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EXHIBIT 10.36
ASSET PURCHASE AGREEMENT
Dated as of August 21, 1998, by and among
Waste Connections, Inc.
Waste Connections of Utah, Inc.
Contractors Waste, Inc.
Xxxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxx
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 21, 1998, entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), Waste
Connections of Utah, Inc., a Delaware corporation ("BUYER"), Contractors Waste,
Inc., a Utah corporation ("SELLER"), and Xxxxxx X. Xxxxxxxxxx and Xxxxx X. Xxxx
(the "SHAREHOLDERS").
WHEREAS, Seller is engaged in the collection and transportation of solid
waste in the City of Salt Lake City, Utah, and in certain unincorporated areas
in Salt Lake and Utah Counties, Utah, and other related activities
(collectively, the "BUSINESS");
WHEREAS, the Shareholders own all of the issued and outstanding Capital
Stock of the Seller; and
WHEREAS, Buyer wishes to purchase, and Seller wishes to sell certain
assets that are necessary to operate the Business;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. Sale and Transfer of Assets. Subject to and in accordance
with the terms and conditions of this Agreement, at the Closing on the Closing
Date (as defined below) Seller shall convey, transfer, deliver and assign to
Buyer, and Buyer shall accept from Seller all of the assets listed on Schedule
1.1 (collectively, the "ASSETS"), including without limitation:
(a) the trucks, containers, operating machinery and
equipment, processing equipment, shop tools, parts, supplies,
accessories, inventory, physical assets and other tangible personal
property used primarily in connection with the ownership, operation and
management of the Business;
(b) all contracts, leases, agreements, customer
accounts, commitments and arrangements specifically identified in
Schedule 3.12(a) as contracts contemplated to be assumed by Buyer
pursuant to this Agreement (the "ASSUMED CONTRACTS");
(c) all permits, licenses, titles (including motor
vehicle titles and current registrations), fuel permits, zoning and land
use approvals and authorizations, including, without limitation, any
conditional or special use approvals or zoning variances, occupancy
permits, and any other similar documents from any and all governmental
authorities constituting a material authorization or entitlement or
otherwise material to the operation or management of the Business owned
by, issued to, or held by or otherwise benefiting Seller (the
"GOVERNMENTAL PERMITS");
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(d) all customer lists of Seller relating to the
Business;
(e) the logos, trade names, fictitious business names
and service marks of Seller, including without limitation, the right to
use the names "Contractor's Waste Inc.", "Contruction Waste, Inc." and
"Dee's Dumpster Service";
(f) the goodwill of the Business;
(g) all guarantees, warranties, indemnities and similar
rights in favor of Seller with respect to any of the Assets and all
books and records primarily in connection with the operation of the
Business; and
(h) All operating and financial records relating to the
Business, including without limitation all ledgers, books of account,
deprecation schedules, inventory information, records relating to
payables and receivables, cancelled checks, bank statements, equipment
records, maintenance records, disposal records and information
concerning customers.
Notwithstanding the foregoing, Buyer shall not acquire any of the assets listed
on Schedule 3.2 (the "EXCLUDED ASSETS").
1.2. Assumption by Buyer of Certain Contracts. Buyer hereby
assumes and agrees to pay, perform and discharge in a timely manner, effective
the day after the Closing Date all of the obligations and commitments of Seller
accruing after the Closing Date under or with respect to each Assumed Contract,
but not including any obligation or liability for any breach thereof occurring
on or prior to the Closing Date.
1.3. Excluded Liabilities. Notwithstanding the provisions of
Section 1.2 or any other provision hereof or any Schedule or Exhibit hereto and
regardless of any disclosure to Buyer, Buyer shall not assume or be bound by any
other duties, responsibilities, obligations, indebtedness or other liabilities
of Seller or to which Seller or any of the Assets or the Business may be bound
or affected, of whatever kind or nature, whether known, unknown, contingent or
otherwise, arising before, on or after the Closing Date (including without
limitation trade payables and taxes arising from the operation of the Business
or the sale of the Assets) except, as to obligations and liabilities arising
after the Closing Date only, those obligations and liabilities expressly assumed
by Buyer pursuant to Section 1.2 (the "EXCLUDED LIABILITIES").
1.4. Purchase Price. The purchase price (the "PURCHASE PRICE")
for the Assets shall be Five Hundred Fifty-Five Thousand Dollars ($555,000),
minus the Closing Date Debt (as definied in Section 3.19). The Purchase Price
shall be paid as provided in Section 1.5.
1.5. Payment of Purchase Price. The Purchase Price shall be
payable as follows:
(a) Four Hundred Thousand Dollars ($400,000), minus the
Closing Date Debt, in cash to the Seller at the Closing by wire
transfer or check payable in
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clearinghouse funds. WCI shall pay the Closing Date Debt by wire
transfer to the holders of such debt. The Purchase Price paid at
the Closing will be based on Schedule 3.19 as delivered at the
Closing, which the parties understand will include only
estimates of the Closing Date Debt as of the Closing Date.
Within 90 days after the Closing Date, Buyer and Seller shall
determine the actual Closing Date Debt, which difference shall
adjust the Purchase Price as described below. If the Purchase
Price increases, Buyer will promptly pay any additional amount
due to Seller; if the Purchase Price declines, Seller will
promptly repay any amount due to Buyer. The adjustments made to
the Purchase Price based on the actual Closing Date Debt shall
be paid in cash.
(b) a number of shares (the "SHARES") of the WCI's
Common Stock, $0.01 par value (the "WCI STOCK"), which shall be
delivered by WCI to the Shareholders at the Closing determined
as follows: The number of Shares shall be an amount equal to One
Hundred Fifty-Five Thousand Dollars ($155,000) divided by the
Average Closing Price (as hereinafter defined). The Average
Closing Price (the "AVERAGE CLOSING PRICE") is the average of
the closing price of WCI Stock as quoted on the NASDAQ Stock
Market for the five (5) successive trading days for which a
closing price is quoted ending on the tenth trading day prior to
the Closing Date. The Average Closing Price and the number of
shares of WCI Stock to be delivered at the Closing shall be
appropriately adjusted in the event of any change in WCI Stock
between the first day for which a closing price is quoted in
determining the Average Closing Price and the Closing Date,
including without limitation any stock dividend, stock split,
reverse stock split, recapitalization, reorganization, merger or
consolidation. WCI shall not be obligated to issue any
fractional shares of WCI Stock, but shall instead pay the
Shareholders cash in lieu of any fractional share equal to the
Average Closing Price multiplied by the fraction of a share of
WCI Stock that would otherwise be issued;
1.6. Certain Taxes. Seller shall pay any and all sales, use,
excise, transfer and conveyance taxes payable or assessable in connection with
or as a result of the transfer of the Assets under the terms of this Agreement
and the transactions contemplated hereby. Buyer shall not be responsible for any
business, occupation, withholding, possessory interest or similar tax or
assessment or any other tax or fee of any kind relating to any period on or
prior to the Closing Date with respect to Seller, the Assets or the ownership,
operation or management of the Business.
1.7. Allocation of Purchase Price. Ten Thousand Dollars
($10,000) of the Purchase Price shall be allocated to the covenant not to
compete described in Section 7.1(a).
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "CLOSING") shall take place at such
time on August 21, 1998 (the "CLOSING DATE"), at the offices of Shartsis, Xxxxxx
& Xxxxxxxx LLP, in San Francisco,
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California, or through an exchange of consideration and signed documents using
overnight courier service. At the Closing, Buyer and Seller shall deliver to
each other the documents, instruments and other items described in Section 5 of
this Agreement. For financial reporting purposes, the Closing will be deemed
effective August 1, 1998.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS
Seller and the Shareholders, jointly and severally, (i) represent and
warrant that each of the following representations and warranties is true as of
the Closing Date, and (ii) agree that such representations and warranties shall
survive the Closing.
3.1. Standing and Authority for the Business. Seller is duly
organized, validly existing and in good standing under the laws of the State of
Utah. Seller has full power and authority to own and lease the Assets and to
carry on the Business as now conducted. Seller is not required to be qualified
or licensed to conduct business as a foreign company in any other jurisdiction
where the failure to qualify would have a material adverse effect on the Seller.
3.2. All Assets Being Acquired. The Assets being acquired by
Buyer hereunder constitute all of the assets of Seller used and necessary to
conduct and operate the Business as presently conducted and operated (other than
certain assets set forth on Schedule 3.2, which are the Excluded Assets).
3.3. Authority for Agreement. Seller and each of the
Shareholders have full right, power and authority to enter into this Agreement
and to perform its or his obligations hereunder. The execution and delivery of
this Agreement by Seller has been duly authorized by Seller's managers and/or
members. This Agreement has been duly and validly executed and delivered by
Seller and each of the Shareholders and, subject to the due authorization,
execution and delivery by WCI and Buyer, constitutes the legal, valid and
binding obligation of Seller and each of the Shareholders, enforceable against
Seller and each of the Shareholders in accordance with its terms.
3.4. No Breach or Default. Except as disclosed on Schedule 3.4,
the execution and delivery by Seller and each of the Shareholders of this
Agreement, and the consummation by Seller and each of the Shareholders of the
transactions contemplated hereby, will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party from
any obligation under, any mortgage, lease, note, bond, indenture, or
material contract, agreement, license or other instrument or obligation
of any kind or nature to which Seller or any of the Shareholders is a
party, or by which Seller or the Assets, are or may be bound or
affected; or
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(b) violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental authority, or
require the approval, consent or permission of any governmental or
regulatory authority;
(c) violate the Articles of Organization of Seller; or
(d) violate any agreements to which any Shareholder is a
party relating to the Assets and the Business.
3.5. Financial Statements. Seller has delivered to Buyer, as
Schedule 3.5, copies of the financial statements ("FINANCIAL STATEMENTS") for
its three most recent fiscal years, compiled by Xxxx X. Xxxxx, C.P.A., and
interim financial statements for the period ended June 30, 1998 (the "BALANCE
SHEET DATE"). The Financial Statements are true and correct and fairly present
the financial condition and results of operations of the Business for the
respective periods indicated. The Financial Statements have been prepared in
accordance with generally accepted accounting principles, applied consistently
with prior periods. Except as disclosed on Schedules 3.5, 3.6, 3.19(a) or
3.19(b), Seller had, as of the Balance Sheet Date, and will have, as of the
Closing Date, no liabilities of any nature, whether accrued, absolute,
contingent or otherwise, including, without limitation, tax liabilities due or
to become due.
3.6. Liabilities. Parts I, II, III and IV of Schedule 3.6, are
accurate lists and descriptions of all liabilities of Seller relating to the
Business required to be described below in the format set forth below.
(a) Part I of Schedule 3.6 lists, as of the Closing
Date, other than with respect to trade payables and as of the end of the
month prior to the Closing Date with respect to trade payables, all
indebtedness for money borrowed and all other fixed and uncontested
liabilities of any kind, character and description, whether reflected or
not reflected on the Financial Statements and whether accrued or
absolute, and states as to each such liability the amount of such
liability and to whom payable. From the end of the month prior to the
Closing Date, trade payables have been incurred only in the ordinary
course of business consistent with comparable prior periods.
(b) Part II of Schedule 3.6 lists, as of the Closing
Date, all claims, suits and proceedings which are pending against Seller
relating to the Business and, to the knowledge of Seller, all material
contingent liabilities and all material claims, suits and proceedings
threatened or anticipated against Seller relating to the Business. For
each such liability, Part II of Schedule 3.6 includes a summary
description of such liability, including, without limitation: (i) the
name of each court, agency, bureau, board or body before which any such
claim, suit or proceeding is pending, including, without limitation,
those arising under Environmental Laws (as defined in Section 3.20),
those relating to personal injury or property damage (including all
workers' compensation and occupational disease and injury claims, suits
and proceedings) and those citations arising under the Federal
Occupational Safety and Health Act or any comparable state law, (ii) the
date such claim, suit or proceeding was instituted, (iii) the parties to
such claim, suit or proceeding, (iv) a description of the factual basis
alleged to underlie such claim, suit
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or proceeding, including the date or dates of all material occurrences,
and (v) the amount claimed and other relief sought.
(c) Part III of Schedule 3.6 lists, as of the Closing
Date and to the extent not otherwise included in Part I of Schedule 3.6,
all material liens, claims and encumbrances secured by any of the
Assets, including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature of
the obligation secured, and the party holding such lien, claim or
encumbrance.
(d) Part IV of Schedule 3.6 lists, as of the Closing
Date and to the extent not otherwise included in Part I or Part III of
Schedule 3.6, all real property and material personal property leasehold
interests to which Seller is a party as lessor or lessee relating to the
Business or affecting or relating to any Facility Property (as described
in Section 3.8).
3.7. Conduct of the Business. Except as set forth on Schedule
3.7, since the Balance Sheet Date and prior to the Closing:
(a) The Business has been conducted only in the ordinary
course of business consistent with past practices; and
(b) There has been no change in Seller's financial
condition, the Assets, liabilities (contingent or otherwise), income or
operations of Seller relating to the Business other than changes in the
ordinary course of business, none of which either singly or in the
aggregate has been materially adverse, or which could have a material
adverse effect on the financial condition, Assets, liabilities
(contingent or otherwise), income or operations of the Business.
3.8. Permits and Licenses.
(a) Schedule 3.8(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, titles
(including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents
constituting a material authorization or entitlement or otherwise
material to the operation of the Business by Seller (collectively the
"GOVERNMENTAL PERMITS") owned by, issued to, held by or otherwise
benefiting Seller as of the Closing Date. The status of the Governmental
Permits related to the disposal areas owned or used by Seller,
including, without limitation, any conditions thereto and, if
applicable, the expiration dates thereof, are also described in Schedule
3.8(a). Schedule 3.8(a) also sets forth the name of any governmental
agency from whom Seller or Buyer must obtain consent (the "REQUIRED
GOVERNMENTAL CONSENTS") in order to effect a direct or indirect transfer
of the Governmental Permits required as a result of the consummation of
the transactions contemplated by this Agreement. Except as set forth on
Schedule 3.8(a), all of the Governmental Permits enumerated and listed
on Schedule 3.8(a) are and will be adequate
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for the operation of the Business of Seller and of each Facility
Property as presently operated and are valid and in full force and
effect. All of said Governmental Permits and agreements have been duly
obtained and are in full force and effect, and there are no proceedings
pending or, to the knowledge of Seller, threatened which may result in
the revocation, cancellation, suspension or adverse modification of any
of the same. Seller has no knowledge of any reason why all such
Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
(b) As part of Schedule 3.8(a), Seller has delivered to
Buyer: (i) all records, notifications, reports, permit and license
applications, engineering and geologic studies, and environmental impact
reports, tests or assessments (collectively, "RECORDS, NOTIFICATIONS AND
REPORTS") that (A) are material to the operation of the Business, or (B)
relate to the discharge or release of materials into the environment
and/or the handling or transportation of waste materials or hazardous or
toxic substances or otherwise relate to the protection of the public
health or the environment, or (C) were filed with or submitted to
appropriate governmental agencies during the past five years by Seller
or their agents, and (ii) all material notifications from such
governmental agencies to Seller or their agents in response to or
relating to any of such Records, Notifications and Reports.
(c) Schedule 3.8(c) lists, as of the Closing Date, each
facility leased, operated or otherwise used by Seller for the Business,
the lease, operation or use of which is being transferred to, assumed by
or otherwise acquired directly or indirectly by Buyer pursuant to this
Agreement (each, a "FACILITY" and collectively, the "FACILITIES").
Except as otherwise disclosed on Schedule 3.8(c):
(i) Each Facility is fully licensed, permitted
and authorized to carry on its current business under all
applicable federal, state and local statutes, orders, approvals,
zoning or land use requirements, rules and regulations and no
Facility is a non-conforming use or otherwise subject to any
restrictions regarding reconstruction.
(ii) All activities and operations at each
Facility are being and have been conducted in compliance in all
material respects with the requirements, criteria, standards and
conditions set forth in all applicable federal, state and local
statutes, orders, approvals, permits, zoning or land use
requirements and restrictions, variances, licenses, rules and
regulations.
(iii) Each Facility is located on real property
owned or leased by Seller (each a "FACILITY PROPERTY"). The
Facility Properties leased by Seller consist only of one parcel
where the Business offices are located and two parcels where
Seller's trucks and equipment are stored.
(iv) To Seller's knowledge, there are no
circumstances, conditions or reasons which are likely to be the
basis for revocation or suspension of any Facility's site
assessments, permits, licenses, consents, authorizations,
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zoning or land use permits, variances or approvals relating to
any Facility owned by Seller, any of the Shareholders or any
Affiliate (as hereinafter defined) of any of the Shareholders
and leased to Seller to be used in the Business after the
Closing, and to the knowledge of Seller there are no
circumstances, conditions or reasons which are likely to be the
basis for revocation or suspension of any site assessments,
permits, licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any such Facility.
(d) Seller does not currently own, operate or control,
and has never in the past owned, operated or controlled, any landfill or
treatment, storage or disposal facility.
3.9. Intentionally Omitted.
3.10. Fixed Assets.
(a) Schedule 3.10(a) lists, as of the Closing Date,
substantially all the fixed assets (other than real estate) of Seller
used in the Business, including, without limitation, identification of
each vehicle by description and serial number, identification of
machinery, equipment and general descriptions of parts, supplies and
inventory. Except as described on Schedule 3.10(a), all of Seller's
containers, vehicles, machinery and equipment necessary for the
operation of the Business are in good working order and condition,
normal wear and tear excepted, and all of the motor vehicles and other
rolling stock of Seller are in material compliance with all applicable
laws, rules and regulations. All such vehicles, machinery and equipment
are substantially fit for the purposes for which they are utilized and
are free from defects which could cause them to fail. All leases of
fixed assets are in full force and effect and binding upon the parties
thereto; neither Seller nor any other party to such leases is in breach
of any of the material provisions thereof.
(b) Seller has good, valid and marketable title to all
personal properties and assets, tangible and intangible, actually used
or necessary for the conduct of the Business, free of any encumbrance or
charge of any kind except: (i) liens for current taxes not yet due; and
(ii) minor imperfections of title and encumbrances, if any, that are not
substantial in amount, do not materially detract from the value of the
property subject thereto, do not materially impair the value of the
Business or the Assets, and have arisen only in the ordinary course of
business and consistent with past practice. There are and as of the
Closing Date will be no leases, occupancy agreements, options, rights of
first refusal or any other agreements or arrangements, either oral or
written, that create or confer in any person or entity the right to
acquire, occupy or possess, now or in the future, any Assets, or any
portion thereof, or create in or confer on any person or entity any
right, title or interest therein or in any portion thereof.
3.11. Acquisition/Disposal of Assets. Except as indicated on
Schedule 3.11, since the Balance Sheet Date, Seller has not acquired or sold or
otherwise disposed of any properties or assets which, singly or in the
aggregate, have a value in excess of $5,000, or which are material to the
operation of the Business as presently conducted.
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3.12. Contracts and Agreements; Adverse Restrictions; Judgments,
Orders, Etc.
(a) Schedule 3.12(a) lists, as of the Closing Date, and
includes copies of, all insurance policies, material contracts and
agreements relating to the Business to which Seller is a party or by
which any of the Assets is bound (including, but not limited to, joint
venture or partnership agreements, contracts with any labor
organizations, promissory notes, loan agreements, bonds, mortgages,
deeds of trust, liens, pledges, conditional sales contracts or other
security agreements) (the "Assumed Contracts"). Except as disclosed on
Schedule 3.12(a), all such contracts and agreements included in Schedule
3.12(a) are and on the Closing Date shall be in full force and effect
and binding upon the parties thereto. Except as described or cross
referenced on Schedule 3.12(a), neither Seller nor, to Seller's or any
of the Shareholders' knowledge, any other parties to such contracts and
agreements is in breach thereof, and none of the parties has threatened
to breach any of the material provisions thereof or notified Seller or
any of the Shareholders of a default thereunder, or exercised any
options thereunder.
(b) Except as set forth on Schedule 3.12(b), there is no
outstanding judgment, order, writ, injunction or decree against Seller,
the result of which could materially adversely affect Seller, the
Business or any of the Assets, nor has Seller been notified that any
such judgment, order, writ, injunction or decree has been requested.
3.13. Personnel. Schedule 3.13 is a complete list, as of the
Closing Date, of all employees (by type or classification) of Seller relating to
the Business and their respective rates of compensation, including (i) the
portions thereof attributable to bonuses, (ii) any other salary, bonus, equity
participation, or other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with employees. Schedule
3.13 also lists the driver's license number for each driver of motor vehicles
used in the Business.
3.14. Benefit Plans and Union Contracts.
(a) Schedule 3.14(a) is a complete list as of the
Closing Date, and includes complete copies, of all employee benefit
plans and agreements currently maintained or contributed to by Seller
relating to the Business, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement plans,
welfare benefit plans and deferred compensation agreements, together
with copies of such plans, agreements and any trusts related thereto,
and classifications of employees covered thereby as of the Closing Date.
Except for the employee benefit plans described on Schedule 3.14(a),
Seller has no other pension, profit sharing, deferred compensation, or
other employee benefit plans or arrangements with any party. Except as
disclosed on Schedule 3.14(a), all employee benefit plans listed on
Schedule 3.14(a) are fully funded and in substantial compliance with all
applicable federal, state and local statutes, ordinances and
regulations. All such plans that are intended to qualify under Section
401(a) of the Internal Revenue Code have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination
letters are included as part of Schedule 3.14(a). All reports and other
documents required to be filed with
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any governmental agency or distributed to plan participants or
beneficiaries (including , but not limited to, actuarial reports, audits
or tax returns) have been timely filed or distributed, and copies
thereof are included as part of Schedule 3.14(a). All employee benefit
plans listed on such Schedule have been operated in accordance with the
terms and provisions of the plan documents and all related documents and
policies. Seller has not incurred any liability for excise tax or
penalty due to the Internal Revenue Service or U.S. Department of Labor
nor any liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, nor have Seller, nor party-in-interest or
disqualified person, engaged in any transaction or other activity which
would give rise to such liability. Seller has not participated in or
made contributions to any "multi-employer plan" as defined in the
Employee Retirement Income Security Act of 1974 ("ERISA"), nor would
Seller be subject to any withdrawal liability with respect to such a
plan if any such employer withdrew from such a plan immediately prior to
the Closing Date. No employee pension benefit plan is under funded on a
termination basis as of the date of this Agreement.
(b) Schedule 3.14(b) is a complete list, as of the
Closing Date, and includes complete copies of all union contracts and
agreements between Seller and any collective bargaining group relating
to the Business. In the operation of the Business, Seller has complied
in all material respects with all applicable federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and
are not engaged in any unfair labor practice. There is no charge pending
nor, to Seller's or the Shareholders' knowledge, is there any charge
threatened against Seller relating to the Business before any court or
agency and alleging unlawful discrimination in employment practices.
There is no charge of or proceeding with regard to any unfair labor
practice relating to the Business that is pending before the National
Labor Relations Board. There is no labor strike, dispute, slow down or
stoppage as of the Closing Date, existing or threatened against Seller
relating to the Business; no union organizational activity exists
respecting employees of Seller relating to the Business not currently
subject to a collective bargaining agreement; except as set forth on
Schedule 3.14(b), the Business has not experienced any work stoppage or
material labor difficulty; the union contracts or other agreements
delivered as part of Schedule 3.14(b) constitute all agreements with the
unions or other collective bargaining groups relating to the Business,
and there are no other arrangements or established practices relating to
the employees covered by any collective bargaining agreement; and
Schedule 3.14(b) contains as of the Closing Date a list of all
arbitration or grievance proceedings relating to the Business that have
occurred since the Balance Sheet Date. No one has petitioned within the
last five years, and no one is now petitioning, for union representation
of any employees of Seller relating to the Business. Seller has not
experienced any labor strike, slow-down, work stoppage, or other job
action during the last five years relating to the Business.
3.15. Taxes.
(a) Seller has timely filed all requisite federal,
state, local and other tax and information returns due for all fiscal
periods ended on or before the Closing
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Date. All such returns are accurate and complete. Except as set forth on
Schedule 3.15, there are no open years, examinations in progress,
extensions of any statute of limitations or claims against Seller
relating to federal, state, local or other taxes (including penalties
and interest) for any period or periods prior to and including the
Closing Date and no notice of any claim for taxes has been received.
Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal income, and state franchise, income
and sales tax returns of Seller for the last three fiscal years are
attached as part of Schedule 3.15. Seller has not been contacted by any
federal, state or local taxing authority regarding a prospective
examination.
(b) Except as set forth on Schedule 3.15 (which schedule
also includes the amount due) Seller has duly paid all taxes and other
related charges required to be paid prior to the Closing Date. The
reserves for taxes contained in the Financial Statements are adequate to
cover the tax liability of Seller as of the Closing Date.
(c) Seller has withheld all required amounts from their
employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes have
been duly filed by Seller for all periods for which returns are due, and
the amounts shown on all such returns to be due and payable have been
paid in full.
3.16. Copies Complete; Consents and Approvals. Except as
disclosed on Schedule 3.16, the copies of all leases, instruments, agreements,
licenses, permits, certificates or other documents that have been delivered to
Buyer in connection with the transactions contemplated hereby are complete and
accurate as of the Closing Date and are true and correct copies of the originals
thereof. None of such leases, instruments, agreements, licenses, permits,
certificates or other documents requires notice to, or consent or approval of,
any governmental agency or other third party to any of the transactions
contemplated hereby, except such consents and approvals as are listed on
Schedule 3.16, all of which will have been obtained prior to the Closing Date.
3.17. Customers, Xxxxxxxx, Current Receipts and Receivables.
Schedule 3.17 is a current, accurate and complete list of, and includes:
(a) the customers of the Business that Seller serves on
an ongoing basis, including name, location and current billing rate, as
of the Closing Date; and
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month
preceding the Closing Date, showing amounts due in 30-day aging
categories. Except to the extent of the allowance for bad debts
reflected on the Financial Statements or otherwise disclosed on Schedule
3.17, Seller's accounts and notes receivable are collectible in the
amounts shown on Schedule 3.17.
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Since the Balance Sheet Date, Seller has not lost any customers and no customers
have threatened or otherwise informed Seller that they intend to discontinue
doing business with Seller. Seller has no knowledge of any intention of any of
such customers that operates a coal mine to terminate or reduce the scope of its
operations at the locations served by the Business, and none of such customers
has indicated to Seller that it is considering terminating or reducing the scope
of any of its operations at any of such locations.
3.18. Brokers; Finders. No person has acted directly or
indirectly as a broker, finder or financial advisor for Seller or the
Shareholders in connection with the transactions contemplated by this Agreement
and no person is entitled to any broker's, finder's, financial advisory or
similar fee or payment in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of Seller or the Shareholders.
3.19. Closing Date Debt. At the Closing, Seller shall prepare
and deliver to Buyer Schedule 3.19, which shall set forth the amount of (i) the
aggregate debt (excluding trade payables) of Seller outstanding on the Closing
Date relating to the Business, which debt will be repaid at or immediately after
the Closing Date, including in each case all interest accrued through and
including the Closing Date and all prepayment penalties to be incurred in
connection with the repayment of any such debt required to be repaid, plus (ii)
the present value of all capitalized lease obligations (determined in accordance
with generally accepted accounting principles) included in the Assumed Contracts
or encumbering the Assets and (iii) the present value, discounted at the lease
rate factor, if known, inherent in the lease or, if the lease rate factor is not
known, at the rate charged to Seller by a third party lender in connection with
its most recent borrowing to finance equipment, of all lease obligations that
are not capitalized lease obligations included in the Assumed Contracts or
encumbering the Assets (the "CLOSING DATE DEBT").
3.20. Compliance With Laws. Except as disclosed on Schedule
3.20, Seller has materially complied with, and Seller is presently in material
compliance with, federal, state and local laws, ordinances, codes, rules,
regulations, Governmental Permits, orders, judgments, awards, decrees, consent
judgments, consent orders and requirements applicable to Seller relating to the
Business (collectively "LAWS"), including, but not limited to, Laws relating to
the public health, safety or protection of the environment (collectively,
"ENVIRONMENTAL LAWS"). Except as disclosed on Schedule 3.20, there has been no
assertion by any party that Seller is in material violation of any Laws.
Specifically and without limiting the generality of the foregoing, except as
disclosed on Schedule 3.20:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, the Federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the
Business has not accepted, processed, handled, transferred, generated,
treated, stored or disposed of any Hazardous Material (as defined in
Section 3.20(e) below) nor has it accepted, processed, handled,
transferred, generated, treated, stored or disposed of asbestos, medical
waste, radioactive waste or municipal waste, except in compliance with
Environmental Laws.
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(b) During Seller's leasing of the Facility Property
leased by Seller and prior to Seller's leasing of such Facility
Property, no Hazardous Material, other than that allowed under
Environmental Laws, including, without limitation, RCRA, has been
disposed of, or otherwise released on any Facility Property.
(c) During Seller's leasing of the Facility Property
leased by Seller and prior to Seller's leasing of such Facility
Property, no Facility Property has ever been subject to nor has Seller
received any notice of any private, administrative or judicial action,
or notice of any intended private, administrative or judicial action
relating to the presence or alleged presence of Hazardous Material in,
under, upon or emanating from any Facility Property. There are no
pending and no threatened actions or proceedings from any governmental
agency or any other entity involving remediation of any condition of any
Facility Property, including, without limitation, petroleum
contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Business has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL"
shall mean (i) any substances defined as "HAZARDOUS WASTE" in 40 CFR
261, and in any corresponding Utah statute or regulation; and (ii) any
substance the presence of which requires remediation pursuant to any
Environmental Laws.
3.21. Patents, Trademarks, Trade Names, etc. Schedule 3.21 lists
all patents, trade names, fictitious business names, trademarks, service marks,
and copyrights owned by Seller or which they are licensed to use in connection
with the Business (other than licenses to use software for personal computer
operating systems that were provided when the computer was purchased and
licenses to use software for personal computers that are granted to retail
purchasers of such software). No patents, trade secrets, know-how, intellectual
property, trademarks, trade names, assumed names, copyrights, or designations
used by Seller in the Business infringe on any patents, trademarks, or
copyrights, or any other rights of any person. Neither Seller nor any of the
Shareholders knows or has any reason to believe that there are any claims of
third parties to the use of any such names or any similar name, or knows of or
has any reason to believe that there exists any basis for any such claim or
claims.
3.22. Assets, etc., Necessary to the Business. Seller owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.4, 3.8(a), 3.12(a) and 3.16,
are a party to all Governmental Permits and other agreements necessary to permit
Seller to carry on the Business as presently conducted.
3.23. Suppliers and Customers. Seller has no knowledge of any
fact (other than general economic and industry conditions) which indicates that
any of the suppliers supplying products, components, materials or providing use
of, or access to, landfills or disposal sites to Seller intends to cease
providing such items to Seller, nor does Seller have knowledge of any fact
(other than general economic and industry conditions) which gives Seller reason
to
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believe that any of the customers of the Business intends to terminate, limit or
reduce its business relations with Seller relating to the Business.
3.24. Absence of Certain Business Practices. Neither Seller nor
any of the Shareholders has directly or indirectly within the past five years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the Business in connection with any actual or proposed transaction which
(a) might subject Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (b) if not given in the past, might have
had an adverse effect on the financial condition, business or results of
operations of the Business, or (c) if not continued in the future, might
adversely affect the financial condition, business or operations of the Business
or which might subject Buyer to suit or penalty in any private or governmental
litigation or proceeding.
3.25. Disclosure Schedules. Any matter disclosed by Seller on
any Schedule to this Agreement shall be deemed to have been disclosed on every
other Schedule that refers to such Schedule by cross reference so long as the
nature of the matter disclosed is obvious from a fair reading of the Schedule on
which the matter is disclosed.
3.26. No Misleading Statements. The representations and
warranties of Seller and the Shareholders contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and information furnished
to Buyer and their representatives pursuant hereto are complete and accurate in
all material respects and do not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements made and to
be made not misleading.
3.27. Accurate and Complete Records. The books, ledgers,
financial records and other records of Seller relating to the Business:
(a) have been made available to Buyer and its agents at
Seller's offices or at the offices of Buyer's attorneys or Seller's
attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete in all material respects,
and reflect all material transactions.
3.28. Intentionally Omitted.
3.29. Investment Representations. Each of the Shareholders
further represent that:
(a) Each of the Shareholders is an "accredited investor"
as defined in Rule 501(a) under the Securities Act of 1933, as amended
(the "Act"). Seller and each of the Shareholders have such knowledge and
experience in financial matters, either
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alone or with their professional advisors, that they are capable of
evaluating the merits and risks of the investment in the WCI Stock.
(b) Each is a resident of the State of Utah.
(c) Each of the Shareholders has had access to such
information relating to WCI as he feels is reasonably necessary to make
an informed investment decision with respect to the WCI Stock.
(d) Each of the Shareholders has had the opportunity to
ask questions and receive answers concerning the terms and conditions of
the transactions contemplated by this Agreement and to obtain additional
information that WCI possesses or can obtain without unreasonable effort
or expense that is necessary to verify the accuracy of the information
provided.
(e) Each of the Shareholders is acquiring the WCI Stock
pursuant to this Agreement for its own account, not as a nominee or
agent. No one else has any interest, beneficial or otherwise, in any of
the WCI Stock.
(f) Each of the Shareholders is able to bear the
economic risk of such an investment in the WCI Stock, are aware that
they must be prepared to hold such WCI Stock for an indefinite period
and are aware that the shares of the WCI Stock have not been registered
under the Act, or registered or qualified under the California Corporate
Securities Law of 1968, as amended, or any other securities law, on the
ground, among others, that no unregistered distribution or public
offering of the WCI Stock is to be effected and that the shares of the
WCI Stock are being issued by WCI without any public offering within the
meaning of section 4(2) of the Act.
(g) Without in any way limiting the representations
herein, each of the Shareholders further agrees that he shall not
encumber, pledge, hypothecate, sell, transfer, assign or otherwise
dispose of, or receive any consideration for, any shares of the WCI
Stock or any interest in them, unless and until prior to any proposed
encumbrance, pledge, hypothecation, sale, transfer, assignment or other
disposition, (i) a registration statement on Form S-1 or S-3 (or any
other form appropriate for the purpose or replacing such form) under the
Act with respect to the shares proposed to be transferred or otherwise
disposed of shall be then effective (ii)(a) he shall have furnished WCI
with a detailed statement of the circumstances of the proposed
disposition, and (b) he or she shall have furnished WCI with an opinion
of counsel or no-action letter issued by the Staff of the Securities and
Exchange Commission ("SEC") (obtained at the Shareholder's expense) in
form and substance satisfactory to WCI to the effect that such
disposition will not require registration of any such WCI Stock under
the Act or qualification of any such shares under any other securities
law; or (iii) Rule 144 is available with respect to such transaction.
(h) Each of the Shareholders understands and agrees that
each certificate or other instrument representing the WCI Stock will
bear a legend on the face
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thereof (or on the reverse thereof with a reference to such legend on
the face thereof) which legend restricts the sale, transfer or other
disposition of the WCI Stock otherwise than in accordance with Section
3.29(g) of this Agreement provided, however, that WCI shall, on the
request of any of the Shareholders, cause such legends to be removed
from the certificates or other instrument evidencing the WCI Stock if
such Shareholder has held such WCI Stock for the period contemplated by
Rule 144(k) under the Act and if such Shareholder is not then and has
not been during the three months preceding such request an affiliate of
WCI (as defined in Rule 144 under the Act).
(i) Each of the Shareholders understands and agrees that
the WCI Stock will be "restricted securities" as that term is defined in
Rule 144 under the Act and, accordingly, that the WCI Stock must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
(j) The Shareholders agree to be bound with respect to
the Shares by any "lock up" provisions to which the executive officers
and directors of WCI are also bound as may be requested by any
underwriters of any offering of WCI Stock or securities convertible into
WCI Stock.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND BUYER
WCI and Buyer, jointly and severally, represent and warrant to Seller
and each Shareholder that each of the following representations and warranties
is true as of the Closing Date, and agree that such representations and
warranties shall survive the Closing:
4.1. Existence and Good Standing. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified to transact
business as a foreign corporation in the State of Utah.
4.2. No Contractual Restrictions. No provisions exist in any
article, document or instrument to which WCI is a party or by which it is bound
which would be violated by consummation of the transactions contemplated by this
Agreement.
4.3. Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due authorization,
execution and delivery by the Corporation and the Shareholders, constitutes a
legal, valid and binding obligation of WCI. WCI has full corporate power, legal
right and corporate authority to enter into and perform its obligations under
this Agreement and to carry on its business as presently conducted. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
terms and conditions hereof do not and will not, after the giving of notice, or
the lapse of time or otherwise: (a) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to WCI; (b) conflict
with any of the provisions of the Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws of WCI; or (c) conflict with,
result in a breach of or constitute
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a default under any material agreement or instrument to which WCI is a party or
by which it is bound.
4.4. Status of Shares. The Shares delivered to the Shareholders
at the Closing are duly authorized and delivered shares of WCI, and shall be
fully paid and nonassessable.
4.5. No Misleading Statements. The representations and
warranties of WCI contained in this Agreement, the Exhibits and Schedules hereto
and all other documents and information furnished to the Shareholders pursuant
hereto are materially complete and accurate, and do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made and to be made not misleading as of the Closing Date.
5. CLOSING DELIVERIES
At the Closing or at the time otherwise indicated, the respective
parties shall make the deliveries indicated:
5.1. WCI's and Buyer's Deliveries.
(a) WCI shall deliver the Purchase Price required to be
delivered on the Closing Date pursuant to Section 1.5; and
(b) WCI shall deliver to the Shareholders certificates
for the Shares.
5.2. Seller's Deliveries.
(a) Seller shall deliver to Buyer (and/or its designee)
an executed xxxx of sale and other instruments of transfer and
conveyance for the full and complete transfer, conveyance, assignment
and delivery to Buyer on the Closing Date of all of Seller's right,
title and interest in and to all of the Assets, accompanied by all third
party consents required with respect thereto, including, without
limitation, written evidence of the release of the liens and
encumbrances with respect to the Assets;
(b) Seller shall deliver to Buyer an executed assignment
or transfer of the Assumed Contracts and Governmental Permits
accompanied by all third party consents required with respect thereto;
(c) Seller shall deliver to Buyer (and/or its designee)
all motor vehicle registrations and ownership documents for the motor
vehicles being acquired by Seller;
(d) Seller shall deliver to Buyer an opinion of counsel
for Seller, dated as of the Closing Date, in substantially the form
attached hereto as Exhibit 5.2(d);
(e) Seller shall deliver to Buyer evidence satisfactory
to Buyer showing that all written employment contracts and all oral
employment contracts other
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than those that are terminable "at will" without payment of severance
(other than normal severance benefits approved by Buyer) or other
benefits with non-union employees of Seller (including, without
limitation, rights to obtain equity in the Business or Assets) have been
terminated, effective on or before the Closing Date;
(f) Seller shall provide evidence satisfactory to Buyer
of compliance with Utah's Bulk Sales Law, if applicable; and
(g) Seller shall execute and deliver such other
documents and instruments as are reasonably requested by WCI or Buyer in
order to consummate the transactions contemplated by this Agreement.
6. INDEMNIFICATION
6.1. Indemnity by Seller, the Shareholders. Subject to Section
6.2, Seller and the Shareholders covenant and agree that they will, jointly and
severally, indemnify and hold harmless WCI and Buyer and their respective
directors, officers and agents and their respective successors and assigns
(collectively the "INDEMNITEES"), from and after the date of this Agreement,
against any and all losses, damages, assessments, fines, penalties, adjustments,
liabilities, claims, deficiencies, costs, expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation),
expenditures, including, without limitation, any "ENVIRONMENTAL SITE LOSSES" (as
such term is hereinafter defined) identified by a Indemnitee with respect to
each of the following contingencies until the expiration of the applicable
statute of limitations (all, the "INDEMNITY EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Seller or the
Shareholders pursuant to the terms of this Agreement or any
misrepresentation in or omission from any Exhibit, Schedule, list,
certificate, or other instrument furnished or to be furnished to WCI or
Buyer pursuant to the terms of this Agreement, regardless of whether, in
the case of a breach of a representation or a warranty, WCI or Buyer
relied on the truth of such representation or warranty or had any
knowledge of any breach thereof.
(b) The design, development, construction or operation
of any "ENVIRONMENTAL SITE" as hereinafter defined, or the installation
or operation of an Underground Storage Tank ("UST") during any period on
or prior to the Closing Date. As used in this Agreement, "Environmental
Site" shall mean any facility, any UST and any other waste storage,
processing, treatment or disposal facility, and any other business site
or any other real property owned, leased, controlled or operated by
Seller or the Shareholders or by any predecessor thereof on or prior to
the Closing Date and used in the Business, provided however, as to
activities of such predecessors, only to the extent that Seller or the
Shareholders had knowledge of such activities. As used in this
Agreement, "ENVIRONMENTAL SITE LOSSES" shall mean any and all losses,
damages (including exemplary damages and penalties), liabilities,
claims, deficiencies, costs, expenses, and expenditures (including,
without limitation, expenses in connection with site evaluations, risk
assessments and feasibility studies) arising out of or required by an
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interim or final judicial or administrative decree, judgment,
injunction, mandate, interim or final permit condition or restriction,
cease and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or any other
remedial action that is required to be undertaken under federal, state
or local law in respect of operating activities on or affecting any
facility, any UST or any other Environmental Site, including, but not
limited to (x) any actual or alleged violation of any law or regulation
respecting the protection of the environment, including, but not limited
to, RCRA and CERCLA or any other law or regulation respecting the
protection of the air, water and land and (y) any remedies or
violations, whether by a private or public action, alleged or sought to
be assessed as a consequence, directly or indirectly, of any "RELEASE"
(as defined below) of pollutants (including odors) or Hazardous
Substances from any facility, any UST or any other Environmental Site
resulting from activities thereat, whether such Release is into the air,
water (including groundwater) or land and whether such Release arose
before, during or after the Closing Date. The term "Release" as used
herein means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the ambient environment.
(c) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
6.2. Limitations on Seller's and the Shareholders' Indemnities.
The maximum amount which the Indemnitees can recover as a result of one or more
Indemnity Events pursuant to the provisions hereof for Claims shall not in the
aggregate exceed the Purchase Price.
6.3. Notice of Indemnity Claim.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any Indemnitee as to which
such Indemnitee may be entitled to indemnification hereunder, Indemnitee
shall notify Seller and the Shareholders (collectively, the
"INDEMNIFYING PARTY") in writing thereof (the "CLAIMS NOTICE") within 60
days after (i) receipt of written notice of commencement of any third
party litigation against such Indemnitee, (ii) receipt by such
Indemnitee of written notice of any third party claim pursuant to an
invoice, notice of claim or assessment, against such Indemnitee, or
(iii) such Indemnitee becomes aware of the existence of any other event
in respect of which indemnification may be sought from the Indemnifying
Party (including, without limitation, any inaccuracy of any
representation or warranty or breach of any covenant). The Claims Notice
shall describe the Claim and the specific facts and circumstances in
reasonable detail, and shall indicate the amount, if known, or an
estimate, if possible, of the losses that have been or may be incurred
or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including
such Claims) do not
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exceed the limit set forth in Section 6.2 at the time the Claim is made,
by the Indemnifying Party's own counsel; provided, however, the
Indemnifying Party may assume and undertake the defense of such a third
party Claim only upon written agreement by the Indemnifying Party that
the Indemnifying Party is obligated to fully indemnify Indemnitee with
respect to such action. Indemnitee may participate, at WCI's
Indemnitee's own expense, in the defense of any Claim assumed by the
Indemnifying Party. Without the written approval of Indemnitee, which
approval shall not be unreasonably withheld, the Indemnifying Party
shall not agree to any compromise of a Claim defended by the
Indemnifying Party.
(c) If, within 30 days of the Indemnifying Party's
receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 6.3(b) and elected to
defend the Claims, Indemnitee shall have the right to assume control of
the defense and/or compromise of such Claim, and the costs and expenses
of such defense, including reasonable attorneys' fees, shall be added to
the Claim. The Indemnifying Party shall promptly, and in any event
within 30 days reimburse Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall
keep the other party reasonably informed at all times of the progress
and development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the parties to this Agreement shall cooperate with each other and make
available to each other and their representatives all available relevant
records or other materials required by them for their use in defending,
compromising or contesting any Claim. The failure to timely deliver a
Claims Notice or otherwise notify the Indemnifying Party of the
commencement of such actions in accordance with this Section 6.3 shall
not relieve the Indemnifying Party from the obligation to indemnify
hereunder but only to the extent that the Indemnifying Party establishes
by competent evidence that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the
Indemnifying Party are named as defendants in an action or proceeding
initiated by a third party, they shall both be represented by the same
counsel (on whom they shall agree), unless such counsel, the Indemnitee,
or the Indemnifying Party shall determine that such counsel has a
conflict of interest in representing both the Indemnitee and the
Indemnifying Party in the same action or proceeding and the Indemnitee
and the Indemnifying Party do not waive such conflict to the
satisfaction of such counsel.
6.4. Survival of Representations, Warranties and Agreements. The
representations and warranties of the parties contained in this Agreement and in
any certificate, Exhibit or Schedule delivered pursuant hereto, or in any other
writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and
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delivering and in carrying out the provisions of this Agreement are relying
solely on the representations, warranties, Schedules, Exhibits, agreements and
covenants contained in this Agreement, or in any writing or document delivered
pursuant to the provisions of this Agreement, and not upon any representation,
warranty, agreement, promise or information, written or oral, made by any
persons other than as specifically set forth herein or therein.
6.5. No Exhaustion of Remedies or Subrogation; Right of Set Off.
Seller and the Shareholders waive any right to require any Indemnitee to (i)
proceed against Seller; (ii) proceed against any other person; or (iii) pursue
any other remedy whatsoever in the power of any Indemnitee. Buyer may, but shall
not be obligated to, set off against any and all payments due Seller under this
Agreement or any other agreement between the parties, any amount to which WCI,
Buyer or any other Indemnitee is entitled to be indemnified hereunder with
respect to any Indemnity Event. Such right of set off shall be separate and
apart from any and all other rights and remedies that the Indemnities may have
against Seller and the Shareholders or their successors.
7. OTHER POST-CLOSING COVENANTS OF SELLER, THE SHAREHOLDERS, WCI AND
BUYER
7.1. Restrictive Covenants. Seller, the Shareholders, the
Shareholders' and Affiliates acknowledge that (i) WCI and Buyer, as the
purchasers of the Assets (including the goodwill of the Business), are and will
be engaged in the same business as the Business; (ii) Seller, the Shareholders,
the their Affiliates are intimately familiar with the Business; (iii) the
Business is currently conducted in the State of Utah and WCI and Buyer, directly
and indirectly through their Affiliates, currently conduct business in Utah and
intend, by acquisition or otherwise, to expand the Business into other
geographic areas of Utah where it is not presently conducted; (iv) Seller, the
Shareholders, and their Affiliates have had access to trade secrets of, and
confidential information concerning, the Business; (v) the agreements and
covenants contained in this Section 7.1 are essential to protect the Business
and the goodwill being acquired; and (vi) Seller, the Shareholders, and their
Affiliates have the means to support themselves and their dependents other than
by engaging in a business substantially similar to the Business and the
provisions of this Section 7 will not impair such ability. Seller and the
Shareholders covenant and agree as set forth in (a), (b) and (c) below with
respect to the Business:
(a) Non-Compete. For a period commencing on the Closing
Date and terminating five years thereafter (the "RESTRICTED PERIOD"),
Seller, the Shareholders, and their Affiliates shall not, anywhere
within a One Hundred (100) mile radius of Salt Lake City, Utah, directly
or indirectly, acting individually or as the owners, shareholders,
partners, or employees of any entity, (i) engage in the operation of a
solid waste collection, transporting, disposal and/or composting
business, transfer facility, recycling facility, materials recovery
facility or solid waste landfill; (ii) enter the employ of, or render
any personal services to or for the benefit of, or assist in or
facilitate the solicitation of customers for, or receive remuneration in
the form of salary, commissions or otherwise from, any business engaged
in such activities; or (iii) receive or purchase a financial interest
in, make a loan to, or make a gift in support of, any such business
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in any capacity, including, without limitation, as a sole proprietor,
partner, shareholder, officer, director, principal, agent, trustee or
lender; provided, however, that any of Seller or the Shareholders may
own, directly or indirectly, solely as an investment, securities of any
business traded on any national securities exchange or NASDAQ, provided
none of Seller or the Shareholders is a controlling person of, or member
of a group which controls, such business and further provided that
Seller and Shareholders do not, in the aggregate, directly or
indirectly, own 2% or more of any class of securities of such business.
(b) Confidential Information. During the Restricted
Period and thereafter, Seller, the Shareholders and their Affiliates
shall keep secret and retain in strictest confidence, and shall not use
for the benefit of themselves or others, all data and information
relating to the Business ("CONFIDENTIAL INFORMATION"), including without
limitation, the existence of and terms of this Agreement, know-how,
trade secrets, customer lists, supplier lists, details of contracts,
pricing policies, operational methods, marketing plans or strategies,
bidding practices and policies, product development techniques or plans,
and technical processes; provided, however, that the term "Confidential
Information" shall not include information that (i) is or becomes
generally available to the public other than as a result of disclosure
by Seller or any of the Shareholders, or (ii) is general knowledge in
the solid waste handling and landfill business and not specifically
related to the Business.
(c) Property of the Business. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or on
behalf of Seller or made available to Seller relating to the Business
(other than those relating to the Excluded Assets and the Excluded
Liabilities), but excluding any materials maintained by any attorneys
for Seller prior to the Closing, are and shall be the property of WCI or
Buyer and have been delivered or will be delivered or made available to
WCI or Buyer at the Closing.
(d) Non-Solicitation. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, Seller, the
Shareholders and their Affiliates shall not, during the Restricted
Period, solicit any employees of WCI, Buyer or their Affiliates to leave
the employ of WCI, Buyer or their Affiliates and join Seller, any of
Shareholders or Affiliate in any business endeavor owned or pursued by
any of them.
(e) No Disparagement. From and after the Closing Date,
none of Seller nor the Shareholders shall, in any way to any customer or
employee of the Business or Buyer, denigrate or derogate WCI, Buyer or
any of their subsidiaries, or any officer, director or employee, or any
product or service or procedure of any such company whether or not such
denigrating or derogatory statements shall be true and are based on acts
or omissions which are learned by Seller or the Shareholders from and
after the date hereof or on acts or omissions which occur from and after
the date hereof, or otherwise. A statement shall be deemed denigrating
or derogatory to any person if it adversely affects the regard or esteem
in which such person or entity is held by such
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person. Without limiting the generality of the foregoing, none of Seller
nor the Shareholders shall, directly or indirectly in any way in respect
of any such company or any such directors or officers, communicate with,
or take any action which is adverse to the position of any such company
with any customer or employee of the Business or Buyer. This paragraph
does not apply to the extent that testimony is required by legal
process, provided that WCI has received not less than five days' prior
written notice of such proposed testimony, or such lesser actual notice
as Seller or any Shareholder or Shareholder shall have.
7.2. Rights and Remedies Upon Breach. If Seller, the
Shareholders or any Affiliate breaches, or threatens to commit a breach of, any
of the provisions of Section 7.1(a), (b) or (d) herein (the "RESTRICTIVE
COVENANTS"), WCI and Buyer shall have the following rights and remedies, each of
which rights and remedies shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to Buyer at law or in equity:
(a) Specific Performance. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to
WCI and Buyer and that money damages would not provide an adequate
remedy to Buyer. Accordingly, in addition to any other rights or
remedies, WCI and Buyer shall be entitled to injunctive relief to
enforce the terms of the Restrictive Covenants and to restrain Seller
and the Shareholders from any violation thereof.
(b) Accounting. The right and remedy to require Seller
and the Shareholders to account for and pay over to WCI or Buyer all
compensation, profits, monies, accruals, increments or other benefits
derived or received by Seller or the Shareholders as the result of any
transactions constituting a breach of the Restrictive Covenants.
(c) Severability of Covenants. Seller and Shareholders
acknowledge and agree that the Restrictive Covenants are reasonable and
valid in geographical and temporal scope and in all other respects. If
any court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions.
(d) Blue-Penciling. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because
of the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI, Buyer, Seller
and Shareholders intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants
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upon the courts of any jurisdiction within the geographic scope of the
Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of WCI,
Buyer, Seller and Shareholders that such determination not bar or in any
way affect Buyer's right to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
8. TERMINATION OF AGREEMENT
8.1. Termination by Buyer; by Seller. This Agreement may be
terminated at any time prior to the Closing Date:
(a) by Buyer, by written notice to Seller if the
representations and warranties of Seller shall not have been true and
correct in all respects as of the date when made; or
(b) by Seller by written notice to WCI if the
representations and warranties of Buyer shall not have been true and
correct in all respects as of the date when made.
8.2. Notice and Effect of Termination. On termination of this
Agreement, the transactions contemplated herein shall forthwith be abandoned and
all continuing obligations and liabilities of the parties under or in connection
with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained in
this Agreement prior to such termination.
8.3. Exclusive Negotiations. Following execution of this
Agreement, Seller and Shareholders shall not, and Seller shall not permit its
employees or agents to, initiate, negotiate or discuss with any other person or
entity the possible sale of all or substantially all of the Assets or the
Business with any party other than Buyer. Seller and Shareholders hereby confirm
that no person or entity presently has or may acquire any rights to purchase or
otherwise acquire the Assets or the Business.
9. GENERAL
9.1. Additional Conveyances. Following the Closing, Seller and
Buyer shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon such additional instruments as Buyer or Seller
may reasonably request for the purpose of carrying out this Agreement. Seller
will cooperate with WCI and Buyer on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings or disputes of any nature with respect to matters
pertaining to all periods prior to the date of this Agreement.
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9.2. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI,
Buyer and Seller and the heirs, legal representatives or assigns of the
Shareholders; provided, however, that any such assignment shall be subject to
the terms of this Agreement and shall not relieve the assignor of its or his
responsibilities under this Agreement. Buyer may assign some or all of its
rights hereunder to another Affiliate of WCI.
9.3. Public Announcements. Except as required by law, Seller
shall not make any public announcement or filing with respect to the
transactions provided for herein without the prior written consent of WCI.
9.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.5. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage prepaid registered or certified U.S. mail,
return receipt requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given hereunder, and shall
be effective upon personal delivery or facsimile transmission thereof or upon
delivery by registered or certified U.S. mail or one business day following
deposit with an air courier service:
If to Seller:
Xxxxxx X. Xxxxxxxxxx
Contractors Waste, Inc.
Xxxx Xxxxxx Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to:
Xxxxxx Xxxxx, Esq.
Law Xxxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxx Xxxx, Xxxx 00000
If to Buyer:
Waste Connections, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
9.6. Attorneys' Fees. In the event of any dispute or controversy
between WCI or Buyer on the one hand and Seller or Shareholders on the other
hand relating to the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party
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shall be entitled to recover from the other party reasonable attorneys' fees and
expenses incurred by the prevailing party. Such award shall include
post-judgment attorney's fees and costs.
9.7. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah without regard to its
conflict of laws provisions.
9.8. Payment of Fees and Expenses. Whether or not the
transactions herein contemplated shall be consummated, each party hereto will
pay its own fees, expenses and disbursements incurred in connection herewith and
all other costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder.
9.9. Incorporation by Reference. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
9.10. Captions. The captions in this Agreement are for
convenience only and shall not be considered a part hereof or affect the
construction or interpretation of any provisions of this Agreement.
9.11. Number and Gender of Words. Whenever the singular number
is used herein, the same shall include the plural where appropriate, and shall
apply to all of such number, and to each of them, jointly and severally, and
words of any gender shall include each other gender where appropriate.
9.12. Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the entire Agreement and understanding between Seller, the
Shareholders, WCI and Buyer and supersedes any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be modified
or amended only by a written instrument executed by Seller, the Shareholders,
WCI and Buyer acting through their officers, thereunto duly authorized.
9.13. Waiver. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
9.14. Construction. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Unless expressly set forth otherwise, all
references herein to a "day" are deemed to be a reference to a calendar day. All
references to "business day" mean any day of the year other than a Saturday,
Sunday or a public or bank holiday in California or Utah. Unless expressly
stated otherwise, cross-references herein refer to provisions within this
Agreement and are not references to the overall transaction or to any other
document.
9.15. Affiliate. For purposes of this Agreement, the term
"AFFILIATE" means, with respect to any person, any person that directly or
indirectly through one or more
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intermediaries controls, or is controlled by, or is under common control with
such person, and in the case of Seller includes directors and officers, in the
case of individuals includes the individual's spouse, father, mother,
grandfather, grandmother, brothers, sisters, children and grandchildren, and in
the case of a trust includes the grantors, trustees and beneficiaries of the
trust.
9.16. Knowledge. Wherever reference is made in this Agreement to
the "knowledge" of Seller or the Shareholders, such term means the actual
knowledge of Seller, the Shareholders or any director, officer or management
employee of Seller whose duties relate to the Business, or any knowledge which
should have been obtained by Seller, the Shareholders or such employee upon
reasonable inquiry by a reasonable business person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement by persons thereunto duly authorized as of the date first above
written.
SELLER: CONTRACTORS WASTE, INC.
By:
--------------------------------
Xxxxx X. Xxxx, President
SHAREHOLDERS:
By:
--------------------------------
Xxxxxx X. Xxxxxxxxxx
By:
--------------------------------
Xxxxx X. Xxxx
WCI: WASTE CONNECTIONS, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxxxxxxx
President, Chief Executive Officer
and Chairman
BUYER: WASTE CONNECTIONS OF UTAH, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxxxxxxx, President
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