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EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
Dated as of May 11, 1998, by and among
Waste Connections, Inc.
T & T Disposal, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 11, 1998, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), T & T
Disposal, Inc., a Wyoming corporation (the "CORPORATION"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(the "SHAREHOLDERS").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste and recyclables in Albany, Campbell, Crook, Converse, Goshen,
Niobrara, Natrona, Platte and Weston Counties, Wyoming and other related
activities;
WHEREAS, the Shareholders own all of the issued and outstanding
capital stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, WCI wishes to acquire from the Shareholders all of the
Corporation's Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
1.1 SHARES TO BE PURCHASED. At the Closing (as defined in Section
2), the Corporation shall issue to WCI one hundred ninety-nine (199) new shares
of the Corporation's Stock in exchange for WCI's payment of the Closing Date
Debt (as defined in Section 3.22) in the total amount of three hundred twenty
eight thousand three hundred seventeen dollars ($328,317). Further, WCI shall
purchase, and the Shareholders shall sell and deliver to WCI, all of the issued
and outstanding shares of the Corporation's Stock before the new issuance to
WCI described above, being the number of shares of the Corporation set forth on
Schedule 3.2 opposite each Shareholder's name. At the Closing, and in exchange
therefor WCI shall deliver to the Shareholders at the Closing or thereafter as
provided by this Agreement the purchase price described in Section 1.2 (the
"PURCHASE PRICE").
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1.2 PURCHASE PRICE. The Purchase Price is:
(a) one hundred sixty four thousand six hundred eighty
three dollars ($164,683) plus or minus, as the case may be, the amount
by which the Closing Date Current Assets (as defined in Section
3.22(b)) are greater or less than the Closing Date Current Liabilities
(as defined in Section 3.22(b)). The $164,683 shall be payable to the
Shareholders at Closing in cash by wire transfer or check payable in
clearinghouse funds. Within 120 days after the Closing Date, WCI and
the Shareholders' Representative shall determine the actual Closing
Date Current Assets and Closing Date Current Liabilities. If the
Closing Date Current Assets are greater than the Closing Date Current
Liabilities, WCI shall promptly pay the difference between the two
amounts to the Shareholders; if the Closing Date Current Liabilities
are greater than the Closing Date Current Assets, the Shareholder
shall promptly pay the difference between the two amounts to WCI;
(b) Thirteen thousand six hundred and thirty-six (13,636)
shares (the "SHARES") of WCI's Common Stock, $0.01 par value (the "WCI
STOCK"), which shall be delivered by WCI to the Shareholders at the
Closing.
(c) WCI shall deliver to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a promissory note
(the "NOTE") in the form of Exhibit 1.2(d) hereto. The Note shall be
in an amount equal to thirty thousand dollars ($30,000) to be paid in
twelve (12) equal monthly installments starting on the first day of
the month following the Closing and continuing on the first day of
each of the eleven months thereafter. The Note shall be non-interest
bearing and shall be secured by a lien on all of the assets of the
Corporation.
1.3 ALLOCATION OF THE PURCHASE PRICE. Ten thousand dollars ($
10,000) of the Purchase Price shall be allocated to the covenant not to compete
as described in Section 8.1(a) hereof, and the balance of the Purchase Price
shall be allocated to the Corporation's Stock.
1.4 EXCLUDED ASSETS. The Assets of the Corporation listed on
Schedule 1.4 (the "EXCLUDED ASSETS") shall be distributed to the Shareholders
prior to the Closing, and WCI shall acquire no interest in or claim to any of
the Excluded Assets.
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1.5 PRICE PROTECTION FOR SHARES OF THE WCI STOCK. If the gross
offering price of the WCI Stock in the IPO (as defined below), before
underwriting discounts and commissions and payment of expenses of the offering
(the "IPO PRICE"), is less than nine dollars ($9.00) per share, WCI will,
within 15 days after the closing of the IPO, issue to the Shareholders a number
of additional shares of the WCI Stock determined by multiplying (x) the
difference between the IPO Price and nine dollars ($9.00) and (y) 13,636 shares
and dividing that product by the IPO Price. In lieu of issuing any fractional
shares, WCI shall pay cash to the Shareholders in an amount equal to the
fraction of a share that would have been delivered times the greater of the IPO
Price and nine dollars ($9.00). For purposes of this agreement, "IPO" means a
public offering of the WCI Stock registered under the Securities Act of 1933
(the "ACT") and sold through underwriters pursuant to a firm commitment in the
amount of at least five million dollars at an IPO Price of at least five
dollars ($5.00) per share. If the closing of the IPO shall not have occurred
by July 31, 1998, the Shareholders may, at their option exercised no later than
August 15, 1998, by written notice to WCI, cause WCI to repurchase all or any
portion of the WCI Stock issued to the Shareholders for eleven dollars ($11.00)
per share, payable by wire transfer to the account of the Shareholders.
Promptly upon exercise of such option, the Shareholders and WCI shall arrange
for a closing of the sale of such WCI Stock, such closing to occur no later
than August 31, 1998.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "CLOSING") shall take place
concurrent with the execution of this Agreement or as the Shareholders'
Representative shall agree (the "CLOSING DATE"). The Closing shall take place
at the Law Offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or through an exchange of
consideration and signed documents using overnight courier service. At the
Closing, WCI, the Corporation and the Shareholders shall deliver to each other
the documents, instruments and other items described in Section 5 of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE
SHAREHOLDERS
The Corporation and the Shareholders, jointly and severally, (i)
represent and warrant that each of the following representations and warranties
is true as of the Closing Date, and (ii) agree that such representations and
warranties shall survive the Closing.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is
duly organized, validly existing and in good standing under the laws of the
State of Wyoming. The Corporation has full corporate power and authority to
own and lease its properties and to carry on its business as now conducted. As
the business of the Corporation is currently conducted, the Corporation is not
required to be qualified or licensed to conduct business as a foreign
corporation in any other jurisdiction.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Closing Date, the
authorized
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and outstanding capital of the Corporation, the names, addresses and social
security numbers or taxpayer identification numbers of the record and
beneficial owners thereof, the number of shares so owned, the allocation of the
cash and Shares among the Shareholders as agreed to among themselves, and wire
transfer instructions for each Shareholder relating to the bank account to
which the Purchase Price should be sent. On the Closing Date, all of the
issued and outstanding shares of the capital stock of the Corporation are owned
of record and beneficially by the Shareholders, as set forth in Schedule 3.2,
and are free and clear of all liens, security interests, encumbrances and
claims of every kind except as set forth in Schedule 3.2. Each share of the
capital stock of the Corporation is duly and validly authorized and issued,
fully paid and nonassessable, and was not issued in violation of any preemptive
rights of any past or present shareholder of the Corporation. No option,
warrant, call, conversion right or commitment of any kind (including any of the
foregoing created in connection with any indebtedness of the Corporation)
exists which obligates the Corporation to issue any of its authorized but
unissued capital stock or other equity interest or which obligates any
Shareholder to transfer the Corporation's Stock to any person.
3.3 ALL STOCK BEING ACQUIRED. The Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporation.
3.4 AUTHORITY FOR AGREEMENT. The Corporation and each of the
Shareholders have full right, power and authority to enter into this Agreement
and to perform its, his or her obligations hereunder. The execution and
delivery of this Agreement by the Corporation and the consummation of the
transactions contemplated hereby by the Corporation have been duly authorized
by its Shareholders. This Agreement has been duly and validly executed and
delivered by the Corporation and each of the Shareholders and, subject to the
due authorization, execution and delivery by WCI, constitutes the legal, valid
and binding obligation of the Corporation and each of the Shareholders
enforceable against each of them in accordance with its terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporation and the Shareholders of this
Agreement, and the consummation by the Shareholders of the transactions
contemplated hereby, will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party
from any obligation under, any mortgage, lease, note, bond, indenture,
or material contract, agreement, license or other instrument or
obligation of any kind or nature to which the Corporation or any of
the Shareholders is a party, or by which the Corporation or the
Shareholders, or any of its or their assets, is or may be bound or
affected; or
(b) violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental authority,
or require the approval, consent or permission of any governmental or
regulatory authority; or
(c) violate the Articles of Incorporation of the
Corporation.
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3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Closing Date any
and all subsidiaries of the Corporation and any securities of any other
corporation or any securities or other interest in any other business entity
owned by the Corporation or any of its subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporation has delivered to WCI,
as Schedule 3.7, copies of financial statements ("FINANCIAL STATEMENTS") for
its three most recent fiscal years, compiled internally by the Corporation, and
interim financial statements for the Corporation for the period ended March 31,
1998 (the "BALANCE SHEET DATE"). The Financial Statements are true and correct
and fairly present (i) the financial position of the Corporation as of the
respective dates of the balance sheets included in said statements, and (ii)
the results of operations for the respective periods indicated. The Financial
Statements have been prepared consistently with prior periods. Except to the
extent reflected or reserved against in the Corporation's balance sheet as of
the Balance Sheet Date, or as disclosed on Schedule 3.7 or Schedule 3.8, the
Corporation had as of the Balance Sheet Date, and has as of the Closing Date,
no liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due.
3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of the Corporation required
to be described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Closing Date,
other than with respect to trade payables and as of the end of the
month prior to the Closing Date with respect to trade payables, all
indebtedness for money borrowed and all other fixed and uncontested
liabilities of any kind, character and description (excluding all real
and personal property leasehold interests included in Part IV of
Schedule 3.8), whether reflected or not reflected on the Financial
Statements and whether accrued or absolute, and states as to each such
liability the amount of such liability and to whom payable. From the
date as of which information is provided with respect to trade
payables, trade payables have been incurred only in the ordinary
course of business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the Closing
Date, all claims, suits and proceedings which are pending against the
Corporation, all contingent liabilities, and, to the knowledge of the
Corporation and the Shareholders, all contingent liabilities and all
claims, suits and proceedings threatened or anticipated against the
Corporation. Part II of Schedule 3.8 includes a summary description
of each such liability, including, without limitation, (A) the name of
each court, agency, bureau, board or body before which any such claim,
suit or proceeding is pending, (B) the date such claim, suit or
proceeding was instituted, (C) the parties to such claim, suit or
proceeding, (D) a brief description of the factual basis alleged to
underlie such claim, suit or proceeding, including the date or dates
of all material occurrences, and (E) the amount claimed and other
relief sought, together with copies of all material documents, reports
and other records relating thereto to the extent that they are in the
Corporation's or the Shareholders' possession or control.
(c) Part III of Schedule 3.8 lists, as of the Closing
Date and to the extent not
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otherwise included in Part I of Schedule 3.8, all liens, claims and
encumbrances secured by or otherwise affecting any asset of the
Corporation (including any Corporate Property, as hereafter defined),
including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature
of the obligation secured, and the party holding such lien, claim or
encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the Closing Date
and to the extent not otherwise included in Part I or Part III of
Schedule 3.8, all real and personal property leasehold interests to
which the Corporation is a party as lessor or lessee or, to the
knowledge of the Corporation or the Shareholders, affecting or
relating to any Corporate Property, and includes a description of the
nature and principal terms of such leasehold interest, including,
without limitation, the identity of the other party thereto, the term
of such leasehold interest (including renewal options), the base rent
and any additional rent owing thereunder (including any adjustments
thereto), security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule 3.8,
neither the Corporation nor any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or with respect
to any of the liabilities or obligations listed on Schedule 3.8 except, in the
case of liabilities and obligations listed on Parts I, III and IV of Schedule
3.8, periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in the ordinary
course of business. Between the Balance Sheet Date and the Closing Date, trade
payables have been incurred only in the ordinary course of business consistent
with comparable prior periods.
3.9 CONDUCT OF BUSINESS. Except as set forth on Schedule 3.21,
since the Balance Sheet Date:
(a) The business of the Corporation has been conducted
only in the ordinary course; and
(b) There has been no change in the condition (financial
or otherwise) of the assets, liabilities or operations of the
Corporation other than changes in the ordinary course of business,
none of which either singly or in the aggregate has been materially
adverse.
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3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, and
service agreements pursuant to which the Corporation is authorized to
collect and haul industrial, commercial and residential solid waste
(the "COLLECTION FRANCHISES"), and of all other material permits,
licenses, titles (including motor vehicle titles and current
registrations), fuel permits, zoning and land use approvals and
authorizations, including, without limitation, any conditional or
special use approvals or zoning variances, occupancy permits, and any
other similar documents constituting a material authorization or
entitlement or otherwise material to the operation of the business of
the Corporation (collectively the "GOVERNMENTAL PERMITS") owned by,
issued to, held by or otherwise benefitting the Corporation or the
Shareholders as of the Closing Date. The status of the Governmental
Permits related to the disposal areas owned or used by the
Corporation, including, without limitation, any conditions thereto
and, if applicable, the expiration dates thereof, are also described
in Schedule 3.10(a). Schedule 3.10(a) also sets forth the name of any
governmental agency or other third party from whom the Shareholders,
the Corporation or WCI must obtain consent (the "REQUIRED GOVERNMENTAL
CONSENTS") in order to effect a direct or indirect transfer of the
Collection Franchises or other Governmental Permits required as a
result of the consummation of the transactions contemplated by this
Agreement. All such consents, if any, have been obtained. Except as
set forth on Schedule 3.10(a), all of the Collection Franchises and
other Governmental Permits enumerated and listed on Schedule 3.10(a)
are adequate for the operation of the business of the Corporation and
of each Corporate Property as presently operated and are valid and in
full force and effect. All of said Collection Franchises and other
Governmental Permits and agreements have been duly obtained and are in
full force and effect, and there are no proceedings pending or, to the
knowledge of the Corporation or the Shareholders, threatened which may
result in the revocation, cancellation, suspension or adverse
modification of any of the same. Neither the Corporation nor any of
the Shareholders has any knowledge of any reason why all such
Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
(b) Schedule 3.10(b) includes: (i) all records,
notifications, reports, permit and license applications, engineering
and geologic studies, and environmental impact reports, tests or
assessments (collectively, "RECORDS, NOTIFICATIONS AND REPORTS") that
(A) are material to the operation of the business of the Corporation,
or (B) relate to the discharge or release of materials into the
environment and/or the handling or transportation of waste materials
or hazardous or toxic substances or otherwise relate to the protection
of the public health or the environment, or (C) were filed with or
submitted to appropriate governmental agencies during the past 24
months by the Corporation or any of the Shareholders or their agents
with respect to the business of the Corporation, and (ii) all material
notifications from such governmental agencies to the Corporation, the
Shareholders or their agents in response to or relating to any of such
Records, Notifications and Reports.
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(c) Schedule 3.10(c) lists, as of the Closing Date, each
facility owned, leased, operated or otherwise used by the Corporation,
the ownership, lease, operation or use of which is being transferred
to, assumed by or otherwise acquired directly or indirectly by WCI
pursuant to this Agreement (each, a "FACILITY" and collectively, the
"FACILITIES"). Except as otherwise disclosed on Schedule 3.10(c), to
the knowledge of the Shareholders:
(i) Each Facility is fully licensed, permitted
and authorized to carry on its current business under all
applicable federal, state and local statutes, orders,
approvals, zoning or land use requirements, rules and
regulations, and no Facility or the current use thereof
constitutes a non-conforming use or is otherwise subject to
any restrictions regarding the operation, renovation or
reconstruction thereof.
(ii) All activities and operations at each
Facility are being and have been conducted in compliance in
all material respects with the requirements, criteria,
standards and conditions set forth in all applicable federal,
state and local statutes, orders, approvals, permits, zoning
or land use requirements and restrictions, variances,
licenses, rules and regulations.
(iii) Each Facility is located on real property
owned or leased by the Corporation (each a "FACILITY
PROPERTY") and each Facility Property owned by the Corporation
is legally described on the preliminary title reports, surveys
or site plans attached to Schedule 3.10(c) (the "FACILITY
SURVEYS/SITE PLANS"), which accurately depict the respective
Facility Property.
(iv) There are no circumstances, conditions or
reasons which are likely to be the basis for revocation or
suspension of any Facility's site assessments, permits,
licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any Facility owned
by the Corporation or owned by any of the Shareholders or an
Affiliate (as hereinafter defined) of any of the Shareholders
and leased to the Corporation, and to the knowledge of the
Corporation and the Shareholders there are no circumstances,
conditions or reasons which are likely to be the basis for
revocation or suspension of any site assessment, permits,
licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any Facility.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as of
the Closing Date of the accounts and notes receivable of the Corporation from
and advances to employees, former employees, officers, directors, the
Shareholders and Affiliates of the foregoing which have not been repaid. For
purposes of this Agreement, the term "AFFILIATE" means, with respect to any
person, any person that directly or indirectly through one or more
intermediaries controls or has an ownership interest in, or is controlled or
owned in whole or in part by, or is under common control or ownership in whole
or in part with such person, and in the case of the Corporation includes
directors and officers, in the case of individuals includes the individual's
spouse, father, mother, grandfather, grandmother, brothers, sisters, children
and grandchildren and in the case of a trust includes the grantors, trustees
and beneficiaries of the trust.
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3.12 FIXED ASSETS AND REAL PROPERTY.
(a) Schedule 3.12(a) lists, as of the Closing Date,
substantially all the fixed assets (other than real estate) of the
Corporation, including, without limitation, identification of each
vehicle by description and serial number, identification of machinery,
equipment and general descriptions of parts, supplies and inventory.
Except as described on Schedule 3.12(a), all of the Corporation's
containers, vehicles, machinery and equipment necessary for the
operation of its business are in operable condition, and all of the
motor vehicles and other rolling stock of the Corporation are in
material compliance with all applicable laws, rules and regulations.
All such containers, vehicles, machinery and equipment are
substantially free of known defects, excepting therefrom defects from
reasonable wear, tear and use, that would cause them to fail. All
leases of fixed assets are in full force and effect and binding upon
the parties thereto; neither the Corporation nor, to the knowledge of
the Corporation or the Shareholders, any other party to such leases is
in breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Closing Date (the "CORPORATE
PROPERTY"), including the street address and, in the case of Corporate
Property owned or being purchased, the legal description thereof, is
listed on Schedule 3.12(b) - Part I, and attached to said Schedule
3.12(b) - Part I are copies of all leases, deeds, outstanding
mortgages, other encumbrances and any existing title insurance
policies or lawyer's title opinions relating to each Corporate
Property. All leases listed on Schedule 3.12(b) - Part I are in full
force and effect and binding on the parties thereto; neither the
Corporation nor any other party to any such lease is in breach of any
of the material provisions thereof; the landlord's interest in any
such lease has not been assigned to any third party nor has any such
interest been mortgaged, pledged or hypothecated; and the Corporation
has not assigned any such lease or sublet all or any part of the
Corporate Property which is the subject of any such lease. Except as
described on Schedule 3.12(b) - Part II, there are no known material
physical or mechanical defects in any Facility located on any
Corporate Property.
(c) The Corporation has good, valid and marketable title
to all properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the conduct of its
business, free of any encumbrance or charge of any kind except: (i)
liens for current taxes not yet due; (ii) minor imperfections of title
and encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the use of the property subject
thereto, do not materially impair the value of the Corporation, and
have arisen only in the ordinary course of business and consistent
with past practice; and (iii) the liens identified on Part III of
Schedule 3.8 (collectively, the "PERMITTED LIENS") and those liens and
encumbrances disclosed on Schedule 3.8-Part I. Except as described on
Schedule 3.12(b) - Part I, there are no leases, occupancy agreements,
options, rights of first refusal or any other agreements or
arrangements, either oral or written, that create or confer in any
person or entity the right to acquire, occupy or possess, now or in
the future, any Facility, any Corporate Property, or any portion
thereof, or create in or confer on any person or entity any right,
title or interest therein or
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in any portion thereof.
3.13 ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on
Schedule 3.13, since the Balance Sheet Date, the Corporation has not acquired
or sold or otherwise disposed of any properties or assets which, singly or in
the aggregate, have a value in excess of $10,000, or which are material to the
operation of the Corporation's business as presently conducted, without the
prior written consent of WCI.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Closing Date, and
includes copies of, all material contracts and agreements (other than
leases and documents included with Schedule 3.12(b)) to which the
Corporation is a party or by which it or any of its property is bound
(including, but not limited to, joint venture or partnership
agreements, contracts with any labor organizations, promissory notes,
loan agreements, bonds, mortgages, deeds of trust, liens, pledges,
conditional sales contracts or other security agreements). Except as
disclosed on Schedule 3.14(a), all such contracts and agreements
included in Schedule 3.14(a) are in full force and effect and binding
upon the parties thereto. Except as described or cross referenced on
Schedule 3.14(a), neither the Corporation nor, to the Corporation's or
any of the Shareholder's knowledge, any other parties to such
contracts and agreements is in breach thereof, and none of the parties
has threatened to breach any of the material provisions thereof or
notified the Corporation or any of the Shareholders of a default
thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate Properties, nor
has the Corporation been notified that any such judgment, order, writ,
injunction or decree has been requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes
copies, as of the Closing Date, of all insurance policies in effect on the
Closing Date or, with respect to "OCCURRENCE" policies that were in effect,
carried by the Corporation in respect of the Corporate Properties or any other
property used by the Corporation specifying, for each policy, the name of the
insurer, the type of risks insured, the deductible and limits of coverage, and
the annual premium therefor. The Corporation currently carries insurance in
the type and amount ordinarily carried by owners or corporations in similar
circumstances, in respect to the Corporation' properties, assets and business.
During the last five years, there has been no lapse in any material insurance
coverage of the Corporation. For each insurer providing coverage for any of
the contingent or other liabilities listed on Schedule 3.8, except to the
extent otherwise set forth in Part II of Schedule 3.8, each such insurer, if
required, has been properly and timely notified of such liability, no
reservation of rights letters have been received by the Corporation and the
insurer has assumed defense of each suit or legal proceeding. All such
proceedings are fully covered by insurance, subject to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the
Closing Date, of all
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officers, directors and employees (by type or classification) of the
Corporation and their respective rates of compensation, including (i) the
portions thereof attributable to bonuses, (ii) any other salary, bonus, stock
option, equity participation, or other compensation arrangement made with or
promised to any of them, and (iii) copies of all employment agreements with
non-union officers, directors and employees. Schedule 3.16 also lists the
driver's license number for each driver of the Corporation's motor vehicles.
3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the Closing
Date, and includes complete copies (or, in the case of oral
arrangements, descriptions), of all employee benefit plans and
agreements (written or oral) currently maintained or contributed to by
the Corporation, including employment agreements and any other
agreements containing "GOLDEN PARACHUTE" provisions, retirement plans,
welfare benefit plans and deferred compensation agreements, together
with copies of such plans, agreements and any trusts related thereto,
and classifications of employees covered thereby as of the Closing
Date. Except for the employee benefit plans described on Schedule
3.17(a), the Corporation has no other pension, retirement, welfare,
profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plans or arrangements with any
party. Except as disclosed on Schedule 3.17(a), all employee benefit
plans listed on Schedule 3.17(a) are fully funded and in substantial
compliance with all applicable federal, state and local statutes,
ordinances and regulations. All such plans that are intended to
qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and
copies of such determination letters are included as part of Schedule
3.17(a). Except as disclosed on Schedule 3.17(a), all reports and
other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely
filed or distributed, and copies thereof are included as part of
Schedule 3.17(a). All employee benefit plans listed on such Schedule
have been operated in accordance with the terms and provisions of the
plan documents and all related documents and policies. The
Corporation has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or U.S. Department of Labor nor
any liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, nor has the Corporation, nor party-in-interest
or disqualified person, engaged in any transaction or other activity
which would give rise to such liability. The Corporation has not
participated in or made contributions to any "MULTI-EMPLOYER PLAN" as
defined in the Employee Retirement Income Security Act of 1974
("ERISA"), nor would the Corporation or any affiliate be subject to
any withdrawal liability with respect to such a plan if any such
employer withdrew from such a plan immediately prior to the Closing
Date. No employee pension benefit plan is under funded on a
termination basis as of the date of this Agreement.
(b) Schedule 3.17(b) is a complete list, as of the
Closing Date, and includes complete copies of all union contracts and
agreements between the Corporation and any collective bargaining
group. The Corporation is in compliance in all material respects with
all applicable federal and state laws respecting employment and
employment
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practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not engaged in any unfair
labor practice. There is no charge pending or, to the Corporation's
or the Shareholders' knowledge, threatened, against the Corporation
before any court or agency and alleging unlawful discrimination in
employment practices and there is no charge of or proceeding with
regard to any unfair labor practice against it pending before the
National Labor Relations Board. There is no labor strike, dispute,
slow down or stoppage as of the Closing Date, existing or threatened
against the Corporation; no union organizational activity exists
respecting employees of the Corporation not currently subject to a
collective bargaining agreement; the union contracts or other
agreements delivered as part of Schedule 3.17(b) constitute all
agreements with the unions or other collective bargaining groups, and
there are no other arrangements or established practices relating to
the employees covered by any collective bargaining agreement; and
Schedule 3.17(b) contains as of the date it is delivered a list of all
arbitration or grievance proceedings that have occurred since the
Balance Sheet Date. No one has petitioned within the last five years,
and no one is now petitioning, for union representation of any
employees of the Corporation. The Corporation has not experienced any
labor strike, slow-down, work stoppage, labor difficulty or other job
action during the last five years.
(c) No payment made to any employee, officer, director or
independent contractor of the Corporation (the "RECIPIENT") pursuant
to any employment contract, severance agreement or other arrangement
(the "GOLDEN PARACHUTE PAYMENT") will be nondeductible by the
Corporation because of the application of Sections 280G and 4999 of
the Code to the Golden Parachute Payment, nor will the Corporation be
required to compensate any Recipient because of the imposition of an
excise tax (including any interest or penalties related thereto) on
the Recipient by reason of Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) The Corporation has timely filed all requisite
federal, state, local and other tax and information returns due for
all fiscal periods ended on or before the Closing Date. All such
returns are accurate and complete. Except as set forth on Schedule
3.18, there are no open years (other than those within the statute of
limitations), examinations in progress, extensions of any statute of
limitations or claims against the Corporation relating to federal,
state, local or other taxes (including penalties and interest) for any
period or periods prior to and including the Closing Date and no
notice of any claim for taxes has been received. Copies of (i) any
tax examinations, (ii) extensions of statutory limitations and (iii)
the federal income, and state franchise, income and sales tax returns
of the Corporation for its last three fiscal years are attached as
part of Schedule 3.18. Copies of all other federal, state, local and
other tax and information returns for all prior years of the
Corporation's existence have been made available to WCI and are among
the records of the Corporation which will accrue to WCI at the
Closing. The Corporation has not been contacted by any federal, state
or local taxing authority regarding a prospective examination.
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(b) Except as set forth on Schedule 3.18 (which schedule
also includes the amount due with respect to the Corporation) the
Corporation has duly paid all taxes and other related charges required
to be paid prior to the Closing Date. The reserves for taxes
contained in the Financial Statements of the Corporation are adequate
to cover its tax liability as of the Closing Date.
(c) The Corporation has withheld all required amounts
from its employees for all pay periods in full and complete compliance
with the withholding provisions of applicable federal, state and local
laws. All required federal, state and local and other returns with
respect to income tax withholding, social security, and unemployment
taxes have been duly filed by the Corporation for all periods for
which returns are due, and the amounts shown on all such returns to be
due and payable have been paid in full.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on
Schedule 3.19, the copies of the Articles of Incorporation of the Corporation,
both as amended to the Closing Date, and the copies of all leases, instruments,
agreements, licenses, permits, certificates or other documents that have been
delivered to WCI in connection with the transactions contemplated hereby are
complete and accurate as of the Closing Date and are true and correct copies of
the originals thereof. Except as specifically disclosed on Schedule 3.19, the
rights and benefits of the Corporation will not be adversely affected by the
transactions contemplated hereby, and the execution of this Agreement and the
performance of the obligations hereunder will not violate or result in a breach
or constitute a default under any of the terms or provisions thereof. None of
such leases, instruments, agreements, licenses, permits, site assessments,
certificates or other documents requires notice to, or consent or approval of,
any governmental agency or other third party to any of the transactions
contemplated hereby, except the Required Governmental Consents, such consents
and approvals as are listed on Schedule 3.19; all of which will have been given
or obtained prior to the Closing.
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES.
Schedule 3.20 is a current, accurate and complete list of, and includes:
(a) the customers the Corporation serves on an ongoing
basis, including name, location and current billing rate, as of the
Closing Date;
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month
preceding the month in which such Schedule is delivered, showing
amounts due in 30-day aging categories; and
(c) the average monthly revenues of the Corporation
derived from ▇▇▇▇▇▇▇▇ to its customers for each of the twelve months
preceding the Closing Date. Except as set forth on Schedule 3.20, the
Corporation and the Shareholders have no knowledge of any reason why
the Corporation's average monthly revenues derived from ▇▇▇▇▇▇▇▇ to
its customers after the Closing Date should not continue at
approximately the same rate as before the Closing Date.
3.21 NO CHANGE WITH RESPECT TO THE CORPORATION. Except as set
forth on
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Schedule 3.21, since the Balance Sheet Date, the business of the corporation
has been conducted only in the ordinary course and there has been no change in
the condition (financial or otherwise) of the assets, liabilities or operations
of the Corporation other than changes in the ordinary course of business, none
of which either singly or in the aggregate has been materially adverse.
Specifically, and without limiting the generality of the foregoing, except as
set forth on Schedule 3.21, with respect to the Corporation, since the Balance
Sheet Date, there has not been:
(a) any material change in its financial condition,
assets, liabilities (contingent or otherwise), income, operations or
business which would have a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), income,
operations or business of the Corporation, taken as a whole;
(b) any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion of
its properties or business;
(c) any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or outstanding
securities, or (iii) its securities;
(d) any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of its capital
stock or any direct or indirect redemption, purchase or other
acquisition of any of its capital stock;
(e) any material increase or bonus or promised increase
or bonus in the compensation payable or to become payable by it, in
excess of usual and customary practices, to any of its directors,
officers, employees or agents, or any accrual or arrangement for or
payment of any bonus or other special compensation to any employee or
any severance or termination pay paid to any of its present or former
officers or other key employees;
(f) any labor dispute or any other event or condition of
any character with respect to the Corporation's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any other
person, including, without limitation, the Shareholders and their
Affiliates, other than in the ordinary course of business;
(h) any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to it,
including, without limitation, any indebtedness or obligation of any
of the Shareholders or any Affiliate thereof;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement,
plan or arrangement to
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purchase or acquire, any of its property, rights or assets outside the
ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any
existing material contract, agreement, license, permit or other right
to which it is a party;
(m) any other material transaction outside the ordinary
course of its business.
3.22 DEBT; CURRENT ASSETS AND CURRENT LIABILITIES.
(a) At the Closing, the Shareholders shall prepare and
deliver to WCI Schedule 3.22(a), which shall be a statement, as of the
Closing Date, of (i) the amount of the aggregate debt (excluding trade
payables) of the Corporation outstanding on the Closing Date required
to be repaid by WCI at the Closing or immediately after the Closing
Date and all prepayment penalties incurred or to be incurred by WCI or
the Corporation in connection with the repayment of any such debt,
(ii) the amount of the aggregate debt (excluding trade payables) of
the Corporation outstanding on the Closing Date which will remain
outstanding obligations of the Corporation after the Closing Date, and
all prepayment penalties applicable to such debt if repaid prior to
maturity, including in each case all interest accrued through and
including the Closing Date, (iii) the aggregate amount of the present
value, discounted at the lease rate factor, if known, inherent in the
lease or, if the lease rate factor is not known, at the rate charged
to the Corporation by a third party lender in connection with its most
recent borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations and (iv) the
aggregate amount of the present value of all capitalized lease
obligations (determined in accordance with generally accepted
accounting principles) of the Corporation (the "CLOSING DATE DEBT").
Schedule 3.22(a) shall include wire transfer instructions for
creditors whose Closing Date Debt WCI has designated for payment, and
attached to Schedule 3.22(a) shall be pay off letters or instructions
from such creditors in the form provided by WCI's bank;
(b) At the Closing, the Shareholders shall prepare and
deliver to WCI Schedule 3.22(b), which shall be an estimate as of the
Closing Date of the amount of the aggregate current liabilities
(including any reserve for unpaid taxes and excluding the current
portion of long-term debt to the extent such current portion is
included in Closing Date Debt) and trade payables of the Corporation
as of the Closing Date (the "CLOSING DATE CURRENT LIABILITIES") and
the amount of the aggregate cash and other current assets of the
Corporation as of the Closing Date, including prepaid expenses the
benefit of which survives the Closing Date and the accounts receivable
of the Corporation earned prior to the Closing Date, and collectible
on or after the Closing Date (the "CLOSING DATE CURRENT ASSETS"). The
Corporation and the Shareholders expressly acknowledge that in
arriving at the Closing Date Current Assets, accounts receivable owed
to the Corporation that are outstanding sixty (60) days or less prior
to the Closing Date are valued at one hundred percent (100%) of their
amount, accounts receivable outstanding sixty-one (61)
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to ninety (90) days prior to the Closing Date are valued at forty
percent (40%) of their amount, and that any amounts outstanding more
than ninety (90) days prior to the Closing Date are valued at zero.
3.23 BANK ACCOUNTS.
(a) Schedule 3.23(a) is a complete and accurate list, as
of the Closing Date, of:
(i) the name of each bank in which the
Corporation has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes
are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw
thereon or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate list, as
of the Closing Date, of:
(i) each credit card or other charge account
issued to the Corporation; and
(ii) the name of each person to whom such credit
cards or other charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24,
the Corporation has complied with, and the Corporation is presently in
compliance with, federal, Wyoming state and local laws, ordinances, codes,
rules, regulations, Governmental Permits, orders, judgments, awards, decrees,
consent judgments, consent orders and requirements applicable to it
(collectively "LAWS"), including, but not limited to, the Americans with
Disabilities Act, the Federal Occupational Safety and Health Act, and Laws
relating to the public health, safety or protection of the environment
(collectively, "ENVIRONMENTAL LAWS"). Except as disclosed on Schedule 3.24,
there has been no assertion by any party that the Corporation is in violation
of any Laws. Specifically and without limiting the generality of the
foregoing, except as disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the
Corporation has not accepted, processed, handled, transferred,
generated, treated, stored or disposed of any Hazardous Material (as
defined in Section 3.24(e) below) nor has it accepted, processed,
handled, transferred, generated, treated, stored or disposed of
asbestos, medical waste, radioactive waste or municipal waste, except
in compliance with Environmental Laws.
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(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other
than that allowed under Environmental Laws, including, without
limitation, RCRA, has been disposed of, or otherwise released on any
Corporate Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Corporate Property has ever
been subject to or received any notice of any private, administrative
or judicial action, or notice of any intended private, administrative
or judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Corporate
Property or any real property now or previously owned or leased by the
Corporation. There are no pending and, to the Corporation's and
Shareholders' knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of the Corporate Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Corporation has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL" means
the substances (i) defined as "HAZARDOUS WASTE" in 40 CFR 261, and
substances defined in any comparable Wyoming statute or regulation;
(ii) any substance the presence of which requires remediation pursuant
to any Environmental Laws; and (iii) any substance disposed of in a
manner not in compliance with Environmental Laws.
3.25 POWERS OF ATTORNEY. The Corporation has not granted any power
of attorney (except routine powers of attorney relating to representation
before governmental agencies) or entered into any agency or similar agreement
whereby a third party may bind or commit the Corporation in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule
3.26, no underground storage tanks containing petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 or Environmental Laws are
currently or have been located on any Corporate Property. Except as set forth
on Schedule 3.26, the Corporation has never owned or leased any real property
not included in the Corporate Property having any underground storage tanks
containing petroleum products or wastes or other hazardous substances regulated
by 40 CFR 280. As to each such underground storage tank ("UST") identified on
Schedule 3.26, the Corporation has provided to WCI, on Schedule 3.26:
(a) the location of the UST, information and material,
including any available drawings and photographs, showing the
location, and whether the Corporation currently
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owns or leases the property on which the UST is located (and if the
Corporation does not currently own or lease such property, the dates
on which it did and the current owner or lessee of such property);
(b) the date of installation and specific use or uses of
the UST;
(c) copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body
or agency relating to the UST;
(e) other material records with regard to the UST,
including, without limitation, repair records, financial assurance
compliance records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the
above, a summary description of instances, past or present, in which,
to the Corporation's, or the Shareholders' knowledge, the UST failed
to meet applicable standards and regulations for tightness or
otherwise and the extent of such failure, and any other operational or
environmental problems with regard to the UST, including, without
limitation, spills, including spills in connection with delivery of
materials to the UST, releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation has
complied with Environmental Laws regarding the installation, use, testing,
monitoring, operation and closure of each UST described on Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists
all patents, tradenames, fictitious business names, trademarks, service marks,
and copyrights owned by the Corporation or which it is licensed to use (other
than licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). No
patents, trade secrets, know-how, intellectual property, trademarks, trade
names, assumed names, copyrights, or designations used by the Corporation in
its business infringe on any patents, trademarks, or copyrights, or any other
rights of any person. Neither the Corporation nor any of the Shareholders
knows or has any reason to believe that there are any claims of third parties
to the use of any such names or any similar name, or knows of or has any reason
to believe that there exists any basis for any such claim or claims.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. The Corporation owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.5, 3.10(a), 3.10(c),
3.14(a) and 3.19, is a party to all Collection Franchises and Governmental
Permits and other agreements necessary to permit it to carry on its business as
presently conducted. All of said Collection Franchises and Governmental
Permits and agreements have been duly obtained and, except as disclosed on
Schedules 3.5, 3.8-Part II,
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3.10(a), 3.10(c) 3.14(a) and 3.19, are in full force and effect and there are
no proceedings pending or threatened which may result in the revocation,
cancellation, suspension or adverse modification of any of the same. Neither
the Corporation nor any of the Shareholders has any knowledge of any reason why
all such Collection Franchises and Governmental Permits and agreements will not
remain in effect after consummation of the transactions contemplated hereby.
3.29 CONDEMNATION. No Corporate Property owned or leased by the
Corporation is the subject of, or would be affected by, any pending
condemnation or eminent domain proceedings, and, to the knowledge of the
Corporation and the Shareholders, no such proceedings are threatened.
3.30 SUPPLIERS AND CUSTOMERS. The relations between the
Corporation and its customers are good. Neither the Corporation nor any of the
Shareholders has knowledge of any fact (other than general economic and
industry conditions) which indicates that any of the suppliers supplying
products, components, materials or providing use of, or access to, landfills or
disposal sites to the Corporation intends to cease providing such items to the
Corporation, nor does the Corporation or any of the Shareholders have knowledge
of any fact (other than general economic and industry conditions) which
indicates that any of the customers of the Corporation intends to terminate,
limit or reduce its business relations with the Corporation.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the
Corporation nor any of the Shareholders has directly or indirectly within the
past five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of the Corporation in connection with
any actual or proposed transaction which (a) might subject the Corporation to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (b) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of the Corporation,
or (c) if not continued in the future, might adversely affect the financial
condition, business or operations of the Corporation or which might subject the
Corporation to suit or penalty in any private or governmental litigation or
proceeding.
3.32 RELATED PARTY TRANSACTIONS. None of the Shareholders or their
respective Affiliates has entered into any transaction with or is a party to
any agreement, lease or other instrument, or as of the date of this Agreement
is indebted to or is owed money by, the Corporation not disclosed on the
Financial Statements delivered to WCI prior to the date of this Agreement.
Except as disclosed in the Financial Statements, none of the Shareholders or
their Affiliates owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee, shareholder or partner of, or
consultant or lender to or borrower from or has the right to participate in the
profits of, any Person which is a competitor, supplier, customer, landlord,
tenant, creditor or debtor of the Corporation.
3.33 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature of the
matter disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
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3.34 NO MISLEADING STATEMENTS. The representations and warranties
of the Corporation and the Shareholders contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to WCI and its representatives pursuant hereto are complete and accurate in all
material respects and do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made and to be
made not misleading.
3.35 ACCURATE AND COMPLETE RECORDS. The corporate minute books,
stock ledgers, books, ledgers, financial records and other records of the
Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material
corporate transactions required to be authorized by the Boards of
Directors and/or shareholders of the Corporation and do not contain or
reflect any material discrepancies.
3.36 KNOWLEDGE. Wherever reference is made in this Agreement to
the "KNOWLEDGE" of the Shareholders, such term means the actual knowledge of
the Shareholders or any knowledge which should have been obtained by the
Shareholders upon reasonable inquiry by a reasonable business person. In the
case of a Shareholders that is a trust, the term "KNOWLEDGE" means the actual
knowledge of the trustee or trustees of the trust or any knowledge which should
have been obtained by the trustee or trustees upon reasonable inquiry by a
reasonable business person. Wherever reference is made in this Agreement to
the "KNOWLEDGE" of the Corporation, such term means the actual knowledge of any
management employee, officer or director of the Corporation or any knowledge
which should have been obtained by any such person upon reasonable inquiry by a
reasonable business person.
3.37 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for the Corporation or the
Shareholders in connection with the transactions contemplated by this Agreement
and no person is entitled to any broker's, finder's, financial advisory or
similar fee or payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of the Corporation or the
Shareholders.
3.38 INVESTMENT REPRESENTATIONS. The Shareholders further
represent that:
(a) Each of the Shareholders has such knowledge and
experience in financial matters, either alone or with the
Shareholder's professional advisors, that he or she is capable of
evaluating the merits and risks of the investment in the Shares.
(b) Each is a resident of the State of Wyoming.
(c) Each of the Shareholders has had access to such
information relating to
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WCI as such Shareholder feels is reasonably necessary to make an
informed investment decision with respect to the Shares, including,
without limitation, WCI's Prospectus dated May, 1998. Each of the
Shareholders understands that the Shares are not covered by the
Prospectus, but rather that such Prospectus has been given to the
Shareholders to provide them information about WCI.
(d) Each of the Shareholders has had the opportunity to
ask questions and receive answers concerning the terms and conditions
of the transactions contemplated by this Agreement and to obtain
additional information that WCI possesses or can obtain without
unreasonable effort or expense that is necessary to verify the
accuracy of the information provided.
(e) Each of the Shareholders is acquiring the Shares
pursuant to this Agreement for its own account, not as a nominee or
agent. No one else has any interest, beneficial or otherwise, in any
of the Shares.
(f) Each of the Shareholders is able to bear the economic
risk of such an investment in the Shares is aware that he, she or it
must be prepared to hold such Shares for an indefinite period (unless
exempt from registration or subsequently registered under the Act or
as otherwise provided in Section 1.5) and is aware that the Shares
have not been registered under the Act, or registered or qualified
under the securities laws of any state, on the ground, among others,
that no unregistered distribution or public offering of Shares is to
be effected and the Shares are being issued by WCI without any public
offering within the meaning of section 4(2) of the Act.
(g) Without in any way limiting the representations
herein, each of the Shareholders further agrees that such Shareholder
shall not encumber, pledge, hypothecate, sell, transfer, assign or
otherwise dispose of, or receive any consideration for, any Shares or
any interest in them, unless and until prior to any proposed
encumbrance, pledge, hypothecation, sale, transfer, assignment or
other disposition, (i) a registration statement on Form S-1 or S-3 (or
any other form appropriate for the purpose or replacing such form)
under the Act with respect to the shares proposed to be transferred or
otherwise disposed of shall be then effective (ii)(a) he, she or it
shall have furnished WCI with a detailed statement of the
circumstances of the proposed disposition, and (b) he, she or it shall
have furnished WCI with an opinion of counsel or no-action letter
issued by the Staff of the Securities and Exchange Commission ("SEC")
(obtained at the Shareholders' expense) in form and substance
satisfactory to WCI to the effect that such disposition will not
require registration of any such Shares under the Act or qualification
of any such Shares under any other securities law; or (iii) Rule 144
is available with respect to such transaction.
(h) Each of the Shareholders understands and agrees that
each certificate or other instrument representing the Shares will bear
a legend on the face thereof (or on the reverse thereof with a
reference to such legend on the face thereof) which legend restricts
the sale, transfer or other disposition of the Shares otherwise than
in accordance with Sections 3.38(g) of this Agreement provided,
however, that WCI shall, on the request of
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any of the Shareholders, cause such legends to be removed from the
certificates or other instrument evidencing the Shares if such
Shareholder has held such Shares for the period contemplated by Rule
144(k) under the Act and if the Shareholder is not then and has not
been during the three months preceding such request an affiliate of
WCI (as defined in Rule 144 under the Act).
(i) Each of the Shareholders understands and agrees that
the Shares will be "RESTRICTED SECURITIES" as that term is defined in
Rule 144 under the Act and, accordingly, that the Shares must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
(j) The Shareholders agree to be bound with respect to
the Shares by any "LOCK UP" provisions to which the executive officers
and directors of WCI are also bound as may be requested by any
underwriters of any offering of WCI Stock or securities convertible
into WCI Stock.
3.39 S CORPORATION. The Corporation has elected to be taxed as an
S Corporation under the Internal Revenue Code of 1986, as amended, for all of
the years listed on Schedule 3.39.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders that each of the
following representations and warranties is true as of the date of this
Agreement and will be true as of the Closing Date, and agrees that such
representations and warranties shall survive the Closing:
4.1 EXISTENCE AND GOOD STANDING. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WCI has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. WCI is not required
to be qualified or licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a material adverse
effect on its financial condition.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any
article, document or instrument to which WCI is a party or by which it is bound
which would be violated by consummation of the transactions contemplated by
this Agreement.
4.3 AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due
authorization, execution and delivery by the Corporation and the Shareholders,
constitutes a legal, valid and binding obligation of WCI. WCI has full
corporate power, legal right and corporate authority to enter into and perform
its obligations under this Agreement and to carry on its business as presently
conducted. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and the fulfillment of and compliance
with the terms and conditions hereof do not and will not, after the giving of
notice, or the lapse of time or otherwise: (a) violate any provisions of any
judicial or administrative order, award, judgment or decree applicable to WCI;
(b) conflict with
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any of the provisions of the Amended and Restated Certificate of Incorporation
or Amended and Restated Bylaws of WCI; or (c) conflict with, result in a breach
of or constitute a default under any material agreement or instrument to which
WCI is a party or by which it is bound.
4.4 STATUS OF SHARES. The Shares delivered to the Shareholders at
the Closing are duly authorized and delivered shares of WCI, and shall be fully
paid and nonassessable.
4.5 NO MISLEADING STATEMENTS. The representations and warranties
of WCI contained in this Agreement, the Exhibits and Schedules hereto and all
other documents and information furnished to the Shareholders pursuant hereto
are materially complete and accurate, and do not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
4.6 BROKERS; FINDERS. No person has acted directly or indirectly
as a broker, finder or financial advisor for WCI in connection with the
transactions contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of WCI.
4.7 DISCLOSURE SCHEDULES. Any matter disclosed by WCI on any
Schedule to this Agreement shall be deemed to have been disclosed on every
other Schedule that refers to such Schedule by cross reference so long as the
nature disclosed is obvious from a fair reading of the Schedule on which the
matter is disclosed.
5. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
5.1 WCI DELIVERIES.
(a) WCI shall deliver the cash portion of the Purchase
Price required to be delivered on the Closing Date pursuant to Section
1.2(a).
(b) WCI shall deliver to the Shareholders certificates
for the Shares.
(c) WCI shall deliver to the Shareholders the Note
substantially in the form of the draft included in Exhibit 1.2(d).
(d) WCI shall execute and deliver an Employment Agreement
with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ substantially in the form of the draft included in
Exhibit 5.1(d).
(e) If WCI does not pay off the Closing Date Debt on the
Closing Date, WCI shall either provide the Shareholders with a written
release from each creditor or place an amount equal to the Closing
Date Debt into an escrow account.
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5.2 SHAREHOLDERS DELIVERIES.
(a) The Shareholders shall deliver to WCI the
certificates representing the outstanding Corporation's Stock free and
clear of all liens, security interests, claims and encumbrances,
accompanied by a stock power duly executed in blank.
(b) The Shareholders shall deliver to WCI Uniform
Commercial Code financing statement searches from the State of
Wyoming, dated within thirty (30) days prior to the Closing Date, with
an unofficial update on the Closing Date obtained from Information
America or another reporting service, showing that there are no
security interests, judgments, taxes, other liens or encumbrances
outstanding against the Corporation or its assets, other than as
disclosed on Part III of Schedule 3.8.
(c) The Shareholders shall deliver to WCI an opinion of
counsel for the Shareholders, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit 5.2(c).
(d) The Shareholders shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby, including without limitation all
Required Governmental Consents and all required consents of the
landlords under all real estate leases to which the Corporation is a
party, were obtained and the Shareholders shall deliver an estoppel
certificate from the landlords under all real estate leases to which
the Corporation is a party confirming the terms thereof and the rental
amount owing thereunder, certifying that such lease is in full force
and effect, that the Corporation is not in default under any of the
terms or conditions thereof, that there have been no amendments or
modifications to any such lease (or specifying the same), and
otherwise containing such statements and certifications as the
Corporation may require.
(e) The Corporation shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts and
all oral employment contracts other than those that are terminable "AT
WILL" without payment of severance (other than normal severance
benefits approved by WCI) or other benefits with non-union employees
of the Corporation (including, without limitation, stock options or
other rights to obtain equity in the Corporation) have been
terminated, effective on or before the Closing Date.
(f) The Shareholders shall cause each officer of the
Corporation to deliver a resignation as an officer of the Corporation
together with a general release releasing the Corporation from all
obligations under any indemnification agreements, the charter
documents of the Corporation, or otherwise, arising out of or relating
to this Agreement or the consummation of the transactions contemplated
thereby, other than obligations arising after the Closing Date under
this Agreement.
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6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE
SHAREHOLDERS
6.1 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to
obtain the termination and release promptly after the Closing Date of the
personal guaranties of the Shareholders listed on Schedule 6.2, all of which
relate to indebtedness of the Corporation included in the Financial Statements
as of the Balance Sheet Date or WCI shall indemnify the Shareholders and hold
them harmless from and against all losses, expenses or claims by third parties
to enforce or collect indebtedness owed by the Corporation as of the Closing
Date which is personally guaranteed by the Shareholders pursuant to such
guaranties. The Shareholders may notify the obligees under such guaranties
that they have terminated their obligations under such guaranties. The
Shareholders shall cooperate with WCI in obtaining such releases.
6.2 RELEASE OF SECURITY INTERESTS. On or after the Closing Date,
the Shareholders and their respective Affiliates shall cause those security
interests in the assets of the Corporation that have been created in favor of
financial institutions or other lenders to secure indebtedness (other than
indebtedness of the Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
6.3 CONFIDENTIALITY. Neither the Corporation nor any of the
Shareholders shall disclose or make any public announcements of the
transactions contemplated by this Agreement without the prior written consent
of WCI, unless required to make such disclosure or announcement by law, in
which event the party making the disclosure or announcement shall notify WCI at
least 24 hours before such disclosure or announcement is expected to be made.
WCI shall not disclose or make any public announcement of the transactions
contemplated by this Agreement without the prior written consent of the
Shareholders' Representative, unless in connection with the initial public
offering of WCI Stock or otherwise required to make such disclosure or
announcement by law, in which event WCI shall notify the Shareholders'
Representative at least 24 hours before such disclosure or announcement is
expected to be made.
6.4 BROKERS AND FINDERS FEES. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee incurred by
such party in connection with the transactions contemplated by this Agreement.
6.5 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters involving the
Shareholders arising out of the Shareholders' ownership of the Corporation
prior to the Closing, including matters relating to tax returns and any tax
audits, appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
Corporation for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to
retaining information and documents which relate to such matters.
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6.6 SHORT YEAR TAX RETURNS. After the Closing Date, the
Shareholders shall prepare at their sole cost and expense, all short year
federal, state, county, local and foreign tax returns required by law for the
period beginning with the first day of the Corporation's fiscal year in which
the Closing occurs and ending with the Closing Date. Each such return shall be
prepared in a financially responsible and conservative manner and shall be
delivered to WCI together with all necessary supporting schedules within 120
days following the Closing Date for its approval (but such approval shall not
relieve the Shareholders of their responsibility for the taxes assessed under
these returns). The Shareholders shall be responsible for the payment of all
taxes shown to be due or that may come to be due on such returns or otherwise
relating to the period prior to the Closing Date in excess of the amount of any
reserve for taxes included in Effective Date Current Liabilities. The
Shareholders shall also be responsible for all taxes arising from the
conversion of the Corporation from a cash to accrual basis of reporting whether
or not due on such returns or on the first return filed by the Corporation for
the period commencing after the Closing Date. At the time of the delivery of
the returns, shall contemporaneously deliver to WCI checks payable to the
respective taxing authorities in amounts equal to the amount due. WCI shall
sign tax returns and cause such returns to be timely filed with the appropriate
authorities. The Shareholders shall be entitled to receive all refunds shown
on said returns and any such refunds received by the Corporation or WCI shall
be remitted to the Shareholders.
6.7 CERTAIN TAX MATTERS. The Shareholders acknowledge that WCI
may make an election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended. The Shareholders agree that WCI, in its discretion, may make
such election; provided, however, that such election shall be made no later
than the due date for such election. If such election is made by WCI:
(a) WCI shall be authorized to complete Form 8023-A;
(b) The Shareholders shall sign such completed Form
8023-A at the Closing; and
(c) WCI and the Shareholders shall agree upon the
allocation of the Purchase Price among the assets (including
intangible assets) of the Corporation.
(d) If WCI does make its election under Section
338(h)(10) of the Internal Revenue Code of 1986, as amended, WCI shall
reimburse the Shareholders and the Corporation for any additional
taxes, penalties, interest and costs of preparation of amended income
tax returns incurred due to such election resulting from the recapture
of depreciation previously taken on various assets of the Corporation
at ordinary income instead of capital gain rates. Such reimbursement
shall be in a sum computed by a simultaneous equation computing the
additional tax owed by stockholders, as well as the tax on the payment
of that sum.
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6.8 SHAREHOLDERS' REPRESENTATIVE.
(a) In order to administer efficiently the rights
and obligations of the Shareholders under this Agreement, the
Shareholders hereby designate and appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as the
Shareholders' Representative, to serve as the Shareholders' agent,
proxy and attorney-in-fact for the limited purposes set forth in this
Agreement.
(b) Each of the Shareholders hereby appoints the
Shareholders' Representative as such Shareholder's agent, proxy and
attorney-in-fact, with full power of substitution, for all purposes
set forth in this Agreement, including, without limitation, the full
power and authority on such Shareholder's behalf (i) to consummate the
transactions contemplated by this Agreement, (ii) to disburse any
funds received hereunder to the Shareholders, (iii) to execute and
deliver on behalf of each Shareholder any amendment or waiver under
this Agreement, to agree to the amount of the actual Closing Date
Debt, Closing Date Current Assets and Closing Date Current Liabilities
pursuant to Section 1.2(a), and to agree to resolution of all Claims
hereunder, (iv) to retain legal counsel and other professional
services, at the expense of the Shareholders, in connection with the
performance by the Shareholders' Representative of this Agreement, and
(v) to do each and every act and exercise any and all rights which
such Shareholder or Shareholders are permitted or required to do or
exercise under this Agreement and the other agreements, documents and
certificates executed in connection herewith. Each of the
Shareholders agrees that such agency and proxy are coupled with an
interest, are therefore irrevocable without the consent of the
Shareholders' Representative and shall survive the death, bankruptcy
or other incapacity of any Shareholder.
(c) Each of the Shareholders hereby agrees that
any amendment or waiver under this Agreement, and any action taken on
behalf of the Shareholders to enforce the rights of the Shareholders
under this Agreement, and any action taken with respect to any
adjustment or Claim (including any action taken to object to, defend,
compromise or agree to the payment of such adjustment or Claim), shall
be effective if approved in writing by persons who were the holders of
a majority of the Corporation's Stock immediately prior to the
Closing, and that each and every action so taken shall be binding and
conclusive on every Shareholder, whether or not such Shareholder had
notice of, or approved, such amendment or waiver.
(d) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall serve as the
Shareholders' Representative until he resigns or is otherwise unable
or unwilling to serve. In the event that a Shareholders'
Representative resigns from such position or is otherwise unable or
unwilling to serve, the remaining Shareholders shall select, by the
vote of the holders of a majority of the Corporation's Stock
immediately prior to the Closing, a successor representative to fill
such vacancy, shall provide prompt written notice to WCI of such
change and such substituted representative shall then be deemed to be
the Shareholders' Representative for all purposes of this Agreement.
6.9 GENERAL RELEASE BY SHAREHOLDERS. Each of the Shareholders
hereby fully
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releases and discharges the Corporation and its directors, officers, agents and
employees from all rights, claims and actions, known or unknown, of any kind
whatsoever, which any of such Shareholders now has or may hereafter have
against the Corporation and its directors, officers, agents and employees,
arising out of or relating to events arising prior to or on the Closing Date,
except (a) as may be described in written contracts disclosed in Schedule 6.9
and expressly described and specifically excepted from this release in Schedule
6.9, (b) compensation as an employee of the Corporation for current periods
expressly described and excepted from such release on schedule 6.9, and (c) for
the obligations of the Corporation arising after the Closing Date under this
Agreement. Specifically, but not by way of limitation, each of the
Shareholders waives any right of indemnification, contribution or other
recourse against the Corporation which he now has or may hereafter have against
the Corporation with respect to representations, warranties or covenants made
in this Agreement by the Corporation.
Each of the Shareholders hereby waives and relinquishes all
rights and benefits afforded by Section 1542 of the California Civil Code,
which states as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS TO WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Each of the Shareholders understands and acknowledges the significance and
consequence of this waiver of Section 1542 and nevertheless elects to, and
does, release those claims described in this Section 6.9, known or unknown,
that it may have now or in the future arising out of or relating to any event
arising on or prior to the date of this Agreement.
7. INDEMNIFICATION
7.1 INDEMNITY BY THE SHAREHOLDERS. Each of the Shareholders,
jointly and severally, subject to the limitations set forth in Section 7.2,
covenants and agrees that he or she will indemnify and hold harmless WCI, the
Corporation and their respective directors, officers and agents and their
respective successors and assigns (collectively the "WCI INDEMNITEES"), from
and after the date of this Agreement and until the third anniversary of the
Closing Date, against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation), expenditures, including, without limitation, any
"ENVIRONMENTAL SITE LOSSES" (as such term is hereinafter defined) identified by
a WCI Indemnitee in a Claims Notice (as defined in Section 7.3(a)), or asserted
by a WCI Indemnitee in litigation commenced against the Shareholders provided
that in either case any such Claims Notice shall be given or the litigation
commenced prior to the earlier of the third anniversary of this Agreement or
the expiration of the applicable statute of limitations (irrespective of the
date of discovery), with respect to each of the following contingencies (all,
the "7.1 INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the
Shareholders or the Corporation pursuant to the
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terms of this Agreement or any misrepresentation in or omission from
any Exhibit, Schedule, list, certificate, or other instrument
furnished or to be furnished to WCI pursuant to the terms of this
Agreement, regardless of whether, in the case of a breach of a
representation or a warranty, WCI relied on the truth of such
representation or warranty or had any knowledge of any breach thereof.
(b) The design, development, construction or operation of
any Facility or any other "ENVIRONMENTAL SITE" as hereinafter defined,
or the installation or operation of a UST during any period on or
prior to the Closing Date, in excess of the amount of liability with
respect thereto, if any, set forth on Part II of Schedule 3.8. As
used in this Agreement, "ENVIRONMENTAL SITE" shall mean any Facility,
any UST and any other waste storage, processing, treatment or disposal
facility, and any other business site or any other real property
owned, leased, controlled or operated by the Corporation or by any
predecessor thereof on or prior to the Closing Date. As used in this
Agreement, "ENVIRONMENTAL SITE LOSSES" shall mean any and all losses,
damages (including exemplary damages and penalties), liabilities,
claims, deficiencies, costs, expenses, and expenditures (including,
without limitation, expenses in connection with site evaluations, risk
assessments and feasibility studies) arising out of or required by an
interim or final judicial or administrative decree, judgment,
injunction, mandate, interim or final permit condition or restriction,
cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any
other remedial action that is required to be undertaken under federal,
state or local law in respect of operating activities on or affecting
any Facility, any UST or any other Environmental Site, including, but
not limited to (x) any actual or alleged violation of any law or
regulation respecting the protection of the environment, including,
but not limited to, RCRA and CERCLA or any other law or regulation
respecting the protection of the air, water and land and (y) any
remedies or violations, whether by a private or public action, alleged
or sought to be assessed as a consequence, directly or indirectly, of
any "RELEASE" (as defined below) of pollutants (including odors) or
Hazardous Substances from any Facility, any UST or any other
Environmental Site resulting from activities thereat, whether such
Release is into the air, water (including groundwater) or land and
whether such Release arose before, during or after the Closing Date.
The term "RELEASE" as used herein means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the ambient environment.
Notwithstanding anything in this paragraph to the contrary, it is
specifically understood and agreed that a Release composed solely of
Hazardous Substances contained in household waste lawfully disposed of
in a landfill during the time the Corporation owned and/or operated
such landfill does not constitute an Environmental Site Loss.
(c) All matters on Schedule 3.8, Part II.
(d) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
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7.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES.
(a) Subject to the provisions of 7.2(b) hereof, the
obligations of the Shareholders to indemnify the WCI Indemnitees as
provided in Section 7.1 shall be equal to the amount by which the
cumulative amount of all such liabilities, claims, damages
deficiencies, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses, expenditures and Environmental Site
Losses with respect to any or all 7.1 Indemnity Events exceed five
thousand dollars ($5,000) (the "GENERAL DEDUCTIBLE AMOUNT").
(b) The maximum amount which WCI can recover as a result
of one or more 7.1 Indemnity Events shall not exceed:
(i) eighty percent (80%) of the Purchase Price
(as adjusted pursuant to Section 1.2(a) hereof), if the 7.1 Indemnity
Event occurs during the time period from the Closing Date to, and
including, the first anniversary of the Closing Date;
(ii) seventy-five percent (75%) of the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof), if the 7.1
Indemnity Event occurs during the time period from the first
anniversary of the Closing Date to, and including, the second
anniversary of the Closing Date; and
(iii) sixty-five percent (65%) of the Purchase
Price (as adjusted pursuant to Section 1.2(a) hereof), if the 10.1
Indemnity Event occurs during the time period from the second
anniversary of the Closing Date to, and including, the third
anniversary of the Closing Date.
For this purpose, the Shares shall be valued at one hundred and fifty thousand
dollars ($150,000).
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7.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any WCI Indemnitee as to
which such Indemnitee may be entitled to indemnification hereunder,
the WCI Indemnitee shall notify the Shareholders (as applicable
collectively, the "INDEMNIFYING PARTY") in writing thereof (the
"CLAIMS NOTICE") within 60 days after (i) receipt of written notice of
commencement of any third party litigation against such WCI
Indemnitee, (ii) receipt by such WCI Indemnitee of written notice of
any third party claim pursuant to an invoice, notice of claim or
assessment, against such WCI Indemnitee, or (iii) such WCI Indemnitee
becomes aware of the existence of any other event in respect of which
indemnification may be sought from the Indemnifying Party (including,
without limitation, any inaccuracy of any representation or warranty
or breach of any covenant). The Claims Notice shall describe the
Claim and the specific facts and circumstances in reasonable detail,
and shall indicate the amount, if known, or an estimate, if possible,
of the losses that have been or may be incurred or suffered by the WCI
Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including
such Claims) do not exceed the limit set forth in Section 7.2(b) at
the time the Claim is made, by the Indemnifying Party's own counsel;
provided, however, the Indemnifying Party may assume and undertake the
defense of such a third party Claim only upon written agreement by the
Indemnifying Party that the Indemnifying Party is obligated to fully
indemnify the WCI Indemnitee with respect to such action. The WCI
Indemnitee may participate, at the WCI Indemnitee's own expense, in
the defense of any Claim assumed by the Indemnifying Party. Without
the written approval of the WCI Indemnitee, which approval shall not
be unreasonably withheld, the Indemnifying Party shall not agree to
any compromise of a Claim defended by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall not
have provided the written agreement required by Section 7.3(b) and
elected to defend the Claim, the WCI Indemnitee shall have the right
to assume control of the defense and/or compromise of such Claim, and
the costs and expenses of such defense, including reasonable
attorneys' fees, shall be added to the Claim. The Indemnifying Party
shall promptly, and in any event within thirty (30) days after demand
therefor, reimburse the WCI Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall
keep the other party reasonably informed at all times of the progress
and development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the parties to this Agreement shall cooperate with each other and make
available to each other and their representatives all available
relevant records or other materials required by them for their use in
defending, compromising or contesting any Claim. The failure to
timely
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deliver a Claims Notice or otherwise notify the Indemnifying Party of
the commencement of such actions in accordance with this Section 7.3
shall not relieve the Indemnifying Party from the obligation to
indemnify hereunder but only to the extent that the Indemnifying Party
establishes by competent evidence that it has been prejudiced thereby.
(e) In the event both the WCI Indemnitee and the
Indemnifying Party are named as defendants in an action or proceeding
initiated by a third party, they shall both be represented by the same
counsel (on whom they shall agree), unless such counsel the WCI
Indemnitee, or the Indemnifying Party shall determine that such
counsel has a conflict of interest in representing both the WCI
Indemnitee and the Indemnifying Party in the same action or proceeding
and the WCI Indemnitee and the Indemnifying Party do not waive such
conflict to the satisfaction of such counsel.
7.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement and
in any certificate, Exhibit or Schedule delivered pursuant hereto, or in any
other writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any persons other than as specifically set forth herein or
therein.
7.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF.
The Shareholders waive any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due any
Shareholder any amount to which any WCI Indemnitee is entitled to be
indemnified hereunder with respect to any 7.1 Indemnity Event. Such right of
set off shall be separate and apart from any and all other rights and remedies
that the Indemnities may have against Shareholders or their successors.
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8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
8.1 RESTRICTIVE COVENANTS. As to the Corporation, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the purchaser of
the Corporation's Stock, is and will be engaged in the same business as the
Corporation (the "BUSINESS"); (ii) the Shareholders and their Affiliates are
intimately familiar with the Business; (iii) the Business is currently
conducted in the State of Wyoming and WCI intends to continue the Business in
Wyoming and intends, by acquisition or otherwise, to expand the Business into
other geographic areas of Wyoming where it is not presently conducted; (iv) the
Shareholders and their Affiliates have had access to trade secrets of, and
confidential information concerning, the Business; (v) the agreements and
covenants contained in this Section 8.1 are essential to protect the Business
and the goodwill being acquired; and (vi) the Shareholders and their Affiliates
have the means to support themselves and their dependents other than by
engaging in a business substantially similar to the Business and the provisions
of this Section 8 will not impair such ability. The Shareholders covenant and
agree as set forth in (a), (b) and (c) below with respect to the Corporation:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating five years thereafter (the "RESTRICTED PERIOD"),
neither the Shareholders nor any of their Affiliates shall, anywhere
in the counties of Albany, Crook, Campbell, Converse, Goshen,
Niobrara, Natrona, Platte or Weston, Wyoming, where WCI or one of its
subsidiaries owns or operates a business similar to the Business (the
"RESTRICTED COUNTIES"), directly or indirectly, acting individually or
as the owner, shareholder, partner, or employee of any entity, (i)
engage in the operation of a solid waste collection, transporting,
disposal and/or composting business, transfer facility, recycling
facility, materials recovery facility or solid waste landfill; (ii)
enter the employ of, or render any personal services to or for the
benefit of, or assist in or facilitate the solicitation of customers
for, or receive remuneration in the form of salary, commissions or
otherwise from, any business engaged in such activities; (iii) as
owner or lessor of real estate or personal property, rent to lease any
facility, equipment or other assets to any business engaged in the
same business as the Corporation; or (iv) receive or purchase a
financial interest in, make a loan to, or make a gift in support of,
any such business in any capacity, including, without limitation, as a
sole proprietor, partner, shareholder, officer, director, principal,
agent, trustee or lender; provided, however, that any of the
Shareholders may own, directly or indirectly, solely as an investment,
securities of any business traded on any national securities exchange
or NASDAQ, provided none of the Shareholders is a controlling person
of, or a member of a group which controls, such business and further
provided that the Shareholders do not, in the aggregate, directly or
indirectly, own 2% or more of any class of securities of such
business.
(b) CONFIDENTIAL INFORMATION. During the Restricted
Period and thereafter, the Shareholders and their Affiliates shall
keep secret and retain in strictest confidence, and shall not use for
the benefit of themselves or others, all data and information relating
to the Business ("CONFIDENTIAL INFORMATION"), including without
limitation, know-how, trade secrets, customer lists, supplier lists,
details of contracts, pricing policies,
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operational methods, marketing plans or strategies, bidding
information, practices, policies or procedures, product development
techniques or plans, and technical processes; provided, however, that
the term "CONFIDENTIAL INFORMATION" shall not include information that
(i) is or becomes generally available to the public other than as a
result of disclosure by the Shareholders or (ii) is general knowledge
in the solid waste handling and landfill business and not specifically
related to the Business.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or
on behalf of the Shareholders or the Corporation or made available to
them relating to the Business, but excluding any materials (other than
the minute books of the Corporation) maintained by any attorneys for
the Corporation or the Shareholders prior to the Closing, are and
shall be the property of WCI and have been delivered or will be
delivered or made available to WCI at the Closing.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the Shareholders
and their Affiliates shall not solicit any employees of the
Corporation to leave the employ of the Corporation and join the
Shareholders or any Affiliate in any business endeavor owned or
pursued by the Shareholders.
(e) NO DISPARAGEMENT. From and after the Closing Date,
none of the Shareholders shall, in any way or to any person or entity
or governmental or regulatory body or agency, denigrate or derogate
WCI or any of its subsidiaries, or any officer, director or employee,
or any product or service or procedure of any such company whether or
not such denigrating or derogatory statements shall be true and are
based on acts or omissions which are learned by the Shareholders from
and after the date hereof or on acts or omissions which occur from and
after the date hereof, or otherwise. A statement shall be deemed
denigrating or derogatory to any person or entity if it adversely
affects the regard or esteem in which such person or entity is held by
investors, lenders or licensing, rating, or regulatory entities.
Without limiting the generality of the foregoing, none of the
Shareholders shall, directly or indirectly in any way in respect of
any such company or any such directors or officers, communicate with,
or take any action which is adverse to the position of any such
company with any person, entity or governmental or regulatory body or
agency who or which has dealings or prospective dealings with any such
company or jurisdiction or prospective jurisdiction over any such
company. This paragraph does not apply to the extent that testimony
is required by legal process, provided that WCI has received not less
than five days' prior written notice of such proposed testimony.
8.2 RIGHTS AND REMEDIES UPON BREACH. If any of the Shareholders
or any Affiliate breaches, or threatens to commit a breach of, any of the
provisions of Section 8.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have
the following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to WCI
at law
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or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to
WCI and that money damages would not provide an adequate remedy to
WCI. Accordingly, in addition to any other rights or remedies, WCI
shall be entitled to injunctive relief to enforce the terms of the
Restrictive Covenants and to restrain the Shareholders from any
violation thereof.
(b) ACCOUNTING. The right and remedy to require the
Shareholders to account for and pay over to WCI all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Shareholders as the result of any transactions
constituting a breach of the Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholders
acknowledge and agree that the Restrictive Covenants are reasonable
and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect, without regard to the invalid
portions.
(d) BLUE-PENCILING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall reduce the duration or scope of such provision, as the
case may be, to the extent necessary to render it enforceable and, in
its reduced form, such provision shall then be enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI and the
Shareholders intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographic scope of the Restrictive Covenants. If the courts of any
one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of WCI and the Shareholders that such determination
not bar or in any way affect WCI's right to the relief provided above
in the courts of any other jurisdiction within the geographic scope of
the Restrictive Covenants as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
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9. GENERAL
9.1 ADDITIONAL CONVEYANCES. Following the Closing, the
Shareholders and WCI shall each deliver or cause to be delivered at such times
and places as shall be reasonably agreed upon such additional instruments as
WCI or the Shareholders may reasonably request for the purpose of carrying out
this Agreement. The Shareholders will cooperate with WCI and/or the
Corporation on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings or
disputes of any nature with respect to matters pertaining to all periods prior
to the date of this Agreement.
9.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI
and the heirs, legal representatives or assigns of the Shareholders; provided,
however, that any such assignment shall be subject to the terms of this
Agreement and shall not relieve the assignor of its or his responsibilities
under this Agreement.
9.3 PUBLIC ANNOUNCEMENTS. Except as required by law, no party
shall make any public announcement or filing with respect to the transactions
provided for herein prior to the Closing Date without the prior consent of the
other parties hereto.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.5 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage prepaid registered or certified U.S.
mail, return receipt requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given hereunder, and shall
be effective upon personal delivery or facsimile transmission thereof or upon
delivery by registered or certified U.S. mail or one business day following
deposit with an air courier service:
If to the Shareholders: at their respective addresses set forth on
Schedule 3.2
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Lubnau, Hand & ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.6 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporation or the Shareholders on the
other hand relating to the interpretation of this Agreement or to the
transactions contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and expenses incurred
by the prevailing party. Such award shall include post-judgment attorney's
fees and costs.
9.7 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to its conflict of laws provisions.
9.8 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the
Shareholders, any such fees, expenses and disbursements paid or accrued by, or
charged to, the Corporation).
9.9 INCORPORATION BY REFERENCE. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
9.10 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
9.11 NUMBER AND GENDER OF WORDS; CORPORATION. Whenever the
singular number is used herein, the same shall include the plural where
appropriate, and shall apply to all of such number, and to each of them,
jointly and severally, and words of any gender shall include each other gender
where appropriate.
9.12 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, the
Shareholders and WCI and supersedes any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be
modified or amended only by a written instrument executed by the Corporation,
the Shareholders (or the Shareholders' Representative on their behalf) and WCI
acting through its officers, thereunto duly authorized by its Board of
Directors.
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9.13 WAIVER. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
9.14 CONSTRUCTION. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Unless expressly set forth otherwise, all
references herein to a "DAY" are deemed to be a reference to a calendar day.
All references to "BUSINESS DAY" mean any day of the year other than a
Saturday, Sunday or a public or bank holiday in Oregon or California. Unless
expressly stated otherwise, cross-references herein refer to provisions within
this Agreement and are not references to the overall transaction or to any
other document.
10. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Terms Section
----- -------
7.1 Indemnity Events Section 7.1
Accredited investor Section 3.38(a)
Act Section 3.38(a)
Affiliate Section 3.11
At will Section 5.2(e)
Balance Sheet Date Section 1.2(a)
Section 3.7
Business Section 8.1
Business day Section 9.14
Claim Section 7.3(a)
Claims Notice Section 7.3(a)
Closing Section 2
Closing Date Section 2
Closing Date Current Assets Section 3.22(b)
Closing Date Current Liabilities Section 3.22(b)
Closing Date Debt Section 3.22(a)
Collection Franchises Section 3.10(a)
Confidential Information Section 8.1(b)
Corporate Property Section 3.12(b)
Corporation Parties
Corporation Debt Section 1.2(c)
Corporation's Stock Shareholders
Day Section 9.14
Environmental Laws Section 3.24
Environmental Site Section 7.1(b)
Environmental Site Losses Section 7.1
ERISA Section 3.17(a)
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Excluded Assets Section 1.4
Facilities Section 3.10(c)
Facility Section 3.10(c)
Facility Property Section 3.10(c)(iii)
Facility Surveys/Site Plans Section 3.10(c)(iii)
Financial Statements Section 3.7
General Deductible Amount Section 7.2(a)
Golden parachute Section 3.17(a)
Golden Parachute Payment Section 3.17(c)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24(e)
Hazardous Waste Section 3.24(e)
Indemnifying Party Section 7.3(a)
Knowledge Section 3.36
Laws Section 3.24
Lock up Section 3.38(j)
Multi-employer plan Section 3.17(a)
Note Section 1.2(d)
Occurrence Section 3.15
Permitted Liens Section 3.12(c)
Purchase Price Section 1.1
RCRA Section 3.24(a)
Recipient Section 3.17(c)
Records, Notifications and Reports Section 3.10(b)
Release Section 7.1(b)
Representations and Warranties Section 7.4
Required Governmental Consents Section 3.10(a)
Restricted Counties Section 8.1(a)
Restricted Period Section 8.1(a)
Restricted securities Section 3.38(i)
Restrictive Covenants Section 8.2
SEC Section 3.38(g)
Shareholders Debt Section 1.2(c)
Shareholders Parties
Shares Section 1.2(b)
UST Section 3.26
WCI Parties
WCI Indemnitees Section 7.1
WCI Stock Section 1.2(b)
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement by persons thereunto duly authorized as of the date first
above written.
THE CORPORATION: T & T DISPOSAL, INC.
By: _______________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
WCI: WASTE CONNECTIONS, INC.
By: _______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
THE SHAREHOLDERS:
___________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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TABLE OF CONTENTS
Page(s)
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1. PURCHASE OF CORPORATION'S STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Shares to be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Allocation of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. CLOSING TIME AND PLACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE SHAREHOLDERS . . . . . . . . . 2
3.1 Organization, Standing and Qualification . . . . . . . . . . . . . . . . . . . 3
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 All Stock Being Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Authority for Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 No Breach or Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Certain Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Fixed Assets and Real Property . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Acquisition/Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Contracts and Agreements; Adverse Restrictions . . . . . . . . . . . . . . . . 9
3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Benefit Plans and Union Contracts . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.19 Copies Complete; Required Consents . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables . . . . . . . . . . . . . 12
3.21 No Change With Respect to the Corporation . . . . . . . . . . . . . . . . . . . 13
3.22 Debt; Current Assets and Current Liabilities . . . . . . . . . . . . . . . . . 14
3.23 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.24 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.25 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.26 Underground Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.27 Patents, Trademarks, Trade Names, etc. . . . . . . . . . . . . . . . . . . . . 17
3.28 Assets, etc., Necessary to Business . . . . . . . . . . . . . . . . . . . . . . 17
3.29 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.30 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.31 Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . 18
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3.32 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.33 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.34 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.35 Accurate and Complete Records . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.36 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.37 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.38 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.39 S Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4. REPRESENTATIONS AND WARRANTIES OF WCI . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 No Contractual Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Authorization of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Status of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 No Misleading Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Brokers; Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5. CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 WCI Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Shareholders Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDERS . . . . . . . . . . . 24
6.1 Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Release of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Brokers and Finders Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.6 Short Year Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.8 Shareholders' Representative . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 General Release by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 27
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Indemnity by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Limitations on Shareholders' Indemnities . . . . . . . . . . . . . . . . . . . 29
7.3 Notice of Indemnity Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . 31
7.5 No Exhaustion of Remedies or Subrogation; Right of Set Off . . . . . . . . . . 31
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI . . . . . . . . . . . . . . . . 31
8.1 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Rights and Remedies Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . 33
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Page(s)
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9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.1 Additional Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.11 Number and Gender of Words; Corporation . . . . . . . . . . . . . . . . . . . . 36
9.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.13 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10. GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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