CONFIDENTIAL SYRACUSE, NY
EXHIBIT 4.5
ASSET PURCHASE AGREEMENT
among
WASTE MANAGEMENT OF NEW YORK, LLC
(Buyer)
and
WASTE MANAGEMENT, INC.
(Buyer Parent)
and
CAPITAL ENVIRONMENTAL RESOURCE (U.S.) INC.
(Seller)
and
CAPITAL ENVIRONMENTAL RESOURCE INC.
(Seller Parent)
CONFIDENTIAL SYRACUSE, NY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is executed and delivered
as of April 2, 2001, among WASTE MANAGEMENT OF NEW YORK, LLC, a New York limited
liability company ("Buyer"); WASTE MANAGEMENT, INC., an Ohio corporation ("Buyer
Parent"); CAPITAL ENVIRONMENTAL RESOURCE (U.S.) INC., a New York corporation
("Seller"); and CAPITAL ENVIRONMENTAL RESOURCE INC., an Ontario corporation
("Seller Parent").
WHEREAS, Seller owns or leases real property described in Schedule A (the
"Land"), and operates thereon a collection business in the Syracuse, New York
area (the "Business");
WHEREAS, Buyer desires to purchase and acquire certain assets, properties
and contractual rights of Seller used in connection with the Business, and
Seller desires to sell such assets, properties and contractual rights to Buyer,
all in accordance with the terms and conditions set forth in this Agreement;
WHEREAS, Seller Parent owns (directly or indirectly) all of the issued and
outstanding shares of the capital stock (or, if not a corporation, the
equivalent ownership interests) of Seller;
WHEREAS, Buyer and Buyer Parent are unwilling to enter into this Agreement
without the covenants and promises of Seller Parent set forth herein;
WHEREAS, Seller Parent desires that Seller sell such assets, properties and
contractual rights to Buyer upon the terms and subject to the conditions set
forth in this Agreement and, in order to induce Buyer to enter into this
Agreement, is willing to make the covenants and promises set forth herein;
WHEREAS, Buyer Parent owns (directly or indirectly) all of the issued and
outstanding shares of the capital stock (or, if not a corporation, the
equivalent ownership interests) of Buyer;
WHEREAS, Seller and Seller Parent are unwilling to enter into this
Agreement without the covenants and promises of Buyer Parent set forth herein;
WHEREAS, Buyer Parent desires that Buyer shall purchase and acquire the
assets, properties and contractual rights of Seller used in connection with the
Business upon the terms and subject to the conditions set forth in this
Agreement and, in order to induce Seller and Seller Parent to enter into this
Agreement, is willing to make the covenants and promises set forth herein;
WHEREAS, concurrently with, and as a condition to, the execution of this
Agreement, Buyer, Buyer Parent, Seller and Seller Parent and/or their affiliates
are entering into the several other Asset Purchase Agreements identified in
Annex I hereto (collectively the "Related
CONFIDENTIAL SYRACUSE, NY
Agreements"), wherein Buyer and/or its affiliates are agreeing to acquire
certain assets and businesses from Seller and Seller Parent and/or their
affiliates; and
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, received to the full
satisfaction of each of them, the parties hereby agree as follows:
CONFIDENTIAL SYRACUSE, NY
ARTICLE 1.
DESCRIPTION OF ASSETS
Section 1.1 DESCRIPTION OF ASSETS. On the terms and subject to the
conditions of this Agreement, Seller will, on the Closing Date (as defined in
Section 3.1), grant, convey, sell, transfer and assign to Buyer all of Seller's
right, title and interest in and to the following assets, properties and
contractual rights, wherever located, subject to the exclusions set forth in
Section 1.2:
(a) the Land, including, but not limited to, (i) all buildings,
fixtures, and personalty located thereon, (ii) easements, interests, rights,
tenements, hereditaments, and appurtenances relating to the Land or any
improvements thereon, or relating principally to the Business, (iii) all
mineral, water, and irrigation rights, if any, (iv) Seller's interests, if any,
in any roadway adjoining the Land, (v) any rights or interests that may accrue
to the benefit of Seller or the Land as a result of the abandonment thereof and
(vi) with respect to the leased Land (the "Leased Land"), Seller's leasehold
interest in and to the Leased Land and improvements thereon that are the subject
of the Real Estate Lease (as defined in Section 5.5(b)(iv)) upon the terms set
forth herein;
(b) subject to Section 1.3, all permits, licenses,
authorizations, registrations, franchises, consents and approvals of every kind
necessary to operate the Business (the "Permits"), including, without
limitation, the Permits listed on SCHEDULE 1.1(b);
(c) all equipment, including containers used or for use
principally in the Business and owned or leased by Seller (the "Equipment")
including, without limitation, the Equipment listed on SCHEDULE 1.1(c);
(d) all of the motor vehicles, including pick-up trucks and
other service related vehicles used or for use principally in the Business and
owned by Seller and all attachments, accessories and materials handling
equipment now located in or on such motor vehicles, including all radios and the
radio base station, if any (the "Rolling Stock"), as the same are described on
SCHEDULE 1.1(d):
(e) all customer information, and transferable software and
programs related to ▇▇▇▇▇▇▇▇ used or for use exclusively in the Business;
(f) all of Seller's inventory of supplies, parts, tires and
accessories of every kind, nature, and description used or for use principally
in the Business (the "Inventory");
(g) all right, title and interest of Seller in and to all
trade secrets, intellectual property rights, patents, copyrights, inventions,
symbols, trademarks, service marks, logos and trade names used exclusively in
the Business and owned by Seller except (subject to Section 4.1) those symbols,
trademarks, service marks, logos and trade names that include the names of or
otherwise identify Seller or Seller Parent or any affiliate thereof;
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CONFIDENTIAL SYRACUSE, NY
(h) all contractual rights of Seller with Seller's customers
(whether oral or in writing) principally relating to the Business (the "Customer
Contracts"), all commitments, lists, and other instruments relating to the
Customer Contracts (the "Related Approvals") and the Assumed Leases (as defined
in Section 5.4(c)) (collectively, the "Assumed Contracts") (a complete and
accurate list of all of the Assumed Contracts is set forth on SCHEDULE 1.1(h)),
and the Material Contracts (as hereinafter defined in Section 1.3(b)) are marked
with an asterisk;
(i) the names listed on SCHEDULE 1.1(i) and the right to use such
names and all similar names in the State(s) listed thereon (the "Business
Names");
(j) the telephone number(s) used principally in the operation of
the Business;
(k) all of Seller's shop tools, nuts and bolts relating
principally to the Business;
(l) all recycling equipment used principally in the Business, if
any;
(m) all books and records relating exclusively to the Business,
including, without limitation, customer lists and vendor lists.
(n) all litigation rights to which Seller is a plaintiff as
described in SCHEDULE 5.10:
(o) the cash on hand or on deposit with Buyer as set forth in
Section 1.4; and
(p) all of the goodwill of the Business;
(q) all the non-competes, confidentiality agreements or similar
contracts benefitting Seller and relating to the Business listed on
Schedule 1.1(q) (the "Covenants").
All of the foregoing assets, properties and contractual rights are
hereinafter sometimes collectively called the "Assets."
Section 1.2 EXCLUDED ASSETS. The parties agree that certain assets of
Seller shall remain the property of Seller or its affiliates and shall not be
sold to Buyer at the Closing (the "Excluded Assets"). Such Excluded Assets are
as follows: (a) all cash on hand, cash equivalents, investment securities, cash
reserves and cash on deposit of Seller, except as set forth in Section 1.4; (b)
all, real property and all buildings on and fixtures to all real property of
Seller except as set forth in Section 1.1(a) and SCHEDULE A: (c) all contracts
and contract rights and obligations of Seller (whether oral or in writing),
other than the Customer Contracts and the Related Approvals, the Permits, the
Real Estate Leases for the Leased Land and the other contracts and contract
rights and obligations identified in Section 1.1; (d) all motor vehicles of
Seller which are not Rolling Stock; (e) records which relate primarily to other
assets not sold hereunder or to liabilities or contracts retained by Seller; (f)
the stock and corporate record books of Seller; (g) the rights which accrue or
will accrue to Seller under this Agreement; (h) all employment
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CONFIDENTIAL SYRACUSE, NY
contracts or similar agreements with Employees of the Business; (i) any other
Assets sold by Seller in the ordinary course of business prior to the Closing
Date and not necessary to operate the Business in accordance with past practices
which, together with any other assets sold by Sellers under the Related
Agreements pursuant to provisions equivalent hereto concerning sales in the
ordinary course of business prior to the closing dates thereunder and not
necessary to operate such businesses in accordance with past practices, have an
aggregate value not in excess of $25,000; (j) any Asset that is disposed of by
Seller in one or a series of transactions in which it is replaced by items of at
least equivalent value and utility to the Business (other than other Excluded
Assets); (k) any intercompany receivables from Seller Parent or its affiliates;
(l) all present and future refunds relating to taxes; (m) all accounts
receivable, prepaid expenses and deposits of the Business; (n) the business
known as the contract management services business, and its related assets, a
list of the hard assets is attached hereto as Schedule 1.2 and described on
Schedule 1.2; (o) computer hardware; and (p) all other assets of Seller that do
not constitute Assets.
Section 1.3 NON-ASSIGNMENT OF CERTAIN CUSTOMER CONTRACTS AND PERMITS.
(a) Notwithstanding anything to the contrary in this Agreement,
to the extent that the assignment hereunder of any Customer Contract, Assumed
Lease or Permit shall require the consent of any third party, neither this
Agreement nor any action taken pursuant to its provisions shall constitute an
assignment or an agreement to assign if such assignment or attempted assignment
would constitute a breach thereof or result in the loss or diminution thereof;
PROVIDED that in each such case, Seller and Buyer shall each use commercially
reasonable efforts to obtain the consent of such other party to such assignment
to Buyer as soon as possible after the date of this Agreement.
(b) If, on or prior to 90 days following the Closing Date or such
other dates as shown on Schedule 1.3, (i) Seller does not receive a consent to a
Material Contract or a consent to a Material Contract is denied Buyer shall
provide written notice to Seller, and Buyer shall be permitted to off-set the
Retained Amount (defined below) by an amount equal to 12 times the monthly
revenue generated from such Material Contract that is not assigned (the
"Material Contract Purchase Price Adjustment"). For purpose of this Section,
"Material Contract" means a Customer Contract that is a contract with a
municipality, a governmental body or agency or any contract or purchase order
needing the consent to assignment with monthly revenue of $3000.00 or more, a
complete list of which is attached hereto as Schedule 1.3.
Section 1.4 PRORATION OF CASH ON HAND AND ADVANCE ▇▇▇▇▇▇▇▇. The parties
shall prorate, as of the close of business on the business day preceding the
Closing Date, all cash on hand or on deposit with Seller consisting of sums paid
to Seller pursuant to the advance billing practice of Seller or otherwise
representing a prepayment to Seller of services to be rendered after the
Closing, provided that Buyer shall be entitled to any cash deemed to be held in
trust pursuant to statutory obligations or existing agreements relating to the
Business. Seller shall be entitled to all such sums allocable to services
performed on or before the close of business on the business day preceding the
Closing Date and Buyer shall be entitled to all such sums allocable to services
to be performed thereafter and shall be solely liable for the performance
thereof. Any advance ▇▇▇▇▇▇▇▇ made prior to the Closing date relating to
services to be rendered after Closing
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CONFIDENTIAL SYRACUSE, NY
or any advance ▇▇▇▇▇▇▇▇ made by Seller at the request of Buyer for periods after
the Closing date shall be deducted from the purchase price paid at Closing.
Seller shall invoice the Customer Contracts for all advance ▇▇▇▇▇▇▇▇ in the
month of April 2001, both commercial in advance and residential in advance for
the quarter or the month, as applicable, and in accordance with Seller's past
practices. Seller and Seller Parent shall be entitled to collect all such
advance ▇▇▇▇▇▇▇▇. At Closing Buyer and/or Buyer Parent shall reduce from the
purchase price paid at Closing all amounts to be so advanced billed. To the
extent such advance billing is only estimated at Closing, Buyer and Seller agree
to make such adjustments to the Retained Amount (defined below) as to properly
reflect the actual amount of such advance billing. All amounts deducted from the
purchase price for advance ▇▇▇▇▇▇▇▇ and prepaids or deposits for services
rendered during the Revenue Tracking Period, (defined below) shall be included
in the calculation of Target Revenue (defined below). Attached hereto as
Schedule 1.4 is a calculation of such advance ▇▇▇▇▇▇▇▇, prepaids or deposits
deducted as of the Closing.
Section 1.5 ALLOCATION OF PURCHASE PRICE. The aggregate Purchase Price
(as defined in Section 2.1 (a)) shall be allocated among the Assets for tax
purposes in accordance with SCHEDULE 1.5. Seller and Buyer will follow and use
such allocation in all tax returns, filings or other related reports made by
them to any governmental agencies. To the extent that disclosures of this
allocation are required to be made by the parties to the Internal Revenue
Service ("IRS") under the provisions of Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any regulations thereunder, each of
Buyer and Seller will disclose such reports to the other prior to filing with
the IRS.
ARTICLE 2.
PURCHASE PRICE
Section 2.1 PURCHASE PRICE.
(a) Subject to adjustment as provided above and in this Article 2
at the Closing, Buyer shall pay to Seller for the Assets the amount set forth in
Annex I with respect to this Agreement (the "Purchase Price").
(b) Buyer, Buyer Parent, Seller and Seller Parent acknowledge
that, and have entered into this Agreement in reliance on the fact that, all
transactions under this Agreement and the Related Agreements constitute a single
business and contractual relationship and have been entered into in
consideration of each other. Accordingly, the parties agree that payments,
deliveries and other transfers made by each party in respect of any Related
Agreement shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of the other Related Agreements and
the obligations to make any such payments, deliveries and other transfers may be
applied against each other and netted. In addition, each party hereunder
acknowledges that, and has entered into this Agreement in reliance on the fact
that, all transactions under each Related Agreement have been entered into in
consideration of the transactions under all other Related Agreements. The
foregoing shall not limit or otherwise affect the right of Buyer, Buyer Parent,
Seller and Seller Parent, upon mutual agreement, to close
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CONFIDENTIAL SYRACUSE, NY
the separate transactions evidenced by this Agreement and the other Related
Agreements as distinct transactions.
Section 2.2 ADJUSTMENT TO PURCHASE PRICE BASED ON REVENUE REPRESENTATION.
(a) At Closing Buyer shall retain the amount set forth on Annex I
(the "Retained Amount") from the Purchase Price for the Business. The Retained
Amount shall be subject to reduction and offset as set forth below. The Retained
Amount shall be paid thirty (30) days after the completion of the Revenue
Tracking Period (defined below). The revenues or invoices pursuant to the
Customer Contracts listed on SCHEDULE 2.2 shall not be counted towards the
Target Revenue (defined below).
(b) If the average monthly gross revenues billed by Buyer for
the Business for services rendered by Buyer after Closing from the Customer
Contracts of Seller set forth on SCHEDULE 1.1(h) do not average the amount set
forth on Annex I for the Business (the "Target Revenue") for three (3) full
calender months following Closing (the "Revenue Tracking Period"), Buyer shall
offset the Retained Amount by an amount equal to 12 times for each dollar that
the actual amounts invoiced by Buyer is less than the Target Revenue set forth
herein. In the event that the Retained Amount is insufficient to pay such
amount, Seller shall pay over to Buyer the amount of such deficiency.
(c) In the event Buyer fails to perform the services under the
Customer Contracts or performs such services poorly, as documented by the
customer, Buyer shall not be permitted to off-set the Retained Amount by the
amount of lost revenues for such customer or make a Material Contract adjustment
under subsection 1.3(b) for such customers.
(d) During the Revenue Tracking Period, Buyer shall not change
the billing rates for the Business but may make service changes and shall only
make selective pricing deductions on a customer by customer basis at Buyer's
discretion and only if necessary to retain business.
ARTICLE 3.
CLOSING
Section 3.1 TIME AND PLACE OF CLOSING. Unless otherwise agreed to by
the parties hereto, this transaction shall be closed within five business days
after the completion, satisfaction or waiver of each of the conditions to
closing set forth in this Agreement, but no later than March 31, 2001 (the
"Closing"). The Closing shall take place at the offices of Seller's counsel in
Buffalo, New York. The date on which the Closing occurred is referred to as the
"Closing Date."
Section 3.2 DELIVERIES BY SELLER AND SELLER PARENT. At the Closing,
Seller and Seller Parent shall deliver to Buyer, all duly and properly executed
(where applicable):
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CONFIDENTIAL SYRACUSE, NY
(a) subject to Section 3.8. a special or limited warranty deed
or state equivalent (the "Deeds") conveying to Buyer insurable fee simple title
to each parcel of owned Land subject only to the Permitted Exceptions
(hereinafter defined) or, if Leased Land, an assignment for each parcel of
Leased Land of all of Seller's rights, title and interest under each, such Real
Estate Lease, together with the consent of the landlord if required, and
appropriate estoppel language (each, an "Assignment, Assumption and Consent to
Leased Land");
(b) a General Conveyance, Assignment and ▇▇▇▇ of Sale in form
and substance satisfactory to Buyer and Seller, conveying, selling, transferring
and assigning to Buyer all of the Assets (other than the Land and Leased Land)
(the "▇▇▇▇ of Sale");
(c) [RESERVED].
(d) certified copies of resolutions of the board of directors
(and stockholders, if required) of Seller and Seller Parent authorizing the
execution of this Agreement, the sale of the Assets to Buyer, and the
consummation of the transactions contemplated herein, along with an incumbency
certificate of Seller;
(e) consent of Seller and Seller's Parent of their lenders to the
transactions contemplated hereby and the release of all liens or encumbrances on
the Assets of the Business (or a written undertaking by their lenders to release
their liens), excluding (y) Excluded Assets, (w) any obligations under any
operating leases for any of the Assets which is specifically assumed by Buyer,
(x) judgments, liens, financing statements or deeds of trust that, individually
or in the aggregate, do not and would not in Buyer's judgment, materially
detract from the value of any of the property or asset of the Business or
materially interfere with the use thereof as currently used (collectively,
"Permitted Encumbrances"); and (y) obligations assumed pursuant to Sections 3.7,
7.8 and 10.2; and
(f) such other separate documents or instruments of sale,
assignment, or transfer as Buyer shall reasonably request, including without
limitation titles and registrations for the Rolling Stock.
Section 3.3 DELIVERIES BY BUYER. At the Closing, Buyer and Buyer Parent
shall deliver to Seller, all duly and property executed (where applicable):
(a) the Purchase Price provided in Section 2.1 less any Purchase
Price adjustments under this Agreement, by wire transfer of immediately
available funds to such account as shall have been specified in writing by
Seller to Buyer not less than two business days prior to Closing;
(b) a certified copy of resolutions of the board of directors of
Buyer or Buyer Parent authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein;
(c) for the Real Estate Lease, the Sublease, the Landlord Consent
to Sublease and Estoppel Certificate, an Assignment, Assumption and Consent to
Leased Land in form
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CONFIDENTIAL SYRACUSE, NY
reasonably satisfactory to Seller and Seller Parent consenting to Buyer's use of
the Leased Land for a one (1) year period;
(d) an Assumption Agreement in form and substance reasonably
satisfactory to Buyer and Seller pursuant to which Buyer assumes certain
obligations in accordance with Section 10.2 (the "Assumption Agreement"); and
(e) such other separate documents or instruments of sale,
assignment, or transfer as Seller shall reasonably request.
Section 3.4 [RESERVED].
Section 3.5 [RESERVED].
Section 3.6 [RESERVED].
Section 3.7 PRORATIONS AND CHARGES. With respect to any taxable period
including the Closing Date, the parties shall prorate and apportion, on a per
diem basis, as of the close of business on the Closing Date, the personal
property taxes and assessments, both general and special, for the Assets, based
upon the last available tax statement. If the actual real and personal property
taxes paid by any party in respect of the period of the proration exceed the
amount so pro rated, the other party shall, upon presentation of appropriate
paid tax bills, reimburse the first party for such excess. In addition, Seller
shall be charged the cost of discharging any and all financial encumbrances,
including, but not limited to, all deeds of trusts, mortgages and mechanics and
materialmen's liens on the Land, unless any of the foregoing is a Permitted
Exception or Permitted Encumbrance. With respect to Leased Land, the parties
shall prorate, as of the close of business on the Closing Date, to the extent
relevant rent, real estate taxes, operating costs and any other amounts due
under the applicable Real Estate Lease. If the pro rata amounts are not known as
of the Closing Date, adjustments shall be made post Closing at such time as they
are known to the parties. Notwithstanding anything to the contrary contained in
this Agreement, Buyer shall pay any federal, state or local sales, use, excise,
transfer, conveyance taxes or registration costs or similar taxes, or fees
(including any mortgage tax or other similar governmental charges) arising in
connection with the transactions contemplated by this Agreement.
Section 3.8 [RESERVED].
ARTICLE 4.
POST CLOSING COVENANTS
Section 4.1 REMOVAL OF IDENTIFICATION. Within six months after the
Closing Buyer shall remove from the Assets all visible names, symbols, trade
names, service marks and logos of Seller or Seller Parent other than the
Business Names identified in Section 1.1(i), if any.
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Section 4.2 FURTHER ASSURANCES. From time to time on and after the
Closing and without further consideration except as provided herein, the parties
hereto shall each deliver or cause to be delivered to any other party at such
times and places as shall be reasonably requested, such additional instruments
as any of the others may reasonably request for the purpose of carrying out this
Agreement and the transactions contemplated hereby. Seller Parent, also without
further consideration, agrees to cooperate with Buyer and to use its reasonable
commercial efforts to have the officers and employees of Seller cooperate on and
after the Closing Date in furnishing to Buyer information, evidence, testimony,
and other assistance in connection with obtaining all necessary permits and
approvals and in connection with any actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all periods prior
to the Closing Date. Buyer and Seller shall cooperate in good faith with each
other following the Closing Date with respect to all official tax inquiries, the
preparation of tax returns and all other legitimate tax matters relating to the
Assets or Business. Such cooperation shall include (without limitation) making
available, as reasonably requested, knowledgeable tax personnel and books,
records and files relating to the Assets or Business, PROVIDED, that the
forgoing shall be done in a manner so as not to interfere unreasonably with the
conduct of the business of the other party or its affiliated entities. Without
the prior written consent of Seller, which consent shall not be unreasonably
withheld or delayed, Buyer shall not file (or cause to be filed) any returns in
respect of the Assets or Business relating to taxes with respect to any period
ending before, or including, the Closing Date and shall not settle or compromise
(or cause to be settled or compromised) any issue relating to such returns or
such taxes with any taxing authority.
Section 4.3. TRANSITIONAL SERVICES. Seller and Seller Parent shall provide
transitional assistance relating to the transitioning of the Business as
requested by Buyer for thirty (30) days after Closing. Such transitional
assistance may include the use of the Land for up to 30 days after Closing
regardless of whether Buyer is assuming the Real Estate Leases. Seller and
Seller Parent will make available to Buyer and Buyer Parent Seller's computer
system for the purposes of transferring customer related information and
performing billing services if necessary. Seller and Seller Parent shall remove
all Excluded Assets from the Land or the Leased Land within thirty (30) days
after Closing. Buyer and Buyer Parent agree to provide access to Seller and
Seller Parent or their representatives to the Leased Land for up to ninety (90)
days after Closing for the purpose of having Seller perform collection and
accounts payable functions, to the extent such functions were previously
performed from such location. To the extent Seller's or Seller Parent's
representative for these tasks become an employee of Buyer, Buyer shall permit
such employee to perform these tasks for Seller or Seller Parent, at Seller or
Seller Parent's expense during such period. Such representative(s) is designated
on Schedule 4.3 attached hereto.
Section 4.4. CONSENTS TO ASSIGNMENT. Seller, Seller Parent, Buyer and
Buyer Parent each agree to use best efforts to obtain the consent to assignment
for all Material Contracts. Such effort may include providing written requests
for assignment, attending meetings and providing documents or certificates as
requested by such municipalities, governmental authorities or customers. To the
extent required by Buyer, Seller and Seller Parent shall also assist Buyer and
Buyer Parent in the transfer of Permits relating to the Business, after the date
of Closing with any regulatory agency having jurisdiction.
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Section 4.5. PENSION ISSUES. Prior to payment of the Retained Amount,
Seller and/or Seller Parent shall provide Buyer and Buyer Parent evidence that
there is no under funded pension issues with respect to the withdrawal liability
of Seller from the Collective Bargaining Agreement with the Teamsters, or in the
alternative, if there is a withdrawal liability, Seller and Seller Parent shall
provide Buyer and Buyer Parent with evidence of the full payment thereof. If for
whatever reason Seller or Seller Parent is challenging the amount of the under
funding, Seller and Seller Parent shall provide evidence to Buyer and Buyer
Parent of the provision for such payment on terms and conditions satisfactory to
Buyer and Buyer Parent.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER PARENT
Seller and Seller Parent, jointly and severally, represent and
warrant to Buyer that the statements contained in this Article 5: (i) except as
set forth in the schedules to the specific subsections of this Article 5
delivered by Seller and Seller Parent to Buyer pursuant to Section 9.7 hereof
(such schedules hereinafter collectively referred to as the "Disclosure
Schedules" and, individually, as a "Disclosure Schedule") will be correct and
complete as of the date of delivery of the final Schedules in accordance with
Section 9.7; (ii) will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 5); and (iii) shall survive the Closing in
accordance with Section 11.1.
Wherever a representation or warranty herein is qualified as having
been made "to the best of Seller's or Seller Parent's knowledge," such phrase
shall mean the knowledge of Seller and Seller Parent after due and diligent
inquiry.
Section 5.1 ORGANIZATION: AUTHORITY.
(a) Each of Seller and Seller Parent is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or organization and is duly authorized, qualified and licensed
under all laws, regulations, ordinances and orders of public authorities to
carry on its businesses in the places and in the manner as presently conducted
except for where failure to be so authorized, qualified or licensed would not
have a material adverse effect on the Business or the Assets, taken as a whole,
or on the ability of Seller or Seller Parent to consummate the transactions
contemplated by this Agreement (a "Material Adverse Effect"). Copies of each of
Seller's and Seller Parent's Certificate of Incorporation (certified by the
Secretary of State of the state of their incorporation) and Bylaws (certified by
their respective Secretaries) each as amended, are attached hereto as SCHEDULE
5.1.
(b) Seller and Seller Parent each have the full legal right and
power to enter into this Agreement and to consummate the transactions
contemplated by this Agreement.
Section 5.2 BINDING EFFECT. This Agreement has been approved by the
requisite action of Seller and Seller Parent, and no other proceedings on the
part of Seller and Seller Parent are
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necessary to authorize the execution and delivery of this Agreement or the
consummation by Seller and Seller Parent of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of Seller
and Seller Parent and, assuming the due authorization, execution and delivery
hereof by Buyer and Buyer Parent, constitutes the valid and legally binding
agreement of Seller and Seller Parent enforceable against Seller and Seller
Parent in accordance with its terms subject to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar proceedings
and to the extent that equitable remedies such as specific enforcement and
injunction are in the discretion of the court from which they are sought (the
"Enforceability Qualifications").
Section 5.3 PERMITS: PROPRIETARY RIGHTS. Attached as SCHEDULE 5.3 is a
complete and accurate list of all material Permits, permit applications, titles
(including motor vehicle titles and current registrations in Seller's
possession), fuel permits, licenses, franchises, certificates, trademarks, trade
names, service marks, patents, patent applications and copyrights owned or held
by Seller exclusively related to the Assets and the operation of the Business
(collectively, the "Rights"), none of which Rights, to the best of Seller's and
Seller Parent's knowledge, infringe on the rights of others and all of which are
now valid, in good standing and in full force and effect except for where such
infringement or the failure to be valid, in good standing and full force and
effect would not have a Material Adverse Effect, and except that no
representation is made as to the effect of the transactions contemplated under
this Agreement on any Permit, some of which may not be transferable or may
require consent to the transfer. Except as set forth on SCHEDULE 5.3. such
Rights are adequate for the operation of the Business as presently constituted
except for where the failure to be adequate would not have a Material Adverse
Effect.
Section 5.4 PERSONAL PROPERTY.
(a) Listed on SCHEDULE 1.1(c) hereto is a complete and accurate
list of all Equipment. Each piece of Equipment is being transferred to Buyer in
the same condition as when inspected by Buyer, normal wear and tear excepted.
(b) Listed on SCHEDULE 1.1(d) hereto is a complete and accurate
list of all Rolling Stock. Each motor vehicle, attachment, accessory and piece
of materials handling equipment comprising the Rolling Stock is being
transferred to Buyer in the same condition as when inspected by Buyer, normal
wear and tear excepted, and all the Rolling Stock which is of 1990 or younger
shall be operational and Department of Transportation compliant.
(c) All of the Assets are either owned by Seller or leased under
an agreement indicated on SCHEDULE 5.4(c) (the "Assumed Leases") except for
where the failure to own or lease such Assets would not have a Material Adverse
Effect. Except as would not have a Material Adverse Effect, (i) each Assumed
Lease is in full force and effect and constitutes a valid and binding agreement
of the parties (and their successors) thereto in accordance with its respective
terms and (ii) no default by Seller or, to the best of Seller's and Seller
Parent's knowledge any other party to any Assumed Lease exists.
(d) At the Closing, Seller shall have good and marketable title
to the Assets, free and clear of all debts (except liabilities assumed by Buyer
pursuant to this Agreement) and
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any liens, security interests, encumbrances, adverse claims, pledges, charges,
voting trusts, equities and other restrictions on transfer of any nature
whatsoever (each, an "Encumbrance") other than Permitted Encumbrances, and, by
virtue of the grant, conveyance, sale, transfer, and assignment of the Assets
hereunder, Buyer shall receive good and marketable title to the Assets, free and
clear of all debts (except liabilities assumed by Buyer pursuant to this
Agreement) and Encumbrances other than Permitted Encumbrances.
Section 5.5 REAL PROPERTY.
(a) To the best of Seller's and Seller Parent's knowledge, Seller
has a valid leasehold interest in the Leased Land.
(b) Except as set forth on SCHEDULE 5.5(b):
(i) To the best of Seller's knowledge, at all times during
the operation of the Business, the Land has been
licensed, permitted and authorized for the operation
of the Business under all Applicable Laws (as defined
in Section 5.8) relating to the conduct of the
Business on the Land and neither Seller nor Seller
Parent has received any written notice of any
violation of any Applicable Law with respect to the
Land that has not been cured.
(ii) The Land is suitable for its current uses, and the
Land can be used by Buyer after the Closing for its
current uses in the manner currently operated by
Seller, without violating any Applicable Law or
private restriction. To the best of Seller's and
Seller Parent's knowledge, there are no proceedings or
amendments pending and brought by, or threatened by,
any third party which would result in a change in the
allowable uses of the Land or which would modify the
right of Buyer to use the Land for its current uses
after the Closing Date.
(iii) Seller Parent and Seller have made available to Buyer
all engineering, geologic and other similar reports,
documentation, plats and maps relating to the Land in
the possession or control of Seller Parent or Seller
and all plans and specifications, as-builts, contracts
and warranties in connection with the improvements
thereon in possession or control of Seller Parent or
Seller.
(iv) Seller Parent and Seller have delivered to Buyer
originals or copies of all existing leases, occupancy
agreements or licenses or similar agreements and any
amendments thereto in connection with the Land
(collectively, the "Real Estate Leases") in Seller's
or Seller Parent's possession. To the best of the
respective knowledge of each, Seller Parent or Seller
is not in default under any Real Estate Lease.
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(v) Except for Permitted Exceptions, if any, and except in
connection with Leased Land, no party except Seller
has a present or future right to possession of all or
any part of the Land.
(vi) Neither Seller nor Seller Parent has received any
notice of any pending or threatened condemnation or
eminent domain proceedings affecting all or any part
of the Land.
(vii) Neither Seller nor Seller Parent has received any
notice of any pending special assessments affecting
the Land.
(viii) All of the Land has access to a public road or public
right of way and neither Seller nor Seller Parent has
received any notice of any fact or condition which
will result in the termination of any currently
existing access to or from the Land and any public
rights of ways and roads.
(ix) To the best of Seller's knowledge, there are no
unrecorded contracts, leases, easements or other
agreements, or claims of any third party, affecting
the use, title, occupancy, or development of the Land,
and no person, firm or entity has any right of first
refusal, option or the right to acquire all or any
part of the Land except as disclosed on the Title
Commitments.
(x) Seller is not a "foreign person" as the term is
defined in Section 1445 of the Code and any applicable
regulations promulgated thereunder.
(xi) Neither Seller nor Seller Parent shall cause or permit
any lien, Encumbrance, covenant, condition,
restriction, assessment, easement, right of way,
obligation, encroachment or liability ("Title Defect")
whatsoever to be placed of record or otherwise exist,
from the date of this Agreement to the Closing or
issuance of the title policies or title opinions (if
as of the Closing such are not issued).
(c) To the best of Seller's and Seller Parent's knowledge, Seller
has provided to the government agencies requiring the same, all material
reports, notices, filings and other disclosures relating to the Land required by
Applicable Laws and, to the best of Seller's and Seller Parent's knowledge, all
such reports, notices, filings and other documents were complete and accurate in
all material respects at the time provided to such government agencies.
Section 5.6 CONTRACTS. Listed on SCHEDULE 1.1(h) hereto is a complete and
accurate list of (a) Customer Contracts and (b) Related Approvals in each case
as of the date hereof, true and complete copies of which have been made
available to Buyer. None of the Customer Contracts and Related Approvals listed
on SCHEDULE 1.1(h) have been modified, altered,
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CONFIDENTIAL SYRACUSE, NY
terminated or otherwise amended in writing other than in the ordinary course of
business and as would not have a Material Adverse Effect. Except as set forth in
SCHEDULE 5.6, to the best of Seller's and Seller Parent's knowledge all Customer
Contracts are in full force and effect and are valid, binding and enforceable
against the respective parties thereto in accordance with their respective
provisions, subject to the Enforceability Qualifications and Seller is not in
default of, nor has there occurred an event or condition (other than Seller's
execution and delivery of or performance under this Agreement) which with the
passage of time or the giving of notice (or both) would constitute a material
default, with regard to the payment or performance of any obligation under any
Customer Contract. Neither Seller Parent nor Seller has received any notice that
any person desires to modify, waive, amend, rescind, release, cancel or
terminate any Material Customer Contract. There is no contract, agreement or
other arrangement granting any person any right to purchase any of the Assets.
Except as set forth on SCHEDULE 5.6 no customers waste is required to be
disposed of at a designated disposal facility.
Section 5.7 EMPLOYEES: COMPENSATION. Attached as SCHEDULE 5.7 is a
complete and accurate list of (i) all employees of Seller employed principally
in the Business (the "Business Employees"), (ii) their rate of compensation as
of the date of delivery of the Disclosure Schedules (including a breakdown of
the portion thereof attributable to salary, bonus and other compensation,
respectively) and (iii) any bonus, incentive or compensation plans (other than
plans subject to ERISA) in which they participate. Except as set forth on
Schedule 5.7 each employee of Seller is an employee at will.
Section 5.8 COMPLIANCE WITH LAW: NO CONFLICTS.
(a) Except as set forth in SCHEDULE 5.8(a): (i) Seller has in the
past complied in all material respects with, and is now in material compliance
with, all federal, state and local statutes, laws, rules, regulations, orders,
permits (including, without limitation, zoning restrictions and land use
requirements and environmental laws and regulations) and licenses and all
administrative and judicial judgments, rulings, decisions and orders applicable
to Seller, the Assets or the Business (collectively, the "Applicable Laws") and
Permits, except for where the failure to so comply would not have a Material
Adverse Effect; (ii) neither Seller nor Seller Parent now is or ever has been
involved in any litigation or administrative proceeding relating to the Assets
or the Business seeking to impose fines, penalties or other liabilities or
seeking injunctive relief for violation of any Applicable Laws or Permits
relating to the environment which would have a Material Adverse Effect; (iii)
neither Seller nor Seller Parent has received any notice that Seller is under
investigation or other form of review relating to the Assets with respect to any
Applicable Law or Permit; and (iv) Seller has been issued, and has kept in force
and effect, all required Permits necessary with respect to the Assets and the
Business under Applicable Laws, except for where the failure of such Permits to
be in full force and effect would not have a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 5.8(b) the execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof by Seller and Seller
Parent will not:
(i) conflict with or result in a breach or violation of
the Certificate of
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CONFIDENTIAL SYRACUSE, NY
Incorporation or Bylaws (or, if not a corporation, the
comparable organizational documents) of Seller or
Seller Parent; or
(ii) conflict with, or result in a material breach under
any Customer Contract, Related Approval or Real Estate
Lease or result in the creation or imposition of any
Encumbrance on the Assets or Business pursuant to: (A)
any law or regulation to which Seller or Seller
Parent, or any of their respective properties are
subject, or (B) any judgment, order or decree to which
Seller or Seller Parent is bound or any of their
respective property is subject, except for where such
breach or the creation or imposition of such
Encumbrance would not have a Material Adverse Effect;
or
(iii) except for the consents or filings required under the
Permits, Customer Contracts, Related Approvals, the
Assumed Leases and Real Estate Leases set forth on
SCHEDULE 5.8(b)(iii), require notice to, or the
consent or approval of, any governmental authority or
agency or other third party in order to remain in full
force and effect.
(c) Seller has made available to Buyer copies of all site
assessments, compliance audits and remediation studies that are in Sellers' or
Seller Parent's possession with respect to the Business or the Assets that are
required under the Federal Occupational Safety and Health Act of 1970, as
amended, and under all other health and safety Applicable Laws or with any order
issued, entered, promulgated or approved thereunder, or which may give rise to
any liability which would reasonably be expected to have a Material Adverse
Effect, including, without limitation, any liability under CERCLA (as defined in
Section 5.12) or similar state or local Applicable Laws, or otherwise form the
basis of any litigation, hearing, notice of violation, study or investigation
which would reasonably be expected to have a Material Adverse Effect, based on
or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or the emission, discharge, release or
threatened release into the environment, of any waste.
Section 5.9 TAXES. Except as set forth on SCHEDULE 5.9, (a) Seller has
filed, or will file, in a timely manner all material federal, state, local and
other tax returns required to be filed on or before the Closing Date; (b) no
federal, state, local or other tax returns or reports filed by Seller (whether
filed prior to, on or after the date hereof) will result in any material taxes,
assessments, fees or other governmental charges upon the Assets or Buyer,
whether as a transferee of the Assets or otherwise, (c) all material federal,
state and local taxes due and payable with respect to the Assets have been paid,
including, without limiting the generality of the foregoing, all material
federal, state and local income, sales, use, franchise, excise and property
taxes; (d) no written notice of any material claim, whether pending or
threatened, for taxes has been received; and (e) there are no liens for taxes on
any Assets except taxes which are not yet due and payable or which are being
contested in good faith.
Section 5.10 LITIGATION. Except as set forth on SCHEDULE 5.10 or the
publicly available
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reports filed by Seller Parent under the Securities and Exchange Act of 1934,
there is no claim, litigation, action, suit or proceeding, formal arbitration,
informal arbitration or mediation, administrative, judicial or otherwise
(collectively, "Proceedings"), pending or, to the best of Seller's and Seller
Parent's knowledge, threatened, against Seller or Seller Parent relating to the
Assets or the Business, at law or in equity, before any federal, state or local
court or regulatory agency, or other governmental or private authority which
individually or in the aggregate might be reasonably expected to have a Material
Adverse Effect; no notice of any of the above has been received by Seller or
Seller Parent; and, to the best of Seller's and Seller Parent's knowledge, no
facts or circumstances exist which would give rise to any of the foregoing. Also
listed on Schedule 5.10 are all instances in which Seller or Seller Parent are
the plaintiffs or complaining or moving parties in a Proceeding brought in
connection with the Assets or the Business.
Section 5.11 CONDUCT OF SELLER'S BUSINESS SINCE JANUARY 1, 2000. Since
January 1, 2000, except as disclosed on SCHEDULE 5.11 or as would not have a
Material Adverse Effect, there has not been any:
(a) work interruption, labor grievance or unfair labor practice
claim filed with respect to the Business;
(b) sale or transfer of, or any agreement to sell or transfer,
any of the Assets or any plan, agreement or arrangement granting any
preferential right to purchase or acquire any interest in any of the Assets, or
requiring consent of any party to the transfer and assignment of any of the
Assets, in each case, except in the ordinary course of business;
(c) waiver of any rights or claims of Seller or Seller Parent
related to the Assets;
(d) breach, amendment or termination of any Customer Contract or
Permit or loss of any customer or Customer Contract;
(e) transaction by Seller outside the ordinary course of its
business with respect to the Assets or the Business, or
(f) any action by Seller, Seller Parent, or any employee, officer
or agent of Seller or Seller Parent committing to do any of the foregoing.
Section 5.12 HAZARDOUS MATERIALS: DISPOSAL SITES.
(a) Except as set forth in SCHEDULE 5.12(a) and except as would
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect: (i) since January 1, 1998 Seller has never owned, leased, had an
interest in, generated, transported, stored, handled, recycled, reclaimed,
disposed of, or contracted for the disposal of, hazardous materials, hazardous
wastes, hazardous substances, toxic waste or substances, infectious or medical
waste, radioactive waste or sewage sludge as those terms are defined by the
Resource Conservation and Recovery Act of 1976; the Comprehensive Environmental
Response,
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Compensation and Liability Act of 1980 ("CERCLA"); the Atomic Energy Act of
1954; the Toxic Substances Control Act; the Occupational Health and Safety Act;
any comparable or similar state statute; any other Applicable Law or the rules
and regulations promulgated under any of the foregoing, as each of the foregoing
may have been from time to time amended (collectively, "Hazardous Materials")
except in material compliance with Applicable Laws; (ii) to the best of Seller's
and Seller Parent's knowledge there have been no spills, leaks, deposits or
other releases into the environment or onto or under the Land of any Hazardous
Materials except in material Compliance with Applicable Laws. No Encumbrances
with respect to environmental liability have been imposed against Seller or any
of the Assets under CERCLA, any comparable state statute or other Applicable
Law, and to the best of Seller's and Seller Parent's knowledge, no facts or
circumstances exist which would give rise to the same; and (iii) no portion of
the Land is listed on the CERCLA list or the National Priorities List of
Hazardous Waste Sites or any similar list maintained by the states in which the
Assets are located or the Business is conducted, and neither Seller nor Seller
Parent is listed as or has been notified that it is a potentially responsible
party with respect to the Assets or the Business or as a result of the operation
of the Assets or the Business under CERCLA any comparable state statute or other
Applicable Law, and neither Seller nor Seller Parent has received a notice of
such listing.
(b) Included on SCHEDULE 5.12(b) is a complete list of the names
and addresses of all disposal sites utilized by Seller after January 1, 1998
with respect to the Business or the Assets, none of which sites (other than as
specifically noted) is listed on the CERCLA list or the National Priorities List
of hazardous waste sites or any comparable state list.
Section 5.13 CORRUPT PRACTICES. Neither Seller nor Seller Parent, nor any
of their respective officers, directors, employees or agents, has ever made,
offered or agreed to offer anything of value to (a) any employees of any
customers of the Acquired Operations for the purpose of attracting business to
Seller or (b) any domestic governmental official, political party or candidate
for government office or any of their employees or representatives which, in
each case, would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect or provide the basis for voiding any Customer
Contract.
Section 5.14 RESERVED.
Section 5.15 AFFILIATES' RELATIONSHIPS.
(a) SCHEDULE 5.15 contains an accurate and complete list of all
contractual arrangements between Seller and any Affiliate thereof that (i) are
currently in effect and (ii) relate to the day to day operations of the
Business.
(b) For purposes of this Section 5.15, an "Affiliate" is a person
or entity controlled by, controlling or under common control with Seller.
Section 5.16 PERFORMANCE BONDS: LETTERS OF CREDIT. Except as set forth
on SCHEDULE 5.16 there are no performance bonds or letters of credit outstanding
with respect to the operation of the Business or the Assets.
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Section 5.17 EMPLOYMENT AND LABOR MATTERS. Except as set forth in
SCHEDULE 5.17 Seller is not a party to (a) any collective bargaining agreement,
(b) any agreement respecting the employment of any employee, or (c) any
agreement for the provision of consulting or other professional services which
is not cancelable without penalty on less than 30 days' notice, in each case
with respect to the Business. Except as set forth in SCHEDULE 5.17, within the
last five years Seller has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with the Business. Except to the extent set forth in SCHEDULE 5.17,
with respect to the Business, (a) Seller is in compliance in all material
respects with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice; (b) there is no unfair labor practice
charge or complaint against Seller pending or, to the best of Seller Parent's
and Seller's knowledge, threatened; (c) there is no labor strike, dispute,
request for representation, slowdown or stoppage actually pending or, to the
best of Seller Parent's and Seller's knowledge, threatened against or affecting
Seller nor any secondary boycott with respect to services of Seller; (d) no
question concerning representation has been raised or is threatened respecting
the employees of Seller of the Business; (e) no grievance which has had or would
reasonably be expected to have a Material Adverse Effect, nor any arbitration
proceedings arising out of or under collective bargaining agreements, is pending
and no such claim therefor exists; and (f) there are no administrative charges
or court complaints against Seller concerning alleged employment discrimination
or other employment related matters pending or threatened before the U.S. Equal
Employment Opportunity Commission or any other governmental entity which would
reasonably be expected to have a Material Adverse Effect.
Section 5.18 DISCLOSURE. The representations and warranties set forth
herein of Seller and Seller Parent and the Exhibits, Schedules and certificates
attached hereto and all documents, certificates and information delivered to
Buyer or Buyer Parent in connection herewith do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements and information contained herein not misleading.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER PARENT
Buyer and Buyer Parent, jointly and severally, represent and warrant to
Seller and Seller Parent that the statements contained in this Article 6: (i)
are correct and complete as of the date of this Agreement: (ii) will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article 6); and (iii) shall survive the Closing in accordance with Section 11.1.
Section 6.1 ORGANIZATION. Each of Buyer and Buyer Parent is duly
organized, validly existing and in good standing under the laws of the state of
its organization. Each of Buyer and Buyer Parent is duly authorized, qualified
and licensed under all laws, regulations, ordinances and orders of public
authorities to carry on its businesses in the places and in the manner as now
conducted except for where the failure to be so authorized, qualified or
licensed would not have a material adverse affect on such businesses.
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CONFIDENTIAL SYRACUSE, NY
Section 6.2 AUTHORITY. Each of Buyer and Buyer Parent has the full legal
right and power to enter into this Agreement and to consummate the transactions
contemplated by this Agreement.
Section 6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(a) conflict with, or result in a breach or violation of the
Certificate of Incorporation or Bylaws (or, if not a corporation, the comparable
organizational documents) of Buyer or Buyer Parent and copies of each of
Seller's and Seller Parent's Certificate of Incorporate (certified by the
Secretary of State of the state of their incorporation), as amended, are
attached hereto as SCHEDULE 6.3;
(b) conflict with, or result in a material breach under any
document, agreement or other instrument to which Buyer or Buyer Parent is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer or Buyer Parent pursuant to: (i) any law
or regulation to which Buyer or Buyer Parent or any of its property is subject,
or (ii) any judgment, order or decree to which Buyer or Buyer Parent is bound or
any of its property is subject, except, in each case, for where such breach or
the creation or imposition of any lien, charge or encumbrance would not have a
material adverse effect on the Acquired Operations, taken as a whole, or the
ability of Buyer and Buyer Parent to consummate the transactions contemplated by
this Agreement and the other Related Agreements;
(c) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of Buyer or
Buyer Parent; or
(d) require notice to, or consent or approval of any governmental
authority or agency or any other third party in order to remain in full force
and effect.
Section 6.4 BINDING EFFECT. This Agreement has been approved by the
requisite action of Buyer and Buyer Parent, and no other proceedings on the part
of Buyer and Buyer Parent are necessary to authorize the execution and delivery
of this Agreement or the consummation by Buyer and Buyer Parent of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Buyer and Buyer Parent and, assuming the due authorization,
execution and delivery hereof by Seller and Seller Parent, constitutes the valid
and legally binding agreement of Buyer and Buyer Parent enforceable against
Buyer and Buyer Parent in accordance with its terms, subject to the
Enforceability Qualifications.
Section 6.5 DISCLOSURE. The representations and warranties set forth
herein of Buyer and Buyer Parent and the exhibits, schedules and certificates
attached hereto do not contain any untrue statement of a material fact necessary
in order to make the statements and information contained herein not misleading.
ARTICLE 7.
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COVENANTS PRIOR TO CLOSING
Section 7.1 ACCESS TO LAND AND RECORDS. After the date hereof and prior
to the Closing Date or the earlier termination of this Agreement, Seller will,
and Seller Parent will cause Seller to, afford to or obtain for the officers and
authorized representatives of Buyer reasonable access to all of the Land
(including, without limitation, for the purpose of permitting Buyer to perform
or cause to be performed at Buyer's sole risk and expense all testing,
inspections and other procedures reasonably considered desirable by Buyer),
Assets, sites, books and records of Seller exclusively related to the Business,
at reasonable times and upon reasonable notice, and furnish Buyer with such
additional financial and operating data and other information as to the Business
as Buyer may from time to time reasonably request. Seller will use commercially
reasonable efforts to cooperate with Buyer, its representatives, engineers,
auditors and counsel in the preparation of any documents or other material which
may be reasonably required in connection with any documents or materials
required by any governmental agency. Buyer will cause all information obtained
in connection with the negotiation of this Agreement to be treated as
confidential in accordance with the provisions of Article 13 hereof. Buyer and
its agents and employees shall not enter the Land and perform inspections unless
accompanied by a representative of Seller, provided that Seller shall make a
representative available on a reasonable basis upon receiving such notice.
Buyer agrees to repair any damage caused by or attributable to Buyer's
exercise of its rights pursuant to this Section 7.1 or to Buyer or any of its
agents or employees being in or on the Land and Buyer shall indemnify and save
harmless Seller from all costs or repairing any such damage attributable to
Buyer's exercise of its rights pursuant to this Section 7.1 or to Buyer or any
of its agents or employees being in or on the Land. If Buyer does not perform
such repairs, Seller shall have the right to perform, or cause to be performed,
such work and to obtain reimbursement for the reasonable costs of such work
(including reasonable legal and consulting fees) from Buyer. which costs shall
be payable by Buyer to Seller upon demand. The provisions of this Section 7.1
shall survive the termination of this Agreement.
Section 7.2 ACTIVITIES OF SELLER PRIOR TO CLOSING. Between the date of
this Agreement and the Closing Date or the earlier termination of this
Agreement, Seller will and Seller Parent will cause Seller to:
(a) carry on the Business in the ordinary and usual course
consistent with past practice;
(b) maintain the Assets in as good working order and condition
as at present, ordinary wear and tear excepted;
(c) use commercially reasonable efforts to maintain its
relationships with suppliers, customers, consultants, employees, independent
contractors, government agencies, communities and others having business
relations with Seller in the operation of the Business, and notify Buyer of the
loss of any customer material to the Acquired Operations; and
(d) provide all commercially reasonable assistance to Buyer to
provide for an orderly transfer of the Assets and the Business from Seller to
Buyer.
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CONFIDENTIAL SYRACUSE, NY
Section 7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. After the date hereof
and prior to the Closing Date or earlier termination of this Agreement, Seller
will not, and Seller Parent will cause Seller not to, without the prior written
consent of Buyer, which consent will not be unreasonably withheld:
(a) incur or agree to incur any liability not in the ordinary
course of business or make any capital expenditures related to the Assets which
in the aggregate, together with the aggregate amount of all liabilities incurred
out of the ordinary course of business or capital expenditures relating to the
assets sold under any Related Agreement, are in excess of $10,000;
(b) enter into any new mortgage, pledge or other lien or
encumbrance upon any Asset except in the ordinary course of business;
(c) breach, amend or terminate any Real Estate Lease, other
Assumed Lease, Permit, Customer Contract or Related Approval in any material
manner except in the ordinary course of business;
(d) enter into any transaction outside the ordinary course of the
Business of Seller or otherwise prohibited hereunder; and
(e) change or increase any compensation payable to, or benefits
made available to, any Business Employees, except (i) to the extent required by
law, (ii) pursuant to a collective bargaining agreement in effect on the date
hereof or other written agreement or (iii) in the case of employees not subject
to collective bargaining agreements, such changes or increases as are consistent
with those granted to those employees subject to collective bargaining
agreements.
Section 7.4 CONTACT WITH GOVERNMENT OFFICIALS AND CUSTOMERS. Seller and
Seller Parent shall each use their commercially reasonable efforts to cooperate
with Buyer in making contact with (a) the appropriate governmental agencies and
officials having information about or jurisdiction over Seller, Seller Parent,
the Business or the Land, assets or obligations or rights of Seller, including,
without limitation, environmental and land use agencies and officials, in order
to assist Buyer in completing its regulatory evaluation of the Business and the
Assets and securing any consents necessary to transfer the Permits or in
securing new permits; and (b) subject to Seller's prior written consent, the
customers under the Customer Contracts, in order to assist Buyer in securing any
consents necessary to transfer the Customer Contracts to Buyer as contemplated
by this Agreement. Each of Buyer and Seller shall use commercially reasonable
efforts to obtain all consents necessary to transfer the Permits (or obtain new
permits for any non-transferable Permits), the Customer Contracts, the Related
Approvals, the Real Estate Leases and the other Assumed Leases to Buyer at the
Closing. Subject to Section 1.3(b), if the transactions contemplated by this
Agreement, without the consent of a third party, would constitute a breach of
any Customer Contract, Permit, Related Approval, Real Estate Lease or Assumed
Lease, and such consent has not been obtained as of the Closing Date, but
nevertheless Buyer elects to consummate the transactions contemplated herein,
Seller Parent and Seller will cooperate with Buyer thereafter in all reasonable
respects to attempt to obtain such third-party
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consent following the Closing Date.
Section 7.5 PUBLIC ANNOUNCEMENTS. Buyer and Seller will prepare a
mutually acceptable written announcement concerning this transaction. Except as
may otherwise be required by law or the rules and regulations of the applicable
exchange of Seller or Seller Parents, neither Buyer nor Seller shall make any
additional public announcements without the prior consent of the other party.
Section 7.6 RESERVED.
Section 7.7 STANDSTILL AGREEMENT. Unless and until this Agreement is
terminated pursuant to Article 12 hereof without the Closing having taken place,
Seller and Seller Parent will not directly or indirectly (through a
representative, agent, employee or otherwise) solicit or accept offers for the
Assets or the Business or for a merger or consolidation involving the Assets or
the Business, or respond to inquiries from, provide or share information with,
negotiate with or in any way facilitate inquiries or offers from, third parties
who express or who have heretofore expressed an interest in acquiring the Assets
or the Business by merger, consolidation or other combination, nor will Seller
Parent permit Seller to do any of the foregoing. Seller Parent shall be
permitted to pursue its merger negotiations with respect to operations in the
Canadian markets.
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER PARENT AND SELLER
The obligations of Seller Parent and Seller to consummate the transactions
contemplated hereunder are subject to the completion, satisfaction, or at their
option, waiver, on or prior to the Closing Date, of the following conditions.
Section 8.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of Buyer and Buyer Parent contained in this
Agreement shall be accurate on and as of the Closing Date in all material
respects with the same effect as though such representations and warranties had
been made on and as of such date; and each and all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Buyer and
Buyer Parent on or before the Closing Date shall have been duly complied with
and performed in all material respects. Buyer and Buyer Parent shall have
delivered to Seller a certificate of a duly authorized officer to the foregoing
effect.
Section 8.2 CONSENTS. All necessary notices to, consents of and filings
with any governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer or Buyer Parent shall have been obtained and made.
Section 8.3 NO ADVERSE PROCEEDING. No action or proceeding before a court
or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit
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any of the transactions contemplated by this Agreement.
Section 8.4 DELIVERIES. Buyer shall be prepared to make the deliveries
described in Section 3.3.
Section 8.5 GENERAL. All certificates and other documents required of
Buyer or Buyer Parent to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Seller.
Section 8.6 BOARD APPROVAL. The Board of Directors of Seller Parent has
approved the consummation of the transactions contemplated herein.
Section 8.7 LENDER APPROVAL. Seller Parent shall have received the
consent of its lenders to the consummation of the transactions contemplated
herein.
ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND BUYER PARENT
The obligations of Buyer and Buyer Parent to consummate the transactions
contemplated hereunder are subject to the completion, satisfaction or, at their
option, waiver, on or prior to the Closing Date, of the following conditions.
Section 9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and Seller Parent contained in this Agreement shall be
accurate on and as of the Closing Date in all material respects with the same
effect as though such representations and warranties had been made on and as of
such date. Seller and Seller Parent shall have delivered to Buyer a certificate
of a duly authorized officer to the foregoing effect.
Section 9.2 COVENANTS. Each and all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller and
Seller Parent on or before the Closing Date shall have been duly complied with
and performed in all material respects. Seller and Seller Parent shall have
delivered to Buyer a certificate of a duly authorized officer to the foregoing
effect.
Section 9.3 NO ADVERSE PROCEEDING. No action or proceeding before a court
or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit any of the transactions contemplated by this
Agreement.
Section 9.4 NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect in the
Business, the results of operations or financial condition of the Business shall
have occurred.
Section 9.5 CONSENTS. All necessary notices to, consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein to be made or obtained by Seller or Seller
Parent shall have been obtained and made by Seller or Seller Parent and Buyer
shall have determined that Buyer has obtained all of the
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consents it deems necessary under any Material Contract, Assumed Lease or Real
Estate Lease requiring consent to assignment by virtue of the transaction
contemplated hereunder.
Section 9.6 DELIVERY OF DISCLOSURE SCHEDULES. Seller shall have delivered
to Buyer complete and final versions of each of the schedules provided for
pursuant to this Agreement, including the Disclosure Schedules (collectively,
the "Schedules") and such Schedules must have been determined to be acceptable
by Buyer.
Section 9.7 TRANSFERABILITY OF PERMITS. Buyer shall have determined that
as a result of this transaction all of the Permits which individually or in the
aggregate are material to the operation of the Assets, taken as a whole (the
"Material Permits"), will be transferred to Buyer and remain in effect as of the
Closing Date.
Section 9.8 [RESERVED].
Section 9.9 [RESERVED].
Section 9.10 DELIVERIES. Seller and Seller Parent shall be prepared to
make the deliveries described in Section 3.2.
Section 9.11 APPROVAL. The Board of Directors of Buyer Parent or the
Executive Committee of Buyer Parent, as applicable, has approved the
consummation of the transactions set forth herein.
Section 9.12 GENERAL. All certificates and other documents required of
Seller and Seller Parent to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Buyer.
ARTICLE 10.
LIABILITIES AND OBLIGATIONS
Section 10.1 NON-ASSUMPTION OF LIABILITIES. Except as explicitly set forth
in Sections 3.7, or 10.2, Buyer shall not, by the execution and performance of
this Agreement or otherwise (including under theories of successor liability),
assume, become responsible for or incur, and Seller shall retain after Closing,
any liability or obligation of any nature of Seller or Seller Parent (or any
other party) relating to the Business or Assets, whether legal or equitable,
matured or contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, arising out of occurrences prior to the
completion of the Closing, including, without limiting the generality of the
foregoing, any liability or obligation arising out of or relating to: (a) any
occurrence or circumstance (whether known or unknown) which occurs or exists on
or prior to the Closing Date and which constitutes, or which by the lapse of
time or giving notice (or both) would constitute, a breach or default under any
lease, contract, or other instrument or agreement (whether written or oral); (b)
injury to or death of any person or damage to or destruction of any property
occurring prior to the Closing Date, whether based on negligence,
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breach of warranty, or any other theory; (c) violation of the requirements of
any governmental authority or of the rights of any third person, including,
without limitation, any requirements relating to the reporting of federal,
state, local or other income, sales, use, franchise, excise or property tax
liabilities of Seller or Seller Parent relating to the Business or Assets
occurring on or prior to the Closing Date; (d) the generation, collection,
transportation, storage or disposal by Seller or any predecessor of Seller of
Hazardous Materials; (e) the presence of any Hazardous Materials on the Land or
the migration, leaking, leaching, flowing, emitting or other movement of
Hazardous Materials from the Land or on to the Land; (f) any obligations related
to any of the Excluded Assets; (g) any liabilities or obligations resulting from
non-compliance with any applicable plant closing or bulk sales laws; (h) any
liabilities or obligations arising in connection with a collective bargaining
agreement; (i) any employee benefit plan, employee welfare benefit plan,
employee pension benefit plan, multi-employer plan or multiple employer welfare
arrangements (as defined in Section 3 (3), (1), (2), (37) and (40), respectively
of ERISA) which are currently maintained and/or sponsored by Seller or Seller
Parent, or to which Seller or Seller Parent contributes, or has an obligation to
contribute in the future including, without limitation, employment agreements
and other agreements containing "golden parachute" provisions and deferred
compensation arrangements; (j) any severance pay obligation of Seller or Seller
Parent or any employee benefit plan (within the meaning of Section 3 (3) of
ERISA) or any other fringe benefit program maintained or sponsored by Seller or
Seller Parent or to which Seller or Seller Parent contributes or any
contributions, benefits, liabilities therefore or any liability for the
withdrawal or partial withdrawal from or termination of any such plan or
program; (k) any liabilities or obligations arising in connection with any
employment agreement; (l) any event or circumstance arising prior to the Closing
relating to the Business of Seller or Seller Parent or debts of Seller or Seller
Parent not specifically assumed by Buyer hereunder; (m) any liability or
obligation under the Real Estate Lease for any period commencing upon
termination of the Sublease; and (n) any liability of any predecessor of Seller
in connection with the foregoing or any other agreement not specifically set
forth below. Notwithstanding that Buyer shall not assume liability with respect
to any Proceedings pending against Seller or Seller Parent as of the Closing
(including but not limited to those set forth on Schedule 5.10), Seller and
Seller Parent shall not, and shall cause any entity assuming such liability not
to, consent to entry of any judgment or order, interim or otherwise, or enter
into any settlement with respect to such Proceedings that provides for
injunctive or other non-monetary relief affecting the Business, the Assets,
Buyer or Buyer Parent or that does not include as an unconditional term thereof
the giving by each claimant or plaintiff to Buyer and Buyer Parent of a release
from all liability with respect to such Proceedings.
Section 10.2 ASSUMPTION OF OBLIGATIONS.
(a) Buyer agrees to perform all obligations relating to the
Assets, including without limitation the Customer Contracts, Related Approvals,
Assumed Leases, Permits and Real Estate Leases, to the extent, and only to the
extent, such obligations first mature and are required to be performed by Buyer
subsequent to the completion of the Closing.
(b) Buyer agrees to assume all obligations first accruing after
the completion of the Closing under any Real Estate Lease assigned at the
Closing (provided that such obligations do not arise as a result of a breach of
Seller's representations and warranties herein).
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(c) Performance bonds and letters of credit with respect to the
Assets set forth on SCHEDULE 5.17 will be replaced by performance bonds and/or
letters of credit of Buyer within 30 days of Closing.
(d) Buyer agrees to assume all obligations set forth in
Sections 3.7.
Section 10.3 ENFORCEMENT OF COVENANTS.
(a) Seller and Seller Parent shall fulfill all of its obligations
under any employment agreement, confidentiality agreement or non-solicitation
agreement each may have with respect to obligations arising in connection with
the Business Employees or prior owners of the Assets for the respective terms
thereof. Seller and Seller Parent agree that to the extent Buyer does not employ
employees with Covenants of the Business, Seller and Seller Parent shall enforce
such Covenants upon written notice from Buyer or Buyer Parent or Seller or
Seller Parent discovering a violation of such Covenants. It is the intention of
the parties hereto that Buyer and Buyer Parent obtain the full benefit of such
Covenants. If under applicable law Buyer or Buyer Parent is able to enforce such
Covenants, Buyer and Buyer Parent shall do so at Buyer or Buyer's Parent
expense. In such circumstance Seller or Seller Parent shall be deemed to have
assigned to Buyer and Buyer Parent such claim. Seller and Seller Parent shall
cooperate in any action undertaken hereunder at the request and expense of Buyer
or Buyer Parent. If such Covenant is not assignable or enforceable by Buyer or
Buyer Parent then upon the written request of Buyer or Buyer Parent Seller or
Seller Parent shall institute a claim against the alleged violation and
thereafter assign such cause of action to Buyer or Buyer Parent, as applicable.
Buyer or Buyer Parent shall bear all of their and Seller and Seller Parent's
costs and expenses associated with such action and the enforcement of such
Covenant.
(b) To the extent Seller or Seller Parent does not institute an
action against such covenantor and assign such to Buyer and Buyer Parent within
30 days of Buyer or Buyer's Parent request, then Seller and Seller Parent hereby
authorizes and empowers Buyer or Buyer Parent to make, constitute and appoint
any officer or agent of Buyer or Buyer Parent, as Buyer or Buyer Parent may
select in their exclusive discretion, as Seller and Seller Parent's true and
lawful attorney-in-fact, with the power to bring such action in Seller and
Seller Parent's name but at Buyer and Buyer's Parent expense and to use Seller
or Seller name on all documents, papers, filings, causes of action, injunction
actions or other legal process necessary for Buyer or Buyer Parent to enforce
the Covenants. Seller and Seller Parent hereby ratify all that such attorney
shall lawfully do or cause to be done by virtue hereof other than acts or
omissions which are grossly negligent or constitute willful misconduct. This
power of attorney, being coupled with an interest, shall be irrevocable for the
term of the Covenants.
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ARTICLE 11.
INDEMNIFICATION
Section 11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of any party hereto contained in this Agreement
and the liabilities and obligations of the parties with respect thereto shall
survive the Closing hereunder for 3 years after the Closing Date: provided,
however, that the representations and warranties in Sections 5.12 shall last
indefinitely and the representations and warranties in Sections 5.4(d) and 5.9
shall survive until 30 days after the expiration of the applicable statute of
limitations period.
Section 11.2 INDEMNIFICATION BY SELLER PARENT AND SELLER. Seller and
Seller Parent agree that they will each, jointly and severally, indemnify,
defend, protect and hold harmless Buyer, its officers, shareholders, directors,
divisions, subdivisions, affiliates, subsidiaries, parent, agents, employees,
successors and assigns at all times from and after the date of this Agreement
from and against all liabilities, claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, penalties, losses, costs and expenses
whatsoever (including specifically, but without limitation, court costs,
reasonable attorneys' and expert witness fees and expenses and expenses of
investigation) whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent,
whether arising out of occurrences prior to, at or after the date of this
Agreement, incurred as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties by Seller or Seller Parent set forth herein, or in the Schedules,
Exhibits or certificates attached hereto or delivered pursuant hereto by Seller
or Seller Parent; (b) breach of any agreement or covenant on the part of Seller
Parent or Seller made in this Agreement; (c) any liability, claim or other cost
or obligation retained pursuant to Article 10; or (d) any claim by a third party
that, if true, would mean that a condition for indemnification set forth in
subsections (a) through (c) of this Section 11.2 had been satisfied.
Section 11.3 INDEMNIFICATION BY BUYER AND BUYER PARENT. Buyer and Buyer
Parent, jointly and severally, agree that they will indemnify, defend, protect
and hold harmless Seller and Seller Parent at all times from and after the
Closing Date from and against all liabilities, claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, penalties, losses, costs and
expenses whatsoever (including specifically, but without limitation, court
costs, reasonable attorneys' fees and expenses and expenses of investigation)
whether equitable or legal, matured or contingent, known or unknown, foreseen or
unforeseen, ordinary or extraordinary, patent or latent, incurred by Seller or
Seller Parent as a result of or incident to: (a) any breach of misrepresentation
in, untruth in or inaccuracy in the representations and warranties of Buyer or
Buyer Parent set forth herein, or in the Schedules, Exhibits or certificates
attached hereto or delivered pursuant hereto by Buyer or Buyer Parent; (b)
breach of any agreement or covenant on the part of Buyer or Buyer Parent made in
this Agreement; (c) any liability, claim or other cost or obligation assumed
pursuant to Section 10.2; or (d) any claim by a third party that, if true, would
mean that a condition for indemnification set forth in subsections (a) through
(c) of this Section 11.3 had been satisfied.
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Section 11.4 LIMITATION ON LIABILITY. The indemnification obligations set
forth in this Article 11 shall apply only if a Closing occurs, and then only
after the aggregate amount of indemnification obligations of the Indemnifying
Party (as defined in Section 11.5) under this Agreement exceed $75,000 at which
time the indemnification obligations shall be effective as to all amounts. The
foregoing indemnification threshold shall not apply to any indemnification
obligations on account of (a) taxes, (b) a breach of the covenants set forth in
Section 10.1 or 10.2, except to the extent the Indemnified Party (as defined in
Section 11.5) knew of such breach on or prior to the Closing, (c) a title or
survey matter resolved under Section 3.8. or (d) a breach of the representations
in Section 2.2 or any adjustment to the Purchase Price as set forth herein.
Further, the indemnification obligations set forth in this Article 11 and each
Article 11 under the Related Agreements shall be limited to an aggregate amount
not to exceed all the Purchase Prices in each Related Agreement actually paid by
Buyer, Buyer Parent and its Affiliates as adjusted in accordance with Article 2;
PROVIDED that the foregoing cap shall not apply to indemnification obligations
on account of taxes. The indemnified party shall not have the right to
indemnification hereunder to the extent that an adjustment to the Purchase Price
or other monetary adjustment has already been made under this Agreement.
Section 11.5 INDEMNIFICATION PROCEDURE BETWEEN BUYER AND SELLER. Upon the
occurrence of any claim for which indemnification is believed to be due
hereunder, the party seeking indemnification (the "Indemnified Party") shall
provide notice of such claim to the party from whom indemnification is sought
(the "Indemnifying Party"), stating in general terms the circumstances giving
rise to the claim, specifying the amount of the claim (or an estimate thereof)
and making a request for any payment then believed due (subject to the
limitations herein). Upon receipt of any such notice, both the Indemnified Party
and the Indemnifying Party shall use all reasonable efforts to cooperate and
arrive at a mutually acceptable resolution of such dispute within the next 30
days. If it is finally determined that all or a portion of such claim amount is
owed to the Indemnified Party, the Indemnifying Party shall (subject to the
terms of Section 11.4) within 10 days of such determination, pay the Indemnified
Party such amount owed in cash, together with interest from the date that the
Indemnified Party initially requested such payment until the date of actual
payment, at an annual rate equal to the prime interest rate then generally in
effect on the date of payment as set forth in THE WALL STREET JOURNAL.
Section 11.6 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY
CLAIMS.
(a) If any third party shall notify an Indemnified Party with
respect to any matter (a "Third Party Claim") that may give rise to a claim for
indemnification against an Indemnifying Party or if any party who may make a
claim for indemnification under this Agreement otherwise becomes aware of any
matter that may give rise to such a claim or wishes to make such a claim
(whether or not related to a Third Party Claim), then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing; PROVIDED that
no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is thereby prejudiced.
(b) Any Indemnifying Party will have the right to assume the
defense of any
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claim or any litigation resulting therefrom, PROVIDED that (i) the counsel for
the Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(iii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligation under
this Agreement except to the extent that such omission results in a failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
materially damaged as a result of such failure to give notice. Except with the
prior written consent of the Indemnified Party, no Indemnifying Party, in the
defense of any such claim or litigation, shall consent to entry of any judgment
or order, interim or otherwise, or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party,
or that the Indemnified Party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not assume
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand and shall be entitled
to settle or agree to pay in full such claim or demand. In any event, the
Indemnifying Party and the Indemnified Party shall cooperate in the defense of
any claim or litigation subject to this Article 11 and the records of each shall
be available to the other with respect to such defense.
(c) TAX TREATMENT OF PAYMENT. Unless otherwise required by law,
Seller and Buyer agree to treat any payment made under this Agreement
(including, without limitation, Sections 2.2 and Article 11) as an adjustment to
the Purchase Price.
ARTICLE 12.
TERMINATION OF AGREEMENT
Section 12.1 TERMINATION BY BUYER. Buyer, by notice in the manner
hereinafter on or before the Closing Date, may terminate this Agreement in the
event of a material breach by Seller or Seller Parent in the observance or in
the due and timely performance of any of the covenants, agreements or conditions
contained herein on their part to be performed, and such breach shall not have
been cured, after written notice thereof, on or before the Closing Date.
Section 12.2 TERMINATION BY SELLER. Seller may, by notice in the manner
hereinafter provided on or before the Closing Date, terminate this Agreement the
event of a material breach
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by Buyer or Buyer Parent in the observance or in the due and timely performance
of any of the covenants, agreements or conditions contained herein on its part
to be performed, and such breach shall not have been cured, after written notice
thereof, on or before the Closing Date.
Section 12.3 TERMINATION DATE. This Agreement may be terminated by either
Seller or Buyer by written notice to the other party if the transactions
contemplated hereby shall not have been consummated pursuant hereto by 5:00 p.m.
(MST) on April 30, 2001 (other than as a result of a breach of this Agreement by
the party giving such notice or by its Affiliates), unless such date shall be
extended by the mutual written consent of Seller and Buyer.
Section 12.4 EFFECT OF TERMINATION. Termination of this Agreement pursuant
to this Article 12 shall not in any way terminate, limit or restrict the rights
and remedies of any party hereto against any other party which has breached this
Agreement prior to the termination hereof.
ARTICLE 13.
NONDISCLOSURE: NONSOLICITATION
Section 13.1 NONDISCLOSURE BY SELLER AND SELLER PARENT. Seller and Seller
Parent recognize and acknowledge that they had in the past, currently have, and
in the future may possibly have, access to certain confidential information of
Buyer, such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of Buyer and its
businesses. Seller and Seller Parent each agree that they will not, except as
may be required by law or valid legal process, disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except to authorized representatives of Buyer,
unless such information becomes known to the public generally through no fault
of Seller or Seller Parent. In the event of a breach or threatened breach by
Seller or Seller Parent of the provisions of this Section, Buyer shall be
entitled to an injunction restraining such party from disclosing, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting Buyer from pursuing any other available remedy for such breach or
threatened breach, including, without limitation. the recovery of damages. The
provisions of this Section shall apply at all times prior to the Closing Date
and for a period of three years following the first to occur of (i the Closing
Date and (ii) termination of this Agreement without a Closing having occurred.
Section 13.2 NONDISCLOSURE BY BUYER AND BUYER PARENT. Buyer and Buyer
Parent recognize and acknowledge that they have in the past, currently have, and
prior to the Closing Date, will have access to certain confidential information
of Seller and Seller Parent, such as lists of customers, operational policies,
and pricing and cost policies that are valuable, special and unique assets of
Seller. Buyer and Buyer Parent agree that they will not, except as may be
required by law or valid legal process, disclose such confidential information
to any person, firm, corporation, association, or other entity for any purpose
or reason whatsoever, prior to the Closing Date except to authorized
representatives of Seller, unless such information becomes known to the public
generally through no fault of Buyer. In the event of a breach or threatened
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CONFIDENTIAL SYRACUSE, NY
breach by Buyer or Buyer Parent of the provisions of this Section, Seller shall
be entitled to an injunction restraining such party from disclosing, in whole or
in part, such confidential information. Nothing contained herein shall be
construed as prohibiting Seller from pursuing any other available remedy for
such breach or threatened breach, including, without limitation, the recovery of
damages. The provisions of this Section shall apply at all times prior to the
Closing Date and for a period of three years following the first to occur of (i)
the Closing Date and (ii) termination of this Agreement without a Closing having
occurred.
Section 13.3 NON-SOLICITATION BY SELLER. Seller and Seller Parent agree
that for a period of three years following the Closing Date, they will not, and
will cause their Affiliates (as defined in Section 5.15(b)) not to, solicit or
accept business from any existing customer accounts of the Business; PROVIDED
that Seller and Seller Parent shall be permitted to service any national account
within such markets if pursuant to the terms of the relevant national account
agreement Seller and Seller Parent are unable to subcontract the services to
Buyer.
Section 13.4 CONFIDENTIAL INFORMATION. Neither Seller Parent nor Seller
(nor any of their subsidiaries or affiliated entities) shall at any time
subsequent to the Closing, except as explicitly requested by Buyer, use for any
purpose, disclose to any person, or keep or make copies of any records and files
containing, any confidential information relating exclusively to the Business,
the Assets, or the liabilities assumed by Buyer hereunder, all such `information
being deemed to be transferred to Buyer hereunder. For purposes hereof,
"confidential information" shall mean information relating exclusively to the
Business, the Assets, or the liabilities assumed by Buyer hereunder, including,
without limitation, all customer and vendor lists and related information, all
information concerning the Business' processes, products, costs, prices, sales,
marketing and distribution methods, properties and assets, liabilities,
finances, employees, all privileged communications and work product, and any
other information not previously disclosed to the public directly by Seller
Parent or Seller. The foregoing provisions shall not apply to any information
which is or relates to an Excluded Asset or which is or relates to the
liabilities retained by Seller hereunder. If at any time after the Closing,
Seller Parent or Seller should discover that they are in possession of any
records and files containing the confidential information of Buyer, then the
party making such discovery shall immediately turn such records and files over
to Buyer, which shall upon request make available to the surrendering party any
information contained therein which is not confidential information. Seller
Parent and Seller severally agree that they will not assert a waiver of loss of
confidential or privileged status of the information based upon such possession
or discovery.
Section 13.5 EQUITABLE RELIEF FOR VIOLATIONS. The parties expressly
covenant and agree that if any of them violates, or overtly threatens to
violate, the covenants set forth in this Article 13 (the "Restrictive
Covenants"), the non-violating party shall be entitled to an accounting and
repayment of all profits, compensation, commissions. remuneration, or benefits
which the violating party. directly or indirectly, realized and/or may realize
as the result of, arising out of, or in connection with any such violation or
threatened violation. The parties acknowledge further that an irreparable injury
may result to the non-violating party and its business in the event of a breach
by the violating party of the Restrictive Covenants. The parties also
acknowledge and agree that the damages or injuries which a non-violating party
sustains as a result of a breach by a violating party of the Restrictive
Covenants are difficult to ascertain and
31
CONFIDENTIAL SYRACUSE, NY
money damages alone may not be an adequate remedy to a non-violating party. The
parties therefore expressly agree that if a controversy arises concerning the
rights or obligations of a party under the Restrictive Covenants, such rights or
obligations shall be enforceable by an arbitral decree of specific performance
and a non-violating party shall also be entitled to any injunctive relief from
the arbitral tribunal pursuant to Section 14.12 necessary to prevent or restrain
any violation of the Restrictive Covenants. Such relief however, shall be
cumulative and non-exclusive and shall be in addition to any other remedy to
which the parties may be entitled.
ARTICLE 14.
GENERAL
Section 14.1 ASSIGNMENT: BINDING EFFECT: AMENDMENT. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of law)
without the prior consent of the others; PROVIDED that Buyer may assign this
Agreement to any affiliate of Buyer (but shall remain responsible for its
obligations hereunder) and the Seller and Seller Parent may assign this
Agreement and their rights hereunder to Bank of America, N.A., as U.S.
Collateral Agent (in such capacity, the "U.S. Collateral Agent") pursuant to the
Restated U.S. Security Agreement dated as of November 26, 1999 among CERI, L.P.,
various other subsidiaries of Seller Parent and the U.S. Collateral Agent." This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, and the successors and permitted assigns of Buyer, Buyer Parent, Seller
and Seller Parent. This Agreement, upon execution and delivery, constitutes a
valid and binding agreement of the parties hereto enforceable in accordance with
its terms, subject to the Enforceability Qualifications and may be modified or
amended only by a written instrument executed by all parties hereto.
Section 14.2 ENTIRE AGREEMENT. This Agreement, and the Related Agreements,
together with the exhibits, schedules and annexes hereto and thereto. are the
final, complete and exclusive statement and expression of the agreement among
the parties hereto with relation to the subject matter of this Agreement and the
Related Agreements. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
Section 14.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts. each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
Section 14.4 NO BROKERS. Seller and Seller Parent represent and warrant to
Buyer and Buyer Parent and Buyer and Buyer Parent represent and warrant to
Seller and Seller Parent that the warranting party has had no dealings with any
broker or agent so as to entitle such broker or agent to a commission or fee in
connection with the within transaction. If for any reason a commission or fee
shall become due, the party dealing with such agent or broker shall pay such
commission or fee and agrees to indemnify and save harmless each of the other
parties from all claims for such commission or fee and from all attorneys' fees,
litigation costs and other expenses relating to such claim.
32
CONFIDENTIAL SYRACUSE, NY
Section 14.5 EXPENSES OF TRANSACTION. Except as otherwise provided in this
Agreement or the other Related Agreements, whether or not the transactions
herein contemplated shall be consummated: (a) Buyer will pay the fees, expenses
and disbursements of Buyer and Buyer Parent and their agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments hereto and all other costs and expenses incurred in
the performance and Compliance with all conditions to be performed by Buyer and
Buyer Parent under this Agreement and (b) Seller will pay the fees, expenses and
disbursements of Seller and Seller Parent and their respective agents,
representatives, accountants and counsel incurred in connection with the subject
matter of this Agreement and any amendments hereto and all other costs and
expenses incurred in the performance and compliance with all conditions to be
performed by Seller Parent and Seller under this Agreement. Seller Parent and
Seller represent and warrant to Buyer and Buyer Parent and Buyer and Buyer
Parent represent and warrant to Seller and Seller Parent that each has] relied
on their own advisors for all legal, accounting, tax or other advice whatsoever
with respect to this Agreement and the transactions contemplated hereby. Nothing
in this Section 14.5 shall limit the rights of a non-breaching party to recover
damages, including fees and expenses if so awarded, in connection with any claim
against a party in breach hereunder.
Section 14.6 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, by overnight courier
or by delivering the same in person to such party.
(a) If to Seller, addressed to it at:
CAPITAL ENVIRONMENTAL RESOURCE (U.S.) INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: President
with a copy to:
CAPITAL ENVIRONMENTAL RESOURCE (U.S.) INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: General Counsel
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇, LLP
▇▇▇ ▇ & ▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
(b) If to Buyer, addressed to it at:
33
CONFIDENTIAL SYRACUSE, NY
WASTE MANAGEMENT OF NEW YORK, LLC
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: V.P. Business Development
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
ten business days after the deposit in the U.S. mail of a writing addressed as
above and sent first class mail, certified, return receipt requested, or when
actually received, if earlier. Any party may change the address for notice by
notifying the other parties of such change in accordance with this Section.
Section 14.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
Section 14.8 NO WAIVER. No delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of or in any similar breach or default occurring
later, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach of default occurring before or after that waiver.
Section 14.9 CAPTIONS. The headings of this Agreement are inserted for
convenience only shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
Section 14.10 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
Section 14.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation
CONFIDENTIAL SYRACUSE, NY
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local or foreign statute shall be deemed to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" means including, without limitation.
All references herein to Articles. Sections, Exhibits, Annexes and Schedules
shall be deemed references to Articles and Sections of and Exhibits, Annexes and
Schedules to, this Agreement unless the context shall otherwise require.
Section 14.12 ARBITRATION. Other than pursuant to Section 2.3 or 2.4 or for
a breach of Article 13, any dispute, controversy or claim arising out of or
related to this Agreement, or any transactions contemplated herein, that cannot
be amicably resolved between Buyer and Seller, including, without limitation,
whether such controversy or claim is subject to arbitration, shall be finally
resolved by binding arbitration held in Buffalo, New York, in accordance with
the domestic arbitration rules of the American Arbitration Association, except
that each party shall have the right to conduct discovery in any manner and to
the extent authorized by the Federal Rules of Civil Procedure as interpreted by
the federal courts and except as may otherwise be modified by this Section or by
mutual agreement of the parties. Arbitration proceedings shall be conducted by a
panel of three persons selected as follows: the party initiating arbitration
shall select one arbitrator and the other party shall select a second
arbitrator. The two arbitrators so selected shall select a third arbitrator as
soon as possible. Each party shall provide prompt written notice of the
arbitrator selected by it in accordance with the terms of this Agreement. No
arbitrator shall have or previously have had any significant relationship with
any of the parties. Notwithstanding Section 14.7 herein, the arbitration and
this clause shall be governed by Title 9 (Arbitration) of the United States
Code. The parties will, upon the request of any party, support the consolidation
of all existing disputes under the Related Agreements in a single action to be
adjudicated by a single arbitration panel in accordance with this Section.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above-written.
BUYER:
WASTE MANAGEMENT OF NEW YORK, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
CONFIDENTIAL SYRACUSE, NY
Its: Vice President
------------------------------------
SELLER:
CAPITAL ENVIRONMENTAL RESOURCE (U.S.) INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Its: Secretary
------------------------------------
SELLER PARENT:
WASTE MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Its: Vice President
------------------------------------
BUYER PARENT:
CAPITAL ENVIRONMENTAL RESOURCE INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Its: Secretary
------------------------------------
CONFIDENTIAL SYRACUSE, NY
LIST OF SCHEDULES
Annex I -- Related Agreements
Schedule A -- Land
Schedule 1.1(b) -- Permits
Schedule 1.1(c) -- Equipment
Schedule 1.1(d) -- Rolling Stock
Schedule 1.1(h) -- Customer Contracts and Related
Approvals
Schedule 1.1(i) -- Business Names
Schedule 1.1(q) -- Covenants
Schedule 1.2 -- Excluded Assets
Schedule 1.3 -- Material Contracts
Schedule 1.4 -- Advance Billings
Schedule 1.5 -- Allocation of Purchase Price
Schedule 2.2 -- Excluded Revenue
Schedule 4.3 -- Transition Employees
Schedule 5.1 -- Certificate of Incorporation and
Bylaws
Schedule 5.3 -- Rights
Schedule 5.4(c) -- Leased Assets
Schedule 5.5(b) -- Real Property Disclosure
Schedule 5.6 -- Contracts
Schedule 5.7 -- Employees; Exceptions to "at
will" Employment
Schedule 5.8(a) -- Compliance with Law
CONFIDENTIAL SYRACUSE, NY
Schedule 5.8(b) -- Conflicts; Consents
Schedule 5.9 -- Taxes
Schedule 5.10 -- Litigation
Schedule 5.11 -- Conduct of Business
Schedule 5.12(a) -- Hazardous Materials
Schedule 5.12(b) -- List of Disposal Sites
Schedule 5.15 -- Affiliate Relationships
Schedule 5.16 -- Performance Bonds; Letters of
Credit
Schedule 5.17 -- Employment and Labor Matters
Schedule 6.3 -- Buyer's Certificate of
Incorporation