ASSET PURCHASE AGREEMENT
Exhibit 10.21
THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is executed and delivered as of July
19, 2006, among Allied Waste Transfer Services of Arizona, LLC, a Delaware limited liability
company (“Buyer”); and those entities set forth as Sellers on Exhibit A
(“Sellers”).
RECITALS
A. Sellers and Cactus Waste Systems, LLC, an Arizona limited liability company (the
“Company”), own and operate hauling operations, transfer station operations, and landfill
operations (collectively, the “Business”) in the State of Arizona (the “Area”).
B. Buyer desires to purchase and acquire substantially all of the assets, properties and
contractual rights used by Sellers in connection with the Business, including the membership
interests of the Company (the “Membership Interests”), and Sellers desire to sell such
assets, properties, contractual rights and Membership Interests to Buyer, all in accordance with
the terms and conditions set forth in this Agreement.
C. The assets and properties used by Sellers and the Company in connection with the Business
include the real property described on Exhibit B-1 (the “Land”) and the leased real
property described on Exhibit B-2 (the “Leased Real Property”).
D. Except as the context otherwise requires, capitalized terms used in this Agreement shall
have the meanings assigned to them in Exhibit C.
NOW, THEREFORE, in consideration of the mutual promises and covenants in this Agreement and
other good and valuable consideration, received to the full satisfaction of each of them, the
parties agree as follows:
ARTICLE I
SALE OF ASSETS
1.1 Sale of Assets by Sellers. On the terms and subject to the conditions set forth
in this Agreement, at the Closing Sellers shall grant, convey, sell, transfer and assign to Buyer,
and Buyer shall purchase from Sellers, all of Sellers’ right, title and interest in and to the
following assets used in the Business, including the following assets owned by the Company which
Buyer will acquire by virtue of its acquisition of the Membership Interests (but excluding the
Excluded Assets), free and clear of all Encumbrances except Permitted Exceptions and Blanket Liens:
(a) the Land, including all structures, improvements, fixtures, easements and other rights and
interests relating thereto, and all leases with respect to the Leased Real Property;
(b) subject to Section 1.3, all Permits held by Sellers in connection with the
Business, including the Permits listed on Schedule 1.1(b);
(c) all Equipment, including the Equipment listed on Schedule 1.1(c);
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(d) all Rolling Stock, including the Rolling Stock described on Schedule 1.1(d);
(e) all computer hardware and related basic operating systems used, or held for use,
principally in connection with the Business;
(f) all Inventory, including the Inventory listed on Schedule 1.1(f);
(g) all intangible property owned by Sellers and used principally in connection with the
Business, including all symbols, trademarks, service marks, logos and trade names, including the
Business Names listed on Schedule 1.1(g), except (subject to Section 4.1) those
symbols, trademarks, service marks, logos and trade names that include the names of or otherwise
identify “Waste Services” (the “Retained IP”);
(h) all Customer Contracts, Assumed Leases and Other Contracts (collectively, the “Assumed
Contracts”);
(i) the telephone numbers used principally in the conduct of the Business;
(j) all shop tools, nuts and bolts used principally in connection with the Business;
(k) all books and records relating principally to the Business, including customer lists and
vendor lists of Sellers and the Company, and including the entity record books, Tax records and
personnel records of the Company;
(l) to the extent relating to the Business, all prepaid expenses and deposits, including any
such expenses and deposits with respect to leases, rentals and utilities;
(m) all Accounts Receivable, except for the Accounts Receivable relating to the Top Grade
contract;
(n) all furniture, fixtures and office equipment used principally in connection with the
Business;
(o) to the extent relating principally to the Business, all rights under agreements with
employees and other third Persons concerning confidentiality and assignment of inventions;
(p) the Membership Interests; and
(q) all goodwill of the Business.
All of the foregoing assets of Sellers described in this Section 1.1 are referred to as the
“Assets”. For greater certainty, the various schedules to this Section 1.1 also
list the relevant assets of the Company, and such assets of the Company are included within the
definition of “Assets” in this Agreement.
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1.2 Excluded Assets. The parties agree that certain assets of Sellers and the Company
shall remain the property of Sellers and shall not be sold to Buyer at the Closing (the
“Excluded Assets”). To the extent any of the Excluded Assets are owned or held by the
Company, prior to the Closing the Company shall transfer such Excluded Assets to Sellers or to any
other Person designated by Sellers as provided in Section 10.1. The Excluded Assets are:
(a) all assets that are not used or held for use in, owned by, leased by or in the possession of
Sellers or their Affiliates, including the Company, principally in connection with the Business;
(b) records which relate primarily to Excluded Assets or Excluded Liabilities, including (with
respect to Sellers but not the Company) files relating to Taxes and personnel files; (c) the stock
and corporate record books of Sellers; (d) the rights which accrue or will accrue to Sellers under
this Agreement; (e) any inter-company receivables from Sellers or their Affiliates; (f) all present
and future refunds relating to Taxes of Sellers; (g) all insurance policies and all rights with
respect thereto; (h) all litigation rights to which Sellers are plaintiffs and all causes of action
and claims of every nature, kind and description; (i) all billing, route management and other
software programs other than basic operating systems; (j) all xxxxx and other cash and cash
equivalents on hand or in a bank; (k) all bank accounts; (l) all escrow accounts; (m) all right,
title and interest in any financial responsibility, financial assurance or similar mechanisms; (n)
all other real property and all buildings on and fixtures to all real property of Sellers and their
Affiliates, including the Company, not described on Exhibit B; (o) all time clocks and GPS
systems; (p) any assets sold by Sellers in accordance with Section 7.3(d); (q) the assets
listed on Schedule 1.2; (r) all other assets that do not constitute Assets; (s) the
Employee Contracts; and (t) letter of intent, dated March 22, 2006 from United Site Services, Inc.
to Arizona Waste Services regarding the acquisition of portable toilet assets of Waste Services of
Arizona, Inc.
1.3 Commercially Reasonable Efforts to Assign. To the extent that the sale or
assignment of any Customer Contract, Assumed Lease or Permit included within the Assets shall
require the consent of any third party, Sellers and Buyer shall each use commercially reasonable
efforts to obtain the consent of such other party to such assignment to Buyer both before and after
the Closing.
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. Subject to adjustment as provided in this Article II and
Section 11.7, Buyer shall pay to Sellers $53,000,000 at the Closing (the “Purchase
Price”), by wire transfer of immediately available funds.
2.2 Purchase Price Adjustments.
(a) Adjustment for Certain Assumed Obligations. The Purchase Price payable at the
Closing pursuant to Section 2.1 shall be reduced on a dollar-for-dollar basis for the
liability reflected on the balance sheet as of the Closing Date with respect to capitalized
equipment leases, if any, assumed by Buyer under Section 10.2.
(b) Working Capital Adjustment.
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(i) The following capitalized terms used in this Agreement shall have the following meanings:
(1) “Adjustment Amount” means an amount (which may be positive or negative) equal to
the actual amount of Net Working Capital as of Closing.
(2) “Net Working Capital” means (A) the aggregate current assets included in the
Assets, less (B) the aggregate current liabilities of Sellers assumed by Buyer under
Section 10.2, in each case determined in accordance with GAAP on a basis consistent with
the balance sheet dated May 31, 2006 included within Sellers’ Financial Statements. For greater
certainty, Sellers are retaining the Top Grade Accounts Receivable, which will not be included in
current assets for purposes of the Net Working Capital calculation.
(ii) At least five Business Days prior to the Closing Date, Sellers shall deliver to Buyer a
worksheet setting forth their good faith estimate of the Net Working Capital of the Business as of
the Closing Date and a computation of the estimated Adjustment Amount (the “Estimated
Adjustment Amount”). The worksheet shall be prepared by Sellers and shall be subject to the
approval of Buyer, which shall not be unreasonably withheld. If the worksheet is not acceptable
to Buyer, Buyer shall promptly submit its comments on the worksheet to Sellers, and Buyer and
Sellers shall endeavor in good faith to address such comments so as not to delay the Closing. If
the Estimated Adjustment Amount is a positive number, the Purchase Price payable at Closing shall
be increased in an amount equal to the positive Estimated Adjustment Amount. If the Estimated
Adjustment Amount is a negative number, the Purchase Price payable at Closing shall be decreased
in an amount equal to the negative Estimated Adjustment Amount.
(iii) Within 45 days after the Closing, Buyer shall prepare a computation of the actual Net
Working Capital and the actual Adjustment Amount as of the Closing Date (the “Actual
Adjustment Amount”) and deliver such computation to Sellers. If within 20 days following
delivery of such computation Sellers do not deliver a written objection thereto to Buyer, then the
Actual Adjustment Amount shall be as reflected on the computation provided pursuant to the
preceding sentence. If Sellers timely object to the computation, then Buyer and Sellers shall
negotiate in good faith and attempt to resolve their disagreement. Should such negotiations not
result in an agreement within 20 days after delivery of such written objection, then the matter
shall be submitted to KPMG LLP (the “Neutral Auditor”). All fees and expenses relating to
the work, if any, performed by the Neutral Auditor will be borne equally by Buyer and Sellers.
The Neutral Auditor will deliver to Buyer and Sellers a written determination (such determination
to include a worksheet setting forth all material calculations used in arriving at such
determination and to be based solely on information provided to the Neutral Auditor by Buyer and
Sellers, or their respective Affiliates) of the disputed items within 30 days of receipt of the
disputed items, which determination will be final, binding and conclusive on the parties.
(iv) Promptly following agreement on or delivery of the final, binding and conclusive
computation setting forth the Actual Adjustment Amount, Buyer and Sellers shall account to each
other as provided for in this Section 2.2(b)(iv). If the Estimated Adjustment Amount less
the Actual Adjustment Amount is a positive number, then Sellers shall
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pay Buyer a cash payment equal to such excess as a decrease in the Purchase Price. If the
Estimated Adjustment Amount less the Actual Adjustment Amount is a negative number, then Buyer
shall pay Sellers a cash payment equal to such deficit as an increase in the Purchase Price. Any
such excess or deficit payment shall be due and payable within 10 days after the final
determination of the Actual Adjustment Amount pursuant to Section 2.2(b)(iii) and shall be
paid in immediately available funds by wire transfer to an account designated by Buyer or Sellers,
as applicable.
2.3 Allocation of Purchase Price. The Purchase Price (including any liabilities that
are considered to be an increase to the Purchase Price for federal income tax purposes) shall be
allocated among the Assets in the manner agreed to by Sellers and Buyer, in accordance with the
requirements of Code Section 1060 and based on the fair market value of the Assets as determined by
arm’s length negotiations. Within 30 days after the Actual Adjustment Amount is finally determined
pursuant to Section 2.2, Sellers will propose a Purchase Price allocation to Buyer, and the
parties shall work in good faith to agree to the same. The parties agree to file (or cause to be
filed) (i) all required federal Forms 8594, Asset Acquisition Statement under Section 1060, and
(ii) all other Tax returns (including amended Tax returns and claims for refund) in a manner
consistent with such allocation of the Purchase Price described in this Section 2.3, and to
use their commercially reasonable efforts to sustain such allocation in any subsequent Tax audit or
Tax dispute.
ARTICLE III
CLOSING
3.1 Time and Place of Closing.
(a) Generally. The purchase and sale provided for in this Agreement (the
“Closing”) shall take place at the offices of Xxxxxxxxx Xxxxx, P.C., 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 at 9:00 a.m., local time, as promptly as practicable
(but in any event within 10 Business Days) following the date on which the last of the conditions
set forth in Article VIII and Article IX are fulfilled, satisfied or waived or at
such other time or place as the parties shall agree in writing. The date on which the Closing
occurs is referred to as the “Closing Date.” The Closing shall be effective for all
purposes at 12:01, a.m., Eastern Time, on the date subsequent to the Closing Date. The parties
shall use commercially reasonable efforts to cause the Closing to occur on or before September 30,
2006. At the Closing, the sale and conveyance of the Land and the assignment of the leases for the
Leased Real Property shall be consummated through an escrow established at the Title Company,
although actual payment of the Purchase Price allocable to the Land shall not be paid through the
escrow (unless required to cure an Unpermitted Exception for which Sellers are obligated or have
elected to cure).
(b) Permit Transfer Issues. If, despite the parties’ commercially reasonable efforts,
the Closing cannot occur as of the relevant date on account of Permit transfer issues or
governmental approvals, and the parties are unable to consummate the Closing under an operating
agreement mutually satisfactory to the parties, then with the mutual consent of Sellers and Buyer
the aspects of the Business affected by such Permit or governmental approval may be carved out by
way of an amendment to this Agreement (including an appropriate adjustment to
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the Purchase Price) and the Closing shall occur forthwith. The transfer of the affected
aspects of the Business shall close as soon as practicable after the Closing when the Permit
transfer issues are resolved or the governmental approvals are obtained, as the case may be.
3.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or cause to be
delivered to Buyer, all duly and properly executed (where applicable):
(a) subject to Section 3.8, Deeds conveying to Buyer indefeasible, fee simple title to
each parcel of Land subject only to the Permitted Exceptions, in form and substance reasonably
satisfactory to Buyer;
(b) a Xxxx of Sale;
(c) a sworn affidavit from each Seller stating, under penalty of perjury, that such Seller is
not a “foreign person” as defined under Section 1445(f)(3) of the Code and other appropriate
evidence or documents necessary to relieve Buyer of any obligation to withhold any portion of the
Purchase Price under Section 1445(a) of the Code or any other withholding provision of any other
Tax law;
(d) an Assignment, Assumption and Consent to Leased Real Property for each parcel of Leased
Real Property, and an Estoppel Certificate (which may be included within the Assignment, Assumption
and Consent to Leased Real Property) for each parcel of Leased Real Property (provided, however,
that if any real estate lease does not require the owner of the Leased Real Property to provide
estoppel certificates, and if Sellers cannot obtain an Estoppel Certificate from the owner through
reasonable efforts, then Sellers shall not be required under this subsection to deliver an Estoppel
Certificate with respect to such real estate lease);
(e) a letter from Sellers’ (or their Affiliate’s) lenders confirming that all Blanket Liens on
the Assets will be released concurrently with the Closing and that evidence thereof shall be
delivered within 60 days following the Closing Date and evidence reasonably satisfactory to Buyer
of satisfaction of all Encumbrances encumbering the Assets other than Permitted Exceptions; and
(f) an assignment of the Membership Interests in a form acceptable to Buyer; and
(g) such other separate documents or instruments of sale, assignment, or transfer as Buyer
shall reasonably request, including titles and registrations for the Rolling Stock.
3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered
to Sellers, all duly and properly executed (where applicable):
(a) the Purchase Price specified in Section 2.1, as adjusted as provided in
Section 2.2, by wire transfer of immediately available funds to the account specified by
Sellers;
(b) the Buyer’s Assumption Agreements;
(c) the Assignment, Assumption and Consent to Leased Real Property; and
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(d) such other separate documents or instruments of sale, assignment, transfer or assumption
as Sellers shall reasonably request.
3.4 Title Policies and Documents.
(a) As soon as reasonably practicable after execution of this Agreement, Sellers shall provide
Buyer with (i) a complete legal description and/or tax parcel numbers for each parcel of the Land,
(ii) for each parcel of Land, a copy of any title policy, title commitment or any certificate of
title that Sellers possess, evidencing title to each parcel of Land as of the date of the
applicable certificate, commitment or policy, and (iii) complete and legible copies of all
instruments and documents affecting title to the Land that Sellers possess.
(b) Promptly thereafter and based on the legal descriptions and/or tax parcel numbers
provided, Sellers shall cause the Title Company to issue one or more Title Commitments for standard
owner’s title insurance insuring fee simple title in the name of Buyer for the Land. Buyer shall
cause the Title Company to deliver to Sellers duplicate copies of Title Commitments and Schedule B
items thereto. In addition, within two Business Days after receipt of a written request from
Buyer, Sellers will execute and deliver authorizations that may be sent by Buyer to governmental
and other public authorities that authorize such authorities to reveal to Buyer all information, if
any, in any files the authorities have on the Land, or any part thereof, provided such
authorizations do not authorize or request inspections with respect to the Land in each case to the
extent such authorizations are required of Sellers. All costs attributable to the issuance of the
Title Commitments, endorsements, modifications, title searches, title policies, or new title
opinions ordered in accordance with the foregoing shall be borne by Buyer. Sellers agree at their
cost to execute all customary affidavits, in reasonable form, and other reasonable documents, in
order to obtain any title opinions or title policies, including a “non-imputation” endorsement, if
available, to the effect that title defects known to the officers, directors, and stockholders of
the owner prior to the Closing shall not be deemed “facts known to the insured” for purposes of the
policies.
(c) The value of the Land for title insurance, transfer tax, documentary stamps and other
relevant purposes will equal the fair value of each parcel as determined by the relevant
governmental assessor, as adjusted by the multiplier covering such assessor, as determined by
Deloitte & Touche, LLP.
3.5 Title Review/Permitted Exceptions. Buyer shall have 10 days after receipt of (i)
all of the Title Commitments and title searches ordered by Sellers in accordance with Section
3.4(b), (ii) complete and legible copies of items listed as exceptions to title on the Title
Commitments or title searches and (iii) a Survey for each tract of Land, to notify Sellers in
writing of any Unpermitted Exceptions. Sellers shall have 10 days after notice of any Unpermitted
Exception is delivered by Buyer within which Sellers shall deliver notice to Buyer in writing as to
whether Sellers elect to cure, or insure around at Sellers’ expense, any such matter; provided,
however, that Sellers shall be required to cure at Sellers’ expense any monetary Unpermitted
Exception (i.e., an exception which can be deleted as an exception upon the delivery of sufficient
funds to the Title Company) at or prior to Closing. Except with respect to a monetary Unpermitted
Exception, failure to notify Buyer in writing within such period of their election to cure or
insure around shall be deemed Sellers’ election not to cure or insure around.
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Buyer shall have 10 days following receipt of Sellers’ notice or deemed notice electing not to
cure or insure around in which to (a) elect to waive its objection to any Unpermitted Exception
that Sellers do not elect to cure or insure around, (b) remove the Land subject to the Unpermitted
Exception from the Assets, which shall result in a mutually-agreeable reduction of the Purchase
Price, or (c) terminate this Agreement in accordance with Article XII, but only if the existence of
the Unpermitted Exception and the removal of the Land pursuant to clause (b) would result in a
Material Adverse Change if the rights, benefits or privileges under such title exception(s) are
asserted or enforced. If Buyer fails to notify Sellers in writing of Buyer’s election within such
10-day period, Buyer shall be deemed to have elected to proceed in accordance with clause (a) of
the preceding sentence.
3.6 Surveys. As soon as reasonably practicable after execution of this Agreement,
Sellers shall deliver to Buyer any surveys of the Land, or any part thereof, that Sellers possess.
In addition, Sellers shall cause a survey to be prepared by the Surveyor and the costs and expenses
thereof shall be borne by Buyer. Sellers shall deliver to Buyer a duplicate copy of any survey
that Sellers receive. For purposes of this Agreement, any survey that satisfies the Title Company
in connection with the issuance of the Title Policy shall be referred to as a “Survey”.
3.7 Prorations and Charges. All Taxes relating to the Land for any tax year prior to
the real estate tax year in which the Closing occurs shall be paid in full by Sellers on or before
the Closing Date or an amount sufficient to fully discharge the same shall be deposited in escrow
with the Title Company for payment to the relevant Tax authority. Real property Taxes for the
current tax year shall be prorated between Sellers and Buyer as of the Closing Date on a daily,
pro-rata basis based upon the latest available estimates of the amount thereof or the actual amount
of such Taxes. If the pro rata amounts are not known as of the Closing Date, adjustments shall be
made post-Closing at such time as they are known to the parties. Buyer and Sellers shall each pay
one-half of the escrow fees and cancellation fees to the Title Company. The following costs shall
be paid by Buyer: (a) all costs attributable to the issuance of the Title Commitments and any
amendments or modifications thereto, endorsements, title searches and title policies ordered in
accordance with Section 3.4(b); (b) the costs and expenses of the Survey pursuant to
Section 3.6; and (c) documentary, transfer or stamp fees and other customary Closing costs,
such as recording fees.
3.8 Post-Closing Title and Survey Work. Notwithstanding anything in this Agreement to
the contrary, if as of the Closing Date, through no fault of Buyer, (a) the Title Company is not
prepared to issue title insurance, and/or (b) Buyer has not had the time permitted under
Section 3.5 to review Title Commitments or title searches, title exception documents and
Surveys, and/or (c) Buyer has not obtained a Survey, then Buyer shall have the right, in its sole
discretion, to either (i) elect to close under this Agreement, provided Sellers agree in writing at
the Closing to provide such missing items promptly after the Closing; or (ii) delay the Closing
with respect to such parcel of Land only and close with respect to such Land when the missing items
are obtained and approved by Buyer in accordance with this Agreement, with (x) Buyer and Sellers to
execute an agreement at Closing regarding the delay of payment of the Purchase Price attributable
to such Land and the use of such Land by Buyer until the extended Closing Date, and (y) the
representations, warranties and covenants of Seller with respect to the applicable Land continuing
until the extended Closing Date.
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3.9 Condemnation or Casualty. If prior to Closing, the Land or any part thereof is
subject to an eminent domain or condemnation proceeding or any improvement thereon is damaged by
fire, flood or other casualty, Sellers shall give written notice thereof to Buyer, and Buyer shall
be entitled, contingent upon the Closing occurring, to any condemnation award or insurance proceeds
resulting from any such event. At the Closing Sellers shall execute and deliver all documents
reasonably requested of Buyer to effectuate such assignment. The assignment of a condemnation
award or insurance proceeds shall be Buyer’s sole remedy as a result of the occurrence of any of
the foregoing events, and all risk of collection with respect thereto shall be on Buyer and not
Sellers.
3.10 Stay-On Bonuses. Sellers shall make payments (the “Stay-On Bonuses”)
under Retention Bonus Agreements in substantially the form of Exhibit D (the “Retention
Bonus Agreements”) in accordance with the terms of such agreements and as set forth on
Schedule 3.10.
ARTICLE IV
POST CLOSING COVENANTS
4.1 Removal of Identification. Within three months after the Closing, Buyer shall
remove from the Assets or otherwise conceal all visible usage of the Retained IP.
4.2 Further Assurances. From time to time on and after the Closing and without
further consideration except as provided in this Agreement, the parties shall each deliver or cause
to be delivered to any other party at such times and places as shall be reasonably requested, such
additional instruments as any of the others may reasonably request for the purpose of carrying out
this Agreement and the Transactions. Sellers, also without further consideration, agree to
cooperate with Buyer and to use their reasonable commercial efforts to have their officers and
employees cooperate on and after the Closing Date in furnishing to Buyer or its advisors (a)
information requested by Buyer with respect to the Assets and the Business, (b) information,
evidence, testimony, and other assistance in connection with obtaining all necessary Permits and
approvals and in connection with any third party actions, proceedings, arrangements or disputes of
any nature with respect to matters pertaining to all periods prior to the Closing Date and (c)
updated loss-claims related to the Business with respect to periods prior to the Closing Date and
any resolution thereof; provided, however, that this obligation shall not apply to disputes among
the parties, and that Sellers shall not be required to expend any sum of money toward that end
beyond reasonable and typical overhead expenditures and outside counsel fees and costs. Buyer,
also without further consideration, agrees to cooperate with Sellers and to use its reasonable
commercial efforts to have its officers and employees cooperate on and after the Closing Date in
furnishing to Sellers information, evidence, testimony, and other assistance (including reasonable
access to the Assets, including the Land and the Leased Real Property) in connection with any third
party actions, proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date; provided, however, that this obligation shall
not apply to disputes among the parties, and that Buyer shall not be required to expend any sum of
money toward that end beyond reasonable and typical overhead expenditures and outside counsel fees
and expenses.
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4.3 Billing, Cash Processing and Scale Software (TRUX) Services. For a period of up
to 60 days following the Closing Date, at the request of Buyer, Sellers shall perform the billing,
cash processing and scale software (TRUX) services relating to the Business for Buyer’s account and
without additional consideration to Sellers. Sellers agree to perform the billing, cash processing
and scale software (TRUX) services in accordance with past practices of Sellers. All payments made
to Sellers on behalf of Buyer after the Closing and relating to the Assets shall be deemed to be
the property of Buyer. The parties agree that after the Closing they will transfer and deliver to
the other, from time to time and at least once per week, any cash, checks or other property that
they may receive on or after the Closing which properly belongs to the other party. During such
60-day period, Buyer shall reimburse Sellers for their and their Affiliates’ reasonably documented
out-of-pocket and internal costs in providing the services pursuant to this Section 4.3.
4.4 Blanket Lien Releases. The Assets are encumbered by blanket liens in favor of
various lenders to Sellers’ Affiliates (the “Blanket Liens”), all of which liens will be
released concurrently with the Closing. Within 60 days after the Closing Date, Sellers shall
deliver evidence to Buyer of the release of any security interests reflecting such Blanket Liens.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer that the statements contained
in this Article V: (a) except as set forth in the Disclosure Schedules, are correct and
complete as of the date of this Agreement; (b) will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the date of this Agreement
throughout this Article V), subject to supplements to the Disclosure Schedules as provided
in Section 7.7, and except for those representations and warranties that, by their terms or
nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing
in accordance with Section 11.1. Each matter referred to in any Disclosure Schedule shall
be deemed to have been disclosed for all relevant purposes in all other parts or sections of all
other Disclosure Schedules.
5.1 Organization; Authority; Ownership.
(a) Each Seller is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation and is duly authorized, qualified and licensed under all
Applicable Laws to carry on the Business in the places and in the manner in which the Business is
presently conducted, except for where the failure to be so authorized, qualified and licensed would
not have a material adverse effect on the Business.
(b) Each Seller has all necessary power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party, to consummate the Transactions and perform its
obligations under this Agreement and the Ancillary Agreements to which it is a party.
5.2 Binding Effect. At or before the Closing, the execution, delivery and performance
of this Agreement and the Ancillary Agreements by Sellers will be within their
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respective corporate powers and will have been approved by all requisite action of Sellers,
and no other proceedings on the part of Sellers will be necessary to authorize the execution and
delivery of this Agreement and the Ancillary Agreements or the consummation by Sellers of the
Transactions and the performance of their obligations under this Agreement and the Ancillary
Agreements to which they are parties. This Agreement has been, and upon delivery, the Ancillary
Agreements to which they are parties will be, duly executed and delivered by each Seller and,
assuming the due authorization, execution and delivery by Buyer, constitutes and will constitute
the valid and legally binding agreement of Sellers enforceable against Sellers in accordance with
their respective terms.
5.3 Permits. Sellers and the Company have all material Permits necessary to enable
them to own the Assets and conduct the Business as currently conducted. To Sellers’ knowledge,
except as set forth on Schedule 5.3, Sellers and the Company are and have been in material
compliance with the terms and conditions of all Permits and all of the Permits are now valid, in
good standing and in full force and effect. Sellers shall not undertake, following the Closing,
any challenges to the Permits or applications for Permits.
5.4 Assets; Personal Property.
(a) Except for (i) the items listed on Schedule 5.4(a) and (ii) the Excluded Assets,
the Assets include all the material properties, assets, rights, licenses, permits and contracts,
wherever located (including any items located on a customer’s site), whether tangible or
intangible, real, personal or mixed, that are currently used, owned by, leased by or in the
possession of Sellers or the Company principally in connection with the Business.
(b) All of the Assets are either owned by Sellers or the Company or leased by Sellers or the
Company under an agreement set forth on Schedule 5.4(b) (the “Assumed Leases”). To
Sellers’ knowledge, each Assumed Lease is in full force and effect and constitutes valid and
binding obligations of the parties thereto and their successors. To Sellers’ knowledge, no default
has occurred nor has there occurred an event or condition that with the passage of time or the
giving of notice (or both) would constitute a default by Sellers or the Company, as the case may
be, or any other party to any Assumed Lease.
(c) At the Closing, Sellers or the Company, as applicable, shall have good and marketable
title to the owned Assets and enforceable leasehold interest in the leased Assets, free and clear
of all Encumbrances other than Permitted Exceptions and the Blanket Liens that will be released as
provided in Section 4.4. By virtue of the grant, conveyance, sale, transfer, and
assignment of the Assets under the Deeds and the Xxxx of Sale, Buyer shall receive good and
marketable title to the Assets, free and clear of all Encumbrances other than Permitted Exceptions
and Blanket Liens that will be released as provided in Section 4.4.
5.5 Real Property.
(a) Except as shown on the Title Commitments, Sellers or the Company, as applicable, have good
and valid title in fee simple to the Land and a valid leasehold interest in the Leased Real
Property, and at Closing good and valid fee simple title to the Land and a valid
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leasehold interest in the Leased Real Property shall be conveyed to Buyer or retained by the
Company, as the case may be,free of all Encumbrances, subject to the Permitted Exceptions.
(b) Except as set forth on Schedule 5.5(b):
(i) There are no Proceedings pending and brought by, or to Sellers’ knowledge, threatened by,
any third Person that would result in a change in the allowable uses of the Land or the Leased
Real Property or that would modify the right of Buyer to use the Land or the Leased Real Property
for its current uses after the Closing Date.
(ii) Except for Permitted Exceptions, no Person except Sellers or the Company has a present
or future right to possession or occupancy or use of all or any part of the Land.
(iii) There are no Proceedings (including condemnation or eminent domain proceedings) pending
or, to Sellers’ knowledge, threatened against all or any part of the Land.
(iv) Neither Sellers nor the Company have received any written notice of (A) any violation of
any applicable zoning ordinance, building code, use or occupancy restriction, covenant, condition
or restriction of record or any other violation of applicable law relating to the Land, the Leased
Real Property or the improvements thereon or (B) any pending special assessments affecting all or
any part of the Land (except as shown on the Title Commitments) or the Leased Real Property.
(v) To Sellers’ knowledge, there are no unrecorded contracts, leases, easements or other
agreements or claims of third parties affecting the use, title, occupancy or development of the
Land, and no Person has any right of first refusal, option or the right to acquire, lease or
otherwise use all or any part of the Land.
(vi) To Sellers’ knowledge, no fact or condition exists which will result in the termination,
restriction or modification of any currently existing access to or from the Land or the Leased
Real Property and any public rights of ways and roads.
(c) Neither Seller nor the Company is a “foreign person” as the term is defined in Section
1445 of the Code and any applicable regulations promulgated thereunder.
5.6 Contracts.
(a) Listed on Schedule 5.6 is a complete and accurate list of all (i) Customer
Contracts that accounted for annual revenues in excess of $100,000 during the 12 months ended May
31, 2006 (“Material Customer Contracts”), (ii) Employee Contracts, and (iii) contracts to
which Sellers or the Company are parties and by which the Assets are affected or bound (the
“Other Contracts”) which: (A) are franchise agreements with a municipality or any
governmental branch, agency or body; (B) relate to the ownership or use of real property (including
the Land and the Leased Real Property); (C) relate to the purchase or lease of any fixed asset with
respect to the Business, whether or not such purchase or lease was made in the ordinary course of
business, for an aggregate price in excess of $100,000 in any 12 month
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period; (D) contain a covenant or agreement limiting the freedom of any of the parties thereto
to compete in any line of business or in any location; or (E) have payment obligations (whether to
or by Sellers or the Company) in excess of $100,000 in any 12 month period, in each case as of the
date of this Agreement. True and complete copies of each such contract have been made available to
Buyer. The disclosure of a contract on Schedule 5.6 shall not constitute a representation
that such contract satisfies one or more of the foregoing criteria.
(b) To Sellers’ knowledge, and except as set forth in Schedule 5.6, all Material
Customer Contracts, Employee Contracts and Other Contracts are in full force and effect and are
valid, binding and enforceable against the respective parties thereto in accordance with their
respective provisions. To Sellers’ knowledge, no default has occurred nor has there occurred an
event or condition which with the passage of time or the giving of notice (or both) would
constitute a default by Sellers or the Company, as the case may be, or any other party to any such
contract. Except as set forth on Schedule 5.6, neither Sellers nor the Company have
received any written notice that any Person intends or desires to modify, waive, amend, rescind,
release, cancel or terminate any Material Customer Contract, Employee Contract and Other Contract.
(c) Except as set forth on Schedule 5.6(c), neither Sellers nor the Company have any
unfulfilled obligations to sellers under the various purchase agreements pursuant to which they
acquired the Assets, including any obligations to pay additional purchase price, royalties or other
amounts. Neither Sellers nor the Company are parties to any contract which would permit the other
party thereto to put assets to the Company at any time. Neither Sellers nor the Company are
parties to any disposal agreements that are not listed on Schedule 5.6.
5.7 Employees; Compensation.
(a) Attached as Schedule 5.7 is a complete and accurate list of (i) all Business
Employees, (ii) their rate of compensation as of the date of delivery of the Disclosure Schedules,
(iii) any bonus, incentive or compensation plans (other than plans subject to ERISA) in which they
participate, (iv) any vacation plans, including accruals thereunder, and (v) any severance plans,
agreements, arrangements or obligations relating to any such employee, including any amounts owed
to any such employee thereunder as of the Closing Date or arising out of or in connection with the
consummation of the Transactions or the performance of the parties’ respective obligations under
this Agreement and the Ancillary Agreements.
(b) Except (i) as otherwise contemplated by this Agreement or the Ancillary Agreements, (ii)
as set forth on Schedule 5.7, and (iii) for employees governed by Employee Contracts, each
Business Employee is an employee at will.
5.8 Compliance with Law; No Conflicts.
(a) Except as set forth in Schedule 5.8(a): (i) to Sellers’ knowledge, the Business is
being operated in compliance in all material respects with all Applicable Laws; (ii) neither
Sellers nor the Company are involved in any litigation or administrative proceeding relating to the
Assets or the Business seeking to impose fines, penalties or other liabilities or seeking
injunctive relief for violation of any Applicable Laws or Permits; and (iii) to Sellers’
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knowledge there is no pending investigation or other form of review relating to Sellers (with
respect to the Business), the Company or the Assets with respect to any Applicable Law or Permit.
(b) Except as set forth in Schedule 5.8(b), the execution, delivery and performance of
this Agreement, the Ancillary Agreements, the consummation of the Transactions and the fulfillment
of the terms of this Agreement and the Ancillary Agreements by Sellers do not and will not:
(i) conflict with, or result in a breach or violation of the Certificate of Incorporation and
Bylaws of Sellers or the Articles of Organization and Operating Agreement of the Company;
(ii) to Sellers’ knowledge, conflict with, or result in the creation or imposition of any
Encumbrance on the Assets or Business pursuant to: (A) any Applicable Law to which Sellers or the
Company or any of their respective properties are subject, or (B) any judgment, order or decree to
which Sellers or the Company are bound or any of their respective property is subject; or
(iii) except for the notices, consents or approvals required under any Material Customer
Contracts, Employee Contracts and Other Contracts required to be listed on Schedule 5.6,
the Permits and the Assumed Leases (collectively, the “Required Consents”), (A) require
Sellers or the Company to provide notice to, or obtain the consent or approval of, any
governmental authority or agency or other third Person, (B) constitute a default under or give
rise to any right of termination, cancellation or acceleration of, or to a loss of any benefit to
which a Seller or the Company is entitled under such Material Customer Contracts, Employee
Contracts Other Contracts, Permits or Assumed Leases or (C) result in the creation or imposition
of any Encumbrance on any Asset.
(c) All of the Required Consents are listed on Schedule 5.8(c).
5.9 Taxes. Except as set forth on Schedule 5.9, with respect to the Business:
(a) Sellers and the Company, either separately or as members of an Affiliated Group, have
completed and timely filed all Tax Returns required to be filed with any Tax authority, and have
paid (or have had paid on their behalf) all Taxes shown as due and payable thereon. Such Tax
Returns reflect all Taxes due and payable with respect to the periods covered by them. There is no
Tax Return filed by Sellers or the Company, either separately or as a member of an Affiliated
Group, and there are no outstanding assessments or Taxes otherwise due for any Pre-Closing Period,
that will result, on or after the Closing Date, in any Taxes or other governmental charges upon the
Assets or Buyer, whether as a transferee of the transferred assets or otherwise. There are no
Encumbrances for Taxes on any of the Assets other than Encumbrances for Taxes not yet due and
payable.
(b) There is no actual pending or, to Sellers’ knowledge, threatened or expected claim, audit,
investigation, dispute or other proceeding concerning any Taxes of Sellers or the Company that will
result in a claim against any of the Assets.
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5.10 Litigation. Except as set forth on Schedule 5.10, (a) there are no
Proceedings pending or, to Sellers’ knowledge, threatened, against Sellers or the Company relating
to the Assets or the Business or that could interfere with the consummation of the Transactions, at
law or in equity, before any federal, state or local court or regulatory agency, or other
governmental or private authority and (b) there are no existing orders, judgments or decrees of any
governmental or private authority affecting any of the Assets or the Business.
5.11 Financial Statements. Sellers have set forth in Schedule 5.11 true and
complete copies of (a) the internal, unaudited, compiled balance sheets of Sellers and the Company
relating to the Business and the Assets as of May 31, 2006 (the “Balance Sheet Date”), and
the related internal, unaudited statements of income for the 12 months then ended (collectively,
“Sellers’ Financial Statements”). Sellers’ Financial Statements are the financial
statements used by Sellers and the Company to operate the Business, except that they do not include
all intercompany transactions. Except as provided in Schedule 5.11, Sellers’ Financial
Statements were prepared in accordance with GAAP, but because the Business are part of a larger
organization, Sellers’ Financial Statements omit certain corporate level adjustments for assets,
accruals or charges that would be required to be recorded if Sellers’ Financial Statements were
prepared on a stand alone entity basis, including those set forth on Schedule 5.11.
Sellers’ Financial Statements fairly present in all material respects the financial position of
Sellers and the Company relating to the Business and Assets as of the dates thereof and the results
of Sellers’ and the Company’s operations for the periods then ended.
5.12 Conduct of Sellers’ Business. Since the Balance Sheet Date, except as disclosed
on Schedule 5.12 or as contemplated by this Agreement, there has not been any:
(a) sale or transfer of, or any agreement to sell or transfer, any of the Assets, or any plan,
agreement or arrangement granting any preferential right to purchase or acquire any interest in any
of the Assets, or requiring consent of any Person to the transfer and assignment of any of the
Assets, in each case other than in the ordinary course of business;
(b) waiver of any material rights or claims of Sellers or the Company related to the Assets;
(c) material breach, amendment or termination of any Material Customer Contract, Employee
Contract, Other Contract, Permit, Assumed Lease or Permit;
(d) material transaction by Sellers or the Company outside the ordinary course of business
with respect to the Assets or the Business; or
(e) action by Sellers or the Company committing to do any of the foregoing.
5.13 Environmental Compliance; Hazardous Materials; Disposal Sites.
(a) Except as set forth in Schedule 5.13(a), to Sellers’ knowledge:
(i) Since January 1, 2003, neither Sellers nor the Company have ever owned, leased, had an
interest in, generated, transported, stored, handled, recycled, reclaimed,
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disposed of, or contracted for the disposal of, Hazardous Materials or solid waste in
connection with the Business, except in material compliance with all Environmental Laws;
(ii) Since January 1, 2003, there have been no Releases of any Hazardous Materials into the
environment or onto, under or about the Land in connection with the Business, except in compliance
with all Environmental Laws;
(iii) No portion of the Land is on a CERCLA or similar state or federal list and neither
Sellers nor the Company has been advised that they are a potentially responsible party with
respect to the Assets; and
(iv) No Encumbrances with respect to Environmental Damages have been imposed against Sellers
or the Company (insofar as they relate to any of the Assets) or any of the Assets under CERCLA,
any comparable state statute or other Applicable Law.
(b) Except as set forth in Schedule 5.13(b), with respect to the Business, neither
Sellers nor the Company have received any written notice or other written communication from any
federal, state or local governmental or regulatory authority or unaffiliated third Person alleging
or relating to the investigation of any alleged (i) material violation of Environmental Law or (ii)
material liability or potential liability for any Environmental Damages, other than those that have
been fully resolved without further liability or obligation to Sellers or the Company. Without
limiting the generality of the foregoing, neither Sellers nor the Company are subject to any
outstanding notice of violation issued by a regulatory authority with respect to the Business or
Assets.
(c) Included on Schedule 5.13(c) is a complete list of the names and addresses of all
disposal sites (including Hazardous Materials disposal sites) used currently or in the past by
Sellers or the Company in connection with the Business.
5.14 Corrupt Practices. Except in compliance with all Applicable Laws, neither
Sellers nor the Company nor any of their respective officers, directors, employees or agents, have,
directly or indirectly, ever made, offered or agreed to offer anything of value to (a) any
employees, representatives or agents of any customers of the Business for the purpose of attracting
business or (b) with respect to the Business, any domestic governmental official, political party
or candidate for government office or any of their employees, representatives or agents.
5.15 Accounts Receivable. All Accounts Receivable represent, or will represent as of
Closing, valid obligations from sales actually made or services actually performed by Sellers or
the Company in the ordinary course of business, except that the Accounts Receivable may include
certain pre-billed services. To Sellers’ knowledge, no Account Receivable is subject to a valid
defense, set-off or counterclaim.
5.16 Affiliates’ Relationships.
(a) Schedule 5.16 contains an accurate and complete list of all material contractual
arrangements between Sellers and any Affiliate thereof that (i) are currently in effect and (ii)
relate to the Assets.
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(b) No Affiliates of Sellers other than Sellers and the Company are presently engaged in
business activities in the Area.
5.17 Performance Bonds; Letters of Credit; Financial Assurances. Set forth on
Schedule 5.17 are all of the outstanding performance bonds, letters of credit and other
financial assurances provided by or on behalf of Sellers or the Company with respect to the Assets.
5.18 Employment and Labor Matters.
(a) Except as set forth in Schedule 5.18, with respect to the Business, neither
Sellers nor the Company are a party to (i) any collective bargaining agreement, (ii) any material
agreement respecting the employment of any Business Employee other than the Employee Contracts, or
(iii) any material agreement for the provision of consulting or other professional services which
is not cancelable without penalty on less than 30 days’ notice.
(b) Except as set forth in Schedule 5.18, within the last five years neither Sellers
nor the Company have experienced any material labor disputes, union organization attempts or any
work stoppage due to labor disagreements in connection with the Business.
(c) Except to the extent set forth in Schedule 5.18, with respect to the Business, (i)
there is no unfair labor practice charge or complaint against Sellers or the Company pending or, to
Sellers’ knowledge, threatened; (ii) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or, to Sellers’ knowledge, threatened against or affecting
Sellers or the Company nor any secondary boycott with respect to services of Sellers or the
Company; (iii) no question concerning representation has been raised to Sellers or the Company or,
to Sellers’ knowledge, is threatened respecting the Business Employees; and (iv) there are no
administrative charges, court complaints or written threatened complaints against Sellers or the
Company concerning alleged employment discrimination or other employment related matters pending
or, to Sellers’ knowledge, threatened before the U.S. Equal Employment Opportunity Commission or
any other governmental entity.
5.19 The Company. With respect to the Company, Sellers represent and warrant as
follows:
(a) The Company is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Arizona and is duly authorized, qualified and licensed
under all Applicable Laws to carry on the Business in the places and in the manner in which the
Business is presently conducted, except for where the failure to be so authorized, qualified and
licensed would not have a material adverse effect on the Business.
(b) The Company does not own or control (directly or indirectly) any equity interest or
investment in any corporation, partnership, joint venture, association or other business
organization. The Company has no subsidiaries.
(c) Waste Services, Inc. owns all of the membership interests in the Company free and clear of
any adverse claim of any other Person, including any Encumbrances, except for general restrictions
on transferability imposed by applicable securities laws and Blanket Liens.
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(d) There are no outstanding (i) subscriptions, options, calls, puts, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any right of conversion
or exchange under any outstanding security, debenture, instrument or other agreement obligating the
Company or Sellers to issue, deliver or sell, or cause to be issued, delivered or sold, additional
membership interests in the Company or obligating the Company or Sellers to grant, extend or enter
into any such agreement or commitment, or (ii) obligations of the Company to repurchase, redeem or
otherwise acquire any securities referred to in clause (i) above. There are no voting trusts,
proxies or other agreements or understandings to which the Company is a party or is bound with
respect to the voting of the membership interests of the Company.
(e) As of the Closing, the Company will have no assets other than the Assets set forth in
Section 1.1, nor any obligations or liabilities other than obligations and liabilities
expressly assumed by Buyer as described in Section 10.2. Any assets other than those set
forth in Section 1.1 shall be transferred prior to the Closing to Sellers or their
designee, and any obligations or liabilities other than those assumed by Buyer as described in
Section 10.2 shall be assumed by Sellers prior to the Closing.
5.20 No Other Representations. Sellers are not making any representations or
warranties, expressed or implied, of any nature whatsoever except as specifically set forth in this
Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that the statements contained in this Article
VI: (a) except as set forth in the Disclosure Schedules, are correct and complete as of the
date of this Agreement; (b) will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this Agreement throughout this
Article VI), except for those representations and warranties that, by their terms or
nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing
in accordance with Section 11.1.
6.1 Organization. Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of its organization and is duly
authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places
and in the manner in which the Business are presently conducted, except for where the failure to be
so authorized, qualified and licensed would not have a material adverse effect on the Business.
6.2 Authority. Buyer has all necessary power and authority to enter into this
Agreement and the Ancillary Agreements and to consummate the Transactions and perform its
obligations under this Agreement and the Ancillary Agreements.
6.3 No Conflicts. The execution, delivery and performance of this Agreement, the
Ancillary Agreements, the consummation of the Transactions and the fulfillment of the terms of this
Agreement and the Ancillary Agreements by Buyer do not and will not:
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(a) conflict with, or result in a breach or violation of the Articles of Organization or
Operating Agreement of Buyer, or result in the creation or imposition of any Encumbrance on any
properties of Buyer pursuant to: (i) any law or regulation to which either Buyer or any of its
property is subject, or (ii) any judgment, order or decree to which either Buyer is bound or any of
its property is subject; or
(b) require Buyer to provide notice to, or to obtain the consent or approval of, any
governmental authority or agency or any other third Person.
6.4 Binding Effect. The execution, delivery and performance of this Agreement and the
Ancillary Agreements by Buyer are within its powers and have been approved by all requisite action
of Buyer, and no other proceedings on the part of Buyer are necessary to authorize the execution
and delivery of this Agreement and the Ancillary Agreements, the consummation by Buyer of the
Transactions and the performance of the parties’ respective obligations under this Agreement and
the Ancillary Agreements. This Agreement has been, and upon delivery, the Ancillary Agreements
will be, duly executed and delivered by Buyer and, assuming the due authorization, execution and
delivery by Sellers, constitutes and will constitute the valid and legally binding agreement of
Buyer enforceable against Buyer in accordance with their respective terms.
6.5 Independent Investigation. Buyer has conducted an independent investigation of
the Assets and the Business. Buyer acknowledges that, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, (i) THE ASSETS AND THE BUSINESS ARE CONVEYED “AS IS, WHERE IS” AND “WITH ALL FAULTS,”
AND (ii) SELLERS HAVE NOT MADE, AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER RELATING TO THE
ASSETS OR THE BUSINESS (INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE). As of the date of this Agreement, Buyer is not aware of any breach of
the representations or warranties made by Sellers in Article V.
ARTICLE VII
COVENANTS
7.1 Access to Land and Records; Due Diligence Period.
(a) After the date of this Agreement, Sellers will afford to or obtain for the officers and
authorized representatives of Buyer reasonable access to the Land (including for the purpose of
permitting Buyer to perform or cause to be performed, at Buyer’s sole risk and expense, all
testing, inspections and other procedures reasonably considered desirable by Buyer), the Leased
Real Property, the Assets, sites, and the books and records of Sellers related to the Business, all
upon reasonable notice and conducted at times agreed to by Sellers, which agreement shall not be
unreasonably withheld. Without limiting the generality of the foregoing, Buyer shall have the
right to conduct Phase I environmental investigations of the Land and the right to conduct Phase II
environmental investigations of the Land if the results of the Phase I
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environmental investigations indicate that a Phase II investigation is necessary or desirable.
In the event that Buyer concludes that a Phase II environmental investigation of the Land is
necessary or desirable, Sellers will allow access to Buyer and its consultants to the Land for the
purposes of conducting such an investigation. Such access shall be granted in accordance with an
access agreement to be agreed upon by the parties.
(b) Between the date of this Agreement and the Closing or the earlier termination of this
Agreement, Sellers shall furnish Buyer with such additional financial and operating data and other
information as to the Business as Buyer may from time to time reasonably request, whether such
information is in the possession of Sellers or any of their Affiliates.
(c) Between the date of this Agreement and the Closing or the earlier termination of this
Agreement, Sellers shall use commercially reasonable efforts to cooperate with Buyer, its
representatives, engineers, auditors and counsel in the preparation of any documents or other
materials that may be reasonably required by any governmental agency. The parties shall cause all
information obtained in connection with the negotiation of this Agreement to be treated as
confidential in accordance with the provisions of Article XIII.
(d) All access and testing shall be coordinated with Sellers, and Buyer and its agents and
employees shall not enter the Land and perform inspections or meet with employees unless
accompanied by a representative of Sellers. Sellers shall have the right to delay access or
testing until such time that the access or testing, in the reasonable judgment of Sellers, will not
materially interfere with the operations of the Business. Sellers shall have the right to require
that access and testing be conducted on weekends or after hours, and shall have the right to limit
access to employees to only those that are designated by Sellers.
(e) Buyer agrees to return the Land and the Leased Real Property to its condition as of the
date of this Agreement to the extent there are any alterations to the Land or the Leased Real
Property attributable to its exercise of its rights pursuant to this Section 7.1, and Buyer
shall indemnify and save harmless Sellers from all costs of returning the Land and the Leased Real
Property to such condition. If Buyer does not promptly perform such work, Sellers shall have the
right to perform, or cause to be performed, such work and to obtain reimbursement for the costs of
such work (including legal and consulting fees) from Buyer, which costs shall be payable by Buyer
to Sellers upon demand.
7.2 Activities of Sellers Prior to Closing. Between the date of this Agreement and
the Closing or the earlier termination of this Agreement, Sellers shall, or shall cause the Company
to, as appropriate:
(a) carry on the Business in the ordinary and usual course consistent with past practice;
provided, however, that Sellers shall have no obligation to purchase any vehicles pursuant to this
Section 7.2 or otherwise;
(b) maintain the Assets in as good working order and condition as at present, ordinary wear
and tear excepted;
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(c) use commercially reasonable efforts to maintain their relationships with suppliers,
customers, consultants, employees, independent contractors, government agencies, communities and
others having business relations with Sellers in the operation of the Business, and promptly notify
Buyer of the loss of any customer or group of customers material to the Business;
(d) use commercially reasonable efforts to provide balance sheets and the related statements
of income for the Business for each month following the date of this Agreement; and
(e) provide all commercially reasonable assistance to Buyer to provide for an orderly transfer
of the Assets and the Business from Sellers to Buyer.
7.3 Prohibited Activities Prior to Closing. Between the date of this Agreement and
the Closing or earlier termination of this Agreement, except as contemplated by this Agreement,
Sellers shall not (as its relates to the Business), and shall cause the Company not to, without the
prior written consent of Buyer, which consent will not be unreasonably withheld:
(a) engage in any practice, take any action, fail to take any action or enter into any
transaction which could cause any representation or warranty of Sellers in this Agreement to be
untrue or result in a breach of any covenant made by Sellers in this Agreement;
(b) breach, amend (except in the ordinary course of business) or terminate any material
Assumed Lease, Permit, Material Customer Contract, Employee Contract or Other Contract;
(c) enter into any transaction outside the ordinary course of the business of Sellers or
otherwise prohibited under this Agreement;
(d) sell, transfer, lease or otherwise dispose of any Assets, other than in the ordinary
course of business; provided, however, that the foregoing restriction shall not prevent Sellers
from selling scrap containers that have no net book value on Sellers’ Financial Statements;
(e) except in the ordinary course of business, cause or, except in the ordinary course of
business, permit to exist any Encumbrance, covenant, condition, restriction, assessment, easement,
right of way, obligation, encroachment or liability (“Title Defect”) whatsoever with
respect to the Land or the Leased Real Property;
(f) materially change or increase any compensation payable to, or benefits made available to,
any Business Employees, except to the extent required by law or in the ordinary course of business
consistent with past practice;
(g) except in the ordinary course of business, relinquish, or seek to modify or amend any
substantive term of, any Permit, other than in the ordinary course of business consistent with the
past practice of the Business; or
(h) agree to do any of the foregoing.
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7.4 Contact with Government Officials and Customers. Sellers shall use their
commercially reasonable efforts to cooperate with Buyer in making contact with the appropriate
governmental agencies and officials having information about or jurisdiction over Sellers, the
Business, the Land, the Leased Real Property, the Assets or the obligations or rights of Sellers,
including environmental and land use agencies and officials, to assist Buyer in completing its
regulatory evaluation of the Business and the Assets and securing any consents necessary to
transfer the Permits or in securing new permits. Buyer and Sellers shall use commercially
reasonable efforts to obtain before Closing all consents necessary to transfer the Permits (or
Buyer will use commercially reasonable efforts to obtain new permits for any non-transferable
Permits), the Customer Contracts and the Assumed Leases to Buyer at the Closing. Buyer
acknowledges and agrees that it shall not contact the Business Employees regarding the acquisition
of the Business by Buyer and the treatment of such Business Employees in connection therewith, or
any customers; in each case until the Closing.
7.5 Public Announcements. Except as otherwise required by Applicable Law or the rules
of the New York Stock Exchange or the Nasdaq Stock Market, the parties agree that: (a) except as
provided below, no press release or other written communication shall be issued by Sellers, on the
one hand, or Buyer, on the other hand, which makes reference in any way to the other party; (b) no
press release or other written communication shall be issued by Sellers, on the one hand, or Buyer,
on the other hand, containing information regarding this Agreement or the Transactions (including
the fact that the Transactions are being discussed or the terms of the Transactions) without the
prior written approval of both Sellers and Buyer, which approval may not be unreasonably withheld.
The parties shall consult with each other concerning the means by which Sellers’ and the Company’s
employees, customers and suppliers and others having dealings with Sellers and the Company will be
informed of the Transactions. Nothing in this Section 7.5 shall restrict Buyer’s ability
to contact the parties listed in Section 7.4 who are permitted to be contacted pursuant to
Section 7.4 with respect to the Transactions.
7.6 Standstill Agreement. Unless and until this Agreement is terminated pursuant to
Article XII without the Closing having taken place, Sellers will not, and will cause the
Company not to, directly or indirectly (through a representative, agent, employee or otherwise)
solicit or accept offers for the Assets or the Business or for a merger, stock sale, consolidation
or other business combination involving the Assets or the Business, or respond to inquiries from,
provide or share information with, negotiate with or in any way facilitate inquiries or offers
from, third parties who express or who have expressed an interest in acquiring the Assets or the
Business by merger, stock sale, consolidation or other business combination.
7.7 Supplements to Sellers’ Schedules. From time to time prior to the date five days
prior to Closing, Sellers may supplement and update any of Sellers’ Disclosure Schedules delivered
pursuant to this Agreement to make the information set forth therein complete and accurate, so long
as such supplement or update does not disclose any event, fact or condition that, individually or
in the aggregate, could result in Material Adverse Change. In the event such supplement or update
discloses an event or condition that could result in Material Adverse Change, then Buyer may
terminate this Agreement under Section 9.6.
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7.8 Employees and Employee Benefits.
(a) Effective as of the Closing Date, Buyer shall offer employment to all Business Employees
who on the Closing Date are actively at work and meet Buyer’s standard hiring criteria unless Buyer
notifies Sellers that it does not intend to hire one or more Business Employees at least 30 days
prior to the Closing Date (each, an “Active Employee”). For purposes of this Agreement,
any Business Employee who is not actively at work on the Closing Date solely because of vacation,
holiday, sick leave, maternity or paternity leave, military leave, jury duty, or bereavement leave,
shall be deemed an Active Employee. Each Business Employee who accepts Buyer’s offer of employment
is referred to as a “Transferred Employee.”
(b) Sellers shall retain sole responsibility for all obligations, claims, liabilities and
commitments under Sellers’ Plans and compensation practices, including severance benefits, if any,
payable to Business Employees as a result of the Transactions and accrued vacation benefits, if
any. Sellers shall retain all liabilities and obligations to Business Employees and their eligible
dependents in respect of health insurance required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, the Health Insurance Portability and Accountability Act of 1996 and
applicable state law.
(c) Buyer agrees to use commercially reasonable efforts to cooperate with and assist Sellers
in eliminating the need for Worker Adjustment and Retraining Notification Act (the “WARN
Act”) notifications by offering employment to sufficient numbers of Business Employees in
accordance with the following sentence. Such offers of employment will be subject to each such
Business Employee satisfying Buyer’s standard hiring criteria, including drug testing, background
check and driver safety criteria. To further assist in avoiding WARN notification requirements,
Buyer will retain sufficient numbers of Business Employees hired pursuant to the preceding sentence
for at least 90 days following the Closing unless terminated earlier for cause. If notwithstanding
Buyer’s compliance with the preceding provisions of this Section 7.8(c) WARN notification
is nonetheless required, Sellers agree to provide any required notice under the WARN Act, and any
similar state or non-U.S. Applicable Law, and to otherwise comply with any such applicable law with
respect to any “plant closing” or “mass layoff” (as defined in the WARN Act or any similar state or
non-U.S. Applicable Law) or group termination or similar event affecting Business Employees
occurring prior to or as a result of the consummation of the Transactions.
(d) All Business Employees who are employed by Buyer from and after Closing shall be given
credit for their years of service with Sellers in determining their entitlement to Buyer’s
severance and other length-of-service related employee benefits.
7.9 HSR Approval. Sellers and Buyer undertake and agree to file as promptly as
practicable following the execution of this Agreement all documents required under the HSR Act.
Sellers and Buyer shall use commercially reasonable efforts to cooperate with each other with
respect to such filing, and shall respond as promptly as reasonably practicable to any inquiries
received from the FTC or the Antitrust Division for additional information or documentation and to
all inquiries and requests received from any other local, state or federal governmental authority
in connection therewith. Each party shall (a) subject to Applicable Laws, promptly notify the
other party of any written communication to that party from the FTC,
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the Antitrust Division or any other governmental entity relating to this Agreement and,
subject to Applicable Law, permit the other party to review in advance any proposed written
communication to any of the foregoing relating to this Agreement; (b) to the extent permitted by
Applicable Laws, not agree to participate in any substantive meeting or discussion with any
governmental authority in respect of any filings, investigation or inquiry concerning this
Agreement or the Transactions unless it consults with the other party in advance and, to the extent
permitted by such governmental authority, gives the other party the opportunity to attend and
participate thereat; and (c) to the extent permitted by Applicable Laws, furnish the other party
with copies of all correspondence, filings, and communications between them and their Affiliates
and their respective representatives on the one hand, and any government or regulatory authority or
members or their respective staffs on the other hand, with respect to this Agreement and the
Transactions.
7.10 Termination of Contracts. Prior to the Closing, Sellers shall terminate that
certain Loaned Equipment Agreement & Supply Contract with Canyon State Oil Co., Inc. for the
facilities located at 1500 S. 7th Street, Phoenix, Arizona, and that certain Loaned Equipment
Agreement & Supply Contract with Canyon State Oil Co., Inc. for the facilities located at Hwy 79 &
Deepwell Ranch, Florence, Arizona.
7.11 City of Phoenix Settlement. From and after the Closing, Buyer will cooperate
with Sellers with respect to Sellers’ completion, at Sellers’ expense, of the improvements to the
0xx Xxxxxx transfer station currently being negotiated by Sellers with the City of
Phoenix.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers to consummate the Transactions are subject to the completion,
satisfaction, or at their option, waiver, on or prior to the Closing Date, of each of the following
conditions.
8.1 Representations and Warranties. The representations and warranties of Buyer
contained in this Agreement shall have been true and correct on and as of the date made and shall
be true and correct in all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date. Buyer shall have
delivered to Sellers a certificate of a duly authorized officer to the foregoing effect.
8.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement
to be complied with and performed by Buyer on or before the Closing Date shall have been duly
complied with and performed in all material respects. Buyer shall have delivered to Sellers a
certificate of a duly authorized officer to the foregoing effect.
8.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting
consummation of the Transactions or which would make the consummation of the Transactions unlawful.
8.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending
before a court or any other governmental agency or body which seeks to restrain or
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prohibit any of the Transactions; provided, however, that the provisions of this Section
8.4 shall not apply if Sellers have directly or indirectly solicited or encouraged any such
Proceeding.
8.5 Deliveries. Buyer shall be prepared to make or cause to be made the deliveries
described in Section 3.3 and Sections 3.4 through 3.8.
8.6 Third Party Consents and Approvals. All materially necessary governmental,
regulatory and third party consents and approvals shall have been obtained.
8.7 Closing of Florida Transaction. The Florida Transaction shall be prepared to
close simultaneously with the Closing of the Transactions.
8.8 HSR Act. The waiting period (and any extension thereof) under the HSR Act
applicable to the Transactions shall have expired or been earlier terminated by the FTC or the
Antitrust Division.
8.9 Approval of Lenders. Sellers shall have obtained all necessary approvals of the
Transactions from its lenders.
8.10 Release From Obligations. Effective as of the Closing, Sellers and their
affiliates shall be released from obligations to pay any royalties or other amounts to the Cactus
Landfill Sellers under the Cactus Landfill Royalty Agreement or the Cactus Landfill Purchase
Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the Transactions are subject to the completion,
satisfaction or, at their option, waiver, on or prior to the Closing Date, of each of the following
conditions.
9.1 Representations and Warranties. Subject to Section 7.7, the
representations and warranties of Sellers contained in this Agreement shall have been true and
correct on and as of the date made and shall be true and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and warranties had been
made on and as of such date. Sellers shall have delivered to Buyer a certificate of a duly
authorized officer to the foregoing effect.
9.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement
to be complied with and performed by Sellers on or before the Closing Date shall have been duly
complied with and performed in all material respects. Sellers shall have delivered to Buyer a
certificate of a duly authorized officer to the foregoing effect.
9.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting
consummation of the Transactions or which would make the consummation of the Transactions unlawful.
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9.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending
before a court or any other governmental agency or body which seeks to restrain or prohibit any of
the Transactions; provided, however, that the provisions of this Section
9.4 shall not apply if Buyer has directly or indirectly solicited or encouraged any such
Proceeding.
9.5 Deliveries. Sellers shall be prepared to make or cause to be made the deliveries
described in Section 3.2.
9.6 No Material Adverse Change. No Material Adverse Change shall have occurred since
May 31, 2006; provided, however, that nothing disclosed in the Disclosure Schedules (without giving
effect to any supplements or updates made by Sellers after the date of this Agreement) or the
Sellers’ Financial Statements, individually or in the aggregate, shall be deemed to be a Material
Adverse Change.
9.7 Third Party Consents and Approvals. All materially necessary governmental,
regulatory and third party consents and approvals shall have been obtained.
9.8 Environmental Investigation Satisfactory. Buyer shall be satisfied in all
respects with the results of Phase I (and Phase II, if undertaken by Buyer) environmental
investigations respecting the Land; provided, however, that this condition shall be deemed
satisfied if Buyer gives written notice to Sellers that Buyer objects to the results of a Phase I
(or Phase II) environmental investigation and Sellers elect to and promptly complete a cure of the
matters subject to the objection.
9.9 Royalty Agreement for Cactus Landfill. Buyer shall have negotiated and entered
into, effective at Closing, a new royalty agreement with the Cactus Landfill Sellers on terms and
conditions satisfactory to Buyer, in its sole discretion, and the obligations to the Cactus
Landfill Sellers from which Sellers are being released pursuant to Section 8.10 shall have
been terminated.
9.10 Closing of Florida Transaction. The Florida Transaction shall be prepared to
close simultaneously with the Closing of the Transactions.
9.11 HSR Act. The waiting period (and any extension thereof) under the HSR Act
applicable to the Transactions shall have expired or been earlier terminated by the FTC or the
Antitrust Division.
ARTICLE X
LIABILITIES AND OBLIGATIONS
10.1 Excluded Liabilities. Except as explicitly set forth in this Agreement, Buyer
shall not, by the execution and performance of this Agreement or otherwise (including under
theories of successor liability), assume, become responsible for or incur, and Sellers, jointly and
severally, hereby expressly agree to pay and perform, any Liability or obligation of any nature of
Sellers or the Company whatsoever arising, or relating to events occurring, on or prior to the
Closing Date, whether legal or equitable, or matured or contingent (collectively, the “Excluded
Liabilities”), including any Liability or obligation: (a) to any Affiliate of Sellers or the
26
Company; (b) to current or former employees, consultants or others for salary, bonuses, other
incentive compensation or benefits arising prior to the Closing Date, (c) for Taxes which (i)
arise, are assessed or become payable or due on or prior to the Closing Date, or (ii) are payable
by Sellers or the Company or any of their Affiliates as a result of purchases, sales or transfers
as of or prior to the Closing Date; (d) with respect to the settlement of any disputes with Top
Grade; and (e) for Environmental Damages arising out of events occurring on or prior to the Closing
Date. Without limiting the generality of the foregoing, all Excluded Liabilities of the Company
shall be assumed by Sellers prior to the Closing pursuant to an instrument comparable to Buyer’s
Assumption Agreements.
10.2 Assumption of Obligations. Subject to the terms and conditions set forth in this
Agreement, at the Closing Buyer shall assume from Sellers and the Company shall retain, as the case
may be, only the Liabilities described in the remainder of this Section 10.2 (the
“Assumed Liabilities”).
(a) Buyer shall assume (or the Company shall retain) all obligations under the Customer
Contracts, Employee Contracts, Assumed Leases, Permits and other contracts included within the
Assets, to the extent such obligations first arise and are related to periods subsequent to the
Closing (provided that such obligations do not arise as a result of actions or omissions by Sellers
or the Company thereof on or prior to Closing).
(b) Within 30 days following the Closing, Buyer will post replacement performance bonds,
letters of credit and other financial assurances for the performance bonds, letters of credit and
other financial assurances of Sellers set forth on Schedule 5.17, and will promptly furnish
to Sellers a copy of such replacement performance bond, letter of credit or other financial
assurance as it is issued. Buyer will pay Sellers interest at 10% per annum on any performance
bonds, letter of credit and other financial assurances not replaced within such 30-day period until
the same are replaced.
(c) Buyer agrees to assume and perform all obligations expressly required to be assumed by
Buyer pursuant to Section 3.7.
(d) Buyer agrees to assume the liability reflected on the balance sheet as of the Closing Date
with respect to any capitalized leases assumed by Buyer, and all liabilities included in the
Adjustment Amount.
(e) Buyer agrees to assume and perform all other Liabilities which Sellers designate in
writing prior to the Closing and which Buyer agrees to assume.
ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations and Warranties and Covenants.
(a) The representations and warranties of any party contained in this Agreement and the
indemnification liabilities and obligations of the parties with respect thereto shall survive the
Closing for a period of one year after the Closing Date; provided, however, that
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the representations and warranties in Sections 5.8, 5.9, 5.13 and
5.19 and the indemnification liabilities and obligations of the parties with respect
thereto shall survive the Closing for a period until the expiration of the applicable statute of
limitations with respect thereto.
(b) The covenants and agreements set forth in this Agreement and to be performed to any extent
after the Closing Date shall survive until fully discharged and performed, and any claims for
indemnification in respect of a breach of such covenants to be performed in any respect after the
Closing Date may be made at any time within the applicable statute of limitations.
11.2 Indemnification by Sellers. Sellers agree that they shall, jointly and
severally, indemnify, defend (as to Third Party Claims only), protect and hold harmless Buyer, its
officers, shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries,
parent, agents, employees, successors and assigns at all times from and after the date of this
Agreement from and against all liabilities, claims, damages, actions, suits, Proceedings, demands,
assessments, adjustments, penalties, losses, costs and expenses whatsoever (including court costs,
reasonable attorneys’ and expert witness fees and expenses and expenses of investigation)
(collectively, “Liabilities”), whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent, whether arising out
of occurrences prior to, at or after the date of this Agreement, incurred as a result of or
incident to: (a) any breach of, or misrepresentation in, the representations and warranties by
Sellers set forth in this Agreement, or in the Schedules, Exhibits, certificates, documents or
agreements attached to this Agreement or delivered pursuant hereto by Sellers; (b) breach of any
agreement or covenant on the part of Sellers made in this Agreement, or in the Schedules, Exhibits,
certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by
Sellers; (c) any Excluded Liability; or (d) any Excluded Asset. Notwithstanding any other
provision set forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this
Section 11.2 shall include any claim by a third Person that, if true, would mean that a
condition for indemnification set forth in subsections (a) through (d) of this Section 11.2
had been satisfied.
11.3 Indemnification by Buyer. Buyer agrees that it shall indemnify, defend (as to
Third Party Claims only), protect and hold harmless Sellers and their respective officers,
shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries, parent,
agents, employees, successors and assigns at all times from and after the Closing Date from and
against all Liabilities, whether equitable or legal, matured or contingent, known or unknown,
foreseen or unforeseen, ordinary or extraordinary, patent or latent, incurred by Sellers as a
result of or incident to: (a) any breach of, or misrepresentation in, the representations and
warranties of Buyer set forth in this Agreement, or in the Schedules, Exhibits, certificates,
documents or agreements attached to this Agreement or delivered pursuant hereto by Buyer; (b)
breach of any agreement or covenant on the part of Buyer made in this Agreement, or in the
Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered
pursuant hereto by Buyer; and (c) any Assumed Liability. Notwithstanding any other provision set
forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this Section
11.3 shall include any claim by a third Person that, if true, would mean that a condition for
indemnification set forth in subsections (a) through (c) of this Section 11.3 had been
satisfied.
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11.4 Limitation on Liability. The indemnification obligations set forth in
Section 11.2(a) and 11.3(a) shall (a) apply only if a Closing occurs, (b) apply
only after the aggregate amount of claims for indemnification from the Indemnifying Party under
this Agreement exceeds an aggregate of $841,269 (the “Deductible”), and thereafter the
Indemnifying Party shall be liable for only those indemnification obligations in excess of such
Deductible; provided, however, that only claims, or series of related claims, equal to or in excess
of $42,063 shall apply toward the Deductible; and (c) be limited to an aggregate amount not to
exceed 35% of the aggregate Purchase Price actually paid under this Agreement by Buyer.
Notwithstanding the foregoing, however, Tax Claims and Fraud Claims shall not be limited by
subsection (b) or (c) of this Section 11.4.
11.5 Indemnification Procedure Between Buyer and Sellers. Upon the occurrence of any
claim for which indemnification is believed to be due under this Agreement, the Indemnified Party
shall provide notice of such claim to the Indemnifying Party, stating in general terms the
circumstances giving rise to the claim, specifying the amount of the claim (or an estimate thereof)
and making a request for any payment then believed due (subject to the limitations in this
Agreement). Upon receipt of any such notice, both the Indemnified Party and the Indemnifying Party
shall use all reasonable efforts to cooperate and arrive at a mutually acceptable resolution of
such dispute within the next 30 days. If a resolution is not reached within the 30-day period,
either party may commence the dispute resolution procedures set forth in Article XVI. If
the Indemnifying Party does not respond within such 30-day period, the claim for indemnification
shall be deemed accepted by the Indemnifying Party. If all or a portion of such claim amount is
owed to the Indemnified Party, the Indemnifying Party shall (subject to the terms of Section
11.4) within 10 days of such determination, pay the Indemnified Party such amount owed in cash.
11.6 Procedure for Indemnification with Respect to Third-Party Claims.
(a) If any third Person shall notify an Indemnified Party with respect to any matter (a
“Third Party Claim”) that may give rise to a claim for indemnification against an
Indemnifying Party or if any party who may make a claim for indemnification under this Agreement
otherwise becomes aware of any matter that may give rise to such a claim or wishes to make such a
claim (whether or not related to a Third Party Claim), then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation under this Agreement unless (and then solely to the extent) the Indemnifying Party
is thereby prejudiced.
(b) Any Indemnifying Party will have the right to assume the defense of any claim or any
litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified
Party and (ii) the Indemnified Party may participate in such defense at such Indemnified Party’s
expense. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in
the defense of any such claim or litigation, shall consent to entry of any judgment or order,
interim or otherwise, or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such Indemnified Party of a
29
release from all liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense of any claim
subject to indemnification under this Agreement or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party, or that the
Indemnified Party may have available to it one or more defenses or counterclaims that are
inconsistent with one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations or litigation
relating to any such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such
claim or litigation without the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld or delayed. In the event that the Indemnifying Party does not accept the
defense of any matter as above provided, the Indemnified Party shall have the full right to defend
against any such claim or demand and shall be entitled to settle or agree to pay in full such claim
or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any claim or litigation subject to this Article XI and the records and personnel
of each shall be reasonably available to the other with respect to such defense.
11.7 Tax Treatment of Payment. Unless otherwise required by law or unless Sellers and
Buyer otherwise mutually agree, any payment made under this Agreement (including Article
XI) shall be treated as an adjustment to the Purchase Price.
11.8 Exclusive Remedy. With the exception of Fraud Claims and other than equitable or
injunctive relief or claims for specific performance, as applicable, the indemnification provided
in this Article XI is the exclusive remedy of the parties with respect to this Agreement,
the Schedules and Exhibits, and the certificates, documents or other agreements attached to this
Agreement or delivered by a party pursuant hereto.
ARTICLE XII
TERMINATION OF AGREEMENT
12.1 Termination by Buyer. Buyer may, by written notice in the manner provided in
Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a
material breach by Sellers (a) of the representations and warranties of Sellers or (b) in the
observance, or in the due and timely performance of any of the covenants or agreements contained in
this Agreement on their part to be performed, and such breach shall not have been cured, after
written notice thereof, on or before the Closing Date. In addition, Buyer, by notice in the manner
provided in Section 15.6, may terminate this Agreement if (i) any of the conditions set
forth in Article IX shall become incapable of fulfillment (other than due to acts or
omissions of Buyer or its Affiliates) on or before the Closing Date and shall not have been waived
by Buyer or (ii) in the circumstances described in Section 3.5.
12.2 Termination by Sellers. Sellers may, by written notice in the manner provided in
Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a
material breach by Buyer (a) of the representations and warranties of Buyer or (b) in the
observance, or in the due and timely performance of any of the covenants or agreements contained in
this
30
Agreement on its part to be performed, and such breach shall not have been cured, after
written notice thereof, on or before the Closing Date. In addition, Sellers, by notice in the
manner provided in Section 15.6, may terminate this Agreement if any of the conditions in
Article VIII shall become incapable of fulfillment (other than due to acts or omissions of
Sellers or their Affiliates) by or before the Closing Date and shall not have been waived by
Sellers.
12.3 Termination Date. This Agreement may be terminated by either party by notice to
the other party if the Transactions shall not have been consummated by 5:00 p.m. (MST) on October
31, 2006 (other than as a result of a breach of this Agreement by the party giving such notice or
by its Affiliates), unless such date shall be extended by the mutual written consent of Sellers and
Buyer.
12.4 Effect of Termination. If this Agreement is validly terminated pursuant to
Section 12.1, 12.2 or 12.3, this Agreement shall thereafter become null and
void, and there shall be no liability or obligation on the part of any of the parties (or any other
their respective officers, director, employees, agents or other representatives or Affiliates),
except that (a) the provisions of Section 7.1(e), Article XIII, Section
15.6 and Article XVI shall survive such termination, (b) such termination shall not
relieve any party of any liability for any willful material breach of this Agreement, and (c) such
termination shall not relieve Buyer of its obligations under Section 12.5, if applicable.
12.5 Certain Consequences of Termination. If this Agreement is terminated by Sellers
because the condition set forth in Section 8.9 was not satisfied, then Sellers shall
promptly pay Buyer $2,500,000 as a termination fee, which shall be Buyer’s sole and exclusive
remedy on account of such termination.
ARTICLE XIII
NONDISCLOSURE AND NONSOLICITATION
13.1 Nondisclosure by Buyer. Buyer recognizes and acknowledges that it has in the
past, currently has, and prior to the Closing Date, will have access to confidential information of
Sellers and the Company, including lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of Sellers and the Company. Buyer agrees
that it will not, except as may be required by law or valid legal process, disclose such
confidential information to any Person for any purpose or reason whatsoever, prior to the Closing
Date, except to authorized representatives of Sellers, unless such information is or becomes known
to the public generally through no fault of Buyer. In connection with the foregoing, the parties
acknowledge and agree that they are competitors in the waste collection, hauling, and disposal
business in the markets serviced by Sellers and the Business, and that nothing contained herein
shall be interpreted to preclude Buyer from providing waste collection, hauling, or disposal
services in such markets or elsewhere. The provisions of this Section 13.1 shall apply at
all times prior to the Closing Date and for a period of one year following the first to occur of
(i) the Closing Date and (ii) termination of this Agreement without a Closing having occurred.
31
13.2 Confidential Information. Neither Sellers (nor any of their respective
Affiliates) shall at any time subsequent to the Closing, except as explicitly requested by Buyer or
as otherwise provided in this Agreement, use for any purpose, disclose to any Person, or keep or
make copies of any records and files containing, any confidential information relating primarily to
the Business, the Assets or the Assumed Liabilities, all such information being deemed to be
transferred to Buyer under this Agreement. For purposes of this Agreement, “confidential
information” shall mean information relating primarily to the Business, the Assets or the
Assumed Liabilities, including all customer and vendor lists and related information, all
information concerning the Business’ processes, products, costs, prices, sales, marketing and
distribution methods, properties and assets, Assumed Liabilities, and other information not
previously disclosed to the public directly by Sellers or the Company. The foregoing provisions
shall not apply to any information which is or relates primarily to an Excluded Asset or which is
or relates primarily to the Excluded Liabilities, or which relates to Tax matters of Sellers (but
not of the Company). Both Sellers and Buyer shall maintain confidential information that relates
to both Assumed Liabilities and Excluded Liabilities in duplicate. If at any time after the
Closing, Sellers should discover that they are in possession of any records and files containing
the confidential information of Buyer, then the party making such discovery shall immediately turn
such records and files over to Buyer, which shall upon request make available to the surrendering
party any information contained therein which is not confidential information. Sellers agree that
they will not assert a waiver of loss of confidential or privileged status of the information based
upon such possession or discovery.
13.3 Non-Solicitation. Sellers agree that for a period of five years following the
Closing Date, they will not, and will cause their Affiliates not to, solicit or accept business
from any customer of the Business during the 12 month period ending on the Closing Date in the area
serviced by the Business during such 12 month period.
13.4 Equitable Relief for Violations. The parties acknowledge that an irreparable
injury may result to the non-violating party and its Business in the event of a breach by the
violating party of any provision in this Article XIII. The parties also acknowledge and
agree that the damages or injuries that a non-violating party sustains as a result of such a breach
are difficult to ascertain and money damages alone may not be an adequate remedy to a non-violating
party. The parties therefore expressly agree that if a controversy arises concerning the rights or
obligations of a party under this Article XIII, such rights or obligations shall be
enforceable by a court decree of specific performance and a non-violating party shall also be
entitled to any injunctive relief from the court pursuant to Article XVI necessary to
prevent or restrain any such breach. Such relief shall be granted without the necessity of a
showing of irreparable harm and without the posting of a bond or other security. Such relief,
however, shall be cumulative and non-exclusive and shall be in addition to any other remedy to
which the parties may be entitled in accordance with this Agreement.
ARTICLE XIV
TAX MATTERS
14.1 Transaction Taxes. Buyer shall be responsible for and shall remit to Seller at
Closing all sales, transfer, conveyance or other Taxes associated with the transfer of the Assets
to
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Buyer pursuant to this Agreement. Seller shall promptly remit such Taxes to the applicable
taxing authority.
ARTICLE XV
GENERAL
15.1 Assignment; Binding Effect; Amendment. This Agreement and the rights of the
parties under it may not be assigned (except by operation of law) without the prior consent of the
others; provided, however, that Buyer may assign any and all of its rights, interests and
obligations under this Agreement as security for obligations to its lenders. This Agreement shall
be binding upon and shall inure to the benefit of the parties and their successors and permitted
assigns. This Agreement may be modified or amended only by a written instrument executed by all
parties.
15.2 Entire Agreement. This Agreement, together with its exhibits and schedules, is
the final, complete and exclusive statement and expression of the agreement among the parties with
relation to the subject matter of this Agreement. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of, any prior or contemporaneous discussions,
correspondence, or oral or written agreements of any kind.
15.3 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
but one and the same instrument.
15.4 No Brokers. Sellers represent and warrant to Buyer, and Buyer represents and
warrants to Sellers, that the warranting party has had no dealings with any broker or agent so as
to entitle such broker or agent to a commission or fee in connection with the Transactions. If for
any reason a commission or fee shall become due, the party dealing with such agent or broker shall
pay such commission or fee and agrees to indemnify and save harmless each of the other parties from
all claims for such commission or fee and from all attorneys’ fees, litigation costs and other
expenses relating to such claim.
15.5 Expenses of Transaction. Except as otherwise provided in this Agreement, whether
or not the Transactions shall be consummated:
(a) Buyer will pay the fees, expenses and disbursements of Buyer and its agents,
representatives, accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments to it and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by Buyer under this Agreement;
(b) Sellers will pay the fees, expenses and disbursements of Sellers and their respective
agents, representatives, accountants and counsel incurred in connection with the subject matter of
this Agreement and any amendments to it and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by Sellers under this Agreement; and
33
(c) Nothing in this Section 15.5 shall limit the rights of a non-breaching party to
recover damages, including fees and expenses if so awarded, in connection with any claim against a
party in breach under this Agreement.
15.6 Notices. All notices or other communications required or permitted hereunder
shall be in writing and may be given by depositing the same in United States mail, addressed to the
party to be notified, postage prepaid and registered or certified with return receipt requested, by
overnight courier or by delivering the same in person to such party.
(a) If to Buyer, addressed to it at:
c/o Allied Waste Industries, Inc.
00000 X. Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxx
00000 X. Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxx
with a copy to:
c/o Allied Waste Industries, Inc.
00000 X. Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Executive Vice President and General Counsel
00000 X. Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Executive Vice President and General Counsel
and a copy to:
Xxxxxxxxx Xxxxx, P.C.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. XxXxxxxxx
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. XxXxxxxxx
(b) If to Sellers, addressed to them at:
c/o Waste Services, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn: Xxxxx Xxxxxxxxxx-Xxxxx, Chairman and Chief Executive Officer
0000 Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn: Xxxxx Xxxxxxxxxx-Xxxxx, Chairman and Chief Executive Officer
with a copy to:
Waste Services, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn: Xxxx X. Xxxxxx, Executive Vice President and General Counsel
0000 Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn: Xxxx X. Xxxxxx, Executive Vice President and General Counsel
34
Notice shall be deemed given and effective the day personally delivered, the day after being sent
by overnight courier, subject to signature verification, and three Business Days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail, registered or
certified, return receipt requested. Any party may change the address for notice by notifying the
other parties of such change in accordance with this Section 15.6. Notwithstanding the
foregoing, if to Buyer, copies of notices and other communications regarding title and survey
matters shall also be provided to Xxxxxxxx X. Xxxxx, Xxxxxxxxx Xxxxx, P.C., 0000 X. Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000.
15.7 No Waiver. No delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party under this Agreement
shall impair any such right, power or remedy, nor shall it be construed as a waiver of or
acquiescence in any such breach or default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach
of default occurring before or after that waiver.
15.8 Captions. The headings of this Agreement are inserted for convenience only,
shall not constitute a part of this Agreement or be used to construe or interpret any of its
provisions.
15.9 No Third Party Beneficiaries. Except for the provisions of Article XI
relating to indemnified parties, nothing contained in this Agreement is intended or shall confer
upon any other Person, including any employee or former employee of any Seller, any legal or
equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for
any specified period, under or by reason of this Agreement.
15.10 Severability. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid,
legal and enforceable but so as most nearly to retain the intent of the parties. If such
modification is not possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this Agreement shall not
in any way be affected or impaired thereby.
15.11 Construction. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute
shall be deemed to refer to such statute as amended and to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word “include” or “including” means include
or including, without limitation. All references in this Agreement to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require.
35
ARTICLE XVI
DISPUTE RESOLUTION
16.1 General. Except with respect to disputes regarding the Actual Adjustment Amount
(which shall be governed by Section 2.2), the parties agree that any disputes arising out
of or related in any way to this Agreement, including a breach of this Agreement, shall be brought
exclusively in the state or federal courts located in Wilmington, Delaware. By execution and
delivery of this Agreement, with respect to any dispute, each of the parties knowingly, voluntarily
and irrevocably: (a) consents, for itself and in respect of its property, to the exclusive
jurisdiction of these courts; (b) waives any immunity or objection, including any objection to
personal jurisdiction or the laying of venue or based on the grounds of forum non conveniens, which
it may have from or to the bringing of the dispute in such jurisdiction; (c) waives any personal
service of any summons, complaint or other process that may be made by any other means permitted by
the State of Delaware; (d) waives any right to trial by jury; (e) agrees that any such dispute will
be decided by court trial without a jury; (f) understands that it is giving up valuable legal
rights under this provision, including the right to trial by jury, and that it voluntarily and
knowingly waives those rights; and (g) agrees that any party to this Agreement may file an original
counterpart or a copy of this Section 16.1 with any court as written evidence of the
consents, waivers and agreements of the parties set forth in this Section 16.1.
16.2 Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving effect to any choice or conflict of
law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of Delaware.
16.3 Attorneys’ Fees. Should any litigation be commenced under this Agreement, the
successful party in such litigation shall be entitled to recover, in addition to such other relief
as the court may award, its reasonable attorneys’ fees, expert witness fees, litigation related
expenses, and court or other costs incurred in such litigation or proceeding. For purposes of this
clause, the term “successful party” means the net winner of the dispute, taking into account the
claims pursued, the claims on which the pursuing party was successful, the amount of money sought,
the amount of money awarded, and offsets or counterclaims pursued (successfully or unsuccessfully)
by the other party. If a written settlement offer is rejected and the judgment or award finally
obtained is equal to or more favorable to the offeror than an offer made in writing to settle, the
offeror is deemed to be the successful party from the date of the offer forward.
[SIGNATURES ON NEXT PAGE]
36
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
BUYER: Allied Waste Transfer Services of Arizona, LLC |
||||
By: | /s/ Xxxxxxxx X. Xxxxx | |||
Its: Authorized Officer | ||||
SELLERS: Waste Services, Inc. |
||||
By: | /s/ Xxxx X. Xxxxxx | |||
Its: Executive Vice President and General | ||||
Counsel | ||||
Waste Services of Arizona, Inc. |
||||
By: | /s/ Xxxx X. Xxxxxx | |||
Its: Vice President | ||||
37
LIST OF EXHIBITS AND SCHEDULES
Exhibit A
|
Sellers and Operations to be Sold | |
Exhibit B-1
|
Land | |
Exhibit B-2
|
Leased Real Property | |
Exhibit C
|
Definitions | |
Exhibit D
|
Retention Bonus Agreement | |
Schedule 1.1(b)
|
Permits | |
Schedule 1.1(c)
|
Equipment | |
Schedule 1.1(d)
|
Rolling Stock | |
Schedule 1.1(f)
|
Inventory | |
Schedule 1.1(g)
|
Business Names | |
Schedule 1.2
|
Excluded Assets | |
Schedule 5.3
|
Permits | |
Schedule 5.4(a)
|
Totality of Assets | |
Schedule 5.4(b)
|
Assumed Leases | |
Schedule 5.5(b)
|
Real Property Disclosure | |
Schedule 5.6
|
Contracts | |
Schedule 5.7
|
Employees; Exceptions to “at will” Employment | |
Schedule 5.8(a)
|
Compliance with Law | |
Schedule 5.8(b)
|
Conflicts | |
Schedule 5.8(c)
|
Required Consents | |
Schedule 5.9
|
Taxes | |
Schedule 5.10
|
Litigation | |
Schedule 5.11
|
Financial Statements | |
Schedule 5.12
|
Conduct of Business | |
Schedule 5.13(a)
|
Hazardous Materials | |
Schedule 5.13(b)
|
Notices Relating to the Environment | |
Schedule 5.13(c)
|
List of Disposal Sites | |
Schedule 5.16
|
Affiliate Relationships | |
Schedule 5.17
|
Performance Bonds; Letters of Credit; Financial Assurances | |
Schedule 5.18
|
Employment and Labor Matters |
38
EXHIBIT A
SELLERS AND OPERATIONS TO BE SOLD
SELLERS AND OPERATIONS TO BE SOLD
Seller
|
Operations to be Sold | ||||
Waste Services of
Arizona, Inc.
|
Downtown Transfer Station, Phoenix, Arizona Arizona Transfer Station, Mesa, Arizona Hauling Operations, Arizona |
||||
Membership Interests of Cactus Waste Systems, LLC, which owns and operates Cactus Landfill | |||||
X-0
XXXXXXX X-0
OWNED REAL PROPERTY
OWNED REAL PROPERTY
1.
|
Cactus Landfill: | Pinal County, Arizona | ||||
Purchase Date: | September 22, 2003 | |||||
Purchase Price: | $1,207,560 | |||||
Owners Title Policy: | Cactus Waste Systems, LLC Policy No. 27-31-92-265757 Issued by: Fidelity National Amount: $1,207,560 |
West half of Section 28; and the west half of Section 33, all within Township 7 South and Range 10
East of the Gila and Salt River Base and Meridian, Pinal County, Arizona and Lots three (3) and
four (4); and the South half of Northwest Quarter of Section 4, Township 8 South of Range 10 East
of the Gila and Salt River Base and Meridian, Pinal County, Arizona. (Southeast Regional
Landfill).
2.
|
Mesa Transfer Station: | 000 X. Xxxxxxx, Xxx 0, Xxxx, Xxxxxxx | ||||
Purchase Date: | August 31, 2004 | |||||
Purchase Price: | $430,010 | |||||
Owners Title Policy: | Cactus Waste Systems, LLC Policy No. 286277 Issued by: Transnational Amount: $400,000 |
A parcel of land known as the Southwest corner of Section 36, Township 1 South, Range 7 East of the
Gila and Salt River Base and Meridian, Maricopa County, Arizona and an easement for drainage as set
forth in Reciprocal Drainage Easement dated July 31, 2003. (Mesa Transfer Station).
3. | Lots 000-00-000 and 044 at back of Hail property recently purchased for $85,000. (505 and 000 Xxxx Xxxx Xxxxxx). |
B-1
EXHIBIT B-2
LEASED REAL PROPERTY
LEASED REAL PROPERTY
1. Lease agreement dated May 5, 2004, between Capital Property Resources, LLC and Waste
Services of Arizona, Inc., guaranteed by Waste Services, Inc. and Waste Services (CA)
Inc.
Property:
|
0000 X. 0xx Xxxxxx, Xxxxxxx, Xxxxxxx | |||
Deposit:
|
$120,000 | |||
Term:
|
to May 4, 2012 — 180 day advance renewal notice |
2. Month to month lease of premises at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx
with Xxxxx Xxxxxx & Xxxxx Xxxxxx.
3. Month to month lease at 0000 Xxxx Xxxx, Xxxxxxx for container storage.
B-2
EXHIBIT C
DEFINITIONS
DEFINITIONS
“Accounts Receivable” means all accounts receivable of Sellers and the Company as of
the Closing Date arising from the operation of the Business.
“Active Employee” has the meaning specified in Section 7.8(a).
“Actual Adjustment Amount” has the meaning specified in Section 2.2(a)(ii).
“Adjustment Amount” has the meaning specified in Section 2.2(a)(i).
“Affiliate” means, with respect to any specified Person, a Person controlled by,
controlling or under common control with such Person.
“Affiliated Group” means an affiliated group as defined in Code Section 1504(a) or any
similar group defined under a similar provision of state or local Tax law.
“Agreement” has the meaning specified in the introductory paragraph of the Agreement.
“Ancillary Agreements” means the Deeds, the Xxxx of Sale, Buyer’s Assumption
Agreements, the Assignment, Assumption and Consent to Leased Land and the other documents and
agreements delivered by the parties pursuant to the terms of this Agreement.
“Antitrust Division” means the Antitrust Division of the United States Department of
Justice.
“Applicable Laws” means all federal, state and local statutes, laws, rules,
regulations, orders, ordinances, permits (including zoning restrictions and land use requirements
and Environmental Laws and regulations) and licenses and all administrative and judicial judgments,
rulings, decisions and orders applicable to Sellers, the Company, Buyer, the Assets or the
Business.
“Area” has the meaning specified in Recital A.
“Assets” has the meaning specified in Section 1.1.
“Assignment, Assumption and Consent to Leased Land” means an assignment, in form and
substance reasonably satisfactory to Buyer, for each parcel of Leased Real Property of all of
Sellers’ rights, title and interest under each the real estate lease with respect thereto, together
with the consent of the landlord to such assignment if required by the applicable lease or by law.
“Assumed Contracts” has the meaning specified in Section 1.1(h).
“Assumed Leases” has the meaning specified in Section 5.4(b).
“Assumed Liabilities” has the meaning specified in Section 10.2.
“Balance Sheet Date” has the meaning specified in Section 5.11.
C-1
“Xxxx of Sale” means a General Conveyance, Assignment and Xxxx of Sale in form and
substance reasonably satisfactory to Buyer and Sellers, providing for the conveyance, sale,
transfer and assignment to Buyer of all of the Assets (other than the Land and the Assets held and
retained by the Company).
“Blanket Liens” shall have the meaning specified in Section 4.4.
“Business” has the meaning specified in Recital A.
“Business Day” means any day that is not a Saturday, a Sunday or other day in which
banks are authorized or required by law to be closed in Phoenix, Arizona.
“Business Employees” means all employees of Sellers or their Affiliates employed in
the Business.
“Business Names” means names and the right to use such names and all similar names in
the state(s) listed on Schedule 1.1(g).
“Buyer” has the meaning specified in the introductory paragraph of the Agreement.
“Buyer’s Assumption Agreements” means assumption agreements in form and substance
reasonably satisfactory to Buyer and Sellers, providing for the assumption by Buyer of the Assumed
Liabilities.
“Cactus Landfill Sellers” means Xxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxxxx, and LJM Interests, Ltd. (or their
predecessors).
“Cactus Landfill Purchase Agreement” means the Purchase Agreement dated July 3, 2003,
as amended, among Waste Services, Inc., Capital Environmental Resource, Inc. and the Cactus
Landfill Sellers.
“Cactus Landfill Royalty Agreement” means the Royalty Agreement dated July 3, 2003, as
amended, among the Company, Waste Services, Inc., Capital Environmental Resource, Inc., and the
Cactus Landfill Sellers (or their predecessors).
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.
“Closing” and “Closing Date” have the meanings specified in Section
3.1(a).
“Code” means the Internal Revenue Code of 1986.
“Company” has the meaning specified in Recital A.
“Customer Contracts” means all contractual rights of Sellers or the Company with
Sellers’ customers or the Company’s customers (whether oral or in writing) exclusively relating to
the Business.
C-2
“Deductible” has the meaning specified in Section 11.4.
“Deed” means a special warranty deed.
“Disclosure Schedules” means the schedules to the specific Sections of the Agreement
delivered by Sellers to Buyer, as supplemented pursuant to Section 7.7.
“Employee Contracts” means the employment contracts that apply to Business Employees.
“Encumbrances” means liens, security interests, encumbrances, adverse claims, leases,
including operating leases, rights of repurchase or purchase, rights of first refusal, pledges,
voting trusts, equities and other restrictions, limitations or conditions on transfer of any nature
whatsoever.
“Environmental Damages” means obligations to pay the amount of any judgment or
settlement, the cost of complying with any settlement, judgment or order for injunctive or other
equitable relief, the cost of compliance or corrective action in response to any notice, demand or
request from any federal, state or local governmental or regulatory authority, including a notice
inviting comment, the amount of any civil penalty or criminal fine, and any court costs and amounts
for attorney’s fees, fees for witnesses and experts, and costs of investigation and preparation for
defense of any notice, claim or proceeding, regardless of whether such proceeding is threatened,
pending or completed, that may be or have been asserted against or imposed upon Sellers, the
Company, or the Land and arise out of: (a) failure of Sellers or the Company to comply at any time
with all Environmental Laws; (b) presence of any Hazardous Materials on, in, under, at, migrating
or threatening to migrate from, or in any way affecting the Land at any time; (c) identification of
Sellers or the Company as potentially responsible parties under CERCLA or as a Person responsible
for damages under any Environmental Law; or (d) any and all claims for injury or damage to Persons
or property arising out of exposure to Hazardous Materials originating at the Land or result from
operation thereof or located at the Land.
“Environmental Laws” means all Applicable Laws relating to pollution or protection of
human health or the environment (including ambient air, surface water, ground water, land surface
or subsurface strata), including laws and regulations relating to workplace or worker safety and
health or emissions, discharges, Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
“Equipment” means all machinery, equipment, including containers, used or held for use
principally in connection with the Business.
“Estimated Adjustment Amount” has the meaning specified in Section 2.2(b)(ii).
“Estoppel Certificate” means an estoppel certificate from the landlord of any Leased
Real Property, in form and substance reasonably acceptable to Buyer, certifying as to matters
reasonably requested by Buyer.
C-3
“Excluded Assets” has the meaning specified in Section 1.2.
“Excluded Liabilities” has the meaning specified in Section 10.1.
“Florida Transaction” means the purchase by certain Affiliates of Sellers of the South
Florida transfer station, recycling operation and hauling operation of certain Affiliates of Buyer
pursuant to an Asset Purchase Agreement of even date with the Agreement.
“Fraud Claims” means indemnity claims based upon a willful, fraudulent or intentional
misrepresentation of any party contained this Agreement, or in the Schedules, Exhibits,
certificates, documents or agreements attached to this Agreement or delivered pursuant hereto.
“FTC” means the United States Federal Trade Commission.
“GAAP” means United States generally accepted accounting principles applied on a
consistent basis.
“Hazardous Materials” means any chemicals, pollutants, contaminants, wastes and toxic
substances, including: (a) the presence of which requires reporting, investigation, removal or
remediation under any Environmental Law; (b) that is defined as a “hazardous waste,” “hazardous
substance,” “pollutant” or “contaminant” under any Environmental Law; (c) that is toxic, explosive,
corrosive, flammable, ignitable, infectious, radioactive, reactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated as such under any Environmental Law; (d) the presence of which
poses a hazard to the health or safety of Persons; or (e) that contains gasoline or any other
petroleum product or byproduct, polychlorinated biphenyls, asbestos and urea formaldehyde.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended.
“Indemnified Party” means a party seeking indemnification under Article XI.
“Indemnifying Party” means a party from whom indemnification is sought under
Article XI.
“Inventory” means all inventory of supplies, fuel, parts, tires, accessories and other
tangible assets of every kind, nature and description (and interests in any of the foregoing) used,
or held for use, principally in connection with the Business.
“Knowledge”, whether capitalized or not, of Sellers means the actual knowledge of the
following persons, without inquiry: Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx XxXxxx.
“Land” has the meaning specified in Recital C.
“Leased Real Property” means all rights as lessee or tenant in respect of all real
property leased by any Seller as more particularly described on Exhibit B, together with
all rights and interests relating or appurtenant thereto and all buildings, structures, fixtures
and other fixed
C-4
assets or improvements of every nature located on or annexed, attached or affixed,
constructively or actually, thereto.
“Liabilities” has the meaning specified in Section 11.2.
“Material Adverse Change” means a material adverse change in the business, financial
condition, and results of operations of the Business, taken as a whole.
“Material Customer Contracts” has the meaning specified in Section 5.6(a).
“Membership Interests” has the meaning specified in Recital B.
“Neutral Auditor” has the meaning specified in Section 2.2(b)(iii).
“Net Working Capital” has the meaning specified in Section 2.2(a)(ii).
“Other Contracts” has the meaning specified in Section 5.6(a).
“Permits” means all permits, filings, notices of intent, exemptions, licenses,
authorizations, registrations, franchises, consents, approvals and related applications of every
kind held by a Seller or the Company in connection with the Business from or with any federal,
state, local or foreign government or regulatory authorities or industrial bodies, including all
FCC radio licenses or call signs.
“Permitted Exceptions” means: (a) zoning ordinances and regulations which do not
materially adversely affect Buyer’s use or marketability of the Land for its current uses; (b) real
estate taxes and assessments, both general and special, which are a lien but are not yet due and
payable at the Closing Date; and (c) easements, Encumbrances, covenants, conditions, reservations
and restrictions of record, if any, as have been approved in writing by Buyer before the Closing
Date.
“Person” means any individual, firm, partnership, association, trust, corporation,
joint venture, unincorporated organization, limited liability company, governmental body or other
entity.
“Pre-Closing Period” means any Tax period or portion thereof ending on or before the
Closing Date (including the portion of any Straddle Period ending on the Closing Date).
“Proceedings” means any claim, investigation, litigation, action, suit or proceeding,
formal arbitration, informal arbitration or mediation, administrative, judicial or otherwise.
“Purchase Price” has the meaning specified in Section 2.1.
“Release” means any “release” as defined in CERCLA or in any Environmental Law.
“Required Consents” has the meaning specified in Section 5.8(b)(iii).
“Retained IP” has the meaning specified in Section 1.1(g).
C-5
“Retention Bonus Agreements” has the meaning specified in Section 3.10.
“Rights” means the intangible assets identified in Schedule 1.1(g).
“Rolling Stock” means all of the motor vehicles used or held for use principally in
connection with the Business and all attachments, accessories and materials handling equipment now
located in or on such motor vehicles, including all radios and the radio base station, if any.
“Sellers” has the meaning specified in the introductory paragraph of the Agreement.
“Sellers’ Financial Statements” has the meaning specified in Section 5.11.
“Stay-On Bonuses” has the meaning specified in Section 3.10.
“Straddle Period” means any Tax period beginning before and ending after the Closing
Date.
“Survey” has the meaning specified in Section 3.6.
“Surveyor” means a surveyor in Arizona acceptable to Sellers and Buyer.
“Tax” or “Taxes” means any federal, state, local, foreign, and other income,
gross receipts, sales, use, ad valorem, transfer, franchise, real property, profits, payroll,
withholding, unemployment, excise, customs, duties and other taxes, fees, assessments and charges
of any kind whatsoever, together with any interest and any penalties and additions to tax with
respect thereto.
“Tax Claims” means indemnity claims made in respect of Taxes.
“Tax Returns” means any report, statement, form, return or other document or
information required to be supplied to a taxing authority in connection with Taxes.
“Third Party Claim” has the meaning specified in Section 11.6(a).
“Title Commitment” means a preliminary title commitment in respect of each parcel
comprising the Land.
“Title Company” means First American Title Insurance Company.
“Title Defect” has the meaning specified in Section 7.3(e).
“Transactions” means the transactions contemplated by this Agreement.
“Transferred Employee” has the meaning specified in Section 7.8(a).
“Unpermitted Exception” means any defect in the title of any of the Land or any other
matter unacceptable to Buyer in Buyer’s reasonable discretion, other than Permitted Exceptions.
“WARN Act” has the meaning specified in Section 7.8(c).
C-6
EXHIBIT D
RETENTION BONUS AGREEMENT
RETENTION BONUS AGREEMENT
To provide an incentive to you to continue in your current position for at least 90 days after
the Arizona operations of Waste Services, Inc. and/or its subsidiaries (collectively, “Waste
Services”), are sold to a third party (the “Purchaser”), Waste Services will cause the Purchaser to
pay you, ___(“Employee”), a retention bonus in the amount of $___on the
91st day following the closing of the acquisition (the “Payment Date”), provided:
1. You do not resign from your current position, you accept a similar position with the
Purchaser, and you continue to faithfully perform the responsibilities of your position, from the
date hereof through the Payment Date;
2. You are not discharged for “cause” prior to the Payment Date;
3. The Purchaser does, in fact, complete its acquisition of the Maricopa County, Arizona
operations of Waste Services at which you are primarily employed on or before ___, 2006; and
4. You do not disclose the existence of this Agreement or its terms to anyone other than your
personal advisors (provided they are bound to keep such terms confidential).
For purposes of this agreement, a discharge for “cause” shall be a termination of your
employment after (1) you are convicted of a crime (other than a minor traffic offense); (2) you
fail or refuse to perform any of your assigned duties; (3) you perform your assigned duties in an
unacceptable manner; (4) you engage in conduct, the result of which causes injury (financial or
otherwise) to the Purchaser, or which exposes the Purchaser to risk of such injury; or (5) you
disclose the existence of this Agreement or its terms to anyone other than your personal advisors
(provided they are bound to keep such terms confidential).
In addition, nothing in this agreement will modify the at-will nature of your employment with
Waste Services (if applicable) or with the Purchaser, nor constitute a contract of employment for
any particular period of time. Either you or the Purchaser may terminate your employment with or
without “cause” or notice. If you terminate your employment with Waste Services or the Purchaser
for any reason prior to payment of the retention bonus, you will forfeit any rights to the
retention bonus. If the Purchaser terminates your employment without “cause” before payment of the
retention bonus, the Purchaser will pay the full amount of the retention bonus as a severance
payment on the date of your termination. This severance payment shall be reduced by any other
payment or benefits from the Purchaser in the nature of severance pay or benefits. If you are
entitled to any notice or payment in lieu of any notice or termination of employment required by
Federal, state or local law, including but not limited to the Worker Adjustment and Retraining
Notification Act, the severance payment will also be reduced by the amount of any payment in lieu
of such a notice.
The payment of the retention bonus shall be conditioned upon your execution of a valid
release, to be prepared by the Purchaser, in which you release Waste Services, the Purchaser and
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their respective affiliates, to the maximum extent permitted by law, from any claims that you
may have against any of them, except such claims arising under this agreement and any employee
benefit plan that is not a severance plan.
All payments to you under this agreement will be subject to withholding for all applicable
employment and income taxes.
This agreement shall be construed in accordance of the laws of the State of Arizona to the
extent not preempted by the Employee Retirement Income Security Act of 1974, as amended.
To accept this offer, you must sign below and return it to ___no later than
___, 2006.
/s/
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