6.19 attached hereto.
6.20 ▇▇▇▇▇▇ TRUST APPROVAL. The ▇▇▇▇▇▇ Trust Approval shall have
been obtained and the ▇▇▇▇▇▇ Trust shall have satisfied its obligations pursuant
to Section 5.8.
6.21 REAL ESTATE DUE DILIGENCE. WCI shall have reviewed all of
the Schedules to this Agreement relating to the Corporate Property and all
documents related to each parcel of real property leased, owned or being
purchased by any of the Corporations, and all such Schedules and documents shall
be reasonably satisfactory to WCI or any problems reflected in, or indicated by,
such Schedules or documents shall have been resolved to the reasonable
satisfaction of WCI.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE CORPORATIONS AND THE
SHAREHOLDERS TO CLOSE. The obligations of the Corporations and the Shareholders
under this Agreement are subject to the satisfaction, at or before Closing, of
all of the following conditions precedent, unless waived in writing by the
Corporations and the Shareholders:
7.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of WCI and the Merger Subs. contained in this Agreement or in any
statement, Exhibit, Schedule, certificate or document delivered by WCI under
this Agreement shall be true, correct and
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complete on and as of the date when made and at all times prior to the Closing
Date, shall be deemed to be made again on the Closing Date, and shall then be
true, correct and complete in all respects as of the Closing Date.
7.2 CONDITIONS. WCI and the Merger Subs. shall have each
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
7.3 NO MATERIAL ADVERSE CHANGE. Since the Signing Date, there
shall not have been any material adverse change in the condition (financial or
otherwise), business, properties or assets of WCI.
7.4 CERTIFICATE. The President of WCI shall have delivered to the
Corporations and the Shareholders a certificate dated as of the Closing Date, in
form and substance satisfactory to the Corporations and the Shareholders,
certifying to the fulfillment of the conditions set forth in Sections 7.1, 7.2
and 7.3.
7.5 NO LITIGATION. None of the transactions contemplated hereby
shall have been enjoined by any court or by any federal or state governmental
branch, agency, commission or regulatory authority and no suit or other
proceeding challenging the transactions contemplated hereby shall have been
threatened or instituted and no investigative or other demand shall have been
made by any federal or state governmental branch, agency, commission or
regulatory authority concerning the transactions contemplated hereby.
7.6 OTHER DELIVERIES. WCI shall have delivered the items which it
is required to deliver under Section 8.1 of this Agreement.
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7.7 CONSENTS TO TRANSFER. Each party whose consent is required to
the transactions contemplated by this Agreement, including without limitation
each party to any contract with any Corporation and all Required Governmental
Consents shall have been obtained.
7.8 NASDAQ LISTING. An additional listing application shall have
been filed with NASDAQ with respect to the shares of Aggregate WCI Stock.
7.9 HSR WAITING PERIOD. The waiting period applicable to the
consummation of the Mergers under the HSR Act, if any, shall have expired or
been terminated.
7.10 REGISTRATION STATEMENTS. The Registration Statements shall
then be effective under the Act.
7.11 GOVERNMENTAL APPROVALS. All governmental consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement, including without limitation those contemplated
by Sections 6.12 and 6.13, shall have been received.
7.12 OPINION OF INDEPENDENT PUBLIC ACCOUNTANTS. WCI shall have
received a letter from Ernst & Young LLP, its independent auditors, regarding
that firm's concurrence with WCI's management's conclusions as to the
appropriateness of pooling of interests accounting for the Mergers under ▇▇▇ ▇▇.
▇▇ if closed and consummated in accordance with this Agreement.
7.13 LEMAY AGREEMENT. Should the Corporations determine that any
additional waiver is required from ▇▇▇▇▇▇ ▇▇▇▇▇ Enterprises, Inc., relating to
that certain
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Agreement dated December 11, 1974, MDC and AD and certain other persons (the
"▇▇▇▇▇ AGREEMENT"), such waiver shall have been obtained.
7.14 ALL MERGERS TO OCCUR. All of the Mergers shall occur at
substantially the same time and no Merger shall be deemed closed unless all have
closed.
7.15 TAX MATTERS. The Shareholders shall be reasonably satisfied
that the Mergers will constitute reorganizations within the meaning of Section
368(a) of the Code and no gain or loss will be recognized by the Shareholders
upon the exchange of their Corporations' Stock solely for shares of Aggregate
WCI Stock.
7.16 DISPOSAL ARRANGEMENTS. The Corporations shall have entered
into the Disposal Agreement.
7.17 ▇▇▇▇▇▇ TRUST APPROVAL. The ▇▇▇▇▇▇ Trust Approval shall have
been obtained and the ▇▇▇▇▇▇ Trust shall have satisfied its obligations pursuant
to Section 5.8.
8. CLOSING DELIVERIES
At the Closing or at or after the Effective Time, as the case may be,
the respective parties shall make the deliveries indicated:
8.1 WCI DELIVERIES.
(a) At or promptly after the Effective Time of each of the
Mergers, WCI shall deliver to the Shareholders certificates for the shares of
WCI Stock in accordance with Section 2.4.
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(b) WCI shall execute and deliver to ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
counterparts of Employment Agreements substantially in the form of Exhibits
8.1(b) and 8.1(b).2, respectively (the "EMPLOYMENT AGREEMENTS").
(c) At the Closing, WCI shall deliver to the Shareholders
an opinion of counsel for WCI dated as of the Closing Date in substantially the
form attached hereto as Exhibit 8.1(c).
(d) At the Closing, WCI shall deliver the Filed Plans,
duly executed by WCI and the respective Merger Subs.
(e) At the Closing, WCI and the Merger Subs. shall execute
and deliver such other instruments and items as the Corporations or the
Shareholders shall reasonably request relating to the transactions contemplated
by this Agreement.
(f) WCI shall execute and deliver to the Shareholders
counterparts of a Common Stock Agreement substantially in the form of Exhibit
8.1(f) (the "COMMON STOCK AGREEMENT").
8.2 SHAREHOLDERS' DELIVERIES.
(a) At or promptly after the Effective Time, the
Shareholders shall deliver to WCI in accordance with Section 2.4 the
certificates representing the outstanding Corporations' Stock free and clear of
all liens, security interests, claims and encumbrances, accompanied by a stock
power duly executed in blank.
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(b) At the Closing, the Shareholders shall deliver to WCI
an opinion of one or more counsel for the Shareholders, dated as of the Closing
Date, covering in substance the matters described in Exhibit 8.2(b).
(c) At the Closing, the Shareholders shall deliver
evidence reasonably satisfactory to WCI that all required third-party consents
to the transactions contemplated hereby, including without limitation all
Required Governmental Consents, were obtained and the Corporations or the
Shareholders shall deliver an estoppel certificate from the landlords under all
real estate leases to which each of the Corporations is a party confirming the
terms thereof and the rental amount owing thereunder, certifying that such lease
is in full force and effect, that the Corporation is not in default under any of
the terms or conditions thereof, that there have been no amendments or
modifications to any such lease (or specifying the same), and otherwise
containing such statements and certifications as WCI may reasonably require.
(d) At the Closing, the Shareholders shall cause each
officer and director of each of the Corporations to deliver a resignation as an
officer and/or director of that Corporation, together with a general release
releasing the Corporations from all obligations under any indemnification
agreements, the charter documents of the Corporations, or otherwise, to
indemnify such officers and directors for liabilities and expenses arising out
of or relating to this Agreement or the consummation of the transactions
contemplated thereby, other than obligations arising after the Closing Date
under this Agreement.
(e) At the Closing, the Shareholders shall deliver the
Filed Plans duly executed by the respective Corporations.
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(f) At the Closing, the Shareholders shall execute and
deliver such other instruments and items as WCI shall reasonably request
relating to the transactions contemplated by this Agreement.
(g) At the Closing, the Shareholders shall execute and
deliver the Affiliate Letter (the "AFFILIATE LETTER") substantially in the form
of Exhibit 8.2(g).
(h) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall execute and deliver to WCI
counterparts of their respective Employment Agreements.
(i) The Shareholders shall execute and deliver to WCI the
Common Stock Agreement.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS AND THE
SHAREHOLDERS
9.1 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to
obtain the termination and release promptly after the Effective Time of the
personal guaranties of the Shareholders listed on Schedule 9.1, all of which
relate to indebtedness of the Corporations included in the Financial Statements
as of the Balance Sheet Date, and WCI shall indemnify the Shareholders and hold
them harmless from and against all losses, expenses or claims by third parties
to enforce or collect indebtedness owed by each Corporation as of the Effective
Time that is personally guaranteed by the Shareholders pursuant to such
guaranties. The Shareholders may notify the obligees under such guaranties that
they have terminated their obligations under such guaranties. The Shareholders
shall cooperate with WCI in obtaining such releases.
9.2 RELEASE OF SECURITY INTERESTS. After the Effective Time, the
Shareholders and their respective Affiliates shall cause those security
interests in the assets of the Corporations
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that have been created in favor of financial institutions or other lenders to
secure indebtedness (other than indebtedness of that Corporation) of the
Shareholders or their respective Affiliates to be released in a manner
reasonably satisfactory to WCI, and shall cause all guaranties by the
Corporations relating to the indebtedness of the Shareholders to be released to
the reasonable satisfaction of WCI.
9.3 CONFIDENTIALITY. Neither WCI, the Corporations nor any of the
Shareholders shall disclose or make any public announcements of the transactions
contemplated by this Agreement except as required by the Act, the Exchange Act,
the HSR Act or in the Registration Statements or the Proxy Statement, without
the prior written consent of the other parties, unless required to make such
disclosure or announcement by law, in which event the party making the
disclosure or announcement shall notify the other parties at least 24 hours
before such disclosure or announcement is expected to be made and allow review
and input as to the form and content of the same.
9.4 BROKERS AND FINDERS FEES. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee incurred by
such party in connection with the transactions contemplated by this Agreement.
9.5 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters involving the
Shareholders arising out of the Shareholders' ownership of the Corporations
prior to the Effective Time, including matters relating to tax returns and any
tax audits, appeals, claims or litigation with respect to such tax returns or
the preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
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Corporations for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to retaining
information and documents which relate to such matters.
9.6 SHORT YEAR TAX RETURNS. After the Effective Time, the
Shareholders shall prepare at their sole cost and expense, all short year
federal, state, county, local and foreign tax returns required by law for the
period beginning with the first day of the applicable Corporation's fiscal year
in which the Effective Time occurs and ending with the Effective Time. Each such
return shall be prepared in a financially responsible and conservative manner
and drafts shall be delivered to WCI together with all necessary supporting
schedules within 120 days following the Effective Time for its approval, which
shall not be unreasonably withheld or delayed. The Shareholders shall each be
responsible for all taxes arising from the conversion of the Corporations from a
cash to accrual basis of reporting whether or not due on such returns or on the
first return filed by a Corporation for the period commencing after the
Effective Time. Each such return shall be prepared in a financially responsible
and conservative manner and drafts shall be delivered to the Shareholders
together with all necessary supporting schedules within 120 days following the
Effective Time for their approval, which shall not be unreasonably withheld or
delayed. At the time of the approval of the returns for each Corporation, the
Shareholders shall contemporaneously deliver to WCI checks payable to the
respective taxing authorities in amounts equal to the amount due from the
Shareholders under this section. WCI shall, upon receipt from the Shareholders,
cause the Corporations to sign tax returns and cause such returns to be timely
filed with the appropriate authorities.
9.7 MATTERS RELATED TO POOLING. The parties acknowledge that the
ability of WCI to account for the transactions contemplated herein as a "pooling
of interests" is of the
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essence of the contract. In addition to ▇▇▇ ▇▇. ▇▇, the SEC has issued
Accounting Series Release Nos. 130 and 135, as amended (collectively the "ASRs")
setting forth certain restrictions applicable to the availability of
"pooling-of-interests" accounting treatment in transactions of the type
contemplated by this Agreement. No Shareholder and no Pooling Affiliate of any
Corporation or WCI shall take any action subsequent to the Effective Time to
sell or in any other way reduce such person's risk (including, by way of example
and not limitation, engaging in any put, call, short-sale, straddle or similar
market transactions) relative to any shares of WCI Stock held at the Effective
Time or received pursuant to this Agreement in such a manner as would cause the
transactions contemplated hereby not to be accounted for as a "pooling of
interests," until such time as financial results covering at least 30 days of
post-Closing combined operations of WCI and the Surviving Corporations have been
published.
9.8 REPRESENTATION LETTER. Prior to the Closing, the Corporations
and the Shareholders shall deliver a representation letter to Ernst & Young LLP,
to enable Ernst & Young LLP to deliver the letter contemplated by Section 6.10.
The representation letter provided for in this section will relate to the
criteria for the "pooling of interests" method of accounting and their relevance
to the Mergers as they relate to the Corporations.
9.9 WCI SHAREHOLDERS' APPROVAL. WCI shall call a shareholders'
meeting to be held as soon as reasonably practicable after the definitive Proxy
Statement is first sent to WCI's Stockholders, for the purpose of voting upon
and obtaining the WCI Shareholder Approval.
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9.10 NASDAQ LISTING. WCI shall file, at its expense, at or before
the Effective Time, an additional listing application with Nasdaq with respect
to the Aggregate WCI Stock to be issued pursuant to the Mergers.
9.11 AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions herein provided
and subject to the fiduciary duties of the respective boards of directors of the
Corporations and WCI, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents or approvals of third parties required in order
to preserve material contractual relationships of WCI and the Corporations, all
necessary or appropriate waivers, consents and approvals and SEC "no-action"
letters to effect all necessary registrations, filings and submissions and to
lift any injunctive or other legal bar to the Mergers (and, in such case, to
proceed with the Mergers as expeditiously as possible). At or immediately after
the Closing, WCI, the Mergers Subs., the Corporations and the Shareholders shall
cause the Filed Plans to be filed with the Secretary of State of the State of
Washington.
(b) Without limitation of the foregoing, if required by
applicable law, each of WCI and the Corporations undertakes and agrees to file
as soon as practicable, and in any event prior to 15 days after the Signing
Date, a Notification and Report Form under the HSR Act with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department of Justice (the
"ANTITRUST DIVISION"). Each of WCI and the Corporations shall (i) respond as
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promptly as practicable to any inquiries received from the FTC or the Antitrust
Division for additional information or documentation and to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters and (ii) not extend any waiting
period under the HSR Act or enter into any agreement with the FTC or the
Antitrust Division not to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other parties hereto. Each party
shall promptly notify the other party of any communication to that party from
the FTC, the Antitrust Division, any State Attorney General or any other
governmental entity and permit the other party to review in advance any proposed
communication to any of the foregoing.
(c) In the event any litigation is commenced by any person
or entity relating to the transactions contemplated by this Agreement, including
any Acquisition Transaction, WCI shall have the right, at its own expense, to
participate therein, and the Corporations will not settle any such litigation
without the consent of WCI, which consent will not be unreasonably withheld.
9.12 NOTIFICATION OF CERTAIN MATTERS. Each of the Corporations,
WCI and the Shareholders agrees to give prompt notice to each other of, and to
use commercially reasonable efforts to remedy, (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at the Effective Time and (ii) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 9.12 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
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9.13 CORRECTIONS TO REGISTRATION STATEMENTS AND PROXY STATEMENT.
Prior to the Effective Time, each of the Corporations, WCI and the Shareholders
shall correct promptly any information provided by it to be used specifically in
the Registration Statements or the Proxy Statement that shall have become false
or misleading in any material respect and WCI shall take all steps necessary to
file with the SEC and (in the case of the Registration Statements) have declared
effective by the SEC any amendment or supplement to the Registration Statements
or Proxy Statement so as to correct the same and to cause the Registration
Statements or Proxy Statement as so corrected to be disseminated to the
stockholders of WCI, the Shareholders or to other persons, in each case to the
extent required by applicable law.
10. INDEMNIFICATION
10.1 INDEMNIFICATION COVENANTS.
(a) INDEMNITY BY THE SHAREHOLDERS. The Shareholders,
jointly and severally, as to each of the Corporations (in which they are
shareholders), severally, subject to the limitations set forth in Section 10.2,
covenant and agree that they will indemnify and hold harmless WCI, the Surviving
Corporations and their respective directors, officers and agents and their
respective successors and assigns (collectively the "WCI INDEMNITEES"), from and
after the date of this Agreement against any and all losses, damages,
assessments, fines, penalties, adjustments, liabilities, claims, deficiencies,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation), including, without limitation,
any "ENVIRONMENTAL SITE LOSSES" (as such term is hereinafter defined) resulting
from activities prior to the Closing Date (but not necessarily identified or
determined prior to the Closing Date), identified by a WCI Indemnitee in a
Claims Notice (as defined in Section 10.3(a)), or asserted by a WCI Indemnitee
in litigation commenced against the Shareholders
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provided that in either case any such Claims Notice shall be given or the
litigation commenced prior to the expiration of the applicable period set forth
in Section 10.2(c) (irrespective of the date of discovery), with respect to each
of the following contingencies (all, the "10.1(a) INDEMNITY EVENTS"):
(i) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the Shareholders or
the Corporations required to be fulfilled pursuant to the terms of this
Agreement on or before the Closing Date or any misrepresentation in or omission
from any Exhibit, Schedule, list, certificate, or other instrument furnished or
to be furnished to WCI pursuant to the terms of this Agreement, regardless of
whether, in the case of a breach of a representation or a warranty, WCI relied
on the truth of such representation or warranty or had any knowledge of any
breach thereof.
(ii) The design, development, installation,
construction or operation by the Corporations of any Environmental Site (as
hereinafter defined) during any period on or prior to the Effective Time, in
excess of the amount of liability with respect thereto, if any, set forth on
Part II of Schedule 3.8. As used in this Agreement, "ENVIRONMENTAL SITE" shall
mean any Facility, any UST and any other waste storage, processing, treatment or
disposal facility, and any other business site or any other real property owned,
leased, controlled or operated by a Corporation or by any predecessor thereof on
or prior to the Closing Date. As used in this Agreement, "ENVIRONMENTAL SITE
LOSSES" shall mean any and all losses, damages (including exemplary damages and
penalties), liabilities, claims, deficiencies, costs, expenses, and expenditures
(including, without limitation, expenses in connection with site evaluations,
risk assessments and feasibility studies) arising out of or required by an
interim or final judicial or administrative decree, judgment, injunction,
mandate, interim or final permit condition or
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restriction, cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any other remedial
action that is required to be undertaken under federal, state or local law in
respect of operating activities prior to the Closing Date on or affecting any
Environmental Site, including, but not limited to (x) any actual or alleged
violation of any Environmental Law or any other law or regulation respecting the
protection of the air, water and land prior to the Closing Date and (y) any
remedies or violations, whether by a private or public action, alleged or sought
to be assessed as a consequence, directly or indirectly, of any "RELEASE" (as
defined below) of pollutants (including odors) or Hazardous Substances from any
Environmental Site resulting from activities thereat prior to the Closing Date,
whether such Release is into the air, water (including groundwater) or land and,
in the case of any Release caused by defective design, development, construction
or operation of an Environmental Site, or other circumstance within the control
of the Shareholders, whether such Release arose before, during or after the
Closing Date from activities thereat prior to the Closing Date. The term
"RELEASE" as used herein means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the ambient environment. Notwithstanding anything in this
paragraph to the contrary, it is specifically understood and agreed that a
Release composed solely of Hazardous Substances contained in mixed municipal
solid waste lawfully disposed of in a landfill during the time a Corporation
owned and/or operated such landfill does not constitute an Environmental Site
Loss.
(iii) Any claim that the execution and delivery of
this Agreement and consummation of the transactions contemplated hereby did not
comply with or is otherwise in breach of the ▇▇▇▇▇ Agreement.
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(iv) All actions, suits, proceedings or demands
incident to any of the foregoing.
(b) INDEMNITY BY WCI. WCI, subject to the limitations set
forth in Section 10.2, covenants and agrees that it will indemnify and hold
harmless the Shareholders and their respective heirs, trustees, beneficiaries,
successors and assigns (collectively the "SHAREHOLDER INDEMNITEES"), from and
after the date of this Agreement against any and all losses, damages,
assessments, fines, penalties, adjustments, liabilities, claims, deficiencies,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation), identified by a Shareholder
Indemnitee in a Claims Notice (as defined in Section 10.3(a)), or asserted by a
Shareholder Indemnitee in litigation commenced against WCI provided that in
either case any such Claims Notice shall be given or the litigation commenced
prior to the expiration of the applicable period set forth in Section 10.2(c)
(irrespective of the date of discovery), with respect to each of the following
contingencies (all, the "10.1(b) INDEMNITY EVENTS"):
(i) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of WCI or any Merger
Sub. required to be fulfilled pursuant to the terms of this Agreement on or
before the Closing Date or any misrepresentation in or omission from any
Exhibit, Schedule, list, certificate, or other instrument furnished or to be
furnished to the Shareholders pursuant to the terms of this Agreement,
regardless of whether, in the case of a breach of a representation or warranty,
the Shareholders relied on the truth of such representation or warranty or had
any knowledge of any breach thereof.
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(ii) All actions, suits, proceedings or demands
incident to any of the foregoing.
10.2 LIMITATIONS ON INDEMNITIES.
(a) The obligations of the Shareholders to indemnify the
WCI Indemnitees, and the obligation of WCI to indemnify the Shareholder
Indemnitees, as provided in Section 10.1 shall be equal to the amount by which
the cumulative amount of all such losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs and expenses,
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation) and Environmental Site Losses with respect to any or
all 10.1(a) and 10.1(b) Indemnity Events exceed, in the case of the obligations
of the Shareholders, one million dollars ($1,000,000) in the aggregate with
respect to all of the Corporations; and in the case of the obligations of WCI,
one million dollars ($1,000,000); provided, that the amount of any obligation of
indemnity arising pursuant to Section 10.1(a)(iii) or pursuant to Section 10.1
with respect to any representation, warranty or covenant contained in Sections
2.1, 3.1 through 3.5; 3.22, 4.4, 4.5, 4.6, 4.7, 9.6 and 9.11 hereof shall not be
subject to the foregoing.
(b) The maximum amount which the Shareholder Indemnitees
can recover as a result of all 10.1(b) Indemnity Events, pursuant to the
provisions hereof for Claims shall not in the aggregate exceed fifty percent
(50%) of the Aggregate Merger Consideration, and the maximum amount that WCI can
recover as a result of all 10.1(a) Indemnity Events pursuant to the provisions
hereof for Claims relating to each Corporation shall not exceed the following
percentages of the Aggregate Merger Consideration: MDC-21%); AD-6.5%; DM-14%;
and TR-8.5%.
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(c) The obligations of the Shareholders under Section
10.1(a) with respect to all Claims, other than Claims arising under Section
10.1(a)(iii), shall expire unless a Claims Notice with all information required
by Section 10.3(a) is given or litigation is commenced by filing a complaint on
or prior to the earlier to occur of (irrespective of the date of discovery of
the Indemnity Event) (i) the first anniversary of the Effective Time; or (ii)
the date of issuance of the first audit report after the Effective Time of the
financial statements that contain the combined results of WCI and the Surviving
Corporations. The obligations of WCI under Section 10.1(b) with respect to all
Claims, other than Claims arising from breach of any covenants contained in
Sections 2.1, 4.4, 4.5, 4.6, 4.7 or the Common Stock Agreement, shall expire
unless a Claims Notice with all information required by Section 10.3(a) is given
or litigation is commenced by filing a complaint on or prior to the earlier to
occur of (irrespective of the date of discovery of the Indemnity Event) (i) the
first anniversary of the Effective Time; or (ii) the date of issuance of the
first audit report after the Effective Time of the financial statements that
contain the combined results of WCI and the Surviving Corporations.
(d) Except to the extent the same shall directly result in
a material increase in insurance premiums on a prospective basis, the
Shareholders shall not be required to indemnify any WCI Indemnitee, nor shall
WCI be required to indemnify any Shareholder Indemnitee, for any Claim to the
extent that such Claim has been reimbursed or is reimbursable through insurance
proceeds received or receivable by the Indemnitee. The Indemnitee shall allow
the Indemnifying Party to pursue such insurance proceeds and shall reasonably
cooperate with the Indemnifying Party in connection therewith. In the event the
insurance does not cover the full amount of the Claim, or in the event the Claim
shall directly result in an increase in insurance premiums on a prospective
basis, the Indemnifying Party shall remain liable for the
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difference in the insurance payment and the amount of the Claim, or in the case
of an increase in insurance premiums, the amount of such increase directly
attributable to the Claim, subject to the other limitations set forth herein.
(e) All claims for which indemnification payment shall be
due shall be deemed adjustments of the Aggregate Merger Consideration.
(f) Any obligation of indemnity of the Shareholders
established pursuant to the terms of this Agreement shall be expressed in dollar
amounts but shall be satisfied first by the delivery to WCI of a number of
shares of WCI Stock (properly endorsed, with signatures guaranteed by a national
bank, and with respect to which all transfer or other taxes have been paid),
each of which shall be deemed to have a value equal to its closing price as
quoted on the NASDAQ Stock Market on the Closing Date (or the last trading day
before the Closing Date if the Closing Date is not a trading day), adjusted for
any stock splits, stock dividends or other capital adjustments after the Closing
Date. To the extent the Shareholders then own an insufficient quantity of WCI
Stock to satisfy any obligation of indemnity of the Shareholders established
pursuant to the terms of this Section 10.2(f), such obligation of indemnity
shall be satisfied by the payment of cash by the Shareholders.
(g) The indemnification provisions of this Section 10
shall be the exclusive remedy for any Claim for monetary damages arising under
this Agreement or from the transactions contemplated hereby, except for Fraud,
provided that nothing in this Section 10 (including with out limitation Section
10.2(c)) shall be deemed to be the exclusive remedy or shall limit the remedies
of any party with respect to the breach or nonfulfillment by any party of any
obligation or covenant in this Agreement or any of the agreements contemplated
hereby or
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entered into pursuant hereto required to be satisfied or fulfilled after the
Closing Date. In addition, the parties shall be entitled to pursue any claims
for non-monetary relief to which they may be entitled at law or in equity.
10.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any WCI Indemnitee or Shareholder
Indemnitee as to which such WCI Indemnitee or Shareholder Indemnitee (an
"INDEMNITEE") may be entitled to indemnification hereunder, the Indemnitee shall
notify the Shareholders or WCI (as applicable collectively, the "INDEMNIFYING
PARTY") in writing thereof (the "CLAIMS NOTICE") within 60 days after (i)
receipt of written notice of commencement of any third party litigation against
such Indemnitee, (ii) receipt by such Indemnitee of written notice of any third
party claim pursuant to an invoice, notice of claim or assessment, against such
Indemnitee, or (iii) such Indemnitee becomes aware of the existence of any other
event in respect of which indemnification may be sought from the Indemnifying
Party (including, without limitation, any inaccuracy of any representation or
warranty or breach of any covenant). The Claims Notice shall describe the Claim
and the specific facts and circumstances in reasonable detail, and shall
indicate the amount, if known, or an estimate, if possible, of the losses that
have been or may be incurred or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including such
Claim) do not exceed the limit set forth in Section 10.2(b) at the time the
Claim is made, by the Indemnifying Party's own counsel. The Indemnitee may
participate, at the Indemnitee's own expense, in the defense of any
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Claim assumed by the Indemnifying Party. Without the written approval of the
Indemnitee, which approval shall not be unreasonably withheld, the Indemnifying
Party shall not agree to any compromise of a Claim defended by the Indemnifying
Party; provided, however, that if the Indemnitee does not consent to a
compromise and the ultimate indemnity obligation of the Indemnifying Party would
be greater than the amount of the proposed compromise, the Indemnifying Party's
total liability to the Indemnitee under this Section 10 shall be limited to the
amount of the proposed compromise and costs through that date.
(c) If, within twenty (20) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall not have
elected to defend the Claim, the Indemnitee shall have the right to assume
control of the defense and/or compromise of such Claim, and the costs and
expenses of such defense, including reasonable attorneys' fees, shall be added
to the Claim. The Indemnifying Party shall promptly, and in any event within ten
(10) days after demand therefor, reimburse the Indemnitee for the costs of
defending the Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall keep
the other party reasonably informed at all times of the progress and development
of its or their defense of and compromise efforts with respect to such Claim and
shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other and make available to each other and their
representatives all available relevant records or other materials required by
them for their use in defending, compromising or contesting any Claim. If the
Claims Notice is given prior to the expiration of the obligations of the
Indemnifying Party under Section 10.2(c), the failure to timely deliver a Claims
Notice or otherwise notify the Indemnifying Party of the commencement
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of such actions in accordance with this Section 10.3 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder except to the
extent that the Indemnifying Party establishes by competent evidence that it has
been prejudiced thereby.
(e) In the event both the Indemnitee and the Indemnifying
Party are named as defendants in an action or proceeding initiated by a third
party, they shall both be represented by the same counsel (on whom they shall
agree), unless such counsel, the Indemnitee, or the Indemnifying Party shall
determine that such counsel has a conflict of interest in representing both the
Indemnitee and the Indemnifying Party in the same action or proceeding and the
Indemnitee and the Indemnifying Party do not waive such conflict to the
satisfaction of such counsel.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties contained in this Agreement and in
any certificate, Exhibit or Schedule delivered pursuant hereto, or in any other
writing delivered pursuant to the provisions of this Agreement and the liability
of the party making such representations and warranties for breaches thereof
shall survive the consummation of the transactions contemplated hereby until the
later of the expiration of the period set forth in Section 10.2(c), or the final
resolution of all Claims for which a Claims Notice is given prior to the
expiration of the obligations of the Indemnifying Party under Section 10.2(c)
but only as to the representations and warranties relevant to such Claims,
provided that the representations and warranties shall survive until expiration
of the applicable statute of limitations with respect to any Claim based in
whole or in part on Fraud (as defined in Section 12.3) solely as to the portion
of such Claim found to be Fraud, provided further that the representations and
warranties of the Shareholders set forth in Sections 3.2, 3.3 and 3.4 shall
survive until the later of expiration of the applicable
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statute of limitations or the resolution of all Claims to the extent the
representations and warranties are relevant to such Claims. The parties hereto
in executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any person other than as specifically set forth herein or therein.
10.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF.
Except as otherwise provided herein, the Shareholders waive any right to require
any WCI Indemnitee to (i) proceed against any Corporation; (ii) proceed against
any other person; or (iii) pursue any other remedy whatsoever in the power of
any WCI Indemnitee.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
11.1 RESTRICTIVE COVENANTS. As to each Surviving Corporation, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the ultimate
purchaser of the Corporations' Stock, is and will be engaged in the same
business as the Corporations were prior to the Closing Date (the "BUSINESS");
(ii) the Shareholders and their Affiliates are intimately familiar with the
Business; (iii) the Business is currently conducted in the State of Washington
and WCI intends to continue the Business in Washington and intends, by
acquisition or otherwise, to expand the Business into other geographic areas of
Washington where it is not presently conducted; (iv) the Shareholders and their
Affiliates have had access to trade secrets of, and confidential information
concerning, the Business; (v) the agreements and covenants contained in this
Section 11.1 are essential to protect the Business and the goodwill being
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acquired; and (vi) the Shareholders and their Affiliates have the means to
support themselves and their dependents other than by engaging in a business
substantially similar to the Business and the provisions of this Section 11 will
not impair such ability. The Shareholders covenant and agree as set forth in
(a), (b) and (c) below with respect to the Corporations:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating five years thereafter (the "RESTRICTED PERIOD"), neither
the Shareholders nor any of their Affiliates shall, anywhere within the State of
Washington, (the "RESTRICTED AREA"), directly or indirectly, acting individually
or as the owner, shareholder, partner, or employee of any entity other than WCI
or one of its subsidiaries, (i) engage in the Business, including without
limitation in the operation of a solid waste collection, transporting, disposal
and/or composting business, transfer facility, recycling facility, materials
recovery facility or solid waste landfill; (ii) enter the employ of, or render
any personal services to or for the benefit of, or assist in or facilitate the
solicitation of customers for, or receive remuneration in the form of salary,
commissions or otherwise from, any business engaged in the same business as the
Business; (iii) as owner or lessor of real estate or personal property, rent to
or lease any facility, equipment or other assets to any business engaged in the
same business as the Business; or (iv) receive or purchase a financial interest
in, make a loan to, or make a gift in support of, any such business in any
capacity, including, without limitation, as a sole proprietor, partner,
shareholder, officer, director, principal, agent, trustee or lender; provided,
however, that (i) any of the Shareholders may own, directly or indirectly,
shares of stock in Land Recovery, Inc., a Washington corporation, or Resource
Investments, Inc., a Washington corporation, and may participate as a director,
officer or employee of either or both of such corporations, or (ii) any of the
Shareholders may own, directly or indirectly, solely as an investment,
securities of any business traded on any national
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securities exchange or NASDAQ, provided none of the Shareholders is a
controlling person of, or a member of a group which controls, such business and
further provided that the Shareholders do not, in the aggregate, directly or
indirectly, own 5% or more of any class of securities of such business.
(b) CONFIDENTIAL INFORMATION. During the Restricted Period
and thereafter, the Shareholders and their Affiliates shall keep secret and
retain in strictest confidence, and shall not use for the benefit of themselves
or others, all data and information relating to the Business ("CONFIDENTIAL
INFORMATION"), including without limitation, know-how, trade secrets, customer
lists, supplier lists, details of contracts, pricing policies, operational
methods, marketing plans or strategies, bidding information, practices, policies
or procedures, product development techniques or plans, and technical processes;
provided, however, that the term "CONFIDENTIAL INFORMATION" shall not include
information that (i) is or becomes generally available to the public other than
as a result of disclosure by the Shareholders or (ii) is general knowledge in
the solid waste handling and landfill business and not specifically related to
the Business or (iii) is disclosed to the Shareholders or their Affiliates by a
third party (other than an agent or representative of WCI) legally entitled to
disclose the same. Notwithstanding the foregoing, (y) the Shareholders may
disclose and discuss confidential information with their legal and tax advisors,
or as is required in connection with any legal proceedings, and the Shareholders
shall give WCI prior written notice of such disclosure at least forty-eight (48)
hours before such disclosure is made, if possible; and (z) during the time that
the Shareholders are employed by WCI or a Surviving Corporation, the
Shareholders may disclose confidential information as required in the ordinary
course and proper performance of their employment
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duties, to persons who need to know such information to perform services for or
receive services from WCI or the Surviving Corporation.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof) relating to the
Business, including such items stored in computer memories, on microfiche or by
any other means, made or compiled by or on behalf of the Shareholders or the
Corporations or made available to them relating to the Business, but excluding
any materials (other than the minute books of the Corporations) maintained by
any attorneys for the Corporations or the Shareholders prior to the Closing, are
and shall be the property of WCI and have been delivered or will be delivered or
made available to WCI at the Closing.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the Shareholders and their
Affiliates shall not solicit any employees of the Surviving Corporations to
leave the employ of the Surviving Corporations and join the Shareholders or any
Affiliate in any business endeavor owned or pursued by the Shareholders.
(e) NO DISPARAGEMENT. From and after the Closing Date,
none of the Shareholders shall, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate WCI or any of
its subsidiaries, or any officer, director or employee, or any product or
service or procedure of any such company whether or not such denigrating or
derogatory statements shall be true and are based on acts or omissions which are
learned by the Shareholders from and after the date hereof or on acts or
omissions which occur from and after the date hereof, or otherwise. A statement
shall be deemed denigrating or
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derogatory to any person or entity if it adversely affects the regard or esteem
in which such person or entity is held by investors, lenders or licensing,
rating, or regulatory entities. Without limiting the generality of the
foregoing, none of the Shareholders shall, directly or indirectly in any way in
respect of any such company or any such directors or officers, communicate with,
or take any action which is adverse to the position of any such company with any
person, entity or governmental or regulatory body or agency who or which has
dealings or prospective dealings with any such company or jurisdiction or
prospective jurisdiction over any such company. This paragraph does not apply to
the extent that testimony is required by legal process, provided that WCI has
received not less than five days' prior written notice of such proposed
testimony, if possible.
11.2 RIGHTS AND REMEDIES UPON BREACH. If the Shareholders or any
Affiliate breaches, or threatens to commit a breach of, any of the provisions of
Section 11.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have the following
rights and remedies, each of which rights and remedies shall be independent of
the others and severally enforceable, and each of which is in addition to, and
not in lieu of, any other rights and remedies available to WCI at law or in
equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to WCI and that money
damages would not provide an adequate remedy to WCI. Accordingly, in addition to
any other rights or remedies, WCI shall be entitled to injunctive relief to
enforce the terms of the Restrictive Covenants and to restrain the Shareholders
from any violation thereof.
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(b) ACCOUNTING. The right and remedy to require the
Shareholders to account for and pay over to WCI all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Shareholders as the result of any transactions constituting a breach of the
Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholders
acknowledge and agree that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions.
(d) BLUE-PENCILING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall reduce the
duration or scope of such provision, as the case may be, to the extent necessary
to render it enforceable and, in its reduced form, such provision shall then be
enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI and the
Shareholders intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of WCI and the Shareholders that such
determination not bar or in any way affect WCI's right to the relief provided
above in the courts of any other jurisdiction within the geographic scope of the
Restrictive Covenants as to breaches
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of such covenants in such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
11.3 TERMINATION DATE.
(a) If the Effective Date has not occurred by March 31,
1999, this Agreement shall be terminated on that date or thereafter (the
"TERMINATION DATE"), unless the Corporations have not then obtained all of the
consents required by Sections 6.7 and 6.8, in which event this Agreement shall
terminate 10 days after written notice from WCI to the Corporations or 10 days
after the later of (i) if any such consent is denied, the latest time for filing
any appeal or further appeal of such denial has lapsed; and (ii) if any such
consent is denied and such denial is appealed, the day the last appeal of such
denial has been dismissed, refused or decided adversely to the Corporation,
provided that the Termination Date shall, at the option of WCI, be extended to
May 31, 1999, if the ▇▇▇▇▇▇ Trust Approval has not been obtained on or before
March 31, 1999.
(b) The Corporations and the Shareholders shall have the
right to terminate this Agreement:
(i) Upon a breach of a representation or warranty
of WCI or the Merger Subs. contained in this Agreement which has not been cured
in all material respects and which has had or is likely to have a Material
Adverse Effect and is incapable of being satisfied by the Termination Date;
(ii) If one or more of the Mergers are enjoined by
a final, unappealable court order not entered at the request or with the support
of any Corporation
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and if the Corporation against which such order is entered shall have used
reasonable efforts to prevent the entry of such order;
(iii) If WCI (A) fails to perform in any material
respect any of its covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written notice of such
default specifying such default in reasonable detail is given to WCI by the
Corporation; or
(iv) If WCI fails to obtain the WCI Shareholders
Approval prior to January 31, 1999.
(c) WCI shall have the right to terminate this Agreement:
(i) Upon a breach of a representation or warranty
of the Corporation or the Shareholders contained in this Agreement which has not
been cured in all material respects and which has had or is likely to have a
material adverse effect and is incapable of being satisfied by the Termination
Date;
(ii) If one or more of the Mergers is enjoined by a
final, unappealable court order not entered at the request or with the support
of WCI and if WCI shall have used reasonable efforts to prevent the entry of
such order; or
(iii) If any of the Corporations or the
Shareholders (A) fails to perform in any material respect any of its, his or her
covenants in this Agreement and (B) does not cure such default in all material
respects within 30 days after written notice of such default specifying such
default in reasonable detail is given to such person by WCI; or
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(iv) If WCI fails to obtain the WCI Shareholders
Approval prior to January 31, 1999.
(d) WCI and the Corporations shall have the right to
terminate the Agreement by mutual consent.
11.4 EFFECT OF TERMINATION. On termination of this Agreement, the
transactions contemplated herein shall forthwith be abandoned and all continuing
obligations and liabilities of the parties under or in connection with this
Agreement shall be terminated and of no further force or effect; provided,
however, that subject to Section 11.5 nothing herein shall relieve any party
from liability for any misrepresentation, breach of warranty or breach of
covenant contained in this Agreement prior to such termination or release any
party from the obligations under Sections 5.2 and 9.3; and provided further
that, if the reason for such termination is the failure of the conditions set
forth in Sections 6.20, 6.21, or 7.17, then the Shareholders and the
Corporations shall not have any liability to WCI or any other party to this
Agreement.
11.5 CORRECTIONS TO SCHEDULES. If, up to fifteen (15) days prior
to the Closing Date, the Shareholders or the Corporations determine that any
Schedule, document or other information provided to WCI or its agents by the
Shareholders or the Corporations is incomplete, inaccurate or misleading, the
Shareholders or the Corporations shall promptly give WCI written notice and
correct such Schedule, document or information. In addition, the Corporations
shall provide WCI with such additional information in their control concerning
such correction as WCI shall reasonably request. If such correction does not
represent a material change in the information previously provided to WCI, WCI
shall not have the right to terminate
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this Agreement based upon such correction. If such correction does represent a
material change in the information previously provided WCI or its agents and WCI
determines that such correction is unacceptable, such correction shall be deemed
to be a failure of the conditions set forth in Section 6.1 and WCI shall have
the right to terminate this Agreement within five (5) days after receipt of the
corrected information; provided that the Corporations shall first have an
opportunity to cure such matter to the reasonable satisfaction of WCI prior to
the later of November 30, 1998 or the then scheduled Closing Date. Upon any such
termination, the transactions contemplated herein shall forthwith be abandoned
and all continuing obligations and liabilities of the parties under or in
connection with this Agreement shall be terminated and of no further force or
effect and, notwithstanding Section 11.4, the Shareholders and the Corporations
shall not have any liability to WCI or any other party to this Agreement.
12. GENERAL
12.1 ADDITIONAL CONVEYANCES. Following the Closing, the
Shareholders and WCI shall each deliver or cause to be delivered at such times
and places as shall be reasonably agreed upon such additional instruments as
WCI, the Surviving Corporations or the Shareholders may reasonably request for
the purpose of carrying out this Agreement. The Shareholders will cooperate with
WCI and/or the Surviving Corporations on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in connection
with any actions, proceedings or disputes of any nature with respect to matters
pertaining to all periods prior to the date of this Agreement. WCI or the
Surviving Corporations will reimburse the Shareholders for all reasonable
expenses incurred by them in providing such information, testimony, evidence or
assistance.
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12.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI and
the Surviving Corporations and the heirs, legal representatives or assigns of
the Shareholders; provided, however, that any such assignment shall be subject
to the terms of this Agreement and shall not relieve the assignor of its or his
responsibilities under this Agreement.
12.3 NO WAIVER RELATING TO CLAIMS FOR FRAUD. Notwithstanding
anything herein to the contrary, the liability of any party under Section 10
shall be in addition to, and not exclusive of any other liability that such
party may have at law or equity based on such party's fraud, fraudulent
inducement or intentional misrepresentation or concealment ("FRAUD").
Notwithstanding anything herein to the contrary, none of the provisions set
forth in this Agreement, including, but not limited to, the provisions set forth
in Sections 10.1 or 10.2 shall be deemed a waiver by any party to this Agreement
of any right or remedy which such party may have at law or equity based on any
other party's Fraud, nor shall any such provisions limit, or be deemed to limit,
(a) the amounts of recovery sought or awarded in any such claim for Fraud, (b)
the time period during which such a claim for Fraud may be brought, or (c) the
recourse which any such party may seek against another party with respect to
such a claim for Fraud.
12.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.5 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage pre-paid registered
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or certified U.S. mail, return receipt requested, to the addresses designated
below or such other addresses as may be designated in writing by notice given
hereunder, and shall be effective upon personal delivery or facsimile
transmission thereof or upon delivery by registered or certified U.S. mail or
one business day following deposit with an air courier service:
If to the Shareholders: At their respective addresses set forth
on Schedule 3.2
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.6 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule
to this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature of the
matter disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
12.7 KNOWLEDGE. Wherever reference is made in this Agreement to
the "KNOWLEDGE" of the Shareholders, such term means the actual knowledge of the
Shareholders or any knowledge which should have been obtained by the
Shareholders from information and documentation in his, her or its possession or
control. In the case of a Shareholder that is a trust, the term "knowledge"
means the actual knowledge of the trustee or trustees of the trust or any
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knowledge which should have been obtained by the trustee or trustees from
information and documentation in his, her or its possession or control. Wherever
reference is made in this Agreement to the "knowledge" of any of the
Corporations, such term means the actual knowledge of any of the Shareholders,
or any current officer, director or management employee of any Corporation, or
any knowledge which should have been obtained by such person from information
and documentation in his, her or its possession or control.
12.8 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporations or the Shareholders on the
other hand relating to the interpretation of this Agreement or to the
transactions contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and expenses incurred by
the prevailing party, as awarded by the court. Such award shall include
post-judgment attorney's fees and costs.
12.9 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington without regard
to its conflict of laws provisions. Any action or proceeding relating to this
Agreement or the transactions contemplated hereby shall be instituted in a state
or federal court located in Kings County, Washington. The parties hereby consent
to the jurisdiction of such courts and waive any objection to venue laid
therein.
12.10 PAYMENT OF FEES AND EXPENSES. Whether or not the
transactions herein contemplated shall be consummated, each party hereto will
pay its own fees, expenses and disbursements incurred in connection herewith and
all other costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the
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case of the Shareholders, any such fees, expenses and disbursements paid or
accrued by, or charged to, the Corporations); provided that WCI shall pay for
the audit of the Corporations by Ernst & Young LLP as contemplated by Section
3.7 and shall pay all filing fees under the Act, the Exchange Act and the HSR
Act.
12.11 INCORPORATION BY REFERENCE. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
12.12 CAPTIONS. The captions in this Agreement are for
convenience only and shall not be considered a part hereof or affect the
construction or interpretation of any provisions of this Agreement.
12.13 NUMBER AND GENDER OF WORDS. Whenever the singular number is
used herein, the same shall include the plural where appropriate, and shall
apply to all of such number, and to each of them, jointly and severally, and
words of any gender shall include each other gender where appropriate.
12.14 ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the entire Agreement and understanding between the Corporations, the
Shareholders, the Merger Subs. and WCI and supersedes any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement
may be modified or amended only by a written instrument executed by the
Corporations, the Shareholders and WCI acting through its officers, thereunto
duly authorized by its Board of Directors.
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12.15 WAIVER. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
12.16 CONSTRUCTION. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Unless expressly set forth otherwise, all
references herein to a "day" are deemed to be a reference to a calendar day. All
references to "business day" mean any day of the year other than a Saturday,
Sunday or a public or bank holiday in Washington or California. Unless expressly
stated otherwise, cross-references herein refer to provisions within this
Agreement and are not references to the overall transaction or to any other
document.
13. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
10.1(a) Indemnity Events........................................................Section 7.1(a)
10.1(b) Indemnity Events...........................................................Section 7.1
Acquired Operations................................................................Section 2.2
Acquisition Transaction............................................................Section 5.7
Act................................................................................Section 2.1
AD.....................................................................................Parties
Affiliate.........................................................................Section 3.11
Affiliate Letter................................................................Section 8.2(f)
Aggregate Adjusted Purchase Price..................................................Section 2.1
Aggregate Merger Consolidation.....................................................Section 2.1
Aggregate WCI Stock................................................................Section 2.1
Antitrust Division.............................................................Section 9.11(b)
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APB No. 16.........................................................................Section 5.2
Balance Sheet Date.................................................................Section 3.7
Balance Sheet Date Current Assets.................................................Section 3.22
Balance Sheet Date Current Liabilities............................................Section 3.22
Balance Sheet Date Debt...........................................................Section 3.22
▇▇▇▇▇▇ Trust..........................................................................Recitals
▇▇▇▇▇▇ Trust Approval .............................................................Section 3.4
Business...........................................................................Section 8.1
business day......................................................................Section 9.14
Cash............................................................................Section 2.1(a)
Claim..............................................................................Section 7.3
Claims Notice......................................................................Section 7.3
Claim Section..................................................................Section 10.3(a)
Closing............................................................................Section 1.7
Closing Date.......................................................................Section 1.7
Closing Price......................................................................Section 2.1
Code..............................................................................Section 3.36
Collection Franchises.............................................................Section 3.10
Common Stock Agreement..........................................................Section 8.1(f)
Confidential Information...........................................................Section 8.1
Contingent Merger Consideration....................................................Section 2.2
Contingent Shares..................................................................Section 2.2
Corporate Property................................................................Section 3.12
Corporations...........................................................................Parties
Corporations' Certificates.........................................................Section 2.4
Corporations Shareholders Approval.................................................Section 3.4
Corporations' Stock...................................................................Recitals
Day...............................................................................Section 9.14
Disposal Agreement................................................................Section 6.19
DM.....................................................................................Parties
▇▇▇▇▇▇.................................................................................Parties
Effective Time.....................................................................Section 1.2
Employment Agreement............................................................Section 8.1(b)
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Environmental Laws................................................................Section 3.24
Environmental Site................................................................Section 10.1
Environmental Site Losses.........................................................Section 10.1
ERISA.............................................................................Section 3.17
Exchange Act.......................................................................Section 4.5
Facilities........................................................................Section 3.10
Facility..........................................................................Section 3.10
Filed Plans........................................................................Section 1.2
Financial Statements...............................................................Section 3.7
FTC............................................................................Section 9.11(b)
Fraud.............................................................................Section 12.3
Golden Parachute..................................................................Section 3.17
Golden Parachute Payment..........................................................Section 3.17
Governmental Permits..............................................................Section 3.10
Hazardous Substance...............................................................Section 3.24
HSR Act...........................................................................Section 3.10
Indemnifying Party................................................................Section 10.3
Indemnitee........................................................................Section 10.3
▇▇▇▇▇▇▇................................................................................Parties
Knowledge.........................................................................Section 3.34
Laws..............................................................................Section 3.24
LeMay Agreement ..................................................................Section 7.13
Material Adverse Effect...........................................................Section 3.21
MDC....................................................................................Parties
Merger................................................................................Recitals
Merger Sub. I..........................................................................Parties
Merger Sub. II.........................................................................Parties
Merger Sub. III........................................................................Parties
Merger Sub. IV.........................................................................Parties
Merger Subs............................................................................Parties
multi-employer plan...............................................................Section 3.17
▇▇▇▇▇▇ Trust...........................................................................Parties
Nasdaq.............................................................................Section 4.5
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occurrence........................................................................Section 3.15
Permitted Liens...................................................................Section 3.12
Pooling Affiliates.................................................................Section 3.3
Proxy Statement...................................................................Section 3.35
Recipient.........................................................................Section 3.17
Records, Notifications and Reports................................................Section 3.10
Registration Statements.........................................................Section 2.1(b)
Release...........................................................................Section 10.1
Representations and Warranties....................................................Section 10.4
Required Governmental Consents....................................................Section 3.10
Restricted Area...................................................................Section 11.1
Restricted Period.................................................................Section 11.1
Restrictive Covenants.............................................................Section 11.2
SEC................................................................................Section 4.6
Shareholder Indemnitees...........................................................Section 10.1
Shareholders...........................................................................Parties
Signing Date.......................................................................Section 1.2
Surviving Corporation..............................................................Section 1.1
10.1(a) Indemnitee Events......................................................Section 10.1(a)
10.1(b) Indemnitee Events......................................................Section 10.1(b)
Termination Date...............................................................Section 11.3(a)
Title Reports..................................................................Section 3.12(a)
TR.....................................................................................Parties
Union Contracts................................................................Section 3.17(a)
UST...............................................................................Section 3.26
Washington Law.....................................................................Section 1.1
WCI....................................................................................Parties
WCI Indemnitees....................................................................Section 7.1
WCI SEC Documents..................................................................Section 4.6
WCI Shareholders Approval..........................................................Section 4.3
WCI Stock.............................................................................Recitals
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by persons thereunto duly authorized as of the date first above
written.
THE CORPORATIONS:
▇▇▇▇▇▇'▇ DISPOSAL COMPANY, INC.
By: __________________________________
Name: __________________________________
Its: __________________________________
AMERICAN DISPOSAL COMPANY, INC.
By: __________________________________
Name: __________________________________
Its: __________________________________
▇.▇. DISPOSAL CO., INC.
By: __________________________________
Name: __________________________________
Its: __________________________________
RECYCLING COMPANY, INC.
By: __________________________________
Name: __________________________________
Its: __________________________________
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WCI:
WASTE CONNECTIONS, INC.
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
MERGER SUB. I:
WCI Acquisition Corporation I
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
MERGER SUB. II:
WCI Acquisition Corporation II
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
MERGER SUB. III:
WCI Acquisition Corporation III
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
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MERGER SUB. IV:
WCI Acquisition Corporation IV
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
THE SHAREHOLDERS:
THE ▇▇▇▇▇▇ TRUST UTA
dated August 5, 1993
________________________________________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
________________________________________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
________________________________________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
________________________________________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
In accordance with Section 5.8 of the foregoing Agreement and Plan of Merger,
the undersigned shareholder of ▇.▇. Disposal Co., Inc. and Tacoma Recycling
Company, Inc., hereby approves the transactions contemplated by such agreement
and agrees to be bound by all of the terms and conditions thereof, and upon
execution below shall be deemed a "Shareholder" for all purposes of the
foregoing Agreement and Plan of Merger.
Dated: _____________________________, 199___
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THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ REVOCABLE TRUST UTA dated August 5, 1993, as amended
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__________________________, Trustee
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__________________________, Trustee
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