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EXHIBIT 10.39
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of July 7
2000 between EarthCare Company, a Delaware corporation ("EarthCare"), and the
persons listed on Exhibit A hereof ("Shareholders"), being the owners of record
of certain of the issued and outstanding stock of Liberty Waste, Inc., a Florida
corporation ("Liberty").
WHEREAS, EarthCare wishes to acquire and the Shareholders wish to
transfer shares of the issued and outstanding stock of Liberty set forth on
Exhibit A in a transaction intended to qualify as a reorganization within the
meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, EarthCare and the Shareholders adopt this plan of
reorganization and agree as follows:
SECTION 1. EXCHANGE OF STOCK
(i) Number of Shares. The Shareholders agree to transfer to
EarthCare at the Closing the number of shares of common stock
of Liberty, $.01 par value per share, shown opposite their
names on Exhibit A, in exchange for an aggregate of 356,000
shares of voting common stock of EarthCare, $.0001 par value
per share, to be issued at the Closing to the Shareholders by
way of unregistered omnibus certificates beneficially owned by
the beneficial owners as set forth in the numbers shown
opposite their names on Exhibit A.
(i) Delivery of Certificates by Shareholders. The transfer of
Liberty shares by the Shareholders shall be effected by the
delivery to EarthCare at the Closing of the certificate(s)
representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with signatures
guaranteed and with all necessary transfer tax and other
revenue stamps, acquired at the Shareholders' expense,
affixed.
(i) Further Assurances. At the Closing, and from time to time
thereafter, the Shareholders shall execute such additional
instruments and take such other action as EarthCare may
request in order more effectively to sell, transfer and assign
the Shares to EarthCare and to confirm EarthCare's title
thereto.
(i) Changes in EarthCare's Capitalization. If between the date of
this Agreement and the Closing, the outstanding shares of
EarthCare common stock are, without the receipt of new
consideration by EarthCare, increased, decreased, changed into
or exchanged for a different number or kind of shares or
securities of EarthCare through reorganization,
reclassification, stock dividend, stock split, reverse stock
split or similar change in EarthCare's capitalization,
EarthCare will issue and deliver to the Shareholders in
addition to or in lieu of the EarthCare shares specified in
Section 1.1,
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voting stock of EarthCare in equitably adjusted amounts. In
the event of any such change in EarthCare's capitalization,
all references to EarthCare shares herein shall refer to the
number of EarthCare shares as thus adjusted.
SECTION 2. CLOSING
The Closing contemplated by Section 1.1 shall be held at the principal
offices of EarthCare, 00000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000 on July 7,
2000, unless another place or time is agreed upon in writing by the parties.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHAREHOLDERS
The Shareholders represent and warrant to, and covenant with, EarthCare
as follows:
3.1 Corporate Status. Liberty is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Florida and is licensed or qualified as a foreign
corporation in all states in which the nature of its business
or the character or ownership of its properties makes such
licensing or qualification necessary.
3.2 Capitalization. The authorized capital stock of Liberty
consists of 1,000,000 shares of capital stock, having a par
value of $.01 per share, of which 816,000 shares are issued
and outstanding, all fully paid and nonassessable
3.3 Financial Statements. The financial statements of Liberty
furnished to EarthCare, consisting of balance sheets as of
December 31, 1998 and December 31, 1999 and related statements
of income for the periods then ended, and the balance sheet as
of December 31, 1999 ("Liberty's Latest Balance Sheet") and
the related statements of income, are correct and fairly
present the financial condition of Liberty as of the dates and
for the periods involved, and such statements were prepared in
accordance with generally accepted accounting principles
consistently applied.
3.4 Undisclosed Liabilities. Liberty has no liabilities of any
nature except to the extent reflected or reserved against in
Liberty's Latest Balance Sheet, whether accrued, absolute,
contingent or otherwise, including, without limitation, tax
liabilities and interest due or to become due; and, Liberty's
accounts receivable are collectible in accordance with the
terms of such accounts, except to the extent of the reserve
therefor in Liberty's Latest Balance Sheet.
3.5 Interim Changes. Between December 31, 1999 and the date of
this Agreement, there have not been, except as set forth in a
list certified by the President of Liberty and delivered to
EarthCare (1) any changes in Liberty's financial condition,
assets, liabilities or business which, in the aggregate, have
been materially adverse; (2) any damage, destruction or loss
of or to Liberty's property, whether or not covered by
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insurance; (3) any declaration or payment of any dividend or
other distribution in respect of Liberty capital stock, or any
direct or indirect redemption, purchase or other acquisition
of any such stock; or (4) any increase paid or agreed to in
the compensation, retirement benefits or other commitments to
employees.
3.6 Title to Property. Liberty has good and marketable title to
all properties and assets, real and personal, reflected on
Liberty's Latest Balance Sheet, except as since sold or
otherwise disposed of in the ordinary course of business, and
Liberty's properties and assets are subject to no mortgage,
pledge, lien or encumbrance, except for liens shown thereon,
with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending, or
to Shareholders' knowledge threatened, against or relating to
Liberty, its properties or business, except as set forth in a
list certified by the President of Liberty and delivered to
EarthCare.
3.8 Access to Records, etc. From the date of this Agreement to the
Closing, the Shareholders will cause Liberty (1) to give to
EarthCare and its representatives full access during normal
business hours to all of its offices, books, records,
contracts and other corporate documents and properties so that
EarthCare may inspect and audit them; and, (2) to furnish such
information concerning Liberty's properties and affairs as
EarthCare may reasonably request.
3.9 Confidentiality. Until the Closing (and permanently if there
is no Closing), the Shareholders and their representatives
will keep confidential any information which they obtains from
EarthCare concerning its properties, assets and business. If
the transactions contemplated by this Agreement are not
consummated by July 30, 2001, the Shareholders will return to
EarthCare all written matter with respect to EarthCare
obtained by them in connection with the negotiation or
consummation of this Agreement.
3.10 Title to Shares. The Shareholders are the owners, free and
clear of any liens and encumbrances, of the number of Liberty
shares which the Shareholders have contracted to exchange.
3.11 Tax Matters. Liberty has timely filed all federal, state,
sales tax, franchise tax, and other tax returns which are
required to be filed by it and has paid or has made provision
for the payment of all taxes which have or may become due
pursuant to said returns. All taxes, including, without
limitation, withholding and social security taxes due with
respect to Liberty's employees, federal and state income tax
liabilities, corporate franchise taxes, sales, use, excise and
ad valorem taxes, due, payable or accrued by Liberty on or
before the Closing Date have or will be paid. Liberty has
filed all reports required to be filed by it with all such
taxing authorities.
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3.12 Environmental Matters. Except as disclosed to EarthCare in
writing, there are no claims, actions, suits, proceedings or
investigations relating to any Environmental Law (as
hereinafter defined) pending or threatened against or
affecting Liberty. Except as disclosed to EarthCare in
writing: (i) no release of any hazardous substance, medical
waste, toxic waste or regulated substance has occurred or is
occurring as a result of the business of Liberty; (ii) no
hazardous substance, medical waste, toxic waste or regulated
substance is currently present at, or has been previously
generated, stored, treated or disposed of at any landfill by
Liberty or through the conduct of the business of Liberty
except de minimis amounts mixed with household waste; (iii) no
underground or partially underground storage tank has been or
is currently located at any facility of Liberty; (iv) the
business, activities and processes heretofore and/or presently
conducted by Liberty complied and presently comply in all
material respects with all applicable Environmental Laws; (v)
no facility of Liberty is listed on any list, registry or
other compilation of sites that require, or potentially
require, removal, remedial action or any other response under
any Environmental Law as the result of the presence, release
or potential release of any hazardous substance, medical
waste, toxic waste or regulated substance; (vi) Liberty has
not received any notice that Liberty is liable or responsible,
or potentially liable or responsible, for any costs of any
removal, remedial action or release of any hazardous
substance, medical waste, toxic waste or regulated substance;
and (vii) there is no pending litigation or administrative
proceeding ( and Shareholders do not have reason to know of
any potential or threatened litigation or administrative
proceeding) in which it is asserted that Liberty has violated
or is not in compliance with any material Environmental Law.
For the purposes of this Agreement, "Environmental Law" means
any law, statute or act of the United States of America, the
State of Florida, or any political subdivision thereof, that
relates to the condition of the air, ground or surface water,
land or other parts of the environment, to the release or
potential release of any substance or radiation into the air,
ground or surface water, land or other parts of the
environment, or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or other handling
of substances that might pollute, contaminate or be hazardous
or toxic if present in the air, ground or surface water, land,
or other parts of the environment. Liberty has not received
any notice to the effect that the landfills and other disposal
sites to which waste material transported by Liberty has been
delivered are not properly licensed pursuant to applicable
Environmental Laws to receive the material disposed of
therein.
3.13 No Brokers or Agents Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to
the authority of Liberty will be entitled to any commission or
finders fee in connection with the origination, negotiation,
execution or performance of the transactions contemplated
under this Agreement.
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SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EARTHCARE
EarthCare represents and warrants to, and covenants with, the
Shareholders as follows:
4.1 Corporate Status. EarthCare is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is licensed or qualified as a foreign
corporation in all states in which the nature of its business
or the character or ownership of its properties makes such
licensing or qualification necessary.
4.2 Authority to Contract. The execution, delivery and performance
of this Agreement by EarthCare has been duly approved by its
Board of Directors, and no further corporate action is
necessary on the part of EarthCare to consummate the
transactions contemplated by this Agreement, assuming due
execution of this Agreement by the parties hereto.
4.3 No Brokers or Agents Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to
the authority of EarthCare will be entitled to any commission
or finders fee in connection with the origination,
negotiation, execution or performance of the transactions
contemplated under this Agreement.
4.4 Accuracy of Information Furnished by EarthCare. No
representation, statement or information made or furnished by
EarthCare to Liberty in this Agreement, or in connection with
the transactions contemplated hereby including, without
limitation copies of EarthCare's filings with the Securities
and Exchange Commission, contains or shall contain any untrue
statement of any material fact or omits or shall omit any
material fact necessary to make the information contained
herein true.
4.5 Registration. Upon the filing of a post effective amendment,
Form S-1 filed with the Securities and Exchange Commission
effective December 9, 1998, is true and correct in all
material respects and does not omit to state any material
information necessary to make such registration statement not
misleading until such time as EarthCare has filed such post
effective amendment to the referenced registration statement
including the EarthCare shares exchanged by this Agreement.
SECTION 5. CONDUCT OF LIBERTY PENDING THE CLOSING
From and after the execution and delivery of this Agreement except in
the ordinary course of business and until the Closing Date, except as otherwise
provided by the prior written consent or approval of EarthCare:
5.1 Conduct of Business. The Shareholders will cause Liberty to
conduct its business and operations in the manner in which the
same has heretofore been conducted and Shareholders will use
their best efforts to cause Liberty to: (i) preserve Liberty's
current business organization intact; (ii) keep available to
EarthCare the services of Liberty's current employees and
Liberty's agents and distributors and (iii) preserve
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Liberty's current relationship with customers, suppliers and
others having business dealings with Liberty.
5.2 Maintenance of Property. The Shareholders will cause Liberty
to maintain all of its properties in customary repair, order
and condition, reasonable wear and use excepted, and will
maintain its existing insurance upon all of its properties and
with respect to the conduct of its business in such amounts
and of such kinds comparable to that in effect on the date of
this Agreement.
5.3 Extraordinary Actions. The Shareholders will take action to
insure that Liberty will not: (i) pay any bonus or increase
the rate of compensation of any of Liberty's employees or
enter into any new employment agreement or amend any existing
employment agreement; (ii) make any general increase in the
compensation or rate of compensation payable or to become
payable to Liberty's hourly-rated employees; (iii) sell or
transfer any of Liberty's assets (iv) obligate itself for
capital expenditures other than in the ordinary course of
business and not unusual in amount; or, (v) incur any material
obligations or liabilities, which are not in the ordinary
course of business, or enter into any material transaction.
5.4 Capitalization, etc. The Shareholders shall not permit Liberty
to issue or enter into any subscriptions, options, agreements
or other commitments in respect of the issuance, transfer,
sale or encumbrance of any shares of Liberty common stock, or
to declare or pay any dividend or other distribution.
5.5 Articles of Incorporation, Bylaws. The Shareholders will take
action to insure that Liberty will not amend its Articles of
Incorporation or Bylaws.
SECTION 6. CONDITIONS PRECEDENT - EARTHCARE
All obligations of EarthCare under this Agreement are subject, at
EarthCare's option, to the fulfillment, before or at the Closing, of each of the
following conditions:
6.1 Representations and Warranties True at Closing. The
Shareholders's representations and warranties contained in
this Agreement shall be deemed to have been made again at and
as of the Closing and shall then be true in all material
respects.
6.2 Due Performance. The Shareholders shall have performed and
complied with all the terms and conditions required by this
Agreement to be performed or complied with by him before the
Closing.
6.3 Opinion of Counsel. The Shareholders shall have delivered to
EarthCare an opinion of Liberty's counsel, dated as of the
Closing, to the effect that: (i) Liberty is a corporation,
duly organized and legally existing under the laws of the
State of
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Florida, and it has the corporate power and authority to carry
on its business as now being conducted and to own or hold
under lease, or otherwise, its assets; (ii) this Agreement has
been duly executed and delivered by Liberty and constitutes a
valid, enforceable and binding obligation of Liberty pursuant
to the terms of this Agreement; (iii) except as otherwise
disclosed in this Agreement, counsel does not know of any
action, suit, investigation or other legal, administrative or
arbitration proceeding pending against Liberty or which
questions the validity or enforceability of this Agreement or
of any action taken or to be taken pursuant to or in
connection with this Agreement or any agreement contemplated
herein; (iv) to the knowledge of such counsel, no consent,
authorization, license, franchise, permit, approval or order
of any court or governmental agency or body, other than those
obtained by Liberty and delivered to EarthCare prior to or on
the date of the opinion, is required for the transfer of
Liberty common stock pursuant to this Agreement; (v) the
execution and performance of this Agreement by Liberty will
not violate: (x) the Articles of Incorporation or the By-Laws
of Liberty, or (y) any order of any court or other agency of
government known to said counsel; (vi) the instruments of
conveyance and assignments executed by Liberty to EarthCare
pursuant to this Agreement are adequate to convey the
ownership to the Liberty common stock, free and clear of all
liens, claims or encumbrances known to such counsel; and (vii)
to the knowledge of such counsel (after reasonable
investigation), Shareholders own all of the issued and
outstanding shares of capital stock of Liberty.
6.4 Books and Records. The Shareholders shall have caused Liberty
to make available to EarthCare all books and records of
Liberty, including minute books and stock transfer records.
6.5 Revocation of Prior Authorizations. The Shareholders shall
have delivered to EarthCare certified copies of resolutions of
Liberty's Board of Directors revoking as of the Closing all
prior authorizations, powers of attorney, designations and
appointments relating to the signing of checks, borrowing of
funds, access to corporate safe-deposit boxes and other
similar matters, to the extent requested by EarthCare.
6.6 Resignations. There shall have been delivered to EarthCare the
signed resignations of such directors of Liberty as EarthCare
shall request, dated as of the Closing.
6.7 Acceptance by the Shareholders. The terms of this Agreement
shall have been accepted by all of the Shareholders of Liberty
as evidenced by their signatures hereto
SECTION 7. CONDITIONS PRECEDENT - THE SHAREHOLDERS
All obligations of Shareholders under this Agreement are subject, at
Shareholders' option, to the fulfillment, before or at the Closing, of each of
the following conditions:
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7.1 Representations and Warranties True at Closing. EarthCare's
representations and warranties contained in this Agreement
shall be deemed to have been made again at and as of the
Closing and shall then be true in all material respects.
7.2 Due Performance. EarthCare shall have performed and complied
with all the terms and conditions required by this Agreement
to be performed or complied with by it before the Closing.
7.3 Opinion of EarthCare's Counsel. The Shareholders shall have
received an opinion of Counsel for EarthCare, dated as of the
Closing, to the effect that: (i) EarthCare is a corporation,
duly organized and legally existing in good standing under the
laws of the State of Delaware, and it has the corporate poser
and authority to carry on its business as now being conducted
and to carry out the transactions and agreements contemplated
hereby; (ii) all corporate and other proceedings required to
be taken by or on the part of EarthCare in order to authorize
it to perform its obligations hereunder have been duly and
property taken, including any necessary approval or
authorization by the Board of Directors of EarthCare; (iii)
this Agreement has been duly executed and delivered by
EarthCare and constitutes a valid, enforceable and binding
obligation of EarthCare pursuant to the terms of this
Agreement; and (iv) except as otherwise disclosed in this
Agreement, said counsel does not know of any action, suit,
investigation or other legal, administrative or arbitration
proceeding which questions the validity or enforceability of
this Agreement or of any action taken or to be taken pursuant
to or in connection with this Agreement or any agreement
contemplated herein.
SECTION 8. INDEMNIFICATION
8.1 Indemnification of EarthCare. The Shareholders agree to
indemnify EarthCare against any loss, damage or expense
(including reasonable attorney's fees) suffered by EarthCare
from (1) any breach by the Shareholders of this Agreement; or
(2) any inaccuracy in or breach of any of the representations,
warranties or covenants by the Shareholders herein.
8.2 Proportionate Liability. The liability of each Shareholder
under this Section 8 shall be in the proportion that the total
number of EarthCare shares to be received by him bears to the
total number of EarthCare shares to be received by all the
Shareholders, and shall in no event exceed the value of the
EarthCare shares received by such Shareholder. With respect to
Shareholders that are estates, trusts or custodianships, the
executor, trustee or custodian is a party to this Agreement
only in its fiduciary capacity and liability hereunder shall
be limited to the fiduciary assets and shall not extend to the
assets of the executor, trustee or custodian.
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8.3 Indemnification of Shareholders. EarthCare agrees to indemnify
the Shareholders against any loss, damage or expense
(including reasonable attorney's fees) suffered by any of the
Shareholders from (1) any breach by EarthCare of this
Agreement; or (2) any inaccuracy in or breach of any of
EarthCare's representations, warranties or covenants herein.
8.4 Defense of Claims. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party
of any claim which has given or could give rise to a right of
indemnification under this Agreement. If the right of
indemnification relates to a claim asserted by a third party
against the indemnified party, the indemnifying party shall
have the right to employ counsel acceptable to the indemnified
party to cooperate in the defense of any such claim. So long
as the indemnifying party is defending any such claim in good
faith, the indemnified party will not settle such claim. If
the indemnifying party does not elect to defend any such
claim, the indemnified party shall have no obligation to do
so.
SECTION 9. TERMINATION
This Agreement may be terminated (1) by mutual consent in writing; (2)
by either the Shareholders or EarthCare if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or, (3) by either the Shareholders or EarthCare if the Closing shall not
have taken place, unless adjourned to a later date by mutual consent in writing,
by July 30, 2001.
SECTION 10. GENERAL PROVISIONS
10.1 Survival of Representations and Warranties Indemnifications.
The representations, warranties, indemnifications, obligations
and agreements of the parties contained in this Agreement, or
in any writing delivered pursuant to provisions of this
Agreement, shall survive the Closing for a period of 3 years
with the exception of representations and warranties
concerning Section 3.12 hereof, Environmental Matters, which
will survive for as long as any claims may be asserted under
the applicable periods of limitation for violations of any
environmental law, rule or regulation.
10.2 Waiver or Extension of Conditions. Liberty or EarthCare may
extend the time for or waive the performance of any of the
obligations of the other party, waive any inaccuracies in the
representations or warranties by the other party, or waive
compliance by the other party with any of the covenants or
conditions contained in this Agreement. Any such extension or
waiver shall be in writing and signed by Liberty and
EarthCare. Any such extension or waiver shall not act as a
waiver or an extension of any other provisions of this
Agreement.
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10.3 Notices. Any notice, request or other document shall be in
writing and sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the party
to be notified at the following addresses, or such other
address as such party may hereafter designate by written
notice to all parties, which notice shall be effective as of
the date of posting, substitute; or alternatively by hand
delivery or complete fax transmission. Notices are effective
upon receipt.
(i) If to EarthCare:
EarthCare Company
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Copy to: Xxxxxx X. Xxxx, Esq.
00000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
(ii) If to Shareholders:
Xxx Xxxxxx
Liberty Waste, Inc.
0000 X. Xxxxxxx Xxxxxxx, Xxxxx X-000
Xxxx Xxxxx, XX 00000
Copy to: Xxxxxx X. Xxxxxxxx, Esq.
000 X. 00xx Xxxxxx Xxxxx
Xxxxxx, XX 00000
10.4 Governing Law. This Agreement shall be governed by the laws of
the State of Texas.
10.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns
10.6 Headings. The subject headings of the Sections of this
Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of
its provisions.
10.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and
the same instrument.
10.8 Entire Agreement; Modification. This Agreement (including the
schedules attached hereto) and the documents delivered
pursuant hereto constitute the entire agreement and
understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter
hereof. This Agreement may be modified or amended by a written
instrument executed by all parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SHAREHOLDERS:
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Xxxxx Xxxxxxx
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Xxx Xxxxx
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Xxxx Xxxxxxxx
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Xxxxx Xxxxxx
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Xxx Xxxxxxxx
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Xxx Xxxxxx
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Xxxx Xxxxxxx
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Xxxx Xxxxxxxxxx
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Xxx Xxxxxx
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Xxxxxx Xxxxxxxx
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Xxx Xxxxxxx
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Xxx Xxxx
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EARTHCARE EarthCare Company
By:
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Xxxxx X. Xxxxxx, President
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EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
Name No. of Liberty Shares*
---- ----------------------
Xxxxx Xxxxxxx 30,000
Xxx Xxxxx 30,000
Xxxx Xxxxxxxx 10,000
Xxxxx Xxxxxx 6,000
Xxx Xxxxxxxx 30,000
Xxx Xxxxxx 30,000
Xxxx Xxxxxxx 10,000
Xxxx Xxxxxxxxxx 10,000
Xxx Xxxxxx 30,000
Xxxxxx Xxxxxxxx 120,000
Xxx Xxxxxxx 25,000
Xxx Xxxx 25,000
-------
356,000
Certain of these shares, including the EarthCare shares being exchanged
are not subject to immediate distribution by reason of delayed vesting schedules
for such shares over the next few years as set forth in the applicable
employment agreement for each of the named shareholder. In general, the vesting
schedule contemplates that 50% of the shares for each person will be distributed
shortly following closing and the remaining 50% over a two year vesting period
so long as these shareholders remain employees of Liberty Waste, Inc. for the
duration of the vesting period. These shares listed in the case of Messrs.
Waters, Xxxxxxx and Xxxx are not subject to vesting schedules.
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