EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of the 24th
day of March, 1997, by and among LIBERTY DISPOSAL, INC., XXXX X.
XXXXXXXXXX, Trustee, THE LIBERTY DISPOSAL, INC. CHARITABLE
REMAINDER ANNUITY TRUST 1997 (collectively "Seller") and
AMERICAN DISPOSAL SERVICES OF MISSOURI, INC., an Oklahoma
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell to Buyer and Buyer
desires to purchase Seller's tangible assets as set forth on
Schedule 3(a), all contractual rights, accounts receivable,
customer lists maintained by Seller in connection with its trash
collection operations (the "Business"), the name Liberty
Disposal, Inc. and all goodwill associated therewith as more
specifically described in paragraph 3 below (the "Assets"), and
Seller desires to grant to Buyer and Buyer desires to acquire
from seller a covenant not to compete for a period of five (5)
years, all upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and
mutual covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged, it is hereby mutually agreed as follows:
1. Seller's Warranties and Representations. To
induce the making of the transaction hereinafter provided for,
Seller represents and warrants as follows:
(a) Financial Materials. Seller has heretofore
delivered to Buyer sales and expenses information with respect to
periods prior to December 31, 1996 (the "Balance Sheet Date") of
its trash collection and disposal operations which are complete,
true and accurate in all material respects, and which are
attached hereto on Schedule 1(a). Seller will deliver to Buyer a
compilation financial statement prepared by Xxxxxxx X. Xxxxxxx,
Inc. for the Seller for the period ending March 31, 1997, which
shall contain a balance sheet and income and expense statement,
which financial statement shall be complete, true and accurate in
all material respects.
(b) Title to Assets and Absence of Encumbrances.
Except as set forth on Schedule 1 (b), Seller owns, and on the
Closing Date will own and have good and marketable title to, the
Assets, such assets to be free and clear of all liens and
encumbrances of every kind and nature as of the Closing Date,
including, without limitation, any liabilities related to unpaid
sales tax, use tax, or bulk sales tax. Seller has not entered
into any contract to sell, mortgage, or otherwise encumber any of
the Assets except in the ordinary course of business, and there
are not, and at the time of closing will not be, any judgments,
tax liens, other liens, actions or proceedings in any court
against such assets or property other than as itemized on
Schedule 1(b) attached. Seller has not received any notice of
violation of any laws, regulations, ordinances or other laws,
regulations or requirements relating to the operation of the
Business or the Assets.
(c) Operating Condition. To the best of Seller's
knowledge, all containers, equipment and other tangible assets
being sold hereunder are in operating condition, subject only to
normal wear and tear thereof.
(d) Conduct of Business. Since the Balance Sheet
Date, there has not been:
(i) Any adverse change in the condition
(financial or other) of the trash collection and disposal
business of Seller, except changes in the ordinary course of
business, none of which has had a material effect on Seller;
(ii) Any damage, destruction or loss (whether or
not covered by insurance) materially or adversely affecting the
Assets or the Business;
(iii) Any sale of inventory, containers,
equipment and other assets other than in the ordinary course of
business; or
(iv) Any other occurrence, event or condition
which materially adversely affects or may materially adversely
affect the Business or the Assets.
(e) Seller's Records. Seller will make available to
Buyer all of its trash service business records, including
specifically, but not exclusively, accounts receivable and sales
and gross profit records showing details concerning purchases and
payments by customers, payroll and workers compensation records.
Buyer agrees to use such information only for the express purpose
of Buyer's Diligence as hereinafter defined and will maintain
such information in a confidential manner, consistent with the
provisions of the Letter of Intent executed by the parties hereto
on December 18, 1996.
(f) Contracts; Deposits. Except as disclosed on
Schedule 1(f) (the "Business Contracts"), neither Seller nor any
agent or employee of Seller is a party to any contract, agreement
or arrangement, whether written or otherwise, which relates to
the Business and (i) provides for Seller providing trash
collection services to any other person, (ii) provides for any
person to provide to Seller services or supplies, inventory,
equipment or other goods, (iii) is an employment contract or
otherwise provides for the paying of any salary, bonus or benefit
to any employee, (iv) which is a lease or sublease with respect
to any real or personal property, whether as lessor or lessee,
(v) is an advertising contract or contract for public relation
services or (vi) which is not terminable without cost or other
liability at will. Except as disclosed on Schedule 1(k)
regarding consent to assignment of contracts, neither Seller nor
any agent or employee of Seller is a party to any contract,
license agreement, or restriction, whether written or otherwise,
which limits or restricts the sale, lease or use of the Assets.
Seller does not have any arrangements, commitments or
undertakings with any customers or suppliers which requires any
special undertakings, commitments or efforts on the part of
Seller or which do not permit Seller from billing for Seller's
services at Seller's going rates. Without limiting the
generality of the foregoing, Seller is under no obligation to
provide and has not provided any bags, containers or equipment
(other than those included in the Assets) or any additional or
reduced rate collection times to any of its customers. Seller
has provided to Buyer a current pick up schedule for Seller's
customers. There have been no statements, notices, threats or
other indications that the validity, enforceability or term of
any of the Business Contracts may be challenged, questioned or
otherwise adversely affected. There exists no condition or event
which, after notice or lapse of time or both, would constitute a
default under any of the Business Contracts. Seller has not
received and is not obligated to pay or refund to any customer
any deposits, security deposits or prepaid amounts (except as
accounted for pursuant to paragraph 5, below).
(g) Customer List. Seller will provide to Buyer prior
to closing a Schedule 1 (g) list of its principal customers in
its trash collection and disposal service operations and a
description of all contracts under which such services are
performed. Such list provided on Schedule 1 (g) will be true and
accurate as of the date set forth on such list and Seller has not
received any notice in writing that any customer listed will not
continue as a customer of Buyer after the closing.
(h) Business. Seller shall use its best efforts to
maintain the goodwill of Seller's suppliers, customers and others
having business relations with Seller.
(i) Adequacy of Rights. Other than the rights and
assets to be conveyed pursuant to this Agreement, no additional
franchises, licenses or other rights to trade names or trademarks
are necessary for Buyer to effectively use and sell the Assets
and conduct the Business previously conducted by Seller.
(j) Authority Relative to this Agreement. Seller has
full and requisite power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder.
(k) No Conflicts. Except as disclosed on Schedule
1(k) hereto, neither the execution, delivery nor performance of
this Agreement will violate any law, statute, rule or regulation
of any governmental agency or authority, nor will conflict with
or result in a breach of, or constitute a default under, any
term, condition or provision of any judgment, order, injunction
or decree, any permit, Business Contract or any agreement or
instrument to which Seller is a party or by which it or any of
the Assets are bound, nor result in the creation of any lien,
charge or encumbrance of any of the Assets. Buyer agrees that it
will obtain legal advice concerning the applicability of the Xxxx
Xxxxx Xxxxxx Antitrust Improvements Act of 1976 to this
transaction, and Buyer acknowledges and agrees that Seller makes
no representation hereunder with respect to the applicability of
the Xxxx Xxxxx Xxxxxx Anti trust Improvements Act of 1976 to this
transaction.
(l) Accounts Receivable. The accounts receivable of
Seller have arisen in bona fide transactions in the ordinary
course of business.
(m) Environmental Matters. Except as specifically
outlined on Schedule 1(m), the following statements are true and
correct:
(i) In connection with the use, ownership,
condition or operation of the Business and the Assets, Seller and
each person or entity owning or having owned any interest (lease
hold, fee or otherwise) in, or operating or having operated, the
Assets, has complied in all material respects with all laws,
ordinances, permits, orders, statutes, rules, permitting and
licensing requirements, determinations and regulations
promulgated or issued or applied by any municipal, local, city,
county, state or federal court, agency, board, legislature,
commission or other legislative, judicial, administrative or
regulatory body ("Governmental Body") relating to the protection
of the environment (including, without limitation, ambient air,
surface water, groundwater and land, natural resources, wildlife
or human health) ("Environmental Laws") (including, without
limitation, all Environmental Laws concerning (i) emissions,
discharges, spills, leaks, releases or threatened releases
("Releases") of petroleum (including, without limitation, oil,
used oil, waste oil, gasoline, constituents thereof and petroleum
based fuels), petroleum by products, petroleum wastes, petroleum
contaminated soils, salt water, asbestos, wastes associated with
oil and gas drilling, exploration and production activities,
pollutants, contaminants, deleterious substances, chemicals,
special waste, or radioactive substances and materials, or
"hazardous substances," "toxic substances," or "hazardous
wastes," as those terms are defined in any Environmental Law
(hereinafter individually and collectively called "Pollutants"),
into the environment, or (ii) the production, manufacture,
processing, distribution, generation, use, treatment, storage,
disposal, transportation, or handling of Pollutants), in
connection with which the failure to comply could reasonably be
expected to result in the Seller or Buyer incurring an expense,
cost, loss or liability of more than $5,000 individually or in
the aggregate.
(ii) Seller is not aware, and has not received
notice from any Governmental Body, person or entity, of any
Release, event, condition, circumstance, activity, practice or
incident concerning the Business or the Assets that (i) may
interfere with or prevent compliance or continued compliance by
the Company with any Environmental Law, (ii) may give rise to or
result in any common law or other liability of Seller or Buyer to
any person, entity or Governmental Body for damage or injury to
natural resources, wildlife, human health or the environment, or
(iii) could reasonably be expected to result in Seller or Buyer
incurring an expense, cost, loss or liability of more than $5,000
individually or in the aggregate.
(iii) There is no civil, criminal, or
administrative action, lawsuit, demand, litigation, claim,
hearing, notice of violation, investigation, proceeding,
injunction, writ, restricting order or other order of any nature
pending or threatened against the Seller, or any present or
former owner of any interest in, or operator of, the Assets
respecting the maintenance of a nuisance, or the violation of any
Environmental Law, or any duty arising at common law to any
person, entity or Governmental Body.
(iv) There is not now and there has never been,
any underground tank or container situated in, at or on any
premises owned or operated by Seller which was used to store or
as a container for any Pollutant. Aboveground tanks are
identified on Schedule 1(m).
(v) Seller has obtained or has taken appropriate
steps, as required by Environmental Laws, to obtain all
environmental, health and safety permits necessary for his
operations as currently conducted, all such permits are in good
standing, and Seller is currently in compliance with all terms
and conditions of such permits.
(n) Revenue. The average monthly revenue of Seller
from the Business has been at least $583,000.00 during the
immediately preceding 6 months. The average monthly revenue
collected from the Business as defined during the three months of
May, June and July immediately following the Closing Date (the
"Test Period") shall be at least $550,000.00 (the "Guaranteed
Revenue"). At Seller's option the Test Period may be extended
up to an additional three months, through October 31, 1997. If
actual average monthly revenue collected from the Business for
work during the Test Period, or the Test Period as extended, is
less than Guaranteed Revenue and the average monthly deficiency
is attributable to:
(i) a material change in service by Buyer; or
(ii) any increase in pricing,
then Guaranteed Revenue shall be reduced by the amount of the
average monthly deficiency ("Adjusted Guaranteed Revenue"). If
actual average monthly revenue from the Business as defined
herein for the Test Period is less than Guaranteed Revenue or
Adjusted Guaranteed Revenue, then an amount equal to 20 times the
average monthly deficiency shall be deemed to be Buyer's loss,
damage or expense resulting from Seller's breach of this
representation and warranty.
For purposes of this Paragraph 1(n) the Seller and Buyer agree
that during the Test Period,
(iii) all of the Business of Seller and Buyer
doing business as T&J Container Systems ("T&J") will be kept
separate, however, if Seller opts to extend the Test Period
pursuant to this Paragraph 1(n), then Buyer may consolidate the
Business of Seller with that of T&J during the extended Test
Period (August, September and October, 1997). Notwithstanding
the foregoing, Buyer shall put in place its own insurance
coverage during the Test Period and further, Buyer shall deposit
all monies collected from the Business into Buyer's banking
account and shall pay all accounts payable out of Buyer's banking
account. In other words, all cash deposits and accounts payable
will be converted to Buyer's accounting systems as of the Closing
Date.
(iv) If Buyer doing business as T&J disposes of
construction and demolition material at Seller's processing
facility, Buyer shall credit Seller at the agreed upon price of
thirty five dollars ($35.00) per ton and such revenues will be
included in computing Seller's actual average monthly revenue for
purposes of meeting the Guaranteed Revenue amount;
(v) If accounts receivable attributable to
municipal contracts for North Providence, East Providence,
Xxxxxx, Somerset and Swansea have not been collected during the
Test Period but Seller verifies that such municipality(ies) have
been billed, then the revenues attributable to such municipal
contract(s) will be included in computing Seller's actual average
monthly revenue for purposes of meeting the Guaranteed Revenue
amount.
(vi) All of Seller's customers will be invoiced on
Seller's existing invoice stock, utilizing Seller's computerized
billing system as it exists on the Closing Date;
(vii) Seller's telephone lines will be
maintained separately from Buyer doing business as T&J and any
person calling Seller's existing telephone number for new or
additional service will be included in computing Seller's actual
average monthly revenue for purposes of meeting the Guaranteed
Revenue amount. However, notwithstanding the foregoing, any new
customer of Seller which is an existing customer of Buyer as of
the Closing Date shall not be included in computing Seller's
actual average monthly revenue, and conversely any new customer
of Buyer which is an existing customer of Seller as of the
Closing Date shall be included in computing Seller's actual
average monthly revenue.
(viii) Except as legally required, during the
Test Period (and any extension thereof) Buyer will not disclose
to the general public through a press release or other public
announcement its acquisition of assets of Seller. However, Buyer
shall be entitled any time on or after the Closing Date to make
any and all submissions of information which are either legally
required, or are necessary in Buyer's sole opinion, to any
governmental body including but not limited to the Securities
Exchange Commission.
(ix) During the Test Period Seller and Buyer agree
that no short term (less than one year) work which is priced
below the pricing floors outlined on the price list attached as
Schedule 1 (n) (ix) will be included in computing Seller's actual
average monthly revenue for purposes of meeting the Guaranteed
Revenue amount, unless consented to by Buyer.
2. Buyer's Warranties and Representations. To induce
the making of this transaction hereinafter provided for, Buyer
represents and warrants as follows:
(a) Corporation. Buyer (i) is a corporation duly
organized validly existing and in good standing under the laws of
the State of Oklahoma, (ii) is authorized to transact business in
the State of Rhode Island and (iii) has the corporate power and
authority to purchase the property being sold hereunder.
(b) Compliance with Laws. The execution, delivery and
performance of this Agreement by the Buyer including, without
limitation, the purchase and acceptance contemplated hereby have
been or will be prior to closing duly and effectively authorized
by Buyer's Board of Directors and do not and will not violate the
Xxxx Xxxxx Xxxxxx Antitrust Improvements Act of 1976 or any
provision of any judicial or governmental decree, order or
judgement or conflict with or result in a breach or constitute a
default under, the Certificate of Incorporation or Bylaws of
Buyer. In addition the execution, delivery and performance of
this Agreement will not violate any law, statute, rule or
regulation of any agency or governmental authority which is
applicable to Buyer prior to the Closing Date, and will not
conflict with, breach or constitute an event of default under any
judgment, order, injunction, decree, permit, contract, agreement
or instrument to which the Buyer is a party prior to the Closing
Date.
3. Purchase and Sale. Subject to and upon the terms
and conditions hereinafter set forth, Seller hereby agrees to
sell, transfer, convey and assign to Buyer pursuant to the
Assignment and Xxxx of Sale attached hereto as Exhibit A, and the
Assignment of Business Contracts attached hereto as Exhibit B,
and Buyer agrees to purchase from Seller, all of the following
described Assets:
(a) The equipment and other operating assets described
on Schedule 3(a), together with approximately 2,014 containers
and 39 compactors, which shall be identified on a revised
Schedule 3(a) to be delivered by Seller to Buyer at Closing.
(b) The Accounts Receivable of Seller determined in
accordance with Paragraph 6(a).
(c) The Business Contracts, customer lists, business
property, the name "Liberty Disposal, Inc.", and all other
contract rights, intangible assets and the goodwill associated
with any of the foregoing used or useful in the Business and all
records, documents and all information in Seller's possession as
may be reasonably necessary to enable Buyer to efficiently use
the Assets.
Buyer does not intend to purchase any interest in,
and the term "Assets" shall not include, Seller's employee
benefit plans, cash or equivalents, certificates of deposits,
income tax refunds or real property. Buyer shall not assume and
Seller expressly agrees to retain and satisfy, any liability or
obligation of Seller which arises directly or indirectly out of
acts or omissions of the Seller prior to the Closing. Other than
as specifically and expressly assumed in writing by Buyer, and
identified on Schedule 3(c), Buyer shall not assume and Seller
expressly agrees to retain and satisfy any liability or
obligation of Seller arising prior to or after the Closing.
4. Consideration for Such Purchase Sale. As and for
the purchase price of the Assets and for the covenant not to
compete, Buyer agrees to pay, and Seller agrees to accept same:
(a) For the Assets described in Paragraph 3(a),
$2,600,000.00, unless adjusted pursuant to Schedule 4(a).
(b) For the Accounts Receivable, the AR Amount as
determined and adjusted in accordance with Paragraph 6.
(c) For the Assets described in Paragraph 3(c),
$11,800,000.00, plus monthly purchase price payments of $12,500
per month for 24 months subject to termination in accordance with
the terms and conditions of Schedule 12 attached.
(d) For the covenant not to compete provided for in
Paragraph 8 $100,000.00.
(e) For the approved capital expenditures and prorated
truck registration payments, that amount identified on Schedule
4(e).
5. Holdback. The purchase price specified in
Paragraph 4 above for the Assets and the covenant not to compete
shall be paid to Seller as follows:
(a) Eleven million, six hundred thousand dollars
($11,600,000.00) plus the AR Amount plus those additional amounts
identified on Schedule 4(e) for approved capital expenditures and
truck registration payments shall be paid in cash to Seller at
Closing.
(b) Two million, nine hundred thousand dollars
($2,900,000.00) shall be held in an Escrow Account established by
Seller and Buyer in Rhode Island (the "Holdback") for a period
of 120 days from the Effective Date or for a period of 30 days
beyond the end of the Test Period if Seller opts to extend the
Test Period under Paragraph 1(n), or as provided in paragraph
5(c) or 5(d) below to protect Buyer against breach of any of
Seller's warranties, representations and covenants, specifically
including but not limited to, those relating to Accounts
Receivable.
(c) The Holdback amount shall be returned to Seller as
follows:
(i) if Buyer makes no claim of breach of any of
Seller's representations, warranties or covenants, then the
Holdback shall be paid in full in cash to Seller within one
hundred and twenty days of the Effective Date, or no later than
thirty (30) days beyond the end of the Test Period if Seller opts
to extend the Test Period under Paragraph 1(n).
(ii) if Buyer asserts there has been a breach of
any of Seller's representations, warranties or covenants, then
Buyer shall notify Seller in writing setting forth the nature of
the breach and/or the amount of loss, damage, cost or expense,
which amount shall remain in the Holdback until the dispute is
resolved. A claim by Buyer against the Holdback must total at
least five thousand dollars ($5,000.00) in the aggregate before
Buyer shall notify Seller, however, once Buyer's claim(s) total
at least five thousand dollars ($5,000.00) in the aggregate, then
Seller shall be liable for the full amount of such claim(s) and
not just for the incremental amount above $5,000.00. The amount
of the Holdback which is not in dispute shall be returned to
Seller pursuant to paragraph 5(c)(i) above. The balance of the
Holdback shall be returned to Seller on the date on which any
unresolved claim asserted by Buyer against Seller is finally
resolved.
(iii) if Seller disputes Buyer's assertion of
breach or loss or damage, then Seller shall notify Buyer of the
dispute in writing. The parties shall then negotiate in good
faith to resolve the dispute within a thirty (30) day period
following Seller's notice to Buyer. If the dispute is not
resolved within the thirty (30) day period, then both parties
reserve all their rights and remedies to resolve the matter.
(d) The Holdback amount shall be deposited in an
Escrow account created by the Seller at a bank located in Rhode
Island and approved by the Buyer subject to the following terms,
conditions and restrictions:
(i) the term of the Escrow shall extend at a
minimum to a date one hundred and twenty (120) days from the
Effective Date, or to a date thirty days from the end of the
Test Period if Seller opts to extend the Test Period under
Paragraph 1(n), and shall terminate on such date if none of the
Holdback amount is in dispute, at which time all funds in the
Escrow which are not subject to an unresolved claim of the Buyer,
shall be distributed to the Seller;
(ii) if the Buyer makes a claim, it shall be
satisfied from the Holdback amount in the Escrow account as soon
as it is authorized by the parties;
(iii) no withdrawals or distributions shall be
made from the Escrow account without the written authorization of
Seller and Buyer, neither of which shall unreasonably withhold
the same;
(iv) when all funds have been fully and completely
distributed, the Escrow account shall automatically terminate.
6. Determination of Accounts Receivable; Prepaids.
(a) As used herein, "Accounts Receivable" means those
accounts receivable of Seller attributable to the Business;
provided, however, Accounts Receivable shall not include: (i)
any accounts which are more than ninety (90) days past due on the
Closing Date, or (ii) any accounts no longer serviced by Seller.
Seller shall provide Buyer with an Accounts Receivable aging
schedule dated immediately prior to the Closing Date. The aging
schedule will identify Accounts Receivable for work performed in
March, 1997 as 30 days past due, work performed in February, 1997
as 60 days past due and work performed in January, 1997 as 90
days past due.
(b) Buyer shall collect on all Accounts Receivable in
the ordinary course of business. In furtherance of the
foregoing, checks and other payments received by the Buyer after
the Closing Date shall be applied as received to the oldest
outstanding balance of the Accounts Receivable. Buyer shall be
under no obligation to institute any legal proceedings or
otherwise take any action to collect accounts receivable not
purchased from Seller if it would require the Buyer to make any
out of pocket expenditures. However, on a twice monthly basis
the Buyer shall remit to Seller any amounts collected which are
in excess of Accounts Receivable and are therefore attributable
to those accounts receivable of Seller which were not purchased
by Buyer, minus any undisputed accounts payable incurred by the
Seller prior to the Closing Date, along with a description of the
accounts paid. Seller shall be entitled to pursue by all lawful
methods or actions any of Seller's uncollected accounts
receivable which were not purchased by Buyer. The purchase price
for the Accounts Receivable purchased hereunder shall be 85% of
their aggregate face value minus any amounts of the Accounts
Receivable which are attributable to services to be rendered by
Buyer on or after the Closing Date (collectively, the "AR
Amount").
(c) It is understood and agreed that any amounts which
have been received by Seller from any customers which are to be
serviced by Buyer and which are attributable to periods on or
after the Closing Date shall be pro rated and the portion
attributable to such post closing periods shall be paid by Seller
to Buyer ("Prepaid Amounts"). At Closing Seller shall deliver to
Buyer a schedule of the Prepaid Amounts as of the close of
business the day immediately preceding closing (detailing by
customer the amount received and the time period covered
thereby). For purposes of the payment to Seller at Closing, the
Prepaid Amount shall be deducted from the AR Amount.
7. Creditors: Diligence.
(a) Seller acknowledges that Buyer may conduct
business with some or all of Seller's trade creditors and that it
could interfere with Buyer's business if such parties are not
paid. Seller agrees that it will, within any grace periods
provided by Seller's creditors, cause all trade creditors to be
paid in full. Seller may, in good faith, dispute any amounts
claimed to be owed to such creditors. Seller shall furnish to
Buyer such information about Seller's creditors as Buyer may
reasonably request. At least ten (10) days prior to Closing,
Seller shall furnish a list of its existing creditors and the
amounts owed. Such list shall include any contingent liabilities
and disputed amounts.
(b) Seller shall allow Buyer at its own expense,
during regular business hours through Buyer's employees, agents
and representatives, to make such investigation of the business,
properties, books and records of Seller, and to conduct such
examination of the condition of the Assets and Seller's business
as Buyer deems necessary or advisable to familiarize itself
further with such business, properties, books, records, condition
and other matters, to verify the representations and warranties
of Seller hereunder ("Buyer's Diligence"). Buyer's Diligence may
include the performance of an environmental audit by persons
chosen by Buyer. Without limiting the scope of this provision,
it is understood that Buyer will conduct an audit of the Assets
and operations of Seller, will verify that the historical
revenues from the operations of Seller are at least $583,000.00
per month, that there are no liens, claims or encumbrances on any
of the Assets, that the Assets and operations of Seller are
generally suitable to Buyer and that Buyer can expect the
existing customers of Seller to continue with Buyer after
Closing. Seller agrees to cooperate fully in Buyer's conduct of
a financial audit and further agrees to provide Buyer with
whatever help may be necessary, including the assistance of both
its employees and its independent public accountant to facilitate
conclusion of Buyer's financial audit as soon as possible.
Seller acknowledges that time is of the essence in the conduct of
the audit. Seller hereby consents to the release by any
governmental body, agency, commission, department, or other
governmental entity of any and all information concerning Seller,
its business and the Assets.
8. Covenant Not to Compete. Seller and Xxxxxx X.
Xxxxxxx will deliver to Buyer at Closing a separate agreement
whereby Seller and Xxxxxx X. Xxxxxxx will covenant and agree with
Buyer, for the benefit of Buyer, its successors and assigns, that
Seller and Xxxxxx X. Xxxxxxx will not, without the written
consent of Buyer for the period commencing on the date of Closing
and ending five (5) years from such date, engage or be
interested, directly or indirectly, whether alone or together
with or on behalf of or through any other person, firm,
association, trust, venture or corporation whether as partner,
stockholder, agent, officer, director, employee, technical
adviser, lender, trustee, beneficiary or otherwise, in any phase
of the solid waste collection, recycling and disposal business.
The term "engage or be interested" directly or
indirectly, as used herein, shall include giving advice or
technical or financial assistance, by loan, guarantee, stock
transactions or in any other manner to any person, firm,
association, trust, venture or corporation, doing such trash
collection or disposal service in a geographic area comprising a
75 mile radius from the center of Johnston, Rhode Island.
9. Filing of Fictitious Name. If Buyer chooses to
operate the Business under the name "Liberty Disposal, " Buyer
shall either file an application for use of such fictitious name,
or incorporate a subsidiary using such name, with the Secretary
of State of Rhode Island to be effective on the Closing Date.
Seller shall not operate the Business, or operate any business or
other activity under the name "Liberty Disposal, Inc." or
similar name on or after the Closing Date, unless otherwise
permitted in writing by Buyer.
10. Conditions of Buyer to Closing. All obligations
of Buyer under this Agreement are subject to fulfillment of each
of the following conditions:
(a) The representations and warranties of Seller
contained in the Agreement or in any certificate or document
delivered pursuant hereto or in connection with the transaction
contemplated hereby, shall be true and correct on and as of
closing date as though such representations and warranties were
made on and as of such date, and Seller shall have complied with
all of its covenants and agreements herein. At Closing, Seller
shall deliver to Buyer a certificate that the foregoing is true
and correct.
(b) Buyer shall have been given unfettered opportunity
to review Seller's books and records and conduct Buyer's
Diligence including completion of a 1995 and 1996 financial audit
by March 31, 1997.
(c) Between December 31, 1996 and the date of Closing,
there will not have been any materially adverse change in the
Assets, the Business or the business prospects of the Business.
(d) No claim, action, suit or proceedings shall be
pending or threatened against Seller or Buyer, which, if
adversely determined, would prevent or hinder the consummation of
the transaction and other actions contemplated hereby or result
in the payment of substantial damages as a result of such
transaction and actions.
(e) Between December 31, 1996 and the date of
Closing, Seller shall have operated the Business in a manner
consistent with past practices and made no material change in
Seller's operations.
(f) Seller shall deliver releases of all security
interests covering the Assets being purchased by Buyer hereunder.
(g) Seller shall deliver all necessary assignments of
the Business Contracts.
(h) Seller, Xxxxxx X. Xxxxxxx and Buyer shall have
entered into a Covenant Not to Compete as contemplated by
Paragraph 8 and substantially in the form of Exhibit C.
(i) Buyer shall have reached a satisfactory conclusion
of its due diligence review (its Diligence) and Buyer shall have
made a finding, in its sole opinion, of no legal, environmental,
financial or operational conditions which would prohibit or
impede Buyer's operation of Liberty Disposal, Inc. after Closing.
(j) Buyer shall have received approval from its Board
of the proposed transaction, and if required, approval from the
Federal Trade Commission with respect to the Xxxx Xxxxx Xxxxxx
Antitrust Improvements Act of 1976.
(k) Buyer and Seller shall have received approval or
consent as required for assignment of Swansea, Mass., Warren, RI,
East Providence, RI, Somerset, Mass., North Providence, RI, and
Little Xxxxxxx, RI municipal contracts and the contract with the
Solid Waste Management Corporation as described on Schedule 1(f)
of Seller on terms and conditions acceptable to Buyer.
(l) Buyer shall have entered an employment agreement
with Xxxxxx X. Xxxxxxx on terms and conditions mutually
acceptable as shown on attached Schedule 10(l).
(m) Buyer shall have raised sufficient equity to pay
Seller the Purchase Price in accordance with paragraph 4 and 5 of
this Agreement by the Closing Date.
11. Conditions of Seller Closing. All obligations of
Seller under this Agreement are subject to fulfillment of each of
the following conditions:
(a) The representations and warranties of Buyer
contained in the Agreement or in any certificate or document
pursuant to the direction hereof or in connection with the
transaction contemplated hereby, shall be true and correct on and
as of Closing Date as though such representations and warranties
were made on and as of such date, and Buyer shall have fully and
completely satisfied and performed all of its duties, obligations
and covenants set forth in this Agreement.
(b) No claim, action, suit or proceedings shall be
pending or threatened against Seller or Buyer, which, if
adversely determined, would prevent or hinder the consummation of
the transaction and other actions contemplated hereby or result
in the payment of substantial damages as a result of such
transaction and actions.
(c) Buyer shall offer those key employees of Seller
identified on attached Schedule 11(c) employment for two years
from the Effective Date on terms which continue those terms in
place as of December 16, 1996, except that, with respect to those
employees of Seller who have enjoyed free health insurance
benefits, Buyer shall offer a salary adjustment to compensate
such employees for health insurance premiums payable under
Buyer's health insurance plan after the Effective Date. In
addition, Buyer shall offer Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxxx,
Xxxx Xxxxxxx and Xxxxx Xxxxxx employment on those terms and
conditions outlined in the attached Employment Agreements which
are also identified as Schedule 11(c).
12. Transition Period. Buyer shall have the right to
occupy Seller's premises at 000 Xxxx Xxxx xx Xxxxxxxx, Xxxxx
Xxxxxx during the transition period following the Closing Date
under those terms and conditions outlined in the Transition
Period Agreement attached hereto as Schedule 12. Such occupancy
by Buyer shall not exceed a transition period of twenty four
months. Buyer shall give Seller sixty (60) days advance notice
of its intention to terminate occupancy of Seller's premises.
During the transition period and thereafter Seller shall retain
all liabilities, obligations, contracts or commitments of Seller
as outlined in Section 17 of this Agreement. Buyer shall be
liable for payment of real estate taxes, utilities and
maintenance and repairs necessitated by Buyer's occupancy of
Seller's premises during the transition period. It is the
intention of both Buyer and Seller that Buyer shall not incur any
liability for pre existing or current environmental conditions at
Seller's premises. However, Buyer shall be responsible for any
act or omission of Buyer during its occupancy of Seller's
premises which results in environmental liability at the
premises.
13. Conduct of Seller's Business and Pending Closing.
Between the date of this Agreement to and including the time of
Closing, Seller will conduct the Business only in the ordinary
course. Without limitation of the foregoing, Seller will not
take any action inconsistent with the following:
(a) Neither the Assets or Seller's business shall have
been materially adversely
affected, as a result of any fire, casualty, act of God, or the
public enemy, or any labor disputes or disturbance.
(b) Seller shall use its best efforts to maintain its
business relations with its customers, suppliers and employees.
(c) There shall have been no amendment, waiver,
termination or materially adverse changes in any of the Business
Contracts.
(d) There shall have been made no new contracts or
commitments for the Business except in the ordinary course of
business and any contracts not terminable at will must have been
approved in advance in writing by Buyer.
(e) There shall exist no violation of any law or
regulation materially adversely affecting any of the Assets or
the Business and Seller shall comply with all such laws and
regulations.
(f) Seller shall not have incurred any additional
indebtedness except such indebtedness as may arise as a result of
normal and usual transactions in the ordinary course of Seller's
business.
(g) Seller shall keep and maintain all tangible Assets
in good working order and repair and shall maintain insurance in
the ordinary course of business.
14. Survival of Warranties. All representations and
warranties herein made shall survive for a period of one year
after the Closing hereunder, and the truth and accuracy of the
same shall constitute conditions of Buyer's obligations to close
hereunder and to pay the purchase price herein provided for, any
of which conditions, however, may be waived by Buyer in whole or
in part at Buyer's option.
15. Assignment. This Agreement may not be assigned in
whole or in part without the written consent of the other party.
16. Closing.
(a) At the time of execution of this Agreement, Buyer
shall pay Seller one hundred thousand dollars ($100,000.00) (the
"Xxxxxxx Money") of the Purchase Price described in Paragraph 4.
The Xxxxxxx Money shall be deposited in the Escrow Account
established by Buyer and Seller. The date of closing shall be
May 1, 1997, if all conditions to closing have been satisfied, or
such other date as the parties shall mutually agree after the
satisfaction of all conditions (the "Closing Date"). The
effective date of this transaction shall be May 1, 1997 (the
"Effective Date"), or such other date as the parties shall
mutually agree upon. However, the parties mutually agree that
time is of the essence in Closing this transaction.
(b) At said Closing, Buyer shall pay the purchase
price in accordance with Paragraph 4 and 5, deducting the Xxxxxxx
Money previously paid by Buyer to Seller at the time of execution
of this Agreement. Contemporaneously therewith, Seller shall
transfer title to and convey to Buyer at the offices of Seller's
Counsel all of the Assets and shall execute and deliver to Buyer
such bills of sale and other instruments as may be appropriate or
necessary to transfer title to the Assets. The form of all
instruments of transfer shall be subject to approval by counsel
for Buyer.
17. Termination of Agreement.
(a) This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the date of
closing:
(i) By mutual consent of Buyer and Seller;
(ii) By Buyer if there has been a material
misrepresentation or breach of any of the representations,
warranties or covenants of the Seller set forth herein (or in any
schedule or certificate delivered pursuant hereto);
(iii) By Buyer if the conditions of Buyer to
closing cannot be satisfied;
(iv) By Seller if there has been a material
misrepresentation or breach of any of the representations,
warranties or covenants of Buyer set forth herein or if Seller's
conditions to closing cannot be satisfied; or
(v) By either Buyer or Seller if the Closing has
not occurred on or before June 1, 1997.
(b) In the event this Agreement shall be terminated
pursuant to Paragraph 17 (a) all further obligations of Buyer and
Seller under this Agreement shall terminate without further
liability to either party, subject to the following:
(i) A termination pursuant to Section 17(a)(i) or
(ii) shall result in immediate release of the Xxxxxxx Money from
Escrow and return of the Xxxxxxx Money to Buyer. Both Buyer and
Seller shall instruct the Escrow Agent to release the Xxxxxxx
Money to Buyer.
(ii) A termination pursuant to Section 17(a)(iii),
(excluding however a termination due to the failure to satisfy
Buyer's condition Section 10(i), Section 10(j) or Section 10(m)
of this Agreement) shall result in immediate release of the
Xxxxxxx Money from Escrow and return of the Xxxxxxx Money to
Buyer. Both Buyer and Seller shall instruct the Escrow Agent to
release the Xxxxxxx Money to Buyer.
(iii) A termination pursuant to Section
17(a)(iv) or (v) or a termination pursuant to Section 17(a)(iii)
if such termination is caused by a failure of Buyer to satisfy
conditions Sections 10(i), (j) or (m), shall result in immediate
release of the Xxxxxxx Money from Escrow and payment of the
Xxxxxxx Money to Seller. Both Buyer and Seller shall instruct
the Escrow Agent to release the Xxxxxxx Money to Seller.
18. Indemnification of Buyer. Buyer is not assuming
any of the liabilities, obligations, contracts or commitments of
Seller, other than the contractual obligations to Seller's
customers pursuant to the Business Contracts and then only to the
extent such obligations arise after Closing and were specifically
disclosed to Buyer. Specifically, Buyer is not assuming any of
the liabilities, obligations, contracts or commitments of Seller
with respect to any environmental conditions at, on , under or
migrating from property owned or leased by Seller. Seller does
hereby agree to retain responsibility for and defend, indemnify
and hold harmless Buyer and its affiliates, from, against and in
respect to any and all liabilities, losses, costs, damages,
penalties or deficiencies (including, without limitation,
reasonable attorney's fees) relating to or resulting from (i) any
breach by Seller of any covenant, warranty or representation
contained in this Agreement or any inaccuracy of any document
delivered by Seller to Buyer pursuant to the terms of this
Agreement, including without limitation, any exhibit or schedule
thereto; (ii) any actions or inactions of Seller or any
operations of Seller's business and the Assets prior to the
Closing, including, without limitation, the liabilities of Seller
for any matters relating to Seller's employees, whether or not
hired by Buyer, all existing contractual liability (whether or
not assumed by Buyer), all claims and demands of Seller's
customers relating to periods prior to Closing, and any
liabilities related to unpaid sales tax, use tax, or bulk sales
tax, (iii) failure to comply with all Environmental Laws prior to
Closing; (iv) any liability arising under 42 U.S.C. Section 9601
et seq. as amended or pursuant to any state, local or private
remediation request, requirement or demand arising before or
after the Closing Date excluding however any liability which is
attributable to Buyer's acts or omissions during occupancy of
Seller's premises in the transition period described in Section
12 of this Agreement; and (v) any failure of Seller or Buyer to
comply with applicable bulk sales, bulk sales tax or similar
laws.
19. Indemnification of Seller. Buyer does hereby
agree to retain responsibility for and defend, indemnify and hold
harmless Seller from, against and in respect to any and all
liabilities, losses, costs, damages, penalties or deficiencies
(including, without limitation, reasonable attorney's fees)
relating to or resulting from (i) any breach by Buyer of any
covenant, warranty or representation contained in this Agreement
or any inaccuracy of any document delivered by Buyer to Seller
pursuant to the terms of this Agreement, including without
limitation, any exhibit or schedule thereto; (ii) any actions or
inactions of Buyer or any operations of the Business and the
Assets after the Closing, including, without limitation, the
liabilities of Buyer for any matters relating to Buyer's
employees, and all claims and demands of Buyer's customers
relating to periods after the Closing; (iii) failure to comply
with all Environmental Laws after the Closing; (iv) any liability
arising under 42 U.S.C. Section 9601 et seq. as amended or
pursuant to any state, local or private remediation request,
requirement or demand arising after the Closing Date which is
attributable to Buyer's acts or omissions during occupancy of
Seller's premises in the transition period described in Section
12 of this Agreement.
20. Employees of Seller. Except as provided in
paragraph 10(l) and paragraph 11(c), Buyer will accept
application for employment from employees of Seller employed in
its trash collection and disposal business as of the time of
acquiring the Assets, and consider hiring such employees but will
not be obligated to hire such employees.
21. Notices. Any and all notices provided for in this
Agreement shall be given as follows:
To the Buyer: American Disposal Services of Missouri,
Inc.
000 XxXxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
To the Seller: Liberty Disposal, Inc.
000 Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxxx, Trustee
Xxx Xxxxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
To Seller's Counsel:Xxxxxx X. Xxxxx
XxxXxxxx and Wieck Incorporated
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
21. Brokers. Seller represents that it has not
engaged or employed any brokers, finders or consultants in
connection with this Agreement and the transaction herein
contained, and Seller shall hold Buyer harmless against any and
all claims or liabilities asserted by or due to any such person
upon the basis of an engagement by Seller. Buyer represents that
it has not engaged or employed any brokers, finders, or
consultants in connection with this Agreement and the transaction
herein contained, and Buyer shall hold Seller harmless against
any and all claims or liabilities asserted by or due to any such
person upon the basis of an engagement by Buyer.
22. Expenses. The parties hereto shall pay their own
expenses in connection with the transaction herein contained
whether or not the same is consummated, other than those expenses
of Seller resulting from Buyer's conduct of a financial audit of
the Business, which expenses (estimated not to exceed $5,000.00)
shall be borne by Buyer.
23. Receipt of Funds. Buyer covenants to deliver to
Seller any funds received by Buyer which apply to any accounts
receivable of Seller not purchased by Buyer. Seller covenants to
deliver to Buyer any funds received by Seller which apply to any
accounts receivable purchased or owned by Buyer.
24. Books and Records. Seller may retain the
originals of all books and records (other than customer
contracts, bills of sale and other evidence of ownership) but
will provide copies of such books and records to Buyer.
Subsequent to the Closing, the Seller will, until such time as
Buyer requests that the originals of all books and records
relating to the Assets or operation of the Business are delivered
to Buyer, or for four years, whichever occurs sooner, (i) retain
and, as the Buyer may from time to time request, permit the Buyer
and its agents to inspect and copy at Buyer's expense, all books
and records (including, without limitation, all data bases and
computer generated records) of the Seller which relate to the
operation of the Assets or the Business and (ii) assist in
arranging discussions with (and the calling as witnesses of )
officers, directors, employees and agents of the Seller on
matters which relate to the Assets or the Business. All books
and records will be kept in their current location until Buyer
has either received the original or a copy of such books and
records, or for a period of four years, whichever occurs sooner.
To the extent Buyer obtains the originals of any books and
records relating to the Business, Buyer will permit Seller and
its agents reasonable access to such books and records as needed
for income tax, accounting and resolution of any disputes.
Seller will maintain all information pertaining to the Assets and
Business in strictest confidence and will not use such
information to the detriment of Buyer or disclose such
information to any third parties, except as may be required by
law and then only after written notice to Buyer at least 30 days
in advance of such disclosure.
25. Parties in Interest. This Agreement shall inure
to the benefit of and bind the parties hereto, and their
successors and assigns.
SELLER: LIBERTY DISPOSAL, INC.
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Date: 3/24/97
/s/Xxxx X. Xxxxxxxxxx
XXXX X. XXXXXXXXXX, Trustee,
THE LIBERTY DISPOSAL, INC. CHARITABLE
TRUST 1997
Date: 3/24/97
BUYER: AMERICAN DISPOSAL SERVICES OF MISSOURI, INC.
By /s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Vice President and Chief Operating Officer
Date: 3/24/97
