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EXHIBIT E
EXCHANGE AGREEMENT
BETWEEN
3CI COMPLETE COMPLIANCE CORPORATION
AND
WASTE SYSTEMS, INC.
DATED AS OF JUNE 24, 1997
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CONTENTS
PAGE
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ARTICLE 1
THE EXCHANGE
1.1. Exchange............................................................ 1
1.2. Closing............................................................. 1
1.3. Effective Date...................................................... 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Representations and Warranties of the Company....................... 2
2.1.1. Organization and Standing................................... 2
2.1.2. Agreement Authorized and its Effect on Other Obligations.... 2
2.1.3. Validity of Stock........................................... 2
2.1.4. Capitalization.............................................. 3
2.1.5. Reports and Financial Statements............................ 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WSI
3.1. Representations and Warranties of WSI............................... 3
3.1.1. Organization and Standing................................... 3
3.1.2. Agreement Authorized and its Effect on Other Obligations.... 4
3.1.3. Ownership of Notes.......................................... 4
3.1.4. Investment Intent........................................... 4
3.1.5. Investor Sophistication..................................... 4
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances.................................................. 5
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI.......................... 5
5.1.1. Representations and Warranties True at Closing Date......... 5
5.1.2. No Material Litigation...................................... 5
5.1.3. Opinion of Counsel.......................................... 5
5.2. Conditions Precedent to Obligations of the Company.................. 6
5.2.1. Representations and Warranties of WSI True at Closing
Date........................................................ 6
5.2.2. No Material Litigation...................................... 6
5.2.3. Opinion of Counsel.......................................... 6
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ARTICLE 6
MISCELLANEOUS
6.1. Entirety............................................................ 7
6.2. Counterparts........................................................ 7
6.3. Notices and Waivers................................................. 7
6.4. Termination of Representations, Warranties, etc..................... 7
6.5. Table of Contents and Captions...................................... 8
6.6. Successors and Assigns.............................................. 8
6.7. Severability........................................................ 8
6.8. Applicable Law...................................................... 8
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EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of June 24, 1997, among 3CI
Complete Compliance Corporation, a Delaware corporation (the "Company") and
Waste Systems, Inc., a Delaware Corporation ("WSI").
WITNESSETH:
WHEREAS, the Company and certain of its affiliates are the Makers of (i) a
promissory note dated September 30, 1995, in the original principal amount of
$8,000,000 (the "1995 Note"), and a promissory note dated December 20, 1996, in
the original principal amount of $2,700,000 (the "1996 Note"), in each case,
payable to the order of WSI (the 1995 Note and the 1996 Note are collectively
referred to herein as the "Notes"); and
WHEREAS, all interest due under the Notes has, in accordance with the terms
of the Notes, been converted to principal; and
WHEREAS, the Company is authorized to issue up to 1,000,000 shares of its
preferred stock, without par value;
WHEREAS, the Company and WSI have agreed that the Company will issue to WSI
1,000,000 shares of its Series A Preferred Stock in the form of the Certificate
of Designation of Series A Preferred Stock attached hereto as Exhibit A (the
"Series A Preferred Stock"), in exchange for the cancellation of the 1996 Note
and a reduction in the principal amount of the 1995 Note.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and to prescribe the terms and
conditions of the exchange contemplated hereby, the parties hereto hereby agree
as follows:
ARTICLE 1
THE EXCHANGE
1.1. Exchange. Upon the terms and subject to the conditions set forth in
this Agreement, the Company agrees to issue and deliver to WSI 1,000,000 shares
of its Series A Preferred Stock, in exchange for the cancellation of the 1996
Note and a reduction of the principal amount of the 1995 Note in an amount equal
to $7,000,000 minus the principal amount of the 1996 Note as of January 1, 1997.
1.2. Closing. The closing of the transactions contemplated hereby (the
"Closing") will occur as soon as practicable after the date hereof (the "Closing
Date"). At the Closing, the Company will deliver to WSI a certificate
representing 1,000,000 shares of the Series A Preferred Stock. WSI will cancel
1996 Note and reduce the outstanding principal balance on the 1995 Note in
accordance with the provisions of this Agreement.
1.3. Effective Date. The effective date of the cancellation of the 1996
Note and the reduction in the principal amount of the 1995 Note described in
Section 1.1 shall be January 1, 1997 (the "Effective Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
2.1. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
2.1.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Delaware, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and operate
the properties
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currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties
owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a material adverse effect on its
financial condition, properties or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations. The
execution and delivery of this Agreement has been authorized by the board
of directors of the Company, the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company, and this Agreement is a valid
and binding obligation of the Company, enforceable against the Company
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The consummation of the transactions contemplated by
this Agreement will not conflict with or result in a violation or breach of
any term or provision of, nor constitute a default under (i) the
Certificate of Incorporation or Bylaws of the Company or (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Company or any of its subsidiaries is a party or by
which any of them or their properties are bound.
2.1.3. Validity of Stock. On the Closing Date, the Series A Preferred
Stock to be issued to WSI hereunder will be in due and proper form, will be
duly authorized by all necessary corporate action on the part of the
Company, and will be validly issued, fully paid and non-assessable shares
of Series A Preferred Stock, free of preemptive rights. Upon delivery of
the shares of Series A Preferred Stock, WSI will acquire valid and
marketable title to such shares of Series A Preferred Stock, free and clear
of any encumbrances. The Common Stock issuable upon conversion of the
Series A Preferred Stock has been duly authorized by all the necessary
corporate acts on the part of the Company and when issued will be validly
issued, fully paid and nonassessable shares of Common Stock of the Company
free of preemptive rights. Upon delivery of the shares of Common Stock upon
conversion of the Series A Preferred Stock, WSI will acquire valid
marketable title to such Common Stock free and clear of any encumbrances.
2.1.4. Capitalization. As of the Effective Date and the Closing Date,
the authorized capitalization of the Company will consist of 15,000,000
shares of Common Stock and 1,000,000 shares of preferred stock, without par
value ("Preferred Stock").
2.1.5. Reports and Financial Statements. The Company has furnished to
WSI true and complete copies of its annual report filed with the Commission
pursuant to the Exchange Act for the fiscal year ended September 30, 1996
(the "10-K"), and (ii) the Company's quarterly report filed with the
Commission for the fiscal quarter ended March 31, 1997 (the "10-Q"). The
consolidated financial statements of the Company and its consolidated
subsidiaries included in the 10-K and the 10-Q were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved and fairly present the consolidated financial
position for the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and changes in
financial position of the periods then ended, and the 10-K and 10-Q did not
contain any untrue statement of a material fact or fail to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since September 30, 1996, the Company has filed with the
Commission all material reports, registration statements and other material
filings required to be filed with the Commission under the rules and
regulations of the Commission.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF WSI
3.1. Representations and Warranties of WSI. WSI represents and warrants as
follows:
3.1.1. Organization and Standing. WSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full requisite corporate power and authority to carry on its
business as it is currently conducted, to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties
owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a material adverse effect on its
financial condition, properties or business.
3.1.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of WSI,
and this Agreement is a valid and binding obligation of WSI enforceable
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The consummation of the transactions contemplated by
this Agreement will not conflict with or result in a violation or breach of
any term or provision of, or constitute a default under (i) the Certificate
of Incorporation or Bylaws of WSI or (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which WSI or
any of its subsidiaries is a party or by which any of them or their
properties are bound.
3.1.3. Ownership of Notes. WSI owns the Notes free and clear of any
encumbrances or rights of any third parties and has the full right and
authority to cancel the indebtedness represented thereby as contemplated by
this Agreement. Upon consummation of the transactions contemplated hereby,
the portion of the debt evidenced by the Notes repaid upon issuance of the
Series A Preferred Stock shall no longer be outstanding.
3.1.4. Investment Intent. WSI is acquiring the shares of Series A
Preferred Stock solely for its own account and not with a view to the
public distribution thereof. WSI acknowledges that the shares of Series A
Preferred Stock being issued hereunder will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and agrees that
it will only re-offer or resell the shares of Series A Preferred Stock in
compliance with the requirements of Rule 144 promulgated under the
Securities Act, in accordance with any other available exemption from the
registration requirements of the Securities Act, or pursuant to a valid
registration statement under the Securities Act. WSI acknowledges that upon
acquisition of the shares of Series A Preferred Stock (other than in
connection with a registered offering thereof), and until such time, if
any, as WSI has received an opinion of counsel to WSI, in form and
substance satisfactory to the Company, that it is no longer necessary or
advisable, the certificate(s) representing such Series A Preferred Stock
shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
3.1.5. Investor Sophistication. WSI acknowledges and understands that
it must bear the economic risk of this investment for an indefinite period
of time. WSI has experience in analyzing and investing in
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entities like the Company, can bear the economic risk of its investment,
including the full loss of its investment, and by reason of its business or
financial experience, has the capacity to evaluate the merits and risks of
its investment and to protect its own interests in connection with the
purchase of Series A Preferred Stock from the Company.
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. The Company hereby covenants and agrees to take
all actions within its power after the date hereof to effect the transactions
contemplated by this Agreement, including but not limited to the filing with the
Delaware Secretary of State of a certificate of designations relating to the
Series A Preferred Stock.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. The obligation of WSI to
consummate and effect the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions or to the waiver thereof by WSI:
5.1.1. Representations and Warranties True at Closing Date. The
representations and warranties of the Company herein contained shall be, in
all material respects, true as of and at the Closing Date with the same
effect as though made at such date; and the Company shall have performed
and complied, in all material respects, with all covenants required by this
Agreement to be performed or complied with by the Company before the
Closing Date.
5.1.2. No Material Litigation. No suit, action or other proceeding
shall be pending or threatened before any court or governmental agency in
which it will be, or it is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.1.3. Opinion of Counsel. WSI shall have received a favorable
opinion, dated as of the Closing Date, from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.,
counsel for the Company, in form and substance satisfactory to WSI, to the
effect that (i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware; (ii) all proceedings required to be taken by or on the part of
the Company to authorize the execution of this Agreement and the
implementation of the transactions contemplated hereby have been taken;
(iii) this Agreement has been duly executed and delivered by, and is the
legal, valid and binding obligation of the Company and is enforceable
against the Company in accordance with its terms, except as enforceability
may be limited by (a) equitable principles of general applicability or (b)
bankruptcy, insolvency, reorganization, fraudulent conveyance or similar
laws affecting the rights of creditors generally; and (iv) the Series A
Preferred Stock, when issued, will have been duly authorized by all
necessary corporate action on the part of the Company, and will be validly
issued, fully paid and nonassessable shares of Series A Preferred Stock,
free of preemptive rights. Such opinion also shall cover such other matters
incident to the transactions herein contemplated as WSI may reasonably
request.
5.2. Conditions Precedent to Obligations of the Company. The obligations of
the Company to consummate the transactions contemplated hereby shall be subject
to the satisfaction of the following conditions or to the waiver thereof by the
Company.
5.2.1. Representations and Warranties of WSI True at Closing Date. The
representations and warranties of WSI herein contained shall be, in all
material respects, true as of and at the Closing Date with the same effect
as though made at such date; and WSI shall have performed and complied in
all
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material respects with all covenants required by this Agreement to be
performed or complied with by it before the Closing Date.
5.2.2. No Material Litigation. No suit, action or other proceeding
shall be pending or threatened before any court or governmental agency in
which it will be, or it is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.2.3. Opinion of Counsel. The Company shall have received a favorable
opinion, dated the Closing Date, from Blanchard, Walker, ▇'▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to WSI, in form and substance satisfactory to the Company, to the
effect that (i) WSI has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware; (ii)
all corporate or other proceedings required to be taken by or on the part
of WSI to authorize the execution of this Agreement and the implementation
of the transactions contemplated hereby have been taken; (iii) this
Agreement has been duly executed and delivered by, and is the legal, valid
and binding obligation of WSI, and is enforceable against WSI in accordance
with its terms, except as enforceability may be limited by (a) equitable
principles of general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting the rights
of creditors generally. Such opinion shall also cover such other matters
incident to the transactions herein contemplated as the Company and its
counsel may reasonably request.
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
6.2. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
6.3. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested as follows:
IF TO THE COMPANY
Addressed to: With a copy to:
3CI Complete Compliance Corporation ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 700 Louisiana, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Crochet Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO WSI
Waste Systems, Inc. Blanchard, Walker, ▇'▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ P.O. Drawer 1126
Attn: ▇▇. ▇▇▇▇▇▇▇ Pues ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile:
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Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
6.4. Termination of Representations, Warranties, etc. The respective
representations and warranties of the Company and WSI contained herein shall
expire on the Closing Date.
6.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
6.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
6.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
6.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
3CI COMPLETE COMPLIANCE CORPORATION
By:
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▇▇▇▇▇▇▇ ▇. Crochet, President
WASTE SYSTEMS, INC.
By:
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▇▇. ▇▇▇▇▇▇▇ Pues
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