EX-10.K
STOCK PURCHASE AGREEMENT
ANNEX A
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STOCK PURCHASE AGREEMENT
AMONG
▇▇▇▇▇▇▇ ENVIRONMENTAL SERVICES, INC.
AND
▇▇▇▇▇▇▇ INC.,
AND
▇▇▇▇▇▇▇ TRANSPORTATION, INC.
DATED AS OF
FEBRUARY 6, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND INTERPRETATION...................................... A-1
1.1 Definitions.............................................. A-1
1.2 Interpretation........................................... A-8
ARTICLE II
THE ACQUISITION..................................................... A-8
2.1 Sale and Purchase of Shares.............................. A-8
2.2 Consideration for Chem-Waste Shares and
Chem-Waste Intercompany Indebtedness................... A-8
2.3 Total Consideration Allocation........................... A-9
2.4 Cash Management Cut-Off.................................. A-9
2.5 Recurring Charges........................................ A-9
ARTICLE III
THE CLOSING AND RELATED MATTERS..................................... A-9
3.1 The Closing.............................................. A-9
3.2 Actions in Contemplation of Closing...................... A-9
3.3 Other Actions at the Closing............................. A-10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER............................ A-10
4.1 Organization of Seller and ▇▇▇▇▇▇▇....................... A-10
4.2 Authority Relative to this Agreement..................... A-10
4.3 Status of Chem-Waste Shares.............................. A-11
4.4 No Violations............................................ A-11
4.5 Consents and Approvals................................... A-11
4.6 Acquired Subsidiaries.................................... A-11
4.7 No Other Subsidiaries.................................... A-12
4.8 Conduct of Hazardous and Industrial
Waste Business......................................... A-12
4.9 SEC Filings.............................................. A-12
4.10 Seller Financial Statements.............................. A-12
4.11 Absence of Certain Changes............................... A-13
4.12 No Undisclosed Liabilities............................... A-13
4.13 Acquired Subsidiary Properties........................... A-13
4.14 Taxes and Tax Returns.................................... A-13
4.15 Litigation............................................... A-13
4.16 Environmental Matters.................................... A-14
4.17 Governmental Licenses and Permits;
Compliance with Laws................................... A-15
4.18 Labor Matters............................................ A-15
4.19 Employee Benefit Plans................................... A-16
4.20 Brokers.................................................. A-17
4.21 Material Contracts....................................... A-17
4.22 Bank Accounts............................................ A-18
4.23 Officers and Directors................................... A-18
4.24 Condition and Sufficiency of Assets...................... A-18
4.25 Affiliate Transactions................................... A-18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER......................... A-19
5.1 Organization of Purchaser Parties........................ A-19
5.2 Authority Relative to this Agreement..................... A-19
5.3 Status of Purchaser Common Shares........................ A-19
5.4 No Violations............................................ A-19
5.5 Consents and Approvals................................... A-20
5.6 Purchaser Capitalization................................. A-20
5.7 Purchaser Subsidiaries................................... A-20
5.8 Conduct of Hazardous and Industrial Waste Business....... A-21
5.9 SEC Filings.............................................. A-21
5.10 Purchaser Financial Statements........................... A-21
5.11 Absence of Certain Changes............................... A-21
5.12 No Undisclosed Liabilities............................... A-21
5.13 Purchaser Properties..................................... A-21
5.14 Taxes and Tax Returns.................................... A-21
5.15 Litigation............................................... A-22
5.16 Environmental Matters.................................... A-22
5.17 Governmental Licenses and Permits; Compliance with Laws.. A-24
5.18 Labor Matters............................................ A-24
5.19 Employee Benefit Plans................................... A-24
5.20 Financing................................................ A-25
5.21 Brokers.................................................. A-25
5.22 Material Contracts....................................... A-26
5.23 Bank Accounts............................................ A-26
5.24 Officers and Directors................................... A-26
5.25 Affiliate Transactions................................... A-27
5.26 Condition and Sufficiency of Assets...................... A-27
ARTICLE VI
SELLER AND ▇▇▇▇▇▇▇ COVENANTS PENDING CLOSING........................ A-27
6.1 Conduct of Business...................................... A-27
6.2 Forbearance by the Acquired Subsidiaries................. A-27
6.3 Access and Information................................... A-28
6.4 Supplemental Information................................. A-29
6.5 Confidentiality.......................................... A-29
6.6 Consummation of Acquisition.............................. A-29
6.7 Access for Environmental Report.......................... A-29
6.8 Acquisitions of Purchaser Common Stock................... A-29
6.9 Competition.............................................. A-29
ARTICLE VII
PURCHASER COVENANTS PENDING CLOSING................................. A-30
7.1 Conduct of Business...................................... A-30
7.2 Forbearance by Purchaser and its Subsidiaries............ A-30
7.3 Access and Information................................... A-31
7.4 Supplemental Information................................. A-31
7.5 Purchaser Stockholders' Meeting and Restated and
Amended Certificate of Incorporation................... A-32
7.6 Confidentiality.......................................... A-32
7.7 Consummation of Acquisitions............................. A-32
7.8 Letter from Stockholders................................. A-32
7.9 Access for Environmental Report.......................... A-32
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ARTICLE VIII
MUTUAL CONDITIONS................................................... A-33
8.1 No Adverse Proceedings................................... A-33
8.2 HSR Waiting Period....................................... A-33
8.3 Purchaser Stockholder Approval........................... A-33
8.4 Competition Act Matters.................................. A-33
8.5 Westinghouse Debt Retirement............................. A-33
8.6 Reorganization........................................... A-33
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF PURCHASER.............................. A-34
9.1 Representations True at Closing.......................... A-34
9.2 No Adverse Changes....................................... A-34
9.3 Investment Canada Act.................................... A-34
9.4 Competition Act Matters.................................. A-34
9.5 Acquisition Financing.................................... A-34
9.6 Opinion of Financial Advisor............................. A-34
ARTICLE X
CONDITIONS TO SELLER'S AND ▇▇▇▇▇▇▇'▇ OBLIGATIONS.................... A-34
10.1 Representations True at Closing.......................... A-34
10.2 No Adverse Changes....................................... A-35
10.3 Investment Canada Act.................................... A-35
10.4 Competition Act Matters.................................. A-35
10.5 Waiver of Rights Plan.................................... A-35
10.6 Acquisition Financing.................................... A-35
ARTICLE XI
ADDITIONAL AGREEMENTS............................................... A-35
11.1 HSR Act Filings.......................................... A-35
11.2 Competition Act Filings.................................. A-35
11.3 Investment Canada Act Filings............................ A-35
11.4 Other Consents and Approvals............................. A-36
11.5 Publicity................................................ A-36
11.6 Expenses................................................. A-36
11.7 Securities Law Matters................................... A-36
11.8 Rule 144 Reports......................................... A-37
11.9 Seller Board Representation.............................. A-37
11.10 Seller Guaranties........................................ A-37
11.11 Guarantees of Performance of Retained Subsidiaries....... A-38
11.12 Pinewood Security........................................ A-38
11.13 Employees................................................ A-39
11.14 Purchaser Stock Option Plan.............................. A-39
11.15 Affiliate Transactions and Business Combination.......... A-39
11.16 Directors and Officers................................... A-39
ARTICLE XII
TAX MATTERS......................................................... A-40
12.1 Future Tax Returns....................................... A-40
12.2 Tax Covenants............................................ A-40
12.3 Other Tax Matters, Post-Closing Cooperation.............. A-41
12.4 Tax Controversies........................................ A-42
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ARTICLE XIII
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES............... A-43
13.1 Nature of Statements..................................... A-43
13.2 Survival of Representations, Warranties and Covenants.... A-43
ARTICLE XIV
INDEMNIFICATION..................................................... A-43
14.1 Indemnification by ▇▇▇▇▇▇▇ and Seller.................... A-43
14.2 Indemnification by Purchaser............................. A-44
14.3 Third Party Claim........................................ A-44
14.4 Claims Between the Parties............................... A-45
ARTICLE XV
AMENDMENT AND TERMINATION........................................... A-46
15.1 Amendment................................................ A-46
15.2 Waiver................................................... A-46
15.3 Termination.............................................. A-46
15.4 Consequences of Termination.............................. A-46
ARTICLE XVI
GENERAL PROVISIONS.................................................. A-47
16.1 Non-Business Days........................................ A-47
16.2 Notices.................................................. A-47
16.3 Entire Agreement......................................... A-47
16.4 Assignment; Binding Effect............................... A-47
16.5 Counterparts............................................. A-47
16.6 Governing Law; Jurisdiction.............................. A-47
16.7 Severability of Provisions............................... A-47
16.8 Specific Performance..................................... A-47
16.9 Joint Drafting........................................... A-48
16.10 Captions................................................. A-48
16.11 No Third-Party Beneficiaries............................. A-48
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), is made as of February 6,
1997, among ▇▇▇▇▇▇▇ Environmental Services, Inc., a Delaware corporation
("Purchaser"), ▇▇▇▇▇▇▇ Inc., a Canadian corporation ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇
Transportation, Inc., a Delaware corporation and indirect wholly-owned
subsidiary of ▇▇▇▇▇▇▇ ("Seller").
W I T N E S S E T H:
WHEREAS, Seller, exclusively through ▇▇▇▇▇▇▇ Chem-Waste, Inc., a Delaware
corporation and a wholly owned subsidiary of Seller ("Chem-Waste") and
Chem-Waste's direct and indirect subsidiaries, is engaged in the Hazardous and
Industrial Waste Business in the United States and Canada; and
WHEREAS, Seller wishes to sell all of its United States and Canadian
Hazardous and Industrial Waste Business; and
WHEREAS, Purchaser, through the acquisition of all of the issued and
outstanding capital stock of Chem-Waste, wishes to purchase all of the United
States and Canadian Hazardous and Industrial Waste Business of Seller;
NOW, THEREFORE, Purchaser, Seller and ▇▇▇▇▇▇▇ (collectively, the "Parties")
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement:
"Acquired Canadian Subsidiaries" means those Acquired Subsidiaries
which are incorporated under the laws of Canada or a Canadian province.
"Acquired Subsidiaries" means (i) Chem-Waste and (ii) the direct and
indirect wholly owned Subsidiaries of Chem-Waste listed and identified on
the attached Schedule I, collectively.
"Acquired U.S. Subsidiaries" means those Acquired Subsidiaries which
are incorporated under the laws of a state of the United States.
"Acquisition" means the acquisition of the Chem-Waste Shares and the
Chem-Waste Intercompany Indebtedness.
"Additional Purchaser Common Shares" means shares of Purchaser Common
Stock which may be issued after the Closing pursuant to the terms of the
Purchaser Convertible Debenture.
"Advance Ruling Certificate" means an advance ruling certificate
issued by the Competition Act Director under Section 102 of the Competition
Act.
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person, with the terms
"control" and "controlled" meaning for purposes of this definition the
power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities or
partnership or other ownership interests, or by contract or otherwise.
"Ancillary Agreements" means, collectively, the Registration Rights
Agreement and the Purchaser Convertible Debenture.
"Antitrust Division" means the Antitrust Division of the United States
Department of Justice.
A-1
"Bond Indebtedness" has the meaning specified in Section 2.2.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in Toronto, Ontario or New York, New York are
authorized or obligated to close.
"Chem-Waste Group Financial Statements" means all financial statements
of the Acquired Subsidiaries delivered to Purchaser under Section 4.10.
"Chem-Waste Group Taxes" means any and all Taxes incurred or imposed
on the Seller Group arising in a Pre-Closing Tax Period including Seller's
post-closing Taxes.
"Chem-Waste Intercompany Indebtedness" has the meaning specified in
Section 2.1.
"Chem-Waste Shares" means all of the issued and outstanding capital
stock of Chem-Waste, which stock as of the date hereof consists solely of
common shares, no par value per share, that are 100% owned by Seller.
"Closing" has the meaning specified in Section 3.1.
"Closing Date" means (i) the fifth Business Day immediately following
the earliest date upon or by which (a) the waiting period under the HSR Act
shall have expired or otherwise been terminated, (b) either (I) the
Competition Act Director shall have issued and not subsequently withdrawn
or threatened to withdraw, an Advance Ruling Certificate relating to the
Acquisition or (II) Purchaser shall have received the advice from the
Competition Act Director specified in Section 9.4(ii), (c) the ICA Minister
shall have made the determination, or shall have been deemed to have made
the determination, specified in Section 9.3, and (d) all other conditions
to the respective obligations of the Parties set forth in Articles VIII, IX
and X shall have been satisfied or waived, or (ii) such other date as
Purchaser and Seller may agree.
"Closing Price" has the meaning specified in Section 12.2.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the regulations and rulings of the Internal Revenue Service
promulgated thereunder.
"Commitment Letter" means the letter dated December 10, 1996,
addressed to ▇▇▇▇▇▇▇, which can be assigned to Purchaser, relating to
senior credit facilities in an aggregate principal amount of $650,000,000
to be provided by The Toronto-Dominion Bank, in connection with, and
conditioned upon consummation of, the Acquisition, subject to the
satisfaction of other conditions and upon the terms set forth therein
including attachments thereto.
"Competition Act" means the Canadian Federal Competition Act, R.S.C.
1985, c. C-34, as amended.
"Competition Act Director" means the Canadian Director of
Investigation and Research appointed under the Competition Act.
"Confidentiality Agreement" means the confidentiality agreement dated
as of November 1, 1996, as amended, between Purchaser and ▇▇▇▇▇▇▇.
"Damages" means all obligations, claims, liabilities, damages,
penalties, deficiencies, losses, investigations, proceedings, judgments,
fines, and reasonable costs and expenses (including, but not limited to,
reasonable costs and expenses incurred in connection with the performance
of obligations, interest, bonding and court costs and attorneys',
accountants', engineers', consultants' and investigators' fees and
disbursements) incurred in connection with any investigation or defense of
any of the foregoing.
"Environmental Claim" means any claim by a Person alleging or imposing
actual or potential liability (including potential liability for any
investigatory cost, containment or oversight cost, control cost, prevention
cost, remediation cost, cleanup cost, governmental response cost, natural
resources damage, toxic tort claim, property damage, personal injury or
penalty) arising out of, based on, resulting from or relating to (i) the
presence, storage, transport, disposal, use,
A-2
discharge, release or threatened release of any Hazardous Substance at any
location, whether or not owned by the Person against which the claim is
made, or (ii) circumstances forming the basis for any liability under, or
any violation or alleged violation of, any Environmental Law.
"Environmental Laws" means all federal, foreign, state, provincial,
municipal and local statutes, codes, regulations, rules, ordinances and
other laws relating to the protection, preservation or conservation of the
environment and to public or worker health and safety, as amended or
reauthorized, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 422
U.S.C. ss.9601 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss.6901 et seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C. ss.11001 et seq., the Clean Air Act, 42 U.S.C.
ss.7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. ss.1251
et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq., the
Safe Drinking Water Act, 42 U.S.C. ss.300f et seq., and the Occupational
Safety and Health Act, 29 U.S.C. Section651 et seq.
"Environmental Liabilities" means any and all costs (including
remedial, removal, response, abatement, cleanup, investigative and/or
monitoring costs), damages, settlements, expenses (including charges and
assessments, and expenses and costs of investigating, preparing or
defending any action or proceeding), liens, penalties, fines, prejudgment
and post-judgment interest, court costs and attorneys' fees incurred or
imposed (i) pursuant to any agreement, order, notice of responsibility,
directive (including requirements embodied in Environmental Laws),
injunction, judgment or similar documents (including settlements)
attributable to, connected with or arising out of or under, Environmental
Laws or (ii) pursuant to any claim by a Governmental Entity or other entity
or Person for personal injury, property damage, damage to natural
resources, remediation or response costs arising out of, connected with or
attributable to, any Hazardous Substance.
"Environmental Permits" means all permits, licenses, registrations,
certifications, exemptions, approvals and other authorizations of or by any
Governmental Entity pursuant to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any Person, any trade or
business, whether or not incorporated, which together with that Person
would be deemed a single employer within the meaning of Section 4001 of
ERISA or Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"FTC" means the United States Federal Trade Commission.
"Governmental Entity" means any U.S., Canadian or foreign, state,
territorial, federal, provincial or local court, executive office,
legislature, governmental agency or ministry, commission, or
administrative, regulatory or self-regulatory authority or instrumentality.
"Hazardous and Industrial Waste Business" means the transportation,
treatment, storage and disposal of Hazardous Substances and industrial
wastes as presently conducted by the Acquired Subsidiaries, but excluding
the coal combustion by-product management services conducted by the
Retained Subsidiaries.
"Hazardous Substances" means chemicals, pollutants, contaminants,
wastes (including ambient wastes, hazardous wastes and liquid industrial
wastes), or other substances (including toxic, deleterious or hazardous
substances), as defined, listed or regulated pursuant to Environmental
Laws, including, asbestos or asbestos-containing materials, polychlorinated
biphenyls, pesticides and oils, and petroleum and petroleum products (as
those exemplary terms are defined in or regulated under the United States
National Oil and Hazardous Substances
A-3
Pollution Contingency Plan, 40 C.F.R. ss.300.1 et seq. and other
Environmental Laws).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"ICA Minister" means the Minister responsible for administering the
Investment Canada Act.
"Income Tax Act" means the Canadian federal Income Tax Act, R.S.C.
1985 c. 1, as amended.
"Indebtedness" means with respect to any Person at any date, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), (ii) any other indebtedness of such Person which is
evidenced by a note, bond, debenture, letter of credit or similar
instrument, (iii) all obligations of such Person with respect to
guarantees, (iv) all obligations of such Person under leases of property
which are required to be capitalized under U.S. GAAP, (v) all obligations
of such Person in respect of acceptances issued or created for the account
of such Person (other than endorsements in the ordinary course of
business), (vi) all obligations of such Person in respect of interest rate
swaps or other interest rate hedging products or foreign currency exchange
agreements or exchange rate hedging arrangements, (vii) all obligations of
such Person in respect of reimbursement obligations under letters of
credit, and (viii) all liabilities of the type referred to in clauses (i)
through (vii) above that are secured by any lien, charge, security interest
or encumbrance on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof.
"Intercompany Indebtedness" means, at any date, all amounts, other
than Recurring Charges, owed on that date by an Acquired Subsidiary, or any
obligation of an Acquired Subsidiary, contingent or otherwise on that date,
to Seller or any other member of the Seller Group other than the Acquired
Subsidiaries.
"Investment Canada Act" means the Investment Canada Act, R.S.C. 1985,
c. C-28, as amended.
"▇▇▇▇▇▇▇ SEC Filings" has the meaning specified in Section 4.9.
"Law" means a law, statute, ordinance, rule, code or regulation
enacted or promulgated, or order, permit, directive, instruction or other
legally binding guideline or policy issued or rendered by, any Governmental
Entity.
"Lien" means a lien, mortgage, deed of trust, deed to secure debt,
pledge, hypothecation, assignment, deposit arrangement, easement,
preference, priority, assessment, security interest, lease, sublease,
charge, claim, adverse claim, levy, interest of other Persons, or other
encumbrance of any kind (including any conditional sale or other title
retention agreement having the same economic effect as any of the
foregoing).
"Mailing Date" has the meaning specified in Section 7.5.
"Material Adverse Effect" means (i) when used with reference to the
Acquired Subsidiaries, a material adverse effect on the financial
condition, business, assets, prospects or results of operations of the
Acquired Subsidiaries taken as a whole, (ii) when used with reference to
Purchaser, to Seller or to ▇▇▇▇▇▇▇, a material adverse effect on its
ability to perform its obligations under this Agreement or any Ancillary
Agreement to which it is a party and (iii) when used with reference to
Purchaser and its Subsidiaries, a material adverse effect on the financial
condition, business, assets, prospects or results of operations of
Purchaser and its Subsidiaries (including from and after the Closing, the
Acquired Subsidiaries) taken as a whole.
A-4
"Notice" means any written citation, directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication from any person, including any governmental agency or
employee thereof.
"Ontario Securities Act" means the Securities Act (Ontario), R.S.O.
1990, c.S.5, as amended.
"Permitted Liens" means (i) those Liens set forth in Section 4.13 of
the Seller Disclosure Schedule or Section 5.13 of the Purchaser Disclosure
Schedule, as applicable, (ii) those Liens reflected in the Purchaser SEC
Filings, in the case of the Purchaser and its assets or properties, (iii)
any Lien that is set forth in the title reports or title insurance binders
that have been made available to the Purchaser by Seller relating to any
interest in real property owned by an Acquired Subsidiary, (iv) Liens for
water and sewer charges and current taxes not yet due and payable or being
contested in good faith, and (v) other Liens (including mechanics',
couriers', workers', repairers', materialmen's, warehousemen's and other
similar Liens) arising in the ordinary course of business as would not in
the aggregate materially adversely affect the value of, or materially
adversely interfere with the use of, the property subject thereto.
"Person" means an individual, corporation, partnership, association,
joint stock company, limited liability company, Governmental Entity,
business trust, unincorporated organization or other legal entity.
"Policies" has the meaning specified in Section 11.15.
"Post-Closing Tax Period" means any Tax period (or portion thereof)
beginning after the close of business on the Closing Date.
"Pre-Closing Seller Insurance Claims" means any liability, personal
injury, property damage, workers compensation or other similar claim (other
than health and welfare insurance claims) made against any Acquired
Subsidiary by any Person with respect to a loss, damage, claim, incident or
occurrence which occurred before the time of Closing, including any such
matter which was incurred but not reported on or before the time of
Closing.
"Pre-Closing Tax Period" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"Purchaser Balance Sheet" has the meaning specified in Section 5.10.
"Purchaser Common Shares" means the 120,000,000 shares of Purchaser
Common Stock issuable to Seller under Section 2.2 as consideration for the
Chem-Waste Shares and, to the extent required, the Chem-Waste Intercompany
Indebtedness.
"Purchaser Common Stock" means the Common Stock, $1.00 par value per
share, of Purchaser.
"Purchaser Contracts" has the meaning specified in Section 5.22.
"Purchaser Convertible Debenture" means the 5% 12 year $350 million
principal amount, convertible, pay-in-kind debenture substantially in the
form of Exhibit A, which is to be issued by Purchaser to Seller under
Section 2.2.
"Purchaser Disclosure Schedule" means the Disclosure Schedule signed
for identification purposes only by the President, Chief Executive Officer
or Chief Financial Officer of Purchaser, which Purchaser has delivered to
Seller on or before the date of this Agreement, and which contains
information relevant to the representations and warranties made by
Purchaser in Article V.
"Purchaser Employee Plans" has the meaning specified in Section 5.19.
"Purchaser Fairness Opinion" means the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. referred to in Section 9.6.
A-5
"Purchaser Intercompany and Affiliate Agreements" means all contracts,
agreements, policies, practices and understandings, whether written or
oral, between any one or more of the Affiliates of the Purchaser other than
its Subsidiaries, on the one hand, and any one or more of Purchaser and its
Subsidiaries on the other hand.
"Purchaser Pension Plan" has the meaning specified in Section 5.19.
"Purchaser Property" means real or personal property or other asset
owned, leased or operated by Purchaser.
"Purchaser Proxy Statement" has the meaning specified in Section 7.5.
"Purchaser Reorganization Transaction" means: (i) any merger,
consolidation, recapitalization, liquidation or other business combination
transaction involving Purchaser; (ii) any tender offer or exchange offer
for any securities of Purchaser; or (iii) any sale or other disposition of
assets of Purchaser or any of its Subsidiaries in a single transaction or
in a series of related transactions.
"Purchaser Rights Plan" means the Rights Agreement dated as of June
14, 1989, as amended, between Purchaser and its registrar and transfer
company.
"Purchaser Securities" means, collectively, the Purchaser Common
Shares, the Purchaser Convertible Debenture and the Additional Purchaser
Common Shares.
"Purchaser SEC Filings" has the meaning specified in Section 5.9.
"Purchaser Stockholders' Meeting" means the meeting of Purchaser's
stockholders referred to in Section 7.5, as originally convened and as it
may be continued following any temporary adjournment or adjournments
thereof.
"Recurring Charges" means expenses for services provided to the
Acquired Subsidiaries by ▇▇▇▇▇▇▇ and Seller and their Affiliates other than
the Acquired Subsidiaries consisting of insurance premiums, corporate
overhead, bank service fees and guarantee fees.
"Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form of Exhibit B to be entered into at the
Closing among Purchaser and Seller as provided in Section 3.3.
"Release" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing
or dumping.
"Retained Subsidiaries" means JTM Industries, Inc. ("JTM") and its
Subsidiary, KBK Enterprises, Inc.
"Revenue Canada" means Revenue Canada, Customs, Excise and Taxation,
the Canadian Federal Taxing Authority.
"SEC" means the United States Securities and Exchange Commission or
any successor agency.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Seller Consolidated Tax Group" means the affiliated group of
corporations within the meaning of Section 1504(c) of the Code, of which
Seller is the common parent corporation, which files a consolidated Tax
Return for U.S. federal income Tax purposes, and which includes Seller, the
Acquired U.S. Subsidiaries, the Retained Subsidiaries and the other U.S.
Subsidiaries of Seller.
"Seller Disclosure Schedule" means the Disclosure Schedule signed for
identification purposes only by the President, Chief Executive Officer or
Senior Vice President of Seller, which
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Seller has delivered to Purchaser on or before the date of this Agreement,
and which contains information relevant to the representations and
warranties made by Seller in Article IV.
"Seller Employee Plans" has the meaning specified in Section 4.19.
"Seller Group" means, at any date, Seller and all of its Affiliates at
that date (but excluding after the Closing, the Acquired Subsidiaries), and
"member of the Seller Group" refers to Seller or any such Affiliates.
"Seller Guaranty" means any guaranty, performance guaranty, bond,
performance bond, suretyship arrangement, surety bond, credit, letter of
credit, reimbursement agreement or other undertaking, deposit commitment or
arrangement by which any member of the Seller Group is or may be primarily,
secondarily, contingently or conditionally liable for or in respect of (or
which creates, constitutes or evidences a Lien on any of the assets or
properties of any member of the Seller Group which secures the payment or
performance of) any present or future liability or obligation of any
Acquired Subsidiary as set forth in Section 4.16 of the Seller Disclosure
Schedule.
"Seller Pension Plan" has the meaning specified in Section 4.19.
"Seller's Post-Closing Taxes" has the meaning specified in Section
12.1.
"Stock Option Plan" means collectively the ▇▇▇▇▇▇▇ Environmental
Services, Inc. 1982 and 1993 Stock Option Plans.
"Subsidiary" of a Party means an Affiliate of that Party more than 50%
of the aggregate voting power (or of any other form of voting equity
interest in the case of a Person that is not a corporation) of which is
beneficially owned by that Party directly or indirectly through one or more
other Persons.
"Tax" means any tax of any kind, however denominated, including any
interest, penalties (civil or criminal), fines or other additions to tax
that may become payable in respect thereof or in respect of a failure to
comply with any requirement relating to any Tax Return, imposed by any
federal, territorial, state, county, provincial or local Governmental
Entity, including all income, gross income, gross receipts, profits, goods
and services, social security, health, old age security, Canadian Pension
Plan, Quebec Pension Plan, sales and use, ad valorem, fees, excise, custom,
franchise, business license, property, capital stock, production,
occupation, real property gains, payroll and employee withholding,
unemployment or employment insurance, real and personal property, stamp,
environmental, transfer, workers' compensation, payroll, severance,
alternative minimum, windfall, and capital taxes, premiums, surtaxes,
charges, levies, assessments, reassessments, and other obligations of the
same or a similar nature to any of the foregoing and any expenses incurred
in connection with the determination, settlement or litigation of any Tax
Controversy.
"Tax Allocation Agreements" means all contracts, agreements, policies,
practices, intercompany procedures and understandings, whether written or
oral, between any Acquired Subsidiary and any other Person (including
another Acquired Subsidiary) by which all or any portion of any federal,
state, provincial or local income Tax is allocated to or shared or required
to be paid by any Acquired Subsidiary.
"Tax Benefit" means any credit carryover, carryback or other reduction
in otherwise required Tax payments. Such term does not include a decrease
in any Tax in one Tax period that results from an adjustment in another Tax
period, such as an increase in a deduction for depreciation that results
from a determination that, in a previous Tax period, an expenditure is
capitalized and not deducted or an item of gain is recognized.
"Tax Controversy" means an audit, review, examination or any other
administrative or judicial proceeding (including any determination with
respect to a claim for refund) with the purpose or effect of redetermining
Taxes.
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"Tax Liability Issue" has the meaning specified in Section 12.4.
"Tax Proceeding" has the meaning specified in Section 12.4.
"Tax Refund" means any rebate, refund or return of Taxes.
"Tax Returns" means all tax returns, declarations, reports, estimates,
information returns and statements required to be filed with any Taxing
Authority, or provided to any partner, shareholder, joint venturer or
member under U.S., Canadian or foreign federal, state, provincial or local
Laws (including reports with respect to backup withholding and payments to
Persons other than Taxing Authorities and, where permitted or required,
combined or consolidated returns for any group of entities), and annual tax
returns or information returns on behalf of employee benefit plans
sponsored by Seller or Purchaser, as the case may be, or any of their
respective ERISA Affiliates.
"Taxing Authority" means any Governmental Entity responsible for the
imposition, assessment, enforcement or collection of any Tax.
"Third-Party Claim" has the meaning specified in Section 14.3.
"Total Consideration" has the meaning specified in Section 2.2.
"Transfer Taxes" has the meaning specified in Section 12.3.
"$" or "U.S. dollars" refers to lawful currency of the United States.
"U.S. GAAP" means United States generally accepted accounting
principles consistently applied throughout the specified period and the
immediately preceding comparable period.
"Wages" has the meaning given such term by Section 3401(a) of the
Code.
"WARN Act" means the United States Worker Adjustment and Retraining
Notification Act of 1988.
"Westinghouse Debt" means the Purchaser's 7.75% Senior Unsecured
Debentures due March 31, 2005 and the Purchaser's 7.25% Convertible
Subordinated Debentures due March 31, 2005.
1.2 Interpretation. Capitalized terms defined in this Agreement are
equally applicable to both their singular and plural forms. References to a
designated "Article" or "Section" refer to an Article or Section of this
Agreement, unless otherwise specifically indicated. In this Agreement,
"including" is used only to indicate examples, without limitation to the
indicated examples, and without limiting any generality which precedes it.
ARTICLE II
THE ACQUISITION
2.1 Sale and Purchase of Shares. On the terms and subject to the
conditions of this Agreement, Seller agrees to sell, convey, assign and
transfer, free and clear of all Liens, and Purchaser agrees to purchase, the
Chem-Waste Shares, together with the Intercompany Indebtedness of the U.S.
Acquired Subsidiaries (the "Chem-Waste Intercompany Indebtedness").
2.2 Consideration for Chem-Waste Shares and Chem-Waste Intercompany
Indebtedness. The consideration payable by Purchaser for the Chem-Waste Shares
and the Chem-Waste Intercompany Indebtedness (the "Total Consideration") shall
be:
(i) $225,000,000 payable in cash at the Closing (less the principal
amount at the Closing of the Bond Indebtedness specified in Section 4.13 of
Seller's Disclosure Schedule (the "Bond Indebtedness"));
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(ii) the Purchaser Common Shares to be issued and delivered by
Purchaser to Seller at the Closing; and
(iii) the Purchaser Convertible Debenture to be issued and delivered
by Purchaser to Seller at the Closing.
2.3 Total Consideration Allocation. The Total Consideration shall be
allocated to the Chem-Waste Intercompany Indebtedness at the face value of such
debt on the Closing Date in the following order to the extent required: (i) the
cash portion of the purchase price; (ii) the Purchaser Convertible Debenture,
which the parties agree shall be valued at $350,000,000; and (iii) the Purchaser
Common Shares; and the remainder to the Chem-Waste Shares.
2.4 Cash Management Cut-Off. ▇▇▇▇▇▇▇ and Seller act as bankers for the
Acquired Subsidiaries and provide cash funding to the Acquired Subsidiaries on a
day-to-day basis with net positions, deposits and withdrawals being incorporated
into the amount of Intercompany Indebtedness of the Acquired Subsidiaries.
Purchaser, ▇▇▇▇▇▇▇ and Seller agree that this procedure will continue in the
normal course of business to the close of business on the Closing Date and that
any cash receipts, remittances and collection advices received by the Acquired
Subsidiaries or the bank collection agencies prior to such time will be for the
account of ▇▇▇▇▇▇▇ and Seller and reduce the amount of Intercompany Indebtedness
of the Acquired Subsidiaries and any checks, transfers, debit notices, drafts or
other payment demands presented to the counters of the bank disbursement agents
for the Acquired Subsidiaries prior to such time will be for the account of the
Acquired Subsidiaries and increase the amount of Intercompany Indebtedness of
the Acquired Subsidiaries.
2.5 Recurring Charges. ▇▇▇▇▇▇▇ and Seller and their Affiliates incur
Recurring Charges in the normal course of business, for which the Acquired
Subsidiaries reimburse ▇▇▇▇▇▇▇ and Seller and their Affiliates on a monthly
basis. Purchaser, ▇▇▇▇▇▇▇ and Seller agree that the Recurring Charges for
periods ending at the close of business on the Closing Date shall be excluded
from the amount of Intercompany Indebtedness of the Acquired Subsidiaries on the
Closing Date and shall be paid by the Acquired Subsidiaries to ▇▇▇▇▇▇▇ and
Seller and their Affiliates in the normal course of business after closing.
ARTICLE III
THE CLOSING AND RELATED MATTERS
3.1 The Closing. The sale and purchase of the Chem-Waste Shares, together
with the Chem-Waste Intercompany Indebtedness (the "Closing") shall take place
at the offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. in New York, New York
at 10:00 a.m. local time on the Closing Date. At the Closing:
(i) Seller shall deliver to Purchaser:
(a) the certificates evidencing the Chem-Waste Shares, duly
endorsed in blank or accompanied by duly executed stock powers, and
in proper form for registration in the name of Purchaser; and
(b) the assignment of the Chem-Waste Intercompany Indebtedness,
and
(ii) Purchaser shall deliver to Seller:
(a) $225,000,000 payable in cash (less the principal amount at
the Closing of the Bond Indebtedness);
(b) the Purchaser Common Shares; and
(c) the Purchaser Convertible Debenture.
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All cash amounts payable by Purchaser at the Closing shall be payable by
wire transfers, to accounts designated in writing by Seller at least two
Business Days before the Closing Date, of U.S. dollar funds immediately
available in Toronto.
3.2 Actions in Contemplation of Closing. On or before the Closing Date,
and in any event not later than immediately before the Closing:
(i) Purchaser and Seller shall have retired the Westinghouse Debt in
accordance with that certain Letter of Intent dated January 6, 1997 by and
among Purchaser, ▇▇▇▇▇▇▇ and Westinghouse Electric Corporation.
(ii) The reorganization of Seller shall have occurred substantially as
described in Schedule II whereby Chem-Waste shall own the entire Hazardous
and Industrial Waste Business of Seller and its Affiliates.
(iii) Chem-Waste shall have transferred to Seller as a dividend on
Chem-Waste's Shares all of the issued and outstanding shares of JTM, a
Retained Subsidiary.
(iv) Except as provided in Sections 2.5 and 3.3(ii), ▇▇▇▇▇▇▇ shall
have contributed to the capital of each of the Canadian Acquired
Subsidiaries, in exchange for common shares, any and all Intercompany
Indebtedness of each of the Canadian Acquired Subsidiaries as of the
Closing Date.
3.3 Other Actions at the Closing. In addition to the consummation of the
Acquisition, the following actions shall take place at the Closing:
(i) Purchaser and Seller shall enter into a Registration Rights
Agreement pertaining to the registration of the Purchaser Common Shares,
the Additional Purchaser Common Shares and the Purchaser Convertible
Debenture.
(ii) Purchaser shall cause the Canadian Acquired Subsidiaries to repay
to ▇▇▇▇▇▇▇ Intercompany Indebtedness owing to it in an amount not to exceed
$175,000,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller and ▇▇▇▇▇▇▇ jointly and severally represent and warrant to
Purchaser that:
4.1 Organization of Seller and ▇▇▇▇▇▇▇. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. ▇▇▇▇▇▇▇ is a corporation duly organized, validly existing and in good
standing under the Laws of Canada. Seller and ▇▇▇▇▇▇▇ each has full authority
and corporate power to conduct its business as it is currently being conducted
and as to be conducted following consummation of the Acquisition. Seller and
▇▇▇▇▇▇▇ are each duly qualified to do business, and in good standing, in each
jurisdiction where the nature of its properties or business requires such
qualification.
4.2 Authority Relative to this Agreement. Seller and ▇▇▇▇▇▇▇ each has the
requisite corporate power and authority to enter into and perform its respective
obligations under this Agreement and each Ancillary Agreement to which each will
be a party. The execution and delivery of this Agreement and each Ancillary
Agreement to which Seller or ▇▇▇▇▇▇▇ will be a party, the consummation of the
Acquisition, and the other transactions contemplated in Articles II and III,
have been duly authorized by the Boards of Directors of Seller and ▇▇▇▇▇▇▇, and
no other corporate proceedings on the part of Seller or ▇▇▇▇▇▇▇, including any
approval by the stockholders of Seller or ▇▇▇▇▇▇▇, are necessary to authorize
this Agreement, any Ancillary Agreement to which Seller or ▇▇▇▇▇▇▇ will be a
party, the consummation of the Acquisition, or the other transactions
contemplated in Articles II and III. This Agreement has been duly executed and
delivered by Seller and ▇▇▇▇▇▇▇. Each Ancillary Agreement required to be
executed and delivered by Seller or ▇▇▇▇▇▇▇ at the Closing will be, upon its or
their execution and delivery as provided in Section 3.3 or elsewhere in this
Agreement duly executed and
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delivered by Seller or ▇▇▇▇▇▇▇. Assuming the valid authorization, execution and
delivery of this Agreement (and each Ancillary Agreement to which Purchaser will
be a party) by Purchaser, this Agreement is, and each Ancillary Agreement which
to Seller or ▇▇▇▇▇▇▇ is a party will be, upon its execution and delivery at the
Closing as provided in Section 3.3 or elsewhere in this Agreement, a valid and
binding obligation of Seller or ▇▇▇▇▇▇▇, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other Laws relating to or affecting creditors'
rights generally or by equitable principles.
4.3 Status of Chem-Waste Shares. Upon their transfer as provided in
Section 2.1, the Chem-Waste Shares will be duly authorized, validly issued,
fully paid and nonassessable. Seller has good and marketable title to the
Chem-Waste Shares, free and clear of any Liens, and the transfer of the Chem-
Waste Shares as provided in Section 2.1 will pass good and marketable title to
the Chem-Waste Shares, free and clear of any Liens, other than any Liens granted
in connection with the financing specified in Section 9.5.
4.4 No Violations. The execution, delivery and performance of this
Agreement and the applicable Ancillary Agreements by Seller and ▇▇▇▇▇▇▇ and the
consummation of the Acquisition and the other transactions contemplated in
Articles II and III will not:
(i) constitute a breach or violation of or default under the charter
or bylaws (or similar organizational documents) or internal rules or
regulations governing the conduct of corporate actions of Seller, ▇▇▇▇▇▇▇
or any Acquired Subsidiary or any Law applicable to Seller, ▇▇▇▇▇▇▇ or any
Acquired Subsidiary; or
(ii) except as accurately reflected in Section 4.4 of the Seller
Disclosure Schedule, violate or conflict with, or result in a breach of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination under, or result in the creation of any Lien upon the
Chem-Waste Shares or any of the assets or properties of any Acquired
Subsidiary under, any contract, indenture, loan document, license, permit,
order, decree or instrument to which Seller, ▇▇▇▇▇▇▇ or any Acquired
Subsidiary is a party or by which any of them or their assets or properties
are bound.
4.5 Consents and Approvals. No consent, order, approval, waiver or
authorization of, or registration, application, declaration or filing with, any
Governmental Entity or other Person is required with respect to Seller, ▇▇▇▇▇▇▇
or any Acquired Subsidiary in connection with the execution and delivery of this
Agreement or any Ancillary Agreement, the consummation of the Acquisition, or
the other transactions contemplated in Articles II and III, except for:
(i) the HSR Act, Competition Act and Investment Canada Act filings and
approvals contemplated in this Agreement;
(ii) the consents and approvals described in Section 4.5 of the Seller
Disclosure Schedule; and
(iii) other cases, considered individually and in the aggregate, in
which any failure to make any such registration, application, declaration
or filing or to obtain any such consent, order, approval, waiver or other
authorization could not have a Material Adverse Effect on the Acquired
Subsidiaries, Seller or ▇▇▇▇▇▇▇.
4.6 Acquired Subsidiaries. Section 4.6 of the Seller Disclosure Schedule
sets forth with respect to each Acquired Subsidiary (i) its jurisdiction of
formation, (ii) each jurisdiction in which it is qualified to do business as a
foreign entity, (iii) its authorized, issued and outstanding shares of capital
stock or units and (iv) the holder or holders of all of its issued and
outstanding shares of capital stock or units. Each Acquired Subsidiary is a
corporation (or a limited liability company in the case of ECDC Environmental,
L.C.) duly organized, validly existing and in good standing under the laws of
its jurisdiction of formation and has full authority and corporate power to
conduct its business as it is currently being conducted. Each Acquired
Subsidiary is duly qualified to do business, and in good
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standing, in each jurisdiction where the nature of its properties or business
requires such qualification, except for failures to be so qualified which could
not, individually or in the aggregate, have a Material Adverse Effect on the
Acquired Subsidiaries.
All of the issued and outstanding shares of capital stock or units of each
Acquired Subsidiary are validly issued, fully paid and nonassessable, and are
owned of record and beneficially, and free of any Liens, by Chem-Waste or
another Acquired Subsidiary (as reflected in Section 4.6 of the Seller
Disclosure Schedule). Except as disclosed in Section 4.6 of the Seller
Disclosure Schedule, there are no preemptive rights or outstanding
subscriptions, options, warrants, calls, rights, convertible securities,
obligations to make capital contributions or advances, voting trust
arrangements, shareholders' agreements or other agreements, commitments or
understandings relating to the capital stock or units of any Acquired
Subsidiary.
Seller will deliver to Purchaser prior to Closing true and correct copies
of the charter and bylaws (or similar organizational documents) of each Acquired
Subsidiary. Each Acquired Canadian Subsidiary is a "private company" within the
meaning of the Ontario Securities Act.
4.7 No Other Subsidiaries. No Acquired Subsidiary has any Subsidiary which
is not another Acquired Subsidiary or a Retained Subsidiary. Except as described
in Section 4.7 of the Seller Disclosure Schedule, and except for other Acquired
Subsidiaries and Retained Subsidiaries, no Acquired Subsidiary, directly or
indirectly, owns or is obligated to acquire any investment in any other
corporation, partnership, joint venture or other business entity.
4.8 Conduct of Hazardous and Industrial Waste Business. The Seller Group
is engaged in the Hazardous and Industrial Waste Business only through the
Acquired Subsidiaries, and neither Seller, any Retained Subsidiary, nor any
member of the Seller Group other than the Acquired Subsidiaries conducts any
operations associated with, or owns any assets or properties used in, or holds
any permits or licenses used in, the Hazardous and Industrial Waste Business.
None of the Acquired Subsidiaries is or has been engaged in any business other
than the Hazardous and Industrial Waste Business or owns or has owned any assets
or properties which are used in any business other than the Hazardous and
Industrial Waste Business.
4.9 SEC Filings. ▇▇▇▇▇▇▇ has filed all forms, reports and documents
required to be filed with the SEC since August 31, 1995 and ▇▇▇▇▇▇▇ has made
available to the Purchaser true and complete copies of (i) ▇▇▇▇▇▇▇'▇ Annual
Report on Form 10-K for the year ended August 31, 1995, and (ii) all other
reports, statements and registration statements (including Current Reports on
Form 8-K) filed by ▇▇▇▇▇▇▇ with the SEC since September 1, 1995 (collectively,
the "▇▇▇▇▇▇▇ SEC Filings"). The ▇▇▇▇▇▇▇ SEC Filings (including all financial
statements or schedules included in them) (i) were prepared in compliance in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and (ii) did not at the time of filing (or if amended,
supplemented or superseded by a later filing, on the date of the later filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.10 Seller Financial Statements. Seller and ▇▇▇▇▇▇▇ have delivered to
Purchaser combined balance sheets of the Acquired Subsidiaries (prepared as a
separate combined group of corporations for financial reporting purposes)
audited at August 31, 1996 and August 31, 1995 and unaudited at November 30,
1996 and November 30, 1995, and the related combined statements of operations
and cash flows audited for the respective years ended August 31, 1996, 1995 and
1994 and unaudited for the three-month periods ended November 30, 1996 and 1995
(the "Chem-Waste Group Financial Statements").
The Chem-Waste Group Financial Statements have been prepared in accordance
with U.S. GAAP and have been prepared by combining the relevant financial
statements in accordance with U.S. GAAP applicable to the preparation of
combined financial statements.
The Chem-Waste Group Financial Statements fairly present in all material
respects the combined financial position of the Acquired Subsidiaries covered
thereby at the respective dates thereof, and the
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results of their combined operations and cash flows for the Acquired
Subsidiaries covered thereby for the respective periods indicated, in accordance
with U.S. GAAP except for the omission of explanatory footnote disclosures with
respect to the interim period Chem-Waste Group Financial Statements ended and as
of November 30, 1996 and November 30, 1995.
4.11 Absence of Certain Changes. Except as set forth in Section 4.11 of
the Seller Disclosure Schedule, since November 30, 1996, the Acquired
Subsidiaries have conducted their businesses only in the ordinary course,
consistent with past practice, and there has not occurred a Material Adverse
Effect with respect to the Acquired Subsidiaries or any event that could result
in a Material Adverse Effect with respect to the Acquired Subsidiaries.
4.12 No Undisclosed Liabilities. Except as disclosed on the August 31,
1996 and the November 30, 1996 Acquired Subsidiaries balance sheets or as set
forth in Sections 4.12 and 4.15 of the Seller Disclosure Schedule, no Acquired
Subsidiary has any liabilities or obligations, known or unknown, fixed or
contingent, other than (i) those liabilities and obligations arising since
August 31, 1996 in the ordinary course of its business and consistent with its
past practice, (ii) liabilities and obligations arising after the date of this
Agreement without violation of Sections 6.1 and 6.2, or (iii) liabilities and
obligations that, individually or in the aggregate, could not result in a
Material Adverse Effect on the Acquired Subsidiaries.
4.13 Acquired Subsidiary Properties. The Acquired Subsidiaries have good
and marketable title to their respective Seller Properties and assets, including
those reflected in the Chem-Waste Group Combined Financial Statements (other
than properties and assets disposed of in the ordinary course of business since
August 31, 1996, which in the aggregate are not material), free of all Liens
except Permitted Liens and Liens disclosed in Section 4.13 of the Seller
Disclosure Schedule.
4.14 Taxes and Tax Returns. Except as described in Section 4.14 of the
Seller Disclosure Schedule:
(i) all Tax Returns required to be filed with any Taxing Authority
with respect to any Pre-Closing Tax Period by or on behalf of the Acquired
Subsidiaries have been duly filed on a timely basis in accordance with all
applicable Laws, or will be timely filed in accordance with Section 12.1;
(ii) at the time of their filings all such Tax Returns were or will
be, in all respects, true, complete and correct;
(iii) Seller and the Acquired Subsidiaries have, and within the time
and in the manner prescribed by Law, paid all Taxes that are due and
payable;
(iv) the reserves for Taxes reflected in the Chem-Waste Group
Financial Statements are adequate (in accordance with U.S. GAAP) to cover
all Taxes that have not been paid, but which under U.S. GAAP were
accruable, through the date of the Chem-Waste Group Financial Statements;
(v) there are no Liens for Taxes upon any assets of any Acquired
Subsidiary, except Liens for Taxes not yet due for current Tax periods
ending on or after the Closing Date;
(vi) there are no outstanding deficiencies, assessments or written
proposals for the assessment of Taxes proposed, pending, asserted or
assessed against any Acquired Subsidiary, or for which any Acquired
Subsidiary could be directly or indirectly liable and there is no basis for
any additional assessment or reassessment for any Taxes for which adequate
provision has not been made in the books and records of the Acquired
Subsidiaries;
(vii) no extension of the statute of limitations or waiver of normal
reassessment periods on the assessment of any Taxes has been requested or
granted to or on behalf of any Acquired Subsidiary.
4.15 Litigation. Except as disclosed in Section 4.15 of the Seller
Disclosure Schedule, there is no suit, action, investigation or proceeding
pending or, to the knowledge of Seller or ▇▇▇▇▇▇▇,
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threatened against any of the Acquired Subsidiaries at law or in equity before
or by any Governmental Entity or before any arbitrator or mediator of any kind,
that could have a Material Adverse Effect on the Acquired Subsidiaries, and
there is no judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator or mediator to which any Acquired Subsidiary (or any of its
assets or properties) is subject that could have a Material Adverse Effect on
the Acquired Subsidiaries. There is no suit, action, investigation or proceeding
pending or, to the knowledge of Seller or ▇▇▇▇▇▇▇, threatened against any
Acquired Subsidiary at law or in equity before or by any Governmental Entity or
before any arbitrator or mediator of any kind, that could have a Material
Adverse Effect on any Acquired Subsidiary, and there is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator or mediator
to which any Acquired Subsidiary is subject that could have a Material Adverse
Effect on any Acquired Subsidiary. Neither Seller nor ▇▇▇▇▇▇▇ has knowledge of
any grounds on which any suit, action, investigation or proceeding of the nature
referred to in this Section 4.15 might be commenced with any reasonable
likelihood of success.
4.16 Environmental Matters.
(i) To the knowledge of Seller or ▇▇▇▇▇▇▇, no Acquired Subsidiary has
transported, stored, received, treated or disposed of, nor has any Acquired
Subsidiary arranged for any third parties to transport, receive, store,
treat or dispose of, waste to or at (a) any location other than a site
where the receipt of such waste for such purposes was not at the time of
such receipt unlawful or (b) any location designated for remedial action
pursuant to the United States Comprehensive Environmental Response,
Compensation and Liability Act, as from time to time amended, or any
similar Law assigning responsibility for the cost of investigating or
remediating releases of Hazardous Substances into the environment, except
to the extent such action would not have a Material Adverse Effect on the
business, results of operations or financial condition of the Acquired
Subsidiaries, or as set forth in Section 4.16 of the Seller Disclosure
Schedule.
(ii) Except as set forth in Section 4.16 of the Seller Disclosure
Schedule, no Acquired Subsidiary has received written notice that any
location to which waste has been transported, stored or disposed of by any
Acquired Subsidiary has been designated for remedial action pursuant to any
applicable Law relating to responsibility for the cost of investigating or
remediating releases of Hazardous Substances into the environment. Set
forth in Section 4.16 of the Seller Disclosure Schedule is, to the
knowledge of Seller or ▇▇▇▇▇▇▇, a complete and accurate list of locations
to which any Acquired Subsidiary has ever transported, or ever caused to be
transported, allowed or arranged for any third party to transport, any type
of waste material generated by customers of any Acquired Subsidiary for
storage, treatment, burning, recycling or disposal.
(iii) Compliance. To Seller's or ▇▇▇▇▇▇▇'▇ knowledge, each Acquired
Subsidiary and their respective processes, operations, transportation,
storage and disposal activities and undertakings have been and are in
compliance with all Environmental Laws (including reporting and record
keeping requirements), except to the extent any such noncompliance would
not have a Material Adverse Effect on the business, results of operations
or financial condition of the Acquired Subsidiaries or as set forth in
Section 4.16 of the Seller Disclosure Statement or noncompliances that have
been fully and finally resolved. To Seller's or ▇▇▇▇▇▇▇'▇ knowledge, the
Acquired Subsidiaries have received no Notice of noncompliance, and neither
Seller nor ▇▇▇▇▇▇▇ has knowledge of any facts which could give rise to a
Notice of noncompliance, with any Environmental Laws, except to the extent
any such noncompliance would not have a Material Adverse Effect on the
business, results of operations or financial condition of the Acquired
Subsidiaries, or as set forth in Section 4.16 of the Seller Disclosure
Schedule.
(iv) Environmental Permits. Except as set forth on Section 4.16 of
the Seller Disclosure Schedule and except to the extent that the failure to
obtain an Environmental Permit would not have a Material Adverse Effect on
the business, results of operations or financial condition of the Acquired
Subsidiaries, the Acquired Subsidiaries have obtained all Environmental
Permits which are required for the operation of the Acquired Subsidiaries'
business as presently conducted, all of
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which Environmental Permits are listed in Section 4.16 of the Seller
Disclosure Schedule. To the knowledge of Seller or ▇▇▇▇▇▇▇, all such
Environmental Permits are valid and in full force and effect, and no
violations thereof have been experienced, noted or recorded by any
administrative or regulatory agency, except for violations that have been
fully and finally resolved and violations which would not have a Material
Adverse Effect on the business, results of operations or financial
condition of the Acquired Subsidiaries, or as set forth in Section 4.16 of
the Seller Disclosure Schedule, and no proceeding is pending or, to the
knowledge of Seller or ▇▇▇▇▇▇▇, threatened to revoke or limit any of them.
(v) No Offenses. Except as disclosed in Section 4.16 of the Seller
Disclosure Schedule, within the past seven (7) years, the Acquired
Subsidiaries have never been convicted of a criminal offense for
noncompliance with any Environmental Laws, or been fined or otherwise
sentenced in or settled any such criminal prosecution short of conviction.
(vi) No Release of Hazardous Substances. Except as disclosed in
Section 4.16 of the Seller Disclosure Schedule, to the knowledge of Seller
or ▇▇▇▇▇▇▇, no Acquired Subsidiary has received any Notice which alleges
that any Acquired Subsidiary is liable for (a) the Release of any Hazardous
Substances on or off-site of its property in a manner that fails to comply
with applicable Environmental Laws or (b) any Environmental Release from a
facility owned or operated by third parties.
(vii) Disposal Sites. Except as set forth in Section 4.16 of the
Seller Disclosure Schedule, to the knowledge of Seller or ▇▇▇▇▇▇▇, no
Acquired Subsidiary has received Notice that any Acquired Subsidiary is a
potentially responsible party for a federal, state, provincial or local
clean-up site or for corrective action under any Environmental Law. Except
as set forth in Section 4.16 of the Seller Disclosure Schedule, to the
knowledge of Seller or ▇▇▇▇▇▇▇, no Acquired Subsidiary has received any
written request for information from a regulatory agency with respect to a
disposal or contaminated site.
(viii) Environmental Audits. To Seller's or ▇▇▇▇▇▇▇'▇ knowledge, each
of the Acquired Subsidiaries has made available to Purchaser all
environmental audits, evaluations and assessments in their possession which
concern any Acquired Subsidiary.
(ix) Financial Assurances. Section 4.16 of the Seller Disclosure
Schedule sets forth a list of each Seller Guaranty currently maintained
pursuant to the requirements of applicable Environmental Laws with regard
to the assets and activities of any Acquired Subsidiary.
(x) Landfills. Section 4.16 of the Seller Disclosure Schedule lists
each Seller Group landfill and accurately describes each such landfill by
its city or county and state or province of location, total acreage,
permitted acreage, estimated remaining permitted capacity in cubic yards,
estimated or mandated closure date, and estimated closure, post-closure and
reclamation liability at its projected or mandated closure date (computed
at the closure date with and without discount to present value) and any
other recorded or unrecorded accruals, contingent or otherwise, or reserves
related to landfill liabilities of any type.
4.17 Governmental Licenses and Permits; Compliance with Laws. Except as
described in Section 4.17 of the Seller Disclosure Schedule, no Acquired
Subsidiary has received any notice of any revocation or modification of any
license, certification, tariff, permit, registration, exemption, approval or
other authorization by any Governmental Entity which remains outstanding. The
conduct of the business of each Acquired Subsidiary complies and has been
conducted in compliance with all applicable Laws, except for violations or
failures to comply, if any, that, individually or in the aggregate, could not
have a Material Adverse Effect on the Acquired Subsidiaries.
4.18 Labor Matters. Section 4.18 of the Seller Disclosure Schedule lists
and describes each collective bargaining agreement covering employees of any
Acquired Subsidiary. Except as disclosed in Section 4.18 of the Seller
Disclosure Schedule, (i) no Acquired Subsidiary is a party to or bound by any
collective bargaining or similar agreement with any labor organization
applicable to employees of any Acquired Subsidiary, (ii) there is no labor
strike, dispute, slowdown, work stoppage, unresolved
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material labor union grievance or labor arbitration proceedings pending or, to
the knowledge of Seller, threatened against any Acquired Subsidiary, and (iii)
to the knowledge of Seller or ▇▇▇▇▇▇▇, there are no current union organizing
activities among employees of any Acquired Subsidiary.
Since the enactment of the WARN Act, no Acquired Subsidiary has effectuated
(i) a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of any
employment or facility of an Acquired Subsidiary. No Acquired Subsidiary has
been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar Canadian
federal, state, provincial or local Law. Except as set forth in Section 4.18 of
the Seller Disclosure Schedule, no employees of any Acquired Subsidiary have
suffered an "employment loss" (as defined in the WARN Act) since December 31,
1995.
4.19 Employee Benefit Plans. Section 4.19 of the Seller Disclosure
Schedule sets forth each retirement, pension, bonus, stock purchase, profit
sharing, stock option, deferred compensation, severance or termination pay,
insurance, medical, hospital, dental, vision care, drug, sick leave, disability,
salary continuation, legal benefits, unemployment benefits, vacation, incentive
or other compensation plan or arrangement or other employee benefit which is
maintained, or otherwise contributed to or required to be contributed to, by any
of the Acquired Subsidiaries, any member of the Seller Group or any ERISA
Affiliate of Seller for the benefit of employees or former employees and
directors or former directors of any of the Acquired Subsidiaries and their
spouses, dependents or beneficiaries (the "Seller Employee Plans"). True and
correct copies of each of the Seller Employee Plans have been delivered to
Purchaser, along with the most recent annual report for each Seller Employee
Plan, any trust agreement relating to each Seller Employee Plan and the most
recent summary plan description, actuarial report and determination letter for
each Seller Employee Plan. Each of the Acquired Subsidiaries has complied, and
currently is in compliance, both as to form and operation, in all material
respects, with the applicable provisions of ERISA and each other Law or
regulation imposed or administered by any Governmental Entity with respect to
each of the Seller Employee Plans. Except as set forth in Section 4.19 of the
Seller Disclosure Schedule, none of the Acquired Subsidiaries has at any time
maintained, adopted, established, contributed to or been required to contribute
to, otherwise participated in or been required to participate in, or had any
liability with respect to, any "employee benefit plan" within the meaning of
section 3(3) of ERISA. All Seller Employee Plans providing pension or retirement
benefits or obligations to current or former employees or their spouses,
dependents and beneficiaries are referred to collectively as "Seller Pension
Plan" and identified in Section 4.19 of the Seller Disclosure Schedule. Except
as set forth in Section 4.19 of the Seller Disclosure Schedule, no provision
concerning the Seller Pension Plan is contained in any collective bargaining
agreement affecting any current or former employees of any Acquired Subsidiary.
Each Seller Pension Plan that is required to be qualified under Section 401(a)
and Section 501(a) of the Code has received a determination letter to such
effect and no event has occurred which is reasonably likely to result in the
disqualification of any such Seller Pension Plan. The Seller Pension Plan is
registered under, and is in material compliance with, applicable Law. All
contributions to, and payments from, each Seller Employee Plan which may have
been required to be made in accordance with the terms of any such Seller
Employee Plan and, where applicable, the Laws which govern such Seller Employee
Plan, have been made in a timely manner, and each Seller Employee Plan has
otherwise at all times been administered in accordance with its terms and
applicable Law in all material respects. All material reports, Tax Returns and
similar documents with respect to any Seller Employee Plan required to be filed
with any Governmental Entity or distributed to any Seller Employee Plan
participant have been duly filed on a timely basis or distributed. There are no
pending investigations by any Governmental Entity involving or relating to any
Seller Employee Plan, no threatened or pending claims (except for claims for
benefits payable in the normal operation of the Seller Employee Plans), suits or
proceedings against any Seller Employee Plan or asserting any rights or claims
to benefits under any Seller Employee Plan which could give rise to a liability
nor, to the knowledge of Seller or ▇▇▇▇▇▇▇, are there any facts that could give
rise to any liability in the event of any such investigation, claim, suit or
proceeding. No Notice has been received by Seller or any of the Acquired
Subsidiaries of any complaints or other proceedings of any kind involving any of
the Acquired Subsidiaries or any of
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the employees of any of the Acquired Subsidiaries or other potential claimants
before any Governmental Entity relating to any Seller Employee Plan or to any of
the Acquired Subsidiaries and to the knowledge of Seller or ▇▇▇▇▇▇▇, there is no
basis for any such claims. Except as set forth in Section 4.19 of the Seller
Disclosure Schedule, the assets of each Seller Employee Plan are at least equal
to the liabilities, contingent or otherwise, of such Seller Employee Plan on a
plan termination basis, and each Seller Pension Plan is fully funded on a going
concern and solvency basis in accordance with its terms, applicable actuarial
recommendations and applicable Law. Neither Seller, ▇▇▇▇▇▇▇ nor any of the
Acquired Subsidiaries contribute to or have an obligation to contribute to, and,
to the knowledge of Seller or ▇▇▇▇▇▇▇, have not within 6 years prior to the date
of this Agreement contributed to or had an obligation to contribute to, a
multi-employer plan within the meaning of Section 3(37) of ERISA. No event has
occurred and, to the knowledge of Seller or ▇▇▇▇▇▇▇, there exists no condition
or set of circumstances in connection with which Purchaser, any of its
Affiliates or the Acquired Subsidiaries could be subject to any liability under
the terms of each Seller Employee Plan or under any applicable law of any
Governmental Entity, other than any condition or set of circumstances that could
not have a Material Adverse Effect on the Acquired Subsidiaries. In connection
with the consummation of the transactions contemplated by this Agreement, no
payments have or will be made under a Seller Employee Plan which, in the
aggregate, would be nondeductible under Section 280G of the Code.
The beneficiaries under all Seller Employee Plans shall consist only of
employees or former employees and directors or former directors of any of the
Acquired Subsidiaries and their spouses, dependents or beneficiaries. No
Acquired Subsidiary shall have any liability under the Seller Employee Plans.
4.20 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from Seller, ▇▇▇▇▇▇▇ or any
Acquired Subsidiary in connection with this Agreement or the Acquisition based
upon arrangements made by or on behalf of Seller.
4.21 Material Contracts. Section 4.21 of the Seller Disclosure Schedule
lists all of the following written or oral contracts, agreements and commitments
(collectively, the "Seller Group Contracts"):
(i) all employment, consulting or personal services agreements or
contracts with any present or former officer, director or employee of any
Acquired Subsidiary who has an annual salary of $250,000 or more
(determined by using the currency in which they are paid);
(ii) all hazardous waste management agreements and contracts
(including those relating to the receipt, transport, disposal or other
management of waste) between any Acquired Subsidiary and any municipality
or other Governmental Entity or Person which resulted in annual payments in
the 1996 fiscal year to or by any Acquired Subsidiary of $2,000,000 or
more, which list includes the term of such agreements or contracts;
(iii) all contracts, agreements, agreements in principle, letters of
intent and memoranda of understanding which call for or contemplate the
future disposition (including restrictions on transfer and rights of first
offer or refusal) or acquisition of (or right to acquire) any interest in
any business enterprise, and all contracts, agreements and commitments
relating to the future disposition of a material portion of the assets and
properties of any Acquired Subsidiary other than in the ordinary course of
business;
(iv) all contracts, agreements with, or commitments to, any Person
containing any provision or covenant relating to the indemnification or
holding harmless by any Acquired Subsidiary of any Person which could
result in a liability to an Acquired Subsidiary of $250,000 or more;
(v) all leases or subleases of real property used in the conduct of
business of any Acquired Subsidiary providing for annual rental payments to
be paid by or on behalf of an Acquired Subsidiary of more than $250,000 in
each case;
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(vi) all contracts or agreements committing any Acquired Subsidiary to
make a capital expenditure in excess of $250,000;
(vii) all guaranties or other commitments or undertakings under which
any Acquired Subsidiary may be primarily, secondarily, contingently or
conditionally liable for or in respect of (or which creates, constitutes or
evidences a Lien on) any of the assets or properties of any Acquired
Subsidiary which secures the payment or performance on any present or
future liability or obligation of or to any member of the Seller Group or
any officer or director of the Seller Group; and
(viii) all Seller Guaranties.
Seller and ▇▇▇▇▇▇▇ shall make available to Purchaser within 15 days of the
Closing a true and correct copy of each Seller Group Contract. Each of the
Seller Group Contracts is in full force and effect and constitutes a legal,
valid and binding obligation of the Acquired Subsidiary which is a party to it,
and, to the knowledge of Seller or ▇▇▇▇▇▇▇, of each other Person that is a party
to it. Except as set forth in Section 4.21 of the Seller Disclosure Schedule, no
Acquired Subsidiary is, and, to the knowledge of Seller or ▇▇▇▇▇▇▇, no other
party to any Seller Group Contract is, in violation, breach or default of such
Seller Group Contract or, with or without notice or lapse of time or both, would
be in violation, breach or default of any such Seller Group Contract, except for
any violation, breach or default which, individually or in the aggregate, could
not result in a Material Adverse Effect on the Acquired Subsidiaries. Except as
set forth in Section 4.21 of the Seller Disclosure Schedule, no Seller Group
Contract provides that any party thereto other than the Acquired Subsidiary
which is a party to such Seller Group Contract may terminate such Seller Group
Contract by reason of the execution of this Agreement or the consummation of the
Acquisitions.
4.22 Bank Accounts. Section 4.22 of the Seller Disclosure Schedule lists
each bank, trust company or similar institution with which any Acquired
Subsidiary maintains an account or safe deposit box, and accurately identifies
each such account or safe deposit box by its number or other identification and
the names of all individuals authorized to draw thereon or have access thereto.
4.23 Officers and Directors. Section 4.23 of the Seller Disclosure
Schedule accurately lists by name and title all officers and directors of each
Acquired Subsidiary.
4.24 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of the Acquired Subsidiaries are structurally sound,
are in good operating condition and repair, and are adequate for the uses to
which they are being put, and none of such buildings, plants, structures or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures and equipment of the Acquired Subsidiaries are sufficient for
the continued conduct of the Acquired Subsidiaries' businesses after the Closing
Date in substantially the same manner as conducted prior to the Closing Date.
4.25 Affiliate Transactions. Neither ▇▇▇▇▇▇▇, nor Seller, nor any
Affiliate of ▇▇▇▇▇▇▇ or Seller, has entered into directly or indirectly any
transaction (including without limitation the purchase, lease, sale or exchange
of property of any kind or the rendering of any service) with any Acquired
Subsidiary, except in the ordinary course and pursuant to the reasonable
requirements of such Acquired Subsidiary's business and upon fair and reasonable
terms no less favorable to such Acquired Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person not ▇▇▇▇▇▇▇, Seller or an
Affiliate of ▇▇▇▇▇▇▇ or Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF
PURCHASER
Purchaser represents and warrants to Seller and ▇▇▇▇▇▇▇ that:
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5.1 Organization of Purchaser Parties. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Purchaser has full authority and corporate power to conduct its
business as it is currently being conducted and as to be conducted following
consummation of the Acquisition. Purchaser is duly qualified to do business, and
in good standing, in each jurisdiction where the nature of its properties or
business requires such qualification.
5.2 Authority Relative to this Agreement. Purchaser has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and each Ancillary Agreement to which it will be a party. The
execution and delivery of this Agreement and each Ancillary Agreement to which
Purchaser will be a party, the consummation of the Acquisition, the issuance or
delivery of Purchaser Securities, and the other transactions contemplated in
Articles II and III, have been duly authorized by the Board of Directors of
Purchaser, and except for the approval by Purchaser's stockholders of the
Acquisition, the issuance by Purchaser in connection with the Acquisition of the
Purchaser Common Shares and the Additional Purchaser Common Shares, no other
corporate proceedings on the part of Purchaser are necessary to authorize this
Agreement, any Ancillary Agreement to which Purchaser will be a party, the
issuance and delivery of the Purchaser Securities, the consummation of the
Acquisition, or the other transactions contemplated in Articles II and III. This
Agreement has been duly executed and delivered by Purchaser. The Purchaser
Convertible Debenture, and each Ancillary Agreement required to be executed and
delivered by Purchaser at the Closing will be, upon its or their execution and
delivery as provided in Section 3.3 or elsewhere in this Agreement, duly
executed and delivered by Purchaser. Assuming the valid authorization, execution
and delivery of this Agreement (and each Ancillary Agreement to which Seller or
▇▇▇▇▇▇▇ will be a party) by Seller and by ▇▇▇▇▇▇▇, this Agreement is, and upon
its issuance and delivery at the Closing, the Purchaser Convertible Debenture
will be, and upon its execution and delivery by Purchaser, each Ancillary
Agreement to which Purchaser is a party will be, a valid and binding obligation
of Purchaser, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other Laws relating to or affecting creditors' rights generally or
by equitable principles.
5.3 Status of Purchaser Common Shares. Upon their issuance as provided in
Section 2.2, the Purchaser Common Shares will be, and upon any issuance thereof
by the Purchaser, the Additional Purchaser Common Shares will be, duly
authorized, validly issued, fully paid and nonassessable.
5.4 No Violations. The execution, delivery and performance of this
Agreement and the applicable Ancillary Agreements by the Purchaser, the issuance
and delivery by Purchaser of the Purchaser Securities, and the consummation of
the Acquisition and the other transactions contemplated in Articles II and III
will not:
(i) constitute a breach or violation of or default under the charter
or bylaws of Purchaser or any of its Subsidiaries or any Law applicable to
Purchaser or any of its Subsidiaries; or
(ii) except as accurately reflected in Section 5.4 of the Purchaser
Disclosure Schedule, violate or conflict with, or result in a breach of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance by, or result in a right of termination
under, or result in the creation of any Lien upon the assets or properties
of Purchaser or any of its Subsidiaries under, any contract, indenture,
loan document, license, permit, order, decree or instrument to which
Purchaser or any of its Subsidiaries is a party or by which any of them or
their assets or properties are bound.
5.5 Consents and Approvals. No consent, order, approval, waiver,
authorization of, or registration, application, declaration or filing with, any
Governmental Entity or other Person is required with respect to Purchaser or any
Subsidiary of Purchaser in connection with the execution and delivery of this
Agreement, the issuance of the Purchaser Securities, the consummation of the
Acquisition, or the other transactions contemplated in Articles II and III,
except for:
(i) the HSR Act, Competition Act and Investment Canada Act filings and
approvals contemplated in this Agreement;
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(ii) the consents and approvals described on Section 5.5 of the
Purchaser Disclosure Schedule;
(iii) the approval by Purchaser's stockholders, as contemplated in
Section 7.5; and
(iv) other cases, considered individually and in the aggregate, in
which any failure to make any such registration, application, declaration
or filing or to obtain any such consent, order, approval, waiver or other
authorization could not have a Material Adverse Effect on Purchaser and its
Subsidiaries.
5.6 Purchaser Capitalization. The authorized capital stock of Purchaser
consists of (i) 120 million shares of Purchaser Common Stock and (ii) 1 million
shares of Preferred Stock, $1.00 par value, of Purchaser ("Purchaser Preferred
Stock"). At September 30, 1996, 60,375,811 shares of Purchaser Common Stock, and
no shares of Purchaser Preferred Stock, were issued and outstanding, all of
which were duly and validly issued, fully paid and nonassessable. Except as set
forth in the Purchaser SEC Filings or Section 5.6 of the Purchaser Disclosure
Schedule, no subscription, warrant, option, convertible security, stock
appreciation or other right (contingent or other) to purchase or acquire any
shares of any class of capital stock of Purchaser or any of its Subsidiaries is
authorized or outstanding and there is not outstanding any commitment of
Purchaser or any of its Subsidiaries to issue any shares, warrants, options or
other such rights or to distribute to holders of any class of its capital stock
any evidences of indebtedness or assets. Except as set forth in the Purchaser
SEC Filings, neither Purchaser nor any of its Subsidiaries has any contingent or
other obligation to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in the Purchaser SEC
Filings, Purchaser is not a party to any voting agreement, voting trust or
similar agreement or arrangement relating to its capital stock or any agreement
or arrangement relating to or providing for registration rights with respect to
its capital stock.
5.7 Purchaser Subsidiaries. Section 5.7 of the Purchaser Disclosure
Schedule sets forth with respect to each Subsidiary (i) its jurisdiction of
incorporation, (ii) each jurisdiction in which it is qualified to do business as
a foreign corporation, (iii) its authorized, issued and outstanding shares of
capital stock, and (iv) the holder or holders of all of its issued and
outstanding shares of capital stock. Each Subsidiary of Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has full authority and corporate power
to conduct its business as it is presently being conducted. Each Subsidiary of
Purchaser is duly qualified to do business, and in good standing, in each
jurisdiction where the nature of its properties or business requires such
qualification, except for failures to be so qualified which could not,
individually or in the aggregate, have Material Adverse Effect on Purchaser and
its Subsidiaries.
Except as accurately disclosed in Section 5.7 of the Purchaser Disclosure
Schedule, all of the issued and outstanding shares of capital stock of each
Subsidiary of Purchaser are validly issued, fully paid and nonassessable and are
owned of record and beneficially by Purchaser or a wholly owned direct or
indirect Subsidiary of Purchaser. Except as set forth in Section 5.7 of the
Purchaser Disclosure Schedule, there are no preemptive rights or outstanding
subscriptions, options, warrants, calls, rights, convertible securities,
obligations to make capital contributions or advances, voting trust
arrangements, shareholders' agreements or other agreements, commitments or
understandings relating to the issued and outstanding capital stock of any
Subsidiary of Purchaser. Except as described in Section 5.7 of the Purchaser
Disclosure Schedule, Purchaser does not, directly or indirectly, have any equity
investment in any corporation, partnership or joint venture or other business
entity.
5.8 Conduct of Hazardous and Industrial Waste Business. Purchaser is
engaged in the Hazardous and Industrial Waste Business. Purchaser is not
currently nor has been engaged in any business other than the Hazardous and
Industrial Waste Business or owns or has owned any assets or properties which
are used in any business other than the Hazardous and Industrial Waste Business.
5.9 SEC Filings. Purchaser has filed all forms, reports and documents
required to be filed with the SEC since January 1, 1993 and Purchaser has made
available to the Seller true and complete copies
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of (i) Purchaser's Annual Report on Form 10-K for the year ended September 30,
1995, and (ii) all other reports, statements and registration statements
(including Current Reports on Form 8-K) filed by Purchaser with the SEC since
January 1, 1993 (collectively, the "Purchaser SEC Filings"). The Purchaser SEC
Filings (including all financial statements or schedules included in them) (i)
were prepared in compliance in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) did not at
the time of filing (or if amended, supplemented or superseded by a later filing,
on the date of the later filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
5.10 Purchaser Financial Statements. The consolidated balance sheets and
consolidated statements of operations, stockholder's equity and cash flows of
Purchaser and its Subsidiaries included in the Purchaser SEC Filings fairly
present in all material respects the consolidated financial position of
Purchaser and its Subsidiaries at their respective dates and the consolidated
results of operations of Purchaser and its Subsidiaries for the respective
periods then ended, in accordance with U.S. GAAP. Purchaser's audited
consolidated balance sheet at September 30, 1996 included in the Purchaser SEC
Filings is herein called the "Purchaser Balance Sheet."
5.11 Absence of Certain Changes. Except as set forth in Section 5.11 of
the Purchaser Disclosure Schedule, since September 30, 1996, Purchaser and its
Subsidiaries have conducted their businesses only in the ordinary course,
consistent with past practice, and there has not occurred a Material Adverse
Effect with respect to Purchaser and its Subsidiaries or any event that could
result in a Material Adverse Effect on Purchaser and its Subsidiaries.
5.12 No Undisclosed Liabilities. Except as disclosed in the Purchaser
Balance Sheet or in Sections 5.12 and 5.15 of the Purchaser Disclosure Schedule,
Purchaser and its Subsidiaries have no liabilities or obligations, known or
unknown, fixed or contingent, other than (i) those liabilities and obligations
arising since September 30, 1996 in the ordinary course of business and
consistent with past practice, (ii) liabilities and obligations arising after
the date of this Agreement without violation of Sections 7.1 and 7.2, or (iii)
liabilities and obligations that, individually or in the aggregate, could not
result in a Material Adverse Effect on Purchaser and its Subsidiaries.
5.13 Purchaser Properties. Purchaser and its Subsidiaries have good and
marketable title to the owned properties and assets used in the conduct of their
business that are reflected in the Purchaser Balance Sheet (other than
properties and assets disposed of in the ordinary course of business since
September 30, 1996, which, in the aggregate, are not material), free of all
Liens except Permitted Liens and Liens disclosed in Section 5.13 of the
Purchaser Disclosure Schedule.
5.14 Taxes and Tax Returns. Except as described in Section 5.14 of the
Purchaser Disclosure Schedule:
(i) all Tax Returns required to be filed with any Taxing Authority
with respect to any Pre-Closing Tax Period by or on behalf of Purchaser and
its Subsidiaries have been or will be duly filed on a timely basis in
accordance with all applicable Laws;
(ii) at the time of their filings all such Tax Returns were or will
be, in all respects, true, complete and correct;
(iii) Purchaser and its Subsidiaries have, and within the time and in
the manner prescribed by Law, paid all Taxes that are due and payable;
(iv) the reserves for Taxes reflected in the Purchaser Balance Sheet
are adequate (in accordance with U.S. GAAP) to cover all Taxes that have
not been paid, but which under U.S. GAAP were accruable, through the date
of the Purchaser Balance Sheet;
(v) there are no Liens for Taxes upon any assets of Purchaser or any
of its Subsidiaries, except Liens for Taxes not yet due for current Tax
periods ending on or after the Closing Date;
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(vi) there are no outstanding deficiencies, assessments or written
proposals for the assessment of Taxes proposed, pending, asserted or
assessed against Purchaser or any Subsidiary of Purchaser and there is no
basis for any additional assessments or reassessments for any Taxes for
which adequate provision has not been made in the books and records of
Purchaser or its Subsidiaries, as the case may be; and
(vii) no extension of the statute of limitations or waiver of normal
reassessment periods on the assessment of any Taxes has been requested or
granted to Purchaser or any Subsidiary of Purchaser.
5.15 Litigation. Except as disclosed in the Purchaser SEC Filings or in
Section 5.15 of the Purchaser Disclosure Schedule, there is no suit, action,
investigation or proceeding pending or, to the knowledge of Purchaser,
threatened against Purchaser or any of its Subsidiaries at law or in equity
before or by any Governmental Entity or before any arbitrator or mediator of any
kind, that could have a Material Adverse Effect on Purchaser and its
Subsidiaries, and there is no judgment, decree, injunction, rule or order of any
Governmental Entity, arbitrator or mediator to which Purchaser or any Purchaser
Subsidiary (or any of its assets or properties) is subject that could have a
Material Adverse Effect on Purchaser and its Subsidiaries. There is no suit,
action, investigation or proceeding pending or, to the knowledge of Purchaser,
threatened against Purchaser at law or in equity before or by any Governmental
Entity or before any arbitrator or mediator of any kind, that could have a
Material Adverse Effect on Purchaser, and there is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator or mediator
to which Purchaser is subject that could have a Material Adverse Effect on
Purchaser. Purchaser has no knowledge of any grounds on which any suit, action,
investigation or proceeding of the nature referred to in this Section 5.15 might
be commenced with any reasonable likelihood of success.
5.16 Environmental Matters.
(i) To the knowledge of Purchaser, no Purchaser or Purchaser Subsidiary has
transported, stored, received, treated or disposed of, nor has Purchaser or any
Purchaser Subsidiary arranged for any third parties to transport, receive,
store, treat or dispose of, waste to or at (a) any location other than a site
where the receipt of such waste for such purposes was not at the time of such
receipt unlawful or (b) any location designated for remedial action pursuant to
the United States Comprehensive Environmental Response, Compensation and
Liability Act, as from time to time amended, or any similar Law assigning
responsibility for the cost of investigating or remediating releases of
Hazardous Substances into the environment, except to the extent such action
would not have a Material Adverse Effect on the business, results of operations
or financial condition of Purchaser and the Purchaser Subsidiaries or as set
forth in Section 5.16 of the Purchaser Disclosure Schedule.
(ii) Except as set forth in Section 5.16 of the Purchaser Disclosure
Schedule, neither Purchaser nor any Purchaser Subsidiary has received written
notice that any location to which waste has been transported, stored or disposed
of by Purchaser or any Purchaser Subsidiary has been designated for remedial
action pursuant to any applicable Law relating to responsibility for the cost of
investigating or remediating releases of Hazardous Substances into the
environment. Set forth in Section 5.16 of the Purchaser Disclosure Schedule is,
to the knowledge of Purchaser, a complete and accurate list of locations to
which Purchaser or any Purchaser Subsidiary has ever transported, or ever caused
to be transported, allowed or arranged for any third party to transport, any
type of waste material generated by customers of Purchaser or any Purchaser
Subsidiary for storage, treatment, burning, recycling or disposal.
(iii) Compliance. To Purchaser's knowledge, Purchaser and the Purchaser
Subsidiaries and their respective processes, operations, transportation, storage
and disposal activities and undertakings have been and are in compliance with
all Environmental Laws (including reporting and record keeping requirements),
except to the extent any such noncompliance would not have a Material Adverse
Effect on the business, results of operations or financial condition of
Purchaser and the Purchaser Subsidiaries or as set forth in Section 5.16 of the
Purchaser Disclosure Schedule or noncompliances that have been fully and finally
resolved. To Purchaser's knowledge, Purchaser and the Purchaser Subsidiaries
have
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received no Notice of noncompliance and Purchaser has no knowledge of any facts
which could give rise to a Notice of noncompliance, with any Environmental Laws,
except to the extent any such noncompliance would not have a Material Adverse
Effect on the business, results of operations or financial condition of
Purchaser and the Purchaser Subsidiaries taken as whole, or as set forth in
Section 5.16 of the Purchaser Disclosure Schedule.
(iv) Environmental Permits. Except as set forth in Section 5.16 of the
Purchaser Disclosure Schedule and except to the extent that the failure to
obtain an Environmental Permit would not have a Material Adverse Effect on the
business, results of operations or financial condition of Purchaser and the
Purchaser Subsidiaries, Purchaser and the Purchaser Subsidiaries have obtained
all Environmental Permits which are required for the operation of the
Purchaser's business as presently conducted, all of which Environmental Permits
are listed in Section 5.16 of the Purchaser Disclosure Schedule. To the
knowledge of Purchaser, all such Environmental Permits are valid and in full
force and effect, and no violations thereof have been experienced, noted or
recorded by any administrative or regulatory agency, except for violations that
have been fully and finally resolved and violations which would not have a
Material Adverse Effect on the business, results of operations or financial
condition of Purchaser and the Purchaser Subsidiaries, or as set forth in
Section 5.16 of the Purchaser Disclosure Schedule, and no proceeding is pending
or, to the knowledge of Purchaser, threatened to revoke or limit any of them.
(v) No Offenses. Except as disclosed in Section 5.16 of the Purchaser
Disclosure Schedule, within the past seven (7) years, Purchaser and the
Purchaser Subsidiaries have never been convicted of a criminal offense for
noncompliance with any Environmental Laws, or been fined or otherwise sentenced
in or settled any such criminal prosecution short of conviction.
(vi) No Release of Hazardous Substances. Except as disclosed in Section
5.16 of the Purchaser Disclosure Schedule, to the knowledge of Purchaser,
neither of Purchaser nor any of the Purchaser Subsidiaries has received any
Notice which alleges that Purchaser or any of the Purchaser Subsidiaries is
liable for (a) the Release of any Hazardous Substances on or off-site of its
property in a manner that fails to comply with applicable Environmental Laws or
(b) any Release from a facility owned or operated by third parties.
(vii) Disposal Sites. Except as set forth in Section 5.16 of the Purchaser
Disclosure Schedule, to the knowledge of Purchaser, neither Purchaser nor any of
the Purchaser Subsidiaries has received Notice that Purchaser or any of the
Purchaser Subsidiaries is a potentially responsible party for a federal, state,
provincial or local clean-up site or for corrective action under any
Environmental Law. Except as set forth in Section 5.16 of the Purchaser
Disclosure Schedule, to the knowledge of Purchaser, neither Purchaser nor any of
the Purchaser Subsidiaries has received any written request for information from
a regulatory agency with respect to a disposal or contaminated site.
(viii) Environmental Audits. To Purchaser's knowledge, Purchaser and the
Purchaser Subsidiaries have made available to Seller all environmental audits,
evaluations and assessments in their possession which concern Purchaser or any
of its Subsidiaries.
(ix) Financial Assurances. Section 5.16 of the Purchaser Disclosure
Schedule sets forth a list of each guaranty or other financial security
currently maintained pursuant to the requirements of applicable Environmental
Laws with regard to the assets and activities of Purchaser or any of its
Subsidiaries.
(x) Landfills. Section 5.16 of the Purchaser Disclosure Schedule lists
each landfill owned or operated by Purchaser and its Subsidiaries and accurately
describes each such landfill by its city or county and state or province of
location, total acreage, permitted acreage, estimated remaining permitted
capacity in tons, estimated or mandated closure date, and estimated closure,
post-closure and reclamation liability at its projected or mandated closure date
(computed at the closure date with and without discount to present value).
5.17 Governmental Licenses and Permits; Compliance with Laws. Except as
described in the Purchaser SEC Filings or Section 5.17 of the Purchaser
Disclosure Schedule, neither Purchaser nor any
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of its Subsidiaries has received notice of any revocation or modification of any
license, certification, tariff, permit, registration, exemption, approval or
other authorization by any Governmental Entity which remains outstanding. The
conduct of the business of Purchaser and its Subsidiaries complies and has been
conducted in compliance with all applicable Laws, except for violations or
failures to comply, if any, that, individually or in the aggregate, could not
have a Material Adverse Effect on Purchaser and its Subsidiaries.
5.18 Labor Matters. Section 5.18 of the Purchaser Disclosure Schedule
lists and describes each collective bargaining agreement covering employees of
Purchaser. Except as disclosed in Section 5.18 of the Purchaser Disclosure
Schedule, (i) neither Purchaser nor any Subsidiary is a party to or bound by any
collective bargaining or similar agreement with any labor organization
applicable to employees of Purchaser, (ii) there is no labor strike, dispute,
slowdown, work stoppage, unresolved material labor union grievance or labor
arbitration proceedings pending or, to the knowledge of Purchaser, threatened
against Purchaser or any Subsidiary, and (iii) to the knowledge of Purchaser,
there are no current union organizing activities among employees of Purchaser or
any Subsidiary.
Since the enactment of the WARN Act, neither Purchaser nor any Subsidiary
has effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of any employment or facility of any Subsidiary. Neither Purchaser nor any
Subsidiary has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar Canadian federal, state, provincial or local Law. Except as set forth in
Section 5.18 of the Purchaser Disclosure Schedule, no employees of Purchaser or
any Subsidiary have suffered an "employment loss" (as defined in the WARN Act)
since December 31, 1995.
5.19 Employee Benefit Plans. Section 5.19 of the Purchaser Disclosure
Schedule sets forth each retirement, pension, bonus, stock purchase, profit
sharing, stock option, deferred compensation, severance or termination pay,
insurance, medical, hospital, dental, vision care, drug, sick leave, disability,
salary continuation, legal benefits, unemployment benefits, vacation, incentive
or other compensation plan or arrangement or other employee benefit which is
maintained, or otherwise contributed to or required to be contributed to, by
Purchaser, any Purchaser Subsidiary or any ERISA Affiliate of Purchaser for the
benefit of employees or former employees and directors or former directors of
any of the Subsidiaries and their spouses, dependents or beneficiaries (the
"Purchaser Employee Plans"). True and correct copies of each of the Purchaser
Employee Plans have been delivered to the Seller, along with the most recent
annual report for each Purchaser Employee Plan, any trust agreement relating to
each Purchaser Employee Plan and the most recent summary plan description,
actuarial report and determination letter for each Purchaser Employee Plan.
Purchaser has complied, and currently is in compliance, both as to form and
operation, in all material respects, with the applicable provisions of ERISA and
each other Law or regulation imposed or administered by any Governmental Entity
with respect to each of the Purchaser Employee Plans. Except as set forth in
Section 5.19 of the Purchaser Disclosure Schedule, Purchaser has at no time
maintained, adopted, established, contributed to or been required to contribute
to, otherwise participated in or been required to participate in, or had any
liability with respect to, any "employee benefit plan" within the meaning of
section 3(3) of ERISA. All Purchaser Employee Plans providing pension or
retirement benefits or obligations to current or former employees or their
spouses, dependents and beneficiaries are referred to collectively as "Purchaser
Pension Plan" and identified in Section 5.19 of the Purchaser Disclosure
Schedule. Except as set forth in Section 5.19 of the Purchaser Disclosure
Schedule, no provision concerning the Purchaser Pension Plan is contained in any
collective bargaining agreement affecting any current or former employees of any
Purchaser Subsidiary. Each Purchaser Pension Plan that is required to be
qualified under Section 401(a) and Section 501(a) of the Code has received a
determination letter to such effect and no event has occurred which is
reasonably likely to result in the disqualification of any such Purchaser
Pension Plan. The Purchaser Pension Plan is registered under, and is in material
compliance with, applicable Law. All contributions to, and payments from, each
Purchaser Employee Plan which may have been required to be made in accordance
with the terms of any such Purchaser Employee Plan and, where applicable, the
Laws which govern such Purchaser
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Employee Plan, have been made in a timely manner, and each Purchaser Employee
Plan has otherwise at all times been administered in accordance with its terms
and applicable Law in all material respects. All material reports, Tax Returns
and similar documents with respect to any Purchaser Employee Plan required to be
filed with any Governmental Entity or distributed to any Purchaser Employee Plan
participant have been duly filed on a timely basis or distributed. There are no
pending investigations by any Governmental Entity involving or relating to any
Purchaser Employee Plan, no threatened or pending claims (except for claims for
benefits payable in the normal operation of the Purchaser Employee Plans), suits
or proceedings against any Purchaser Employee Plan or asserting any rights or
claims to benefits under any Purchaser Employee Plan which could give rise to a
liability nor, to the knowledge of Purchaser, are there any facts that could
give rise to any liability in the event of any such investigation, claim, suit
or proceeding. No Notice has been received by Purchaser or any of its
Subsidiaries of any complaints or other proceedings of any kind involving any of
the Purchaser Subsidiaries or any of the employees of any of the Purchaser
Subsidiaries or other potential claimants before any Governmental Entity
relating to any Purchaser Employee Plan or to any of the Purchaser Subsidiaries
and to the knowledge of Purchaser, there is no basis for any such claims. Except
as set forth in Section 5.19 of the Purchaser Disclosure Schedule, the assets of
each Purchaser Employee Plan are at least equal to the liabilities, contingent
or otherwise, of such Purchaser Employee Plan on a plan termination basis, and
each Purchaser Pension Plan is fully funded on a going concern and solvency
basis in accordance with its terms, applicable actuarial recommendations and
applicable Law. Neither Purchaser nor any of its Subsidiaries contribute to or
have an obligation to contribute to, and, to the knowledge of Purchaser, have
not within 6 years prior to the date of this Agreement contributed to or had an
obligation to contribute to, a multi-employer plan within the meaning of Section
3(37) of ERISA. No event has occurred and, to the knowledge of Purchaser, there
exists no condition or set of circumstances in connection with which Seller, any
of its Affiliates or Subsidiaries could be subject to any liability under the
terms of each Purchaser Employee Plan or under any applicable law of any
Governmental Entity, other than any condition or set of circumstances that could
not have a Material Adverse Effect on the Subsidiaries. In connection with the
consummation of the transactions contemplated by this Agreement, no payments
have or will be made under a Purchaser Employee Plan which, in the aggregate,
would be nondeductible under Section 280G of the Code.
The beneficiaries under all Purchaser Employee Plans consist only of
employees or former employees and directors or former directors of any of
Purchaser and its Subsidiaries and their spouses, dependents or beneficiaries.
5.20 Financing. The funds committed to be made available to Purchaser
under the Commitment Letter, together with Purchaser's funds and funds otherwise
available to Purchaser, are sufficient to consummate the Acquisition.
5.21 Brokers. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., which has acted
as financial advisor to Purchaser in connection with the Acquisition, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with this Agreement or the Acquisition based upon
arrangements made by or on behalf of Purchaser.
5.22 Material Contracts. Section 5.22 of Purchaser Disclosure Schedule
lists all of the following written or oral contracts, agreements and commitments
(collectively, the "Purchaser Contracts"):
(i) all employment, consulting or personal services agreements or
contracts with any present or former officer, director or employee of
Purchaser who has an annual salary of $250,000 or more (determined by using
the currency in which they are paid);
(ii) all hazardous waste management agreements and contracts
(including those relating to the receipt, transport, disposal or other
management of waste) between Purchaser and any municipality or other
Governmental Entity or Person which resulted in annual payments in the 1996
fiscal year to or by Purchaser of $2,000,000 or more, which list includes
the term of such agreements or contracts;
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(iii) all contracts, agreements, agreements in principle, letters of
intent and memoranda of understanding which call for or contemplate the
future disposition (including restrictions on transfer and rights of first
offer or refusal) or acquisition of (or right to acquire) any interest in
any business enterprise, and all contracts, agreements and commitments
relating to the future disposition of a material portion of the assets and
properties of Purchaser other than in the ordinary course of business;
(iv) all contracts, agreements with, or commitments to, any Person
containing any provision or covenant relating to the indemnification or
holding harmless by Purchaser of any Person which could result in a
liability to Purchaser of $250,000 or more;
(v) all leases or subleases of real property used in the conduct of
business of Purchaser providing for annual rental payments to be paid by or
on behalf of Purchaser of more than $250,000 in each case;
(vi) all contracts or agreements committing Purchaser to make a
capital expenditure in excess of $250,000;
(vii) all guaranties or other commitments or undertakings under which
Purchaser may be primarily, secondarily, contingently or conditionally
liable for or in respect of (or which creates, constitutes or evidences a
Lien on) any of the assets or properties of Purchaser which secures the
payment or performance on any present or future liability or obligation of
or to Purchaser or its Subsidiaries or any officer or director of Purchaser
or its Subsidiaries; and
(viii) all Purchaser Intercompany and Affiliate Agreements.
Purchaser shall make available to Seller within 15 days of the Closing a
true and correct copy of each Purchaser Contract. Each of the Purchaser
Contracts is in full force and effect and constitutes a legal, valid and binding
obligation of the Purchaser, and, to the knowledge of Purchaser, of each other
Person that is a party to it. Except as set forth in Section 5.22 of the
Purchaser Disclosure Schedule, Purchaser is not, and, to the knowledge of
Purchaser, no other party to any Purchaser Contract is, in violation, breach or
default of such Purchaser Contract or, with or without notice or lapse of time
or both, would be in violation, breach or default of any such Purchaser
Contract, except for any violation, breach or default which, individually or in
the aggregate, could not result in a Material Adverse Effect on the Purchaser.
Except as set forth in Section 5.22 of the Purchaser Disclosure Schedule, no
Purchaser Contract provides that any party thereto other than Purchaser may
terminate such Purchaser Contract by reason of the execution of this Agreement
or the consummation of the Acquisition.
5.23 Bank Accounts. Section 5.23 of the Purchaser Disclosure Schedule
lists each bank, trust company or similar institution with which Purchaser
maintains an account or safe deposit box, and accurately identifies each such
account or safe deposit box by its number or other identification and the names
of all individuals authorized to draw thereon or have access thereto.
5.24 Officers and Directors. Section 5.24 of the Purchaser Disclosure
Schedule accurately lists by name and title all officers and directors of
Purchaser.
5.25 Affiliate Transactions. Purchaser has not entered into directly or
indirectly any transaction (including without limitation the purchase, lease,
sale or exchange of property of any kind or the rendering of any service) with
any Affiliate, except in the ordinary course and pursuant to the reasonable
requirements of such Affiliate's business and upon fair and reasonable terms no
less favorable to such Affiliate than would be obtainable in a comparable
arm's-length transaction with a Person not Purchaser or any Affiliate of
Purchaser.
5.26 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of Purchaser are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, plants,
structures, and equipment of Purchaser are sufficient for the
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continued conduct of Purchaser's businesses after the Closing Date in
substantially the same manner as conducted prior to the Closing Date.
ARTICLE VI
SELLER AND ▇▇▇▇▇▇▇ COVENANTS PENDING CLOSING
Seller and ▇▇▇▇▇▇▇ jointly and severally agree that pending the Closing,
without the prior written consent of Purchaser:
6.1 Conduct of Business. Each Acquired Subsidiary shall conduct its
operations according to its ordinary and usual course of business, comply with
applicable Laws, comply with the terms of Seller Employee Plans (including by
making all contributions required by the terms of the Seller Pension Plan,
applicable actuarial recommendations and applicable Laws), and use its best
efforts to preserve intact its business organization, keep available the
services of its officers and employees and maintain normal business
relationships with customers, suppliers and others having business relationships
with it. Seller and ▇▇▇▇▇▇▇ shall confer on a regular and frequent basis with
one or more designated representatives of Purchaser to report on operational
matters of materiality and to report the general status of on-going operations
of the Acquired Subsidiaries. Seller or ▇▇▇▇▇▇▇ shall notify Purchaser of:
(i) any unexpected material emergency or other material change in the
normal course of business or in the operation of the properties of the
Acquired Subsidiaries;
(ii) the instigation of or any significant development in any
regulatory proceedings or complaints, investigations or hearings of
Governmental Entities (or communications indicating that any may be
contemplated) involving either Seller or any Acquired Subsidiary, which
instigation or development could have a Material Adverse Effect on the
Acquired Subsidiaries, ▇▇▇▇▇▇▇ or Seller;
(iii) proposed budgets, capital expenditures, acquisitions and
dispositions of assets and other decisions involving material properties of
the Acquired Subsidiaries; and
(iv) any matter or event which comes to the knowledge of Seller or
▇▇▇▇▇▇▇ and which makes or could make any representation and warranty made
by Seller or ▇▇▇▇▇▇▇ in Article IV untrue or inaccurate.
Seller and ▇▇▇▇▇▇▇ shall keep Purchaser fully informed of such events and
permit Purchaser's representatives access to all materials prepared in
connection with such events.
6.2 Forbearance by the Acquired Subsidiaries. Neither Seller nor ▇▇▇▇▇▇▇
shall cause or permit any Acquired Subsidiary to (except as contemplated in
Section 3.2):
(i) amend its charter or bylaws (or other similar organizational
documents);
(ii) issue, sell, pledge, dispose of or encumber any shares of its
capital stock or securities convertible into any such shares, or enter into
any agreement or commitment with respect to the issuance or purchase of any
such shares or securities;
(iii) pay any dividend or other distribution in respect of the
Chem-Waste Shares or redeem, purchase or acquire any Chem-Waste Shares;
(iv) incur any indebtedness for borrowed money other than Intercompany
Seller Indebtedness;
(v) make or commit to make any capital investment, capital
expenditure, capital addition or capital improvement, except to the extent
that any single capital expenditure (or series of related capital
expenditures) made or committed to be made by any Acquired Subsidiary and
all capital expenditures made or committed to be made by all Acquired
Subsidiaries do not exceed the amounts set forth in the budget of capital
expenditures included in Section 6.2 of the Seller Disclosure Schedule;
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(vi) except in the ordinary course of business, and except for
settlements made by insurers, enter into any compromise or settlement of
any litigation, proceeding or governmental investigation relating to such
Acquired Subsidiary or its respective properties which requires such
Acquired Subsidiary to make a payment in excess of $250,000 or which would
result in the imposition of any restriction upon the operations of such
Acquired Subsidiary or the disposition of any of its properties, except for
restrictions or dispositions which could not have a Material Adverse Effect
on the Acquired Subsidiaries;
(vii) sell real property or any interest in or improvement upon real
property or any other capital asset the book value or sales price of which
is more than $250,000;
(viii) amend the Seller Pension Plan or Seller Employee Plans or make
any statement relating to any anticipated or proposed increase in benefits
under the Seller Pension Plan or Seller Employee Plans for current, future
or former employees of any of the Acquired Subsidiaries other than strictly
in accordance with the terms of the Seller Pension Plan or Seller Employee
Plans as currently constituted;
(ix) transfer, license, lease, sell, dispose, mortgage or encumber any
assets or properties other than in the ordinary course of business; or
(x) increase compensation, benefits or severance for employees of any
Acquired Subsidiary except as required by any collective bargaining
agreements entered into by the Acquired Subsidiaries as in effect on the
date of this Agreement and except as set forth in Section 6.2 of the Seller
Disclosure Schedule.
6.3 Access and Information. Seller and ▇▇▇▇▇▇▇ shall give to Purchaser and
its representatives (including its lenders and their representatives) full
access during normal business hours to all the properties, books, contracts,
commitments, records, Tax Returns, personnel and advisors of Seller, ▇▇▇▇▇▇▇ and
the Acquired Subsidiaries so that Purchaser may have full opportunity to make
such investigation of the Acquired Subsidiaries as it shall reasonably request
in advance. Seller and ▇▇▇▇▇▇▇ will cause Coopers & ▇▇▇▇▇▇▇ to permit KPMG Peat
Marwick to review and examine the work papers of Coopers & ▇▇▇▇▇▇▇ relating to
Seller, ▇▇▇▇▇▇▇ and the Acquired Subsidiaries. Seller and ▇▇▇▇▇▇▇ will promptly
furnish to Purchaser all information with respect to the Acquired Subsidiaries
which Purchaser may reasonably request. Additionally, Seller and ▇▇▇▇▇▇▇ will
promptly furnish Purchaser all information concerning the Acquired Subsidiaries
required for inclusion in any application, filing, statement or notice to be
made by Purchaser to, or filed or joined in by Purchaser with, any Governmental
Entity in connection with this Agreement or the Acquisition, including the
Purchaser Proxy Statement, and none of such information shall, at the date
furnished, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Seller and
▇▇▇▇▇▇▇ shall prior to the Mailing Date promptly inform Purchaser on becoming
aware that any information concerning any of the Acquired Subsidiaries furnished
to Purchaser pursuant to this Section 6.3 contains any such material
misstatement or omission.
6.4 Supplemental Information. ▇▇▇▇▇▇▇ shall, within five days following
each such filing, furnish Purchaser with a copy of each Current Report on Form
8-K, each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K
filed by ▇▇▇▇▇▇▇ with the SEC. Seller shall also furnish to Purchaser copies of
interim monthly financial statements for the Acquired Subsidiaries (prepared
using the format customarily used by Seller for such internal reports and, no
less frequently than each fiscal quarter, prepared for the Acquired Subsidiaries
for such fiscal quarter on a combined basis) as soon as practicable but in any
event within 35 days after the end of each month or quarter, as the case may be,
together with any information ordinarily prepared in connection with such
financial statements. All such interim financial statements shall fairly present
in all material respects in accordance with U.S. GAAP, consistently applied, the
combined financial position of the Acquired Subsidiaries covered thereby at the
respective dates thereof, and the results of their operations, and cash flows
for the Acquired Subsidiaries covered thereby for the respective periods covered
thereby, subject to year-end
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adjustments (consisting of normal recurring accruals) and the omission of
explanatory footnote materials required by U.S. GAAP.
6.5 Confidentiality. All information and data furnished by Purchaser to
Seller or ▇▇▇▇▇▇▇ under Section 7.3 or any other provision of this Agreement
shall be received, held, treated and, if applicable, returned to Purchaser, in
accordance and compliance with the Confidentiality Agreement.
6.6 Consummation of Acquisition. Seller and ▇▇▇▇▇▇▇ shall use their best
efforts to perform and fulfill, and shall use their best efforts to cause the
Acquired Subsidiaries to perform and fulfill, all conditions and obligations on
their part to be performed and fulfilled under this Agreement, to the end that
the Acquisition shall be consummated.
6.7 Access for Environmental Report. Seller shall cause the Acquired
Subsidiaries to each give to The Toronto-Dominion Bank environmental
consultants, full access to the facilities, personnel and records of the
Acquired Subsidiaries as such consultants shall reasonably request (including
for physical inspection of sites and the drilling of ▇▇▇▇▇ and the conducting of
soil borings and other Phase II investigatory techniques) in order to conduct
Phase I and II environmental assessments of each parcel of real property owned,
or under the management or control of, or operated, leased or occupied by, an
Acquired Subsidiary, and to prepare a report reflecting the findings and
recommendations of such consultants concerning such Phase I and Phase II
environmental assessments. Seller shall use its best efforts to ensure that all
information provided to The Toronto-Dominion Bank environmental consultants in
the course of its conduct of such environmental assessments is accurate,
complete and not misleading (including by omissions). Seller will provide, and
will cause the Acquired Subsidiaries to provide, upon written request therefor,
all consents, approvals and directions (and waivers of privacy, freedom of
information and similar Laws) so as to permit such consultants to have prompt
and unrestricted access to all relevant information in the possession or under
the control of Governmental Entities.
6.8 Acquisitions of Purchaser Common Stock. ▇▇▇▇▇▇▇ and its Affiliates for
a period of three years from the Closing Date shall not purchase any issued and
outstanding shares of Purchaser Common Stock (other than the Purchaser Common
Shares and Additional Purchaser Common Shares), unless ▇▇▇▇▇▇▇ or its Affiliate,
as the case may be, shall have received the consent of a majority of those
members of the Board of Directors of Purchaser appointed jointly by Purchaser
and ▇▇▇▇▇▇▇. Notwithstanding anything in this Section 6.8 to the contrary, the
shares of Purchaser Common Stock purchased by employees of Purchaser or any
Purchaser Subsidiary upon exercise of options issued to any of such employees
pursuant to the Purchaser Employee Plans shall not be aggregated with any shares
of Purchaser Common Stock purchased by ▇▇▇▇▇▇▇ or its Affiliates subsequent to
the Closing Date for purposes of determining whether ▇▇▇▇▇▇▇ or its Affiliates
have complied with the limitation on purchases of shares of Purchaser Common
Stock set forth in the immediately preceding sentence.
6.9 Competition. None of ▇▇▇▇▇▇▇ or its Affiliates for a period of five
years after the Closing Date shall compete with Purchaser or any Purchaser
Affiliate with respect to owning, operating, constructing or otherwise engaging
in the Hazardous and Industrial Waste Business.
ARTICLE VII
PURCHASER COVENANTS PENDING CLOSING
Purchaser agrees that pending the Closing, without the prior written
consent of ▇▇▇▇▇▇▇ and Seller:
7.1 Conduct of Business. Purchaser and its Subsidiaries shall conduct
their operations according to their ordinary and usual course of business,
comply with all applicable Laws, comply with the terms of the Purchaser Employee
Plans (including by making all contributions required by the terms of the
Purchaser Pension Plan, applicable actuarial recommendations and applicable
Laws), and shall use their best efforts to preserve intact their business
organization, keep available the services of their officers and employees and
maintain normal business relationships with customers, suppliers and
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others having business relationships with it. Purchaser shall confer on a
regular and frequent basis with one or more designated representatives of
▇▇▇▇▇▇▇ and Seller to report on operational matters of materiality and to report
the general status of on-going operations of Purchaser. Purchaser shall notify
▇▇▇▇▇▇▇ and Seller of:
(i) any unexpected material emergency or other material change in the
normal course of business or in the operation of the properties of
Purchaser and its Subsidiaries;
(ii) the instigation of or any significant development in any
regulatory proceedings or complaints, investigations or hearings of
Governmental Entities (or communication indicating that any may be
contemplated) involving Purchaser and its Subsidiaries, which instigation
or development could have a Material Adverse Effect on Purchaser and its
Subsidiaries;
(iii) proposed budgets, capital expenditures, acquisitions and
dispositions of assets and other decisions involving material properties of
Purchaser and its Subsidiaries; and
(iv) any matter or event which comes to the knowledge of Purchaser and
which makes or could make any representation and warranty made by Purchaser
in Article V untrue or inaccurate.
Purchaser shall keep ▇▇▇▇▇▇▇ and Seller fully informed of such events and
permit Seller's representatives access to all materials prepared in connection
with such events.
7.2 Forbearance by Purchaser and its Subsidiaries. Purchaser shall not nor
shall it cause or permit any of its Subsidiaries to:
(i) amend or propose to amend its certificate of incorporation (except
as contemplated in Section 7.5) or bylaws;
(ii) issue any shares of Purchaser Common Stock or shares of any
Subsidiary or securities convertible into or exchangeable for shares of
Purchaser Common Stock or shares of any Subsidiary, or enter into any
agreement or commitment with respect to the issuance or purchase of any
such shares or securities, except that Purchaser may (a) issue shares of
Purchaser Common Stock upon any exercise of any presently outstanding
convertible indebtedness of Purchaser which are, in each such case,
described in the Purchaser SEC Filings and (b) issue shares of Purchaser
Common Stock issuable upon any exercise of any options granted under any
presently existing director and employee stock option plans;
(iii) split, combine or reclassify any outstanding shares of Purchaser
Common Stock or shares of any Subsidiary;
(iv) declare, pay or set aside for payment any dividend or other
distribution in respect of any outstanding shares of Purchaser Common Stock
or redeem, purchase or acquire any Purchaser Common Stock;
(v) incur any Indebtedness for borrowed money other than Indebtedness
to Purchaser or another Purchaser Subsidiary; or
(vi) make or commit to make any capital investment, capital
expenditure, capital addition or capital improvement, except to the extent
that any single capital expenditure (or series of related capital
expenditures) made or committed to be made by Purchaser or any Purchaser
Subsidiary and all capital expenditures made or committed to be made by
Purchaser or any Purchaser Subsidiary do not exceed the amounts set forth
in the budget of capital expenditures included in Section 7.2 of the
Purchaser Disclosure Schedule.
(vii) except in the ordinary course of business, and except for
settlements made by insurers, enter into any compromise or settlement of
any litigation, proceeding or governmental investigation relating to
Purchaser or any Purchaser Subsidiary or its respective properties which
requires Purchaser or such Purchaser Subsidiary to make a payment in excess
of $250,000 or which would result in the imposition of any restriction upon
the operations of Purchaser or any
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Purchaser Subsidiary or the disposition of any of its properties, except
for restrictions or dispositions which could not have a Material Adverse
Effect on Purchaser and its Subsidiaries;
(viii) sell real property or any interest in or improvement upon real
property or any other capital asset the book value or sales price of which
is more than $250,000;
(ix) amend the Purchaser Pension Plan or Purchaser Employee Plans or
make any statement relating to any anticipated or proposed increase in
benefits under the Purchaser Pension Plan or Purchaser Employee Plans for
current, future or former employees of Purchaser or its Subsidiaries other
than strictly in accordance with the terms of the Purchaser Pension Plan or
Purchaser Employee Plans as currently constituted;
(x) transfer, license, lease, sell, dispose, mortgage or encumber any
assets or properties other than in the ordinary course of business; or
(xi) increase compensation, benefits or severance for employees of
Purchaser or any Purchaser Subsidiary except as required by any collective
bargaining agreements entered into by Purchaser or such Purchaser
Subsidiary as in effect on the date of this Agreement and except as set
forth in Section 7.2 of the Purchaser Disclosure Schedule.
7.3 Access and Information. Purchaser shall give ▇▇▇▇▇▇▇, Seller and its
representatives full access during normal business hours to all the properties,
books, contracts, commitments, Tax Returns, personnel and advisors, and records
of Purchaser and its Subsidiaries so that ▇▇▇▇▇▇▇ and Seller may have full
opportunity to make such investigation of Purchaser and its Subsidiaries as they
shall reasonably request in advance. Purchaser will cause KPMG Peat Marwick to
permit Coopers & ▇▇▇▇▇▇▇ to review and examine the workpapers of KPMG Peat
Marwick relating to Purchaser and its Subsidiaries. Purchaser will furnish
▇▇▇▇▇▇▇ and Seller all information concerning Purchaser and its Subsidiaries
which ▇▇▇▇▇▇▇ or Seller may reasonably request. Additionally, the Purchaser will
promptly furnish to ▇▇▇▇▇▇▇ and Seller all information concerning Purchaser and
its Subsidiaries required for inclusion in any application, filing, statement or
notice made by ▇▇▇▇▇▇▇ or Seller to, or filed or joined in by ▇▇▇▇▇▇▇ or Seller
with, any Governmental Entity in connection with this Agreement or the
Acquisition, and none of such information shall, at the date furnished, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Purchaser shall prior
to the Mailing Date promptly inform ▇▇▇▇▇▇▇ and Seller on becoming aware that
any information concerning the Purchaser furnished to ▇▇▇▇▇▇▇ and Seller
pursuant to this Section 7.3 contains any such material misstatement or
omission.
7.4 Supplemental Information. Purchaser shall, within five days following
each such filing, furnish ▇▇▇▇▇▇▇ and Seller with a copy of each Current Report
on Form 8-K, each Quarterly Report on Form 10-Q and each Annual Report on Form
10-K filed by Purchaser with the SEC. Purchaser shall also furnish ▇▇▇▇▇▇▇ and
Seller copies of Purchaser's interim monthly consolidated financial statements
as soon as practicable but in any event within 35 days after the end of each
month, together with any information ordinarily prepared in connection with such
financial statements. All financial statements included in each such Quarterly
Report on Form 10-Q and Annual Report on Form 10-K shall be prepared in
conformity with U.S. GAAP, shall present fairly in all material respects, in
accordance with U.S. GAAP, the consolidated financial position of Purchaser and
its Subsidiaries at the end of the periods covered thereby and the results of
their consolidated operations for the periods covered thereby, subject, in the
case of unaudited interim financial statements, to year-end adjustments
(consisting of normal recurring accruals) and the omission of explanatory
footnote materials required by U.S. GAAP.
7.5 Purchaser Stockholders' Meeting and Restated and Amended Certificate of
Incorporation. Purchaser shall call a special meeting of the holders of
Purchaser Common Stock to be held to vote to approve the Agreement, the issuance
of the Purchaser Common Shares, the Additional Purchaser Common Shares, and to
approve the Restated and Amended Certificate of Incorporation of the Purchaser,
which shall provide for the authorization of additional shares of
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authorized Purchaser Common Stock, for the change of the name of the Purchaser
to "▇▇▇▇▇▇▇ Environmental Services, Inc." and the increase in the size of the
Board of Directors to ten members and that the Board of Directors shall consist
of the individuals in Section 7.5 of the Seller Disclosure Schedule. Purchaser
will use its best efforts to hold the Purchaser Stockholders' Meeting no later
than 40 days following the date of mailing of the definitive proxy statement to
be furnished to its stockholders in connection with such meeting (the "Purchaser
Proxy Statement"). Subject to fiduciary duties under applicable Laws, Purchaser
will recommend to its stockholders approval of the matters referred to above,
and agrees to take all lawful action to solicit and use its best efforts to
obtain a favorable vote thereon. In connection with the Purchaser Stockholders'
Meeting, Purchaser shall prepare and file with the SEC, as soon as practicable
following the delivery to Purchaser of the Chem-Waste Group Audited Financial
Statements, a preliminary copy of the Purchaser Proxy Statement. As soon as
practicable thereafter, Purchaser will cause to be mailed to each holder of
Purchaser Common Stock a copy of the Purchaser Proxy Statement complying in all
material respects with the Exchange Act. All information concerning Purchaser or
any of its Subsidiaries included in the Purchaser Proxy Statement will be, on
the date of commencement of the mailing of the Purchaser Proxy Statement (the
"Mailing Date"), true and correct in all material respects without omission of
any material fact required to be stated to make the information set forth
therein, in light of the circumstances under which they were made, not
misleading.
7.6 Confidentiality. All information and data furnished by Seller or
▇▇▇▇▇▇▇ to Purchaser under Section 6.3 or any other provision of this Agreement
shall be received, held, treated and, if applicable, returned to Seller, in
accordance and compliance with the Confidentiality Agreement.
7.7 Consummation of Acquisitions. Purchaser shall use its best efforts to
perform and fulfill, and shall use its best efforts to cause its Subsidiaries to
perform and fulfill, all conditions and obligations on their part to be
performed and fulfilled under this Agreement, to the end that the Acquisition
shall be consummated.
7.8 Letter from Stockholders. On or before the date of this Agreement,
Purchaser has received, and has delivered to ▇▇▇▇▇▇▇ and Seller copies of, a
letter from ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ agreeing
to vote all shares of Purchaser Common Stock held by them for approval of the
matters to be submitted to Purchaser's stockholders for approval pursuant to
Section 7.5 of this Agreement.
7.9 Access for Environmental Report. Purchaser shall and shall cause its
Subsidiaries to give to The Toronto-Dominion environmental consultants, full
access to the facilities, personnel and records of the Purchaser and its
Subsidiaries as such consultants shall reasonably request (including for
physical inspection of sites and the drilling of ▇▇▇▇▇ and the conducting of
soil borings and other Phase II investigatory techniques) in order to conduct
Phase I and II environmental assessments of each parcel of real property owned,
or under the management or control of, or operated, leased or occupied by,
Purchaser and its Subsidiaries, and to prepare a report reflecting the findings
and recommendations of such consultants concerning such Phase I and Phase II
environmental assessments. Purchaser shall and shall cause its Subsidiaries to
use its best efforts to ensure that all information provided to The
Toronto-Dominion Bank environmental consultants in the course of its conduct of
such environmental assessments is accurate, complete and not misleading
(including by omissions). The Purchaser will and will cause its Subsidiaries to
provide, upon written request therefor, all consents, approvals and directions
(and waivers of privacy, freedom of information and similar Laws) so as to
permit such consultants to have prompt and unrestricted access to all relevant
information in the possession or under the control of Governmental Entities.
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ARTICLE VIII
MUTUAL CONDITIONS
The respective obligations of all Parties to consummate the Acquisition and
to take the other actions called for under Articles II and III are subject to
the fulfillment of each of the following conditions on or before the Closing
Date:
8.1 No Adverse Proceedings. No order entered or Law promulgated or enacted
by any Governmental Entity shall be in effect which would prevent consummation
of the Acquisition, and no proceeding brought by a Governmental Entity or any
other Person shall have been commenced and be pending which seeks to restrain,
enjoin, prevent or materially delay or restructure the Acquisition.
8.2 HSR Waiting Period. The waiting period under the HSR Act shall have
expired or otherwise been terminated.
8.3 Purchaser Stockholder Approval. The matters to be submitted to
Purchaser's stockholders as set forth in Section 7.5 of this Agreement shall
have been approved by the requisite vote of the holders of Purchaser Common
Stock.
8.4 Competition Act Matters. Either (i) the Competition Act Director shall
have issued an Advance Ruling Certificate in respect of the Acquisition and
shall not have subsequently withdrawn the Advance Ruling Certificate or
indicated that he has obtained new information as result of which the
Competition Act Director is no longer satisfied that he would not have
sufficient grounds on which to make an application under Section 92 of the
Competition Act with respect to the Acquisition, (ii) the applicable time period
under Section 123 of the Competition Act shall have expired or (iii) the Parties
determine that the Competition Act does not apply to the Acquisition.
8.5 Westinghouse Debt Retirement. The Westinghouse Debt shall be retired
in accordance with that certain Letter of Intent dated January 6, 1997 by and
among Purchaser, ▇▇▇▇▇▇▇ and Westinghouse Electric Corporation.
8.6 Reorganization. Seller shall have reorganized such that Chem-Waste
shall own the entire Hazardous and Industrial Waste Business of Seller and its
Affiliates.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the Acquisition and to take the
other actions called for under Articles II and III are subject to the
fulfillment of each of the following conditions on or before the Closing Date:
9.1 Representations True at Closing. Seller and ▇▇▇▇▇▇▇ shall have
performed and complied in all material respects with all obligations and
agreements required to be performed or complied with by them under this
Agreement at or prior to the Closing, and the representations and warranties of
Seller and ▇▇▇▇▇▇▇ contained in this Agreement shall be true and correct when
made and at and as of the Closing as if made at and as of such date and time;
and the Purchaser shall have received certificates, each dated the Closing Date,
of the President or a Vice President of each of Seller and ▇▇▇▇▇▇▇, to the
effect set forth in this Section 9.1.
9.2 No Adverse Changes. Since the date of this Agreement, no event or
series of events taken in the aggregate shall have occurred which could have a
Material Adverse Effect on the Acquired Subsidiaries or Seller.
9.3 Investment Canada Act. Purchaser shall have received from the ICA
Minister a notice, satisfactory in form and substance to the Purchaser, under
subsection 21(l) of the Investment Canada Act, stating that the Acquisition is
likely to be of net benefit to Canada, or the ICA Minister shall have been
deemed, under Section 21(2) of the Investment Canada Act, to be satisfied that
the Acquisition is likely to be of net benefit to Canada and Purchaser shall
have received a notice from the ICA Minister
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to that effect, or the Parties shall have determined that the Investment Canada
Act does not apply to the Acquisition.
9.4 Competition Act Matters. Either (i) the Competition Act Director shall
have issued an Advance Ruling Certificate in respect of the Acquisition and
shall not have subsequently withdrawn the Advance Ruling Certificate or
indicated that he has obtained new information as a result of which the
Competition Act Director is no longer satisfied that he would not have
sufficient grounds on which to make an application under Section 92 of the
Competition Act in respect of the Acquisition, (ii) the Competition Act Director
or his representative shall have advised the Purchaser (on terms and in form
satisfactory to them) that the Competition Act Director does not currently
intend to make an application under Section 92 of the Competition Act in respect
of the Acquisition, and such advice shall not have been amended or rescinded or
(iii) the Parties determine that the Competition Act does not apply to the
Acquisition.
9.5 Acquisition Financing. Purchaser shall have received the proceeds of
the financings contemplated in the Commitment Letter, or proceeds from other
financing with respect to the Acquisition which are satisfactory to Purchaser,
in an aggregate amount of at least $650,000,000.
9.6 Opinion of Financial Advisor. On the date of this Agreement, Purchaser
has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. to the effect that
on the basis of the assumptions referred to therein, the consideration payable
by Purchaser in connection with the Acquisition, taken as a whole, is fair to
Purchaser.
ARTICLE X
CONDITIONS TO SELLER'S AND ▇▇▇▇▇▇▇'▇ OBLIGATIONS
The respective obligations of Seller and ▇▇▇▇▇▇▇ to consummate the
Acquisition and to take the other actions called for under Articles II and III
are subject to the fulfillment of each of the following conditions on or before
the Closing Date:
10.1 Representations True at Closing. Purchaser shall have performed and
complied in all material respects with all obligations and agreements required
to be performed or complied with by them under this Agreement at or prior to the
Closing and the representations and warranties of Purchaser contained in this
Agreement shall be true and correct when made and at and as of the Closing as if
made at and as of such date and time; and Seller shall have received a
certificate, dated the Closing Date, of the President or Vice President of
Purchaser, to the effect set forth in this Section 10.1.
10.2 No Adverse Changes. Since the date of this Agreement, no event or
series of events taken in the aggregate shall have occurred which could have a
Material Adverse Effect on Purchaser and its Subsidiaries.
10.3 Investment Canada Act. Seller shall have received from the ICA
Minister a notice, satisfactory in form and substance to Seller, under
subsection 21(l) of the Investment Canada Act, stating that the Acquisition is
likely to be of net benefit to Canada, or the ICA Minister shall have been
deemed, under Section 21(2) of the Investment Canada Act, to be satisfied that
the Acquisition is likely to be of net benefit to Canada and Seller shall have
received a notice from the ICA Minister to that effect, or the Parties determine
that the Investment Canada Act does not apply to the Acquisition.
10.4 Competition Act Matters. Either (i) the Competition Act Director
shall have issued an Advance Ruling Certificate in respect of the Acquisition
and shall not have subsequently withdrawn the Advance Ruling Certificate or
indicated that he has obtained new information as a result of which the
Competition Act Director is no longer satisfied that he would not have
sufficient grounds on which to make an application under Section 92 of the
Competition Act in respect of the Acquisition, (ii) the Competition Act Director
or his representative shall have advised Seller (on terms and in form
satisfactory to them) that the Competition Act Director does not currently
intend to make an application under Section 92 of the Competition Act in respect
of the Acquisition, and such advice
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shall not have been amended or rescinded or (iii) the Parties determine that the
Competition Act does not apply to the Acquisition.
10.5 Waiver of Rights Plan. Purchaser shall have exempted the sale of
Purchaser Securities from Purchaser's Rights Plan.
10.6 Acquisition Financing. Purchaser shall have received the proceeds of
the financings contemplated in the Commitment Letter, or proceeds from other
financing with respect to the Acquisition which are satisfactory to ▇▇▇▇▇▇▇ and
Seller, in an aggregate amount of at least $650,000,000.
ARTICLE XI
ADDITIONAL AGREEMENTS
11.1 HSR Act Filings. ▇▇▇▇▇▇▇, Seller and Purchaser shall use their best
efforts to respond as promptly as practicable to all requests received from the
FTC or the Antitrust Division for additional information or documentation with
respect to notification and reports filed under the HSR Act.
11.2 Competition Act Filings. Purchaser and Seller agree to file with the
Competition Act Director, within 10 Business Days after the date of this
Agreement, the information set out in Section 121 of the Competition Act,
certified in accordance with Section 118 of the Competition Act. If the
Competition Act Director, before the expiration of seven days after the date of
filing of such information, requires the information set out in Section 122 of
the Competition Act, Purchaser and Seller shall file the required information
with the Competition Act Director within 10 Business Days after the date the
information is required by him. Purchaser shall prepare and file with the
Competition Act Director, and Seller shall cooperate with Purchaser in their
preparation and filing of, an Advance Ruling Certificate in respect to the
Acquisition, and all Parties will provide to the Competition Act Director all
information requested by him in connection with the Advance Ruling Certificate
application.
11.3 Investment Canada Act Filings. Purchaser agrees to prepare and file
with the ICA Minister, within 10 Business Days after the date of this Agreement,
an application for review under the Investment Canada Act in connection with the
Acquisition, and Seller agrees to cooperate with Purchaser in connection with
such application.
11.4 Other Consents and Approvals. All Parties shall use their best
efforts to obtain before the Closing, in addition to the approvals and consents
referred to in Section 4.5, and all other consents and approvals listed and
disclosed in Section 4.5 of the Seller Disclosure Schedule, Section 4.17 of the
Seller Disclosure Schedule or Section 5.5 of the Purchaser Disclosure Schedule;
provided, however, that nothing in this Section 11.4 or Sections 11.1, 11.2 or
11.3 shall require Purchaser or any Acquired Subsidiary to (i) dispose of or
hold separately all or any material portion of the assets, properties or
businesses of the Acquired Subsidiaries or the assets, properties or business of
Purchaser and its Subsidiaries or agree to the imposition of any material
limitation on the ability of Purchaser and its Subsidiaries after the Closing
(including the Acquired Subsidiaries) to conduct their business and own their
assets and properties after the Closing in substantially the same manner as
before the Closing, or (ii) in the case of Section 11.2 or 11.3 and the
applications referred to therein, make any undertaking relating to any Acquired
Canadian Subsidiary or its assets, properties, business, operations, employees
or practices, which in the reasonable judgment of Purchaser, would or could
have, after the Closing, a Material Adverse Effect on such Acquired
Subsidiaries.
11.5 Publicity. No Party other than Purchaser, ▇▇▇▇▇▇▇ or Seller shall
issue any press release or public announcement pertaining to the Acquisition.
Purchaser, ▇▇▇▇▇▇▇ and Seller shall consult with each Party concerning any such
press release or public announcement and shall use their best efforts to agree
on its text before its public dissemination and before making any filings with
any Governmental Entity or national securities exchange with respect to any such
press release or public announcement. In cases where Purchaser and ▇▇▇▇▇▇▇ and
Seller are unable to agree on a press release or public
A-36
announcement, the Party proposing it will not issue or make it unless the
proposing Party is required to do so by Law, in which case the Party so
obligated shall use its reasonable efforts to provide a copy of the press
release or public announcement to the other Party before its filing or public
dissemination.
11.6 Expenses. Except as otherwise provided in Article XIV, each Party
shall pay its own costs and expenses incurred in connection with the
Acquisition, whether or not the Acquisition is consummated. No such costs or
expenses shall be paid by or charged to any Acquired Subsidiary.
11.7 Securities Law Matters. Seller represents and warrants to Purchaser
that the Purchaser Securities to be issued to Seller under this Agreement are
being acquired, and any Purchaser Common Stock issued pursuant to this Agreement
or Additional Purchaser Common Shares will be acquired, by Seller for
investment, for its own account and not with a view to, or for resale in
connection with, any distribution of Purchaser Securities within the meaning of
the Securities Act. No Purchaser Securities may be sold, transferred, or
otherwise disposed of without registration under the Securities Act and any
applicable state or provincial securities Laws, rules, regulations or policies.
Notwithstanding such representations, and subject to the provisions of this
Agreement and the terms of such securities, Purchaser agrees to permit a sale or
transfer of such securities if Purchaser obtains satisfactory assurances that
the sale or transfer may be made without registration under the Securities Act
and related rules and regulations (and all applicable state or provincial
securities Laws, rules, regulations or policies) including, without limitation,
receipt by Purchaser of an opinion to such effect from counsel reasonably
satisfactory to Purchaser, or compliance by Seller with the requirements of Rule
144, Rule 144A or Regulation S under the Securities Act.
Seller agrees that the Purchaser Convertible Debenture may be inscribed
with the legend set forth on the form thereof attached as Exhibit D to this
Agreement, and that all certificates evidencing Additional Purchaser Common
Shares and Purchaser Common Shares, but only if required under the Securities
Act and applicable state or provincial securities Laws at the time of their
issuance, will be inscribed with the following restrictive legend:
"The shares represented by this certificate have not been registered
(or qualified by prospectus) under the United States Securities Act of
1933, as amended, or the securities laws of any state of the United
States or any province of Canada. Such shares may not be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of in
the absence of such a registration thereunder other than pursuant to
an exemption from such registration or prospectus requirements and
delivery to ▇▇▇▇▇▇▇ Environmental Services, Inc. of an opinion of
counsel reasonably satisfactory to it to the effect that such transfer
is exempt from registration under those laws."
11.8 Rule 144 Reports. For as long as Seller or any Affiliate of Seller
owns shares of Purchaser Common Stock representing at least 10% of total number
of shares of Purchaser Common Stock issued and outstanding from time to time,
Purchaser will
(i) make and keep "current public information" "available" (as both
those terms are defined in Rule 144) at all times;
(ii) timely file with the SEC in accordance with all applicable rules
and regulations, all reports and other documents (a) required of Purchaser
for Rule 144, as it may be amended from time to time (or any rule,
regulation, or statute replacing Rule 144) to be available and (b) required
to be filed under Section 15(d) of the Exchange Act even if Purchaser's
duty to file those reports or documents is suspended or therwise terminated
under the terms of Section 15(d); and
(iii) furnish Seller annually a written statement by Purchaser that it
has complied with the reporting requirements of the Exchange Act and Rule
144, together with a copy of the most recent annual or quarterly report of
Purchaser and such reports and documents filed by Purchaser with the SEC as
may reasonably be requested by Seller.
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11.9 Seller Board Representation. At or prior to the Closing, Purchaser
shall increase the size of its Board of Directors to ten (10) members. At
Closing, Purchaser and Seller, as set forth below, shall use their best efforts
to cause to be elected the following individuals to Purchaser's Board of
Directors: (i) the President and Chief Executive Officer of Purchaser; (ii)
three individuals who shall be designated by Purchaser; (iii) three individuals
who shall be designated by Seller; and (iv) three individuals who shall be
designated jointly by Purchaser and Seller. The Board of Directors shall consist
of three classes of directors. The term of office of the first class shall
expire at the next annual meeting of the Board of Directors, of the second class
one year thereafter and of the third class two years thereafter, and at each
annual meeting of the Board of Directors held after such classification,
directors shall be chosen for a full three year term to succeed those whose
terms expire. Each class of directors shall have at least one representative who
has been nominated solely by the Purchaser, solely by the Seller and by the
Purchaser and Seller acting jointly.
11.10 Seller Guaranties. Except as provided in Section 11.12 and except in
so far as any member of the Seller Group shall incur any liability or obligation
under Article XIV of this Agreement, Purchaser and Chem-Waste agree to use best
efforts, and to cause all other Acquired Subsidiaries to use best efforts, to
cause each member of the Seller Group to be fully and finally released and
discharged from all further liability or obligation in respect of all Seller
Guaranties in respect of which such member of the Seller Group is an obligated
party, within six months following the Closing Date, and to that end, Purchaser
and Acquired Subsidiaries agree to use best efforts to:
(i) cause all liabilities and obligations of each Acquired Subsidiary
which are guaranteed or secured by a Seller Guaranty to be fully and
faithfully performed on a timely basis and in accordance with their terms;
(ii) secure the surrender of and the return to each Seller issuer bank
of each letter of credit which is a Seller Guaranty which is outstanding at
the Closing Date, without draw thereon by any beneficiary thereof;
(iii) secure the cancellation and return to Seller or to the issuer
thereof, as appropriate, without payment thereunder, of all Seller
Guaranties which are performance, suretyship or other bonds; and
(iv) cause to be delivered to the respective members of the Seller
Group written releases, duly executed by all necessary releasing parties,
evidencing the full and final release of each member of the Seller Group
liable thereon or thereunder, from all liabilities and obligations under
each Seller Guaranty which is a guaranty or other direct undertaking or
commitment on the part of such member of the Seller Group.
For purposes of this Section 11.10, "best efforts" on the part of Purchaser
includes:
(i) the offering of a substitution of a like guaranty of Purchaser for
any Seller Guaranty which is a guaranty of Seller; and
(ii) the offering to the beneficiary or beneficiaries of any letter of
credit which is a Seller Guaranty, a substitute letter of credit having an
expiry date no earlier than the expiry date of such Seller Guaranty and
issued by a bank having credit ratings by each of Standard & Poor's Ratings
Services and ▇▇▇▇▇'▇ Investors Services, Inc. which are at least as high as
the credit ratings given by such credit rating organizations for the Seller
issuer bank which is the issuer of such Seller Guaranty.
If at the end of six months following the Closing Date any Seller Guaranty
remains outstanding, then no later than the fifth Business Day following the
expiration of such six-month period, Purchaser shall cause to be delivered to
Seller a letter of credit which shall:
(i) name Seller as the beneficiary thereof;
(ii) be in an amount at least equal to the aggregate outstanding and
undrawn balances of all such outstanding Seller Guaranties;
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(iii) be issued by a bank having credit ratings by each of Standard &
Poor's Ratings Services and ▇▇▇▇▇'▇ Investors Services, Inc. which are at
least as high as the credit ratings given by such credit rating
organizations for the Seller issuer banks;
(iv) have an expiry date no earlier than the expiry date of the last
to expire of the Seller Guaranties; provided, however, that if the letter
of credit to be obtained by the Purchaser for the benefit of Seller
pursuant hereto is to be issued with respect to more than one Seller
Guaranty, the amount of such letter of credit will reduce automatically and
without any action by any party upon the expiring date of each Seller
Guaranty by the amount thereof or upon the acceptance by the beneficiary of
such Seller Guaranty of a substitute letter of credit provided by
Purchaser; and
(v) be payable at sight to Seller upon presentation of a written,
sworn affidavit of an officer of Seller stating that the Seller reclamation
credit issued by such Seller issuer bank has been drawn upon by the
beneficiary thereof in an amount not less than the draw being made by
Seller on such letter of credit.
Notwithstanding any provisions of this Section 11.10, any liabilities or
obligations of any member of the Seller Group under Section 11.12 or Article XIV
of this Agreement shall remain in full force and effect and shall not be reduced
or replaced by any substitute hereunder.
11.11 Guarantees of Performance of Retained Subsidiaries. ▇▇▇▇▇▇▇ and
Seller shall use all reasonable efforts to cause each Acquired Subsidiary to be
fully and finally released and discharged from all further liability or
obligation in respect of any guarantee given by any Acquired Subsidiary for
obligations of any Retained Subsidiary and agree to indemnify and hold harmless
Purchaser and each Acquired Subsidiary from and against any and all Damages
suffered by Purchaser or the Acquired Subsidiaries in connection with any such
guarantee and any and all other liabilities or obligations relating to the
Retained Subsidiaries.
11.12 Pinewood Security. ▇▇▇▇▇▇▇ has provided its corporate guarantee to
provide financial assurance for the costs of clean-up and/or environmental
impairment restoration incurred following closure or following a final order to
cease operations and commence closure of the hazardous waste management facility
operated by ▇▇▇▇▇▇▇ Environmental Services of South Carolina, Inc. in Pinewood,
South Carolina. This financial assurance required by the South Carolina
Department of Health and Environmental Control is comprised of the corporate
guarantee, the State Permitted Sites Fund and the GSX Contribution Fund. ▇▇▇▇▇▇▇
shall maintain, solely at its expense, until the tenth anniversary of the
Closing Date, the corporate guarantee or such other form of financial mechanism
as may be permitted by the relevant Environmental Laws to provide the required
financial assurance. This commitment shall not extend to any amounts released
from the GSX Contribution Fund. Notwithstanding this Section 11.11, Purchaser
shall be responsible for the costs of any clean-up and/or environmental
restoration incurred.
11.13 Employees. Unless and until the Closing shall have occurred, neither
Party shall for a period of 18 months beginning January 6, 1997, without the
prior written consent of the other Party, solicit the employment of, or employ
or offer to employ, any employees of the other Party. This prohibition shall
only extend to employees in senior management, or key employees in operations,
regulatory, financial, marketing and sales or permitting aspect of a Party's
business. This prohibition shall not apply to any employee 90 days after such
employee has left the employ of either Party.
11.14 Purchaser Stock Option Plan. Notwithstanding any other provision of
this Agreement, on or prior to the Closing Date the Purchaser may amend its
Stock Option Plan to permit the immediate vesting of stock options held by any
employee of Purchaser or any of its Subsidiaries, and ▇▇▇▇▇▇▇, Seller and the
Purchaser agree that the Purchaser shall within 60 days after the Closing Date
file with the SEC and use its best efforts to have declared effective a
registration statement with respect to the Purchaser Common Stock to be issued
upon the exercise of options granted under the Stock Option Plan.
11.15 Affiliate Transactions and Business Combination. ▇▇▇▇▇▇▇ and Seller
agree with Purchaser that neither ▇▇▇▇▇▇▇, nor Seller, nor any Affiliate of
▇▇▇▇▇▇▇ or Seller,
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(i) shall enter into directly or indirectly any transaction (including
without limitation the purchase, lease, sale or exchange or property of any
kind or the rendering of any service) with Purchaser or any of its
Subsidiaries, except in the ordinary course and pursuant to the reasonable
requirements of Purchaser's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Purchaser or such Subsidiary than
would be obtainable in a comparable arm's-length transaction with a Person
not ▇▇▇▇▇▇▇, Seller or an Affiliate of ▇▇▇▇▇▇▇ or Seller. Any agreement
approved by a majority of the independent director of Purchasers shall be
deemed to be upon fair and reasonable terms.
(ii) shall engage in any business combination (as such term is defined
in Section 203 of the Delaware General Corporation Law) with Purchaser or
any of its Subsidiaries unless the stockholders of the Purchaser (other
than Seller or its Affiliates) receive consideration and are otherwise
treated on terms no less favorable than the consideration and terms
received by Seller or its Affiliates in connection with such business
combination.
11.16 Directors and Officers. Purchaser shall, and ▇▇▇▇▇▇▇ and Seller
shall cause Purchaser, and any successor of Purchaser, to maintain in effect for
a period of six years after the Closing Date the identical provisions currently
set forth in the Restated Certificate of Incorporation and Bylaws of Purchaser
with respect to the limitation on the personal liability of directors and the
indemnification of directors and officers of Purchaser and its Subsidiaries,
except for revisions that would increase the protection afforded thereunder.
Seller, and any Affiliate of Seller that is the record or beneficial owner of
shares of Purchaser Common Stock, shall vote to authorize, and shall cause any
member of the Board nominated by Seller or any of its Affiliates to authorize,
any indemnification made by Purchaser or any successor of Purchaser to such
directors and officers to the extent that any such approval may be required by
Section 145 of the Delaware General Corporation Law. In addition, Purchaser
shall, and ▇▇▇▇▇▇▇ and Seller shall cause Purchaser or its successors to
maintain in effect Purchaser's current directors and officers' liability
insurance policies (or policies providing comparable directors and officers'
liability insurance coverage) (the "Policies") covering current and former
members of the Board of Directors and officers of Purchaser (for liabilities
resulting from or arising out of this Agreement or events that occurred on or
prior to the Closing Date) for a period of at least six years after the Closing
Date and continuing members of the Board of Directors of the Purchaser (for
liabilities resulting from or arising out of events that occurred on or prior to
the third anniversary of the Closing Date) for a period of at least nine years.
Notwithstanding anything in the immediately preceding sentence to the contrary,
in the event that Purchaser determines that the Policies can only be maintained
or procured, as the case may be, at too great an expense to Purchaser or its
successor, Purchaser or its successor shall be permitted to substitute, and
Seller and ▇▇▇▇▇▇▇ shall cause Purchaser or its successor to substitute, in lieu
of the Policies, self-insurance or other insurance pursuant to which such
members of the Board of Directors shall be provided with similar directors and
officers' liability coverage; provided, however, that any such substitution
shall not cause a lapse of the directors and officers' liability coverage.
ARTICLE XII
TAX MATTERS
12.1 Future Tax Returns.
(i) Seller shall prepare and file, or cause to be prepared and filed,
in a timely fashion and at its sole expense all Tax Returns of the Acquired
Subsidiaries for the periods ended August 31, 1996 and the Closing Date
(which shall include the income of the U.S. Acquired Subsidiaries for the
periods ended August 31, 1996 and the Closing Date). The Tax Return for the
period ending on the Closing Date shall include the results of operations
of the Acquired Subsidiaries for the Pre-Closing Tax Period beginning
September 1, 1996, and ending on the Closing Date. Seller shall prepare all
Tax Returns in a manner consistent with prior periods. Seller shall pay or
discharge any and all U.S. Tax reflected on such Tax Returns, including the
tax liability of any member or former member of the Seller Group, however
measured, for which any Acquired
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Subsidiary is or may be held liable. Each such payment shall be made on or
before the date any such payment is due. Seller shall receive any tax
refunds reflected on such returns. The Acquired Subsidiaries will promptly
provide the information to Seller to prepare such returns.
(ii) Purchaser shall prepare and file in a timely fashion, all
corporate federal and provincial Tax Returns of the Acquired Canadian
Subsidiaries for the period ended August 31, 1997 (which shall include the
income of the Acquired Canadian Subsidiaries for the periods ended prior to
the Closing Date, and the period ended August 31, 1997). At least 15 days
prior to the filing of any Tax Returns required under this Section
12.1(ii), ▇▇▇▇▇▇▇ shall pay the Acquired Canadian Subsidiaries or the
Purchaser for any and all taxes reflected on such Tax Returns attributable
to Taxes accrued or recognized prior to the Closing Date, for which any
Acquired Canadian Subsidiary is or may be held liable. ("Seller's
Post-Closing Taxes") The Purchaser or the Acquired Canadian Subsidiary
shall reimburse ▇▇▇▇▇▇▇ for any Tax Refunds reflected on such returns
attributable to Taxes recoverable, accrued or recognized prior to the
Closing Date, determined on an after-tax basis.
(iii) With respect to all taxable periods including any Pre-Closing
Tax Period, the Seller Group, Purchaser, and the Acquired Subsidiaries will
make all computations, allocations, determinations and elections affecting
the Seller Group, and the Acquired Subsidiaries in accordance with the
provisions of the regulations promulgated under Section 1502 of the Code,
the provisions of the Income Tax Act and state, provincial and local income
tax rules. Unless one of the preceding provisions requires otherwise, the
Seller Group's share of income to be reported on such Acquired
Subsidiaries' return will be computed as of the Closing Date.
12.2 Tax Covenants.
(i) Without the prior written consent of Purchaser, neither the Seller
Group nor any Affiliate of the Seller Group shall, to the extent it may
affect or relate to any of the Acquired Subsidiaries, make or change any
tax election, change any annual tax accounting period, adopt or change any
method of tax accounting, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim, assessment or proposed assessment,
surrender any right to claim a Tax Refund, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
or take or omit to take any other action, if any such action or omission
would have the effect of increasing any post-closing Tax liability of any
Acquired Subsidiary, Purchaser or any Affiliate of Purchaser.
(ii) Without the prior written consent of Seller, neither Purchaser
nor its Affiliates shall, to the extent it may affect or relate to any of
the Acquired Subsidiaries, make or change any tax election, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim,
assessment or proposed assessment, surrender any right to claim a Tax
Refund, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment or take or omit to take any other
action, if any such action or omission would affect a Pre-Closing Tax
Period.
(iii) Purchaser and the Seller Group agree that so long as any books,
records and files retained by the Seller Group and their Affiliates
relating to the business of the Acquired Subsidiaries, or the books,
records and files delivered to the control of Purchaser pursuant to this
Agreement to the extent they relate to the operations of the Acquired
Subsidiaries prior to the Closing Date, remain in existence and available,
each Party (at its own expense) shall have the right upon prior reasonable
notice to inspect and to make copies of the same at any time during
business hours for any proper purpose. Purchaser and the Seller Group and
their Affiliates shall use reasonable efforts not to destroy or allow the
destruction of any such books, records and files until the later of the
expiration of all applicable statutes of limitation and extensions thereof,
or the conclusion of administrative or judicial proceedings with respect to
Taxes for such period.
(iv) Purchaser will make its personnel or that of the Acquired
Subsidiaries available to answer requests related to Tax Proceedings as
defined in Section 12.4(ii). Purchaser will either
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provide documents needed to respond to federal and state information
requests or queries for such proceedings within 30 days or allow Seller to
take possession of records necessary to answer such requests.
(v) For income Tax purposes, each share of Purchaser Common Stock
shall be valued at the average the daily Closing Prices per share of
Purchaser Common Stock for the five consecutive trading days preceding the
Closing Date. The "Closing Price" for each trading day shall be the
reported last sale price of the New York Stock Exchange.
12.3 Other Tax Matters, Post-Closing Cooperation.
(i) If Purchaser receives any Tax Refund (including interest and
penalties refunded) for a Pre-Closing Tax Period of an Acquired Subsidiary,
other than any such Tax Refund arising from the application of a loss or
Tax credit arising in a Post-Closing Tax Period, then such persons shall
pay to Seller Group the actual amount of such Tax Refund as and when
received, on an after-tax basis.
(ii) Seller and Seller Group agree to cooperate with Purchaser in the
preparation and filing of any application to carryback a loss or Tax credit
arising in a Post-Closing Tax period to Pre-Closing Tax Period and Seller
or Seller Group shall pay to Purchaser and the actual amount of any Tax
Refund as and when received on an after-tax basis.
(iii) All transfer, real property transfer, recording, gains, stock
transfer, documentary, sales, use, stamp, registration, goods and services,
value added and other such Taxes and fees (including any penalties and
interest) incurred in connection with the sale of the stock of the Acquired
Subsidiaries, or otherwise in connection with the transactions effected
pursuant to this Agreement (collectively, the "Transfer Taxes") shall be
borne and paid by the Seller Group. To the extent permissible under Tax
Laws, the Seller Group shall undertake all actions and file such Tax
Returns or other forms or instruments as may be necessary to make payment
of any Transfer Taxes due prior to or on the Closing Date, and present
evidence of such payment at the Closing Date to Purchaser.
(iv) Any payment to be made to any party under Section 12 shall be
made within 15 days of demand (or receipt in the event of a refund of any
overpayment). Payment after that time shall bear interest at the rate of
interest prescribed by IRC Sec 6621(a)(1) and (z).
12.4 Tax Controversies.
(i) Purchaser and Seller shall each use reasonable efforts to keep the
other advised as to the status of Tax audits and litigation involving any
direct, indirect or contingent Taxes which could give rise to a liability
of the Seller Group to Purchaser under this Agreement for any pre-closing
period (a "Tax Liability Issue"). Seller agrees to timely notify Purchaser
regarding any proposed written communication (i.e., communications not
relating to inquiries or requests for information) by Seller to any such
Taxing Authority with respect to a Tax Liability Issue to the extent that
the issue would impact a post-closing period of Purchaser or the Acquired
Subsidiaries. Purchaser shall have the right to consult with Seller
regarding any response to such communications.
(ii) Seller shall have full responsibility for and discretion in
handling any Tax Controversy including, without limitation, an audit, a
protest to the appeals division of the IRS, or similar state or local
appellate division, and litigation in the U.S. Tax Court, or any other
court of competent jurisdiction (a "Tax Proceeding") for any pre-closing
period. Purchaser or the Acquired Subsidiaries shall give the Seller Group
the ability to handle any Tax Controversy whether by power of attorney or
as otherwise required by the Taxing Authority. However, upon request by
Purchaser and with the consent of Seller, Purchaser at its own expense
shall have full responsibility and discretion in handling any Tax
Proceeding for any Pre-closing tax period.
(iii) In the event that any one of the Acquired Subsidiaries is
required or elects to pay any Tax, file any bond or deposit any amount in
connection with a Tax Proceeding, Seller shall loan to Purchaser no later
than three (3) Business Days before such payment is required to be made,
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without interest and until a final determination with respect to such Tax
has occurred, one hundred percent of the amount to be paid or deposited by
Purchaser. Within three (3) Business Days of the receipt by Purchaser of a
refund of any amount loaned to it by Seller (including any interest
received by Purchaser), Purchaser shall pay such refunded amount to Seller
net of any Tax cost incurred by Purchaser and its Affiliates as a result of
such refund.
(iv) If the completion or settlement of any Tax Proceeding relating to
a Pre-Closing Tax Period, tax controversy or amended Tax Return gives rise
to a Tax Benefit for any Post-Closing Tax Period to Purchaser, the Acquired
Subsidiaries and any Affiliates, then such persons shall pay to Seller the
actual amount of such Tax Benefit realized by such persons as it relates to
such Pre-Closing Tax Period as and when received on an after-tax basis. No
payment will be made under this paragraph for less than $50,000 per period
or for a period of more than ten years.
(v) If the completion or settlement of any Tax Proceeding relating to
a Pre-Closing Tax Period, tax controversy or amended Tax Return gives rise
to a tax liability for any Post-Closing Tax Period to Purchaser, the
Acquired Subsidiaries and any Affiliates, then Seller shall pay to such
persons the actual amount of such tax liability on an after-tax basis as
and when paid. No payment will be made under this paragraph for less than
$50,000 per period or for a period of more than ten years.
(vi) By written notice to Seller, Purchaser shall have the right to
instruct Seller to forego proceedings with respect to one or more items for
which Seller may be liable to indemnify Purchaser. Such notice shall
constitute a waiver of the right of Purchaser to indemnification for any
Taxes arising out of such item for the period or periods involved, but
shall not otherwise waive any rights of Seller to any refund of a deposit
under Section 12.4(iii).
ARTICLE XIII
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
13.1 Nature of Statements. All, but only those, statements contained in
this Agreement or any Disclosure Schedule or certificate delivered or by on
behalf of a Party under this Agreement shall be deemed representations and
warranties made by that Party in connection with the transactions contemplated
by this Agreement.
13.2 Survival of Representations, Warranties and Covenants. Regardless of
any investigation made at any time by or on behalf of any Party or of any
information any Party may have as a result of any such investigation, all
representations and warranties made in or pursuant to this Agreement (including
in any Disclosure Schedule or certificate delivered under this Agreement) shall,
except as otherwise provided in this Section 13.2, terminate on the Closing
Date. The representations and warranties made by ▇▇▇▇▇▇▇ and Seller in Sections
4.12 and 4.16 and the representations and warranties made by Purchaser in
Sections 5.12 and 5.16 shall survive until the sixth anniversary of the Closing
Date. The representations and warranties made by ▇▇▇▇▇▇▇ and Seller in Sections
4.2, 4.3, the second paragraph of 4.6, 4.13 and 4.14 and the representations and
warranties made by Purchaser in Sections 5.2, 5.3, 5.13 and 5.14 shall survive
indefinitely. If a bona fide claim is asserted before the expiration of the
survival period of a representation or warranty, such representation, warranty,
covenant, obligation or agreement shall continue in effect until the claim is
settled, adjudicated or otherwise resolved. With respect to this Section 13.2,
"known" means with respect to any matter referred to above that (i) the matter
is known to any Person who is or was an officer, director, employee or agent of,
or consultant to, ▇▇▇▇▇▇▇ or any member of the Seller Group (including the
Acquired Subsidiaries) or Purchaser or any of its Subsidiaries on or before the
Closing Date or (ii) any such Person is aware of facts which would have led a
reasonable Person to have conducted an investigation or inquiry likely to have
led to discovery of such matter.
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ARTICLE XIV
INDEMNIFICATION
The respective indemnification obligations of (i), ▇▇▇▇▇▇▇ and Seller and
(ii) Purchaser are as follows:
14.1 Indemnification by ▇▇▇▇▇▇▇ and Seller. ▇▇▇▇▇▇▇ and Seller jointly and
severally agree to pay and to indemnify and hold harmless Purchaser and each
Acquired Subsidiary and their respective Affiliates (but, in the case of the
Acquired Subsidiaries, only their respective Affiliates after the Closing),
successors and assigns from and against any and all Damages suffered by
Purchaser or the Acquired Subsidiaries which are caused by, arising out of or in
respect of:
(i) any and all Chem-Waste Group Taxes attributable to any Pre-Closing
Tax Period (including any transaction consummated in such Pre-Closing Tax
Period);
(ii) any Pre-Closing Seller Insurance Claims;
(iii) any breach or default in the performance by ▇▇▇▇▇▇▇ or Seller of
(a) any covenant or agreement contained in this Agreement to be performed
on or after the Closing Date or (b) any representation or warranty made
pursuant to Article IV, but only to the extent such representation or
warranty survives the Closing pursuant to Section 13.2; or
(iv) any Environmental Liability or Environmental Claim arising as a
result of any act or omission, including any Release, occurring prior to
the Closing Date, but only to the extent such Environmental Liability or
Environmental Claim
(a) was known to ▇▇▇▇▇▇▇ or a member of the Seller Group and not
disclosed in writing to Purchaser; or
(b) arose with respect to the treatment of waste at the facility
operated by Marine Shale Processors or the remediation of contaminated
soils and water arising from the former lagoon sites and operation of
the incinerator at Mercier, Quebec, but only to the extent that the
aggregate cash expenditures with respect to any such Environmental
Liabilities or Environmental Claims exceeds in the aggregate (I)
$1,000,000 during such year and (II) since the Closing Date an amount
equal to the product of $1,000,000 times the number of years that have
elapsed since the Closing Date; provided, however, that there shall be
no liability under this paragraph (iv)(b) for any cash expenditures
incurred more than six years after the Closing Date.
The amount of any damages that ▇▇▇▇▇▇▇ and Seller are required to
indemnify Purchaser against under (iii)(b) above, shall be the amount by
which the aggregate of all such damages exceeds $2 million.
14.2 Indemnification by Purchaser. Purchaser agrees to pay and to
indemnify and hold harmless and defend each of ▇▇▇▇▇▇▇, Seller and their
Affiliates (but not any Acquired Subsidiary after the Closing), and their
respective successors and assigns from and against any and all Damages suffered
by Seller which are caused by or arising out of or in respect of:
(i) all Chem-Waste Group Taxes attributable to any Post-Closing Tax
Period (including, any transaction considered in such Post-Closing Tax
Period);
(ii) any breach or default in the performance by Purchaser of any (a)
covenant or agreement contained in this Agreement to be performed after the
Closing Date or (b) any representation or warranty made pursuant to Article
V, but only to the extent such representation or warranty survives the
Closing pursuant to Section 13.2 of this Agreement; or
(iii) any Environmental Liability or Environmental Claim of any
Acquired Subsidiary, but only to the extent that such Environmental
Liability or Environmental Claim
(a) was known to Purchaser and not disclosed in writing to ▇▇▇▇▇▇▇
and Seller; or
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(b) arose solely as a result of an act or omission, including any
Release, occurring after the Closing Date;
provided, however, that there shall be no liability under this
paragraph (iii) for any Environmental Liability or Environmental Claim
asserted more than six years after the Closing Date.
(iv) Seller Guaranties listed and identified in Section 4.21 of the
Seller Disclosure Schedule.
The amount of any damages that Purchaser is required to indemnify
▇▇▇▇▇▇▇, Seller and their Affiliates against under (ii)(b) shall be the
amount by which the aggregate of all such damages exceeds $2 million.
14.3 Third Party Claim. If any Party (for purposes of this Section 14.3,
an "Indemnified Party") becomes aware of a fact, circumstance, claim, situation,
demand or other matter for which it or any other Indemnified Party has been
indemnified under this Article XIV and which has resulted or could result in a
liability owed by the Indemnified Party to a third party or a claim otherwise
advanced by a third party against the Indemnified Party (any such items being
herein called a "Third Party Claim"), the Indemnified Party, shall give prompt
written notice of the Third Party Claim to the Party obligated to provide
indemnity with respect to such Third Party Claim (for purposes of this Section
14.3, the "Indemnifying Party"), requesting indemnification therefor, specifying
the nature of and specific basis for the Third Party Claim and the amount or
estimated amount thereof to the extent then feasible; provided, however, a
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
materially prejudiced by such failure. The Indemnifying Party shall have the
right to assume the defense or investigation of such Third Party Claim and to
retain counsel and other experts to represent the Indemnified Party and shall
pay the fees and disbursements of such counsel and other experts. If within 30
days after receipt of the request (or five days if litigation is pending) the
Indemnifying Party fails to give notice to the Indemnified Party that the
Indemnifying Party assumes the defense or investigation of the Third Party
Claim, an Indemnified Party may retain counsel and other experts (whose fees and
disbursements shall be at the expense of the Indemnifying Party) to file any
motion, answer or other pleading and take such other action which the
Indemnified Party reasonably deems necessary to protect its interests or those
of the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnifying Party. If an Indemnifying Party assumes the
defense or investigation and retains such counsel and other experts, any
Indemnified Party shall have the right to retain its own counsel and other
experts, but the fees and expenses of such counsel and other experts shall be at
the expense of the Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party mutually agree to the retention of such counsel and other
experts or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would, in the opinion of
counsel retained by the Indemnifying Party, be inappropriate due to actual or
potential differing interests between them.
If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any Third
Party Claim which the Indemnifying Party defends, or, if appropriate and related
to Third Party Claim in question, in making any counterclaim against the person
asserting the Third Party Claim, or any cross-complaint against any Person. No
Third Party Claim may be settled by the Indemnified Party without the consent of
the Indemnifying Party, which consent will not be unreasonably withheld. Unless
the Indemnifying Party agrees in writing that the Damages to the Indemnified
Party resulting from such settlement are fully covered by the indemnities
provided herein and that such Damages are fully compensable in money, no Third
Party Claim may be settled without the consent of the Indemnified Party, which
consent will not be unreasonably withheld. Except with respect to settlements
entered without the Indemnified Party's consent pursuant to the immediately
preceding sentence, to the extent it is determined that the Indemnified Party
has no right under this Article XIV to be indemnified by the Indemnifying Party,
shall promptly pay to the Indemnifying Party any amounts previously paid or
advanced by the Indemnifying Party with respect to such matters pursuant to this
Article XIV.
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After the delivery of notice of a Third Party Claim hereunder, at the
reasonable request of the Indemnifying Party the Indemnified Party shall grant
the Indemnifying Party and its representatives full and complete access to the
books, records and properties of the Indemnified Party to the extent reasonably
related to the matters to which the notice relates. The Indemnifying Party will
not disclose to any third person (except its representatives) any information
obtained pursuant to the preceding sentence which is designated as confidential
by the Indemnified Party and which is not otherwise generally available to the
public, except as may be required by applicable law. The Indemnifying Party
shall request its representatives not to disclose any such information (except
as may be required by applicable law). All such access shall be subject to the
normal safety regulations of the Indemnified Party, and shall be granted under
conditions which will not unreasonably interfere with the business and
operations of the Indemnified Party.
14.4 Claims Between the Parties. If any Party (for purposes of this
Section 14.4, an "Indemnified Party") becomes aware of a fact, circumstance,
claim, situation, demand or other matter (other than a Third Party Claim) for
which it or any other Indemnified Party has been indemnified under this Article
XIV and which has resulted or could result in a liability (any such items being
herein called a "Claim") being owed to the Indemnified Party by another Party
(the "Indemnifying Party"), the Indemnified Party shall give prompt written
notice to the Indemnifying Party of the Claim, stating the nature and basis of
the Claim and the amount claimed thereunder, together with supporting
information to the Claim, if any. If the Indemnifying Party does not notify the
Indemnified Party within 30 days from the date such Claim notice is given that
it disputes the Claim, the amount of the Claim shall conclusively be deemed to
be a liability of the Indemnifying Party hereunder.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment. This Agreement may be amended by the Parties, by or
pursuant to action taken by their respective Boards of Directors, at any time
before or after approval by Purchaser's stockholders of the matters specified in
Section 7.5, but after such approval, no amendment shall be made which
materially increases the amount or materially alters the terms of the Purchaser
Securities without the further approval of Purchaser's stockholders. This
Agreement may be amended only by a written instrument executed by all of the
Parties.
15.2 Waiver. At any time on or before the Closing Date, each Party may (i)
extend the time for the performance of any of the obligations or other acts of
any other Party, (ii) waive any inaccuracies in the representations and
warranties made in this Agreement or in a Disclosure Schedule of any other
Party, (iii) waive compliance with any of the agreements or conditions of this
Agreement which may be legally waived, and (iv) grant consents under this
Agreement; provided, however, that no such extension, waiver or grant shall be
effective until all Parties, other than the Party receiving the extension,
waiver or grant, shall have given such extension, waiver or grant. Any such
extension, waiver or grant shall be valid only if evidenced by a written
instrument executed by the Party giving it.
15.3 Termination. This Agreement may be terminated at any time before the
Closing by:
(i) the mutual consent of the Boards of Directors of Seller and
Purchaser;
(ii) by either Purchaser or Seller if the Acquisition has not been
consummated on or before the later to occur of April 30, 1997 or the 61st
day after the SEC has approved the Purchaser Proxy Statement (or any later
date which may be agreed to by the mutual written consent of Purchaser and
Seller); provided, however, that such right to terminate this Agreement
shall not be available to any Party that has breached in any material
respect its obligations under this Agreement in any manner that has
proximately contributed to the failure of the Acquisition to occur on or
before such date; or
(iii) by either Seller or Purchaser if the stockholders of Purchaser
shall have failed to approve at the Purchaser Stockholders' Meeting the
matters specified in Section 7.5.
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15.4 Consequences of Termination.
(i) If this Agreement is terminated as provided in Section 15.3, it
shall forthwith become void and, except as otherwise hereinafter provided
in this Section 15.4, there shall be no liability or obligation on the part
of any Party or their respective officers or directors. Notwithstanding the
foregoing, the Confidentiality Agreement shall also survive such a
termination. Nothing in this Section 15.4 shall, however, relieve any Party
from any liability for any breach of this Agreement.
(ii) Notwithstanding paragraph (i) of this Section 15.4, if this
Agreement is terminated solely because the stockholders of Purchaser fail
to approve the matters referred to in Section 7.5 hereof, and the failure
to receive such stockholder approval directly results from the existence of
a third party offer to acquire at least 51% of Purchaser's stock or assets
(whether in the form of a tender offer, merger proposal, asset purchase or
otherwise), then Purchaser will pay to Seller within 10 days of such
termination of this Agreement an amount equal to $10 million.
(iii) Notwithstanding paragraph (i) of this Section 15.4, if this
Agreement is terminated because of the breach or default under this
Agreement of ▇▇▇▇▇▇▇ or Seller, then Seller will pay to Purchaser within 10
days of such termination of this Agreement an amount equal to $10 million.
ARTICLE XVI
GENERAL PROVISIONS
16.1 Non-Business Days. If the date on which any action (including the
delivery of notices) to be taken under this Agreement is to occur falls on a day
which is not a Business Day, such action will be deemed timely taken if taken on
the first Business Day following.
16.2 Notices. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by telecopier (with
receipt confirmed) to a Party at the address or telecopy number, as applicable,
set forth below (as any such address or telecopier number may be changed from
time to time by notice similarly given):
(1) if to Seller or ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(2) if to Purchaser, to:
▇▇▇▇▇▇▇ Environmental Services, Inc.
One ▇▇▇▇▇▇▇ Plaza
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
16.3 Entire Agreement. This Agreement, its Exhibits, the Disclosure
Schedules, all documents delivered under this Agreement and the Confidentiality
Agreement constitute, and together with the Ancillary Agreements upon their
execution and delivery as herein provided will constitute, the entire agreement,
and supersede all of the prior agreements and undertakings, both written and
oral among the Parties, or any of them, with respect to the subject matter of
this Agreement.
16.4 Assignment; Binding Effect. This Agreement may not be assigned by any
of the Parties. Subject to the preceding sentence, this Agreement shall be
binding upon the Parties and their respective successors and assigns.
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16.5 Counterparts. This Agreement may be executed in counterparts which
together shall constitute a single agreement.
16.6 Governing Law; Jurisdiction. This Agreement and the rights and
obligations of the parties created hereby shall be governed by the internal Laws
of the State of Delaware without regard to its conflict of law rules. The
Parties irrevocably consent to the non-exclusive jurisdiction of the courts of
the State of Delaware in connection with any dispute between or among them
arising under this Agreement or any Ancillary Agreement.
16.7 Severability of Provisions. If a provision of this Agreement or its
application to any Person or circumstance, is held invalid or unenforceable in
any jurisdiction, to the extent permitted by Law, such provision or the
application of such provision to Persons or circumstances other than those as to
which it is held invalid or unenforceable and in other jurisdictions, and the
remaining provisions of this Agreement, shall not be affected.
16.8 Specific Performance. Each Party agrees that one or more other
Parties would be irreparably damaged if any provision of this Agreement were not
performed in accordance with its specific terms or was otherwise breached.
Therefore, the Parties agree that each Party shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement or any of its provisions
and to specifically enforce this Agreement its terms and provisions in any
action instituted in the courts of the State of Delaware subject matter
jurisdiction, in addition to any other remedy to which a Party may be entitled,
at law or in equity.
16.9 Joint Drafting. This Agreement and its Exhibits have been jointly
drafted by the Parties and their counsel. Neither this Agreement nor any of its
Exhibits shall be construed against any Party based on its authorship.
16.10 Captions. The article and section headings in this Agreement are for
convenience only, and shall not affect the meaning or interpretation of this
Agreement.
16.11 No Third-Party Beneficiaries. There are no third-party beneficiaries
of this Agreement, except that the respective Affiliates and current or former
directors and officers of the Parties are entitled to the benefits of the
respective indemnification obligations of the Parties under Article XIV.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement, all as
of the date first written above.
▇▇▇▇▇▇▇ INC.
By:_____________________________________
Title:__________________________________
▇▇▇▇▇▇▇ TRANSPORTATION, INC.
By:_____________________________________
Title:__________________________________
▇▇▇▇▇▇▇ ENVIRONMENTAL SERVICES, INC.
By:_____________________________________
Title:__________________________________
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EXHIBIT A TO ANNEX A
THIS DEBENTURE HAS NOT BEEN REGISTERED (OR QUALIFIED BY PROSPECTUS) UNDER
THE SECURITIES ACT (DEFINED BELOW) OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THIS DEBENTURE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS HEREOF
AND THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT
AND SUCH STATE LAWS OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS AND UPON DELIVERY TO ▇▇▇▇▇▇▇
TRANSPORTATION, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ▇▇▇▇▇▇▇
ENVIRONMENTAL SERVICES, INC. TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION AND THE PROSPECTUS DELIVERY REQUIREMENTS UNDER THOSE LAWS.
5% SUBORDINATED CONVERTIBLE, PAY-IN-KIND DEBENTURE DUE 2009
$350,000,000 _______________, 1997
FOR VALUE RECEIVED, ▇▇▇▇▇▇▇ Environmental Services, Inc. ("▇▇▇▇▇▇▇"), a
Delaware corporation, promises to pay ▇▇▇▇▇▇▇ Transportation, Inc., a Delaware
corporation ("▇▇▇▇▇▇▇"), or its registered assigns, the principal amount of
$350,000,000 on the Maturity Date, with interest on the principal balance
outstanding from time to time at the rate and payable at the times and in the
manner hereinafter set forth.
1. Definitions.
1.1 For all purposes of this Debenture:
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person with the terms
"control" and "controlled," meaning, for purposes of this definition, the
power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities or
partnership or other ownership interests, or by contract or otherwise.
"Applicable Price" means (i) in the event of a Non-Stock Fundamental
Change in which the holders of Common Stock receive only cash, the amount
of cash receivable by a holder of one share of Common Stock and (ii) in the
event of any other Fundamental Change, the Current Market Price for one
share of Common Stock on the record date for the determination of the
holders of Common Stock entitled to receive cash, securities, property or
other assets in connection with such Fundamental Change or, if there is no
such record date, on the date on which the holders of Common Stock will
have the right to receive such cash, securities, property or other assets.
"Bankruptcy or Insolvency Proceeding" has the meaning specified in
Section 5.2.
"Blockage Period" means any period when a Default or an Event of
Default or an event which, with the giving of notice or the lapse of time
or both, would constitute a Default or an Event of Default has occurred and
is continuing under the terms of the Credit Facility or under the terms of
any agreement or instrument pursuant to which any other Designated Senior
Indebtedness is created, issued, evidenced, secured or guaranteed.
"Board" means the Board of Directors of ▇▇▇▇▇▇▇, as it shall exist
from time to time.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in Toronto, Ontario or New York, New York are
authorized or obligated to close.
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"Closing Price" of any Common Stock or other security on any day shall
mean the last reported sale price on such day on the New York Stock
Exchange, if the Common Stock or other security is not listed or admitted
to trading on such exchange, on the principal national securities exchange
on which such Common Stock or other security is listed or admitted to
trading, or, if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any Nasdaq National Market member firm selected from time to
time by the Board for that purpose or, if not so available in such manner,
as otherwise determined in good faith by the Board.
"Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board)
of the consideration received by holders of Common Stock (subject to
certain limited exceptions) pursuant to such transaction consists of shares
of Common Stock that, for the twenty consecutive Trading Days immediately
prior to such Fundamental Change, has been admitted for listing, admitted
for listing subject to notice of issuance on a national securities exchange
or quoted on the New York Stock Exchange; provided, however, that a
Fundamental Change will not be a Common Stock Fundamental Change unless
▇▇▇▇▇▇▇ continues to exist after the occurrence of such Fundamental Change.
"Common Stock" means the Common Stock, $1.00 par value per share, of
▇▇▇▇▇▇▇.
"Conversion Price" means $3.75, as adjusted from time to time in
accordance with Section 7.
"Credit Facility" means the Credit Agreement dated as of ____________,
1997, among ▇▇▇▇▇▇▇, as borrower, The Toronto-Dominion Bank, as agent, and
the other financial institutions now or hereafter parties thereto (as the
same may be renewed, amended, modified, increased, extended, refinanced or
otherwise supplemented from time to time).
"Current Market Price" per share of Common Stock or any other security
on any date in question means the average of the daily Closing Prices for
the ten consecutive Trading Days selected by ▇▇▇▇▇▇▇ commencing not more
than 20 Trading Days before, and ending not later than, the day in
question; provided, however, that if another event occurs that would
require an adjustment pursuant to Sections 7.3.1 through 7.3.5, inclusive,
the Board may make such adjustments to the Closing Prices during such ten
Trading Day period as it deems appropriate to effectuate the intent of the
adjustments in this Debenture, in which case any such determination by the
Board shall be set forth in a resolution of the Board and shall be
conclusive.
"Debenture" means this 5% Subordinated Convertible, Pay-In-Kind
Debenture due 2009.
"Default" and "Event of Default" have the meaning specified in Section
8.
"Default Rate" means an annual interest rate equal to 9% per annum.
"Designated Senior Indebtedness" means (i) the Senior Indebtedness
incurred with respect to the Credit Facility and (ii) any other Senior
Indebtedness which is incurred pursuant to an agreement (or series of
related agreements simultaneously entered into) providing for Indebtedness,
or commitments to lend, of at least [$10,000,000] at the time of
determination and is specifically designated in the instrument evidencing
such Senior Indebtedness or the agreement under which such Senior
Indebtedness arises as "Designated Senior Indebtedness."
"$" or "U.S. dollars", refers to lawful currency of the United States
of America.
"Expiration Time" shall have the meaning specified in Section 7.3.5.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with generally accepted accounting principles to be capitalized on a
balance sheet of the lessee.
"Fundamental Change" means the occurrence of any transaction or event
or series of transactions or events pursuant to which all or substantially
all of the Common Stock is
A-A-2
exchanged for, converted into, acquired for or constitutes solely the right
to receive cash, securities, property or other assets (whether by means of
an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise); provided,
however, in the case of a plan involving more than one such transaction or
event, for purposes of adjustment of the Conversion Price, such Fundamental
Change will be deemed to have occurred when substantially all of the Common
Stock has been exchanged for, converted into, or acquired for or
constitutes solely the right to received cash, securities, property or
other assets but the adjustment shall be based upon the consideration that
the holders of Common Stock received in the transaction or event as a
result of which more than 50% of the Common Stock shall have been exchanged
for, converted into, or acquired for or shall constitute solely the right
to receive such cash, securities, property or other assets.
"Governmental Entity" means any U.S. or Canadian or foreign, state,
federal, territorial, provincial or local court, executive office,
legislature, governmental agency, or ministry, commission, or
administrative, regulatory or self-regulatory authority or instrumentality.
"Guarantee" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase or lease
property, securities or services for the purpose of assuring the owner of
such Indebtedness of the payment of such Indebtedness or (iii) to maintain
working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to
pay such Indebtedness; provided, however, that the term "Guarantee" shall
not include endorsements for collection or deposit in the ordinary course
of business.
"Indebtedness" means, with respect to any Person at any date, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), (ii) any other indebtedness of such Person which is
evidenced by a note, bond, debenture, letter of credit or similar
instrument, (iii) all obligations of such Person with respect to
Guarantees, (iv) all obligations of such Person under Financing Leases, (v)
all obligations of such Person in respect of acceptances issued or created
for the amount of such Person (other than endorsements in the ordinary
course of business), (vi) all obligations of such Person in respect of
reimbursement obligations under letters of credit and (vii) all liabilities
of the type referred to in clauses (i) through (vi) above that are secured
by any lien, charge, security interest or encumbrance on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Interest Payment Date" shall have the meaning specified in Section
3.2.
"▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ Transportation, Inc., a Delaware corporation.
"Mandatory PIK Interest Payment Period" means the period of time from
the date hereof until the second anniversary of the date hereof.
"Maturity Date" means __________, 2009.
"Non-Stock Fundamental Change" means any Fundamental Change other than
a Common Stock Fundamental Change.
"Notice of Conversion" shall have the meaning specified in Section
7.2.1.
"Optional PIK Interest Payment Period" means the period of time from
the second anniversary of the date hereof until the Maturity Date.
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"Person" means an individual, corporation, partnership, association,
joint stock company, limited liability company, Governmental Entity,
business trust, unincorporated organization, or other legal entity.
"Purchased Shares" shall have the meaning specified in Section 7.3.5.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the Current Market Price of common stock received by
the holders of Common Stock in such Common Stock Fundamental Change on the
record date for the determination of the holders of Common Stock entitled
to receive such shares of common stock or, if there is no such record date,
on the date upon which the holders of Common Stock shall have the right to
receive such shares of common stock.
"Reference Date" shall have the meaning specified in Section 7.3.3.
"Reference Market Price" will initially mean $____ (which, unless
otherwise specified in this Debenture, will be 100% of the last reported
sale price per share of the Common Stock on the New York Stock Exchange on
__________, 1997) and, in the event of any adjustment to the Conversion
Price other than as a result of a Fundamental Change, the Reference Market
Price will also be adjusted so that the ratio of the Reference Market Price
to the Conversion Price after giving effect to any adjustment will always
be the same as the ratio of the initial Reference Market Price to the
initial Conversion Price.
"Representative" means at any date, with respect to the Credit
Facility, the Person or Persons then acting as the administrative agent
under the Credit Facility, and with respect to any other Designated Senior
Indebtedness, the holders of such Designated Senior Indebtedness or any
Person acting as agent of such holders at such date.
"▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ Environmental Services, Inc., a Delaware
corporation, and its successors and assigns.
"Section 4.2 Prepayment Date" has the meaning specified in Section 4.2
of this Debenture.
"Section 4.2 Prepayment Notice" has the meaning specified in Section
4.2.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Indebtedness" means principal of, premium, if any, interest on
(including interest that, but for the filing of a petition initiating any
Bankruptcy or Insolvency Proceeding, would accrue on such obligations at
the rate provided in the agreements or instruments creating or evidencing
the respective obligations, whether or not such claim is allowed or
allowable in such Bankruptcy or Insolvency Proceeding) and all other
amounts of every kind or nature (including, but not limited to, fees,
indemnities and expenses) due on or in connection with any Indebtedness of
▇▇▇▇▇▇▇ whether outstanding on the date of this Debenture or thereafter
created, incurred, assumed or Guaranteed by ▇▇▇▇▇▇▇ (including all
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing) unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness
shall not be senior in right of payment to this Debenture. Without limiting
the generality of the foregoing, "Senior Indebtedness" shall include (i)
all obligations and liabilities of every kind and nature (including, but
not limited to, fees, expenses and indemnities) under the Credit Facility,
(ii) all obligations and liabilities of every kind and nature (including,
but not limited to, fees, expenses and indemnities) in respect of any
interest rate swaps or other interest rate hedging product entered into in
connection with Indebtedness incurred or to be incurred pursuant to the
Credit Facility, and (iii) any renewal, extension, refinancing or
rearrangement of any Indebtedness incurred or to be incurred pursuant to
the Credit Facility. Notwithstanding the foregoing, Senior Indebtedness
shall not include (a) amounts owed (except to banks, insurance companies
and other financing institutions and except for obligations under Financing
Leases) for goods, materials, services or operating lease rental
A-A-4
payments in the ordinary course of business or for compensation to
employees of ▇▇▇▇▇▇▇, and (b) any liability for federal, state, provincial,
local or other taxes owed or owing by ▇▇▇▇▇▇▇.
"Subordinated Obligations" has the meaning specified in Section 5.1.
"Subsidiary" of a Person means an Affiliate of that Person more than
50% of the aggregate voting power (or of any other form of voting equity
interest in the case of a Person that is not a corporation) of which is
beneficially owned by that Person directly or indirectly through one or
more other Persons.
"Trading Day" means a day on which securities are traded on the
national securities exchange or quotation system used to determine the
Closing Price.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.
Code ss.77aaa-77bbbb).
1.2 Interpretation. Capitalized terms defined in this Debenture are
equally applicable to both their singular and plural forms. References to a
designated "Section" refers to a Section of this Debenture, unless
otherwise specifically indicated. In this Debenture, "including" is used
only to indicate examples, without limitation to the indicated examples,
and without limiting and generally which precedes it.
2. Interest Rate; Default Rate. From (and including) the date of this
Debenture through (but not including) the earlier of the Maturity Date or the
date the maturity of this Debenture is accelerated pursuant to Section 9.1,
interest shall accrue on the unpaid principal balance of this Debenture at an
annual fixed rate equal to 5% per annum. All past due principal and interest
shall accrue interest at the Default Rate from (and including) the day after the
date such principal or interest is payable hereunder through (but not including)
the date of payment. Interest will be calculated on the basis of the actual
number of days elapsed over a year composed of 365 days (or 366 days, as the
case may be).
3. Payment Terms. Subject to Section 5:
3.1 The outstanding principal balance of this Debenture shall be due
and payable on the Maturity Date.
3.2 ▇▇▇▇▇▇▇ shall pay to ▇▇▇▇▇▇▇ all accrued interest hereunder with
payments on each of ____________ and ____________ (each, an "Interest
Payment Date"), beginning ____________. Unless prohibited under applicable
law, during the Mandatory PIK Interest Payment Period, ▇▇▇▇▇▇▇ must, and
during the Optional PIK Interest Payment Period, ▇▇▇▇▇▇▇ may at its option,
make any payment due hereunder, including any accrued interest or
principal, in Common Stock. The number of shares of Common Stock for each
such payment shall be equal to the dollar amount in accrued interest or
principal due divided by the Current Market Price as of the date such
payment is due.
3.3 Each payment or prepayment made in cash hereunder shall be made in
accordance with ▇▇▇▇▇▇▇'▇ reasonable instructions. Each other payment or
prepayment made in Common Stock shall be made in accordance with ▇▇▇▇▇▇▇'▇
reasonable instructions.
3.4 Any payment or action that is due hereunder on a day which is not
a Business Day shall be deferred until the next succeeding Business Day
(but interest shall continue to accrue on any applicable payment until such
payment is made).
4. Optional Redemption.
4.1 This Debenture may not be redeemed or prepaid, in whole or in
part, before the fifth anniversary of the date hereof.
4.2 On and after the fifth anniversary of the date hereof, ▇▇▇▇▇▇▇
shall have the right and option (the "Section 4.2 Prepayment Option") to
redeem and prepay this Debenture, in whole or in part, only in cash, on the
terms and subject to the conditions of this Section 4.2; provided, however,
that ▇▇▇▇▇▇▇ can exercise the Section 4.2 Prepayment Option only in the
event the last
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reported sales price of the Common Stock, as reported by the New York Stock
Exchange, equals or exceeds 120% of the Conversion Price for a period of at
least 10 consecutive Trading Days. ▇▇▇▇▇▇▇ may exercise this Section 4.2
Prepayment Option by giving the holder of this Debenture written notice
(the "Section 4.2 Prepayment Notice") of its election to exercise the
Section 4.2 Prepayment Option and by specifying in the Section 4.2
Prepayment Notice the date on which ▇▇▇▇▇▇▇ will prepay this Debenture
pursuant to this Section 4.2 (the "Section 4.2 Prepayment Date") and the
principal amount of this Debenture to be prepaid. This Section 4.2
Prepayment Date shall be at least 10 Business Days, and not more than 20
Business Days, after the date of the Section 4.2 Prepayment Notice. Upon
the Section 4.2 Prepayment Date, ▇▇▇▇▇▇▇ shall prepay this Debenture to the
extent specified in the Section 4.2 Prepayment Notice, by payment of an
amount equal to the principal amount of the Debenture identified in the
Section 4.2 Prepayment Notice.
5. Subordination.
5.1 The Indebtedness evidenced by, and all obligations in respect of,
this Debenture and the payment of principal of, premium and interest, if
any, on and all other obligations in respect of, this Debenture
(collectively, the "Subordinated Obligations") are expressly subordinate to
all Senior Indebtedness to the extent and in the manner set forth herein.
For purposes hereof, the term "subordinate" means that, unless and until
the Senior Indebtedness has been indefeasibly paid in full in cash, ▇▇▇▇▇▇▇
will not have the right under any circumstances to, and will not, take,
demand, commence any suit or any other proceeding for collection, pursue
any other judicial or non-judicial remedy or receive from ▇▇▇▇▇▇▇ or any of
its Subsidiaries or Affiliates, and ▇▇▇▇▇▇▇ will not and will not permit
any of its Subsidiaries or Affiliates to, make, give or permit, directly or
indirectly, by set-off, redemption, purchase or in any other manner, any
payment of or on account of the Subordinated Obligations; provided,
however, that at any time, ▇▇▇▇▇▇▇ shall make, and ▇▇▇▇▇▇▇ may receive, and
▇▇▇▇▇▇▇ may commence any suit or other proceeding for collection of,
scheduled payments of principal or interest on this Debenture in accordance
with the terms hereof.
5.2 Upon any payment or distribution of any kind or character to
creditors of ▇▇▇▇▇▇▇ (whether in cash, property or securities) in (i) a
total or partial liquidation, winding up or dissolution of ▇▇▇▇▇▇▇ (whether
voluntarily or involuntarily) or (ii) a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to ▇▇▇▇▇▇▇ or its
property, or an assignment for the benefit of creditors or any marshaling
of ▇▇▇▇▇▇▇' assets and liabilities (any of the foregoing in clauses (i) and
(ii) being referred to herein as a "Bankruptcy or Insolvency Proceeding"),
the holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all the principal of, interest on and other amounts payable
in respect of such Senior Indebtedness (including interest accruing after
the commencement of any such proceeding at the rate specified in the
agreements or instruments creating or evidencing the applicable Senior
Indebtedness and whether or not such interest is an allowed or allowable
claim under applicable law) before ▇▇▇▇▇▇▇ will be entitled to receive any
payment with respect to this Debenture (whether in cash, property or
securities); and until all obligations with respect to Senior Indebtedness
are indefeasibly paid in full in cash, any distribution received by ▇▇▇▇▇▇▇
or to which ▇▇▇▇▇▇▇ would be entitled shall be paid over or made to the
holders of Senior Indebtedness. Upon the occurrence of any Bankruptcy or
Insolvency Proceeding relating to ▇▇▇▇▇▇▇, the holders of Senior
Indebtedness are authorized and empowered to (a) demand, ▇▇▇ for, collect
and receive every payment or distribution on account of the Subordinated
Obligations payable or deliverable in connection with such event or
proceeding and give acquittance therefor, and (b) file claims and proofs of
claim in any statutory or non-statutory proceeding and take such other
actions as may be necessary or desirable for the enforcement of the
subordination provisions of this Debenture. Promptly after taking any
action provided in clauses (a) or (b) above, ▇▇▇▇▇▇▇ shall give written
notice therefore to the holder of this Debenture; provided, however, that
failure to give such notice shall in no event affect the validity of any
action so taken.
5.3 In the event that, notwithstanding the occurrence of any of the
events described in Sections 5.1 and 5.2, any such payment or distribution
of assets of ▇▇▇▇▇▇▇ of any kind or
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character, whether in cash, property or securities, shall be received by
the holder of this Debenture which is not permitted hereby, such payment or
distribution shall be held in trust for the ratable benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness.
5.4 The holders of Senior Indebtedness shall have no duty or
obligation to the holder of this Debenture in any manner whatsoever and
may, at any time and from time to time, in their sole discretion, without
the consent of or notice to the holder of this Debenture and without
impairing or releasing any rights of the holders of Senior Indebtedness or
any of the obligations of the holder of this Debenture hereunder, take any
or all of the following actions:
5.4.1 change the amount, manner, place, terms of payment or
interest rate, change or extend the time of payment of, or renew or
alter, any of the Senior Indebtedness, or amend, supplement or waive any
of the terms of any instrument or agreement now or hereafter executed
pursuant to which any of the Senior Indebtedness is issued or incurred;
5.4.2 sell, exchange, release, surrender, relend, realize upon or
otherwise deal with any manner and in any order, any property (or the
income, revenues, profits or proceeds therefrom) by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, any Senior
Indebtedness;
5.4.3 release any Person liable in any manner for the payment or
collection of the Senior Indebtedness;
5.4.4 exercise or refrain from exercising any rights or remedies
against ▇▇▇▇▇▇▇ or others, or otherwise act or refrain from acting or,
for any reason, fail to file, record or otherwise perfect any security
interest in or lien on any property of ▇▇▇▇▇▇▇ or any other Person; and
5.4.5 apply any sums received by the holders of Senior
Indebtedness, by whomsoever paid and however realized, to payment of the
Senior Indebtedness in such manner as the holders of Senior
Indebtedness, in their sole discretion, may deem appropriate.
5.5 ▇▇▇▇▇▇▇ and any future holder of this Debenture, by acceptance of
this Debenture, agree to provide to any holder of Senior Indebtedness, at
any time and from time to time, upon the written request of ▇▇▇▇▇▇▇ or such
holder of Senior Indebtedness, an agreement signed by ▇▇▇▇▇▇▇ or such
future holder of this Debenture addressed to the holder of such Senior
Indebtedness in substantially the form of, and on substantially the terms
set out in, Exhibit A, attached hereto, to the effect that such holder is a
holder of Senior Indebtedness, that the holder or holders of such Senior
Indebtedness are entitled to the benefits of Sections 5, 6 and 12 of this
Debenture and that the holder or holders of such Senior Indebtedness may
enforce the terms and provisions thereof to the same extent ▇▇▇▇▇▇▇ would
be able to do so, provided, however, that prior to furnishing such
agreement, ▇▇▇▇▇▇▇ has received from ▇▇▇▇▇▇▇ or such holder such
information as ▇▇▇▇▇▇▇ may reasonably request demonstrating to ▇▇▇▇▇▇▇'▇
reasonable satisfaction that such holder is a holder of Senior
Indebtedness. ▇▇▇▇▇▇▇, and each subsequent holder of this Debenture, by
acceptance of this Debenture, irrevocably appoints ▇▇▇▇▇▇▇ (with full power
of substitution) as its agent and attorney in fact (which appointment is
coupled with an interest and shall be irrevocable so long as any Senior
Indebtedness is outstanding) to execute and deliver on behalf and in the
name of ▇▇▇▇▇▇▇ or such holder, as the case may be, an agreement in
substantially the form of, and on substantially the terms set out in,
Exhibit A, attached hereto, in favor of each such holder of Senior
Indebtedness and to take such further action as may be necessary or
appropriate to effectuate the subordination as provided herein. Promptly
after exercise of any such power, ▇▇▇▇▇▇▇ will give written notice thereof
to the holder of the Debenture; provided, however, that failure to give
such notice shall in no event affect the validity of any power so
exercised.
5.6 If a Default shall have occurred and be continuing (other than a
Default pursuant to Section 8.2 or 8.3) and the holder of this Debenture
elects to accelerate this Debenture pursuant to Section 9, ▇▇▇▇▇▇▇ shall
give the Representative under the Credit Facility 30 days' prior written
notice before accelerating this Debenture, which notice shall state that it
is a "Notice of Intent to
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Accelerate"; provided, however, that ▇▇▇▇▇▇▇ shall not be required to give
such notice if at such time payment of any Indebtedness incurred pursuant
to the Credit Facility shall have been accelerated. If payment of this
Debenture is accelerated because of a Default, the holder shall promptly
notify the Representatives under the Designated Senior Indebtedness and the
holders of all other Senior Indebtedness of the accelerations.
5.7 Until all Senior Indebtedness has been indefeasibly paid in full
in cash, the holders of this Debenture shall not be entitled to assert,
enforce or otherwise exercise any right of subrogation against ▇▇▇▇▇▇▇ or
any other Person obligated on the Subordinated Obligations. After all
Senior Indebtedness has been indefeasibly paid in full in cash, and until
the Subordinated Obligations have been so paid in full, the holder of this
Debenture shall be subrogated to the rights of the holders of Senior
Indebtedness to receive distributions applicable to such Senior
Indebtedness. A distribution made under this Section 5 to holders of Senior
Indebtedness which otherwise would have been made to the holder of this
Debenture is not, as between ▇▇▇▇▇▇▇ and the holder of this Debenture, a
payment by ▇▇▇▇▇▇▇ on Senior Indebtedness.
5.8 This Section 5 defines the relative rights of the holder of this
Debenture and holders of Senior Indebtedness. Nothing in this Debenture
shall:
5.8.1 impair, as between ▇▇▇▇▇▇▇ and such holder, the obligation of
▇▇▇▇▇▇▇, which is absolute and unconditional, to pay principal of and
premium and interest, if any, on this Debenture in accordance with its
terms; or
5.8.2 except as otherwise set forth in this Section 5, prevent the
holder of this Debenture from exercising its available remedies upon a
Default, subject to the rights of holders of Senior Indebtedness to
receive distributions otherwise payable to such holder.
6. No Impairment. Section 5, this Section 6, the proviso to Section 9.1,
and Section 12 (and all defined terms used in such Sections) shall constitute a
continuing offer to all Persons who become holders of, or continue to hold,
Senior Indebtedness. Such provisions are made for the benefit of the holders
from time to time of Senior Indebtedness, and such Persons are conclusively
presumed to have relied upon such provisions. Such holders are made obligees
hereunder, and they or each of them may enforce such provisions. No right of any
present or future holder of any Senior Indebtedness to enforce the subordination
or other provisions referred to in this Section 6 shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇, or by any non-compliance by ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ with the terms,
provisions and covenants of this Debenture, regardless of any knowledge thereof
any such holder may have or otherwise be charged with. Section 5, this Section 6
and the subordination and other provisions referred to in this Section 6 may not
be amended or modified in any manner which might terminate or impair the
subordination or such other provisions except with the prior written consent of
the Representatives of all the Designated Senior Indebtedness.
7. Conversion of Debenture.
7.1 Conversion Rights. Subject to and upon compliance with the
provisions of this Section 7, the Debenture is convertible, in whole or in
part, at the option of the holder at any time on and after the fifth
anniversary of the date hereof, and on or prior to 5:00 p.m. (New York City
time) on the Business Day immediately preceding the date of repayment of
the Debenture, whether at maturity or upon redemption, into that number of
fully paid and nonassessable shares of Common Stock which shall be equal to
the quotient of the outstanding aggregate principal amount of the Debenture
divided by the Conversion Price (calculated as to each conversion to the
nearest 1/100th of a share), subject to adjustment as described in this
Section 7. In case the Debenture or portion thereof is called for
redemption, such conversion right in respect of the Debenture or portion so
called shall expire at 5:00 p.m. (New York City time) on the Business Day
immediately preceding the corresponding redemption date, unless the Company
defaults in making the payment due upon redemption.
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7.2 Conversion Procedures.
7.2.1 In order to convert all or a portion of the Debenture,
▇▇▇▇▇▇▇ shall deliver to ▇▇▇▇▇▇▇ an irrevocable Notice of Conversion
setting forth the principal amount of the Debenture to be converted,
together with the name or names, if other than ▇▇▇▇▇▇▇, in which the
shares of Common Stock should be issued upon conversion (the "Notice of
Conversion").
7.2.2 Subject to any right of ▇▇▇▇▇▇▇ to receive interest as
provided in Section 2 and 3.2, ▇▇▇▇▇▇▇'▇ delivery upon conversion of the
fixed number of shares of Common Stock into which the Debenture is
convertible (together with the cash payment, if any, in lieu of
fractional shares) shall be deemed to satisfy the ▇▇▇▇▇▇▇'▇ obligation
to pay the principal amount of the portion of the Debenture so converted
and any unpaid interest accrued on such Debenture at the time of such
conversion.
7.2.3 No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, ▇▇▇▇▇▇▇ shall pay a cash
adjustment in an amount equal to the same fraction of the last reported
sale price of such fractional interest on the date on which the
Debenture was duly surrendered for conversion, or, if such day is not a
Trading Day, on the next Trading Day.
7.2.4 In the event of the conversion of the Debenture in part only,
a new Debenture for the unconverted portion thereof will be issued in
the name of ▇▇▇▇▇▇▇.
7.3. Conversion Price Adjustments. The Conversion Price shall be
subject to adjustment (without duplication) from time to time as follows:
7.3.1 In case ▇▇▇▇▇▇▇ shall, while the Debenture or any portion
thereof is outstanding, (i) pay a dividend or make a distribution with
respect to its Common Stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock any shares of capital
stock of ▇▇▇▇▇▇▇, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the Debenture, or any portion
thereof, thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of ▇▇▇▇▇▇▇ which it would
have owned immediately following such action had the Debenture or such
portion thereof been converted immediately prior thereto. An adjustment
made pursuant to this Section 7.3.1 shall become effective immediately
after the record date in the case of a dividend or other distribution
and shall become effective immediately after the effective date in case
of a subdivision, combination or reclassification (or immediately after
the record date if a record date shall have been established for such
event). If, as a result of an adjustment made pursuant to this Section
7.3.1, ▇▇▇▇▇▇▇ shall become entitled to receive shares of two or more
classes or series of capital stock of ▇▇▇▇▇▇▇, the Board (whose
determination shall be conclusive and shall be described in a resolution
of the Board) shall determine the allocation of the adjusted Conversion
Price between or among shares of such classes or series of capital
stock.
7.3.2 In case ▇▇▇▇▇▇▇ shall, while the Debenture or any portion
thereof, is outstanding, issue rights or warrants to all holders of the
Common Stock entitling them (for a period expiring within 45 days after
the record date mentioned in this Section 7.3.2) to subscribe for or
purchase shares of Common Stock at a price per share less than the
Current Market Price on such record date, the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date
of issuance of such rights or warrants by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such rights or warrants plus the number of
shares which the aggregate offering price of the total number of shares
so offered for subscription or purchase would purchase at such Current
Market Price, and of which the denominator shall be the number of shares
of Common Stock outstanding
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on the date of issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase.
Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such rights or
warrants. For the purposes of this subsection, the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ shall not issue any rights or warrants
in respect of shares of Common Stock held in the treasury of ▇▇▇▇▇▇▇. In
case any rights or warrants referred to in this subsection in respect of
which an adjustment shall have been made shall expire unexercised within
45 days after the same shall have been distributed or issued by ▇▇▇▇▇▇▇,
the Conversion Price shall be readjusted at the time of such expiration
to the Conversion Price that would have been in effect if no adjustment
had been made on account of the distribution or issuance of such expired
rights or warrants.
7.3.3 Subject to the last sentence of this Section 7.3.3, in case
▇▇▇▇▇▇▇ shall, by dividend or otherwise, distribute to holders of Common
Stock evidences of its Indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any
rights or warrants referred to in Section 7.3.2, any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in Section 7.3.1), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this Section 7.3.3 by a
fraction of which the numerator shall be the Current Market Price on the
date fixed for the payment of such distribution (the "Reference Date")
less the fair market value (as determined in good faith by the Board,
whose determination shall be conclusive and described in a resolution of
the Board), on the Reference Date, of the portion of the evidences of
Indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the
Reference Date. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not occurred. If the Board determines the fair market
value of any distribution for purposes of this Section 7.3.3 by
reference to the actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the prices in
such market over the same period used in computing the current market
price per share of Common Stock. For purposes of this Section 7.3.3, any
dividend or distribution that includes shares of Common Stock or rights
or warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (i) a dividend or distribution of the evidences of
Indebtedness, shares of capital stock, cash or assets other than such
shares of Common Stock or such rights or warrants (making any Conversion
Price reduction required by this Section 7.3.3) immediately followed by
(ii) a dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further Conversion Price reduction
required by Section 7.3.1 or 7.3.2), except (a) the Reference Date of
such dividend or distribution as defined in this Section 7.3.3 shall be
substituted as (I) "the record date in the case of a dividend or other
distribution," and (II) "the record date for the determination of
stockholders entitled to receive such rights or warrants" and (III) "the
date fixed for such determination" within the meaning of Sections 7.3.1
and 7.3.2 and (b) any shares of Common Stock included in such dividend
or distribution shall not be deemed outstanding for purposes of
computing any adjustment of the Conversion Price in Section 7.3.1.
7.3.4 In case ▇▇▇▇▇▇▇ shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding any cash
distribution referred to in Section 7.3.3) to all holders of Common
Stock in an aggregate amount that, together with (i) all other cash
distributions (excluding any cash distributions referred to in Section
7.3.3) made within the 12 months preceding such distribution and (ii)
any cash and the fair market value of other consideration payable in
respect of any tender offer by ▇▇▇▇▇▇▇ or a Subsidiary of ▇▇▇▇▇▇▇ for
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the Common Stock consummated within the 12 months preceding such
distribution, exceeds 12.5% of ▇▇▇▇▇▇▇'▇ market capitalization (being
the product of the current market price multiplied by the number of
shares of Common Stock then outstanding (current market price per share
shall be determined on the Trading Day immediately preceding the date of
declaration of such dividend)), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this Section 7.3.4 by a
fraction of which the numerator shall be the Current Market Price on the
date fixed for the payment of such distribution less the amount of cash
so distributed and not excluded as provided applicable to one share of
Common Stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of
business on the day following the date fixed for the payment of such
distribution; provided, however, that in the event the portion of the
cash so distributed applicable to one share of Common Stock is equal to
or greater than the Current Market Price on the record date mentioned
above, in lieu of the foregoing adjustment, adequate provision shall be
made so that ▇▇▇▇▇▇▇ shall have the right to receive upon conversion the
amount of cash ▇▇▇▇▇▇▇ would have received had ▇▇▇▇▇▇▇ converted the
Debenture immediately prior to the record date for the distribution of
the cash. In the event that such dividend or distribution is not so paid
or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such record date had
not been fixed.
7.3.5 In the case of a tender offer by ▇▇▇▇▇▇▇ or any Subsidiary of
▇▇▇▇▇▇▇ for Common Stock which involves an aggregate consideration that,
together with (i) any cash and other consideration payable in respect of
any tender offer consummated by ▇▇▇▇▇▇▇ or a Subsidiary of ▇▇▇▇▇▇▇ for
the Common Stock consummated within the 12 months preceding the
consummation of such tender offer and (ii) the aggregate amount of all
cash distributions (excluding any cash distributions referred to in
Section 7.3.3) to all holders of Common Stock within the twelve months
preceding the consummation of such tender offer, exceeds 12.5% of
▇▇▇▇▇▇▇'▇ market capitalization (being the product of the Current Market
Price multiplied by the number of shares of Common Stock then
outstanding at the date of consummation of such tender offer), the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction
contemplated by this Section 7.3.5 by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered shares) multiplied by the closing price per share of the Common
Stock on the Trading Day next succeeding the last time tenders may be
made pursuant to such tender offer (as it shall have been amended) (the
"Expiration Time") and the denominator shall be the sum of (a) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (b) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
closing bid price per share of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time.
7.3.6 ▇▇▇▇▇▇▇ may make at its option such reductions in the
Conversion Price, in addition to those required by Sections 7.3.1
through 7.3.5, as it considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax
purposes. ▇▇▇▇▇▇▇ from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 days, the
reduction is irrevocable during the period, and the Board shall have
made a determination that such reduction would be in the best interest
of ▇▇▇▇▇▇▇, which
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determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, ▇▇▇▇▇▇▇ shall mail to
▇▇▇▇▇▇▇ a notice of the reduction at least 15 days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period it will be in effect and, in
reasonable detail, the facts supporting such reduced Conversion Price.
7.3.7 No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least
1% in the Conversion Price then in effect; provided, however, that any
adjustments which by reason of this Section 7.3.7 are not required to be
made shall be carried forward and taken into account in determining
whether any subsequent adjustment shall be required.
7.3.8 If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above only
one adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to ▇▇▇▇▇▇▇.
7.4 Reclassification, Consolidation, Merger or Sale of Assets.
7.4.1 In the event that ▇▇▇▇▇▇▇ shall be a party to any transaction
or series of transactions constituting a Fundamental Change, including,
without limitation, (i) any recapitalization or reclassification of
Common Stock (other than a change in par value or as a result of a
subdivision or combination of Common Stock), (ii) any consolidation of
▇▇▇▇▇▇▇ with, or merger of ▇▇▇▇▇▇▇ into, any other Person, any merger of
another Person into ▇▇▇▇▇▇▇ (other than a merger which does not result
in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), (iii) any sale or transfer of all
or substantially all of the assets of ▇▇▇▇▇▇▇ or (iv) any compulsory
share exchange pursuant to any of which holders of Common Stock shall be
entitled to receive other securities, cash or other property or assets,
then appropriate provision shall be made as part of the terms of such
transaction or series of transactions so that ▇▇▇▇▇▇▇ shall have the
right thereafter to convert such Debenture only into (a) if any such
transaction does not constitute a Common Stock Fundamental Change, the
kind and amount of the securities, cash or other property or assets that
would have been receivable upon such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of
the number of shares of Common Stock into which such Debenture might
have been converted immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or share
exchange, after, in the case of a Non-Stock Fundamental Change, giving
effect to any adjustment in the Conversion Price required by the
provisions which follow in Sections 7.4.3.1 and (b) in the case of a
Common Stock Fundamental Change, common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental
Change in an amount determined pursuant to the provisions which follow
in Section 7.4.3.2. The company formed by such consolidation or
resulting from such merger or which acquires such assets or which
acquires the Common Stock, as the case may be, shall enter into a
supplemental debenture with ▇▇▇▇▇▇▇, satisfactory in form to ▇▇▇▇▇▇▇ and
executed and delivered to ▇▇▇▇▇▇▇, the provisions of which shall
establish such right and provide for adjustments which, for events
subsequent to the effective date of such supplemental debenture, shall
be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 7. The above provisions shall similarly
apply to successive recapitalizations, reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
7.4.2 Notwithstanding any other provisions in this Section 7 to the
contrary, if any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately following such Fundamental Change as
described below in Section 7.4.3. In addition, in the event of a Common
Stock Fundamental Change, the Debenture shall be convertible solely into
common stock of the kind received by holders of Common Stock as the
result of such Common Stock Fundamental Change as more specifically
provided below in Section 7.4.3.
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7.4.3 For purposes of calculating any adjustment to be made
pursuant to this Section 7 in the event of a Fundamental Change,
immediately following such Fundamental Change (and for such purposes a
Fundamental Change shall be deemed to occur on the earlier of (i) the
occurrence of such Fundamental Change and (ii) the date, if any, fixed
for determination of shareholders entitled to receive the cash,
securities, property or other assets distributable in such Fundamental
Change to holders of the Common Stock):
7.4.3.1 in the case of a Non-Stock Fundamental Change, the
Conversion Price per share of Common Stock shall be the lower of (i)
the Conversion Price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Section 7, and (ii) the
Applicable Price; and
7.4.3.2 in the case of a Common Stock Fundamental Change, the
Conversion Price per share of Common Stock shall be the Conversion
Price in effect immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other adjustments effected
pursuant to this Section 7, multiplied by a fraction, the numerator
of which is the Purchaser Stock Price and the denominator of which
is the Applicable Price; provided, however, that in the event of a
Common Stock Fundamental Change in which (i) 100% of the value of
the consideration received by a holder of Common Stock (subject to
certain limited exceptions) is shares of common stock of the
successor, acquiror or other third party (and cash, if any, paid
with respect to any fractional interests in such shares of common
stock resulting from such Common Stock Fundamental Change) and (ii)
all of the Common Stock shall have been exchanged for, converted
into or acquired for shares of common stock (and cash, if any, with
respect to fractional interests) of the successor, acquiror or other
third party, the Conversion Price per share of Common Stock
immediately following such Common Stock Fundamental Change shall be
the Conversion Price in effect immediately prior to such Common
Stock Fundamental Change divided by the number of shares of common
stock of the successor, acquiror or other third party received by a
holder of one share of Common Stock as a result of such Common Stock
Fundamental Change.
7.4.4 In determining the amount and type of consideration received
by a holder of Common Stock in the event of a Fundamental Change,
consideration received by a holder of Common Stock pursuant to a
statutory right of appraisal will be disregarded.
7.5 Other Events. Upon the occurrence of any event similar to or
having the same economic effect on the Conversion Price as those events
specified in Sections 7.3 and 7.4, the Board shall make an appropriate
reduction in the Conversion Price.
7.6 Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided, ▇▇▇▇▇▇▇ shall compute the
adjusted Conversion Price and shall prepare a certificate signed by the
chief financial officer or the treasurer of ▇▇▇▇▇▇▇ setting forth the
adjusted Conversion Price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall forthwith be
delivered to ▇▇▇▇▇▇▇.
7.7 Prior Notice of Certain Events. In case:
7.7.1 ▇▇▇▇▇▇▇ shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (a) a dividend payable in
shares of Common Stock or (b) a dividend payable in cash that would not
require an adjustment pursuant to Section 7.3.3 or 7.3.4, or (ii)
authorize a tender or exchange offer that would require an adjustment
pursuant to Section 7.3.5;
7.7.2 ▇▇▇▇▇▇▇ shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
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7.7.3 of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which ▇▇▇▇▇▇▇ is a
party and for which approval of any stockholders of ▇▇▇▇▇▇▇ shall be
required, or of the sale or transfer of all or substantially all of the
assets of ▇▇▇▇▇▇▇ or of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or other property; or
7.7.4 of the voluntary or involuntary dissolution, liquidation or
winding up of ▇▇▇▇▇▇▇; then ▇▇▇▇▇▇▇ shall cause to be mailed to ▇▇▇▇▇▇▇,
at least 15 days prior to the applicable record or effective date
hereinafter specified, a notice stating (i) the date on which a record
(if any) is to be taken for the purpose of such dividend, distribution,
rights or warrants or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (ii)
the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required to be
specified in such notice).
7.8 Dividend or Interest Reinvestment Plans.Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock
pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of ▇▇▇▇▇▇▇ and the investment of
additional optional amounts in shares of Common Stock under any such
plan, and the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any employee benefit plan or
program of ▇▇▇▇▇▇▇ or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the
date the Debenture was first issued, shall not be deemed to constitute
an issuance of Common Stock or exercisable, exchangeable or convertible
securities by ▇▇▇▇▇▇▇ to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the
Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of ▇▇▇▇▇▇▇ except as
specifically described in this Section 7.
7.9 Certain Additional Rights. In case ▇▇▇▇▇▇▇ shall, by dividend
or otherwise, declare or make a distribution on its Common Stock
referred to in Section 7.3.3 or 7.3.4 (including, without limitation,
dividends or distributions referred to in the last sentence of Section
7.3.3), ▇▇▇▇▇▇▇, upon the conversion of the Debenture subsequent to 5:00
p.m. (New York City time) on the date fixed for the determination of
stockholders entitled to receive such distribution and prior to the
effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common
Stock into which the Debenture is converted, the portion of the shares
of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of ▇▇▇▇▇▇▇ (whose
election shall be evidenced by a resolution of the Board), ▇▇▇▇▇▇▇ may,
in lieu of distributing to ▇▇▇▇▇▇▇ any portion of such distribution not
consisting of cash or securities of ▇▇▇▇▇▇▇, pay ▇▇▇▇▇▇▇ an amount in
cash equal to the fair market value thereof (as determined in good faith
by the Board whose determination shall be conclusive and described in a
resolution of the Board). If any conversion of the Debenture described
in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which ▇▇▇▇▇▇▇ is entitled
to receive in accordance with the immediately preceding sentence,
▇▇▇▇▇▇▇ may elect (such election to be evidenced by a resolution of the
Board) to distribute to ▇▇▇▇▇▇▇ a due ▇▇▇▇ for the shares of Common
Stock, rights, warrants, evidences
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of indebtedness, shares of capital stock, cash or assets to which
▇▇▇▇▇▇▇ is so entitled, provided that such due ▇▇▇▇ (i) meets any
applicable requirements of the New York Stock Exchange or other market
on which the Common Stock is then traded and (ii) requires payment or
delivery of such shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the
date of payment or delivery thereof to holders of shares of Common Stock
receiving such distribution.
8. Events of Default. "Default" or "Event of Default" mean the occurrence
of one or more of the following:
8.1 Payment. ▇▇▇▇▇▇▇ fails to pay the outstanding principal or
accrued interest amount due on this Debenture on the Maturity Date or any
Interest Payment Date, respectively.
8.2 Voluntary Bankruptcy. ▇▇▇▇▇▇▇ (i) files a petition initiating a
voluntary Bankruptcy or Insolvency Proceeding, (ii) seeks, consents to, or
does not contest the appointment of a receiver or trustee for itself for
all or any substantial part of its property, (iii) is voluntarily
adjudicated a bankrupt or insolvent, (iv) makes a general assignment for
the benefit of its creditors, or (v) admits in writing its inability to pay
its debts as they mature.
8.3 Involuntary Bankruptcy. A petition filed against ▇▇▇▇▇▇▇ seeking
to initiate a Bankruptcy or Insolvency Proceeding and such petition is not
dismissed within 180 days after being filed, or a court of competent
jurisdiction enters an order, judgment or decree appointing a receiver or
trustee for ▇▇▇▇▇▇▇, or for all or substantially all of its property, and
such order, judgment or decree is not discharged or stayed within 180 days
after its entry.
8.4 Acceleration of Other Indebtedness. An event of default occurs
and is continuing under the Credit Facility and, as a result thereof, the
Indebtedness outstanding pursuant to the Credit Facility is accelerated;
provided, however, that in the event the holders of such Indebtedness elect
to waive such event of default or to otherwise de-accelerate such
Indebtedness, no Default shall subsist hereunder.
9. Remedies of ▇▇▇▇▇▇▇. Upon the occurrence and during the continuance of
a Default, ▇▇▇▇▇▇▇ shall have the following rights:
9.1 Acceleration. Subject to the provisions of Section 5 hereof,
▇▇▇▇▇▇▇ may, at its option, declare the entire principal balance of this
Debenture, together with the accrued and unpaid interest thereon,
immediately due and payable without notice of Default, notice of intent to
accelerate, notice of acceleration, or any other notice, presentment,
protest, demand or action of any kind or nature whatsoever (each of which
is hereby expressly waived by ▇▇▇▇▇▇▇), whereupon the entire Indebtedness
under this Debenture shall become immediately due and payable, provided,
however, that no such acceleration (except for an acceleration upon the
occurrence of a Default specified in Section 8.4) shall be effective or of
any force whatsoever and the holder of this Debenture may not take any
action against ▇▇▇▇▇▇▇ with respect to a Default hereunder if made during a
Blockage Period, or if such acceleration would result in a Blockage Period;
provided further,that in the event the Indebtedness under this Debenture is
accelerated upon the occurrence of a Default specified in Section 8.4 and
the holders of the Indebtedness outstanding pursuant to the Credit Facility
elect to waive the event of Default giving rise to the acceleration
thereunder or otherwise elect to de-accelerate such Indebtedness, ▇▇▇▇▇▇▇
shall de-accelerate the obligations hereunder.
9.2 Other Rights. Except as otherwise modified hereby, ▇▇▇▇▇▇▇ shall
have all rights and remedies available at law or equity and the same (i)
shall be cumulative and concurrent, (ii) may be pursued separately,
successively, or concurrently against ▇▇▇▇▇▇▇, (iii) may be exercised as
often as occasion therefor shall arise, it being agreed by ▇▇▇▇▇▇▇ that the
exercise or failure to exercise any of the same shall in no event be
construed as a waiver or release thereof or of any other right or remedy,
and (iv) are intended to be, and shall be, nonexclusive.
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10. Consolidation, Merger, Conveyance, Transfer or Lease.
10.1 ▇▇▇▇▇▇▇ May Consolidate, Etc., Only on Certain Terms. ▇▇▇▇▇▇▇
shall not consolidate with or merge with or into any other Person, or
directly or indirectly, convey, transfer or lease all or substantially all
of its properties and assets on a consolidated basis to any Person, unless:
10.1.1 the Person formed by such consolidation or into which
▇▇▇▇▇▇▇ is merged or the Person which acquires by conveyance, transfer
or lease, all or substantially all of the properties and assets of
▇▇▇▇▇▇▇ on a consolidated basis shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia
and shall expressly assume, by a supplement hereto in form reasonably
satisfactory to ▇▇▇▇▇▇▇, the due and punctual payment of the principal
of (and premium, if any) and interest on the Debenture and the
performance or observance of every covenant of this Debenture on the
part of ▇▇▇▇▇▇▇ to be performed or observed and shall have provided for
conversion rights in accordance with Section 7;
10.1.2 immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of ▇▇▇▇▇▇▇ or a
Subsidiary as a result of such transaction as having been incurred by
▇▇▇▇▇▇▇ or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing;
and
10.1.3 ▇▇▇▇▇▇▇ has delivered to ▇▇▇▇▇▇▇ an officers' certificate
and an opinion of counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental debenture is
required in connection with such transaction, such supplemental
debenture, comply with this Section 10 and that all conditions precedent
hereto provided for relating to such transaction have been complied
with.
This Section 10 shall only apply to a merger or consolidation in which
▇▇▇▇▇▇▇ is not the surviving corporation and to conveyances, leases and
transfers by ▇▇▇▇▇▇▇ as transferor or lessor.
10.2 Successor Substituted. Upon any consolidation of ▇▇▇▇▇▇▇ with,
or merger of ▇▇▇▇▇▇▇ into, any other Person or any conveyance, transfer or
lease of all or substantially all the properties and assets of ▇▇▇▇▇▇▇ on a
consolidated basis in accordance with Section 10.1, the successor Person
formed by such consolidation or into which ▇▇▇▇▇▇▇ is merged or to which
such conveyance, transfer or lease is made shall succeed to, be substituted
for and may exercise every right and power of ▇▇▇▇▇▇▇ under this Debenture
with the same effect as if such successor Person had been named as ▇▇▇▇▇▇▇
herein, and thereafter the predecessor Person shall be relieved of all
obligations and covenants under this Debenture.
11. Indenture.
11.1 Indenture. Upon a written request by ▇▇▇▇▇▇▇ delivered to
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ shall enter into an indenture or indentures for the
purpose of publicly registering the Debenture, adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Debenture or of modifying in any manner the rights of ▇▇▇▇▇▇▇ under this
Debenture.
11.2 Conformity with Trust Indenture Act. Every indenture executed
pursuant to this Section 11 shall conform to the requirements of the Trust
Indenture Act.
11.3 Reference in Securities to Supplemental Indenture. Securities
authenticated and delivered after the execution of any indenture pursuant
to this Section 11, may, and shall if required by the trustee, bear a
notation in form approved by the trustee as to any matter provided for in
such indenture. If ▇▇▇▇▇▇▇ shall so determine, new securities so modified
as to conform, in the opinion of the trustee and ▇▇▇▇▇▇▇, to any such
indenture may be prepared and executed by ▇▇▇▇▇▇▇ and authenticated and
delivered by the trustee in exchange for the Debenture.
▇-▇-▇▇
▇▇. ▇▇▇▇▇▇▇▇▇, Representations and Warranties.
12.1 Payment of Principal and Interest. ▇▇▇▇▇▇▇ will duly and
punctually pay the principal of (and premium, if any) and interest on the
Debenture, if any, in accordance with the terms of this Debenture.
12.2 Maintenance of Office or Agency. ▇▇▇▇▇▇▇ will maintain in the
United States an office or agency where the Debenture may be presented or
surrendered for payment, where the Debenture may be surrendered for
registration of transfer or exchange and where notices and demands to or
upon ▇▇▇▇▇▇▇ in respect of the Debenture may be served. ▇▇▇▇▇▇▇ will give
prompt written notice to ▇▇▇▇▇▇▇ of the location, and any change in the
location, of such office or agency.
▇▇▇▇▇▇▇ may also from time to time designate one or more other offices
or agencies (in the United States) where the Debenture may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or
rescission shall in any manner relieve ▇▇▇▇▇▇▇ of its obligation to
maintain an office or agency in the United States for such purposes.
▇▇▇▇▇▇▇ will give prompt written notice to ▇▇▇▇▇▇▇ of any such designation
or rescission and of any change in the location of any such other office or
agency.
12.3 Limitation on Dividends. ▇▇▇▇▇▇▇ covenants that so long as the
Debenture is outstanding, if there shall have occurred and be continuing
any event that with the giving of notice or the lapse of time or both,
would constitute an Event of Default, then ▇▇▇▇▇▇▇ shall (i) not declare or
pay dividends on, or make a distribution with respect to, or redeem or
purchase or acquire, or make a liquidation payment with respect to, any of
its capital stock (other than (a) purchases or acquisitions of shares of
Common Stock in connection with the satisfaction by ▇▇▇▇▇▇▇ of its
obligations under any employee benefit plans or the satisfaction by ▇▇▇▇▇▇▇
of its obligations pursuant to any contract or security requiring ▇▇▇▇▇▇▇
to purchase shares of Common Stock, (b) as a result of a reclassification
of ▇▇▇▇▇▇▇' capital stock or the exchange or conversion of one class or
series of ▇▇▇▇▇▇▇' capital stock for another class or series of capital
stock, (c) the purchase of fractional interests in shares of ▇▇▇▇▇▇▇'
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged or (d) stock
dividends paid by ▇▇▇▇▇▇▇ where the dividend stock is the same stock as
that on which the dividend is paid), (ii) not make any payment of interest
on or principal of (or premium, if any, on) or repay, repurchase or redeem
any debt securities (including guarantees) issued by ▇▇▇▇▇▇▇ that rank pari
passu with or junior to the Debenture and (iii) not make any Guarantee
payments with respect to the foregoing.
12.4 Reservation of Stock. ▇▇▇▇▇▇▇ shall have reserved a sufficient
number of shares of Common Stock initially issuable upon conversion of the
Debenture and issuable during the Mandatory PIK Interest Payment Period and
the Optional PIK Interest Payment. All such shares of Common Stock, when
issued, shall be fully paid and non-assessable.
13. Non-Business Days. If the date on which any action (including the
delivery of notices) to be taken under this Debenture is to occur falls on a day
which is not a Business Day, such action will be deemed timely taken if taken on
the first Business Day following.
14. Notices. All notices or other communications which are required or may
be given under this Debenture shall be in writing and shall be deemed to have
been duly given when delivered in person or transmitted by telecopier (with
receipt confirmed) to a party at the address or telecopy number, as applicable,
set forth below (as any such address or telecopier number may be changed from
time to time by notice similarly given):
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(i) if to ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ Transportation, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ Environmental Services, Inc.
One ▇▇▇▇▇▇▇ Plaza
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
15. Entire Agreement. This Debenture and its Exhibits upon their execution
and delivery as herein provided will constitute the entire agreement, and
supersede all of the prior agreements and undertakings, both written and oral
among the parties, or any of them, with respect to the subject matter of this
Debenture.
16. Transfer Restriction. This Debenture may not be sold, assigned,
transferred, pledged or hypothecated in any manner, directly or indirectly, by
▇▇▇▇▇▇▇ or any other holder except to (i) any Affiliate of ▇▇▇▇▇▇▇ or (ii) any
Person not an Affiliate of ▇▇▇▇▇▇▇ if such transfer is of at least $50 million
in principal amount provided, however, in each case the assignee, transferee,
pledgee or hypothecatee has agreed in writing to be bound by the provisions of
this Debenture applicable to ▇▇▇▇▇▇▇, including but not limited to the
provisions of Section 5 hereof.
17. Counterparts. This Debenture may be executed in counterparts which
together shall constitute a single agreement.
18. Governing Law; Jurisdiction. This Debenture and the rights and
obligations of the parties created hereby shall be governed by the internal laws
of the State of Delaware without regard to its conflict of law rules. The
parties irrevocably consent to the non-exclusive jurisdiction of the courts of
the State of Delaware in connection with any dispute between or among them
arising under this Debenture.
19. Severability of Provisions. If a provision of this Debenture or its
application to any Person or circumstance, is held invalid or unenforceable in
any jurisdiction, to the extent permitted by law, such provision or the
application of such provision to Persons or circumstances other than those as to
which it is held invalid or unenforceable and in other jurisdictions, and the
remaining provisions of this Debenture, shall not be affected.
20. Specific Performance. Each Party agrees that one or more other parties
would be irreparably damaged if any provision of this Debenture were not
performed in accordance with its specific terms or was otherwise breached.
Therefore, the parties agree that each party shall be entitled to an injunction
or injunctions to prevent breaches of this Debenture or any of its provisions
and to specifically enforce this Debenture, its terms and provisions in any
action instituted in the courts of the State of Delaware subject matter
jurisdiction, in addition to any other remedy to which a party may be entitled,
at law or in equity.
21. Joint Drafting. This Debenture and its Exhibit have been jointly
drafted by the parties and their counsel. Neither this Debenture nor its Exhibit
shall be construed against any party based on its authorship.
22. Captions. The article and section headings in this Debenture are for
convenience only, and shall not affect the meaning or interpretation of this
Debenture.
A-A-18
NOTICE: THE RIGHTS AND OBLIGATIONS OF ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ SHALL BE
DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY
PRIOR ORAL AGREEMENTS BETWEEN ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS DEBENTURE (AS AMENDED IN WRITING FROM TIME TO TIME)
REPRESENTS THE FINAL AGREEMENT BETWEEN ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR OR CONTEMPORANEOUS ORAL AGREEMENTS BY ▇▇▇▇▇▇▇
AND ▇▇▇▇▇▇▇. THERE ARE NO UNDERWRITTEN ORAL AGREEMENTS BETWEEN ▇▇▇▇▇▇▇ AND
▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ ENVIRONMENTAL SERVICES, INC.
a Delaware corporation
By:
-------------------------------------
President and Chief Executive Officer
Agreed and Accepted:
▇▇▇▇▇▇▇ TRANSPORTATION, INC.
a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
A-A-19
EXHIBIT A
to the 5% Subordinated
Convertible Pay-In-Kind
Debenture Due 2009 Issued by
▇▇▇▇▇▇▇ Environmental Services, Inc.
in favor of ▇▇▇▇▇▇▇ Transportation, Inc.
[DATE]
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
Gentlemen:
Reference is made to the 5% Subordinated Convertible, Pay-In-Kind Debenture
Due 2009 dated _________, 1997 (the "Subordinated Debenture"), in the original
principal amount of $350 million issued by ▇▇▇▇▇▇▇ Environmental Services, Inc.,
a Delaware corporation ("▇▇▇▇▇▇▇"), in favor of ▇▇▇▇▇▇▇ Transportation, Inc., a
Delaware corporation, and the [DESCRIBE SENIOR INDEBTEDNESS] (the "Subject
Indebtedness"), being issued contemporaneously herewith by ▇▇▇▇▇▇▇ in favor of
[IDENTITY OF HOLDER OF HOLDERS OF SUBJECT INDEBTEDNESS] (whether one or more,
the "Senior Creditor"). Hereinafter, capitalized words and phrases used herein
which are defined in the Subordinated Debenture are used herein as therein
defined.
The undersigned (the "Subordinated Creditor") hereby represents and
warrants to the Senior Creditor that the Subordinated Creditor is the owner and
holder of the Subordinated Debenture and that the Subordinated Creditor is
entitled to make the agreements herein contained. The Subordinated Creditor
hereby acknowledges and agrees that the principal of, premium, if any, interest
on (including interest that, but for the filing of a petition initiating any
Bankruptcy or Insolvency Proceeding would accrue on such obligations at the time
provided in the agreements or instruments creating or evidencing the respective
obligations, whether or not such claim is allowed in such Bankruptcy or
Insolvency Proceeding) and all other amounts of every kind or nature (including,
but not limited to, fees, indemnities and expenses and any interest rate swaps
or other interest rate hedging products entered into in connection with the
Subject Indebtedness) due or in connection with the Subject Indebtedness,
whether outstanding on the date hereof or hereafter created, incurred, assumed,
guaranteed or in effect guaranteed by ▇▇▇▇▇▇▇ (including all renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing) are in all respects Senior Indebtedness, that the Senior Creditor
(and any other Person who from time to time is a holder of the Subject
Indebtedness) is entitled to the benefits of Sections 5, 6 and 12 of the
Subordinated Debenture and that the Senior Creditor (and any other Person who
from time to time is a holder of the Subject Indebtedness) may enforce the terms
and provisions of the Subordinated Debenture to the same extent that ▇▇▇▇▇▇▇ or
any other holder of Senior Indebtedness would be able to do so.
The Subordinated Creditor hereby agrees that the Subordinated Debenture
will not be sold, assigned, transferred, pledged or hypothecated in any manner,
directly or indirectly, by the Subordinated Creditor, unless the assignee,
transferee, pledgee or hypothecatee has agreed in writing to be bound by the
provisions of this agreement.
The Subordinated Creditor has executed this agreement in the space provided
below in order to induce the Senior Creditor to advance funds or extend credit
to ▇▇▇▇▇▇▇, and this agreement is intended by the Subordinated Creditor to be
binding and enforceable undertaking by the Subordinated Creditor in favor of the
Senior Creditor.
A-A-20
The rights credited hereby of the Senior Creditor and of any subsequent
holder of the Senior Indebtedness will be assigned automatically, and without
any further act, by the Senior Creditor or such holder upon any sale,
assignment, conveyance or other transfer of all or any part of the Senior
Indebtedness to the extent of the interest sold, assigned, conveyed or otherwise
transferred, unless and to the extent the Senior Creditor or such holder
expressly provides otherwise in the instrument pursuant to which such interest
is conveyed.
Very truly yours,
[NAME OF SUBORDINATED CREDITOR]
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Accepted and agreed to as of
the date first above written:
[NAME OF SENIOR CREDITOR]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
A-A-21