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EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
Dated as of February 4, 1998, by and among
Waste Connections, Inc.
Madera Disposal Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, as trustee of the ▇▇▇▇▇▇▇▇ Family Trust B
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 4, 1998, is entered into
by and among Waste Connections, Inc., a Delaware corporation ("WCI"), Madera
Disposal Systems, Inc., a California corporation (the "Corporation"), ▇▇▇▇
▇▇▇▇▇▇▇▇, as trustee of the ▇▇▇▇▇▇▇▇ Family Trust B, (the "▇▇▇▇▇▇▇▇ Trust"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Dupreau"), ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇▇" and, collectively with the ▇▇▇▇▇▇▇▇ Trust, Dupreau and ▇▇▇▇, the
"Shareholders"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇").
WHEREAS, the Corporation is engaged in the collection and transport of
solid waste in the City of Chowchilla and in the unincorporated areas of Madera
County, California, the operation of two transfer stations and a recycling
facility for the County of Madera, operating the Fairmead Landfill pursuant to
an operating agreement with the County of Madera, and other related activities;
WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of the Corporation in the amount set forth on Schedule 3.2 hereto (the
"Corporation's Stock") in the amount set forth on Schedule 3.2;
WHEREAS, WCI wishes to acquire from the Shareholders all of the issued
and outstanding capital stock of the Corporation;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK
1.1 SHARES TO BE PURCHASED. At the Closing (as hereinafter defined),
the Shareholders shall sell and deliver to WCI all of the issued and outstanding
Corporation's Stock, being the number of shares of the Corporation set forth on
Schedule 3.2. At the Closing, WCI shall purchase the Corporation's Stock and in
exchange therefor shall deliver to the Shareholders at the Closing or thereafter
as provided by this Agreement the purchase price described in Section 1.2, plus
any and all additions to the Purchase Price payable pursuant to Section 1.4 (the
"Purchase Price").
1.2 PURCHASE PRICE. The Purchase Price shall be payable as follows:
(a) eight million one hundred eighty five thousand dollars
($8,185,000), (i) minus the Closing Date Debt (as defined in Section
3.22(a)), and (ii) plus or minus, as the case may be, the amount by
which the Closing Date Current Assets (as defined in
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Section 3.22(b)) are greater or less than the Closing Date Current
Liabilities (as defined in Section 3.22(b)) shall be paid to the
Shareholders at Closing in cash by wire transfer or check payable in
clearinghouse funds. The adjustment to the Purchase Price based on the
Closing Date Debt, the Closing Date Current Assets and the Closing Date
Current Liabilities shall be based on estimates of such amounts provided
at the Closing. Within 120 days after the Closing, WCI and the
Shareholders' Representative (as hereinafter defined) shall determine
the actual Closing Date Debt, Closing Date Current Assets and Closing
Date Current Liabilities. If the difference between the actual amounts
of such items and the estimated amounts provided at the Closing Date
results in an increase in the amount that should have been paid at the
Closing over the amount that was so paid, WCI shall promptly pay such
amount to the Shareholders in the same proportion as cash was paid to
them at the Closing; if the result is a decrease in the amount that
should have been paid at the Closing below the amount that was so paid,
the Shareholders shall promptly pay such amount to WCI in the same
proportion as they received cash at the Closing. Of the cash portion of
the Purchase Price paid at the Closing, five million five hundred
forty-five thousand dollars ($5,545,000) shall be paid to the ▇▇▇▇▇▇▇▇
Trust and the balance shall be paid to Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ as
provided in Schedule 3.2.
(b) At the Closing, WCI shall deliver to Dupreau, ▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ 1,000,000 shares (the "Shares") of its Common Stock, $0.01
par value (the "WCI Stock") as follows: Dupreau-333,333 shares;
▇▇▇▇-333,334 shares; and ▇▇▇▇▇▇▇▇▇▇- 333,333 shares.
(c) At the Closing, WCI shall deliver to Dupreau, ▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ warrants (the "Warrants") to purchase an aggregate of 200,000
shares of WCI Stock, substantially in the form of Exhibit 1.2(c), with
an exercise price of four dollars ($4.00) per share of WCI Stock as
follows: Dupreau-Warrants for 66,667 shares; ▇▇▇▇-Warrants for 66,666
shares; and ▇▇▇▇▇▇▇▇▇▇-Warrants for 66,667 shares.
The Shareholders acknowledge that the allocation of the Purchase Price
among the Shareholders has been agreed to by the Shareholders among themselves
as provided in Schedule 3.2. Such allocation provides that certain of the
Shareholders will receive more cash and fewer Shares and Warrants, and
conversely that certain of the Shareholders will receive more Shares and
Warrants and less cash, than would be the case if the cash, Shares and Warrants
were allocated in proportion to their ownership of the Corporation's Stock.
1.3 ADDITIONAL CONTINGENT PURCHASE PRICE. The Purchase Price may be
increased by the additional contingent payments described in this Section.
(a) If, prior to the third anniversary of the date of this
Agreement (the "Signing Date"), the Corporation enters into an exclusive
franchise agreement to provide residential refuse collection services to
the City of Madera for a minimum term of at least five years on terms
satisfactory to WCI, WCI shall pay to the Procuring Shareholders (as
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defined below) as additional contingent Purchase Price cash in the
amount of six hundred thousand dollars ($600,000), which amount shall be
paid on the Closing Date if such franchise agreement is entered into on
or prior to the Closing Date or thirty (30) days after the date such
franchise agreement is entered into if it is entered into after the
Closing Date.
(b) If, prior to the third anniversary of the Signing Date, the
Corporation enters into exclusive franchise agreements on terms
satisfactory to WCI with any of the municipalities of Los Banos, Kerman
or Dos Palos, or any other municipality in Madera, Kings, Merced and
Fresno Counties not otherwise provided for in this Agreement, WCI shall
pay to the Procuring Shareholders as additional contingent Purchase
Price a cash amount equal to ten percent (10%) of the projected gross
revenue (after deduction of any franchise fee) expected to be received
by the Corporation pursuant to such exclusive franchise agreement during
the first year of its term, which amount shall be paid on the Closing
Date if such franchise agreement is entered into on or prior to the
Closing Date or thirty (30) days after the date such franchise agreement
is entered into if it is entered into after the Closing Date.
(c) If, prior to the third anniversary of the Signing Date, the
Corporation enters into an extension, on terms at least as favorable to
the Corporation as the franchise agreement in effect on the Signing
Date, of its existing exclusive franchise agreement with the County of
Madera for at least seven (7) years from the present termination date of
such agreement or an extension, on terms at least as favorable to the
Corporation as the franchise agreement in effect on the Signing Date, of
its existing exclusive franchise agreement with the City of Chowchilla
for at least five (5) years from the present termination date of such
agreement, then, in each such case, WCI shall pay the Procuring
Shareholders as additional contingent Purchase Price a cash amount equal
to five percent (5%) of the projected gross revenue (after deduction of
any franchise fee) expected to be received by the Corporation pursuant
to such exclusive franchise agreement during the first year of such
extension, which amount shall be paid on the Closing Date if such
extension is entered into on or prior to the Closing Date or thirty (30)
days after the date such extension is entered into if it is entered into
after the Closing Date.
(d) If, prior to the third anniversary of the Signing Date, any
of the Shareholders provides substantial assistance to WCI or any of its
subsidiaries in acquiring directly or indirectly (through asset
purchase, stock purchase, merger or otherwise) the waste collection
operations of any other company providing such services within a
seventy-five (75) mile radius of Madera, California, including without
limitation the waste collection operations of Turlock Scavenger and
EMADCO, WCI shall pay the Procuring Shareholders as additional
contingent Purchase Price a cash amount equal to three percent (3%) of
the projected gross revenue (after deduction of any franchise fee) with
respect to such operations during the first year after they are acquired
by WCI, which amount shall be paid on the Closing Date if such
acquisition is consummated on or
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prior to the Closing Date or thirty (30) days after the date any such
acquisition is consummated if consummated after the Closing Date. WCI
shall have sole discretion in determining whether and on what terms it
will consummate any such acquisition, and WCI shall not be liable to any
of the Procuring Shareholders for any decision not to pursue any such
acquisition or its failure to consummate any such acquisition, without
regard to the reason therefor.
(e) If on March 1, 1999, the Corporation's franchise agreement
with the County of Madera (or any extension described in Section 1.3(c))
remains in effect and the County of Madera has not threatened to
terminate or revoke such franchise agreement, the Corporation shall pay
to Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, in equal shares, as additional
contingent Purchase Price cash in the amount of two million eight
hundred thousand dollars ($2,800,000), and upon receipt of such payment
Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ shall return their shares of WCI Stock and
Warrants to WCI for cancellation. WCI's obligations under this Section
1.3(e) shall terminate and be of no further force or effect on the
closing date of a public offering of WCI common stock with an aggregate
net proceeds to WCI of at least five million dollars ($5,000,000). So
long as WCI's obligations under this Section 1.3(e) remain in effect,
Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ shall not dispose of any of their WCI Stock
or Warrants. Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ may elect, by written notice
to WCI, to forego such payment of additional contingent Purchase Price,
in which event they may retain their WCI Stock and Warrants.
(f) For purposes of this Section 1.3, a Shareholder shall be
deemed a "Procuring Shareholder" if such Shareholder is an employee of,
or consultant to, the Corporation or WCI at the time the event in
question occurs.
(g) Subject to satisfaction of Federal and State Securities laws
and execution by the Procuring Shareholders of such agreements
containing such representations as counsel for WCI shall advise is
reasonably necessary to satisfy such laws, the Procuring Shareholders
may elect to take all or any portion of the additional contingent
payments in shares of WCI Stock in lieu of receiving a cash payment. Any
Procuring Shareholder electing to receive shares of WCI Stock shall
advise WCI at least ten (10) days prior to the date any such payment is
due pursuant to this Section of such Procuring Shareholder's intention
to receive some or all of the additional continent payments in shares of
WCI Stock and of the amount of such payments with respect to which such
election is made. Subject to satisfaction of State and Federal
Securities laws as aforesaid, WCI shall issue to such Procuring
Shareholders on the date payment of such additional contingent payments
are due shares of WCI Stock in a number determined by dividing the
amount of the additional contingent payment elected to be received in
shares of WCI Stock by the Fair Market Value of a share of WCI Stock. If
such stock is to be delivered prior to the time that a public market for
the WCI Stock exists, the Fair Market Value of WCI Stock shall be
determined by the Board of Directors of WCI in good faith. If such stock
is to be delivered at a time when a public market for WCI Stock exists,
Fair Market Value shall
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mean the average of the closing price of the WCI Stock as quoted on the
NASDAQ Stock Market or the principal exchange on which the WCI Stock is
listed if such stock is listed on an exchange for the ten successive
trading days for which a closing price is quoted ending on the third
trading day prior to the date on which such additional contingent
payment is due. The Fair Market Value and the number of shares of WCI
Stock to be delivered pursuant to this Section shall be appropriately
adjusted in the event of any change in the WCI Stock between the first
day for which a closing price is quoted in determining the Fair Market
Value and such date, including without limitation any stock dividend,
stock split, reverse stock split, recapitalization, reorganization,
merger or consolidation. WCI shall not be obligated to issue any
fractional shares of WCI Stock, but shall instead pay the Shareholder
entitled thereto cash in lieu of any fractional share equal to the Fair
Market Value multiplied by the fraction of a share of WCI Stock that
would otherwise be issued.
1.4 EXCLUDED ASSETS. The Assets of the Corporation listed on Schedule
1.4 (the "Excluded Assets") shall be distributed to the Shareholders prior to
the Closing, and WCI shall acquire no interest in or claim to any of the
Excluded Assets.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "Closing") shall take place on such
date (the "Closing Date") after the consents required by Section 6.7 have been
obtained (or WCI has waived the requirement that one or more such consents be
obtained) as WCI and the Shareholders' Representative shall agree. The Closing
shall take place at the Law Offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At the Closing,
WCI, the Corporation and the Shareholders shall deliver to each other the
documents, instruments and other items described in Section 8 of this Agreement.
The Closing Date shall occur no earlier than February 5, 1998, but shall be
deemed effective as of February 1, 1998, for financial reporting purposes.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION,
THE SHAREHOLDERS AND ▇▇▇▇
The Corporation, the Shareholders and ▇▇▇▇, jointly and severally, (i)
represent and warrant that each of the following representations and warranties
is true as of the Signing Date and will be true as of the Closing Date, and (ii)
agree that such representations and warranties shall survive the Closing.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is duly
organized, validly existing and in good standing under the laws of the State of
California. The Corporation has full corporate power and authority to own and
lease its properties and to carry on its business
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as now conducted. The Corporation is not required to be qualified or licensed to
conduct business as a foreign corporation in any other jurisdiction.
3.2 CAPITALIZATION. Schedule 3.2 sets forth, as of the Signing Date,
the authorized and outstanding capital of the Corporation, the name, addresses
and social security numbers or taxpayer identification numbers of the record and
beneficial owners thereof, the number of shares so owned, and the allocation of
the cash, Shares and Warrants among the Shareholders as agreed to among
themselves. On the Closing Date, all of the issued and outstanding shares of the
capital stock of the Corporation shall be owned of record and beneficially by
the Shareholders as set forth in Schedule 3.2 and shall be free and clear of all
liens, security interests, encumbrances and claims of every kind except as set
forth in Schedule 3.2. Each share of the capital stock of the Corporation is and
on the Closing Date will be duly and validly authorized and issued, fully paid
and nonassessable, and was not issued in violation of any preemptive rights of
any past or present shareholder of the Corporation. No option, warrant, call,
conversion right or commitment of any kind (including any of the foregoing
created in connection with any indebtedness of the Corporation) exists which
obligates the Corporation to issue any of its authorized but unissued capital
stock or other equity interest, which obligates the Shareholders to transfer any
Corporation's Stock to any person.
3.3 ALL STOCK BEING ACQUIRED. The Corporation's Stock being acquired
by WCI hereunder constitutes all of the outstanding capital stock of the
Corporation.
3.4 AUTHORITY FOR AGREEMENT. The Corporation, each of the
Shareholders and ▇▇▇▇ has full right, power and authority to enter into this
Agreement and to perform its, his or her obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Corporation. This Agreement has been duly and validly executed and delivered by
the Corporation, each of the Shareholders and ▇▇▇▇ and, subject to the due
authorization, execution and delivery by WCI, constitutes the legal, valid and
binding obligation of the Corporation, each of the Shareholders and ▇▇▇▇
enforceable against each of them in accordance with its terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5, the
execution and delivery by the Corporation and the Shareholders of this
Agreement, and the consummation by the Shareholders of the transactions
contemplated hereby, will not:
(a) result in the breach of any of the terms or conditions of,
or constitute a default under, or allow for the acceleration or
termination of, or in any manner release any party from any obligation
under, any mortgage, lease, note, bond, indenture, or material contract,
agreement, license or other instrument or obligation of any kind or
nature to which the Corporation or any of the Shareholders is a party,
or by which the Corporation, or any of its assets, is or may be bound or
affected; or
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(b) violate any law or any order, writ, injunction or decree of
any court, administrative agency or governmental authority, or require
the approval, consent or permission of any governmental or regulatory
authority; or
(c) violate the Articles of Incorporation or Bylaws of the
Corporation.
3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Signing Date any and
all subsidiaries of the Corporation and any securities of any other corporation
or any securities or other interest in any other business entity owned by the
Corporation or any of its subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporation has delivered to WCI, as
Schedule 3.7, copies of financial statements ("Financial Statements") for the
fiscal years ended December 31, 1995 and 1996, audited by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CPA,
and unaudited interim financial statements for the Corporation for the period
ended September 30, 1997 (the "Balance Sheet Date"), which interim financial
statements were not compiled, reviewed or audited by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CPA. The
Financial Statements are true and correct and fairly present (i) the financial
position of the Corporation as of the respective dates of the balance sheets
included in said statements, and (ii) the results of operations for the
respective periods indicated. The Financial Statements have been prepared in
accordance with generally accepted accounting principles, applied consistently
with prior periods. Except to the extent reflected or reserved against in the
Corporation's balance sheet as of the Balance Sheet Date, or as disclosed on
Schedule 3.7 or Schedule 3.8, the Corporation did not have as of the Balance
Sheet Date, nor will it have as of the Closing Date, any liabilities of any
nature, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due except, with respect to the
period from the Signing Date through the Closing Date, as permitted by Section
5.2(d).
3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of the Corporation required
to be described below in the format set forth below.
(a) Part I of Schedule 3.8 list, as of the Signing Date, other
than with respect to trade payables and as of the end of the month prior
to the Signing Date with respect to trade payables, all indebtedness for
money borrowed and all other fixed and uncontested liabilities of any
kind, character and description, whether reflected or not reflected on
the Financial Statements and whether accrued or absolute, and states as
to each such liability the amount of such liability and to whom payable.
From the date as of which information is provided with respect to trade
payables, trade payables have been incurred only in the ordinary course
of business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the Signing Date, all
claims, suits and
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proceedings which are pending against the Corporation and, to the
knowledge of the Corporation and the Shareholders, all contingent
liabilities and all claims, suits and proceedings threatened or
anticipated against the Corporation. For each such liability, the
following is provided in Part II of Schedule 3.8:
(i) a summary description of such liability together
with copies of all material documents, reports and other records
relating thereto;
(ii) all amounts claimed or relief sought with respect
to such liability and the identity of the claimant; and
(iii) without limitation of the foregoing, (A) the name
of each court, agency, bureau, board or body before which any
such claim, suit or proceeding is pending, including, without
limitation, those arising under Environmental Laws (as defined
in Section 3.24), those relating to personal injury or property
damage (including all workers' compensation and occupational
disease and injury claims, suits and proceedings) and those
citations arising under the Federal Occupational Safety and
Health Act or any comparable state law, (B) the date such claim,
suit or proceeding was instituted, (C) the parties to such
claim, suit or proceeding, (D) a description of the factual
basis alleged to underlie such claim, suit or proceeding,
including the date or dates of all material occurrences, (E) the
amount claimed and other relief sought, and (F) all material
pleadings, briefs and other documents relating thereto to the
extent the same are in the possession or under the control of
the Corporation or the Shareholders.
(c) Part III of Schedule 3.8 list, as of the Signing Date and to
the extent not otherwise included in Part I of Schedule 3.8, all liens,
claims and encumbrances secured by or otherwise affecting any asset of
the Corporation (including any Corporate Property, as hereafter
defined), including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature of
the obligation secured, and the party holding such lien, claim or
encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the Signing Date and to
the extent not otherwise included in Part I or Part III of Schedule 3.8,
all real and material personal property leasehold interests or to which
the Corporation is a party as lessor or lessee or, to the knowledge of
the Corporation or the Shareholders, affecting or relating to any
Corporate Property, including a description of the nature and principal
terms of such leasehold interest and the identity of the other party
thereto.
Except as described on the applicable part of Schedule 3.8,
neither the Corporation nor any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or with respect to
any of the liabilities or obligations listed on Schedule 3.8 except, in the case
of liabilities and obligations listed on Parts I, III and IV of Schedule 3.8,
periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities.
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3.9 CONDUCT OF BUSINESS. Except as set forth on Schedule 3.21, since the
Balance Sheet Date:
(a) The business of the Corporation has been conducted only in
the ordinary course; and
(b) There has been no change in the condition (financial or
otherwise) of the assets, liabilities or operations of the Corporation
other than changes in the ordinary course of business, none of which
either singly or in the aggregate has been materially adverse.
3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and includes
copies, of all material permits, licenses, franchises, and service
agreements pursuant to which the Corporation is authorized to collect
and haul industrial, commercial and residential solid waste (the
"Collection Franchises"), and of all other material permits, licenses,
titles (including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents
constituting a material authorization or entitlement or otherwise
material to the operation of the business of the Corporation
(collectively the "Governmental Permits") owned by, issued to, held by
or otherwise benefiting the Corporation or the Shareholders as of the
Signing Date. The status of the Governmental Permits related to the
disposal areas owned or used by the Corporation, including, without
limitation, any conditions thereto and, if applicable, the expiration
dates thereof, are also described in Schedule 3.10(a). Schedule 3.10(a)
also sets forth the name of any third party from whom the Shareholders,
the Corporation or WCI must obtain consent (the "Required Governmental
Consents") in order to effect a direct or indirect transfer of the
Collection Franchises or other Governmental Permits required as a result
of the consummation of the transactions contemplated by this Agreement.
Except as set forth on Schedule 3.10(a), all of the Collection
Franchises and other Governmental Permits enumerated and listed on
Schedule 3.10(a) are adequate for the operation of the business of the
Corporation and of each Corporate Property as presently operated and are
valid and in full force and effect. All of said Collection Franchises
and other Governmental Permits and agreements have been duly obtained
and are in full force and effect, and there are no proceedings pending
or, to the knowledge of the Corporation or the Shareholders, threatened
which may result in the revocation, cancellation, suspension or adverse
modification of any of the same. Neither the Corporation nor any of the
Shareholders has any knowledge of any reason why all such Governmental
Permits and agreements will not remain in effect after consummation of
the transactions contemplated hereby.
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(b) Schedule 3.10(b) includes: (i) all records, notifications,
reports, permit and license applications, engineering and geologic
studies, and environmental impact reports, tests or assessments
(collectively, "Records, Notifications and Reports") that (A) are
material to the operation of the business of the Corporation, or (B)
relate to the discharge or release of materials into the environment
and/or the handling or transportation of waste materials or hazardous or
toxic substances or otherwise relate to the protection of the public
health or the environment, or (C) were filed with or submitted to
appropriate governmental agencies during the past 24 months by the
Corporation or any of the Shareholders or their agents, and (ii) all
material notifications from such governmental agencies to the
Corporation, the Shareholders or their agents in response to or relating
to any of such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists, as of the Signing Date, each
facility owned, leased, operated or otherwise used by the Corporation,
the ownership, lease, operation or use of which is being transferred to,
assumed by or otherwise acquired directly or indirectly by WCI pursuant
to this Agreement (each, a "Facility" and collectively, the
"Facilities"). Except as otherwise disclosed on Schedule 3.10(c):
(i) Each Facility is fully licensed, permitted and
authorized to carry on its current business under all applicable
federal, state and local statutes, orders, approvals, zoning or
land use requirements, rules and regulations and no Facility is a
non-conforming use or otherwise subject to any restrictions
regarding reconstruction.
(ii) All activities and operations at each Facility are
being and have been conducted in compliance in all material
respects with the requirements, criteria, standards and
conditions set forth in all applicable federal, state and local
statutes, orders, approvals, permits, zoning or land use
requirements and restrictions, variances, licenses, rules and
regulations.
(iii) Each Facility is located on real property owned or
leased by a Corporation (each a "Facility Property") and each
Facility Property owned by the Corporation is legally described
on the surveys or site plans attached to Schedule 3.10(c) (the
"Facility Surveys/Site Plans"), each of which when delivered will
accurately depict the respective Facility Property.
(iv) There are no circumstances, conditions or reasons
which are likely to be the basis for revocation or suspension of
any Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility owned by a Corporation or
owned by any of the Shareholders or an Affiliate (as hereinafter
defined) of any of the Shareholders and leased to the
Corporation, and to the knowledge of the Corporation and the
Shareholders there are no circumstances, conditions or
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reasons which are likely to be the basis for revocation or
suspension of any site assessment, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as of the
Signing Date of the accounts and notes receivable of the Corporation from and
advances to employees, former employees, officers, directors, the Shareholders
and Affiliates of the foregoing. For purposes of this Agreement, the term
"Affiliate" means, with respect to any person, any person that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with such person, and in the case of a Corporation
includes directors and officers, in the case of individuals includes the
individual's spouse, father, mother, grandfather, grandmother, brothers,
sisters, children and grandchildren and in the case of a trust includes the
grantors, trustees and beneficiaries of the trust.
3.12 FIXED ASSETS AND REAL PROPERTY.
(a) Schedule 3.12(a) lists, as of the Signing Date,
substantially all the fixed assets (other than real estate) of each
Corporation, including, without limitation, identification of each
vehicle by description and serial number, identification of machinery,
equipment and general descriptions of parts, supplies and inventory.
Except as described on Schedule 3.12(a), all of the Corporation's
containers, vehicles, machinery and equipment necessary for the
operation of its business are in operable condition, and all of the
motor vehicles and other rolling stock of each Corporation are in
material compliance with all applicable laws, rules and regulations. All
leases of fixed assets are in full force and effect and binding upon the
parties thereto; neither the Corporation nor, to the knowledge of the
Corporation or the Shareholders, any other party to such leases is in
breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being
purchased by the Corporation as of the Signing Date (the "Corporate
Property"), including the legal description and address thereof, is
listed on Schedule 3.12(b) - Part I, and attached to said Schedule
3.12(b) - Part I are copies of all leases, deeds, outstanding mortgages,
other encumbrances and title insurance policies or lawyer's title
opinions relating to each Corporate Property, as well as a current
commitment for title insurance issued by a title insurance company
satisfactory to WCI with respect to each Corporate Property together
with copies of all of the title exceptions referred to in said
commitments. All leases listed on Schedule 3.12(b) - Part I are and
shall be in full force and effect and binding on the parties thereto.
Except as described on Schedule 3.12(b) - Part II, there are no material
physical or mechanical defects in or any Facility located on any
Corporate Property and each such Facility is in good condition and
repair.
(c) The Corporation has good, valid and marketable title to all
properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for
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the conduct of its business, free of any encumbrance or charge of any
kind except: (i) liens for current taxes not yet due; (ii) minor
imperfections of title and encumbrances, if any, that are not
substantial in amount, do not materially detract from the value of the
property subject thereto, do not materially impair the value of the
Corporation, and have arisen only in the ordinary course of business and
consistent with past practice; and (iii) the liens identified on Part
III of Schedule 3.8 (collectively, the "Permitted Liens"). Except as
described on Schedule 3.12(b) - Part I, there are and as of the Closing
Date will be no leases, occupancy agreements, options, rights of first
refusal or any other agreements or arrangements, either oral or written,
that create or confer in any person or entity the right to acquire,
occupy or possess, now or in the future, any Facility, any Corporate
Property, or any portion thereof, or create in or confer on any person
or entity any right, title or interest therein or in any portion
thereof.
3.13 ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on Schedule
3.13, since the Balance Sheet Date, the Corporation has not acquired or sold or
otherwise disposed of any properties or assets which, singly or in the
aggregate, have a value in excess of $10,000, or which are material to the
operation of the Corporation's business as presently conducted, without the
prior written consent of WCI.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Signing Date, and includes
copies of, all material contracts and agreements (other than leases
included with Schedule 3.12(b) and documents included with Schedule
3.12(b)) to which the Corporation is a party or by which it or any of
its property is bound (including, but not limited to, joint venture or
partnership agreements, contracts with any labor organizations,
promissory notes, loan agreements, bonds, mortgages, deeds of trust,
liens, pledges, conditional sales contracts or other security
agreements). Except as disclosed on Schedule 3.14(a), all such contracts
and agreements included in Schedule 3.14(a) are and on the Closing Date
shall be in full force and effect and binding upon the parties thereto.
Except as described or cross referenced on Schedule 3.14(a), neither the
Corporation nor, to the Corporation's or any of the Shareholders'
knowledge, any other parties to such contracts and agreements is in
breach thereof, and none of the parties has threatened to breach any of
the material provisions thereof or notified the Corporation or any of
the Shareholders of a default thereunder, or exercised any options
thereunder. None of such contracts, agreements and licenses requires
notice to, or consent or approval of, any third party to any of the
transactions contemplated hereby, except such consents and approvals as
are listed on Schedule 3.14(a).
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect the
Corporation or its business or any of the Corporate
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Properties, nor has the Corporation been notified that any such
judgment, order, writ, injunction or decree has been requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes copies,
as of the Signing Date, of all insurance policies in effect on the Signing Date
or, with respect to "occurrence" policies that were in effect, carried by the
Corporation in respect of the Corporate Properties or any other property used by
the Corporation specifying, for each policy, the name of the insurer, the type
of risks insured, the deductible and limits of coverage, and the annual premium
therefor. The Corporation currently carries insurance in the type and amount
ordinarily carried by owners or corporations in similar circumstances, in
respect to the Corporation' properties, assets and business. During the last
five years, there has been no lapse in any material insurance coverage of the
Corporation. For each insurer providing coverage for any of the contingent or
other liabilities listed on Schedule 3.8, except to the extent otherwise set
forth in Part II of Schedule 3.8, each such insurer, if required, has been
properly and timely notified of such liability, no reservation of rights letters
have been received by the Corporation and the insurer has assumed defense of
each suit or legal proceeding. All such proceedings are fully covered by
insurance, subject to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the Signing
Date, of all officers, directors and employees (by type or classification) of
the Corporation and their respective rates of compensation, including (i) the
portions thereof attributable to bonuses, (ii) any other salary, bonus, stock
option, equity participation, or other compensation arrangement made with or
promised to any of them, and (iii) copies of all employment agreements with
non-union officers, directors and employees. Schedule 3.16 shall also lists the
driver's license number for each driver of the Corporation's motor vehicles.
3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the Signing Date,
and includes complete copies, of all employee benefit plans and
agreements currently maintained or contributed to by the Corporation,
including employment agreements and any other agreements containing
"golden parachute" provisions, retirement plans, welfare benefit plans
and deferred compensation agreements, together with copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Signing Date. Except for the
employee benefit plans described on Schedule 3.17(a), the Corporation
has no other pension, profit sharing, deferred compensation, stock
option, employee stock purchase or other employee benefit plans or
arrangements with any party. Except as disclosed on Schedule 3.17(a),
all employee benefit plans listed on Schedule 3.17(a) are and shall be
fully funded and in substantial compliance with all applicable federal,
state and local statutes, ordinances and regulations. All such plans
that are intended to qualify under Section 401(a) of the Internal
Revenue Code have been determined by the Internal Revenue Service to be
so qualified, and copies of such determination letters are included as
part of Schedule 3.17(a). Except as disclosed on Schedule 3.17(a), all
reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including,
but not limited to, actuarial reports, audits or tax returns) have been
timely filed or distributed, and copies thereof are included as part of
Schedule
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3.17(a). All employee benefit plans listed on such Schedule have been
operated in accordance with the terms and provisions of the plan
documents and all related documents and policies. The Corporation has
not incurred any liability for excise tax or penalty due to the Internal
Revenue Service or U.S. Department of Labor nor any liability to the
Pension Benefit Guaranty Corporation for any employee benefit plan, nor
has the Corporation, nor party-in-interest or disqualified person,
engaged in any transaction or other activity which would give rise to
such liability. The Corporation has not participated in or made
contributions to any "multi-employer plan" as defined in the Employee
Retirement Income Security Act of 1974 ("ERISA"), nor would the
Corporation or any affiliate be subject to any withdrawal liability with
respect to such a plan if any such employer withdrew from such a plan
immediately prior to the Signing Date. No employee pension benefit plan
is under funded on a termination basis as of the date of this Agreement.
(b) Schedule 3.17(b) is a complete list, as of the Signing Date,
and includes complete copies of all union contracts and agreements
between the Corporation and any collective bargaining group. The
Corporation is in compliance in all material respects with all
applicable federal and state laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not engaged in any unfair labor
practice. There is no charge pending or, to the Corporation's or the
Shareholders' knowledge, threatened, against the Corporation before any
court or agency and alleging unlawful discrimination in employment
practices and there is no charge of or proceeding with regard to any
unfair labor practice against it pending before the National Labor
Relations Board. There is no labor strike, dispute, slow down or
stoppage as of the Signing Date, existing or threatened against the
Corporation nor has the Corporation experienced any labor strike,
slow-down, work stoppage, labor difficulty or other job action during
the last five years. No union organizational activity exists respecting
employees of the Corporation not currently subject to a collective
bargaining agreement. The union contracts or other agreements delivered
as part of Schedule 3.17(b) constitute all agreements with the unions or
other collective bargaining groups, and there are no other arrangements
or established practices relating to the employees covered by any
collective bargaining agreement; and Schedule 3.17(b) will contain as of
the date it is delivered a list of all arbitration or grievance
proceedings that have occurred since the Balance Sheet Date. No one has
petitioned within the last five years, and no one is now petitioning,
for union representation of any employees of the Corporation.
(c) No payment made to any employee, officer, director or
independent contractor of the Corporation (the "Recipient") pursuant to
any employment contract,
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severance agreement or other arrangement (the "Golden Parachute
Payment") will be nondeductible by the Corporation because of the
application of Sections 280G and 4999 of the Code to the Golden
Parachute Payment, nor will the Corporation be required to compensate
any Recipient because of the imposition of an excise tax (including any
interest or penalties related thereto) on the Recipient by reason of
Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) The Corporation has timely filed or will timely file all
requisite federal, state, local and other tax and information returns
due for all fiscal periods ended on or before the date of this
Agreement. All such returns are accurate and complete. Except as set
forth on Schedule 3.18, there are no open years (other than those within
the statute of limitations), examinations in progress, extensions of any
statute of limitations or claims against the Corporation relating to
federal, state, local or other taxes (including penalties and interest)
for any period or periods prior to and including the Signing Date and no
notice of any claim for taxes has been received. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the
federal income, and state franchise, income and sales tax returns of the
Corporation for its last three fiscal years are attached as part of
Schedule 3.18. Copies of all other federal, state, local and other tax
and information returns for all prior years of the Corporation's
existence have been made available to WCI and are among the records of
the Corporation which will accrue to WCI at the Closing. The Corporation
has not been contacted by any federal, state or local taxing authority
regarding a prospective examination.
(b) Except as set forth on Schedule 3.18 (which schedule also
includes the amount due with respect to such Corporation) the
Corporation has duly paid all taxes and other related charges required
to be paid prior to the date of this Agreement. The reserves for taxes
contained in the Financial Statements of the Corporation are adequate to
cover its tax liability as of the date of this Agreement.
(c) The Corporation has withheld all required amounts from its
employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes have
been duly filed by the Corporation for all periods for which returns are
due, and the amounts shown on all such returns to be due and payable
have been paid in full.
3.19 COPIES COMPLETE. Except as disclosed on Schedule 3.19, the
certified copies of the Articles of Incorporation and Bylaws of the Corporation,
both as amended to the Signing Date, and the copies of all leases, instruments,
agreements, licenses, permits, certificates or other documents that have been
delivered to WCI in connection with the transactions contemplated hereby are
complete and accurate as of the Signing Date and are true and correct
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copies of the originals thereof. Except as specifically disclosed on Schedule
3.19, the rights and benefits of the Corporation will not be adversely affected
by the transactions contemplated hereby, and the execution of this Agreement and
the performance of the obligations hereunder will not violate or result in a
breach or constitute a default under any of the terms or provisions thereof.
None of such leases, instruments, agreements, licenses, permits, site
assessments, certificates or other documents requires notice to, or consent or
approval of, any governmental agency or other third party to any of the
transactions contemplated hereby, except such consents and approvals as are or
shall be listed on Schedule 3.19 and which will have been obtained prior to the
Closing.
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES. Schedule
3.20 is a current, accurate and complete list of, and includes:
(a) the customers the Corporation serves on an ongoing basis,
including name, location and current billing rate, as of the Signing
Date;
(b) an accurate and complete aging of all accounts and notes
receivable from customers as of the last day of the month preceding the
month in which such Schedule is delivered, showing amounts due in 30-day
aging categories. Except to the extent of the allowance for bad debts
reflected on the Financial Statements or otherwise disclosed on
Schedules 3.11 and 3.20, the Corporation's accounts and notes receivable
are and on the date such Schedule is delivered shall be collectible in
the amounts shown on Schedules 3.11 and 3.20; and
(c) the average monthly revenues of the Corporation derived from
▇▇▇▇▇▇▇▇ to its customers for each of the twelve months preceding the
Signing Date. Except as set forth on Schedule 3.20, the Corporation and
the Shareholders have no knowledge of any reason why the Corporation's
average monthly revenues derived from ▇▇▇▇▇▇▇▇ to its customers after
the Closing Date should not continue at approximately the same rate as
before the Signing Date.
3.21 NO CHANGE WITH RESPECT TO CORPORATION. Except as set forth on
Schedule 3.21, with respect to the Corporation, since the Balance Sheet Date,
there has not been:
(a) any change in its financial condition, assets, liabilities
(contingent or otherwise), income, operations or business which would
have a material adverse effect on the financial condition, assets,
liabilities (contingent or otherwise), income, operations or business of
the Corporation, taken as a whole;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting any material portion of its properties or
business;
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(c) any change in or agreement to change (i) its shareholders,
(ii) ownership of its authorized capital or outstanding securities, or
(iii) its securities;
(d) any declaration or payment of, or any agreement to declare
or pay, any dividend or distribution in respect of its capital stock or
any direct or indirect redemption, purchase or other acquisition of any
of its capital stock;
(e) any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or
other special compensation to any employee or any severance or
termination pay paid to any of its present or former officers or other
key employees;
(f) any labor dispute or any other event or condition of any
character, materially adversely affecting its business or future
prospects;
(g) any sale or transfer, or any agreement to sell or transfer,
any of its material assets, property or rights to any other person,
including, without limitation, the Shareholders and their Affiliates,
other than in the ordinary course of business;
(h) any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including,
without limitation, any indebtedness or obligation of any of the
Shareholders or any Affiliate thereof;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or
assets outside the ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any existing
material contract, agreement, license, permit or other right to which it
is a party;
(m) any decline in the stockholders equity of the Corporation to
an amount less than the stockholders equity of the Corporation as of the
Balance Sheet Date;
(n) any decline in the current assets of the Corporation to an
amount less than the current assets of the Corporation as of the Balance
Sheet Date;
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(o) any increase in the amount of indebtedness owed by the
Corporation to the Shareholders or their respective Affiliates;
(p) any increase in the amount of indebtedness owed by the
Shareholders or their Affiliates to any person other than the
Corporation and secured by one or more Corporate Properties;
(q) any decline in any indebtedness of the type described in
Sections 3.21(o) and 3.21(p) other than reductions attributable to
normal, recurring installment payments due in the ordinary course under
the terms of the instruments governing such indebtedness;
(r) any increase in the amount of aggregate indebtedness owed by
the Shareholders or its Affiliate to the Corporation; or
(s) any other transaction outside the ordinary course of its
business.
3.22 DEBT; CURRENT ASSETS AND CURRENT LIABILITIES.
(a) At the Closing, the Corporation shall prepare and deliver to
WCI Schedule 3.22(a), which shall set forth (i) the amount of the
aggregate debt (excluding trade payables) of the Corporation outstanding
on the Closing Date required to be repaid by WCI at or immediately after
the Closing Date, (ii) the amount of the debt (excluding trade payables)
of the Corporation outstanding on the Closing Date which will remain
outstanding obligations of either Corporation after the Closing Date,
including in each case all interest accrued through and including the
Closing Date and all prepayment penalties (other than prepayment
penalties associated with any obligations due Bank of America Leasing
Company) to be incurred by WCI in connection with the repayment of any
such debt required to be repaid, (iii) the present value of all
capitalized lease obligations (determined in accordance with generally
accepted accounting principals) of the Corporation and (iv) the present
value, discounted at the lease rate factor, if known, inherent in the
lease or, if the lease rate factor is not known, at the rate charged to
the Corporation by a third party lender in connection with its most
recent borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations (the "Closing
Date Debt").
(b) At the Closing, the Corporation shall prepare and deliver to
WCI Schedule 3.22(b), which shall set forth the amount of the aggregate
current liabilities (excluding the current portion of long-term debt to
the extent such current portion is included in Closing Date Debt) and
trade payables of the Corporation as of the Closing Date (the "Closing
Date Current Liabilities") and the amount of the aggregate current
assets of the Corporation as of the Closing Date and the accounts
receivable of the Corporation earned
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prior to the Closing Date and collectible (less an allowance for
doubtful accounts) on or after the Closing Date (the "Closing Date
Current Assets").
3.23 BANK ACCOUNTS. Schedule 3.23 is a complete and accurate list,
as of the Signing Date, of:
(a) the name of each bank in which the Corporation has
accounts or safe deposit boxes;
(b) the name(s) in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or have
access thereto.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24, the
Corporation has materially complied with, and the Corporation is presently in
material compliance with, federal, state and local laws, ordinances, codes,
rules, regulations, Governmental Permits, orders, judgments, awards, decrees,
consent judgments, consent orders and requirements applicable to it
(collectively "Laws"), including, but not limited to, Laws relating to the
public health, safety or protection of the environment (collectively,
"Environmental Laws"). Except as disclosed on Schedule 3.24, there has been no
assertion by any party that a Corporation is in material violation of any Laws.
Specifically and without limiting the generality of the foregoing, except as
disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and regulations,
including, without limitation, the federal Resource Conservation
Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the Corporation has
not accepted, processed, handled, transferred, generated, treated,
stored or disposed of any Hazardous Material (as defined in Section
3.24(e) below) nor has it accepted, processed, handled, transferred,
generated, treated, stored or disposed of asbestos, medical waste,
radioactive waste or municipal waste, except in compliance with
Environmental Laws.
(b) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the Corporation's ownership
or leasing of such Corporate Property, no Hazardous Material, other than
that allowed under Environmental Laws, including, without limitation,
RCRA, has been disposed of, or otherwise released on any Corporate
Property.
(c) During the Corporation's ownership or leasing of the
Corporate Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders,
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prior to the Corporation's ownership or leasing of such Corporate
Property, no Corporate Property has ever been subject to or received any
notice of any private, administrative or judicial action, or notice of
any intended private, administrative or judicial action relating to the
presence or alleged presence of Hazardous Material in, under, upon or
emanating from any Corporate Property or any real property now or
previously owned or leased by the Corporation. There are no pending and,
to the Corporation's and Shareholders' knowledge, no threatened actions
or proceedings from any governmental agency or any other entity
involving remediation of any condition of the Corporate Property,
including, without limitation, petroleum contamination, pursuant to
Environmental Laws.
(d) Except as allowed under Environmental Laws, the Corporation
has not knowingly sent, transported or arranged for the transportation
or disposal of any Hazardous Material, to any site, location or
facility.
(e) As used in this Agreement, "Hazardous Material" shall mean
the substances (i) defined as "Hazardous Waste" in 40 CFR 261, and
substances defined in any comparable California statute or regulation;
(ii) any substance the presence of which requires remediation pursuant
to any Environmental Laws; and (iii) any substance disposed of in a
manner not in compliance with Environmental Laws.
3.25 POWERS OF ATTORNEY. The Corporation has not granted any power of
attorney (except routine powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar agreement whereby a
third party may bind or commit either Corporation in any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule 3.26,
no underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or Environmental Laws are currently
or have been located on any Corporate Property. Except as set forth on Schedule
3.26, no Corporation has ever owned or leased any real property not included in
the Corporate Property having any underground storage tanks containing petroleum
products or wastes or other hazardous substances regulated by 40 CFR 280. As to
each such underground storage tank ("UST") identified on Schedule 3.26, the
Corporation has provided to WCI, on Schedule 3.26:
(a) the location of the UST, information and material, including
any available drawings and photographs, showing the location, and
whether the Corporation currently owns or leases the property on which
the UST is located (and if the Corporation does not currently own or
lease such property, the dates on which it did and the current owner or
lessee of such property);
(b) the date of installation and specific use or uses of the
UST;
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(c) copies of tank and piping tightness tests and cathodic
protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body or
agency relating to the UST;
(e) other material records with regard to the UST, including,
without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the above,
a summary description of instances, past or present, in which, to the
Corporation's, or the Shareholders' knowledge, the UST failed to meet
applicable standards and regulations for tightness or otherwise and the
extent of such failure, and any other operational or environmental
problems with regard to the UST, including, without limitation, spills,
including spills in connection with delivery of materials to the UST,
releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporation has
complied with Environmental Laws regarding the installation, use, testing,
monitoring, operation and closure of any UST described on Schedule 3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists all
patents, tradenames, trademarks, service marks, and copyrights owned by the
Corporation or which it is licensed to use (other than licenses to use software
for personal computer operating systems that are provided when the computer is
purchased and licenses to use software for personal computers that are granted
to retail purchasers of such software). No patents, trade secrets, know-how,
intellectual property, trademarks, trade names, assumed names, copyrights, or
designations used by the Corporation in its business infringe on any patents,
trademarks, or copyrights, or any other rights of any person. Neither the
Corporation nor any of the Shareholders knows or has any reason to believe that
there are any claims of third parties to the use of any such names or any
similar name, or knows of or has any reason to believe that there exists any
basis for any such claim or claims.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. The Corporation owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.5, 3.10(a), 3.10(c), 3.14(a)
and 3.19, is a party to all Collection Franchises and Governmental Permits and
other agreements necessary to permit it to carry on its business as presently
conducted. All of said Collection Franchises and Governmental Permits and
agreements have been duly obtained and, except as disclosed on Schedules 3.5,
3.8-Part II, 3.10(a), 3.10(c) 3.14(a) and 3.19, are in full force and effect and
there are no proceedings pending or threatened which may result in the
revocation, cancellation, suspension or adverse modification of any of the same.
Neither the Corporation nor any of the Shareholders has any
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knowledge of any reason why all such Collection Franchises and Governmental
Permits and agreements will not remain in effect after consummation of the
transactions contemplated hereby.
3.29 CONDEMNATION. No Corporate Property owned or leased by the
Corporation is the subject of, or would be affected by, any pending condemnation
or eminent domain proceedings, and, to the knowledge of the Corporation and the
Shareholders, no such proceedings are threatened.
3.30 SUPPLIERS AND CUSTOMERS. The relations between the Corporation
and its customers are good. Neither the Corporation nor any of the Shareholders
has knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the suppliers supplying products, components,
materials or providing use of, or access to, landfills or disposal sites to the
Corporation intends to cease providing such items to the Corporation, nor does
the Corporation or any of the Shareholders have knowledge of any fact (other
than general economic and industry conditions) which indicates that any of the
customers of a Corporation intends to terminate, limit or reduce its business
relations with the Corporation.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Corporation
nor any of the Shareholders or ▇▇▇▇ has directly or indirectly within the past
five years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of a Corporation in connection with any actual
or proposed transaction which (a) might subject a Corporation to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (b) if
not given in the past, might have had an adverse effect on the financial
condition, business or results of operations of the Corporation, or (c) if not
continued in the future, might adversely affect the financial condition,
business or operations of the Corporation or which might subject the Corporation
to suit or penalty in any private or governmental litigation or proceeding.
3.32 RELATED PARTY TRANSACTIONS. Since January 1, 1992, none of the
Shareholders or ▇▇▇▇ nor their respective Affiliates has entered into any
transaction with or is a party to any agreement, lease or other instrument, or
as of the date of this Agreement is indebted to or is owed money by, the
Corporation not disclosed on the Financial Statements (with respect to the
period since January 1, 1995) or on the financial statements of a Corporation
for each of the years ended December 31, 1992, 1993 and 1994 delivered to WCI
prior to the date of this Agreement. Except as disclosed in the Financial
Statements or such financial statements, none of the Shareholders or ▇▇▇▇ nor
their Affiliates owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee, shareholder or partner of, or
consultant to or lender to or borrower from or has the right to participate in
the profits of, any Person which is a competitor, supplier, customer, landlord,
tenant, creditor or debtor of the Corporation.
3.33 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by
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cross reference so long as the nature of the matter disclosed is obvious from a
fair reading of the Schedule on which the matter is disclosed.
3.34 NO MISLEADING STATEMENTS. The representations and warranties of
the Corporation, the Shareholders and ▇▇▇▇ contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to WCI and its representatives pursuant hereto are complete and accurate in all
material respects and do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made and to be
made not misleading.
3.35 ACCURATE AND COMPLETE RECORDS. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of the Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material corporate
transactions required to be authorized by the Boards of Directors and/or
shareholders of the Corporation and do not contain or reflect any
material discrepancies.
3.36 KNOWLEDGE. Wherever reference is made in this Agreement to the
"knowledge" of the Shareholders, such term means the actual knowledge of the
Shareholders or any knowledge which should have been obtained by the
Shareholders upon reasonable inquiry by a reasonable business person. In the
case of a Shareholder that is a trust, the term "knowledge" means the actual
knowledge of the trustee or trustees of the trust or any knowledge which should
have been obtained by the trustee or trustees upon reasonable inquiry by a
reasonable business person. Wherever reference is made in this Agreement to the
"knowledge" of the Corporation, such term means the actual knowledge of any
management employee, officer or director of the Corporation or any knowledge
which should have been obtained by any such person upon reasonable inquiry by a
reasonable business person.
3.37 BROKERS; FINDERS. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Corporation or the Shareholders in
connection with the transactions contemplated by this Agreement and no person is
entitled to any broker's, finder's, financial advisory or similar fee or payment
in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of the Corporation or the Shareholders.
3.38 INVESTMENT REPRESENTATIONS. The Shareholders further represent
that:
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(a) Each of the Shareholders is an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Act"). Each of the Shareholders has such knowledge and experience in
financial matters, either alone or with the Shareholder's professional
advisors, that he or she is capable of evaluating the merits and risks
of the investment in the Securities.
(b) Each is a resident of the State of California.
(c) Each of the Shareholders has had access to such information
relating to WCI as such Shareholder feels is reasonably necessary to
make an informed investment decision with respect to the Shares, and the
Warrants (collectively, together with shares of WCI Stock issuable on
exercise of the Warrants and any additional shares of WCI Stock issued
pursuant to Section 1.3(c), the "Securities").
(d) Each of the Shareholders has had the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain additional
information that WCI possesses or can obtain without unreasonable effort
or expense that is necessary to verify the accuracy of the information
provided.
(e) Each of the Shareholders is acquiring the Securities
pursuant to this Agreement for its own account, not as a nominee or
agent. No one else has any interest, beneficial or otherwise, in any of
the Securities.
(f) Each of the Shareholders is able to bear the economic risk of
such an investment in the Securities is aware that he, she or it must be
prepared to hold such Securities for an indefinite period and is aware
that the Securities have not been registered under the Act, or
registered or qualified under the California Corporate Securities Law of
1968, as amended (the "Law"), or any other securities law, on the
ground, among others, that no unregistered distribution or public
offering of Securities is to be effected and the are being issued by WCI
without any public offering within the meaning of section 4(2) of the
Act.
(g) Without in any way limiting the representations herein, each
of the Shareholders further agrees that such Shareholder shall not
encumber, pledge, hypothecate, sell, transfer, assign or otherwise
dispose of, or receive any consideration for, any shares of the
Securities or any interest in them, unless and until prior to any
proposed encumbrance, pledge, hypothecation, sale, transfer, assignment
or other disposition, (i) a registration statement on Form S-1 or S-3
(or any other form appropriate for the purpose or replacing such form)
under the Act with respect to the shares proposed to be transferred or
otherwise disposed of shall be then effective (ii)(a) he, she or it
shall have furnished WCI with a detailed statement of the circumstances
of the proposed disposition, and (b) he, she or it shall have furnished
WCI with an opinion of counsel or
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no-action letter issued by the Staff of the Securities and Exchange
Commission ("SEC") (obtained at the Shareholders' expense) in form and
substance satisfactory to WCI to the effect that such disposition will
not require registration of any such Securities under the Act or
qualification of any such shares under any other securities law; or
(iii) Rule 144 is available with respect to such transaction.
(h) Each of the Shareholders understands and agrees that each
certificate or other instrument representing the Securities will bear a
legend on the face thereof (or on the reverse thereof with a reference
to such legend on the face thereof) which legend restricts the sale,
transfer or other disposition of the Securities otherwise than in
accordance with Sections 3.38(g) of this Agreement provided, however,
that WCI shall, on the request of any of the Shareholders, cause such
legends to be removed from the certificates or other instrument
evidencing the Securities if such Shareholder has held such Securities
for the period contemplated by Rule 144(k) under the Act and if the
Shareholder is not then and has not been during the three months
preceding such request an affiliate of WCI (as defined in Rule 144 under
the Act).
(i) Each of the Shareholders understands and agrees that the
Securities will be "restricted securities" as that term is defined in
Rule 144 under the Act and, accordingly, that the Securities must be
held indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
(j) The Shareholders agree to be bound with respect to the
Securities by any "lock up" provisions to which the executive officers
and directors of WCI are also bound as may be requested by any
underwriters of any offering of WCI Stock or securities convertible into
WCI Stock.
3.39 MADERA COUNTY LANDFILL OPERATION. Any costs, expenses or
liabilities associated with, or arising from, the closure of the landfills
operated by the Corporation for Madera County, California, are the
responsibility of Madera County.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders that each of the
following representations and warranties is true as of the date of this
Agreement and will be true as of the Closing Date, and agrees that such
representations and warranties shall survive the Closing:
4.1 EXISTENCE AND GOOD STANDING. WCI is a Corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any article,
document or instrument to which WCI is a party or by which it is bound which
would be violated by consummation of the transactions contemplated by this
Agreement.
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4.3 AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due authorization,
execution and delivery by the Shareholders, constitutes a legal, valid and
binding obligation of WCI. WCI has full corporate power, legal right and
corporate authority to enter into and perform its obligations under this
Agreement and to carry on its business as presently conducted. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the fulfillment of and compliance with the terms and conditions
hereof do not and will not, after the giving of notice, or the lapse of time or
otherwise: (a) violate any provisions of any judicial or administrative order,
award, judgment or decree applicable to WCI; (b) conflict with any of the
provisions of the Certificate of Incorporation or Bylaws of WCI; or (c) conflict
with, result in a breach of or constitute a default under any material agreement
or instrument to which WCI is a party or by which it is bound.
4.4 STATUS OF SHARES. When delivered to the Shareholders at the
Closing in accordance with the terms and conditions of this Agreement, the
Shares shall have been duly authorized and delivered shares of WCI, and shall be
fully paid and nonassessable.
4.5 NO MISLEADING STATEMENTS. The representations and warranties of
WCI contained in this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to the Shareholders pursuant hereto are
materially complete and accurate, and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
4.6 BROKERS; FINDERS. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI in connection with the transactions
contemplated by this Agreement and no person is entitled to any broker's,
finder's, financial advisory or similar fee or payment in respect thereof based
in any way on any agreement, arrangement or understanding made by or on behalf
of WCI.
4.7 DISCLOSURE SCHEDULES. Any matter disclosed by WCI on any Schedule
to this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature disclosed
is obvious from a fair reading of the Schedule on which the matter is disclosed.
5. COVENANTS FROM SIGNING TO CLOSING DATE
5.1 OPERATIONS. Between the Signing Date and the Closing Date, the
Corporation will, and the Shareholders will cause the Corporation to:
(a) carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method, or discontinue
any existing material method, of operation or accounting;
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(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform all of its material obligations under agreements
relating to or affecting its assets, properties, business operations and
rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business
relations with it;
(f) file on a timely basis all notices, reports or other filings
required to be filed with or reported to any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
any instrumentality of any of the foregoing wherever located with
respect to the continuing operations of the Corporation;
(g) maintain material compliance with all Collection Franchises
and Governmental Permits and all laws, rules, regulations and consent
orders;
(h) file on a timely basis all complete and correct applications
or other documents necessary to maintain, renew or extend any site
assessment, permit, license, variance or any other approval required by
any governmental authority necessary and/or required for the continuing
operation of the Corporation's business operations, whether or not such
approval would expire before or after the Closing; and
(i) advise WCI promptly in writing of any material change in any
document, Schedule, Exhibit, or other information delivered pursuant to
this Agreement.
5.2 NO CHANGE. Between the Signing Date and the Closing Date, the
Corporation will not, and the Shareholders will not permit the Corporation to,
take any action described below without the prior written consent of WCI:
(a) make any change in its Articles of Incorporation or Bylaws;
(b) authorize, issue, transfer or distribute any securities;
(c) declare or pay any dividend or make any distribution in
respect of its capital stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of
its capital stock;
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(d) enter into any contract or commitment or incur or agree to
incur any liability other than in the ordinary course of business other
than the transactions contemplated by this Agreement or make any single
capital expenditure in excess of $10,000 or in excess of $25,000 in the
aggregate during any consecutive thirty (30) day period without regard
to whether such capital expenditure is in the ordinary course of
business;
(e) except as set forth on Schedule 3.16, change or promise to
change the compensation payable or to become payable to any director,
officer, employee or agent, or make or promise to make any bonus payment
to any such person;
(f) create, assume or otherwise permit the imposition of any
mortgage, pledge or other lien or encumbrance upon or grant any option
or right of first refusal with respect to any assets or properties
whether now owned or hereafter acquired;
(g) sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(h) merge or consolidate or agree to merge or consolidate with
or into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend or terminate any material agreement or any site
assessment, permit, license or other right;
(k) enter into any other transaction outside the ordinary course
of the Corporation's business or prohibited hereunder; or
(l) take any action or suffer or permit any event to occur that
would cause any representation or warranty of the Corporation or the
Shareholders to become untrue as of the Closing Date.
5.3 OBTAIN CONSENTS. Promptly after the execution of this Agreement,
the Corporation will, and the Shareholders shall cause the Corporation to, make
all filings and take all steps reasonably necessary to obtain all other
approvals and consents required to be obtained by the Corporation or the
Shareholders to consummate the transactions contemplated by this Agreement and
otherwise to satisfy the conditions of Sections 6.7.
5.4 ACCESS; CONFIDENTIAL INFORMATION. Between the Signing Date and
the Closing Date, the Shareholders and the Corporation will, and the
Shareholders will cause the Corporation to, afford to the officers and
authorized representatives of WCI, including, without limitation,
its engineers, counsel, independent auditors and investment bankers, access to
the Facilities, plants,
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Corporate Properties and other properties, books and records of the Corporation,
and will furnish WCI with such additional financial and operating data and other
information as to the business and properties of the Corporation as WCI may from
time to time reasonably request. The Shareholders will and will cause the
Corporation to cooperate with WCI, its representatives and counsel in the
preparation of any documents or other material which may be required by any
governmental agency. WCI will cause all information obtained from the
Shareholders and the Corporation in connection with the negotiation and
performance of this Agreement which the Shareholders or the Corporation have
stamped or otherwise marked as confidential to be treated as confidential
(except such information which is in the public domain or which WCI may be
required to disclose to any governmental agency, or pursuant to any court or
regulatory agency order) and will not use, and will not knowingly permit others
to use, any such confidential information in a manner detrimental to the
Corporation or the Shareholders. The Corporation will not, and the Shareholders
will not and will cause the Corporation not to, disclose to any third persons
other than their accountants, bankers or legal counsel any of the terms or
provisions of this Agreement prior to or after the Closing Date without the
prior written consent of WCI.
5.5 NOTICE OF MATERIAL ADVERSE CHANGE. WCI shall promptly notify the
Shareholders' Representative of any material adverse change in its business or
financial condition between the Signing Date and the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE
The obligations of WCI under this Agreement are subject to the
satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by WCI:
6.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Corporation and the Shareholders contained in this Agreement
or in any statement, Exhibit, Schedule, certificate or document delivered by the
Corporation or the Shareholders under this Agreement shall be true, correct and
complete on and as of the date when made and at all times prior to the Closing
Date, shall be deemed to be made again on the Closing Date, and shall then be
true, correct and complete in all material respects as of the Closing Date.
6.2 CONDITIONS. The Corporation and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE. Since the Signing Date, there shall
not have been any material adverse change in the condition (financial or
otherwise), business, properties or assets of the Corporation.
6.4 CERTIFICATES. The President of the Corporation shall have
delivered to WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to
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the fulfillment of the conditions set forth in Sections 6.1, 6.2 and 6.3, and
the Shareholders shall have delivered to WCI a certificate dated as of the
Closing Date, in form and substance satisfactory to WCI, certifying to the
fulfillment of the conditions set forth in Section 6.1, 6.2 and 6.3 applicable
to the Shareholders.
6.5 NO LITIGATION. None of the transactions contemplated hereby shall
have been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand shall have been made by any
federal or state governmental branch, agency, commission or regulatory
authority.
6.6 OTHER DELIVERIES. The Shareholders shall have delivered the items
which they are required to deliver under Section 8 of this Agreement.
6.7 GOVERNMENTAL APPROVALS; CONSENTS TO TRANSFER. All governmental
consents and approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been received, and each
other party whose consent is required to the transactions contemplated by this
Agreement, including without limitation (if applicable) each party to any
contract with the Corporation, each municipality or other jurisdiction that has
granted a franchise to the Corporation and each jurisdiction issuing or granting
any other Governmental Permit, shall have consented to such transactions, and
every other Required Governmental Consent shall have been obtained.
6.8 RELEASE OF SECURITY INTERESTS. All security interests in assets
of the Corporation that have been created in favor of financial institutions or
other lenders to secure indebtedness of the Shareholders or their Affiliates
shall have been released.
6.9 DUE DILIGENCE. WCI shall have reviewed all of the schedules to
this Agreement and all documents related to the Corporation's 401(k) plan, and
all such schedules and documents shall be satisfactory to WCI or any problems
reflected in, or indicated by, such schedules or documents shall have been
resolved to the satisfaction of WCI.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE
SHAREHOLDERS TO CLOSE
The obligations of the Shareholders under this Agreement are subject to
the satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by the Shareholders:
7.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of WCI contained in this Agreement or in any statement, Exhibit,
Schedule, certificate or document delivered by WCI under this Agreement shall be
true, correct and complete on and as of the date
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when made and at all times prior to the Closing Date, shall be deemed to be made
again on the Closing Date, and shall then be true, correct and complete in all
respects as of the Closing Date.
7.2 CONDITIONS. WCI shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it on or before the Closing Date.
7.3 CERTIFICATE. WCI shall have delivered to the Shareholders a
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Shareholders, certifying to the fulfillment of the conditions set forth in
Sections 7.1 and 7.2.
7.4 NO LITIGATION. None of the transactions contemplated hereby shall
have been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand shall have been made by any
federal or state governmental branch, agency, commission or regulatory
authority.
7.5 OTHER DELIVERIES. WCI shall have delivered the items which it is
required to deliver under Section 8 of this Agreement.
7.6 ELECTION OF DIRECTOR AND ADVISORY DIRECTOR. At the Closing, a
nominee of the Shareholders, who shall be one of Dupreau, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇,
shall be elected to the Board of Directors of WCI for a term of one year. In
addition, a nominee of the Shareholders, who shall be one of Dupreau, ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇ and who is not elected to the Board of Directors of WCI pursuant to the
preceding sentence, shall be an advisory director of WCI for a period of one
year from the Closing Date, with the right to attend meetings of the Board of
Directors of WCI at WCI's expense, but without authority to vote on any matter.
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
8.1 WCI DELIVERIES.
(a) WCI shall deliver the cash portion of the Purchase Price
required to be delivered on the Closing Date pursuant to Section 1.2(a).
(b) WCI shall deliver to Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇
certificates for the Shares.
(c) WCI shall deliver to Dupreau, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ the
Warrants.
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(d) WCI shall deliver to the Procuring Shareholders any payments
due pursuant to Sections 1.3 (a)-(d).
(e) WCI shall execute and deliver an Employment Agreement with
Dupreau and ▇▇▇▇▇▇▇▇▇▇ substantially in the form of the draft included
in Exhibit 8.1(e).
(f) WCI shall execute and deliver the Consulting Agreement with
▇▇▇▇, substantially in the form of the draft included in Exhibit 8.1(f)
with such changes therein as shall be applicable.
(g) WCI shall execute and deliver the Investors' Rights
Agreement, as amended, then in effect between WCI and its stockholders.
(h) WCI shall execute and deliver the Stockholders Agreement
with each Shareholder substantially in the form of Exhibit 8.1(h).
8.2 SHAREHOLDERS DELIVERIES.
(a) The Shareholders shall deliver to WCI the certificates
representing the outstanding Corporation's Stock free and clear of all
liens, security interests, claims and encumbrances, accompanied by a
stock power duly executed in blank.
(b) The Shareholders shall deliver to WCI Uniform Commercial
Code financing statement searches from the State of California, dated
within thirty (30) days prior to the Closing Date, with an unofficial
update on the Closing Date obtained from Information America or another
reporting service, showing that there are no security interests,
judgments, taxes, other liens or encumbrances outstanding against the
Corporation or its assets, other than as disclosed on Part III of
Schedule 3.8.
(c) the Shareholders shall deliver to WCI an opinion of counsel
for the Shareholders, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit 8.2(c).
(d) the Shareholders shall execute and deliver such other
documents and instruments as are reasonably requested by WCI in order to
consummate the transactions contemplated by this Agreement.
(e) The Corporation shall deliver to WCI evidence satisfactory
to WCI showing that all written employment contracts and all oral
employment contracts other than those that are terminable "at will"
without payment of severance (other than normal severance benefits
approved by WCI) or other benefits with non-union employees of the
Corporation (including, without limitation, stock options or other
rights to obtain equity in the Corporation) have been terminated,
effective on or before the Closing Date.
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(f) The Shareholders shall execute and deliver, and shall cause
each officers and director of the Corporation who is not a Shareholder
to execute and deliver, a release substantially in the form of Exhibit
8.2(f).
(g) Each Shareholder shall execute and deliver the Investors'
Rights Agreement.
(h) Each Shareholder shall execute and deliver the Stockholders
Agreement substantially in the form of Exhibit 8.1(h).
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE
SHAREHOLDERS
9.1 NO DELAY. The Corporation, the Shareholders and WCI covenant and
agree from and after the date hereof not to hinder in any way or unreasonably
delay the Closing Date and to use their respective reasonable efforts to obtain
required Governmental Consents and otherwise to cause the Closing Date to occur
as soon as reasonably practicable after the Signing Date, provided, however,
that in using its reasonable efforts WCI shall not be required to take any
action or to agree to any condition, including without limitation any condition
imposed by any government authority with respect to the transfer of any
Governmental Permit, that, in WCI's reasonable judgment, imposes a materially
adverse financial burden or operating condition on WCI.
9.2 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to obtain
the termination and release on or prior to the Closing Date of the personal
guaranties of the Shareholders of any indebtedness of the Corporation included
in the Financial Statements as of the Balance Sheet Date or WCI shall indemnify
the Shareholders and hold them harmless from and against all losses, expenses or
claims by third parties to enforce or collect indebtedness owed by the
Corporation as of the Closing Date which is personally guaranteed by the
Shareholders pursuant to such guaranties. The Shareholders shall cooperate with
WCI in obtaining such releases.
9.3 RELEASE OF SECURITY INTERESTS. Between the Signing Date and the
Closing Date, the Shareholders and their respective Affiliates shall cause those
security interests in the assets of the Corporation that have been created in
favor of financial institutions or other lenders to secure indebtedness (other
than indebtedness of the Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
9.4 CONFIDENTIALITY. Neither the Corporation nor any of the
Shareholders shall disclose or make any public announcements of the transactions
contemplated by this Agreement
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without the prior written consent of WCI, unless required to make such
disclosure or announcement by law, in which event the party making the
disclosure or announcement shall notify WCI at least 24 hours before such
disclosure or announcement is expected to be made. WCI shall not disclose or
make any public announcement of the transactions contemplated by this Agreement
without the prior written consent of the Shareholders' Representative, unless in
connection with the IPO or otherwise required to make such disclosure or
announcement by law, in which event WCI shall notify the Shareholders'
Representative at least 24 hours before such disclosure or announcement is
expected to be made.
9.5 BROKERS AND FINDERS FEES. Each party shall pay and be responsible
for any broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
9.6 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters involving the
Shareholders arising out of the Shareholders' ownership of the Corporation prior
to the Closing, including matters relating to tax returns and any tax audits,
appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
Corporation for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to retaining
information and documents which relate to such matters.
9.7 SHORT YEAR TAX RETURNS. After the Closing Date, the Shareholders
shall prepare at their sole cost and expense, all short year federal, state,
county, local and foreign tax returns required by law for the period beginning
with the first day of each Corporation's fiscal year in which the Closing occurs
and ending with the Closing Date. Each such return shall be prepared in a
financially responsible and conservative manner and shall be delivered to WCI
together with all necessary supporting schedules within 120 days following the
Closing Date for its approval (but such approval shall not relieve the
Shareholders of their responsibility for the taxes assessed under these
returns). The Shareholders shall be responsible for the payment of all taxes
shown to be due or that may come to be due on such returns. The Shareholders
shall also be responsible for all taxes arising from the conversion of the
Corporation from a cash to accrual basis of reporting whether or not due on such
returns or on the first return filed by the Corporation for the period
commencing after the Closing Date. At the time of the delivery of the returns,
shall contemporaneously deliver to WCI checks payable to the respective taxing
authorities in amounts equal to the amount due. WCI shall sign tax returns and
cause such returns to be timely filed with the appropriate authorities. The
Shareholders shall be entitled to receive all refunds shown on said returns and
any such refunds received by the Corporation or WCI shall be remitted to the
Shareholders.
9.8 SHAREHOLDERS' REPRESENTATIVE.
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(a) In order to administer efficiently the rights and
obligations of the Shareholders under this Agreement, the Shareholders
hereby designate and appoint Dupreau as the Shareholders'
Representative, to serve as the Shareholders' agent, proxy and
attorney-in-fact for the limited purposes set forth in this Agreement.
(b) Each of the Shareholders hereby appoints the
Shareholders' Representative as such Shareholder's agent, proxy and
attorney-in-fact, with full power of substitution, for all purposes set
forth in this Agreement, including, without limitation, the full power
and authority on such Shareholder's behalf (i) to consummate the
transactions contemplated by this Agreement, (ii) to disburse any funds
received hereunder to the Shareholders, (iii) to execute and deliver on
behalf of each Shareholder any amendment or waiver under this Agreement,
to agree to the amount of the actual Closing Date Debt, Closing Date
Current Assets and Closing Date Current Liabilities pursuant to Section
1.2(a), and to agree to resolution of all Claims hereunder, (iv) to
retain legal counsel and other professional services, at the expense of
the Shareholders, in connection with the performance by the
Shareholders' Representative of this Agreement, and (v) to do each and
every act and exercise any and all rights which such Shareholder or
Shareholders are permitted or required to do or exercise under this
Agreement and the other agreements, documents and certificates executed
in connection herewith. Each of the Shareholders agrees that such agency
and proxy are coupled with an interest, are therefore irrevocable
without the consent of the Shareholders' Representative and shall
survive the death, bankruptcy or other incapacity of any Shareholder.
(c) Each of the Shareholders hereby agrees that any
amendment or waiver under this Agreement, and any action taken on behalf
of the Shareholders to enforce the rights of the Shareholders under this
Agreement, and any action taken with respect to any adjustment or Claim
(including any action taken to object to, defend, compromise or agree to
the payment of such adjustment or Claim), shall be effective if approved
in writing by the Shareholders' Representative and the holders of a
majority of the Corporation's Stock (including any Corporation's Stock
held by the Shareholders' Representative), or, in the case of any
amendment or waiver made or given or action taken after the Closing, if
so approved by persons who were the holders of a majority of the
Corporation's Stock immediately prior to the Closing, and that each and
every action so taken shall be binding and conclusive on every
Shareholder, whether or not such Shareholder had notice of, or approved,
such amendment or waiver.
(d) Dupreau shall serve as the Shareholders'
Representative until he resigns or is otherwise unable or unwilling to
serve. In the event that a Shareholders' Representative resigns from
such position or is otherwise unable or unwilling to serve, the
remaining Shareholders shall select, by the vote of the holders of a
majority of the Corporation's Stock immediately prior to the Closing, a
successor representative to fill such vacancy, shall provide prompt
written notice to WCI of such change and such
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substituted representative shall then be deemed to be the Shareholders'
Representative for all purposes of this Agreement.
9.9 CERTAIN TAX MATTERS. The Shareholders acknowledge that WCI has
indicated its intention to make an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. The Shareholders agree that WCI, in
its discretion, may make such election; provided, however, that such election
shall be made no later than the due date for such election.
If such election is made by WCI:
(a) WCI shall be authorized to complete Form 8023-A;
(b) The Shareholders shall sign such completed Form 8023-A at
the Closing; and
(c) WCI and the Shareholders shall agree upon the allocation of
the Purchase Price among the assets (including intangible assets) of the
Corporation.
(d) If WCI does make its election under Section 338(h)(10) of
the Internal Revenue Code of 1986 as amended, WCI shall reimburse the
Shareholders and the Corporation for any additional taxes, penalties,
interest and costs of preparation of amended income tax returns incurred
due to such election resulting from the recapture of depreciation
previously taken on various assets of the Corporation at ordinary income
instead of capital gain rates. Such reimbursement shall be in a sum
computed by a simultaneous equation computing the additional tax owed by
stockholders, as well as the tax on the payment of that sum.
10. INDEMNIFICATION
10.1 INDEMNITY BY THE SHAREHOLDERS. The Shareholders and ▇▇▇▇ jointly
and severally, subject to the limitations set forth in Section 10.2, covenant
and agree that they will indemnify and hold harmless WCI, the Corporation and
their respective directors, officers and agents and their respective successors
and assigns (collectively the "WCI Indemnitees"), from and after the date of
this Agreement, against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation), expenditures, including, without limitation, any
"Environmental Site Losses" (as such term is hereinafter defined) identified by
a WCI Indemnitee in a Claims Notice (as defined in Section 10.3(a)), or asserted
by a WCI Indemnitee in litigation commenced against the Shareholders provided
that in either case any such Claims Notice shall be given or the litigation
commenced prior to the third anniversary of the date of filing of the
Corporation's federal and California income tax returns for the fiscal year
ending on the Closing Date or, in the case of fraud, expiration of the
applicable statute of limitations, with respect to each of the following
contingencies (all, the "10.1 Indemnity Events"):
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(a) Any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant on the part of the Shareholders or the
Corporation pursuant to the terms of this Agreement or any
misrepresentation in or omission from any Exhibit, Schedule, list,
certificate, or other instrument furnished or to be furnished to WCI
pursuant to the terms of this Agreement, regardless of whether, in the
case of a breach of a representation or a warranty, WCI relied on the
truth of such representation or warranty or had any knowledge of any
breach thereof.
(b) The design, development, construction or operation of any
Facility or any other "Environmental Site" as hereinafter defined, or
the installation or operation of a UST during any period on or prior to
the Closing Date, in excess of the amount of liability with respect
thereto, if any, set forth on Part II of Schedule 3.8. As used in this
Agreement, "Environmental Site" shall mean any Facility, any UST and any
other waste storage, processing, treatment or disposal facility, and any
other business site or any other real property owned, leased, controlled
or operated by the Corporation or by any predecessor thereof on or prior
to the Closing Date, provided however, as to activities of such
predecessors, only to the extent that the Corporation or the
Shareholders had knowledge of such activities. As used in this
Agreement, "Environmental Site Losses" shall mean any and all losses,
damages (including exemplary damages and penalties), liabilities,
claims, deficiencies, costs, expenses, and expenditures (including,
without limitation, expenses in connection with site evaluations, risk
assessments and feasibility studies) arising out of or required by an
interim or final judicial or administrative decree, judgment,
injunction, mandate, interim or final permit condition or restriction,
cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any other
remedial action that is required to be undertaken under federal, state
or local law in respect of operating activities on or affecting any
Facility, any UST or any other Environmental Site, including, but not
limited to (x) any actual or alleged violation of any law or regulation
respecting the protection of the environment, including, but not limited
to, RCRA and CERCLA or any other law or regulation respecting the
protection of the air, water and land and (y) any remedies or
violations, whether by a private or public action, alleged or sought to
be assessed as a consequence, directly or indirectly, of any "Release"
(as defined below) of pollutants (including odors) or Hazardous
Substances from any Facility, any UST or any other Environmental Site
resulting from activities thereat, whether such Release is into the air,
water (including groundwater) or land and whether such Release arose
before, during or after the Closing Date. The term "Release" as used
herein means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the ambient environment. Notwithstanding anything in this
paragraph to the contrary, it is specifically understood and agreed that
a Release composed solely of Hazardous Substances contained in household
waste lawfully disposed of in a landfill during the time a Corporation
owned and/or operated such landfill does not constitute an Environmental
Site Loss.
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(c) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incident to any of the foregoing. To the extent not covered by the
Company's insurance, all matters on Schedule 3.8, Part II.
10.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES.
(a) Subject to Section 10.2(b), the obligations of the
Shareholders to indemnify the WCI Indemnitees as provided in Section
10.1 shall be equal to the amount by which the cumulative amount of all
such liabilities, claims, damages deficiencies, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses,
expenditures and Environmental Site Losses with respect to any or all
10.1 Indemnity Events exceed $100,000 (the "Deductible Amount");
provided, that the amount of any obligation of indemnity arising
pursuant to Section 10.1 with respect to any representation, warranty or
covenant contained in Sections 3.1 through 3.5, 3.18 and 3.22 hereof
shall not be subject to the Deductible Amount.
(b) Absent fraud, the maximum amount which WCI can recover as a
result of one or more 10.1 Indemnity Events pursuant to the provisions
hereof for Claims shall not in the aggregate exceed six million dollars
($6,000,000) with respect to Claims made prior to the first anniversary
of the Closing Date, five million dollars ($5,000,000) with respect to
Claims on or after the first anniversary of the Closing Date and prior
to the second anniversary of the Closing Date, four million dollars
($4,000,000) with respect to Claims made on or after the second
anniversary of the Closing Date and prior to the third anniversary of
the filing of the Corporation's federal and California income tax
returns for the fiscal year ending on the date of the Closing Date, and
thereafter nothing in the absence of fraud.
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10.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("Claim") is hereafter asserted
against or arises with respect to any WCI Indemnitee as to which such
Indemnitee may be entitled to indemnification hereunder, the WCI
Indemnitee shall notify the Shareholders (as applicable collectively,
the "Indemnifying Party") in writing thereof (the "Claims Notice")
within 60 days after (i) receipt of written notice of commencement of
any third party litigation against such WCI Indemnitee, (ii) receipt by
such WCI Indemnitee of written notice of any third party claim pursuant
to an invoice, notice of claim or assessment, against such WCI
Indemnitee, or (iii) such WCI Indemnitee becomes aware of the existence
of any other event in respect of which indemnification may be sought
from the Indemnifying Party (including, without limitation, any
inaccuracy of any representation or warranty or breach of any covenant).
The Claims Notice shall describe the Claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount, if
known, or an estimate, if possible, of the losses that have been or may
be incurred or suffered by the WCI Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim for
money damages where the cumulative total of all Claims (including such
Claims) do not exceed the limit set forth in Section 10.2 at the time
the Claim is made, by the Indemnifying Party's own counsel; provided,
however, the Indemnifying Party may assume and undertake the defense of
such a third party Claim only upon written agreement by the Indemnifying
Party that the Indemnifying Party is obligated to fully indemnify the
WCI Indemnitee with respect to such action. The WCI Indemnitee may
participate, at the WCI Indemnitee's own expense, in the defense of any
Claim assumed by the Indemnifying Party. Without the written approval of
the WCI Indemnitee, which approval shall not be unreasonably withheld,
the Indemnifying Party shall not agree to any compromise of a Claim
defended by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying Party's
receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 10.3(b) and elected
to defend the Claim, the WCI Indemnitee shall have the right to assume
control of the defense and/or compromise of such Claim, and the costs
and expenses of such defense, including reasonable attorneys' fees,
shall be added to the Claim. The Indemnifying Party shall promptly, and
in any event within thirty (30) days reimburse the WCI Indemnitee for
the costs of defending the Claim, including attorneys' fees and
expenses.
(d) The party assuming the defense of any Claim shall keep the
other party reasonably informed at all times of the progress and
development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the
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parties to this Agreement shall cooperate with each other and make
available to each other and their representatives all available relevant
records or other materials required by them for their use in defending,
compromising or contesting any Claim. The failure to timely deliver a
Claims Notice or otherwise notify the Indemnifying Party of the
commencement of such actions in accordance with this Section 10.3 shall
not relieve the Indemnifying Party from the obligation to indemnify
hereunder but only to the extent that the Indemnifying Party establishes
by competent evidence that it has been prejudiced thereby.
(e) In the event both the WCI Indemnitee and the Indemnifying
Party are named as defendants in an action or proceeding initiated by a
third party, they shall both be represented by the same counsel (on whom
they shall agree), unless such counsel the WCI Indemnitee, or the
Indemnifying Party shall determine that such counsel has a conflict of
interest in representing both the WCI Indemnitee and the Indemnifying
Party in the same action or proceeding and the WCI Indemnitee and the
Indemnifying Party do not waive such conflict to the satisfaction of
such counsel.
10.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement and in
any certificate, Exhibit or Schedule delivered pursuant hereto, or in any other
writing delivered pursuant to the provisions of this Agreement (the
"Representations and Warranties") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any persons other than as specifically set forth herein or
therein.
10.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF. The
Shareholders waive any right to require any WCI Indemnitee to (i) proceed
against the Corporation; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any WCI Indemnitee. WCI may, but
shall not be obligated to, set off against any and all payments due any
Shareholder any amount to which any WCI Indemnitee is entitled to be indemnified
hereunder with respect to any 10.1 Indemnity Event. Such right of set off shall
be separate and apart from any and all other rights and remedies that the
Indemnities may have against Shareholders or their successors.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
11.1 RESTRICTIVE COVENANTS. As to the Corporation, the Shareholders,
▇▇▇▇ and their Affiliates acknowledge that (i) WCI, as the purchaser of the
Corporation's Stock, is and will be
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engaged in the same business as the Corporation (the "Business"); (ii) the
Shareholders, ▇▇▇▇ and their Affiliates are intimately familiar with the
Business; (iii) the Business is currently conducted in the State of California
and WCI intends to continue the Business in California and intends, by
acquisition or otherwise, to expand the Business into other geographic areas of
California where it is not presently conducted; (iv) the Shareholders, ▇▇▇▇ and
their Affiliates have had access to trade secrets of, and confidential
information concerning, the Business; (v) the agreements and covenants contained
in this Section 11.1 are essential to protect the Business and the goodwill
being acquired; and (vi) the Shareholders, ▇▇▇▇ and their Affiliates have the
means to support themselves and their dependents other than by engaging in a
business substantially similar to the Business and the provisions of this
Section 11 will not impair such ability. The Shareholders covenant and agree as
set forth in (a), (b) and (c) below with respect to each Corporation:
(a) NON-COMPETE. For a period commencing on the Closing Date and
terminating five years thereafter (the "Restricted Period"), neither of
the Shareholders, ▇▇▇▇ nor any of their Affiliates shall, anywhere in
the counties of Madera, Fresno, Stanislaus, San ▇▇▇▇▇▇▇, and Calaveras,
California where WCI or one of its subsidiaries owns or operates a
business similar to the Business (the "Restricted Counties"), directly
or indirectly, acting individually or as the owner, shareholder,
partner, or employee of any entity, (i) engage in the operation of a
solid waste collection, transporting, disposal and/or composting
business, transfer facility, recycling facility, materials recovery
facility or solid waste landfill; (ii) enter the employ of, or render
any personal services to or for the benefit of, or assist in or
facilitate the solicitation of customers for, or receive remuneration in
the form of salary, commissions or otherwise from, any business engaged
in such activities; or (iii) receive or purchase a financial interest
in, make a loan to, or make a gift in support of, any such business in
any capacity, including, without limitation, as a sole proprietor,
partner, shareholder, officer, director, principal, agent, trustee or
lender; provided, however, that any of the Shareholders and ▇▇▇▇ may
own, directly or indirectly, solely as an investment, securities of any
business traded on any national securities exchange or NASDAQ, provided
none of the Shareholders is a controlling person of, or a member of a
group which controls, such business and further provided that the
Shareholders do not, in the aggregate, directly or indirectly, own 2% or
more of any class of securities of such business and provided further
that ▇▇▇▇▇▇▇▇▇▇ shall be permitted to continue the business described on
Schedule 11.1.
(b) CONFIDENTIAL INFORMATION. During the Restricted Period and
thereafter, the Shareholders, ▇▇▇▇ and their Affiliates shall keep
secret and retain in strictest confidence, and shall not use for the
benefit of themselves or others, all data and information relating to
the Business ("Confidential Information"), including without limitation,
know-how, trade secrets, customer lists, supplier lists, details of
contracts, pricing policies, operational methods, marketing plans or
strategies, bidding information, practices, policies or procedures,
product development techniques or plans, and technical processes;
provided, however, that the term "Confidential Information" shall not
include
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information that (i) is or becomes generally available to the public
other than as a result of disclosure by the Shareholders and ▇▇▇▇ or
(ii) is general knowledge in the solid waste handling and landfill
business and not specifically related to the Business.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof) relating
to the Business, including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of
the Shareholders, ▇▇▇▇ or the Corporation or made available to them
relating to the Business, but excluding any materials (other than the
minute books of the Corporation) maintained by any attorneys for the
Corporation or the Shareholders prior to the Closing, are and shall be
the property of WCI and have been delivered or will be delivered or made
available to WCI at the Closing.
(d) NON-SOLICITATION. Without the consent of WCI, which may be
granted or withheld by WCI in its discretion, the Shareholders, ▇▇▇▇ and
their Affiliates shall not solicit any employees of the Corporation to
leave the employ of the Corporation and join the Shareholders or any
Affiliate in any business endeavor owned or pursued by the Shareholders.
(e) NO DISPARAGEMENT. From and after the Closing Date, none of
the Shareholders or ▇▇▇▇ shall, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate WCI or
any of its subsidiaries, or any officer, director or employee, or any
product or service or procedure of any such company whether or not such
denigrating or derogatory statements shall be true and are based on acts
or omissions which are learned by the Shareholders or ▇▇▇▇ from and
after the date hereof or on acts or omissions which occur from and after
the date hereof, or otherwise. A statement shall be deemed denigrating
or derogatory to any person or entity if it adversely affects the regard
or esteem in which such person or entity is held by investors, lenders
or licensing, rating, or regulatory entities. Without limiting the
generality of the foregoing, none of the Shareholders or ▇▇▇▇ shall,
directly or indirectly in any way in respect of any such company or any
such directors or officers, communicate with, or take any action which
is adverse to the position of any such company with any person, entity
or governmental or regulatory body or agency who or which has dealings
or prospective dealings with any such company or jurisdiction or
prospective jurisdiction over any such company. This paragraph does not
apply to the extent that testimony is required by legal process,
provided that WCI has received not less than five days' prior written
notice of such proposed testimony.
11.2 RIGHTS AND REMEDIES UPON BREACH. If the Shareholders or ▇▇▇▇ or
any Affiliate breaches, or threatens to commit a breach of, any of the
provisions of Section 11.1 herein (the "Restrictive Covenants"), WCI shall have
the following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each
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of which is in addition to, and not in lieu of, any other rights and remedies
available to WCI at law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to WCI and that
money damages would not provide an adequate remedy to WCI. Accordingly,
in addition to any other rights or remedies, WCI shall be entitled to
injunctive relief to enforce the terms of the Restrictive Covenants and
to restrain the Shareholders and ▇▇▇▇ from any violation thereof.
(b) ACCOUNTING. The right and remedy to require the Shareholders
and ▇▇▇▇ to account for and pay over to WCI all compensation, profits,
monies, accruals, increments or other benefits derived or received by
the Shareholders and ▇▇▇▇ as the result of any transactions constituting
a breach of the Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholders and ▇▇▇▇
acknowledge and agree that the Restrictive Covenants are reasonable and
valid in geographical and temporal scope and in all other respects. If
any court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.
(d) BLUE-PENCILING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI and the Shareholders and
▇▇▇▇ intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic
scope of the Restrictive Covenants. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of
WCI and the Shareholders and ▇▇▇▇ that such determination not bar or in
any way affect WCI's right to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
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12. TERMINATION OF AGREEMENT
12.1 TERMINATION DATE.
(a) If the Closing Date has not occurred by March 31, 1998, this
Agreement shall be terminated at 5:00 p.m., Pacific Time, March 31,
1998, unless the Corporation has not then obtained all of the consents
required by Section 6.7, in which event this Agreement shall terminate
10 days after the later of (i) if any such consent is denied, the latest
time for filing any appeal or further appeal of such denial has lapsed;
(ii) if any such consent is denied and such denial is appealed, the day
the last appeal of such denial has been dismissed, refused or decided
adversely to the Corporation; and (iii) notice by WCI.
(b) This Agreement may be terminated at any time prior to the
Closing Date:
(i) by WCI, by written notice to the Corporation and the
Shareholders if the representations and warranties of the
Corporation and the Shareholders shall not have been true and
correct in all respects as of the date when made; or
(ii) by the Corporation and the Shareholders by written
notice to WCI if the representations and warranties of WCI shall
not have been true and correct in all respects as of the date
when made.
12.2 NOTICE AND EFFECT OF TERMINATION. On termination of this
Agreement, the transactions contemplated herein shall forthwith be abandoned and
all continuing obligations and liabilities of the parties under or in connection
with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained in
this Agreement prior to such termination.
12.3 EXCLUSIVE NEGOTIATIONS. Following execution of this Agreement,
the Corporation, the Shareholders and ▇▇▇▇ shall not, and the Shareholders and
▇▇▇▇ shall not permit the Corporation's or the Shareholders' and Alma's
officers, directors, employees or agents to, initiate, negotiate or discuss with
any other person or entity the possible sale of all or substantially all of the
assets, business or stock of either Corporation, or to effect the merger of a
Corporation with any party other than WCI. The Shareholders and ▇▇▇▇ hereby
confirm that no person or entity presently has or may acquire any rights to
purchase or otherwise acquire the assets or the stock of the Corporation.
13. GENERAL
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13.1 ADDITIONAL CONVEYANCES. Following the Closing, the Shareholders
and WCI shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon such additional instruments as WCI or the
Shareholders may reasonably request for the purpose of carrying out this
Agreement. The Shareholders will cooperate with WCI and/or the Corporation on
and after the Closing Date in furnishing information, evidence, testimony and
other assistance in connection with any actions, proceedings or disputes of any
nature with respect to matters pertaining to all periods prior to the date of
this Agreement.
13.2 ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, the successors or assigns of WCI and the
heirs, legal representatives or assigns of the Shareholders; provided, however,
that any such assignment shall be subject to the terms of this Agreement and
shall not relieve the assignor of its or his responsibilities under this
Agreement.
13.3 PUBLIC ANNOUNCEMENTS. Except as required by law, no party shall
make any public announcement or filing with respect to the transactions provided
for herein prior to the Closing Date without the prior consent of the other
parties hereto and in no case shall any such announcement be made prior to the
filing by WCI of a registration statement under the Act relating to the IPO
without the consent of WCI.
13.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
13.5 NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or upon delivery by
registered or certified U.S. mail or one business day following deposit with an
air courier service:
If to the Shareholders: at their respective addresses set forth on
Schedule 3.2
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Dietrich, Glasrud, ▇▇▇▇▇▇ & ▇▇▇▇
An Association Including Law Corporations
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
13.6 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporation or the Shareholders on the other
hand relating to the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees and expenses incurred by the prevailing
party. Such award shall include post-judgment attorney's fees and costs.
13.7 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to its
conflict of laws provisions.
13.8 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the
Shareholders, any such fees, expenses and disbursements paid or accrued by, or
charged to, the Corporation).
13.9 INCORPORATION BY REFERENCE. All Schedules and Exhibits attached
hereto are incorporated herein by reference as though fully set forth at each
point referred to in this Agreement.
13.10 CAPTIONS. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
13.11 NUMBER AND GENDER OF WORDS; CORPORATION. Whenever the singular
number is used herein, the same shall include the plural where appropriate, and
shall apply to all of such number, and to each of them, jointly and severally,
and words of any gender shall include each other gender where appropriate.
13.12 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and
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understanding between the Corporation, the Shareholders and WCI and supersedes
any prior agreement and understanding relating to the subject matter of this
Agreement. This Agreement may be modified or amended only by a written
instrument executed by the Corporation, the Shareholders (or the Shareholders'
Representative on their behalf) and WCI acting through its officers, thereunto
duly authorized by its Board of Directors.
13.13 WAIVER. No waiver by any party hereto at any time of any breach
of, or compliance with, any condition or provision of this Agreement to be
performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
13.14 CONSTRUCTION. The language in all parts of this Agreement must be
in all cases construed simply according to its fair meaning and not strictly for
or against any party. Unless expressly set forth otherwise, all references
herein to a "day" are deemed to be a reference to a calendar day. All references
to "business day" mean any day of the year other than a Saturday, Sunday or a
public or bank holiday in California. Unless expressly stated otherwise,
cross-references herein refer to provisions within this Agreement and are not
references to the overall transaction or to any other document.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
THE CORPORATION: MADERA DISPOSAL SYSTEMS, INC.
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President
WCI: WASTE CONNECTIONS, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
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THE SHAREHOLDERS:
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▇▇▇▇ ▇▇▇▇▇▇▇▇, as Trustee of the
▇▇▇▇▇▇▇▇ Family Trust B
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇:
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▇▇▇▇ ▇▇▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
1. PURCHASE OF CORPORATION'S STOCK................................................. 1
1.1 SHARES TO BE PURCHASED................................................... 1
1.2 PURCHASE PRICE........................................................... 1
1.3 ADDITIONAL CONTINGENT PURCHASE PRICE..................................... 2
1.4 EXCLUDED ASSETS.......................................................... 5
2. CLOSING TIME AND PLACE.......................................................... 5
3. REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION, THE SHAREHOLDERS AND ▇▇▇▇.......................................... 5
3.1 ORGANIZATION, STANDING AND QUALIFICATION................................. 5
3.2 CAPITALIZATION........................................................... 5
3.3 ALL STOCK BEING ACQUIRED................................................. 6
3.4 AUTHORITY FOR AGREEMENT.................................................. 6
3.5 NO BREACH OR DEFAULT..................................................... 6
3.6 SUBSIDIARIES............................................................. 6
3.7 FINANCIAL STATEMENTS..................................................... 6
3.8 LIABILITIES.............................................................. 7
3.9 CONDUCT OF BUSINESS...................................................... 8
3.10 PERMITS AND LICENSES..................................................... 8
3.11 CERTAIN RECEIVABLES...................................................... 10
3.12 FIXED ASSETS AND REAL PROPERTY........................................... 10
3.13 ACQUISITION/DISPOSAL OF ASSETS........................................... 11
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS........................... 11
3.15 INSURANCE................................................................ 12
3.16 PERSONNEL................................................................ 12
3.17 BENEFIT PLANS AND UNION CONTRACTS........................................ 12
3.18 TAXES.................................................................... 14
3.19 COPIES COMPLETE.......................................................... 14
3.20 CUSTOMERS, ▇▇▇▇▇▇▇▇, CURRENT RECEIPTS AND RECEIVABLES.................... 15
3.21 NO CHANGE WITH RESPECT TO CORPORATION.................................... 15
3.22 DEBT; CURRENT ASSETS AND CURRENT LIABILITIES............................. 17
3.23 BANK ACCOUNTS............................................................ 17
3.24 COMPLIANCE WITH LAWS..................................................... 18
3.25 POWERS OF ATTORNEY....................................................... 19
3.26 UNDERGROUND STORAGE TANKS................................................ 19
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC.................................... 20
3.28 ASSETS, ETC., NECESSARY TO BUSINESS...................................... 20
3.29 CONDEMNATION............................................................. 20
3.30 SUPPLIERS AND CUSTOMERS.................................................. 20
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES.................................... 20
3.32 RELATED PARTY TRANSACTIONS............................................... 21
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3.33 DISCLOSURE SCHEDULES..................................................... 21
3.34 NO MISLEADING STATEMENTS................................................. 21
3.35 ACCURATE AND COMPLETE RECORDS............................................ 21
3.36 KNOWLEDGE................................................................ 21
3.37 BROKERS; FINDERS......................................................... 22
3.38 INVESTMENT REPRESENTATIONS............................................... 22
3.39 MADERA COUNTY LANDFILL OPERATION......................................... 23
4. REPRESENTATIONS AND WARRANTIES OF WCI........................................... 24
4.1 EXISTENCE AND GOOD STANDING.............................................. 24
4.2 NO CONTRACTUAL RESTRICTIONS.............................................. 24
4.3 AUTHORIZATION OF AGREEMENT............................................... 24
4.4 STATUS OF SHARES......................................................... 24
4.5 NO MISLEADING STATEMENTS................................................. 24
4.6 BROKERS; FINDERS......................................................... 24
4.7 DISCLOSURE SCHEDULES..................................................... 24
5. COVENANTS FROM SIGNING TO CLOSING DATE.......................................... 25
5.1 OPERATIONS............................................................... 25
5.2 NO CHANGE................................................................ 25
5.3 OBTAIN CONSENTS.......................................................... 26
5.4 ACCESS; CONFIDENTIAL INFORMATION......................................... 26
5.5 NOTICE OF MATERIAL ADVERSE CHANGE........................................ 27
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO
CLOSE........................................................................... 27
6.1 REPRESENTATIONS AND WARRANTIES........................................... 27
6.2 CONDITIONS............................................................... 27
6.3 NO MATERIAL ADVERSE CHANGE............................................... 27
6.4 CERTIFICATES............................................................. 27
6.5 NO LITIGATION............................................................ 28
6.6 OTHER DELIVERIES......................................................... 28
6.7 GOVERNMENTAL APPROVALS; CONSENTS TO TRANSFER............................. 28
6.8 RELEASE OF SECURITY INTERESTS............................................ 28
6.9 DUE DILIGENCE............................................................ 28
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7. CONDITIONS PRECEDENT TO OBLIGATION OF THE
SHAREHOLDERS TO CLOSE........................................................... 28
7.1 REPRESENTATIONS AND WARRANTIES........................................... 28
7.2 CONDITIONS............................................................... 29
7.3 CERTIFICATE.............................................................. 29
7.4 NO LITIGATION............................................................ 29
7.5 OTHER DELIVERIES......................................................... 29
7.6 ELECTION OF DIRECTOR AND ADVISORY DIRECTOR............................... 29
8. CLOSING DELIVERIES.............................................................. 29
8.1 WCI DELIVERIES........................................................... 29
8.2 SHAREHOLDERS DELIVERIES.................................................. 30
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION
AND THE SHAREHOLDERS............................................................ 31
9.1 NO DELAY................................................................. 31
9.2 RELEASE OF GUARANTIES.................................................... 31
9.3 RELEASE OF SECURITY INTERESTS............................................ 31
9.4 CONFIDENTIALITY.......................................................... 31
9.5 BROKERS AND FINDERS FEES................................................. 32
9.6 TAXES.................................................................... 32
9.7 SHORT YEAR TAX RETURNS................................................... 32
9.8 SHAREHOLDERS' REPRESENTATIVE............................................. 32
9.9 CERTAIN TAX MATTERS...................................................... 33
10. INDEMNIFICATION................................................................. 34
10.1 INDEMNITY BY THE SHAREHOLDERS............................................ 34
10.2 LIMITATIONS ON SHAREHOLDERS' INDEMNITIES................................. 35
10.3 NOTICE OF INDEMNITY CLAIM................................................ 36
10.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS................... 37
10.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF............... 37
11. OTHER POST-CLOSING COVENANTS OF THE
SHAREHOLDERS AND WCI............................................................ 37
11.1 RESTRICTIVE COVENANTS.................................................... 37
11.2 RIGHTS AND REMEDIES UPON BREACH.......................................... 39
12. TERMINATION OF AGREEMENT........................................................ 40
12.1 TERMINATION DATE......................................................... 40
12.2 NOTICE AND EFFECT OF TERMINATION......................................... 41
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12.3 EXCLUSIVE NEGOTIATIONS................................................... 41
13. GENERAL......................................................................... 41
13.1 ADDITIONAL CONVEYANCES................................................... 41
13.2 ASSIGNMENT............................................................... 41
13.3 PUBLIC ANNOUNCEMENTS..................................................... 41
13.4 COUNTERPARTS............................................................. 42
13.5 NOTICES.................................................................. 42
13.6 ATTORNEYS' FEES.......................................................... 42
13.7 APPLICABLE LAW........................................................... 42
13.8 PAYMENT OF FEES AND EXPENSES............................................. 42
13.9 INCORPORATION BY REFERENCE............................................... 43
13.10 CAPTIONS................................................................. 43
13.11 NUMBER AND GENDER OF WORDS; CORPORATION.................................. 43
13.12 ENTIRE AGREEMENT......................................................... 43
13.13 WAIVER................................................................... 43
13.14 CONSTRUCTION............................................................. 43
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