1
EXHIBIT 2.1
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of October
31, 1995 by and among Republic Waste Industries, Inc., a Delaware corporation
("Republic"); RWI/GDS Mergersub, Inc., a North Carolina corporation and wholly-
owned subsidiary of Republic ("Republic Merger Sub", and together with
Republic, the "Republic Companies"); Garbage Disposal Service, Inc., a North
Carolina corporation (the "Company"); and the shareholders of the Company, Xxx
X. Xxxxx, a resident of the State of North Carolina ("Xxxxx") and Xxxx Xxxxx
XxXxxx, a resident of the State of South Carolina ("XxXxxx"), (together, Xxxxx
and XxXxxx are sometimes referred to hereinafter as the "Shareholders").
Certain other capitalized terms used herein are defined in Article XI.
RECITALS
The Boards of Directors of Republic and the Company have determined
that it is in the best interests of their respective shareholders for Republic
to acquire the Company upon the terms and subject to the conditions set forth
in this Agreement. In order to effectuate the transaction, Republic has
organized Republic Merger Sub as a wholly-owned subsidiary, and the parties
have agreed, subject to the terms and conditions set forth in this Agreement,
to merge Republic Merger Sub with and into the Company so that the Company
continues as the surviving corporation (the "Surviving Corporation"). As a
result, the Company will become a wholly-owned subsidiary of Republic.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below) Republic Merger Sub shall
be merged with and into the Company (the "Merger") on the terms and conditions
set forth in the Plan of Merger and Reorganization annexed hereto as Exhibit A
(the "Plan of Merger"). The terms and conditions of the Plan of Merger are
incorporated
2
herein by reference as if fully set forth herein. As a result of the Merger,
the separate corporate existence of Republic Merger Sub shall cease and the
Company shall continue as the Surviving Corporation.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Akerman, Senterfitt & Xxxxxx, P.A., 000 Xxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxx, Xxxxxxx 00000, or such other place as the parties may otherwise
agree.
1.3 FILING OF ARTICLES OF MERGER. At the time of the Closing,
the parties shall cause the Merger to be consummated by filing duly executed
Articles of Merger (with the completed Plan of Merger annexed thereto) with the
Department of the Secretary of State of the State of North Carolina, in such
form as Republic determines is required by and is in accordance with the
relevant provisions of the North Carolina Business Corporation Act (the
"NCBCA") (the date and time of such filing is referred to herein as the
"Effective Date" or "Effective Time").
1.4 ISSUANCE OF REPUBLIC SHARES. At the Effective Time, by
virtue of the Merger and without any further action on the part of the parties
hereto, each share of capital stock of the Company (the "Company Stock") shall
be converted into and exchanged for such number of shares (the "Conversion
Amount") of the voting common stock, $0.01 par value per share of Republic
("Republic Common Stock"), as determined by the following formula: the
Conversion Amount shall be equal to the quotient determined by dividing (i)
$60,060,000 divided by the average closing sale price of a share of Republic
Common Stock on the Nasdaq Stock Market for the five consecutive trading days
which precede the third trading day which is immediately prior to the Effective
Date, as reported (absent manifest error in the printing thereof) by the Wall
St. Journal (Eastern Edition), by (ii) the aggregate number of shares of
Company Stock issued and outstanding on the Effective Date; provided, however,
in determining the average closing sale price in clause (i) above, if the
Closing is on or before December 31, 1995, the parties agree that the average
closing sale price is deemed to be equal to $20.00 per share of Republic Common
Stock. Republic shall issue to each shareholder of record of the Company at
the Effective Time duly executed certificates, in valid form registered in such
record holder's name, evidencing that number of shares of Republic Common Stock
determined, to the nearest whole share, by multiplying (a) the Conversion
Amount times (b) the number of shares of the Company Stock owned of record by
such shareholder.
-2-
3
1.5 DELIVERY OF CERTIFICATES. At the Closing, each holder of
shares of Company Stock shall deliver the certificates representing such shares
to Republic for cancellation, and Republic shall deliver one or more
certificates representing the shares of Republic Common Stock issued pursuant
to Section 1.4 to each such holder (rounded to the nearest whole share). The
shares of Republic Common Stock issuable by Republic in exchange for the
Company Stock in the Merger are sometimes referred to herein as the "Republic
Shares," and will be validly issued, fully paid and non-assessable.
1.6 ACCOUNTING TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as a pooling
of interests combination.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to the Company and to each of the
Shareholders to enter into this Agreement and to consummate the transactions
contemplated hereby, each of the Republic Companies jointly and severally make
the following representations and warranties to the Company and the
Shareholders:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Republic Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. Republic Merger
Sub is a wholly-owned subsidiary of Republic, within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code and Rev. Rul. 74-564, 1974-2 C.B.
124.
2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic
Companies has the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. Each of the Republic Companies has taken
all action necessary to authorize its execution and delivery of this Agreement,
the performance of its respective obligations hereunder and the consummation of
the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
-3-
4
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the Merger and
the issuance and delivery of certificates representing the Republic Shares to
the Shareholders, the Republic Shares will be validly issued, fully paid and
non-assessable shares of Republic Common Stock.
2.5 NO COMMISSIONS. Neither of the Republic Companies has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
2.6 CAPITALIZATION. The authorized capital stock of Republic
consists of 350,000,000 shares of Republic Common Stock and 5,000,000 shares of
preferred stock. As of October 25, 1995, (i) 62,328,628 shares of Republic
Common Stock were validly issued and outstanding, fully paid and nonassessable
and not issued in violation of any preemptive right of any stockholder of
Republic, and (ii) no shares of preferred stock were issued and outstanding.
The Republic Shares to be issued in the Merger will be "voting stock" within
the meaning of the Internal Revenue Code.
2.7 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Republic, nor the consummation by Republic of
the transactions contemplated hereby, nor compliance by Republic with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of its First Amended and Restated Certificate of Incorporation, (b)
violate, conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of any lien, upon
any of the properties or assets of Republic or any of its subsidiaries (the
"Republic Subsidiaries") under any of the terms, conditions or provisions of
any contract or lien, to which Republic or any Republic Subsidiary is a party
or to which they or any of their respective properties or assets may be
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which,
individually or in the aggregate, will not have a Material Adverse Effect on
Republic, (c) violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Republic or any Republic subsidiary
or any of their respective properties or assets, except for such violations
which, individually or in the aggregate, will not have a Material Adverse
Effect on Republic, or (d) require any consent, approval, authorization or
permit of or from, or filing with or notification
-4-
5
to, any Governmental Authority except (i) pursuant to the Exchange Act and the
Securities Act, (ii) filings required under the securities or blue sky laws of
the various states, (iii) filings required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iv) consents,
approvals, authorizations, permits, filings or notifications which have either
been obtained or made prior to the Closing or which, if not obtained or made,
will neither, individually or in the aggregate, have a Material Adverse Effect
on Republic nor restrict Republic's legal authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby, or (v) any
filings required to be made by the Company or the Company Shareholders.
2.8 REPORTS AND FINANCIAL STATEMENTS. Within the last three
years, except where failure to have done so did and would not have a Material
Adverse Effect on Republic, Republic has filed all reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with the SEC, including, but not limited to Forms 10-K, Forms 10-Q,
Forms 8-K and proxy statements (collectively, the "Republic Reports").
Republic has previously furnished to the Company and made available to the
Company Shareholders copies of all Republic Reports filed with the SEC since
January 1, 1995, and with respect to Republic Reports filed after the date of
this Agreement until the Effective Date, will promptly furnish to the Company
and make available to the Company Shareholders, copies of each of the Republic
Reports filed with the SEC during such period. As of their respective dates
(but taking into account any amendments filed prior to the date of this
Agreement), the Republic Reports complied, or, with respect to Republic Reports
filed after the date of this Agreement, will comply, in all material respects
with all the rules and regulations promulgated by the SEC and did not contain,
or, with respect to Republic Reports filed after the date of this Agreement,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Republic Reports filed by Republic with the SEC prior to the date of this
Agreement, since December 31, 1994 to the date of this Agreement, there has not
been any change in the financial condition, results of operations or business
of Republic and the Republic Subsidiaries that either individually or in the
aggregate would have a Material Adverse Effect on the financial condition of
Republic.
2.10 ACCOUNTING AND TAX MATTERS. Neither Republic nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to take any
action that would prevent Republic from accounting for the business combination
to be affected by the
-5-
6
Merger as a "pooling of interests." Republic warrants that it has no intention
of disposing of any of the Company Stock to be received by Republic in the
Merger. Republic agrees that from and after the Effective Time, it will not
take any action to cause the Merger to lose its tax free status.
2.11 SURVIVAL. Each of the representations and warranties made
by Republic in this Agreement or pursuant hereto shall survive for a period of
one year after the Effective Time, notwithstanding any investigation at any
time made by or on behalf of the Company Shareholders, and upon expiration of
such one year period, such representations and warranties of Republic shall
expire, except that the representations and warranties of Republic contained in
Sections 2.1, 2.2, 2.3 and 2.4 shall not expire but shall continue
indefinitely.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND XXXXX
As a material inducement to each of the Republic Companies to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Company and Xxxxx jointly and severally make the following representations and
warranties to the Republic Companies:
3.1 CORPORATE STATUS. The Company and each of the Company's
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina and has the requisite
power and authority to own or lease its properties and to carry on its business
as now being conducted. The Company and each of the Company's subsidiaries is
legally qualified to transact business as a foreign corporation in all
jurisdictions where the nature of its properties and the conduct of its
business requires such qualification (all of which jurisdictions are listed on
Schedule 3.1) and is in good standing in each of the jurisdictions in which it
is so qualified. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of the Company or any of
its subsidiaries.
3.2 POWER AND AUTHORITY. The Company has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Company
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. Xxxxx is an individual residing in the
State of North Carolina and Xxxxxx is an
-6-
7
individual residing in the State of South Carolina, and each of the
Shareholders has the requisite competence and authority to execute and deliver
this Agreement, to perform his respective obligations hereunder and to
consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and each of the Shareholders and constitutes the
legal, valid and binding obligation of the Company and each of the
Shareholders, enforceable against the Company and each of the Shareholders in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 CAPITALIZATION. Schedule 3.4 sets forth, with respect to
the Company and each of its subsidiaries, (a) the number of authorized shares
of each class of its capital stock, and (b) the number of issued and
outstanding shares of each class of its capital stock. All of the issued and
outstanding shares of capital stock of the Company and each of its subsidiaries
(a) have been duly authorized and validly issued and are fully paid and
non-assessable, (b) were issued in compliance with all applicable state and
federal securities laws, and (c) were not issued in violation of any preemptive
rights or rights of first refusal, and no preemptive rights or rights of first
refusal exist, and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require the Company or any of its subsidiaries to issue or sell
any shares of its capital stock (or securities convertible into or exchangeable
for shares of its capital stock). There are no outstanding stock appreciation,
phantom stock, profit participation or other similar rights with respect to the
Company or any of its subsidiaries. There are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer of
the capital stock of the Company or any of its subsidiaries. Neither the
Company nor any of its subsidiaries is obligated to redeem or otherwise acquire
any of its outstanding shares of capital stock.
3.5 SHAREHOLDERS OF THE COMPANY. Schedule 3.5 sets forth, with
respect to the Company and each of its subsidiaries, (a) the name, address and
social security number of, and the number of outstanding shares of each class
of its capital stock owned by, each shareholder of record as of the close of
business on the date of this Agreement; and (b) the name, address and social
security number of, and number of shares of each class of its capital stock
beneficially owned by each beneficial owner of outstanding shares
-7-
8
of capital stock (to the extent that record and beneficial ownership of any
such shares are different). Each of the holders of shares of capital stock of
the Company owns such shares, and the Company owns the shares of capital stock
of its subsidiaries, free and clear of all Liens, restrictions and claims of
any kind, except as set forth on Schedule 3.5.
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by the Company and each of the
Shareholders, the performance by the Company and each of the Shareholders of
its respective obligations hereunder and the consummation by the Company and
each of the Shareholders of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or
bylaws of the Company or any of its subsidiaries, (ii) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company
or any of its subsidiaries or any of the Shareholders except for such
violations which, individually, or in the aggregate, will not have a Material
Adverse Effect on the Company; (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or any of its
subsidiaries or any of the Shareholders except for such conflicts, breaches and
defaults which, individually or in the aggregate, will not have a Material
Adverse Effect on the Company, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
the Company or any of its subsidiaries, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any applicable
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR") and any filings required to be made by the Republic
Companies.
3.7 RECORDS OF THE COMPANY. The copies of the articles of
incorporation and bylaws of the Company and its subsidiaries which were
provided to Republic are true, accurate and complete and reflect all amendments
made through the date of this Agreement. The minute books for the Company and
its subsidiaries made available to Republic for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, such minute books contain the true
signatures of the persons purporting to have signed it, and such minute books
contain a substantially complete and accurate record of all corporate actions
of the shareholders and directors (and any committees thereof) of the Company
and its subsidiaries taken by
-8-
9
written consent or at a meeting since incorporation. All material corporate
actions taken by the Company and its subsidiaries have been duly authorized or
ratified. All accounts, books, ledgers and official and other records of the
Company have been fully, properly and accurately kept and completed in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained therein. The stock ledger of the Company, as previously
made available to Republic, contains an accurate and complete record of all
issuances, transfers and cancellations of shares of the capital stock of the
Company.
3.8 SUBSIDIARIES. Except as set forth on Schedule 3.8, the
Company does not own, directly or indirectly, any outstanding voting securities
of or other interests in, or control, any corporation, partnership, joint
venture or other business entity.
3.9 FINANCIAL STATEMENTS. The Company has delivered to
Republic the financial statements of the Company, including the notes thereto,
audited by Xxxxxx, Xxxxx & Associates, P.A. (the "Financial Statements"), a
copy of which is attached to Schedule 3.9 hereto. The balance sheet dated as
of September 30, 1994 of the Company is referred to herein as the "Current
Balance Sheet". The Financial Statements fairly present the financial position
of the Company at the balance sheet date and the results of operations for the
periods covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated. The books and records
of the Company fully and fairly reflect all transactions, properties, assets
and liabilities of the Company. There are no material special or non-recurring
items of income or expense during the periods covered by the Financial
Statements and the balance sheets included in the Financial Statements do not
reflect any writeup or revaluation increasing the book value of any assets,
except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 3.10, since the date of the Current Balance Sheet,
neither the Company nor any of its consolidated subsidiaries has (i) issued any
capital stock or other securities; (ii) made any distribution of or with
respect to its capital stock or other securities or purchased or redeemed any
of its securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees or amended any other
terms of employment of such persons except in the ordinary course of business
consistent with past practice; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (v) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (vi)
-9-
10
made any payment in respect of its liabilities other than in the ordinary
course of business consistent with past practice; (vii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $25,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (viii) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed, in excess of $25,000 in the aggregate; (ix) suffered any
extraordinary losses (whether or not covered by insurance); (x) waived,
cancelled, compromised or released any rights having a value in excess of
$25,000 in the aggregate; (xi) made or adopted any change in its accounting
practice or policies not consistent with GAAP; (xii) made any adjustment to its
books and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (xiii) entered
into any transaction with any Affiliate other than intercompany transactions in
the ordinary course of business consistent with past practice; (xiv) entered
into any employment agreement; (xv) terminated, amended or modified any
agreement involving an amount in excess of $25,000; (xvi) imposed any security
interest or other Lien on any of its assets other than in the ordinary course
of business consistent with past practice; (xvii) delayed paying any accounts
payable which is due and payable except to the extent being contested in good
faith; (xviii) made or pledged any charitable contribution other than in the
ordinary course of business consistent with past practice; (xix) entered into
any other transaction or been subject to any event which has or may have a
Material Adverse Effect on the Company; or (xx) agreed to do or authorized any
of the foregoing.
3.11 LIABILITIES OF THE COMPANY. Except as set forth on Schedule
3.11, the Company and its consolidated subsidiaries do not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected or taken into account in the Current Balance
Sheet and not heretofore paid or discharged, (b) to the extent specifically set
forth in or incorporated by express reference in any of the Schedules attached
hereto, (c) liabilities incurred in the ordinary course of business consistent
with past practice since the date of the Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), (d) normal accruals,
reclassifications, and audit adjustments which would be reflected on an audited
financial statement and which would not be material in the aggregate, and (e)
liabilities incurred in the ordinary course of business prior to the date of
the Current Balance Sheet which, in accordance with GAAP consistently applied,
were not recorded thereon. The aggregate amount of indebtedness for borrowed
money, including principal and accrued but unpaid
-10-
11
interest, and including the net present value of remaining payments on
capitalized equipment leases, of the Company and its consolidated subsidiaries,
will not exceed $13,000,000.00, and its consolidated net worth will be no less
than $7,000,000.00, as of the Effective Time.
3.12 LITIGATION. Except as set forth on Schedule 3.12, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending, or to Xxxxx'x knowledge threatened, anticipated or
contemplated against, by or affecting the Company, or any of its subsidiaries,
or any of their properties or assets, or the Shareholders, or which question
the validity or enforceability of this Agreement or the transactions
contemplated hereby, and, to the knowledge of Xxxxx and the Company, there is
no basis for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which
the Company or any of its subsidiaries is or was a party which have not been
complied with in full or which continue to impose any material obligations on
the Company or its subsidiaries.
3.13 ENVIRONMENTAL MATTERS. To the knowledge of Xxxxx and the
Company, and except as set forth on Schedule 3.13:
(a) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company (i) the Company is and has at all times been in
substantial compliance with all material Environmental, Health and Safety Laws
(as defined herein) governing its business, operations, properties and assets,
including, without limitation, Environmental, Health and Safety Laws with
respect to discharges into the ground water, surface water and soil, emissions
into the ambient air, and generation, accumulation, storage, treatment,
transportation, transfer, labeling, handling, manufacturing, use, spilling,
leaking, dumping, discharging, release or disposal of Hazardous Substances (as
defined herein), or other Waste (as described herein); and (ii) the Company has
not been notified in writing by any Governmental Authority that it is liable
for any penalties, fines or forfeitures for failure to comply with any
Environmental, Health and Safety Laws; and (iii) the Company is in substantial
compliance with all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied substantially with all
informational requests or demands made of it in writing by any Governmental
Authority under the Environmental, Health and Safety Laws.
(b) The Company has obtained, or caused to be obtained,
and is in substantial compliance with, all material licenses, certificates,
permits, approvals and registrations (collectively "Licenses") required by the
Environmental, Health and Safety Laws
-11-
12
applicable to its ownership of its properties and assets and the operation of
its business as presently conducted, including, without limitation, all air
emission, water discharge, water use and solid waste and other Waste
generation, transportation, transfer, storage, treatment or disposal Licenses,
and the Company is in substantial compliance with all the terms, conditions
and requirements of such Licenses, and copies of such Licenses have been
provided to Republic. There are no material administrative or judicial
investigations, notices, claims or other proceedings pending or threatened in
writing by any Governmental Authority or third parties against the Company, its
businesses, operations, properties, or assets, which question the validity or
entitlement of the Company to any License required by the Environmental, Health
and Safety Laws for the ownership of each of the properties and assets of the
Company and the operation of its business or wherein an unfavorable decision,
ruling or finding could have a Material Adverse Effect on the Company.
(c) The Company has not received any written notice of
any non-compliance order, Potentially Responsible Party letter, notice of
violation, claim, suit, action, judgment, or administrative or judicial
proceeding pending against or involving the Company, its business, operations,
properties, or assets, issued by any Governmental Authority or third party with
respect to any Environmental, Health and Safety Laws in connection with the
ownership by the Company of its properties or assets or the operation of its
business, which if has not been resolved to the satisfaction of the issuing
Governmental Authority or third party could reasonably be expected to have a
Material Adverse Effect on the Company.
(d) The Company is in substantial compliance with, and
is not in breach of or default under any applicable writ, order, judgment,
injunction, governmental decree issued to the Company pursuant to the
Environmental, Health and Safety Laws and no event has occurred or is
continuing which, with the passage of time or the giving of notice or both,
would constitute such non-compliance, breach or default thereunder.
(e) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company:
(1) (i) the Company has not generated,
manufactured, used, transported, transferred, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed,
nor has it allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or
other waste to or at any location other than a site lawfully allowed
to receive such
-12-
13
Hazardous Substances or other waste for such purposes; and (iii) the
Company has not generated, manufactured, used, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed of,
or allowed or arranged for any third parties to generate, manufacture,
use, store, handle, treat, spill, leak, dump, discharge, release or
dispose of, Hazardous Substances or other waste upon property owned or
leased by it, except as allowed by law. For purposes of this Section
3.13, the term "Hazardous Substances" shall be construed broadly to
include any toxic or hazardous substance, material, or waste, and any
other contaminant, pollutant or constituent thereof, whether liquid,
solid, semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, by-products, pesticides, asbestos
containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires remediation
under any Environmental, Health and Safety Laws or which are
regulated, listed or controlled by, under or pursuant to any
Environmental Health and Safety Laws, including, without limitation,
by the Environmental Protection Agency as hazardous substances (40 CFR
Part 302) and any amendments thereto; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq. (hereinafter collectively "CERCLA"); the Solid Waste
Disposal Act, as amended by the Resource Conversation and Recovery Act
of 1976 and subsequent Hazardous and Solid Waste Amendments of 1984,
42 U.S.C. Section 6901 et seq. (hereinafter, collectively "RCRA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section
1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section
1311, et seq.; the Clean Air Act, as amended (42 U.S.C. Section
7401-7642); Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601 et seq; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986 as amended,
42 U.S.C. Section 11001, et seq. (Title III of XXXX) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
Section 651, et seq. ("OSHA"); any similar state statute, including
without limitation, and by way of example, the North Carolina Solid
Waste Management Rules and Solid Waste Management Law (15A NCAC 13B),
as amended, the North Carolina Solid Waste Management General Statutes
(GS 130A-290), as amended, the Solid Waste Management Act of 1989 (GS
130A-309.01) and the North Carolina Scrap Tire Disposal Act (GS 130A-
309.51), or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, or which has been or shall be determined or
interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order,
-13-
14
code, rule, order, or decree. For purposes of this Section 3.13, the
term "Waste" shall have the same meaning, and be defined the same as,
the term "Solid Waste" is defined in RCRA.
(2) The Company has not caused, or allowed to
be caused a Release or Discharge, or threatened Release or Discharge,
of any Hazardous Substance on, into or beneath the surface of any
parcel of the Owned Properties or the Leased Premises that would
reasonably be expected to have a Material Adverse Effect on the
Company. There has not occurred, nor is there presently occurring, a
Release or Discharge, or threatened Release or Discharge, of any
Hazardous Substance on, into or beneath the surface of any parcel of
the Owned Properties or the Leased Premises that would reasonably be
expected to have a Material Adverse Effect on the Company. For
purposes of this Section, the terms "Release" and "Discharge" shall
have the meanings given them in the Environmental, Health and Safety
Laws.
(3) Other than is stated in Schedule 3.13, the
Company has not generated, handled, manufactured, treated, stored,
used, shipped, transported, transferred, or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any
third parties to generate, handle, manufacture, treat, store, use,
ship, transport, transfer or dispose of, any Hazardous Substance or
other Waste to or at a site which, pursuant to CERCLA or any similar
state law (i) has been placed on the National Priorities List or its
state equivalent; or (ii) the Environmental Protection Agency or the
relevant state agency has notified the Company that it has proposed or
is proposing to place on the National Priorities List or its state
equivalent. Neither the Company nor the Shareholders has received
written notice, and neither the Company nor the Shareholders has
knowledge of any facts which could give rise to any notice, that the
Company is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA, RCRA
or any other applicable Environmental Health and Safety Laws. The
Company has not submitted nor was required to submit any notice
pursuant to Section 103(c) of CERCLA with respect to the Leased
Premises or the Owned Properties. Other than is stated in Schedule
3.13, the Company has not received any written request for information
in connection with any federal or state environmental cleanup site, or
in connection with any of the real property or premises where the
Company has transported, transferred or disposed of other Wastes. The
Company has not been required to and has not undertaken any response
or remedial actions or clean-up actions of any kind at the written
request of any Governmental Authorities or at the request of any other
third party.
-14-
15
(f) Other than is stated in Schedule 3.13, the Company
does not use, nor has it used, any Aboveground Storage Tanks or Underground
Storage Tanks, and there are not now nor have there ever been any Underground
Storage Tanks on the Leasehold Premises or the Owned Properties. For purposes
of this Section 3.13, the terms "Aboveground Storage Tanks" and "Underground
Storage Tanks" shall have the meanings given them in Section 6901 et seq., as
amended, of RCRA, or any applicable state or local statute, law, ordinance,
code, rule, regulation, order ruling, or decree governing Aboveground Storage
Tanks or Underground Storage Tanks.
(g) Schedule 3.13 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by the Company or
its agents or, to the knowledge of the Company or the Shareholders, undertaken
by any Governmental Authority, or any third party, concerning the Company or
any of the Leased Premises or the Owned Properties; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken by the Company or
its agents or, to the knowledge of the Company or the Shareholders, undertaken
by any Governmental Authority or any third party, concerning the Company or
any of the Leased Premises or the Owned Properties; (iii) all written
communications between the Company and any Governmental Authority arising under
or related to Environmental, Health and Safety Laws; and (iv) all citations
issued under OSHA, or similar state or local statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, concerning either of the
Company or any of the Leased Premises or the Owned Properties.
(h) Schedule 3.13 contains a list of the assets of the
Company which contain "asbestos" or "asbestos-containing material" (as such
terms are identified under the Environmental, Health and Safety Laws).
Schedule 3.13 also identifies (i) the degree of friability of all existing
asbestos and asbestos-containing material and (ii) all documents or actions
taken by the Company, directly or indirectly, or by any of their agents,
employees, representatives or contractors with respect to asbestos or
asbestos-containing materials, including but not limited to all methods and
manner of abatement, removal, containment, encapsulation, repair, maintenance,
renovation, demolition, salvage, installation, storage, transportation,
disposal, monitoring, spill/emergency clean-up, protective health and safety
measures and training of personnel (whether employees or independent
contractors or otherwise). Except as set forth in Schedule 3.13, the Company
has operated and continues to operate in substantial compliance with all
Environmental, Health & Safety Laws governing the handling, use and exposure to
and disposal of asbestos or asbestos-containing materials. Except as set forth
in Schedule 3.13, there are no claims, actions, suits, governmental
investigations or proceedings before any Governmental Authority or third party
pending, or threatened against or directly affecting
-15-
16
the Company, or any of its assets or operations relating to the use, handling
or exposure to and disposal of asbestos or asbestos-containing materials in
connection with their assets and operations.
(i) As used in this Agreement, "Environmental, Health
and Safety Laws" means all federal, state, regional or local statutes, laws,
rules, regulations, codes, orders, injunctions, decrees, rulings, and
ordinances or judicial or administrative interpretations thereof, and that
govern (or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the
Clean Water Act, FIFRA, EPCRA, OSHA and including without limitation, and by
way of example, the North Carolina Solid Waste Management Rules and Solid Waste
Management Law (15A NCAC 13B), as amended, the North Carolina Solid Waste
Management General Statutes (GS 130A-290), as amended, the Solid Waste
Management Act of 1989 (GS 130A-309.01) and the North Carolina Scrap Tire
Disposal Act (GS 130A-309.51).
(j) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by the Company on any of the Owned Properties or the Leased Premises
which have materially involved the generation, accumulation, storage,
treatment, transportation, labelling, handling, manufacturing, use, spilling,
leaking, dumping, discharging, release or disposal of Hazardous Substances.
(k) Schedule 3.13 identifies the locations to which the
Company has transferred, transported, hauled, moved, or disposed of Waste over
the past five (5) years and the types and volumes of Waste transferred,
transported, hauled, moved, or disposed of to each such location.
(l) As used in this Section 3.13, the term "the Company"
is deemed to refer to the Company and/or any of its subsidiaries or Affiliates,
including, without limitation, D & L Waste, Inc.
-16-
17
3.14 REAL ESTATE
(a) The Company and its subsidiaries do not own any real
property or any interest therein except as set forth on Schedule 3.14(a) (the
"Owned Properties"), which Schedule sets forth the location and size of, and
principal improvements and buildings on, the Owned Properties. Except as set
forth on Schedule 3.14(a), with respect to each such parcel of Owned Property:
(i) The Company or a subsidiary thereof has good and
marketable title to the parcel of Owned Property, free and clear of
any Lien other than (x) liens for real estate taxes currently due and
payable but not yet delinquent; (y) recorded easements, covenants, and
other restrictions which do not materially impair the current useof
the property subject thereto, and (z) encumbrances and restrictions
described in the title insurance policies listed on Schedule 3.14(a),
all of which policies have been previously delivered or made available
to Republic by the Company;
(ii) there are no pending or, to the knowledge of
Xxxxx and the Company, threatened condemnation proceedings, suits or
administrative actions relating to the Owned Properties affecting
adversely and materially the current use thereof;
(iii) the legal descriptions for the parcels of Owned
Property contained in the deeds thereof describe such parcels fully
and adequately; the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation
of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances and do not encroach on any
easement which may burden the land; the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land; and the Owned Properties are not located within any flood plain
(such that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been
obtained;
(iv) to the knowledge of the Company and Xxxxx, all
facilities have received all approvals of Governmental Authorities
(including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained
substantially in accordance with applicable laws, ordinances, rules
and regulations;
-17-
18
(v) there are no Contracts granting to any party or
parties the right of use or occupancy of any portion of the parcels of
Owned Property, except as set forth on Schedule 3.14(a);
(vi) there are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
(vii) there are no parties (other than the Company and
its subsidiaries) in possession of the parcels of Owned Property,
other than tenants under any leases disclosed in Schedule 3.14(a) who
are in possession of space to which they are entitled;
(viii) to the knowledge of the Company and Xxxxx, all
facilities located on the parcels of Owned Property are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules and
regulations, and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcels of Owned
Property;
(ix) each parcel of Owned Property abuts on and has
direct vehicular access to a public road, or has access to a public
road via a permanent, irrevocable, appurtenant easement benefitting
the parcel of Owned Property; access to the property is provided by
paved public right-of-way with adequate curb cuts available; and
there is no pending or threatened termination of the foregoing access
rights;
(x) except for matters or conditions which would not
reasonably, individually or in the aggregate, have a Material Adverse
Effect on the Company, all improvements and buildings on the Owned
Property are in good repair (reasonable wear and tear excepted) and
are safe for occupancy and use, free from termites or other
wood-destroying organisms; the roofs thereof are watertight; and the
structural components and systems (including plumbing, electrical, air
conditioning/heating, and sprinklers) are in good working order and
adequate for the use of such Owned Property in the manner in which
presently used; and
(xi) there are no service contracts, management
agreements or similar agreements which affect the parcels
-18-
19
of Owned Property, except as set forth on Schedule 3.14(a).
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements ("Leases") to which the Company or any of its
subsidiaries is a party (copies of which have previously been furnished to
Republic), in each case, setting forth (A) the lessor and lessee thereof and
the date and term of each of the Leases, (B) the legal description, including
street address, of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), to the knowledge of the Company and Xxxxx, all
of which are within the property set-back and building lines of the respective
property. The Leases are in full force and effect and have not been amended
except as set forth on Schedule 3.14(b), and to the knowledge of the Company
and Xxxxx, no party thereto is in default or breach under any such Lease. To
the knowledge of the Company and Xxxxx, no event has occurred which, with the
passage of time or the giving of notice or both, would cause a material breach
of or default under any of such Leases. To the knowledge of the Company and
Xxxxx, there is no breach or anticipated breach by any other party to such
Leases. Except as set forth on Schedule 3.14(b), with respect to each such
Leased Premises:
(i) The Company or a subsidiary thereof has valid
leasehold interests in the Leased Premises, free and clear of any
Liens, covenants and easements or title defects of any nature
whatsoever;
(ii) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company, theportions of the buildings
located on the Leased Premises that are used in the Company's business
are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Company's current
and reasonably anticipated normal business activities as conducted
thereat;
(iii) Each of the Leased Premises (a) has direct
access to public roads or access to public roads by means of a
perpetual access easement; and (b) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal
business activities as conducted at such parcel; and
(iv) Neither the Company nor its subsidiaries have
received notice of (a) any condemnation proceeding with respect to any
portion of the Leased Premises or any
-19-
20
access thereto; or (b) any special assessment which may affect any of
the Leased Premises.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except as set forth in Schedule 3.15(a), the Company
and its subsidiaries have good and marketable title to all of their Assets (as
hereinafter defined), free and clear of any Liens or restrictions on use. For
purposes of this Agreement, the term "Assets" means all of the properties and
assets of the Company and its subsidiaries, other than the Owned Properties and
the Leased Premises, whether personal or mixed, tangible or intangible,
wherever located.
(b) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company, theFixed Assets (as hereinafter defined)
currently in use or necessary for the business and operations of the Company
and its subsidiaries are in good operating condition, normal wear and tear
excepted. For purposes of this Agreement, the term "Fixed Assets" means all
vehicles, machinery, equipment, tools, supplies, leasehold improvements,
furniture and fixtures used by or located on the premises of the Company and
its subsidiaries or set forth on the Current Balance Sheet or acquired by the
Company or its subsidiaries since the date of the Current Balance Sheet.
Schedule 3.15 lists the vehicles owned, leased or used by the Company and its
subsidiaries, setting forth the make, model, description of body and chassis,
vehicle identification number, and year of manufacture, and for each vehicle,
whether it is owned or leased, and if owned, the name of any lienholder and the
amount of the lien, and if leased, the name of the lessor and the general terms
of the lease, and, whether owned or leased.
3.16 COMPLIANCE WITH LAWS.
(a) The Company and each of its subsidiaries is and has
been in material compliance with all laws, regulations and orders applicable to
it, its business and operations (as conducted by it now and in the past), the
Assets, the Owned Properties and the Leased Premises and any other properties
and assets (in each case owned or used by it now or in the past) the
noncompliance of with which could have a Material Adverse Effect on the
Company. Except as set forth on Schedule 3.16 or other Schedules to this
Agreement, neither the Company nor any of its subsidiaries has been cited,
fined or otherwise notified of any asserted past or present failure to comply
with any laws, regulations or orders and no proceeding with respect to any such
violation is pending or, to the knowledge of the Company and Xxxxx, threatened.
-20-
21
(b) Neither the Company, nor any of its subsidiaries,
nor any of their employees or agents, has made any payment of funds in
connection with the business of the Company which is prohibited by law, and no
funds have been set aside to be used in connection with the business of the
Company for any payment prohibited by law.
(c) The Company and each of its subsidiaries is and at
all times has been in full compliance with the terms and provisions of the
Immigration Reform and Control Act of 1986, as amended (the "Immigration Act").
With respect to each Employee (as defined in 8 C.F.R. 274a.1(f)) of the Company
and each of its subsidiaries for whom compliance with the Immigration Act by
the Company as employer is required, the Company has made available to Republic
a true, accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained by the Company or its subsidiaries
pursuant to the Immigration Act. Neither the Company nor any of its
subsidiaries has been cited, fined, served with a Notice of Intent to Fine or
with a Cease and Desist Order, nor has any action or administrative proceeding
been initiated or, to the Company and Xxxxx'x knowledge, threatened against the
Company or its subsidiaries by reason of any actual or alleged failure to
comply with the Immigration Act.
(d) Neither the Company nor any of its subsidiaries is
subject to any Contract, decree or injunction in which the Company is a party
which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of each
of the employees of the Company and each of its subsidiaries. Neither the
Company nor any of its subsidiaries is a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and there has
been no effort by any labor union during the 24 months prior to the date hereof
to organize any employees of the Company or its subsidiaries into one or more
collective bargaining units. There is no pending or to the knowledge of the
Company and Xxxxx threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company or its subsidiaries or
which may interfere with their continued operation. Neither the Company or its
subsidiaries nor any agent, representative or employee of the Company or its
subsidiaries has within the last 24 months committed any unfair labor practice
as defined in the National Labor Relations Act, as amended, and there is no
pending or, to the knowledge of the Company and Xxxxx, threatened charge or
complaint against the Company or its subsidiaries by or with the National Labor
Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the
-21-
22
employees of the Company or its subsidiaries during the 24 months prior to the
date hereof. Neither the Company nor any Shareholder has received notice that
any executive or key employee or group of employees has any plans to terminate
his, her or their employment with the Company or its subsidiaries as a result
of the Merger or otherwise. Schedule 3.17 contains detailed information about
each contract, agreement or plan of the following nature, whether formal or
informal, and whether or not in writing, to which the Company or its
subsidiaries is a party or under which the Company or its subsidiaries has an
obligation: (i) employment agreements, (ii) employee handbooks, policy
statements and similar plans, (iii) noncompetition agreements and (iv)
consulting agreements. The Company and each of its subsidiaries has complied
in all material respects with applicable laws, rules and regulations relating
to employment, civil rights and equal employment opportunities, including but
not limited to, the Civil Rights Act of 1964, the Fair Labor Standards Act, and
the Americans with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a
list setting forth each employee benefit plan or arrangement of the Company and
each of its subsidiaries, including but not limited to employee pension benefit
plans, as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), multiemployer plans, as defined in Section
3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of
ERISA, deferred compensation plans, stock option plans, bonus plans, stock
purchase plans, hospitalization, disability and other insurance plans,
severance or termination pay plans and policies, whether or not described in
Section 3(3) of ERISA, in which employees, their spouses or dependents, of the
Company participate ("Employee Benefit Plans") (true and accurate copies of
which, together with the most recent annual reports on Form 5500 and summary
plan descriptions with respect thereto, were furnished to Republic).
(b) Compliance with Law. With respect to each Employee
Benefit Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no actions, suits, claims or disputes are pending, or threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) to the knowledge of
the Company and Xxxxx, there are no facts which could give rise to any material
liability in the event of any such investigation, claim, action, suit, audit,
review, or other proceeding; (v) all material reports, returns, and similar
documents required to be filed with any governmental agency or distributed to
any plan participant have
-22-
23
been duly or timely filed or distributed; and (vi) no "prohibited transaction"
has occurred within the meaning of the applicable provisions of ERISA or the
Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a) (i) the
Internal Revenue Service has issued a favorable determination letter, true and
correct copies of which have been furnished to Republic, that such plans are
qualified and exempt from federal income taxes; (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs; (iii) no such plan has been amended in a manner that would
require security to be provided in accordance with Section 401(a)(29) of the
Code; (v) no reportable event (within the meaning of Section 4043 of ERISA) has
occurred, other than one for which the 30-day notice requirement has been
waived; and (v) as of the Effective Date, the present value of all liabilities
that would be "benefit liabilities" under Section 4001(a)(16) of ERISA if
benefits described in Code Section 411(d)(6)(B) were included will not exceed
the then current fair market value of the assets of such plan (determined using
the actuarial assumptions used for the most recent actuarial valuation for such
plan); (vi) except as disclosed on Schedule 3.18, all contributions to, and
payments from and with respect to such plans, which may have been required to
be made in accordance with such plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code, have been timely made; (vii) all such
contributions to the plans, and all payments under the plans (except those to
be made from a trust qualified under Section 401(a) of the Code) and all
payments with respect to the plans (including, without limitation, PBGC and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
Current Balance Sheet or are disclosed on Schedule 3.18.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of the
Company and its subsidiaries have been timely paid; (ii) the Company and its
subsidiaries have not incurred and are not expected to incur, directly or
indirectly, any withdrawal liability under ERISA with respect to any such plan
(whether by reason of the transactions contemplated by the Agreement or
otherwise); (iii) Schedule 3.18 sets forth (A) the withdrawal liability under
ERISA to each MPPA Plan, (B) the date as of which such amount was calculated,
and (C) the method for determining the withdrawal liability; and (iv) no such
plan is (or is expected to be) insolvent or in reorganization and no
-23-
24
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, exists or is expected to exist with
respect to any such plan.
(e) Welfare Plans. Other than as disclosed in Schedule
3.18, (i) the Company and its subsidiaries are not obligated under any employee
welfare benefit plan as described in Section 3(1) of ERISA ("Welfare Plan"),
whether or not disclosed in Schedule 3.18, to provide medical or death benefits
with respect to any employee or former employee of any of the Company, its
subsidiaries or their predecessors after termination of employment; (ii) the
Company and each of its subsidiaries has complied in all material respects with
the notice and continuation coverage requirements of Section 4980B of the Code
and the regulations thereunder with respect to each Welfare Plan that is, or
was during any taxable year of the Company for which the statute of limitations
on the assessment of federal income taxes remains, open, by consent or
otherwise, a group health plan within the meaning of Section 5000(b)(1) of the
Code, and (iii) there are no reserves, assets, surplus or prepaid premiums
under any Welfare Plan which is an Employee Benefit Plan. The consummation of
the transactions contemplated by this Agreement will not entitle any individual
to severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
(f) Controlled Group Liability. The Company, or any
entity that would be aggregated with the Company under Code Section 414(b),
(c), (m) or (o): (i) has not ever terminated or withdrawn from an employee
benefit plan under circumstances resulting (or expected to result) in liability
to the Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the
employee benefit plan is funded, or any employee or beneficiary for whose
benefit the plan is or was maintained (other than routine claims for benefits);
(ii) has no assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has not failed to pay
premiums to the PBGC when due; (iv) is not subject to (or expected to be
subject to) an excise tax under Code Section 4971; (v) has not engaged in any
transaction which would give rise to liability under Section 4069 or Section
4212(c) of ERISA; or (vi) has not violated Code Section 4980B or Section 601
through 608 of ERISA.
(g) Other Liabilities. Except as set forth on Schedule
3.18, (i) none of the Employee Benefit Plans obligates the Company or any of
its subsidiaries to pay separation, severance, termination or similar benefits
solely as a result of any transaction contemplated by this Agreement or solely
as a result of a "change of control" (as such term is defined in Section 280G
of the Code), (ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals for
all periods ending prior to or as
-24-
25
of the Effective Date shall have been made or properly accrued on the Current
Balance Sheet or will be properly accrued on the books and records of the
Company as of the Effective Date, and (iii) none of the Employee Benefit Plans
has any unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of the Company.
3.19 TAX MATTERS. Except as set forth in Schedule 3.19 hereto,
all Tax Returns required to be filed prior to the date hereof with respect to
the Company and each of its subsidiaries or any of their income, properties,
franchises or operations have been filed, each such Tax Return has been
prepared in substantial compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects. All Taxes due
and payable by or with respect to the Company and each of its subsidiaries
shown on the Tax Returns has been paid or are accrued on the Current Balance
Sheet or will be accrued on the books and records of the Company as of the
Closing. Except as set forth in Schedule 3.19 hereto: (i) with respect to each
taxable period of the Company and its subsidiaries, either such taxable period
has been audited by the relevant taxing authority or the time for assessing or
collecting Taxes with respect to each such taxable period has closed and such
taxable period is not subject to review by any relevant taxing authority; (ii)
no deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by any taxing
authority against the Company or its subsidiaries; (iii) the Company and each
of its subsidiaries have not consented to extend the time in which any Taxes
may be assessed or collected by any taxing authority; (iv) the Company and each
of its subsidiaries have not requested or been granted an extension of the time
for filing any Tax Return to a date later than the Effective Time; (v) there is
no action, suit, taxing authority proceeding, or audit or claim for refund now
in progress, pending or, to the knowledge of the Company and Xxxxx, threatened
against or with respect to the Company or its subsidiaries regarding Taxes;
(vi) the Company and each of its subsidiaries has not made an election or filed
a consent under Section 341(f) of the Code (or any corresponding provision of
state, local or foreign law) on or prior to the Effective Time; (vii) there are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the Company or its subsidiaries; (viii) the Company and each of
its subsidiaries will not be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Effective Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Effective Time or (B) as a
result of any "closing agreement," as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from
-25-
26
any taxable period (or portion thereof) beginning after the Effective Time;
(ix) the Company and its subsidiaries have not been a member of an affiliated
group (as defined in Section 1504 of the Code) or filed or been included in a
combined, consolidated or unitary income Tax Return; (x) neither the Company
nor any of its subsidiaries is a party to or bound by any tax allocation or tax
sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (xiii) the Company and each
of its subsidiaries has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provision of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xiv) no claim has ever been
asserted against the Company in writing by a taxing authority in a jurisdiction
where the Company or its subsidiaries do not file Tax Returns that the Company
or such subsidiaries is or may be subject to Taxes assessed by such
jurisdiction; and (xv) the Company and each of its subsidiaries has no
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xvi)
true, correct and complete copies of all income and sales Tax Returns filed by
or with respect to the Company and each of its subsidiaries for the past three
years have been furnished or made available to Republic; (xvii) the Company and
each of its subsidiaries will not be subject to any Taxes for the period ending
at the Effective Time for any period for which a Tax Return has not been filed
imposed pursuant to Section 1374 or Section 1375 of the Code (or any
corresponding provision of state, local or foreign law).
3.20 INSURANCE. The Company and each of its subsidiaries is
covered by valid, outstanding and enforceable policies of insurance issued to
it or them by reputable insurers covering its or their properties, assets and
business against risks of the nature normally insured against by corporations
in the same or similar lines of business and in coverage amounts typically and
reasonably carried by such corporations (the "Insurance Policies"). Such
Insurance Policies are in full force and effect, and all premiums due thereon
have been paid. As of the Effective Time, each of the Insurance Policies will
be in full force and effect. None of the Insurance Policies will lapse or
terminate as a result of the transactions contemplated by this Agreement. The
Company and each of its subsidiaries have complied with the provisions of such
Insurance Policies in all material respects. Schedule 3.20 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Republic) and (ii) a
detailed description of each pending claim under any of the Insurance Policies
for an amount in excess of $10,000 that relates to loss or damage to the
properties, assets or businesses of the Company or its subsidiaries. To the
-26-
27
knowledge of the Company and Xxxxx, the Company and its subsidiaries have not
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
3.21 RECEIVABLES. Except as set forth in Schedule 3.21:(i) all
of the Receivables (as hereinafter defined) are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business
of the Company and its consolidated subsidiaries; and (ii) all of the
Receivables are good and collectible receivables, without setoff or
counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the Current Balance Sheet as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business consistent with past
practice. For purposes of this Agreement, the term "Receivables" means all
receivables of the Company and its consolidated subsidiaries, including all
trade account receivables arising from the provision of services, sale of
inventory, notes receivable, and insurance proceeds receivable.
3.22 LICENSES AND PERMITS. The Company and its subsidiaries
possess all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "Permits") for their business and
operations, including with respect to the operation of each of the Owned
Properties and Leased Premises except where the failure to obtain any such
Permits would not have a Material Adverse Effect on the Company. To the
knowledge of the Company and Xxxxx, all such Permits are valid and in full
force and effect, the Company and each of its subsidiaries is in compliance
with their requirements in all material respects, and no proceeding is pending
or, to the knowledge of the Company and Xxxxx, threatened to revoke or amend
any of them. None of such Permits is or will be materially impaired or
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
3.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company and its subsidiaries
in the manner in which and to the extent to which such business is currently
being conducted. No current supplier to the Company or its subsidiaries of
items essential to the conduct of their business has, to the knowledge of the
Company and Xxxxx, threatened to terminate its business relationship with the
Company or such subsidiary for any reason. Except as set forth on Schedule
3.23, to the knowledge of the Company and Xxxxx, the Company and its
subsidiaries have no direct or indirect interest in any customer, supplier or
competitor of the Company or its subsidiaries, nor in any person from whom or
to whom the Company or its subsidiaries leases real or personal property.
-27-
28
Except as set forth on Schedule 3.23, to the knowledge of Company and Xxxxx, no
officer, director or shareholder of the Company or its subsidiaries, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with the Company or its subsidiaries or has any interest in any
property used by the Company or its subsidiaries.
3.24 INTELLECTUAL PROPERTY. To the knowledge of the Company and
Xxxxx, the Company and each of its subsidiaries has full legal right, title and
interest in and to all trademarks, servicemarks, tradenames, copyrights,
know-how, patents, trade secrets, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the
conduct of its business (the "Intellectual Property"). To the knowledge of the
Company and Xxxxx, the conduct of the Company's business as presently conducted
and the unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or, to the knowledge of the
Company and Xxxxx, threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Contract
to which the Company and each of its subsidiaries is a party or by which the
Company or its subsidiaries or their properties and assets are bound and which
is material to the business, assets or properties of the Company or its
subsidiaries (the "Designated Contracts"), true and correct copies of which
have been made available to Republic. The copy of each Designated Contract
supplied by the Company to Republic is a true and complete copy of the document
it purports to represent and reflects all amendments thereto made through the
date of this Agreement. Except as set forth on Schedule 3.25, neither the
Company nor any of its subsidiaries has violated any of the material terms or
conditions of any Designated Contract or any term or condition which would
permit termination or material modification of any Designated Contract, and all
of the covenants to be performed by any other party thereto have been fully
performed and there are no claims for breach or indemnification or notice of
default or termination under any Designated Contract. Except as set forth on
Schedule 3.25, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a material default by the Company
or its subsidiaries under any Designated Contract, and no such event has
occurred which constitutes or would, to the knowledge of the Company and Xxxxx,
constitute a material default
-28-
29
by any other party. Neither the Company nor any of its subsidiaries is subject
to any liability or payment resulting from renegotiation of amounts paid it
under any Designated Contract. As used in this Section, Designated Contracts,
subject to the materiality standard set forth in the first sentence of this
Section 3.25, shall include, without limitation, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional
sale or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligations to any other Person, or letters of intent or
commitment letters with respect to same; (b) contracts obligating the Company
or any of its subsidiaries to provide products or services for a period of one
year or more, excluding standard waste collection and disposal contracts
entered into in the ordinary course of business without material modification
from the preprinted forms used by the Company or its subsidiaries in the
ordinary course of their business; (c) leases of real property, and leases of
personal property not cancelable without penalty on notice of sixty (60) days
or less or calling for payment of an annual gross rental exceeding Twenty-Five
Thousand Dollars ($25,000.00); (d) distribution, sales agency or franchise or
similar agreements, or agreements providing for an independent contractor's
services, or letters of intent with respect to same; (e) employment agreements,
management service agreements, consulting agreements, confidentiality
agreements, non-competition agreements and any other agreements between the
Company and any employee, officer or director of the Company or its
subsidiaries; (f) licenses, assignments or transfers of trademarks, trade
names, service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (g) any
Contract relating to pending capital expenditures by the Company or its
subsidiaries; and (h) other material Contracts or understandings, irrespective
of subject matter and whether or not in writing, not entered into in the
ordinary course of business by the Company or any of its subsidiaries and not
otherwise disclosed on the Schedules.
3.26 CUSTOMER LISTS AND RECURRING REVENUE. Schedule 3.26 is a
true, correct and complete list of all material existing municipal, county or
city or other large customers (collectively, the "Material Customers") of the
Company and its subsidiaries who have entered into valid and enforceable
long-term (i.e., more than one year) waste collection and disposal, recycling
or other franchises or agreements with the Company or one or more of its
subsidiaries. True, correct and complete copies of such franchises and
agreements and any ordinances relating thereto have been furnished by the
Company to Republic. Other than the Material Customers listed on Schedule
3.26, no customer of the Company or its subsidiaries as of the date of this
Agreement accounts for more than 1% of the Company's consolidated annual
revenue. Schedule
-29-
30
3.26 sets forth each Material Customer's name, address, account number, term of
franchise or agreement, billing cycle, type of service and rates charged.
3.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring the Republic Shares hereunder
for his own account for investment and not with a view to, or for the sale in
connection with, any distribution of any of the Republic Shares, except in
compliance with applicable state and federal securities laws. Each of the
Shareholders has had the opportunity to discuss the transactions contemplated
hereby with Republic and has had the opportunity to obtain such information
pertaining to the Republic Companies as has been requested, including but not
limited to filings made by Republic with the SEC under the Exchange Act. Each
of the Shareholders is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act, and has such knowledge and
experience in business or financial matters that he is capable of evaluating
the merits and risks of an investment in the Republic Shares.
3.28 BUSINESS LOCATIONS. As of the date hereof, the Company and
its subsidiaries have no office or place of business other than as identified
on Schedules 3.14(a) and 3.14(b) and the Company's principal place of business
and chief executive office (as such terms are used in subsection 9-401 of the
Uniform Commercial Code as enacted in the State of North Carolina as of the
date hereof) are indicated on Schedule 3.14(a) or 3.14(b), and, except for
equipment leased to customers in the ordinary course of business, all locations
where the equipment, inventory, chattel paper and books and records of the
Company and its subsidiaries are located as of the date hereof are fully
identified on Schedules 3.14(a) and 3.14(b).
3.29 NAMES; PRIOR ACQUISITIONS. All names under which the
Company and each of its subsidiaries does business as of the date hereof are
specified on Schedule 3.30. Except as set forth on Schedule 3.30, neither the
Company nor any of its subsidiaries has changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive office,
within the past three years.
3.30 NO COMMISSIONS. Neither the Company nor any Shareholder has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
-30-
31
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Except as set forth on Schedule 4.1, the Company covenants and agrees that,
between the date of this Agreement and the Effective Time, the business of the
Company and its consolidated subsidiaries shall be conducted only in, and the
Company and its consolidated subsidiaries shall not take any action except in,
the ordinary course of business, consistent with past practice. The Company
and its subsidiaries shall use their reasonable best efforts, subject to the
covenants of this Article IV, to preserve intact their business organization,
to keep available the services of their current officers, employees and
consultants and to preserve their present relationships with customers,
suppliers and other persons with which they have significant business
relations. By way of amplification and not limitation, except as contemplated
by this Agreement, the Company and each of its consolidated subsidiaries shall
not, between the date of this Agreement and the Effective Time, directly or
indirectly, do or propose or agree to do any of the following without the prior
written consent of Republic:
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with
past practice;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, for cash
or shares of stock), by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions
-31-
32
of capital or property transfer, or, except in the ordinary course of
business, consistent with past practice, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances other than in the
ordinary course of business, or (iii) enter into any Contract other
than in the ordinary course of business, consistent with past
practice;
(f) increase the compensation payable or to become
payable to its officers or employees other than the ordinary course of
business consistent with past practice, or, except as presently bound
to do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its directors, officers
or other employees, or establish, adopt, enter into or amend or take
any action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date hereof in the ordinary course of business and
consistent with past practice;
(i) materially increase or decrease prices charged to
its customers, except for previously announced price changes, or take
any other action which might reasonably result in any material
increase in the loss of customers through non-renewal or termination
of service contracts or other causes; or
-32-
33
(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III materially untrue or
incorrect except in the ordinary course of business.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby.
5.2 COVENANTS OF THE COMPANY. The Shareholders shall cause the
Company to comply with all of the covenants of the Company under this
Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with
the other in the preparation and filing of all forms, notifications, reports
and information, if any, required or reasonably deemed advisable pursuant to
any law, rule or regulation or the rules of any exchange on which the Republic
Common Stock is listed or the NASDAQ National Market in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly (and in no event later than ten (10) business days following
the date hereof) its respective filings, if any, and thereafter make any other
required submissions, under the HSR Act, with respect to the transactions
contemplated hereby, and (ii) use its reasonable best efforts to take, or cause
to be taken, all appropriate actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, using its best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of any
Governmental Authority and parties to Contracts with the Company or its
subsidiaries as are necessary for the consummation of the transactions
contemplated hereby. Each of parties shall make on a prompt and timely basis
all governmental or regulatory notifications and filings required to be made by
it for the consummation of the transactions contemplated hereby. The parties
also agree to use all reasonable best efforts to defend all
-33-
34
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby and to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. The fees
and expenses incurred in responding to any injunction brought by a governmental
authority under the HSR Act shall be paid by Republic.
5.5 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, the Company and each of its subsidiaries shall (and shall cause
its and their directors, officers, employees, auditors, counsel and agents) to
afford Republic and Republic's officers, employees, auditors, counsel and
agents reasonable access at all reasonable times to its and their properties,
offices, and other facilities, to its and their officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Republic of the occurrence or non-occurrence of any event of
which the Company becomes aware or has knowledge which would likely cause any
representation or warranty contained herein to be materially untrue or
inaccurate, or any covenant, condition, or agreement contained herein not to be
complied with or satisfied in all material respects.
5.7 TAX TREATMENT. Republic, the Company and the Shareholders
will use their respective best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and will not
take any action after the Merger is effected to cause the Merger to lose its
tax-free status. All parties hereto agree to file the Plan of Merger with
their respective federal income tax returns for the year in which the Merger is
effective, and to comply with the reporting requirements of Treasury Regulation
1.368-3.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party hereto
or their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Republic may make such public
disclosure which it believes in good faith to be required by law or by the
terms of any listing agreement with a securities exchange (in which case
Republic will consult with the other parties prior to making such disclosure).
-34-
35
5.9 NO OTHER DISCUSSIONS. The Company, the Shareholders, and
their respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company or any or all of its subsidiaries
(whether by merger, consolidation, sale of stock or otherwise) or (ii) enter
into any agreement or commitment (whether or not binding) with respect to any
of the foregoing transactions. The Company will immediately notify Republic if
any third party attempts to initiate any solicitation, discussion or
negotiation with respect to any of the foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that the Republic
Companies will realize the benefits of the Merger and in consideration of being
employed by the Company and/or Republic after completion of the Merger, Xxxxx
agrees with the Republic Companies that he will not for a period of three years
from the Effective Time:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any
business activity in the State of North Carolina which is directly or
indirectly in competition with the business conducted by the Company
and its subsidiaries at the Effective Time; provided, however, that,
the beneficial ownership of less than five percent (5%) of the shares
of stock of any corporation having a class of equity securities
actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person which
is a customer of the Company or its subsidiaries at the Effective Time
to patronize any business directly or indirectly in competition with
the business conducted by the Company or its subsidiaries; (ii)
canvass or solicit from any Person which is a customer of the Company
or its subsidiaries, any such competitive business, or (iii) request
or advise any Person which is a customer of the Company or its
subsidiaries at the Effective Time to withdraw, curtail or cancel any
such customer's business with the Company, its subsidiaries or their
successors;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to
employ, any person who was employed by either the Company or its
subsidiaries at or within
-35-
36
six months prior to the Effective Time, or in any manner seek to
induce any such person to leave his or her employment except any such
person who was discharged by the Company or voluntarily terminated
employment with the Company;
(d) directly or indirectly, at any time following the
Effective Time, in any way utilize, disclose, copy, reproduce or
retain in his possession any of the Company's proprietary rights or
records, including, but not limited to, the Company's and its
subsidiaries' customer lists.
Xxxxx agrees and acknowledges that the restrictions contained in this Section
5.10 are reasonable in scope and duration and are necessary to protect Republic
after the Effective Time. If any provision of this Section as applied to any
party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section will cause
irreparable damage to Republic and upon breach of any provision of this
Section, Republic shall be entitled to injunctive relief, specific performance
or other equitable relief; provided, however, that, this shall in no way limit
any other remedies which Republic may have (including, without limitation, the
right to seek monetary damages).
5.11 ENVIRONMENTAL ASSESSMENT. Republic, at its sole expense,
shall be entitled to have conducted prior to Closing an environmental
assessment of the Owned Properties and Leased Premises (hereinafter referred to
as "Environmental Assessment"). The Environmental Assessment may include, but
not be limited to, a physical examination of the Owned Property or Leased
Premises, and any structures, facilities, or equipment located thereon, soil
samples, ground and surface water samples, storage tank testing, review of
pertinent records, documents, and Licenses of the Company and its subsidiaries.
The Company shall provide Republic or its designated agents or consultants with
the access to such property which Republic, its agents or consultants require
to conduct the Environmental Assessment. If the results of the Environmental
Assessment are not satisfactory to Republic in its sole discretion, then
Republic may elect not to close. Republic shall provide promptly the Company
and the Shareholders with copies of the Environmental Assessment. The contents
of the Environmental
-36-
37
Assessment and all related documents or findings shall automatically become
part of the Company's and Xxxxx'x exception list to Section 3.13. If the
Environmental Assessment identifies environmental contamination which requires
remediation or further evaluation under the Environmental, Health, and Safety
Laws, then Republic may elect to not close the transactions contemplated by
this Agreement, or Republic may elect to close in which case the Company shall
undertake and complete the required remediation and further evaluation that may
be required by a Governmental Authority, and a reasonable estimate, based on a
report of a mutually agreeable engineering or environmental remediation firm,
of such costs of remediation and evaluation shall be deducted from the
consideration granted in determining the Conversion Amount under Section 1.4.
Republic's failure or decision not to conduct any such Environmental Assessment
shall not affect any representation or warranty of the Shareholders under this
Agreement. The amount of the deduction set forth above shall not exceed the
maximum amount of Indemnifiable Damages set forth in Section 9.1(a) hereof.
5.12 TRADING IN REPUBLIC COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time, neither the Company nor the Shareholders (nor any Affiliates
thereof) will directly or indirectly purchase or sell (including short sales)
any shares of Republic Common Stock in any transactions effected on the Nasdaq
Stock Market, the Toronto Stock Exchange or otherwise.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions, any or all of which may be waived in whole or in part by
the Republic Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the Company and Xxxxx
contained in this Agreement shall be true and correct in all material respects
at and as of the Effective Time with the same force and effect as though made
at and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Each of the Company and Xxxxx shall have
performed and complied in all material respects with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Effective Time. Each of the Company and Xxxxx shall have delivered to the
Republic
-37-
38
Companies a certificate, dated as of the Effective Time, duly signed (in the
case of the Company, by its Chief Executive Officer and Chief Financial
Officer), certifying that such representations and warranties are true and
correct and that all such obligations have been performed and complied with in
all material respects.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change of the Company, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of the Company, and (iii)
none of the properties and assets of the Company shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Change on the Company, and there shall have been delivered to
the Republic Companies a certificate to that effect, dated the Effective Time
and signed by or on behalf of the Company and Xxxxx.
6.3 CORPORATE CERTIFICATE. The Company and Xxxxx shall have
delivered to the Republic Companies and each of its consolidated subsidiaries
(i) copies of the articles of incorporation and bylaws of the Company and each
of its consolidated subsidiaries as in effect immediately prior to the
Effective Time, (ii) copies of resolutions adopted by the Board of Directors
and shareholders of the Company authorizing the transactions contemplated by
this Agreement, and (iii) a certificate of good standing of the Company and
each of its consolidated subsidiaries issued by the Department of the Secretary
of State of the State of North Carolina and each other state in which the
Company is qualified to do business as of a date not more than ten days prior
to the Effective Time, certified in each case as of the Effective Time by the
Secretary of the Company as being true, correct and complete.
6.4 OPINION OF COUNSEL. The Republic Companies shall have
received an opinion dated as of the Effective Time from counsel for the Company
and the Shareholders, in form and substance acceptable to the Republic
Companies, to the effect that:
(i) the Company and each of its subsidiaries is
a corporation duly organized and existing and in good standing under
the laws of the State of North Carolina and has the corporate power
and authority to carry on the business now conducted by it and to own
or lease the properties now owned or leased by it;
(ii) The Company has obtained all necessary
authorizations and consents of its Board of Directors and the
Shareholders to effect the Merger;
-38-
39
(iii) All issued and outstanding shares of capital
stock of the Company and its subsidiaries are owned of record as set
forth on Schedule 3.5 hereto;
(iv) Except as set forth in Schedule 3.12, to the
knowledge of such counsel, there is no litigation, proceeding or
investigation pending or threatened which would result in any Material
Adverse Change in the properties, business or prospects or in the
condition of the Company, or which questions the validity of this
Agreement;
(v) This Agreement is a valid and binding
obligation of the Company and the Shareholders, and enforceable
against the Company and the Shareholders in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally (except that such counsel does not opine
as to Section 5.10 of this Agreement).
6.5 CONSENTS. The Company shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company or its subsidiaries from any
person from whom such consent or waiver is required under any Designated
Contract as of a date not more than ten days prior to the Effective Time, or
who, as a result of the transactions contemplated hereby, would have such
rights to terminate or modify such Designated Contracts, either by the terms
thereof or as a matter of law.
6.6 SECURITIES LAWS. Republic shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of the Republic Shares, in connection with the
transactions contemplated hereby.
6.7 POOLING LETTERS. Republic shall have received from Xxxxxx,
Xxxxx & Associates, P.A., independent certified public accountants for the
Company, a letter dated the Effective Time, in form and substance acceptable to
Republic, confirming that, to their knowledge after due and diligent inquiry of
management, there have been no transactions or events with respect to the
Company which would, and the structure of the Company and the Shareholders,
would not, proscribe the transactions contemplated hereby, if consummated, from
being considered as a pooling of interests combination. Republic shall have
received from Xxxxxx Xxxxxxxx LLP, a letter dated the Effective Time,
confirming that the transactions contemplated hereby, if consummated, can
properly be accounted for as a pooling of interests combination in accordance
with GAAP and the criteria of Accounting Principles Board Opinion No. 16 and
the regulations of the SEC.
-39-
40
6.8 UNDERTAKINGS. At or prior to the Closing, the Shareholders
shall have delivered to Republic a letter agreement relating to Rule 145 under
the Securities Act and "pooling of interests" criteria, in form and substance
satisfactory to the Republic Companies.
6.9 COMPANY STOCK. At the Closing, each of the Shareholders
shall have delivered to the Republic Companies all certificates evidencing the
Company Stock held by him or her or duly executed stock powers with indemnity.
6.10 STOCK POWERS. At the Closing, Xxxxx shall have delivered to
Republic, for use in connection with the Pledged Shares, as hereinafter
defined, ten stock powers executed in blank.
6.11 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
and which, in the reasonable judgment of Republic, makes it inadvisable to
proceed with the Merger and other transactions contemplated hereby.
6.12 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting
period shall have expired or been terminated.
6.13 BOARD APPROVAL. The Board of Directors of Republic shall
have authorized and approved this Agreement, the Merger and transactions
contemplated hereby and thereby.
6.14 EMPLOYMENT. Xxxxx and G. Xxxx Xxxxxxx shall have agreed to
become employees of Republic, or remain employees of the Company, on terms and
conditions acceptable to Republic.
6.15 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG THE COMPANY,
XXXX X. XXXXX AND XXXX XXXXX XXXXXX. Prior to the Closing, the Company shall
have closed the purchase of a certain parcel of real property located in
Hickory, North Carolina from Xxxx X. Xxxxx and Xxxx Xxxxx XxXxxx, pursuant to
the terms of that certain real estate purchase contract to be entered into
among the Company, Xxxx X. Xxxxx, and Xxxx Xxxxx XxXxxx.
6.16 REAL ESTATE PURCHASE AND SALE AGREEMENTS AMONG REPUBLIC,
XXXXX AND XXXXXX X. XXXXX. At the Closing, Republic shall close the purchase
of certain parcels of real property located in Morganton, North Carolina,
Boone, North Carolina and Atlanta, Georgia, respectively, from Xxxxx and Xxxxxx
X. Xxxxx, pursuant to the terms of those certain real estate purchase contracts
to be entered into among Republic, Xxxxx and Xxxxxx X. Xxxxx.
-40-
41
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions, any or all of which may be waived in whole or in part
by the Company and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of each of the Republic
Companies contained in this Agreement shall be true and correct at and as of
the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. Each of the Republic Companies shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Effective Time. Each of the
Republic Companies shall have delivered to the Company a certificate, dated as
of the Effective Time, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the Shareholders
certificates representing the Republic Shares required to be issued to them
hereunder.
7.3 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
and which in the judgment of Xxxxx makes it inadvisable to proceed with the
Merger and other transactions.
7.4 HSR ACT WAITING PERIOD. Any applicable HSR Act Waiting
Period shall have expired or been terminated.
7.5 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG THE COMPANY,
XXXX X. XXXXX AND XXXX XXXXX XXXXXX. Prior to the Closing, the Company shall
have closed the purchase of a certain parcel of real property located in
Hickory, North Carolina from Xxxx X. Xxxxx and Xxxx Xxxxx XxXxxx, pursuant to
the terms of that certain real estate purchase contract to be entered into
among the Company, Xxxx X. Xxxxx and Xxxx Xxxxx XxXxxx.
-41-
42
7.6 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG REPUBLIC,
XXXXX AND XXXXXX X. XXXXX. At the Closing, Republic shall close the purchase
of certain parcels of real property located in Morganton, North Carolina,
Boone, North Carolina and Atlanta, Georgia, respectively, from Xxxxx and Xxxxxx
X. Xxxxx, pursuant to the terms of those certain real estate purchase contracts
to be entered into among Republic, Xxxxx and Xxxxxx X. Xxxxx.
7.7 KEY PERSONNEL. H. Xxxxx Xxxxxxxx shall be a member of
Republic's Board of Directors as of the Effective Time.
7.8 NO CASH DIVIDENDS. Republic shall not have declared or paid
any cash dividends with respect to its Common Stock between the date hereof and
the Effective Time.
7.9 NO STOCK ADJUSTMENTS. Republic shall not have declared or
caused to occur a stock split or stock dividend with respect to the Common
Stock of Republic without proportionately adjusting the number of Republic
shares to be issued pursuant to the Merger.
7.10 CAPITALIZATION. Republic shall not have amended its First
Amended and Restated Certificate of Incorporation to change its capitalization
from that described in Section 2.6 herein.
7.11 OPINION OF COUNSEL. The Company and the Shareholders shall
have received an opinion dated as of the Effective Time from counsel for
Republic, in the form and substance acceptable to the Company and the
Shareholders to the effect that:
(i) Republic is a corporation duly organized and
existing and in good standing under the laws of the State of Delaware
and has the necessary corporate power and authority to carry on the
business now conducted by it and to own or lease the properties now
owned by it;
(ii) Republic has obtained all necessary
authorizations and consents of its Board of Directors to effect the
Merger;
(iii) To the knowledge of such counsel, there is no
litigation, proceeding or investigation pending or threatened which
would result in any Material Adverse Change in the properties,
business or condition of Republic or which questions the validity of
this Agreement; and
(iv) This Agreement is a valid and binding obligation
of the Republic Companies in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or
-42-
43
other laws affecting the enforcement of creditors' rights generally.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Republic Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR REPUBLIC SHARES; FILING OF
REGISTRATION STATEMENT. Republic will utilize its reasonable best efforts to
cause, as soon as practicable following the Effective Time, a registration
statement to be filed under the Securities Act or an existing registration
statement to be amended for the purpose of registering the Republic Shares for
resale by a Holder thereof (the "Registration Statement"). For purposes of
this Article, a person is deemed to be a "Holder" of Republic Shares whenever
such person is the record owner of Republic Shares. Republic will use its
reasonable best efforts to have the Registration Statement become effective and
cause the Republic Shares to be registered under the Securities Act, and
registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable.
8.2 EXPENSES OF REGISTRATION. Republic shall pay all expenses
incurred by Republic in connection with the registration, qualification and/or
exemption of the Republic Shares, including any SEC and state securities law
registration and filing fees, printing expenses, fees and disbursements of
Republic's counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration Statement or prospectuses contained
therein. Republic shall not, however, be liable for any sales, broker's or
underwriting commissions upon sale by any Holder of any of the Republic Shares.
8.3 FURNISHING OF DOCUMENTS. Republic shall furnish to the
Holders such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as the Holders may reasonably request in order to facilitate the
offering of the Republic Shares.
8.4 AMENDMENTS AND SUPPLEMENTS. Republic shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of
such amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Republic Shares is required
to be
-43-
44
delivered under the Securities Act, any event shall have occurred as a result
of which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Republic shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
8.5 DURATION. Republic shall maintain the continual
effectiveness of the Registration Statement for a period of three (3) years
following the Effective Date or until such earlier time as Republic reasonably
determines, based on an opinion of counsel, (a copy of which shall be provided
to the Holders), that the Holders will be eligible to sell all of the Shares
then owned by the Holders without the need for continued registration of the
shares, in the three month period immediately following the termination of the
effectiveness of the Registration Statement.
8.6 FURTHER INFORMATION. If Republic Shares owned by a Holder
are included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.7 INDEMNIFICATION.
(a) Republic will indemnify and hold harmless the
Holders and each person, if any, who controls a Holder within the meaning of
the Securities Act, from and against any and all losses, damages, liabilities,
costs and expenses to which the Holders or any such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that, Republic will
not be liable in any such case to the extent that any such loss, claim, damage,
liability, cost or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished
-44-
45
by or on behalf of any Holder or such controlling person in writing
specifically for use in the preparation thereof.
(b) Each of the Holders, individually and not jointly,
will indemnify and hold harmless Republic and each person, if any, who controls
Republic within the meaning of the Securities Act, from and against any and all
losses, damages, liabilities, costs and expenses to which Republic or any such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by or on behalf of any Holder specifically for use in the
preparation thereof; provided, however, that the indemnification obligations of
each Holder hereunder shall be limited to the amount of gross proceeds received
by such Holder from the sale of Republic Shares pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 8.7 notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have hereunder unless the
indemnifying party has been materially prejudiced thereby nor will such failure
to so notify the indemnifying party relieve it from any liability which it may
have to any indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After
-45-
46
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party.
(d) In the event any of the Republic Shares are sold by
any Holder or Holders in an underwritten public offering consented to by
Republic, Republic shall provide indemnification to the underwriters of such
offering and any person controlling any such underwriter on behalf of the
Holder or Holders making the offering; provided, however, that Republic shall
not be required to consent to any such underwriting or to provide such
indemnification in respect of the matters described in the proviso to the first
sentence of Section 8.7(a).
8.8 ADDITIONAL UNDERTAKINGS.
(a) In order to facilitate the resale by Holders of Republic
Shares during any period in which the Registration Statement shall not be
effective, Republic shall use its best efforts to take all action and file with
the SEC such information as the SEC may require as a condition to the
availability of Rule 144 or Rule 145 under the Securities Act (or any successor
exemptive rule hereafter in effect).
(b) During the three (3) years following the Effective Date,
Republic shall use its best efforts to maintain its listing on The Nasdaq Stock
Market or other nationally recognized securities exchange.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY XXXXX TO INDEMNIFY. Xxxxx agrees to indemnify
and hold Republic harmless from and against the aggregate of all Indemnifiable
Damages (as defined below).
(a) For purposes of this Agreement, "Indemnifiable
Damages" means, without duplication, the aggregate of all
-46-
47
expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and
expenses) incurred or suffered by Republic in excess of $500,000.00,
to the extent (i) resulting from any breach of a representation or
warranty made by the Company or Xxxxx in or pursuant to this
Agreement, except for matters disclosed to Republic prior to Closing
pursuant to Section 5.6 herein, (ii) resulting from any breach of the
covenants or agreements made by the Company or Xxxxx in this
Agreement, or (iii) resulting from any inaccuracy in any certificate
delivered by the Company or any Shareholder pursuant to this
Agreement. The total Indemnifiable Damages shall not exceed Seven
Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) in
the aggregate.
(b) Without limiting the generality of the foregoing,
with respect to the measurement of Indemnifiable Damages, Republic
shall have the right to be put in the same financial position as it
would have been in had each of the representations and warranties of
the Company and the Shareholders been true and correct.
(c) Each of the representations and warranties made by
the Company and Xxxxx in this Agreement or pursuant hereto shall
survive for a period of one year after the Effective Time,
notwithstanding any investigation at any time made by or on behalf of
Republic and upon expiration of such one year period, such
representations and warranties shall expire except the representations
and warranties of the Shareholders contained in Sections 3.1, 3.2,
3.3, 3.4, and 3.5 shall not expire but shall continue indefinitely.
No claim for the recovery of Indemnifiable Damages may be asserted by
Republic against Xxxxx after such representations and warranties shall
thus expire, provided, however, that claims for Indemnifiable Damages
first asserted within the applicable period shall not thereafter be
barred.
9.2 SECURITY FOR XXXXX'X INDEMNIFICATION OBLIGATION. As
security for the agreement by Xxxxx to indemnify and hold Republic harmless as
described in Section 9.1, at the Closing, Xxxxx shall deliver to and Republic
shall set aside and hold certificates representing five percent (5%) of the
shares of Republic Common Stock to be issued pursuant to Section 1.4 hereunder
(the "Pledged Shares") for a period not to exceed one year from the Effective
Date. There shall also be deposited with Republic, subject to the terms of
this Section 9.2, all shares of Republic Common Stock issued to Xxxxx with
respect to the Pledged Shares as a result of any stock dividend or stock split.
The Pledged Shares and all stock issued or paid upon the Pledged Shares and
proceeds thereof
-47-
48
are hereinafter referred to as the "Collateral." Except with respect to shares
transferred pursuant to the right of setoff referred to below (and in the case
of such shares, until the same are transferred), all Pledged Shares shall be
deemed to be owned by Xxxxx and Xxxxx shall be entitled to vote the same and to
receive all cash dividends paid upon same.
(a) Republic may make a claim for payment of
Indemnifiable Damages and may set off against the Pledged Shares any
Indemnifiable Damages for which Xxxxx may be responsible pursuant to
this Agreement, subject, however, to the following terms and
conditions:
(1) Republic shall give written notice to Xxxxx
of any claim for Indemnifiable Damages, which notice shall
set forth (i) the amount of Indemnifiable Damages which
Republic claims to have sustained, and (ii) the basis of the
claim therefore, and (iii) copies of all documentation and
other evidence in support of such claim;
(2) Unless the Indemnifiable Damages arise from
a claim of a third party, with respect to which Xxxxx has
elected to assume the defense of and pay any resulting
liability, judgment or settlement thereunder, such set off
shall be affected on the later to occur of the expiration of
thirty (30) days from the delivery of such notice (the
"Notice of Contest Period") or, if such claim is contested,
the date the dispute is resolved, in accordance with
paragraph (3) below;
(3) If, prior to the expiration of the Notice
of Contest Period, the Shareholders shall notify Republic in
writing of an intention to dispute the claim and if such
dispute is not resolved within 30 days after expiration of
such period (the "Resolution Period"), then Republic shall
submit such dispute to arbitration. The arbitration shall
be conducted in Ft. Lauderdale, Florida by a committee of
three arbitrators (one appointed by Xxxxx, one appointed by
Republic and one appointed by the two arbitrators so
appointed), which shall be appointed within 60 days after
the expiration of the Resolution Period. The arbitrators
shall permit discovery in accordance with the Federal Rules
of Civil Procedure and shall abide by the rules of the
American Arbitration Association. Their decision shall be
made within 45 days of being appointed and shall be final
and binding on all parties;
-48-
49
(4) If the judgment of the arbitrators is
adverse to Xxxxx, the amount thereof shall be paid by Xxxxx
within ten (10) days of the written decision of the
arbitrators. In the event Xxxxx does not pay within such
ten day period, then Republic shall within five (5) days
thereafter, set off against such portion of the Collateral
as shall have an aggregate value (based upon the sale price
per share as determined pursuant to Section 1.4 hereof)
equal to the amount of the final judgment of the
arbitrators.
(b) Subject to applicable accounting, securities, tax
and other legal requirements, Xxxxx may at any time instruct Republic
to sell some or all of the Pledged Shares and the proceeds thereof
shall be held as substitute collateral for the Pledged Shares. Xxxxx
may direct that such proceeds be reinvested in investment grade
securities in his name subject to the security interest contemplated
hereby.
(c) The Republic Companies agree to release the
Collateral from the security interest created in this Section 9.2 no
later than the first anniversary of the Effective Time and the
Republic Companies agree to promptly deliver to Xxxxx all certificates
evidencing any Pledged Shares then held by them unless there then
remains unresolved any claim for Indemnifiable Damages or other
damages hereunder as to which notice has been given, in which event
any Collateral remaining on deposit after such claim shall not be
returned to Xxxxx until after the time of satisfaction.
(d) The remedies provided for in this Section 9.2 shall
be in addition to and not in lieu of any other remedies available to
the Republic Companies under this Agreement; provided however,
following consummation of the Merger, a claim for Indemnifiable
Damages pursuant to this Article IX shall be Republic's sole and
exclusive remedy for a breach of the representations and warranties
contained herein, and in consideration of such limitation, Xxxxx
agrees to waive any and all rights of contribution or other claims he
may have against the Company with respect to the breach of any of the
Company's representations and warranties.
9.3 ADJUSTMENT TO MERGER CONSIDERATION. All setoffs of Pledged
Shares for Indemnifiable Damages made pursuant to this Article IX shall be
treated as adjustments to the consideration granted in determining the
Conversion Amount under Section 1.4.
-49-
50
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after Effective Time of the Republic Shares:
10.1 DISPOSITION OF SHARES. Xxxxx represents and warrants on
behalf of himself and XxXxxx, that the shares of Republic Common Stock being
acquired by them hereunder are being acquired and will be acquired for their
own respective accounts and will not be sold or otherwise disposed of, except
pursuant to (a) an exemption from the registration requirements under the
Securities Act, which does not require the filing by Republic with the SEC of
any registration statement, offering circular or other document, in which case,
the Shareholders shall first supply to Republic an opinion of counsel (which
counsel and opinions shall be satisfactory to Republic) that such exception is
available, or (ii) an effective registration statement filed by Republic with
the SEC under the Securities Act.
10.2 LEGEND. The certificate representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 (D) PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE, AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE SECURITIES AND EXCHANGE
COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.
-50-
51
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business which
change (or effect) individually or in the aggregate, is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, business.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate,
-51-
52
trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"Republic Shares" means the shares of Republic Common Stock
which the Shareholders receive in connection with the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
-52-
53
11.3 KNOWLEDGE. Whenever any representation or warranty of an
individual is expressly qualified by reference to knowledge, the "knowledge" so
referred to shall be deemed to be such individual's actual knowledge after
reasonable inquiry under the circumstances. Whenever any representation and
warranty of a corporation is expressly qualified by reference to knowledge, the
"knowledge" so referred to shall be deemed to be the actual knowledge, after
reasonable inquiry under the circumstances, of its officers, directors and
employees, including those officers, directors and employees having authority
over or responsibility for the subject matter of such representation or
warranty, at the time such representation or warranty is made.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by any party at any time prior to the Closing Date
if there shall be a pending or threatened action or proceeding before
any court or other governmental body which shall seek to restrain,
prohibit or invalidate the transactions contemplated hereby, and
which, in the reasonable judgment of such party, makes it inadvisable
to proceed with the transactions contemplated by this Agreement.
(c) by Republic in the event of a material breach by the
Company or by Xxxxx of any provision of this Agreement, or by Xxxxx in
the event of a material breach by the Republic Companies of any
provision of this Agreement; or
(d) if the Closing shall not have occurred by April 30,
1996.
12.2 EFFECT OF TERMINATION. Except as provided in Article IX, in
the event of termination of this Agreement pursuant to Section 12.1, this
Agreement and the Plans of Merger shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
-53-
54
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO ANY OF THE REPUBLIC COMPANIES TO:
Republic Waste Industries, Inc.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, President
Telecopy: (000) 000-0000
WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANY OR THE SHAREHOLDERS TO:
Garbage Disposal Service, Inc.
X.X. Xxx 0000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxx X. Xxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
Xxxxxxx, Xxxxxx & Xxxxx
Xxxxx 000, Fidelity Professional Building
00 Xxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire
-54-
55
understanding of the parties in respect of its subject matter and supersedes
all prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The Exhibits and Schedules
constitute a part hereof as though set forth in full above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any party without the prior written consent of
the other parties.
13.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by
-55-
56
the words "without limitation." Time shall be of the essence in this
Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
-56-
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC WASTE INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxxx, Executive
Vice President
RWI/GDS MERGERSUB, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxxx, Executive
Vice President
GARBAGE DISPOSAL SERVICE, INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Xxx X. Xxxxx, President
/s/ Xxx X. Xxxxx
--------------------------------------------
Xxx X. Xxxxx, individually
/s/ Xxx X. Xxxxx
--------------------------------------------
Xxx X. Xxxxx, Attorney-In-Fact for
Xxxx Xxxxx XxXxxx, individually
The undersigned hereby join in this Agreement for the limited purpose
of agreeing that they will comply with those sections which are applicable to
such parties including, without limitation, Sections 6.15, 6.16, 7.5 and 7.6 of
this Agreement.
/s/ Xxx X. Xxxxx
--------------------------------------------
Xxx X. Xxxxx, Attorney-In-Fact for
Xxxx X. Xxxxx, individually
/s/ Xxx X. Xxxxx
--------------------------------------------
Xxx X. Xxxxx, Attorney-In-Fact for
Xxxxxx X. Xxxxx, individually
-57-
