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Exhibit 10.1
ACQUISITION AGREEMENT
Dated as of August 11, 1999, by and among
Waste Connections, Inc.
WCI Acquisition Corporation I
International Environmental Industries, Inc.
X. X. Xxxxxxx, Jr.
Ralner Corporation
XXX Enterprises, Ltd.
and
International Environmental Industries Equipment Company, L.P.
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of August 11, 1999, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), WCI
Acquisition Corporation I, a Nevada corporation ("MERGER SUB"), International
Environmental Industries, Inc., a Nevada corporation (the "CORPORATION"), X. X.
Xxxxxxx, Jr. ("J.O.", the "OWNER" or, with respect to Section 11, one of the
"Owners"), Ralner Corporation, a Texas corporation ("RALNER"), XXX Enterprises,
Ltd., a Texas limited partnership ("XXX"), AND International Environmental
Industries Equipment Company, LP, a Texas limited partnership ("EQUIPMENT" and,
collectively with XXX, the "PARTNERSHIPS").
WHEREAS, the Corporation owns all of the issued and outstanding capital
stock of Rubbish Removal Incorporated, a Texas corporation ("RRI"), and RRI owns
all of the issued and outstanding capital stock of El Paso Disposal, Inc., a
Texas corporation ("EL PASO DISPOSAL"), Camino Real Environmental Center, Inc.,
a New Mexico corporation ("CREC"), Southwest Disposal Corporation, a New Mexico
corporation ("SDC"), and seventy percent (70%) of the issued and outstanding
capital stock of Medical Technologies of New Mexico, Inc., a New Mexico
corporation ("MTI," and collectively with RRI, El Paso Disposal, CREC and SDC,
the "SUBSIDIARIES");
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WHEREAS, the Corporation, the Subsidiaries (other than MTI) and the
Partnerships collectively are engaged in the collection and transportation of
solid waste and recyclables and own certain real estate, including a landfill,
located in and around El Paso, Texas and Las Cruces, New Mexico, and are engaged
in other related activities;
WHEREAS, J.O. owns all of the issued and outstanding capital stock of
Ralner (the "RALNER STOCK");
WHEREAS, Ralner is the sole general partner and J.O. is the sole limited
partner of XXX, and Ralner is the sole general partner and J.O. is the sole
limited partner of Equipment;
WHEREAS, WCI will contribute as a capital contribution to Merger Sub
sufficient cash and shares of WCI Common Stock, $0.01 par value (the "WCI
STOCK"), to consummate the Merger (as defined below) contemplated by this
Agreement in exchange for all of the outstanding capital stock of the Merger
Sub;
WHEREAS, the Merger Sub will use such cash and shares of WCI Stock to
effect the merger of the Corporation into Merger Sub in accordance with the
terms and subject to the conditions of this Agreement (the "MERGER") in a
transaction that qualifies as a tax-free reorganization under section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, prior to the Closing Date (as defined in Section 1.7), J.O.
will contribute to the Corporation all of the outstanding capital stock of
Ralner so that the Corporation will own 100% of the outstanding stock of the
sole general partner of each Partnership as of the Closing Date;
WHEREAS, prior to the Closing Date, the Owner will transfer all of his
limited partnership interests in XXX and Equipment to the Corporation, so that
the Corporation will be the sole limited partner of each Partnership as of the
Closing Date;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. MERGER AND STOCK AND INTERESTS PURCHASE
1.1 THE MERGER. In accordance with the General Corporation Law of Nevada
(the "NEVADA Law"), at the Effective Time (as defined in Section 1.2), the
Corporation shall be merged with and into Merger Sub in a transaction intended
to qualify as a tax-free reorganization under Section 368(a) of the Code.
Immediately following the Merger, the separate existence of the Corporation
shall cease and Merger Sub (the "SURVIVING CORPORATION") shall continue to exist
under and be governed by the Nevada Law as a direct, wholly-owned subsidiary of
WCI.
1.2 EFFECTIVE TIME. As soon as practicable after the date of this
Agreement (the "SIGNING DATE") and the satisfaction or waiver of all of the
conditions to the Merger at the Closing (as defined in Section 1.7), the parties
shall cause the Merger to be consummated by causing Articles of Merger (the
"FILED ARTICLES"), substantially in the form of Exhibit 1.2, to be
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executed and filed in accordance with the relevant provisions of the Nevada Law.
The Merger shall become effective at the time specified in the Filed Articles
(the "EFFECTIVE TIME").
1.3 EFFECTS OF THE MERGER. The Merger shall have the effect set forth in
Section 92A.250 of the Nevada Law. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Corporation shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Corporation shall become the debts,
liabilities and duties of the Surviving Corporation in the same manner as if the
Surviving Corporation had itself incurred them. All rights of creditors and all
liens upon the property of the Corporation shall thereafter be preserved
unimpaired.
1.4 ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.
The Articles of Incorporation of the Merger Sub, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law. The Bylaws of the Merger Sub in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation until amended in accordance
with the provisions thereof and applicable law.
1.5 DIRECTORS. The directors of the Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and shall
hold office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
1.6 OFFICERS. The officers of the Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation and shall hold
office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.
1.7 CLOSING TIME AND PLACE. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated herein (the "CLOSING")
shall take place as promptly as practicable (but in any event within five
business days) following the date on which the last of the conditions set forth
in Sections 6 and 7 is fulfilled or waived, or on such other date as WCI and the
Corporation shall agree (the "CLOSING DATE"). The Closing shall take place at
the law offices of Scott, Hulse, Marshall, Feuille, Finger & Xxxxxxxx, P.C.,
11th Floor, Texas Xxxxxxxx Xxxx Xxxxxxxx, Xx Xxxx, Xxxxx 00000. At the Closing,
WCI, the Merger Sub, the Corporation and the Owner shall deliver to each other
the documents, instruments and other items described in Section 8 of this
Agreement. At the election of WCI and the Corporation, the Closing of this
transaction may take place through an exchange of consideration and documents
using overnight courier service or facsimile.
1.8 SELLING PARTIES AND ENTITIES. The Corporation, the Subsidiaries, the
Partnerships, the Owner and Ralner are sometimes referred to herein collectively
as the "SELLING PARTIES" AND INDIVIDUALLY WITHOUT DESIGNATION AS A "SELLING
PARTY" AND THE CORPORATION, THE SUBSIDIARIES, THE PARTNERSHIPS AND RALNER ARE
sometimes referred to herein collectively as the "SELLING ENTITIES" AND
INDIVIDUALLY WITHOUT DESIGNATION AS A "SELLING ENTITY".
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2. CONSIDERATION; CONVERSION OF SECURITIES
2.1 CONSIDERATION. The aggregate consideration (the "AGGREGATE
CONSIDERATION") for the Merger is cash and the number of shares of WCI Stock
EQUAL TO the sum of (i) one hundred thirty six million dollars ($136,000,000),
(ii) minus the Closing Date Debt (as defined in Section 3.22(a)), and (iii) plus
or minus, as the case may be, the amount by which the Closing Date Current
Assets (as defined in Section 3.22(b)) are greater or less than the Closing Date
Current Liabilities (as defined in Section 3.22(b)). The number of shares of WCI
Stock to be issued shall be determined by dividing the amount allocated to WCI
Stock on Schedule 2.2 by $26.00 (the "MERGER PRICE"). The Merger Price and the
number of shares of WCI Stock to be DELIVERED AFTER THE EFFECTIVE TIME shall be
appropriately adjusted in the event of any change in WCI Stock between the
Signing Date and the Effective Time, including without limitation any stock
dividend, stock split, reverse stock split, recapitalization, reorganization,
merger or consolidation. WCI shall not be obligated to issue any fractional
shares of WCI Stock, but instead the Owner shall be paid cash in lieu of any
fractional share equal to the Merger Price multiplied by the fraction of a share
of WCI Stock that would otherwise have been issued to such Owner. WCI shall use
its reasonable efforts to cause the shares of WCI Stock to be covered by one or
more Registration Statements on Form S-4 (the "REGISTRATION STATEMENTS"), each
of which is to be effective under the Securities Act of 1933, as amended (the
"ACT"), as of the Signing Date, so that such shares shall be freely tradable,
subject to the restrictions set forth in Section 9.7. WCI shall maintain the
Registration Statements effective for resales of the WCI Stock received by the
Owner for a period of two (2) years after the Effective Time pursuant to the
terms of the Common Stock Agreement (as hereinafter defined).
2.2 ALLOCATION OF AGGREGATE CONSIDERATION. The portion of the Aggregate
Consideration paid in cash and in WCI Stock in the Merger is set forth on
Schedule 2.2, which will be revised at the Closing to reflect estimated
adjustments pursuant to Sections 2.1(ii) and 2.1(iii). Final adjustments will be
made pursuant to Sections 2.1(ii) and 2.1(iii) within ninety (90) days after the
Closing and additional shares of Merger Stock will be issued to the Owner, or
the Owner will return shares of Merger Stock, as necessary to effect such final
adjustments. The shares of WCI Stock issued in connection with the Merger is
sometimes referred to herein as the "MERGER STOCK," AND THE AMOUNT OF CASH
ALLOCATED TO THE MERGER IS SOMETIMES REFERRED TO HEREIN AS THE "Merger Cash."
2.3 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Subject to Section 2.7, the aggregate shares of the
Corporation's Stock issued and outstanding immediately prior to the
Effective Time (the "Corporation's Stock") shall be converted into the
Merger Cash and the Merger Stock as provided in Schedule 2.2.
(b) All of the shares of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall remain
outstanding common stock of Merger Sub and shall continue as the
outstanding common stock of the Surviving Corporation.
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2.4 EXCHANGE OF MERGER CASH AND CERTIFICATES.
(a) After the Effective Time, WCI shall deliver to the Owner in
accordance with this Section 2 Merger Cash and certificates representing
the shares of the Merger Stock issuable pursuant to Section 2.3 in
exchange for issued and outstanding shares of the Corporation's Stock as
contemplated by that Section. The Merger Stock into which the
Corporation's Stock shall be converted pursuant to the Merger shall be
deemed to have been issued at the Effective Time. WCI will take
appropriate steps to allow J.O. to trace the shares of WCI Stock he
receives in exchange for the shares of the Corporation's Stock J.O.
acquired from X.X. Xxxx.
(b) At or after the Closing as provided in Section 8.2(a), each
Owner shall deliver to WCI certificates evidencing the shares of the
Corporation's Stock owned by such Owner that are to be converted
pursuant to Section 2.3 into the right to receive Merger Cash and Merger
Stock (the "CORPORATION'S CERTIFICATES"). Promptly after the Effective
Time, each Owner who has surrendered the Corporation's Certificates
registered in the name of such Owner to WCI, together with such
documents as WCI shall reasonably request, shall be entitled to receive
in exchange therefor Merger Cash and certificates representing that
number of shares (rounded down to the nearest whole number) of Merger
Stock which such Owner has the right to receive pursuant to this Section
2 (together with any cash in lieu of fractional shares of Merger Stock
pursuant to Section 2.1). The Corporation's Certificates so surrendered
shall be cancelled immediately after the Effective Time. Until
surrendered as contemplated by this Section 2.4, the Corporation's
Certificates shall be deemed cancelled as of the Effective Time and at
any time after the Effective Time shall be deemed to represent only the
right to receive upon such surrender (i) the certificates representing
shares of Merger Stock as contemplated by this Section 2.4, (ii) a
portion of the Merger Cash as contemplated by this Section 2.4, (iii) a
cash payment in lieu of any fractional shares of Merger Stock as
contemplated by Section 2.1 and (iv) any dividends or distributions with
a record date after the Effective Time theretofore paid or payable with
respect to Merger Stock as contemplated by Section 2.5.
2.5 DISTRIBUTIONS. Dividends and other distributions declared or made
after the Effective Time with respect to Merger Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Corporation's Certificates with respect to the Merger Stock represented thereby.
2.6 NO FURTHER OWNERSHIP RIGHTS IN THE CORPORATION'S STOCK. All Merger
Cash and shares of Merger Stock issued upon the surrender for exchange of shares
of the Corporation's Stock in accordance with the terms hereof (including any
cash paid pursuant to Section 2.1 or 2.5) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of the Corporation's
Stock, and, at and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of the Corporation's Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, a
Corporation's Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Section 2.
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2.7 LOST CERTIFICATES. In the event the Corporation's Certificates shall
have been lost, stolen or destroyed, on the making of an affidavit of that fact
by the Owner claiming such certificate to be lost, stolen or destroyed, WCI will
issue in exchange for such lost, stolen or destroyed certificate the shares of
Merger Stock (together with any cash pursuant to Section 2.1 and any dividends
or distributions with respect thereto pursuant to Section 2.5) deliverable in
respect thereof as determined in accordance with Section 2.4. When authorizing
such payment in exchange for any lost, stolen or destroyed Corporation's
Certificate, the Owner to whom the Merger Stock is to be issued shall, as a
condition precedent to the issuance thereof, give WCI a bond satisfactory to WCI
in such sum as WCI may direct or otherwise indemnify WCI in a manner reasonably
satisfactory to WCI against any claim that may be made against WCI or the
Surviving Corporation with respect to the Certificate alleged to have been lost,
stolen or destroyed.
2.8 EXCLUDED ASSETS. Prior to the Closing, the assets described on
Schedule 2.8 shall be distributed to X.X. X.X. agrees to lease the facilities
described on Schedule 2.8 under "Leased Facilities" to the Corporation until the
second anniversary of the Closing Date at a rate of $1.00 per year.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION, RALNER, THE OWNER AND
THE PARTNERSHIPS
The Corporation, Ralner, the Owner and the Partnerships, jointly and
severally, with respect to the Corporation, the Subsidiaries, Ralner and the
Partnerships; and J.O., with respect to Ralner, (collectively, the "REPRESENTING
PARTIES"), represent and warrant that each of the following representations and
warranties is true and correct as of the date of this Agreement (the "SIGNING
DATE") and will be true and correct as of the Closing Date.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Corporation is duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Each of RRI, El Paso Disposal and Ralner is duly organized, validly
existing and in good standing under the laws of the State of Texas. Each of
CREC, SDC and MTI is duly organized, validly existing and in good standing under
the laws of the State of New Mexico. Each of the Corporation, the Subsidiaries
and Ralner has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. Each of the
Corporation, the Subsidiaries and Ralner is licensed or qualified to do business
as a foreign corporation in the states listed on Schedule 3.1. None of the
Corporation, the Subsidiaries or Ralner is required to be qualified or licensed
to conduct business as a foreign corporation in any other jurisdiction. Each of
the Partnerships is duly organized, validly existing and in good standing under
the laws of the State of Texas. Each of the Partnerships has full partnership
power and authority to own and lease its properties and to carry on its business
as now conducted. Each of the Partnerships is licensed or qualified to do
business as a foreign partnership in the states listed on Schedule 3.1. Each of
the Partnerships is not required to be qualified or licensed to conduct business
as a foreign partnership in any other jurisdiction.
3.2 CAPITALIZATION AND PARTNERSHIP INTERESTS. Schedule 3.2 sets forth
the authorized and outstanding capital of the Corporation, the Subsidiaries and
Ralner, the names, addresses and social security numbers or taxpayer
identification numbers of the record and
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beneficial owners thereof, the number of shares so owned, the names, addresses
and social security numbers or taxpayer identification numbers of the partners
of each of the Partnerships and the percentage ownership interests of each
partner. All of the issued and outstanding shares of the capital stock of the
Corporation, the Subsidiaries and Ralner are, as of the Signing Date, owned of
record and beneficially by the persons and entities set forth in Schedule 3.2,
and will be as of the Effective Time, owned of record and beneficially by the
persons or entities set forth on Schedule 3.2, and are as of the Signing Date,
and will be as of the Effective Time, free and clear of all liens, security
interests, encumbrances, restrictions, pledges and claims of every kind except
as set forth in Schedule 3.2. Each share of the capital stock of the
Corporation, the Subsidiaries and Ralner is duly and validly authorized and
issued, fully paid and nonassessable, and was not issued in violation of any
preemptive rights of any past or present Owner of the Corporation, the
Subsidiaries or Ralner. Except as set forth on Schedule 3.2, no option, warrant,
call, conversion right or commitment of any kind (including any of the foregoing
created in connection with any indebtedness of the Corporation, the Subsidiaries
or Ralner) exists that obligates the Corporation, the Subsidiaries or Ralner to
issue any of its authorized but unissued capital stock or other equity interest
or that obligates any Owner to transfer the Corporation's Stock, the Ralner
Stock or the capital stock of any of the Subsidiaries to any person or entity,
and no commitment of any kind exists that obligates any partner of either of the
Partnerships to transfer its or his partnership interest to any person or
entity. The Corporation's Stock, the Ralner Stock and the capital stock of the
Subsidiaries were issued in compliance with all applicable federal and state
securities laws.
3.3 ASSETS NECESSARY TO CONDUCT BUSINESS. Upon consummation of the
Merger, WCI will acquire through Merger Sub all of the Corporation's Stock and
all of the assets of the Corporation and the Partnerships necessary to the
conduct of the business of the Corporation and the Partnerships as conducted on
the Signing Date and all assets owned, directly or indirectly, by the Owner and
used or involved in the business of collecting, transporting and disposing of
solid waste, operating solid waste transfer stations and recycling. None of the
Corporation or the Owner intends to take or, to the knowledge of the
Representing Parties, has taken or agreed to take, any action or has any
knowledge of any fact or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of section 368(a)
of the Code.
3.4 AUTHORITY FOR AGREEMENT AND FILED ARTICLES. The Corporation has
obtained the approval of the percentage of the holders of the outstanding
Corporation's Stock required by Section 92A.120 of the Nevada Law and the
Corporation and the Owner have full right, power and authority to enter into
this Agreement and the Filed Articles, if applicable, and to perform its or
their obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Filed Articles by the Corporation and the consummation of the
transactions contemplated hereby and thereby by the Corporation have been duly
authorized by the Corporation's Board of Directors. The execution and delivery
of this Agreement by Ralner and the consummation of the transactions
contemplated hereby by Ralner have been duly authorized by Ralner's Board of
Directors. The execution and delivery of this Agreement by the Partnerships has
been duly authorized by Ralner's Board of Directors and by all necessary
partnership action. This Agreement has been duly and validly executed and
delivered by the Corporation, the Owner, Ralner and the Partnerships, and when
executed and delivered at the Closing by the Corporation and the Owner, the
Filed Articles will have been duly and validly executed and delivered, and,
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subject to the due authorization, execution and delivery by WCI and the Merger
Sub, constitute, or in the case of the Filed Articles will constitute, the
legal, valid and binding obligations of the Corporation, the Owner, Ralner and
the Partnerships, as applicable, enforceable against the Corporation, the Owner,
Ralner and the Partnerships, as applicable, in accordance with their respective
terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5, the
execution and delivery by the Corporation, the Owner, Ralner and the
Partnerships of this Agreement and the Filed Articles, if applicable, and the
consummation by the Corporation, the Owner, Ralner and the Partnerships of the
transactions contemplated hereby and thereby will not:
(a) Result in the breach of any of the terms or conditions of,
or constitute a default under, or allow for the acceleration or
termination of, or in any manner release any party from any obligation
under, any mortgage, lease, note, bond, indenture, or material contract,
agreement, license or other instrument or obligation of any kind or
nature to which any of the Selling Parties is a party, or by which any
of the Selling Parties, or any of their assets, is or may be bound or
affected; or
(b) Violate any law or any order, writ, injunction or decree of
any court, administrative agency or governmental authority, or require
the approval, consent or permission of any governmental or regulatory
authority applicable to any of the Selling Parties; or
(c) Violate the Articles of Incorporation or Bylaws of the
Corporation or Ralner or violate the agreement of limited partnership of
either of the Partnerships.
3.6 SUBSIDIARIES. Schedule 3.6 lists any and all subsidiaries of the
Corporation and Ralner and any securities of any other corporation or any
securities or other interest in any other business entity owned by the
Corporation or Ralner or any of the Corporation's, the Subsidiaries' or Ralner's
subsidiaries.
3.7 FINANCIAL STATEMENTS. Attached as Schedule 3.7 are copies of
financial statements ("Financial Statements") for each Selling Entity's three
most recent fiscal years (or, in the case of Equipment, since inception) and
interim financial statements for each Selling Entity for the period ended June
30, 1999 (the "BALANCE SHEET DATE"). Such financial statements (other than the
Financial Statements of Equipment and the interim financial statements) have
been audited by PricewaterhouseCoopers LLP. The Financial Statements are correct
and complete and fairly present (i) the financial position of each Selling
Entity as of the respective dates of the balance sheets included in said
statements, and (ii) the results of operations for the respective periods
indicated. The Financial Statements have been prepared in accordance with
generally accepted accounting principles, applied consistently with prior
periods. Except to the extent reflected or reserved against in each Selling
Entity's balance sheets as of the Balance Sheet Date, or as disclosed on
Schedule 3.7 or Schedule 3.8, none of the Selling Entities had as of the Balance
Sheet Date, nor will any of the Selling Entities have as of the Closing Date,
any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due
other than liabilities
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incurred in the ordinary course of business since the Balance Sheet Date and
which are included as part of the Closing Date Current Liabilities.
3.8 LIABILITIES.
(a) Schedule 3.8(a) lists, as of close of the month prior to the
Signing Date, all fixed and uncontested liabilities of any kind,
character and description of each Selling Entity not described on
Schedule 3.8(d), whether reflected or not reflected on the Financial
Statements and whether accrued or absolute, and states as to each such
liability the amount of such liability and to whom payable. From the
close of the month prior to the Signing Date, liabilities have been
incurred by each Selling Entity only in the ordinary course of business
consistent with comparable prior periods.
(b) Schedule 3.8(b) lists, as of the Signing Date, all claims,
suits and proceedings which are pending against any of the Selling
Entities and, to the knowledge of the Representing Parties, all
contingent liabilities and all claims, suits and proceedings threatened
or anticipated against the Selling Entities. Schedule 3.8(b) includes a
summary description of each such liability, including, without
limitation, (i) the name of each court, agency, bureau, board or body
before which any such claim, suit or proceeding is pending, (ii) the
date such claim, suit or proceeding was instituted, (iii) the parties to
such claim, suit or proceeding, (iv) a brief description of the factual
basis alleged to underlie such claim, suit or proceeding, including the
date or dates of all material occurrences, and (v) the amount claimed
and other relief sought, together with copies of all material documents,
reports and other records relating thereto to the extent that they are
in the possession or control of any of the Representing Parties.
(c) Schedule 3.8(c) lists, to the extent not otherwise included
in Schedule 3.8(a), all mortgages, deed of trust, liens, claims and
encumbrances secured by or otherwise affecting any asset (including any
Asset) of the Selling Entities (including any Property (as defined in
Section 3.11(b)), including a description of the nature of such lien,
claim or encumbrance, the amount secured if it secures a liability, the
nature of the obligation secured, and the party holding such mortgages,
deed of trust, lien, claim or encumbrance.
(d) Schedule 3.8(d) lists, to the extent not otherwise included
in on Schedule 3.8(a) or (d), all real and personal property leasehold
interests to which any of the Selling Entities is a party as lessor or
lessee or, to the knowledge of the Representing Parties, affecting or
relating to any Property, and includes a description of the nature and
principal terms of such leasehold interest, including, without
limitation, the identity of the other party thereto, the location of the
real estate leased, the term of such leasehold interest (including
renewal options), the base rent and any additional rent owing thereunder
(including any adjustments thereto), security deposits, rights of first
offer or first refusal, purchase options, and restrictions on transfer.
All such leases are in full force and effect and binding upon the
parties thereto; none of the Selling Entities nor, to the knowledge of
the Representing Parties, any other party to such leases is in breach of
any of the provisions thereof. The landlord's interest in each such
lease has not been assigned to any third party nor, except as provided
in Schedule 3.11(b), has any such
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interest been mortgaged, pledged or hypothecated; and none of the
Selling Entities has assigned any such lease or sublet all or any part
of the Property that is the subject of any such lease.
Except as described on Schedule 3.8(a), (c) or (d), none of the Selling
Parties has made any payment or committed to make any payment since the Balance
Sheet Date on or with respect to any of the liabilities or obligations listed on
Schedule 3.8(a), (c) or (d) except periodic payments required to be made under
the terms of the agreements or instruments governing such obligations or
liabilities or made in the ordinary course of business.
3.9 ACCURATE AND COMPLETE RECORDS. Except as set forth on Schedule 3.9,
the corporate minute books, stock ledgers, books, ledgers, financial records and
other records of the Selling Entities:
(a) Have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) Have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) Are accurate and complete and reflect all material corporate
transactions authorized by the Board of Directors and/or shareholders of
the Corporation, the Subsidiaries and Ralner and all material
partnership transactions authorized by the general partner of each of
the Partnerships.
3.10 PERMITS AND LICENSES.
(a) Schedule 3.10(a) is a full and complete list, and includes
copies, of all material permits, licenses, franchises, and service
agreements pursuant to which each of the Selling Entities is authorized
to collect and haul industrial, commercial and residential solid waste
(the "COLLECTION FRANCHISES"), and of all other material permits,
licenses, fuel permits, zoning and land use approvals and
authorizations, including, without limitation, any conditional or
special use approvals or zoning variances, occupancy permits, and any
other similar documents constituting a material authorization or
entitlement or otherwise material to the operation of the business of
each Selling Entity (collectively the "GOVERNMENTAL PERMITS") owned by,
issued to, held by or otherwise benefiting the Selling Entities. The
status of the Governmental Permits related to the disposal areas owned
by the Selling Entities and, to the knowledge of the Representing
Parties, the status of the governmental permits related to the disposal
areas used but not owned by the Selling Entities, including, without
limitation, any conditions thereto and, if applicable, the expiration
dates thereof, are also described on Schedule 3.10(a). Except as set
forth on Schedule 3.10(a), all of the Collection Franchises and other
Governmental Permits listed on Schedule 3.10(a) are adequate for the
operation of the business of each of the Selling Entities and of each
Facility (as defined in Section 3.10(d)) as presently operated and are
valid and in full force and effect. All of said Collection Franchises
and other Governmental Permits and agreements have been duly obtained,
and there are no proceedings pending or, to the knowledge of the
Representing Parties, threatened which
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may result in the revocation, cancellation, suspension or adverse
modification of any of the same. None of the Representing Parties has
any knowledge of any reason why all such Collection Franchises and
Governmental Permits will not remain in effect for the period or term
stated therein, subject to the Surviving Corporation's and WCI's full
compliance therewith, after consummation of the transactions
contemplated hereby.
(b) Schedule 3.10(b) sets forth the name of any governmental
agency or other third party from whom the Selling Entities, Representing
Parties or WCI must obtain consent (the "REQUIRED GOVERNMENTAL
CONSENTS") in order to effect a direct or indirect transfer of the
Collection Franchises or other Governmental Permits required as a result
of the consummation of the transactions contemplated by this Agreement.
All such Required Governmental Consents will have been obtained prior to
Closing. Except for any filings required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX XXX"), the filing of the
Filed Articles with the Secretary of State of Nevada in connection with
the Merger and the Required Governmental Consents, no declaration,
filing or registration with, or notice to, or authorization, consent or
approval or permit of, any governmental or regulatory body or authority
is necessary for the execution and delivery of this Agreement or the
Filed Articles by the Corporation, the Owner, Ralner or the Partnerships
or the consummation by the Corporation, the Owner, Ralner or the
Partnerships of the transactions contemplated hereby or thereby.
(c) Schedule 3.10(c) includes (i) all notifications, reports,
permit and license applications (other than items included in Schedule
3.10(a)), engineering and geologic studies, and environmental impact
reports, tests or assessments (collectively, "RECORDS, NOTIFICATIONS AND
REPORTS") that are material to the operation of the business of each
Selling Entity, and (A) relate to the discharge or release of materials
into the environment and/or the handling or transportation of waste
materials or hazardous or toxic substances or otherwise relate to the
protection of the public health or the environment, or (B) were filed
with or submitted to appropriate governmental agencies during the 24
months prior to the Signing Date by the Selling Parties or their agents
with respect to the business of each Selling Entity, and (ii) all
material notifications from such governmental agencies to the Selling
Parties or their agents in response to or relating to any of such
Records, Notifications and Reports.
(d) Schedule 3.10(d) lists each facility owned, leased, operated
or otherwise used by a Selling Entity, the ownership, lease, operation
or use of which is being transferred to, assumed by or otherwise
acquired directly or indirectly by WCI pursuant to this Agreement (each,
a "FACILITY" and collectively, the "Facilities"). Except as otherwise
disclosed on Schedule 3.10(d):
(i) Each Facility owned by a Selling Entity or an Affiliate
(as defined in Section 3.13) of a Selling Party and leased to a
Selling Entity is fully licensed, permitted and authorized to
carry on its current business under all applicable federal,
state and local statutes, orders, approvals, zoning or land use
requirements, rules and regulations, and, none of such
Facilities or the current use thereof constitutes a
non-conforming use or is otherwise subject to any restrictions
regarding the operation, renovation or reconstruction thereof.
To the
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knowledge of the Representing Parties, no Facility that is
leased by a Selling Entity from a non-Affiliate or the current
use thereof constitutes a non-conforming use or is otherwise
subject to any restrictions regarding the operation, renovation
or reconstruction thereof.
(ii) There are no circumstances, conditions or reasons that
are likely to be the basis for revocation or suspension of any
Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility, and to the knowledge of the
Representing Parties, there are no circumstances, conditions or
reasons that are likely to be the basis for revocation or
suspension of any site assessment, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility leased by a Selling Entity
from a third party who is not an Affiliate of a Selling Party.
3.11 FIXED ASSETS.
(a) Schedule 3.11(a) lists, as of the Signing Date, all the
fixed assets (other than real estate) of the Selling Entities,
including, without limitation, identification of each vehicle by
description and serial number, identification of machinery, equipment
and general descriptions of parts, supplies and inventory. Attached to
Schedule 3.11(a) are titles and current registrations for each motor
vehicle described on Schedule 3.11(a). Except as described on Schedule
3.11(a), all of the Selling Entities' containers, vehicles, machinery
and equipment necessary for the operation of their businesses are free
of known defects, are in good and operable condition and all of the
motor vehicles and other rolling stock of the Selling Entities are in
compliance with all applicable laws, rules and regulations. All such
containers, vehicles, machinery and equipment are free of known defects
that would cause them to fail.
(b) Each parcel of real property owned or being purchased by
each Selling Entity (the "PROPERTY"), including the street address and
the legal description thereof, is listed on Schedule 3.11(b), and
attached to said Schedule 3.11(b) are copies of all deeds, outstanding
mortgages, other encumbrances (other than leases included on Schedule
3.8(d)) and any existing title insurance policies or lawyer's title
opinions relating to each Property, as well as a current commitment for
title insurance issued by a title insurance company satisfactory to WCI
with respect to each Property, together with copies of all of the title
exceptions referred to in each such commitment. Except as described on
Schedule 3.11(b), there are no material physical or mechanical defects
on any Property and each Facility is in good condition and repair.
3.12 TITLE TO ASSETS. Each Selling Entity has good, valid and marketable
title to all of its properties and assets, real, personal, and mixed, tangible
and intangible, actually used or necessary for the conduct of its business, free
of any encumbrance or charge of any kind except: (i) liens for current taxes not
yet due; (ii) minor imperfections of title and encumbrances, if any, that are
not substantial in amount, do not materially reduce the value or impair the use
of the property subject thereto, do not materially impair the value of any
Selling Entity, and have arisen only in the ordinary course of business and
consistent with past practice; and (iii) the liens
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identified on Schedules 3.8(a) and 3.8(c) (collectively, the "PERMITTED LIENS").
Except as described on Schedule 3.8(d), there are no leases, occupancy
agreements, options, rights of first refusal or any other agreements or
arrangements, either oral or written, that create or confer in any person or
entity the right to acquire, occupy or possess, now or in the future, any
Facility, any Property, or any portion thereof, or create in or confer on any
person or entity any right, title or interest therein or in any portion thereof.
3.13 RELATED PARTY TRANSACTIONS. Schedule 3.13 lists all accounts and
notes receivable of the Selling Entities from and advances to employees, former
employees, officers, directors, the Selling Entities and Affiliates of the
foregoing which have not been repaid. For purposes of this Agreement, the term
"Affiliate" means, with respect to any person, any person that directly or
indirectly through one or more intermediaries controls or has an ownership
interest in, or is controlled or owned in whole or in part by, or is under
common control or ownership in whole or in part with such person, and in the
case of a corporation includes its directors and officers, in the case of a
partnership includes its partners, in the case of individuals includes the
individual's spouse, father, mother, grandfather, grandmother, brothers,
sisters, children and grandchildren and in the case of a trust includes the
grantors, trustees and beneficiaries of the trust. Except as disclosed on
Schedule 3.13 or in the Financial Statements, none of the Owner, Ralner or their
respective Affiliates has entered into any transaction with or is a party to any
agreement, lease or other instrument with any of the Selling Entities. Except as
disclosed on Schedule 3.13 or in the Financial Statements, none of the Owner,
Ralner or their respective Affiliates owns any direct or indirect interest of
any kind in, or controls or is a director, officer, employee, shareholder or
partner of, or consultant or lender to or borrower from or has the right to
participate in the profits of, any person or entity that is a competitor,
supplier, customer, landlord, tenant, creditor or debtor of a Selling Entity.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists and includes copies of, all material
written contracts and agreements and written summaries of key terms of
all material oral agreements to which each Selling Entity is a party or
by which it or any of its property is bound (other than leases and
documents included with Schedules 3.8(a), 3.8(c) or 3.8(d)), including,
but not limited to, joint venture or partnership agreements, contracts
with any labor organizations, promissory notes, loan agreements, bonds,
mortgages, deeds of trust, liens, pledges, conditional sales contracts
or other security agreements. Except as disclosed on Schedule 3.14(a),
all such contracts and agreements included in Schedule 3.14(a) are in
full force and effect and binding upon the parties thereto. Except as
described or cross referenced on Schedule 3.14(a), none of the Selling
Entities or, to the knowledge of the Representing Parties, any other
parties to such contracts and agreements is in breach thereof, and none
of the parties has threatened to breach any of the material provisions
thereof or notified any of the Selling Parties of a default thereunder,
or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against any
Selling Entity, the result of which could materially adversely affect
such Selling Entity or its respective business or any Property,
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nor has any of the Selling Parties been notified that any such judgment,
order, writ, injunction or decree has been requested.
(c) Except for any consents and approvals listed on Schedule
3.14(c) and except for Required Governmental Consents, none of the
contracts and agreements described on Schedules 3.8(a), 3.8(c), 3.8(d)
or 3.14(a) and any of the judgments, orders, writs, injunctions or
decrees described on Schedule 3.14(b) requires notice to, or consent or
approval of, any agency or other third party to any of the transactions
contemplated hereby.
(d) Except as set forth on Schedule 3.14(d), no Selling Entity
is a party to any agreement that (i) purports to restrict or prohibit in
any respect such Selling Entity or any Affiliate of a Selling Entity
from, directly or indirectly, engaging in any business currently engaged
in by the Selling Entities, WCI or any Affiliate of any of them or (ii)
would restrict or prohibit WCI or any subsidiary of WCI from engaging in
such business. None of the Corporation's, the Subsidiaries' or Ralner's
officers, directors or key employees or any of the Partnerships'
partners or key employees is a party to any agreement which, by virtue
of such person's relationship with a Selling Entity, restricts in any
respect such Selling Entity or any Affiliate of such Selling Entity
from, directly or indirectly, engaging in any such business.
3.15 INSURANCE. Schedule 3.15 is a complete list, and includes copies of
all insurance policies of each Selling Entity currently in effect or, with
respect to "OCCURRENCE" policies that were in effect, in respect of any Property
or any other property used by a Selling Entity specifying, for each policy, the
name of the insurer, the type of risks insured, the deductible and limits of
coverage, and the annual premium therefor. Each Selling Entity currently carries
insurance covering such Selling Entity and its operations, assets and personnel
in the type and amount ordinarily carried by corporations or partnerships in
similar circumstances. During the last five years, there has been no lapse in
any material insurance coverage of any Selling Entity. For each insurer
providing coverage for any of the contingent or other liabilities listed on
Schedule 3.8(c), except to the extent otherwise set forth on Schedule 3.8(c),
each such insurer, if required, has been properly and timely notified of such
liability, no reservation of rights letters have been received by the
Corporation and the insurer has assumed defense of each suit or legal
proceeding. To the knowledge of the Representing Parties, all such proceedings
are fully covered by insurance, subject to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list of all officers,
directors and employees (by type or classification) of each Selling Entity and
their respective rates of compensation, including (i) the portions thereof
attributable to bonuses, (ii) any other salary, bonus, stock option, equity
participation, or other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with non-union officers,
directors and employees. Schedule 3.16 also lists the driver's license number
for each driver of each Selling Entity's motor vehicles. All employees of the
Selling Entities (including employees with written or oral employment contracts)
are terminable "AT WILL" without payment of severance or other benefits
(including, without limitation, stock options or other rights to obtain equity
in the Selling Entities).
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3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list and includes copies (or,
in the case of oral arrangements, descriptions) of all employee benefit
plans and agreements (written or oral) currently maintained or
contributed to by each Selling Entity, including employment agreements
and any other agreements containing "golden parachute" provisions,
retirement plans, welfare benefit plans and deferred compensation
agreements, together with copies of such plans, agreements and any
trusts related thereto, and classifications of employees covered thereby
as of the Signing Date. Except for the employee benefit plans described
on Schedule 3.17(a), no Selling Entity has any other pension,
retirement, welfare, profit sharing, deferred compensation, stock
option, employee stock purchase or other employee benefit plans or
arrangements with any party. Except as disclosed on Schedule 3.17(a),
all employee benefit plans listed on Schedule 3.17(a) are fully funded
and in substantial compliance with all applicable federal, state and
local statutes, ordinances and regulations. Except as disclosed on
Schedule 3.17(a), all such plans that are intended to qualify under
Section 401(a) of the Code have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters are
included as part of Schedule 3.17(a). Except as disclosed on Schedule
3.17(a), all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax
returns) have been timely filed or distributed, and copies thereof are
included as part of Schedule 3.17(a). All employee benefit plans listed
on such Schedule have been operated substantially in accordance with the
terms and provisions of the plan documents and all related documents and
policies. No Selling Entity has incurred any liability for excise tax or
penalty due to the Internal Revenue Service or U.S. Department of Labor
nor any liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, and no Selling Party, nor a party-in-interest or
disqualified person, has engaged in any transaction or other activity
which would give rise to such liability. No Selling Entity has
participated in or made contributions to any "MULTI-EMPLOYER PLAN" as
defined in the Employee Retirement Income Security Act of 1974
("ERISA"), nor would any Selling Entity or any Affiliate be subject to
any withdrawal liability with respect to such a plan if any such
employer withdrew from such a plan immediately prior to the Effective
Time. No employee pension benefit plan is under funded on a termination
basis as of the date of this Agreement.
(b) There are currently no union contracts or agreements between
any Selling Entity and any collective bargaining group, nor have there
ever been any such contracts in effect. Each Selling Entity is now, and
for the four (4) years prior to the Signing Date has been, in compliance
in all material respects with all applicable federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and no
Selling Entity is engaged in any unfair labor practice. Except as set
forth on Schedule 3.17(b), there is no charge pending or, to the
knowledge of the Representing Parties, threatened, against any Selling
Entity before any court or agency and alleging unlawful discrimination
in employment practices and there is no charge of or proceeding with
regard to any unfair labor practice against any Selling Entity pending
before the National Labor Relations Board. There is no labor strike,
dispute, slow down or stoppage as of the Signing Date, existing or
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threatened, against any Selling Entity; no union organizational activity
exists respecting employees of any Selling Entity, and Schedule 3.17(b)
contains a list of all arbitration or grievance proceedings that have
occurred since the Balance Sheet Date. No one has petitioned within the
last five years, and no one is now petitioning, for union representation
of any employees of any Selling Entity. No Selling Entity has
experienced any labor strike, slow-down, work stoppage, labor difficulty
or other job action during the last five years.
(c) No payment made to any employee, officer, director or
independent contractor of any Selling Entity (the "RECIPIENT") pursuant
to any employment contract, severance agreement or other arrangement
(the "GOLDEN PARACHUTE PAYMENT") will be nondeductible by such Selling
Entity because of the application of Sections 280G and 4999 of the Code
to the Golden Parachute Payment, nor will any Selling Entity be required
to compensate any Recipient because of the imposition of an excise tax
(including any interest or penalties related thereto) on the Recipient
by reason of Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) Each Selling Entity has timely filed or will timely file all
requisite federal, state, local and other tax and information returns
due for all fiscal periods ended on or before the Closing Date. All such
returns are accurate and complete. Except as set forth on Schedule
3.18(a), there are no open years (other than those within the statute of
limitations), examinations in progress, extensions of any statute of
limitations or claims against any Selling Entity relating to federal,
state, local or other taxes (including penalties and interest) for any
period or periods prior to and including the Signing Date and no notice
of any claim for taxes has been received. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations, and (iii) the
federal income, and state franchise, income and sales tax returns of the
Corporation for its last three fiscal years, are attached as part of
Schedule 3.18(a). Copies of all other federal, state, local and other
tax and information returns for all prior years of each Selling Entity's
existence have been made available to WCI and are among the records of
the Selling Entities that will accrue to WCI at the Closing. No Selling
Entity has been contacted by any federal, state or local taxing
authority regarding a prospective examination.
(b) Except as set forth on Schedule 3.18(b) (which schedule also
includes the amount due with respect to each Selling Entity), each
Selling Entity has duly paid all taxes and other related charges
required to be paid prior to the Signing Date. The reserves for taxes
contained in the Financial Statements are adequate to cover its tax
liability as of the Signing Date; provided, however, that it is
understood and agreed that, on termination of the Corporation's S
Corporation election, an amount for deferred income taxes will be
reinstated.
(c) Each Selling Entity has withheld all required amounts from
its employees for all pay periods in full and complete compliance with
the withholding provisions of applicable federal, state and local laws.
All required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes
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have been duly filed by the Selling Entities for all periods for which
returns are due, and the amounts shown on all such returns to be due and
payable have been paid in full.
(d) WCI and the Merger Sub will not file an election under
Section 338 of the Code unless they indemnify and hold Owner harmless
from any effect on Owner resulting therefrom.
3.19 CUSTOMERS, XXXXXXXX, CURRENT RECEIPTS AND RECEIVABLES. Schedule
3.19 is a current, accurate and complete list of, and includes:
(a) The customers that each Selling Entity serves on an ongoing
basis, including name, location and current billing rate, as of the
Signing Date;
(b) An accurate and complete aging of all accounts and notes
receivable from customers as of the last day of the month preceding the
Signing Date, showing amounts due in 30-day aging categories. Except to
the extent of the allowance for bad debts reflected on the Financial
Statements or otherwise disclosed on Schedules 3.13 and 3.19, to the
knowledge of the Representing Parties, each Selling Entity's accounts
and notes receivable are collectible in the amounts shown on Schedules
3.13 and 3.19; and
(c) The average monthly revenues of each Selling Entity derived
from xxxxxxxx to its customers for each of the twelve months preceding
the Signing Date. None of the Representing Parties has knowledge of any
fact (other than general economic and industry conditions) that
indicates that the average monthly revenues derived from xxxxxxxx to its
customers after the Signing Date for the Selling Entities should not
continue at approximately the same rate as before the Signing Date.
3.20 NO CHANGE WITH RESPECT TO THE CORPORATION. Except as set forth on
Schedule 3.20, since the Balance Sheet Date, the business of each Selling Entity
has been conducted only in the ordinary course and there has been no change in
the condition (financial or otherwise) of the assets, liabilities or operations
of any Selling Entity other than changes in the ordinary course of business,
none of which either singly or in the aggregate has been materially adverse.
Specifically, and without limiting the generality of the foregoing, except as
set forth on Schedule 3.20, with respect to each Selling Entity, if applicable,
since the Balance Sheet Date, there has not been:
(a) Any change in its financial condition, assets, liabilities
(contingent or otherwise), income, operations, business or prospects
which would have a material adverse effect on the financial condition,
assets, liabilities (contingent or otherwise), income, operations,
business or prospects, taken as a whole (a "Material Adverse Effect");
(b) Any damage, destruction or loss (whether or not covered by
insurance) adversely affecting any material portion of its properties or
business;
(c) Any change in or agreement to change (i) its shareholders,
(ii) ownership of its authorized capital, outstanding securities or
partnership interests, or (iii) its securities;
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(d) Any declaration or payment of, or any agreement to declare
or pay, any dividend or distribution in respect of its capital stock or
any direct or indirect redemption, purchase or other acquisition of any
of its capital stock;
(e) Any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or
other special compensation to any employee or any severance or
termination pay paid to any of its present or former officers or other
key employees;
(f) Any labor dispute or any other event or condition of any
character with respect to any of its employees which could have a
Material Adverse Effect;
(g) Any sale or transfer, or any agreement to sell or transfer,
any of its material assets, property or rights to any other person,
including, without limitation, the Owner and his Affiliates, other than
in the ordinary course of business;
(h) Any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to it, including, without limitation, any
indebtedness or obligation of the Subsidiaries, the Owner, Ralner or any
Affiliate thereof;
(i) Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) Any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or
assets outside the ordinary course of its business;
(k) Any waiver of any of its material rights or claims;
(l) Any new or any amendment or termination of any existing
material contract, agreement, license, permit or other right to which it
is a party; or
(m) Any other material transaction outside the ordinary course
of business.
3.21 BANK ACCOUNTS.
(a) Schedule 3.21(a) is a complete and accurate list of:
(i) the name of each bank in which each Selling Entity has
accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are held;
(iii) the type of account; and
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(iv) the name of each person authorized to draw thereon or
have access thereto.
(b) Schedule 3.21(b) is a complete and accurate list of:
(i) each credit card or other charge account issued to a
Selling Entity; and
(ii) the name of each person to whom such credit cards or
other charge accounts have been issued.
3.22 CLOSING DATE DEBT; CLOSING DATE CURRENT ASSETS AND CLOSING DATE
CURRENT LIABILITIES.
(a) Schedule 3.22(a), which will be delivered at the Closing,
will accurately list (i) the amount of the aggregate debt (excluding
trade payables and other short term debt to the extent included in
Closing Date Current Liabilities, except for short term maturities of
long term debt) of the Selling Entities outstanding on the Closing Date
required to be repaid by WCI or the Selling Entities at or immediately
after the Closing Date and all prepayment penalties incurred or to be
incurred by WCI or the Selling Entities in connection with the repayment
of any such debt, (ii) the amount of the aggregate debt (excluding trade
payables and other short term debt to the extent included in Closing
Date Current Liabilities, except for short term maturities of long term
debt) of the Selling Entities outstanding on the Closing Date which will
remain outstanding obligations of the Selling Entities after the Closing
Date and all prepayment penalties applicable to such debt if repaid
prior to maturity, including in each case all interest accrued through
and including the Closing Date, (iii) the aggregate amount of the
present value as of the Closing Date, discounted at the lease rate
factor, if known, inherent in the lease or, if the lease rate factor is
not known, at the rate charged to the Selling Entities by a third party
lender in connection with its most recent borrowing to finance
equipment, of all lease obligations of the Selling Entities that are not
capitalized lease obligations and (iv) the aggregate amount of the
present value as of the Closing Date of all capitalized lease
obligations (determined in accordance with generally accepted accounting
principles) of the Selling Entities (the "CLOSING DATE DEBT "). Schedule
3.22(a) will include wire transfer instructions for creditors whose
Closing Date Debt WCI has designated for payment, and pay-off letters or
instructions from such creditors in the form provided by WCI's bank or
acceptable to WCI will be attached to Schedule 3.22(a).
(b) Schedule 3.22(b), which will be delivered at the Closing,
will accurately list as of the Closing Date the amount of the aggregate
current liabilities (including any reserve for unpaid taxes and any
accrued vacation and sick leave benefits and excluding the current
portion of long-term debt to the extent such current portion is included
in Closing Date Debt) and trade payables of the Selling Entities as of
the Closing Date (the "CLOSING DATE CURRENT LIABILITIES ") and the
amount of the aggregate cash and other current assets of the Selling
Entities as of the Closing Date, including prepaid expenses the benefit
of which survives the Closing Date and the accounts receivable of the
Selling Entities earned prior to the Closing Date, and collectible (less
an allowance for doubtful
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accounts) on or after the Closing Date (the "CLOSING DATE CURRENT
ASSETS"); provided, however, that any amount of reinstatement of
deferred income taxes resulting from termination of the Corporation's S
Corporation election shall not be considered as a Closing Date Current
Liability or as part of Closing Date Debt.
3.23 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.23, each
Selling Entity has complied with, and is presently in compliance with, all
federal, state and local laws, ordinances, codes, rules, regulations,
Governmental Permits, orders, judgments, awards, decrees, consent judgments,
consent orders and requirements applicable to it (collectively "Laws"),
including, but not limited to, the Americans with Disabilities Act, the Federal
Occupational Safety and Health Act, and Environmental Laws (as defined in
Section 3.23(e)). Except as disclosed on Schedule 3.23, there has been no
assertion by any party that any Selling Entity is in violation of any Laws.
Specifically and without limiting the generality of the foregoing, except as
disclosed on Schedule 3.23:
(a) To the best of the knowledge of the Representing Parties,
except as permitted under applicable laws and regulations, including,
without limitation, Environmental Laws, no Selling Entity has accepted,
processed, handled, transferred, generated, treated, stored or disposed
of any Hazardous Substances (as defined in Section 3.23(f)) nor has any
Selling Entity accepted, processed, handled, transferred, generated,
treated, stored or disposed of asbestos, medical waste, radioactive
waste or municipal waste, except in compliance with Environmental Laws.
(b) During each Selling Entity's ownership or leasing of the
real property owned or leased by it and, to the knowledge of
Representing Parties, prior to such Selling Entity's ownership or
leasing of such real property, no Hazardous Substances, other than that
allowed under Environmental Laws, has been disposed of, or otherwise
released on any such real property.
(c) During each Selling Entity's ownership or leasing of any
real property owned or leased by it and, to the knowledge of the
Representing Parties, prior to such Selling Entity's ownership or
leasing of such real property, no such real property was ever subject to
or received any notice of any private, administrative or judicial
action, or notice of any intended private, administrative or judicial
action relating to the presence or alleged presence of any Hazardous
Substance in, under, upon or emanating from any such real property.
There are no pending and, to the Representing Parties' knowledge, no
threatened actions or proceedings from any governmental agency or any
other entity involving remediation of any condition of any such real
property, including, without limitation, petroleum contamination,
pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, no Selling
Entity has knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Substance, to any site,
location or facility.
(e) As used herein, "Environmental Law" means any federal,
state, local or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, legal doctrine,
order, judgment, decree, injunction, requirement or
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agreement with any governmental entity relating to (x) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any
other natural resource) or to human health or safety or (y) the exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances. The term "Environmental Law" includes,
without limitation, (i) the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972,
the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto (the "RCRA")), the Federal Solid
Waste Disposal Act and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, and the Federal
Occupational Safety and Health Act of 1970, each as amended, and (ii)
any common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations
for injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
(f) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive, or dangerous, or otherwise regulated,
under any Environmental Law. Hazardous Substance includes any substance
to which exposure is regulated by any government authority or any
Environmental Law including, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos,
or asbestos containing material, urea formaldehyde foam insulation, lead
or polychlorinated biphenyls.
3.24 POWERS OF ATTORNEY. No Selling Entity has granted any power of
attorney (except routine powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar agreement whereby a
third party may bind or commit any Selling Entity in any manner.
3.25 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule 3.25, no
underground storage tanks containing petroleum products or wastes or other
hazardous substances regulated by 40 CFR 280 or other Environmental Laws are
currently or have been located on any Property. Except as set forth on Schedule
3.25, no Selling Entity has owned or leased any real property not included in
the Property having any underground storage tanks containing petroleum products
or wastes or other hazardous substances regulated by 40 CFR 280 or other
Environmental Laws. Except to the extent set forth on Schedule 3.25, each
Selling Entity has complied with Environmental Laws regarding the installation,
use, testing, monitoring, operation and closure of each UST described on
Schedule 3.25. As to each such underground storage tank ("UST") identified on
Schedule 3.25, each Selling Entity has provided to WCI, on Schedule 3.25:
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(a) The location of the UST, information and material, including
any available drawings and photographs, showing the location, and
whether the Selling Entity currently owns or leases the property on
which the UST is located (and if the Selling Entity does not currently
own or lease such property, the dates on which it did and the current
owner or lessee of such property);
(b) The date of installation and specific use or uses of the
UST;
(c) Copies of tank and piping tightness tests and cathodic
protection tests and similar studies or reports for each UST;
(d) A copy of each notice to or from a governmental body or
agency relating to the UST;
(e) Other material records with regard to the UST, including,
without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f) To the extent not otherwise set forth pursuant to the above,
a summary description of instances, past or present, in which, to the
Representing Parties' knowledge, the UST failed to meet applicable
standards and regulations for tightness or otherwise and the extent of
such failure, and any other operational or environmental problems with
regard to the UST, including, without limitation, spills, including
spills in connection with delivery of materials to the UST, releases
from the UST and soil contamination. Except to the extent set forth on
Schedule 3.25, each Selling Entity has complied with Environmental Laws
regarding the installation, use, testing, monitoring, operation and
closure of each UST described on Schedule 3.25.
3.26 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.26 lists all
patents, trade names, fictitious business names, trademarks, service marks, and
copyrights owned by each Selling Entity or which it is licensed to use (other
than licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). To
the knowledge of the Representing Parties, no trade secrets, know-how,
intellectual property, trademarks, trade names, assumed names, copyrights, or
designations used by a Selling Entity in its business infringe on any patents,
trademarks, or copyrights, or any other rights of any person. None of the
Representing Parties knows or has any reason to believe that there are any
claims of third parties to the use of any such names or any similar name, or
knows of or has any reason to believe that there exists any basis for any such
claim or claims.
3.27 ASSETS, ETC. NECESSARY TO BUSINESS. Each Selling Entity owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, that are necessary for it to carry on its business and operations as
presently conducted and is a party to all Collection Franchises and Governmental
Permits and other agreements necessary to permit it to carry on its business as
presently conducted.
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3.28 CONDEMNATION. No real property owned or leased by any Selling
Entity is the subject of, or would be affected by, any pending condemnation or
eminent domain proceedings, and, to the knowledge of the Representing Parties,
no such proceedings are threatened.
3.29 SUPPLIERS AND CUSTOMERS. To the knowledge of the Representing
Parties, the relations between each Selling Entity and its customers are good.
None of the Representing Parties has knowledge of any fact (other than general
economic and industry conditions) that indicates that any of the suppliers
supplying products, components, materials or providing use of, or access to,
landfills or disposal sites to any Selling Entity intends to cease providing
such items to such Selling Entity, nor do any of the Representing Parties have
knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the customers of a Selling Entity intends to
terminate, limit or reduce its business relations with such Selling Entity.
3.30 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of the Selling Parties
has directly or indirectly within the past five years given or agreed to give
any gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the business of
any Selling Entity in connection with any actual or proposed transaction which
(a) might subject such Selling Entity to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (b) if not given in the past,
might have had an adverse effect on the financial condition, business, results
of operations or prospects of such Selling Entity, or (c) if not continued in
the future, might adversely affect the financial condition, business, operations
or prospects of such Selling Entity or which might subject such Selling Entity
to suit or penalty in any private or governmental litigation or proceeding.
3.31 NO MISLEADING STATEMENTS. The representations and warranties of the
Representing Parties contained in this Agreement, the Exhibits and Schedules
hereto and all other documents and information furnished to WCI and its
representatives pursuant hereto are complete and accurate in all material
respects and do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made not misleading.
Except as disclosed on Schedule 3.31, the certified copies of the Articles of
Incorporation and Bylaws of the Corporation, the Subsidiaries and Ralner, the
certified copies of the agreement of limited partnership of each Partnership,
and the copies of all leases, instruments, agreements, licenses, permits,
certificates or other documents that have been delivered to WCI in connection
with the transactions contemplated hereby are complete and accurate and are true
and correct copies of the originals thereof.
3.32 BROKERS; FINDERS. No person has acted directly or indirectly as a
broker, finder or financial advisor for any of the Selling Parties in connection
with the transactions contemplated by this Agreement and no person is entitled
to any broker's, finder's, financial advisory or similar fee or payment in
respect thereof based in any way on any agreement, arrangement or understanding
made by or on behalf of any of the Selling Parties.
3.33 ACCREDITED INVESTORS. Each Owner is an "ACCREDITED INVESTOR" as
defined in Rule 501(a) under the Act. Each Owner has received a copy of the
Prospectus portion of the Registration Statements.
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3.34 S CORPORATION. The Corporation has elected to be treated as an S
Corporation within the meaning of the Code for the years listed on Schedule
3.34.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER SUB.
WCI and the Merger Sub, jointly and severally, represent and warrant to
the Corporation, the Owner, Ralner and the Partnerships that each of the
following representations and warranties is true as of the Signing Date and will
be true as of the Closing Date.
4.1 EXISTENCE AND GOOD STANDING. WCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
WCI has full corporate power and authority to own and lease its properties and
to carry on its business as now conducted. WCI is not required to be qualified
or licensed to conduct business as a foreign corporation in any jurisdiction
where the failure to be so qualified would have a Material Adverse Effect. The
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. The Merger Sub has full
corporate power and authority to own and lease its properties and to carry on
its business as now conducted. The Merger Sub is not required to be qualified or
licensed to conduct business as a foreign corporation in any jurisdiction where
the failure to be so qualified would have a Material Adverse Effect.
4.2 NO CONTRACTUAL RESTRICTIONS. No provisions exist in any article,
document or instrument to which WCI is a party or by which it is bound that
would be violated by consummation of the transactions contemplated by this
Agreement or the Filed Articles. No provisions exist in any article, document or
instrument to which the Merger Sub is a party or by which either is bound that
would be violated by consummation of the transactions contemplated by this
Agreement or the Filed Articles.
4.3 AUTHORIZATION OF AGREEMENT. This Agreement and the Filed Articles
have been duly authorized, executed and delivered by WCI and the Merger Sub, as
applicable, and, subject to the due authorization, execution and delivery by the
Corporation and the Owner, constitute legal, valid and binding obligations of
WCI and the Merger Sub. Each of WCI and the Merger Sub has full corporate power,
legal right and corporate authority to enter into and perform its obligations
under this Agreement and the Filed Articles and to carry on its business as
presently conducted. The execution and delivery of this Agreement and the Filed
Articles and the consummation of the transactions contemplated hereby and
thereby and the fulfillment of and compliance with the terms and conditions
hereof and thereof do not and will not, after the giving of notice, or the lapse
of time or otherwise: (a) violate any provisions of any law, regulation,
judicial or administrative order, writ, award, judgment or decree applicable to
WCI or the Merger Sub; (b) conflict with any of the provisions of the Amended
and Restated Certificate of Incorporation or Amended and Restated Bylaws of WCI;
(c) conflict with any of the provisions of the Articles of Incorporation or
Bylaws of the Merger Sub; or (d) conflict with, result in a breach of or
constitute a default under any material agreement or instrument to which either
WCI or the Merger Sub is a party or by which it is bound.
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4.4 STATUS OF SHARES. When delivered to the Owner after the Effective
Time in accordance with the terms and conditions of this Agreement, the Merger
Stock shall have been duly authorized and delivered shares of WCI, shall be
fully paid and nonassessable.
4.5 GOVERNMENTAL AUTHORITIES; CONSENTS. Except for (i) the filing of the
Filed Articles with the Secretary of State of the State of Nevada, and (ii) any
filings by WCI and the Merger Sub required by the HSR Act, neither WCI nor the
Merger Sub is required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by it of
this Agreement, the Filed Articles or the consummation of the transactions
contemplated hereby or thereby, and no consent, approval or authorization of any
governmental or regulatory authority or any other party or person is required to
be obtained by either WCI or the Merger Sub in connection with its execution,
delivery and performance of this Agreement and the Filed Articles or the
transactions contemplated hereby or thereby, except such as shall have been
obtained by the Signing Date.
4.6 SEC DOCUMENTS. WCI has filed all required reports, schedules, forms,
statements, and other documents with the Securities and Exchange Commission
("SEC") since May 22, 1998, has filed the Registration Statements (together with
later filed documents that revise or supersede earlier filed documents, the "WCI
SEC DOCUMENTS"). As of their respective dates, the WCI SEC Documents complied or
will comply in all material respects with the requirements of the Act or the
Securities Exchange Act of 1934 (the "EXCHANGE ACT"), as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
WCI SEC Documents. None of the WCI SEC Documents contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were or are made, not
misleading. The financial statements of WCI included in the WCI SEC Documents
complied or will comply as of their respective dates of filing with the SEC in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Regulation S-X promulgated by the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto), and are correct and complete and fairly present
the consolidated financial position of WCI and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
4.7 CAPITAL STOCK.
(a) The WCI SEC Documents set forth WCI's capitalization in all
material respects. All outstanding shares of the WCI Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
WCI issued all such shares in compliance with applicable federal and
state securities laws.
(b) WCI owns, beneficially and of record, all issued and
outstanding shares of the Merger Sub, which shares are validly issued,
fully paid, and non-assessable, and free and clear of all liens, OTHER
THAN LIENS IN FAVOR OF WCI'S BANKS PURSUANT TO THE TERMS OF ITS CREDIT
AGREEMENT.
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4.8 NO MISLEADING STATEMENTS. The representations and warranties of WCI
and the Merger Sub contained in this Agreement, the Exhibits and Schedules
hereto and all other documents and information furnished to the Owner pursuant
hereto are accurate and complete in all material respects (as of the date such
statements are or were made), and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made not misleading.
4.9 BROKERS; FINDERS. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI or the Merger Sub in connection with
the transactions contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in respect
thereof based in any way on any agreement, arrangement or understanding made by
or on behalf of WCI or the Merger Sub.
4.10 TAX FREE REORGANIZATION.
(a) There is no intercorporate indebtedness existing between WCI
and any of the Selling Entities that was issued at a discount, acquired
at a discount or will be settled at a discount.
(b) WCI has no present plan or intention to sell or dispose of
any of the assets of the Selling Entities after the Closing, except for
(i) sales, transfers or other distributions made in the ordinary course
of business and (ii) transfers or successive transfers to one or more
corporations controlled within the meaning of Section 368(c) of the Code
in each case by the transferor corporation.
(c) Following the Closing, WCI currently intends to continue the
historic businesses of the Selling Entities that are presently conducted
or use a significant portion of the Selling Entities' historic assets in
operating a business.
5. COVENANTS OF THE CORPORATION AND THE OWNER PRIOR TO EFFECTIVE TIME
5.1 ACCESS; CONFIDENTIAL INFORMATION. Between the Signing Date and the
Effective Time, each Selling Entity will afford to the officers and authorized
representatives of WCI, including, without limitation, its engineers, counsel,
independent auditors and investment bankers, access to the Facilities, plants,
each Property and other properties, books and records of such Selling Entity and
will furnish WCI with such additional financial and operating data and other
information as to the business and properties of such Selling Entity as WCI may
from time to time reasonably request. The Selling Parties will cooperate with
WCI, its representatives and counsel in the preparation of any documents or
other material which may be required by any governmental agency. WCI will cause
all information obtained from the Selling Parties in connection with the
negotiation and performance of this Agreement that the Selling Parties have
stamped, marked or otherwise indicated as being confidential to be treated as
confidential (except such information which is in the public domain or which WCI
may be required to disclose under Law or to any governmental agency, or pursuant
to any court or regulatory agency order) and will not use, and will not
knowingly permit others to use, any such confidential information in a manner
detrimental to the Selling Parties. The Selling Parties covenant and
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agree not to disclose to any third persons other than their accountants,
brokers, bankers, investment advisers or legal counsel any of the terms or
provisions of this Agreement without the prior written consent of WCI.
5.2 OPERATIONS. Between the Signing Date and the Effective Time, each
Selling Entity will:
(a) carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method, or discontinue
any existing material method, of operation or accounting;
(b) maintain its equipment, assets, Property and Facilities,
including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all of its material obligations under agreements
relating to or affecting its assets, Property, Facilities, business
operations and rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) maintain and preserve its business organization intact,
retain its present employees and maintain its relationship with
suppliers, customers and others having business relations with it;
(f) file on a timely basis all notices, reports or other filings
required to be filed with or reported to any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
any instrumentality of any of the foregoing wherever located with
respect to its continuing operations;
(g) maintain compliance with all Governmental Permits and all
laws, rules, regulations and consent orders;
(h) file on a timely basis all complete and correct applications
or other documents necessary to maintain, renew or extend any site
assessment, permit, license, variance or any other approval required by
any governmental authority necessary and/or required for the continuing
operation of its business operations, whether or not such approval would
expire before or after the Effective Time; and
(i) advise WCI immediately in writing of any material change in
any document, Schedule, Exhibit or other information delivered pursuant
to this Agreement.
5.3 NO CHANGE. Between the Signing Date and the Effective Time, no
Selling Entity will and, in the case of paragraphs (b), (l), (m) and (n) below,
none of the Owner or Ralner will cause any Selling Entity to, without the prior
written consent of WCI:
(a) make any change in its Articles of Incorporation or Bylaws
or agreement of limited partnership;
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(b) authorize, issue, transfer or distribute any of its
securities (including issuance of any option, warrant or right with
respect thereto) or transfer or assign any of its partnership interests;
(c) except as described on Schedule 2.8, declare or pay any
dividend or make any distribution in respect of its capital stock
whether now or hereafter outstanding, or purchase, redeem or otherwise
acquire or retire for value any shares of its capital stock;
(d) except as set forth on Schedule 5.3(d), enter into any
contract or commitment or incur or agree to incur any liability other
than in the ordinary course of business other than the transactions
contemplated by this Agreement or make any single capital expenditure in
excess of $10,000 or in excess of $25,000 in the aggregate during any
consecutive thirty day period without regard to whether such capital
expenditure is in the ordinary course of business;
(e) change or promise to change the compensation payable or to
become payable to any director, officer, employee or agent, or make or
promise to make any bonus payment to any such person;
(f) create, assume or otherwise permit the imposition of any
mortgage, pledge or other lien (except for current property taxes) or
encumbrance upon or grant any option or right of first refusal with
respect to any assets or properties whether now owned or hereafter
acquired;
(g) sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(h) merge or consolidate or agree to merge or consolidate with or
into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend or terminate any material agreement or any site
assessment, permit, license or other right;
(k) enter into any other transaction outside the ordinary course
of its business or prohibited hereunder;
(l) take any action or suffer or permit any event to occur that
would cause any representation or warranty of the Representing Parties
to become untrue as of the Closing Date; or
(m) take or fail to take any action, which action or failure to
take action is reasonably likely to cause the Owner (except to the
extent of stockholders in special circumstances) to recognize gain or
loss for federal income tax purposes as a result of the consummation of
the Merger or otherwise is reasonably likely to cause the Merger not to
qualify as a reorganization under Section 368(a) of the Code;
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5.4 OBTAIN CONSENTS. Promptly after the Signing Date, the Selling
Parties shall make all filings and take all steps reasonably necessary to obtain
all approvals and consents (including Required Governmental Consents) required
to be obtained by a Selling Party to consummate the transactions contemplated by
this Agreement and otherwise to satisfy the conditions of Sections 6.7 and 6.8.
5.5 NO CHANGE IN RELATIVE OWNERSHIP. Except as set forth on Schedule
5.5, between the Signing Date and the Effective Time, there will be no change in
voting structure or relative ownership of any Selling Entity without the prior
consent of WCI, except that WCI hereby consents to J.O.'s contribution to the
Corporation of all of the outstanding capital stock of Ralner and the transfers
or contributions of each Partnership's limited partner interests to the
Corporation.
5.6 CONTROL OF OPERATIONS. Nothing contained in this Agreement shall
give to WCI, directly or indirectly, rights to control or direct any Selling
Entity's operations prior to the Effective Time. Prior to the Effective Time,
each Selling Entity shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision of its operations.
5.7 ACQUISITION TRANSACTIONS. From the Signing Date to the Effective
Time, or earlier termination of this Agreement, no Selling Party shall initiate,
solicit, negotiate, encourage or provide information to facilitate, and the
Selling Parties shall not, and shall use their reasonable efforts to cause any
officer, director or employee of each Selling Entity, or any attorney,
accountant, investment banker, financial advisor or other agent retained by him
or it not to, initiate, solicit, negotiate, encourage or provide information to
facilitate, any proposal or offer to acquire all or any substantial part of the
business or properties of any Selling Entity or any capital stock (including
without limitation the Corporation's Stock and the Ralner Stock) of the
Corporation, the Subsidiaries or Ralner, whether by merger, purchase of assets
or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"ACQUISITION TRANSACTION"). The Selling Parties shall immediately notify WCI
after receipt of any proposal for an Acquisition Transaction, indication of
interest or request for information relating to the Selling Parties in
connection with an Acquisition Transaction or for access to the properties,
books or records of any Selling Entity by any person or entity that informs the
Board of Directors of the Corporation, the Subsidiaries or Ralner that it is
considering making, or has made, a proposal for an Acquisition Transaction. Such
notice to WCI shall be made orally and in writing.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI AND THE MERGER SUB TO CLOSE.
The obligations of WCI and the Merger Sub under this Agreement are
subject to the satisfaction, at or before Closing, of all of the following
conditions precedent, unless waived in writing by WCI:
6.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of the Representing Parties contained in this Agreement or in any Exhibit,
Schedule, certificate or document delivered by the Selling Parties under this
Agreement shall be true, correct and complete on and as of the date when made
and at all times prior to the Closing Date, shall be
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deemed to be made again on the Closing Date, and shall then be true, correct and
complete in all respects as of the Closing Date.
6.2 CONDITIONS. The Selling Parties shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
6.3 NO MATERIAL ADVERSE CHANGE. Since the Signing Date, there shall not
have been any material adverse change in the condition (financial or otherwise),
business, properties, assets or prospects of any Selling Entity.
6.4 CERTIFICATES. The President of the Corporation and Ralner shall have
each delivered to WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to the fulfillment of the conditions
set forth in Sections 6.1, 6.2 and 6.3 applicable to the Corporation, the
Subsidiaries, Ralner and the Partnerships and the Owner and Ralner shall have
each delivered to WCI a certificate dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to the fulfillment of the conditions
set forth in Section 6.1 and 6.2 applicable to the Owner and Ralner.
6.5 NO LITIGATION. None of the transactions contemplated hereby shall
have been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand relating to the transactions
contemplated hereby shall have been made by any federal or state governmental
branch, agency, commission or regulatory authority and shall remain open or be
resolved to the reasonable satisfaction of WCI.
6.6 OTHER DELIVERIES. The Selling Parties shall have delivered the items
that they are required to deliver under Section 8.2 of this Agreement.
6.7 GOVERNMENTAL APPROVALS. All governmental consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement, including without limitation those contemplated by Sections 6.12
and 6.13, shall have been received.
6.8 CONSENTS TO TRANSFER. Each party whose consent is required to the
transactions contemplated by this Agreement, including without limitation each
party to any contract with any Selling Entity and each Required Governmental
Consent shall have been obtained.
6.9 DISSENTING SHARES. No Owner shall have exercised dissenters' rights
in accordance with Sections 92A.300-92A.500 of the Nevada Law with respect to
any shares of the Corporation's Stock.
6.10 TITLE INSURANCE. Lawyers Title of El Paso, Inc., or its designee,
shall be irrevocably committed to issue, within three business days after the
Effective Time, at WCI's cost and expense, a TLTA Owner and Mortgages Policy of
title insurance for each Property owned by a Selling Entity insuring fee simple
title to such Property in the Surviving Corporation or WCI, subject only to
current real property taxes and assessments, standard printed conditions
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and exceptions, and such title exceptions as shall have been accepted in writing
by WCI, containing such endorsements as WCI may reasonably require. Each Selling
Entity shall cooperate with WCI in removing certain exceptions by providing
customary assurances to such title company in connection with the issuance of
the title policy.
6.11 NASDAQ LISTING. An additional listing application shall have been
filed with NASDAQ with respect to the shares of Merger Stock.
6.12 HSR WAITING PERIOD. The waiting period applicable to the
consummation of the Merger under the HSR Act, if any, shall have expired or been
terminated.
6.13 REGISTRATION STATEMENTS. The Registration Statements shall then be
effective under the Act.
6.14 SCHEDULES. The Representing Parties shall have delivered Schedules
3.22(a) and 3.22(b) to this Agreement.
6.15 PURCHASE OF MTI MINORITY INTERESTS. MTI shall have redeemed the
thirty percent (30%) of its capital stock not owned by RRI.
6.16 PARTNERSHIP OWNERSHIP. Ralner shall be the sole general partner of
each of the Partnerships and the Corporation shall be the owner of 100% of the
stock of Ralner and the sole limited partner of each of the Partnerships.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE CORPORATION AND THE OWNER TO
CLOSE.
The obligations of the Corporation, the Owner, Ralner and the
Partnerships under this Agreement are subject to the satisfaction, at or before
Closing, of all of the following conditions precedent, unless waived in writing
by the Corporation, the Owner, Ralner and the Partnerships:
7.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of WCI and the Merger Sub contained in this Agreement or in any statement,
Exhibit, Schedule, certificate or document delivered by WCI under this Agreement
shall be true, correct and complete on and as of the date when made and at all
times prior to the Closing Date, shall be deemed to be made again on the Closing
Date, and shall then be true, correct and complete in all respects as of the
Closing Date.
7.2 CONDITIONS. WCI and the Merger Sub shall have each performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by them on or before the Closing Date.
7.3 NO MATERIAL ADVERSE CHANGE. Since the Signing Date, there shall not
have been any material adverse change in the condition (financial or otherwise),
business, properties or assets of WCI.
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7.4 CERTIFICATE. WCI shall have delivered to the Owner a certificate,
dated as of the Closing Date, in form and substance satisfactory to the Owner,
certifying to the fulfillment of the conditions set forth in Sections 7.1, 7.2
and 7.3.
7.5 NO LITIGATION. None of the transactions contemplated hereby shall
have been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand relating to the transactions
contemplated hereby shall have been made by any federal or state governmental
branch, agency, commission or regulatory authority concerning the transactions
contemplated hereby and shall remain open or be resolved to the reasonable
satisfaction of the Owner and Ralner.
7.6 OTHER DELIVERIES. WCI shall have delivered the items which it is
required to deliver under Section 8.1 of this Agreement.
7.7 CONSENTS TO TRANSFER. Each party whose consent is required to the
transactions contemplated by this Agreement, including without limitation each
party to any contract with the Corporation, a Subsidiary, or a Partnership, and
all Required Governmental Consents shall have been obtained.
7.8 NASDAQ LISTING. An additional listing application shall have been
filed with NASDAQ with respect to the shares of Merger Stock.
7.9 HSR WAITING PERIOD. The waiting period applicable to the
consummation of the Mergers under the HSR Act, if any, shall have expired or
been terminated.
7.10 REGISTRATION STATEMENTS. The Registration Statements shall then be
effective under the Act.
7.11 GOVERNMENTAL APPROVALS. All governmental consents and approvals, if
any, necessary to period the consummation of the transactions contemplated by
this Agreement, including without limitation those contemplated by Sections 6.12
and 6.13, shall have been received.
8. CLOSING DELIVERIES
At the Closing the respective parties shall make the deliveries
indicated:
8.1 WCI DELIVERIES.
(a) At the Closing, WCI shall deliver to the Owner the cash
contemplated by Section 2.1 and 2.2, and within ten (10) business days
after the Effective Time, WCI shall deliver to the Owner certificates
for the shares of the Merger Stock in accordance with Sections 2.2 and
2.3.
(b) At the Closing, WCI shall deliver the Filed Articles, duly
executed by the Merger Sub.
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(c) At the Closing, WCI shall deliver to the Owner the
certificate set forth in Section 7.4.
(d) At the Closing, WCI and the Merger Sub shall execute and
deliver such other instruments and items as the Corporation and the
Owner shall reasonably request relating to the transactions contemplated
by this Agreement.
(e) At the Closing, WCI shall execute and deliver a Common Stock
Agreement substantially in the form of Exhibit 8.1(e) (the "COMMON STOCK
AGREEMENT").
8.2 CORPORATION'S AND OWNER'S DELIVERIES.
(a) At or promptly after the Effective Time, the Owner shall
deliver, or arrange for Marine Midland Bank, as pledgee, to deliver to
WCI in accordance with Section 2.3 the certificates representing the
outstanding Corporation's Stock free and clear of all liens, security
interests, claims and encumbrances, accompanied by a stock power duly
executed in blank.
(b) At the Closing, the Owner shall deliver to WCI an opinion of
counsel for the Owner, dated as of the Closing Date, in substantially
the form attached hereto as Exhibit 8.2(b).
(c) At the Closing, the Owner shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby, including without limitation all
Required Governmental Consents, were obtained and the Owner and the
Partnerships shall deliver an estoppel certificate from the landlords
under all real estate leases to which any Selling Entity is a party
confirming the terms thereof and the rental amount owing thereunder,
certifying that such lease is in full force and effect, that the Selling
Entity is not in default under any of the terms or conditions thereof,
that there have been no amendments or modifications to any such lease
(or specifying the same), and otherwise containing such statements and
certifications as WCI may require.
(d) At the Closing, the Corporation shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts and
all oral contracts other than those that are terminable "AT WILL"
without payment of severance (other than normal severance benefits
approved by WCI) or other benefits with non-union employees of each
Selling Entity (including, without limitation, stock options or other
rights to obtain equity in the Selling Entities) have been terminated,
effective on or before the Closing Date.
(e) At the Closing, the Owner shall cause each officer and
director of the Corporation and each Subsidiary to deliver a resignation
as an officer and/or director of such Selling Entity, together, in the
case of each officer, director and each employee of the Partnerships who
is not a party to this Agreement, with a general release releasing such
Selling Entity from certain obligations under any indemnification
agreements, charter documents of the Corporations or the Subsidiaries,
agreements of limited partnership of the Partnerships or otherwise.
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(f) At the Closing, the Owner shall deliver the Filed Articles
duly executed by the Corporation.
(g) At the Closing, the Corporation, the Owner and Ralner shall
deliver to WCI the certificates set forth in Section 6.4.
(h) At the Closing, the Owner shall execute and deliver to WCI
the Common Stock Agreement.
(i) At the Closing, the Corporation, the Owner and Ralner shall
execute and deliver such other instruments and items, including bills of
sale, certificates of title, deeds, assignments and other instruments of
conveyance, as WCI shall reasonably request relating to the transactions
contemplated by this Agreement.
9. ADDITIONAL COVENANTS OF WCI AND THE SELLING PARTIES
9.1 RELEASE OF GUARANTIES. WCI shall use reasonable efforts to obtain
the termination and release promptly after the Effective Time of the personal
guaranties of the Owner listed on Schedule 9.1, all of which relate to
indebtedness of the Selling Entities included in the Financial Statements as of
the Balance Sheet Date, and WCI shall indemnify the Owner and hold the Owner
harmless from and against all losses, expenses or claims by third parties to
enforce or collect indebtedness owed by the Selling Entities as of the Effective
Time that is personally guaranteed by the Owner pursuant to such guaranties. The
Owner may notify the obligees under such guaranties that the Owner has
terminated his obligations under such guaranties. The Owner shall cooperate with
WCI in obtaining such releases.
9.2 RELEASE OF SECURITY INTERESTS. After the Effective Time, the Owner
and his Affiliates shall cause those security interests in the assets of the
Selling Entities that have been created in favor of financial institutions or
other lenders to secure indebtedness (other than indebtedness of the Selling
Entities) of the Owner or their Affiliates to be released in a manner reasonably
satisfactory to WCI, and shall cause all guaranties by the Selling Entities
relating to the indebtedness of the Owner to be released to the reasonable
satisfaction of WCI.
9.3 CONFIDENTIALITY. None of WCI or the Selling Parties shall disclose
or make any public announcements of the transactions contemplated by this
Agreement, except as required by the Act, the Exchange Act, the HSR Act or in
the Registration Statements, without the prior written consent of the other
parties, unless required to make such disclosure or announcement by law, in
which event the party making the disclosure or announcement shall notify the
other parties at least 24 hours before such disclosure or announcement is
expected to be made and allow review and input as to the form and content of the
same.
9.4 BROKERS AND FINDERS FEES. Each party shall pay and be responsible
for any broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
9.5 TAXES. WCI shall reasonably cooperate, at the expense of the Owner,
with the Owner with respect to any matters involving the Owner arising out of
their ownership of the Corporation prior to the Effective Time, including
matters relating to tax returns and any tax
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audits, appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Owner such files, documents, books and records of the
Corporation for inspection and copying as may be reasonably requested by the
Owner and shall cooperate with the Owner with respect to retaining information
and documents which relate to such matters.
9.6 SHORT YEAR TAX RETURNS. After the Effective Time, the Owner, on
behalf of the Corporation, shall prepare at their sole cost and expense, all
short year federal, state, county, local and foreign tax returns required by law
for the period beginning with the first day of the fiscal year of the
Corporation, in which the Effective Time occurs and ending with the Effective
Time. Each such return shall (i) be prepared in a financially responsible and
conservative manner, (ii) not, without WCI's prior written consent, contain any
elections that would have an adverse effect on the financial condition or tax
position of the Surviving Corporation or WCI after the Effective Time, (iii)
include any and all dividends or distributions to shareholders, or other changes
in stockholders equity that occurs on or before the Effective Time, and (iv) be
delivered to WCI together with all necessary supporting schedules within ninety
(90) days following the Effective Time (or at least sixty (60) days prior to the
date on which such return is required to be filed, if earlier) for its approval
(but such approval shall not relieve the Owner of his responsibility for the
taxes assessed under these returns). The Owner shall be responsible for the
payment of all taxes shown to be due or that may come to be due on such returns
or otherwise relating to the period prior to the Effective Time in excess of the
amount of any reserve for taxes included in Closing Date Current Liabilities.
Each Owner shall be responsible for all taxes arising from the conversion of the
Corporation from a cash to accrual basis of reporting whether or not due on such
returns or on the first return filed by the Surviving Corporation or WCI for the
period commencing after the Effective Time. At the time of the delivery of the
returns, shall contemporaneously deliver to WCI checks payable to the respective
taxing authorities in amounts equal to the amount due from the Corporation and
Ralner under this section. WCI shall, on receipt of the tax returns from the
Owner and approval of such tax returns, cause the Corporation to sign tax
returns and cause such returns to be timely filed with the appropriate
authorities. The Owner shall be entitled to receive all refunds shown on said
returns and any such refunds received by the Corporation or WCI shall be
remitted to the Owner as applicable.
9.7 RULE 145 AND OTHER RESTRICTIONS.
(a) As a result of the Merger, the Owner will receive shares of
WCI Stock in exchange for shares of the Corporation's Stock owned by
them. The Owner has been advised that as of the Signing Date he may be
deemed to be an "AFFILIATE" of the Corporation for purposes of Rule 145
("RULE 145") promulgated under the Act.
(b) The Owner understands that the issuance of the WCI Stock to him
pursuant to the Merger has been registered with the Securities and
Exchange Commission ("SEC") under the Act on one or more Registration
Statements on Form S-4. They also understand, however, that because they
may be deemed to have been an "AFFILIATE" of the Corporation at the time
of the Merger, they may not sell, transfer, exchange, pledge, or
otherwise dispose of, or make any offer or agreement relating to any of
the foregoing with respect to, any shares of WCI Stock issued to them
pursuant to the Merger unless
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(i) such transaction is permitted pursuant to Rules 145(c) and 145(d)
under the Act, (ii) counsel reasonably satisfactory to WCI shall have
advised WCI in a written opinion letter satisfactory to WCI and its
legal counsel, and upon which WCI and its legal counsel may rely, that
no registration under the Act would be required in connection with the
proposed sale, transfer or other disposition, (iii) a registration
statement under the Act covering the WCI Stock proposed to be sold,
transferred or otherwise disposed of, describing the manner and terms of
the proposed sale, transfer or other disposition, and containing a
current prospectus, shall have been filed with the SEC and made
effective under the Act, (iv) an authorized representative of the SEC
shall have rendered written advice to the Owner (sought by the Owner or
counsel representing him, with a copy thereof and all other related
communications delivered to WCI) to the effect that the SEC would take
no action, or that the Staff of the SEC would not recommend that the SEC
take action, with respect to the proposed disposition if consummated, or
(v) such transfer is permitted under Section 2(d) of the Common Stock
Agreement.
(c) The Owner agrees that for so long as he is an affiliate of
WCI as defined in Section 9.7(b), he will agree to any underwriters'
lock-up, not to exceed a period of ninety (90) days, requested by the
underwriters of a firm commitment underwritten public offering in which
WCI is selling shares of WCI Stock for financing purposes. Each Owner
also agrees that for so long as he is such an affiliate of WCI, he will,
at the request of WCI, execute an affiliate letter pursuant to which he,
in connection with a transaction effected by WCI and accounted for as a
"POOLING OF INTEREST," would agree not to dispose of any shares of WCI
Stock then owned by him except in compliance with SEC Accounting Series
Releases No. 130 and 135.
9.8 AGREEMENT TO COOPERATE.
(a) Each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all action 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 by this Agreement, including using its reasonable efforts
to obtain all necessary or appropriate waivers, consents or approvals of
third parties required in order to preserve material contractual
relationships of WCI and the Selling Entities, all necessary or
appropriate waivers, consents and approvals and SEC "NO-ACTION" letters
to effect all necessary registrations, filings and submissions and to
lift any injunctive or other legal bar to the Merger (and, in such case,
to proceed with the Merger as expeditiously as possible); provided,
however, that in using its reasonable efforts WCI shall not be required
to take any action or to agree to any condition, including without
limitation any condition imposed by any government authority with
respect to the transfer of any Governmental Permit or obtaining any
Required Governmental consent, that, in WCI's reasonable judgment,
imposes a materially adverse financial burden or operating condition on
WCI or any of the Selling Entities. At or immediately after the Closing,
the Merger Sub, the Corporation, and the Owner shall cause the Filed
Articles to be filed with the Secretary of State of the State of Nevada.
(b) Without limitation of the foregoing, if required by applicable law,
each of WCI and the Corporation undertakes and agrees to file as soon as
practicable, and in any
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event prior to 2 days after the Signing Date, a Notification and Report
Form under the HSR Act with the Federal Trade Commission ("FTC") and the
Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION"). Each of WCI and the Corporation shall (i) respond as
promptly as practicable to any inquiries received from the FTC or the
Antitrust Division for additional information or documentation and to
all inquiries and requests received from any State Attorney General or
other governmental authority in connection with antitrust matters and
(ii) not extend any waiting period under the HSR Act or enter into any
agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior
consent of the other parties hereto. Each party shall promptly notify
the other party of any communication to that party from the FTC, the
Antitrust Division, any State Attorney General or any other governmental
entity and permit the other party to review in advance any proposed
communication to any of the foregoing. If the filing contemplated by
this Section is made on or before August 10, 1999, WCI shall pay the
filing fee of the Corporation
(c) In the event any litigation is commenced by any person or
entity relating to the transactions contemplated by this Agreement,
including any Acquisition Transaction, WCI shall have the right, at its
own expense, to participate therein, and the Corporation and Ralner will
not settle any such litigation without the consent of WCI, which consent
will not be unreasonably withheld.
9.9 NASDAQ LISTING. WCI shall file, at its expense, at or before the
Effective Time, an additional listing application with NASDAQ with respect to
the Merger Stock to be issued pursuant to the Merger.
9.10 NOTIFICATION OF CERTAIN MATTERS. The Corporation, WCI, the Owner,
Ralner and the Partnerships agree to give prompt notice to each other of, and to
use commercially reasonable efforts to remedy (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of its or his representations or warranties in this Agreement to be untrue
or inaccurate in any material respect at the Effective Time and (ii) any
material failure on its or his part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it or him hereunder;
provided, however, that the delivery of any notice pursuant to this Section 9.10
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
9.11 GENERAL RELEASE BY THE OWNER. The Owner hereby fully releases and
discharges the Selling Entities and the Surviving Corporation and their
respective directors, officers, agents and employees from all rights, claims and
actions, known or unknown, of any kind whatsoever, which the Owner now has or
may hereafter have against the Selling Entities or the Surviving Corporation and
their respective directors, officers, agents and employees, arising out of or
relating to events arising prior to or on the Effective Time arising out of or
relating to any misrepresentation, breach of warranty, nonfulfillment of any
agreement or covenant, or Fraud (as hereinafter defined) on the part of the
Owner, except (a) as may be described in written contracts disclosed in Schedule
9.11, (b) compensation as an employee of the Surviving Corporation or a
Subsidiary for current periods expressly described and specifically excepted
from such release on Schedule 9.11, and (c) for the obligations of the Surviving
Corporation arising after the Effective
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Time under this Agreement. Specifically but not by way of limitation, the Owner
waives any right of indemnification, contribution or other recourse against the
Selling Entities and the Surviving Corporation that he now has or may hereafter
have with respect to representations, warranties or covenants made in this
Agreement by the Corporation, Ralner and the Partnerships; provided, however,
that the foregoing waiver only pertains to those claims arising out of the
Merger or any related documents, agreements or transactions contemporaneous
therewith, alleged to result from any breach of this Agreement or the related
agreements of the Owner.
9.12 APPOINTMENT OF DIRECTOR. At the request of J.O. made anytime within
six months after the Effective Date, WCI will create a vacancy on its Board of
Directors and will appoint J.O. to fill the vacancy. Thereafter, for so long as
J.O. owns a number of shares of WCI Stock equal to at least one-half the number
of Shares of WCI Stock issued to him in the Merger, WCI will nominate him for
re-election as a director at any annual or special meeting of WCI stockholders
at which he wishes to stand for re-election; provided, however, that at such a
time that J.O.'s ownership of shares of WCI Stock is reduced to less than
one-half the number of Shares of WCI Stock issued to him in the Merger, J.O.
will resign as a member of WCI's Board of Directors and will not pursue
re-election for such position at any later date.
9.13 EFFECTIVENESS OF REGISTRATION STATEMENTS. WCI SHALL USE REASONABLE
EFFORTS TO CAUSE the shares of Merger Stock to be covered by the Registration
Statements as of the Signing Date and shall use its reasonable efforts to
maintain the Registration Statements effective as of the Closing Date and for
resales of the WCI Stock received by the Owner for a period of two (2) years
after the Effective Time pursuant to the terms of the Common Stock Agreement.
10. INDEMNIFICATION
10.1 INDEMNIFICATION COVENANTS.
(a) Indemnity by the Owner. The Owner, subject to the
limitations set forth in Section 10.2, covenants and agrees that he will
indemnify and hold harmless WCI, the Surviving Corporation and their
respective directors, officers and agents and their respective
successors and assigns (collectively the "WCI Indemnities"), from and
after the date of this Agreement against any and all losses, damages,
assessments, fines, penalties, adjustments, liabilities, claims,
deficiencies, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation),
including, without limitation, any ENVIRONMENTAL SITE LOSSES (as defined
in Section 10.1(a)(ii)) resulting from activities prior to the Effective
Time (but not necessarily identified or determined prior to the
Effective Time), identified by a WCI Indemnitee in a Claims Notice (as
defined in Section 10.3(a)), or asserted by a WCI Indemnitee in
litigation commenced against the Owner provided that in either case any
such Claims Notice shall be given or the litigation commenced prior to
the expiration of the applicable period set forth in Section 10.2(c)
(irrespective of the date of discovery), with respect to each of the
following contingencies (all, the "10.1(a) Indemnity Events"):
(i) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part
of the Owner, Ralner, the Partnerships or the
Corporation pursuant to the terms of this Agreement or
any misrepresentation
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in or omission from any Exhibit, Schedule, list, certificate, or
other instrument furnished or to be furnished to WCI pursuant to
the terms of this Agreement, regardless of whether, in the case
of a breach of a representation or a warranty, WCI relied on the
truth of such representation or warranty or had any knowledge of
any breach thereof.
(ii) Any Environmental Site Losses in excess of the
amount of liability with respect thereto, if any, set forth on
Schedule 3.8(b) arising from the design, development,
construction, installation or operation of any " ENVIRONMENTAL
SITE" (as hereinafter defined) during any period on or prior to
the Closing Date but only to the extent the Environmental Site
Loss resulted from a failure to comply with applicable laws,
rules, regulations, ordinances, building codes, permits,
licenses, franchises, municipal service contracts, judgments,
orders, injunctions or decrees. As used in this Agreement,
"ENVIRONMENTAL SITE" shall mean any Facility, any UST and any
other waste storage, processing, treatment or disposal facility,
and any other business site or any other real property owned,
leased, controlled or operated by a Selling Entity or by any
predecessor thereof on or prior to the Closing Date. As used in
this Agreement, "ENVIRONMENTAL SITE LOSSES" shall mean any and
all losses, damages (including exemplary damages and penalties),
liabilities, claims, deficiencies, costs, expenses, and
expenditures (including, without limitation, expenses in
connection with site evaluations, risk assessments and
feasibility studies) arising out of or required by an interim or
final judicial or administrative decree, judgment, injunction,
mandate, interim or final permit condition or restriction, cease
and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or
any other remedial action that is required to be undertaken
under federal, state or local law in respect of operating
activities prior to the Closing Date on or affecting any
Environmental Site, including, but not limited to (x) any actual
or alleged violation of any Environmental Law or any other law
or regulation respecting the protection of the air, water and
land prior to the Closing Date and (y) any remedies or
violations, whether by a private or public action, alleged or
sought to be assessed as a consequence, directly or indirectly,
of any "RELEASE" (as defined below) of pollutants (including
odors) or Hazardous Substances from any Environmental Site
resulting from activities thereat prior to the Closing Date,
whether such Release is into the air, water (including
groundwater) or land and, in the case of any Release caused by
defective design, development, construction or operation of an
Environmental Site, or other circumstance within the control of
the Owner or the Partnerships, whether such Release arose
before, during or after the Closing Date from activities thereat
prior to the Closing Date. The term "ENVIRONMENTAL SITE LOSSES"
shall not include any losses or deficiencies relating to the
inefficiency or lack of optimal use, design or function of any
Environmental Site. The term "RELEASE" as used herein means any
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing
into the ambient environment. Notwithstanding anything in this
paragraph to the contrary, it is specifically understood and
agreed that a Release composed solely of Hazardous Substances
contained in mixed municipal solid
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waste lawfully disposed of in a landfill during the time a
Selling Entity owned and/or operated such landfill does not
constitute an Environmental Site Loss.
(iii) All matters on Schedule 3.8(c), or required to be
described on Schedule 3.8(c), of which the Corporation, Ralner
or the Owner have knowledge on the Closing Date and which are
not so described.
(iv) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees
and expenses of investigation) incident to any of the foregoing.
10.2 LIMITATIONS ON INDEMNITIES.
(a) The obligations of the Owner to indemnify the WCI
Indemnitees, as provided in Section 10.1 shall be equal to the amount by
which the cumulative amount of all such losses, damages, assessments,
fines, penalties, adjustments, liabilities, claims, deficiencies, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) and Environmental Site
Losses with respect to any or all 10.1(a) Indemnity Events exceed two
million dollars ($2,000,000); provided, that the amount of any
obligation of indemnity arising pursuant to Section 10.1 with respect to
any representation, warranty or covenant contained in Section 2.1, 3.1
through 3.5; 3.12, 3.18, 3.22, 3.24, 9.6 and 9.11 hereof shall not be
subject to the foregoing.
(b) The maximum amount that WCI can recover as a result of all
10.1(a) Indemnity Events pursuant to the provisions hereof for Claims
(as defined in Section 10.3(a)) shall not in the aggregate exceed Fifty
Million Dollars ($50,000,000).
(c) The obligations of the Owner under Section 10.1(a) with
respect to all Claims relating to a breach of representations and
warranties shall expire on the first anniversary of the Effective Time,
unless a Claims Notice is given or litigation is commenced on or prior
to such date (irrespective of the date of discovery of the 10.1(a)
Indemnity Event). All obligations of the Owner under Section 10.1(a)
with respect to all Claims relating to a breach of covenants and
agreements (as described in Section 10.1(a)(i)) shall survive until
performed in accordance with its terms.
(d) Except to the extent the same shall directly result in a
material increase in insurance premiums on a prospective basis, the
Owner shall not be required to indemnify any WCI Indemnitee for any
Claim to the extent that such Claim has been reimbursed or is
reimbursable through insurance proceeds received or receivable by the
Indemnitee (as defined in Section 10.3(a)). The Indemnitee shall allow
the Indemnifying Party (as defined in Section 10.3(a)) to pursue such
insurance proceeds and shall reasonably cooperate with the Indemnifying
Party in connection therewith. In the event the insurance does not cover
the full amount of the Claim, or in the event the Claim shall directly
result in an increase in insurance premiums on a prospective basis, the
Indemnifying Party shall remain liable for the difference in the
insurance payment and the amount of the Claim, or in the case of an
increase in insurance premiums, the amount
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of such increase directly attributable to the Claim, subject to the
other limitations set forth herein.
(e) All claims for which indemnification payment shall be due
shall be deemed adjustments of the Aggregate Consideration.
(f) The obligation of the Owner to indemnify WCI pursuant to
Section 10.1 shall be limited to the portion of the Aggregate
Consideration paid to the Owner.
10.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter asserted
against or arises with respect to any WCI Indemnitee as to which such
WCI Indemnitee (an "INDEMNITEE") may be entitled to indemnification
hereunder, the Indemnitee shall notify the Owner (as applicable
collectively, the "INDEMNIFYING PARTY") in writing thereof (the "CLAIMS
NOTICE") within 60 days after (i) receipt of written notice of
commencement of any third party litigation against such Indemnitee, (ii)
receipt by such Indemnitee of written notice of any third party claim
pursuant to an invoice, notice of claim or assessment, against such
Indemnitee, or (iii) such Indemnitee becomes aware of the existence of
any other event in respect of which indemnification may be sought from
the Indemnifying Party (including, without limitation, any inaccuracy of
any representation or warranty or breach of any covenant). The Claims
Notice shall describe the Claim and the specific facts and circumstances
in reasonable detail, and shall indicate the amount, if known, or an
estimate, if possible, of the losses that have been or may be incurred
or suffered by the Indemnitee. The failure to timely deliver a Claims
Notice or otherwise notify the Indemnifying Party of the commencement of
such actions in accordance with this Section 10.3 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder except to
the extent that the Indemnifying Party establishes by competent evidence
that it has been prejudiced thereby.
(b) The Indemnifying Party may elect to defend any Claim for
money damages where the cumulative total of all Claims (including such
Claims) does not exceed the limit set forth in Section 10.2 at the time
the Claim is made, by the Indemnifying Party's own counsel (which
counsel shall be subject to the reasonable approval of the Indemnitee);
provided, however, the Indemnifying Party may assume and undertake the
defense of such a third party Claim only upon written agreement by the
Indemnifying Party that the Indemnifying Party is obligated to fully
indemnify the WCI Indemnitee. The Indemnitee may participate, at the
Indemnitee's own expense, in the defense of any Claim assumed by the
Indemnifying Party. Without the written approval of the Indemnitee,
which approval shall not be unreasonably withheld, the Indemnifying
Party shall not agree to any compromise of a Claim defended by the
Indemnifying Party.
(c) If, within ten (10) days of the Indemnifying Party's receipt
of a Claims Notice, the Indemnifying Party shall not have elected to
defend the Claim, the Indemnitee shall have the right to assume control
of the defense and/or compromise of such Claim, and the costs and
expenses of such defense, including reasonable attorneys' fees, shall be
added to the Claim. The Indemnifying Party shall promptly, and in any
event within ten
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(10) days after demand therefor, reimburse the Indemnitee for the
costs of defending the Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall keep the
other party reasonably informed at all times of the progress and
development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of
all relevant pleadings, correspondence and other papers. In addition,
the parties to this Agreement shall cooperate with each other and make
available to each other and their representatives all available relevant
records or other materials required by them for their use in defending,
compromising or contesting any Claim. If the Claims Notice is given
prior to the expiration of the obligations of the Indemnifying Party
under Section 10.2(c), the failure to timely deliver a Claims Notice or
otherwise notify the Indemnifying Party of the commencement of such
actions in accordance with this Section 10.3 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder except to
the extent that the Indemnifying Party establishes by competent evidence
that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the Indemnifying Party
are named as defendants in an action or proceeding initiated by a third
party, they shall both be represented by the same counsel (on whom they
shall agree), unless such counsel the Indemnitee, or the Indemnifying
Party shall determine that such counsel has a conflict of interest in
representing both the Indemnitee and the Indemnifying Party in the same
action or proceeding and the Indemnitee and the Indemnifying Party do
not waive such conflict to the satisfaction of such counsel.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in this Agreement and in any certificate,
Exhibit or Schedule delivered pursuant hereto, or in any other writing delivered
pursuant to the provisions of this Agreement and the liability of the party
making such representations and warranties for breaches thereof shall survive
the consummation of the transactions contemplated hereby until the later of the
expiration of the period set forth in Section 10.2(c), or the final resolution
of all Claims, but only as to the representations and warranties relevant to
such Claims, provided that the representations and warranties shall survive
until expiration of the applicable statute of limitations with respect to any
Claim based in whole or in part on Fraud (as defined in Section 12.3) solely as
to the portion of such Claim found to be Fraud, provided further that the
representations and warranties of the Owner set forth in Sections 3.1 through
3.5 shall survive until the later of expiration of the applicable statute of
limitations or the resolution of all Claims to the extent the representations
and warranties are relevant to such Claims. The parties hereto in executing and
delivering and in carrying out the provisions of this Agreement are relying
solely on the representations, warranties, Schedules, Exhibits, agreements and
covenants contained in this Agreement, or in any writing or document delivered
pursuant to the provisions of this Agreement, and not upon any representation,
warranty, agreement, promise or information, written or oral, made by any person
other than as specifically set forth herein or therein.
10.5 NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF. Except
as otherwise provided herein, the Owner waives any right to require any WCI
Indemnitee to (i) proceed against any Selling Entity; (ii) proceed against any
other person; or (iii) pursue any other
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remedy whatsoever in the power of any WCI Indemnitee. WCI may, but shall not be
obligated to, set off against any and all payments due to the Owner any amount
to which any WCI Indemnitee is entitled to be indemnified hereunder with respect
to any 10.1(a) Indemnity Event. Such right of set off shall be separate and
apart from any and all other rights and remedies that the Indemnities may have
against Owner or his successors.
11. OTHER POST-CLOSING COVENANTS OF THE OWNERS AND WCI
11.1 RESTRICTIVE COVENANTS. As to the Surviving Corporation, the Owners
and their Affiliates acknowledge that (i) WCI, as the ultimate purchaser of the
Corporation's Stock, is and will be engaged in the same business as the
Corporation, the Subsidiaries and the Partnerships were engaged in prior to the
Effective Time (the "Business"); (ii) the Owners and their Affiliates are
intimately familiar with the Business; (iii) the Business is currently conducted
in the States of Texas and New Mexico and WCI intends to continue the Business
in Texas and New Mexico and intends, by acquisition or otherwise, to expand the
Business into other geographic areas of Texas and New Mexico where it is not
presently conducted; (iv) the Owners and their Affiliates have had access to
trade secrets of, and confidential information concerning, the Business; (v) the
agreements and covenants contained in this Section 11.1 are essential to protect
the Business and the goodwill being acquired; and (vi) the Owners and their
Affiliates have the means to support themselves and their dependents other than
by engaging in a business substantially similar to the Business and the
provisions of this Section 11 will not impair such ability. The Owners covenant
and agree as set forth in (a), (b), (c), (d) and (e) below with respect to the
Corporation and the Subsidiaries:
(a) Non-Compete. For a period commencing on the Closing Date and
terminating five (5) years thereafter (the "Restricted Period"), none of
the Owners or any of their Affiliates (including without limitation the
Partnerships) shall, anywhere within the states of Texas and New Mexico
(the "Restricted Area"), directly or indirectly, acting individually or
as the owner, shareholder, partner, or employee of any entity other than
WCI or one of its subsidiaries, (i) engage in the Business, including
without limitation in the operation of a solid waste collection,
transportation, disposal and/or composting business, transfer facility,
recycling facility, materials recovery facility or solid waste landfill;
(ii) enter the employ of, or render any personal services to or for the
benefit of, or assist in or facilitate the solicitation of customers
for, or receive remuneration in the form of salary, commissions or
otherwise from, any business engaged in the same business as the
Business; (iii) as owner or lessor of real estate or personal property,
rent to or lease any facility, equipment or other assets to any business
engaged in the same business as the Business; or (iv) receive or
purchase a financial interest in, make a loan to, or make a gift in
support of, any such business in any capacity, including, without
limitation, as a sole proprietor, partner, shareholder, officer,
director, principal, agent, trustee or lender; provided, however, that
the Owners may own, directly or indirectly, solely as an investment,
securities of any business traded on any national securities exchange or
NASDAQ, provided none of the Owners is a controlling person of, or a
member of a group which controls, such business and further provided
that the Owners do not, in the aggregate, directly or indirectly, own 2%
or more of any class of securities of such business.
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(b) Confidential Information. During the Restricted Period and
thereafter, the Owners and their Affiliates shall keep secret and retain
in strictest confidence, and shall not use for the benefit of themselves
or others, all data and information relating to the Business
("CONFIDENTIAL INFORMATION"), including without limitation, know-how,
trade secrets, customer lists, supplier lists, details of contracts,
pricing policies, operational methods, marketing plans or strategies,
bidding information, practices, policies or procedures, product
development techniques or plans, and technical processes; provided,
however, that the term "Confidential Information" shall not include
information that (i) is or becomes generally available to the public
other than as a result of disclosure by the Owners or (ii) is general
knowledge in the solid waste handling and landfill business and not
specifically related to the Business. Notwithstanding the foregoing, the
Owners may disclose and discuss confidential information in connection
with any legal proceedings, and the Owners shall give WCI prior written
notice of such disclosure at least 48 hours before such disclosure is
made, if possible.
(c) Property of the Business. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof) relating
to the Business, including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of
the Owners or the Selling Entities or made available to them relating to
the Business, but excluding any materials (other than the minute books
of the Corporation and the Subsidiaries) maintained by any attorneys for
the Corporation or the Owners prior to the Closing, are and shall be the
property of WCI and have been delivered or will be delivered or made
available to WCI at the Closing.
(d) Non-Solicitation. Without the consent of WCI, which shall not
be unreasonably withheld, the Owners and their Affiliates shall not
solicit any employees of the Surviving Corporation or either of the
Partnerships to leave the employ of the Surviving Corporation or such
Partnership and join the Owners or any Affiliate in any business
endeavor owned or pursued by the Owners or any Affiliate.
(e) No Disparagement. From and after the Closing Date, the
Owners shall not, in any way or to any person or entity or governmental
or regulatory body or agency, denigrate or derogate WCI or any of its
subsidiaries, or any officer, director or employee, or any product or
service or procedure of any such company whether or not such denigrating
or derogatory statements shall be true and are based on acts or
omissions which are learned by the Owners from and after the date hereof
or on acts or omissions which occur from and after the date hereof, or
otherwise. A statement shall be deemed denigrating or derogatory to any
person or entity if it adversely affects the regard or esteem in which
such person or entity is held by investors, lenders or licensing,
rating, or regulatory entities. Without limiting the generality of the
foregoing, the Owners shall not, directly or indirectly in any way in
respect of any such company or any such directors or officers,
communicate with, or take any action which is adverse to the position of
any such company with any person, entity or governmental or regulatory
body or agency who or which has dealings or prospective dealings with
any such company or jurisdiction or prospective jurisdiction over any
such company. This paragraph does not apply to the extent required to
enforce this Agreement or to the extent that testimony is
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required by legal process, provided that WCI has received not less than
five days' prior written notice of such proposed testimony, if possible.
11.2 RIGHTS AND REMEDIES UPON BREACH. If the Owners or any Affiliate
breaches, or threatens to commit a breach of, any of the provisions of Section
11.1 herein (the "RESTRICTIVE COVENANTS"), WCI shall have the following rights
and remedies, each of which rights and remedies shall be independent of the
others and severally enforceable, and each of which is in addition to, and not
in lieu of, any other rights and remedies available to WCI at law or in equity:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to WCI and that
money damages would not provide an adequate remedy to WCI. Accordingly,
in addition to any other rights or remedies, WCI shall be entitled to
injunctive relief to enforce the terms of the Restrictive Covenants and
to restrain the Owners from any violation thereof.
(b) Accounting. The right and remedy to require the Owners to
account for and pay over to WCI all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Owners
as the result of any transactions constituting a breach of the
Restrictive Covenants.
(c) Severability of Covenants. The Owners acknowledge and agree
that the Restrictive Covenants are reasonable and valid in geographical
and temporal scope and in all other respects. If any court determines
that any of the Restrictive Covenants, or any part thereof, is invalid
or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to
the invalid portions.
(d) Blue-penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Owners intend to
and hereby confer jurisdiction to enforce the Restrictive Covenants upon
the courts of any jurisdiction within the geographic scope of the
Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of WCI and
the Owners that such determination not bar or in any way affect WCI's
right to the relief provided above in the courts of any other
jurisdiction within the geographic scope of the Restrictive Covenants as
to breaches of such covenants in such other respective jurisdictions,
such covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
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11.3 TERMINATION DATE.
(a) If the Effective Time has not occurred by October 31, 1999,
this Agreement shall be terminated on that date or thereafter (the
"TERMINATION DATE"), unless the Selling Entities have not then obtained
all of the consents required by Sections 6.7 and 6.8, in which event
this Agreement shall terminate 10 days after written notice from WCI to
the Corporation and the Partnerships or 10 days after the later of (i)
if any such consent is denied, the latest time for filing any appeal or
further appeal of such denial has lapsed; and (ii) if any such consent
is denied and such denial is appealed, the day the last appeal of such
denial has been dismissed, refused or decided adversely to the
Corporation or either of the Partnerships.
(b) The Corporation, Ralner, the Partnerships and the Owners
shall have the right to terminate this Agreement:
(i) Upon a breach of a representation or warranty of WCI
or the Merger Sub contained in this Agreement which has not been
cured in all material respects and which has had or is likely to
have a Material Adverse Effect and is incapable of being
satisfied by the Termination Date;
(ii) If the Merger is enjoined by a final, unappealable
court order not entered at the request or with the support of any
Selling Entity and if the Selling Entities shall have used
reasonable efforts to prevent the entry of such order; or
(iii) If WCI (A) fails to perform in any material respect
any of its covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written
notice of such default specifying such default in reasonable
detail is given to WCI by the Corporation or either of the
Partnerships.
(c) WCI shall have the right to terminate this Agreement:
(i) Upon a breach of a representation or warranty of the
Representing Parties contained in this Agreement which has not
been cured in all material respects and which has had or is
likely to have a Material Adverse Effect and is incapable of
being satisfied by the Termination Date;
(ii) If the Merger is enjoined by a final, unappealable
court order not entered at the request or with the support of WCI
and if WCI shall have used reasonable efforts to prevent the
entry of such order; and
(iii) If the Corporation, Ralner or the Owners (A) fails
to perform in any material respect any of its or his covenants in
this Agreement and (B) does not cure such default in all material
respects within 30 days after written notice of such default
specifying such default in reasonable detail is given to such
person by WCI.
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(d) WCI, the Corporation, the Owners, the Partnerships and Ralner
shall have the right to terminate the Agreement by mutual consent.
11.4 EFFECT OF TERMINATION. On termination of this Agreement, the
transactions contemplated herein shall forthwith be abandoned and all continuing
obligations and liabilities of the parties under or in connection with this
Agreement shall be terminated and of no further force or effect; provided,
however, that nothing herein shall relieve any party from liability for any
misrepresentation, breach of warranty or breach of covenant contained in this
Agreement prior to such termination or release any party from the obligations
under Sections 5.1 and 9.3.
11.5 NO DISPARAGEMENT BY WCI. From and after the Closing Date, WCI shall
not, in any way or to any person or entity or governmental or regulatory body or
agency, denigrate or derogate any of the Owners whether or not such denigrating
or derogatory statements shall be true and are based on acts or omissions which
are learned by WCI from and after the date hereof or on acts or omissions which
occur from and after the date hereof, or otherwise. A statement shall be deemed
denigrating or derogatory if it adversely affects the regard or esteem in which
an Owner is held by investors, lenders or licensing, rating, or regulatory
entities. Without limiting the generality of the foregoing, WCI shall not,
directly or indirectly in any way in respect of any Owner, communicate with, or
take any action which is adverse to the position of any Owner with any person,
entity or governmental or regulatory body or agency who or which has dealings or
prospective dealings with any Owners or jurisdiction or prospective jurisdiction
over any Owner. This Section does not apply to the extent required to enforce
this Agreement or to the extent that that testimony is required by legal
process, provided that the applicable Owner has received not less than five
days' prior written notice of such proposed testimony, if possible.
12. GENERAL
12.1 ADDITIONAL CONVEYANCES. Following the Closing, the Owner, the
Partnerships and WCI shall each deliver or cause to be delivered at such times
and places as shall be reasonably agreed upon such additional instruments as
WCI, the Surviving Corporation or the Owner may reasonably request for the
purpose of carrying out this Agreement. The Owner and the Partnerships will
cooperate with WCI and the Surviving Corporation on and after the Closing Date
in furnishing information, evidence, testimony and other assistance in
connection with any actions, proceedings or disputes of any nature with respect
to matters pertaining to all periods prior to the date of this Agreement. WCI
and the Surviving Corporation will reimburse the Owner for all reasonable
expenses incurred by him in providing such information, testimony, evidence or
assistance.
12.2 ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, the successors or assigns of WCI, Ralner, the
Partnerships and the Surviving Corporation and the heirs, legal representatives
or assigns of the Owner; provided, however, that any such assignment shall be
subject to the terms of this Agreement and shall not relieve the assignor of its
or his responsibilities under this Agreement.
12.3 NO WAIVER RELATING TO CLAIMS FOR FRAUD. Notwithstanding anything
herein to the contrary, the liability of any party under Section 10 shall be in
addition to, and not exclusive of any other liability that such party may have
at law or equity based on such party's Fraud,
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fraudulent inducement, intentional misrepresentation or concealment ("FRAUD").
Notwithstanding anything herein to the contrary, none of the provisions set
forth in this Agreement, including, but not limited to, the provisions set forth
in Sections 10.1 or 10.2 shall be deemed a waiver by any party to this Agreement
of any right or remedy which such party may have at law or equity based on any
other party's Fraud, nor shall any such provisions limit, or be deemed to limit,
(a) the amounts of recovery sought or awarded in any such claim for Fraud, (b)
the time period during which such a claim for Fraud may be brought, or (c) the
recourse which any such party may seek against another party with respect to
such a claim for Fraud; provided, however, that there shall be no adjustments of
the Aggregate Consideration based on such right or remedy after the expiration
of the applicable period set forth in Section 10.2(c).
12.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12.5 NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage pre-paid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or upon delivery by
registered or certified U.S. mail or one business day following deposit with an
air courier service:
If to the Owner: At the address set forth on Schedule 3.2
With a copy to: Xxxxx X. Xxxxx, Esq.
Scott, Hulse, Marshall, Feuille, Finger
& Xxxxxxxx, P.C.
11th Floor, Texas Commerce Bank Building
Xx Xxxx, Xxxxx 00000
Fax: (000) 000-0000
If to WCI: Waste Connections, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
12.6 ATTORNEYS' FEES. In the event of any dispute or controversy between
WCI on the one hand and the Corporation, Ralner, the Partnerships or the Owner
on the other hand relating to the interpretation of this Agreement or to the
transactions contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and expenses
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incurred by the prevailing party, as awarded by the court. Such award shall
include post-judgment attorney's fees and costs.
12.7 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to this
Agreement shall be deemed to have been disclosed on every other Schedule that
refers to such Schedule by cross reference so long as the nature of the matter
disclosed is obvious from a fair reading of the Schedule on which the matter is
disclosed.
12.8 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to its
conflict of laws provisions.
12.9 PAYMENT OF FEES AND EXPENSES. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will pay its own
fees, expenses and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder (including, in the case of the Owner, any
such fees, expenses and disbursements paid or accrued by, or charged to, any of
the Selling Entities).
12.10 INCORPORATION BY REFERENCE. All Schedules and Exhibits attached
hereto are incorporated herein by reference as though fully set forth at each
point referred to in this Agreement.
12.11 CAPTIONS. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
12.12 NUMBER AND GENDER OF WORDS. Whenever the singular number is used
herein, the same shall include the plural where appropriate, and shall apply to
all of such number, and to each of them, jointly and severally, and words of any
gender shall include each other gender where appropriate.
12.13 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, Ralner, the
Owner, WCI and the Merger Sub and supersedes any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement
may be modified or amended only by a written instrument executed or approved by
the Corporation (or the Surviving Corporation if after the Effective Time), WCI,
the Merger Sub, the Owner, Ralner and the Partnerships.
12.14 WAIVER. No waiver by any party hereto at any time of any breach
of, or compliance with, any condition or provision of this Agreement to be
performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
12.15 CONSTRUCTION. The language in all parts of this Agreement must be
in all cases construed simply according to its fair meaning and not strictly for
or against any party. Unless expressly set forth otherwise, all references
herein to a "DAY" are deemed to be a reference to a
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calendar day. All references to "BUSINESS DAY" mean any day of the year other
than a Saturday, Sunday or a public or bank holiday in Nevada or California.
Wherever reference is made in this Agreement to the "KNOWLEDGE" of the Owner,
such term means the actual knowledge of the Owner and any knowledge which should
have been obtained by the Owner upon reasonable inquiry by a reasonable business
person. Wherever reference is made in this Agreement to the "KNOWLEDGE" of a
corporation, such term means the actual knowledge of any of the Owner and any
officer, director or management employee of such corporation, and any knowledge
which should have been obtained by such person upon reasonable inquiry by a
reasonable business person. Wherever reference is made in this Agreement to the
"KNOWLEDGE" of a partnership, such term means the actual knowledge of any of the
partners and any officer or management employee of such partnership, and any
knowledge which should have been obtained by such person upon reasonable inquiry
by a reasonable business person. Unless expressly stated otherwise,
cross-references herein refer to provisions within this Agreement and are not
references to the overall transaction or to any other document.
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13. GLOSSARY
The definitions of the terms used below can be found at the page
indicated:
10.1(a) INDEMNITY EVENTS....................................................................38
accredited investor.........................................................................23
Acquisition Transaction.....................................................................29
Act..........................................................................................4
affiliate...................................................................................35
AFFILIATE...................................................................................13
affiliates..................................................................................35
AGGREGATE CONSIDERATION......................................................................4
Antitrust Division..........................................................................37
at will.................................................................................14, 33
BALANCE SHEET DATE...........................................................................8
BUSINESS....................................................................................43
business day................................................................................50
Claim.......................................................................................41
Claims Notice...............................................................................41
CLOSING......................................................................................3
CLOSING DATE.................................................................................3
Closing Date Current Assets.................................................................20
Closing Date Current Liabilities............................................................19
Closing Date Debt...........................................................................19
COLLECTION FRANCHISES.......................................................................10
Common Stock Agreement......................................................................33
CONFIDENTIAL INFORMATION....................................................................44
Corporation..................................................................................1
CORPORATION'S CERTIFICATES...................................................................5
Corporation's Stock..........................................................................4
CREC.........................................................................................1
day.........................................................................................49
El Paso Disposal.............................................................................1
ENVIRONMENTAL LAW.......................................................................20, 21
Environmental Site..........................................................................39
Environmental Site Losses...................................................................39
EQUIPMENT....................................................................................1
ERISA.......................................................................................15
Exchange Act................................................................................25
FACILITIES..................................................................................11
FACILITY....................................................................................11
FINANCIAL STATEMENTS.........................................................................8
FRAUD.......................................................................................48
FTC.........................................................................................37
GOLDEN PARACHUTE............................................................................15
GOLDEN PARACHUTE PAYMENT....................................................................16
GOVERNMENTAL PERMITS........................................................................10
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HAZARDOUS SUBSTANCE.........................................................................21
HSR Act.....................................................................................11
Indemnifying Party..........................................................................41
Indemnitee..................................................................................41
J.O..........................................................................................1
XXX..........................................................................................1
knowledge...................................................................................50
LAWS........................................................................................20
MATERIAL ADVERSE EFFECT.....................................................................17
Merger Cash..................................................................................4
MERGER PRICE.................................................................................4
MERGER STOCK.................................................................................4
MERGER SUB...................................................................................1
MTI..........................................................................................1
multi-employer plan.........................................................................15
no-action...................................................................................36
occurrence..................................................................................14
Owner........................................................................................1
Owners.......................................................................................1
PARTNERSHIPS.................................................................................1
Permitted Liens.............................................................................13
pooling of interest.........................................................................36
PROPERTY....................................................................................12
Ralner STOck.................................................................................2
RCRA........................................................................................21
Recipient...................................................................................16
RECORDS, NOTIFICATIONS AND REPORTS..........................................................11
Registration Statements......................................................................4
Release.....................................................................................39
Representing Parties.........................................................................6
Required Governmental Consents..............................................................11
RESTRICTED AREA.............................................................................43
RESTRICTED PERIOD...........................................................................43
RESTRICTIVE COVENANTS.......................................................................45
RRI..........................................................................................1
Rule 145....................................................................................35
SDC..........................................................................................1
SEC.....................................................................................25, 35
Selling Entities.............................................................................3
Selling Entity...............................................................................3
Selling PARTIES..............................................................................3
Selling Party................................................................................3
Signing Date.................................................................................6
Subsidiaries.................................................................................1
Termination Date............................................................................46
UST.........................................................................................21
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WCI..........................................................................................1
WCI INDEMNITIES.............................................................................38
WCI SEC Documents...........................................................................25
WCI STOck....................................................................................2
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IN WITNESS WHEREOF, the parties hereto have executed this Acquisition
Agreement by persons thereunto duly authorized as of the date first above
written.
THE CORPORATION: INTERNATIONAL ENVIRONMENTAL INDUSTRIES,
INC.
By:_____________________________________
X. X. Xxxxxxx, Jr., President
WCI: WASTE CONNECTIONS, INC.
By:_____________________________________
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer & President
MERGER SUB: WCI ACQUISITION CORPORATION I
By:_____________________________________
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer & President
THE OWNER:
________________________________________
X. X. Xxxxxxx, Jr.
RALNER: RALNER CORPORATION
By:_____________________________________
X. X. Xxxxxxx, Jr., President
[Signatures continue on next page.]
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XXX: XXX ENTERPRISES, LTD.
By: RALNER CORPORATION
General Partner
By:_________________________________
X. X. Xxxxxxx, Jr., President
EQUIPMENT: INTERNATIONAL ENVIRONMENTAL INDUSTRIES
EQUIPMENT COMPANY, L.P.
By: RALNER CORPORATION
General Partner
By:_________________________________
X. X. Xxxxxxx, Jr., President
The undersigned agree to be bound by the provisions of Sections 11.1 and 11.2
and shall be included in the term "Owners" only for purposes of such Sections.
____________________________________
Xxxxxx Xxx
____________________________________
Xxxxxx Xxxxx
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1. MERGER AND STOCK AND INTERESTS PURCHASE.............................................2
1.1 The Merger...................................................................2
1.2 Effective Time...............................................................2
1.3 Effects of the Merger........................................................2
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation............2
1.5 Directors....................................................................2
1.6 Officers.....................................................................2
1.7 Closing Time and Place.......................................................3
1.8 Selling Parties and Entities.................................................3
2. CONSIDERATION; CONVERSION OF SECURITIES.............................................3
2.1 Consideration................................................................3
2.2 Allocation of Aggregate Consideration........................................3
2.3 Conversion of Capital Stock..................................................4
2.4 Exchange of Merger Cash and Certificates.....................................4
2.5 Distributions................................................................5
2.6 No Further Ownership Rights in The Corporation's Stock.......................5
2.7 Lost Certificates............................................................5
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION, RALNER, THE OWNER AND THE
PARTNERSHIPS........................................................................5
3.1 Organization, Standing and Qualification.....................................5
3.2 Capitalization and Partnership Interests.....................................6
3.3 Assets Necessary to Conduct Business.........................................6
3.4 Authority for Agreement and Filed Articles...................................7
3.5 No Breach or Default.........................................................7
3.6 Subsidiaries.................................................................7
3.7 Financial Statements.........................................................7
3.8 Liabilities..................................................................8
3.9 Accurate and Complete Records................................................9
3.10 Permits and Licenses.........................................................9
3.11 Fixed Assets................................................................11
3.12 Title to Assets.............................................................11
3.13 Related Party Transactions..................................................12
3.14 Contracts and Agreements; Adverse Restrictions..............................12
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3.15 Insurance...................................................................13
3.16 Personnel...................................................................13
3.17 Benefit Plans and Union Contracts...........................................14
3.18 Taxes.......................................................................15
3.19 Customers, Xxxxxxxx, Current Receipts and Receivables.......................16
3.20 No Change With Respect to the Corporation...................................16
3.21 Bank Accounts...............................................................17
3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current
Liabilities.................................................................18
3.23 Compliance With Laws........................................................18
3.24 Powers of Attorney..........................................................20
3.25 Underground Storage Tanks...................................................20
3.26 Patents, Trademarks, Trade Names, etc.......................................21
3.27 Assets, etc. Necessary to Business..........................................21
3.28 Condemnation................................................................21
3.29 Suppliers and Customers.....................................................21
3.30 Absence of Certain Business Practices.......................................22
3.31 No Misleading Statements....................................................22
3.32 Brokers; Finders............................................................22
3.33 Accredited Investors........................................................22
3.34 S Corporation...............................................................22
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER SUB...........................22
4.1 Existence and Good Standing.................................................22
4.2 No Contractual Restrictions.................................................23
4.3 Authorization of Agreement..................................................23
4.4 Status of Shares............................................................23
4.5 Governmental Authorities; Consents..........................................23
4.6 SEC Documents...............................................................24
4.7 Capital Stock...............................................................24
4.8 No Misleading Statements....................................................24
4.9 Brokers; Finders............................................................24
4.10 Tax Free Reorganization.....................................................25
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5. COVENANTS OF THE CORPORATION AND THE OWNER PRIOR TO EFFECTIVE TIME.................25
5.1 Access; Confidential Information............................................25
5.2 Operations..................................................................25
5.3 No Change...................................................................26
5.4 Obtain Consents.............................................................27
5.5 No Change in Relative Ownership.............................................27
5.6 Control of Operations.......................................................27
5.7 Acquisition Transactions....................................................28
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI AND THE MERGER SUB TO CLOSE..............28
6.1 Representations and Warranties..............................................28
6.2 Conditions..................................................................28
6.3 No Material Adverse Change..................................................29
6.4 Certificates................................................................29
6.5 No Litigation...............................................................29
6.6 Other Deliveries............................................................29
6.7 Governmental Approvals......................................................29
6.8 Consents to Transfer........................................................29
6.9 Dissenting Shares...........................................................29
6.10 Title Insurance.............................................................29
6.11 NASDAQ Listing..............................................................30
6.12 HSR Waiting Period..........................................................30
6.13 Registration Statements.....................................................30
6.14 Schedules...................................................................30
6.15 Purchase of MTI Minority Interests..........................................30
6.16 Partnership Ownership.......................................................30
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE CORPORATION AND THE OWNER TO CLOSE.......30
7.1 Representations and Warranties..............................................30
7.2 Conditions..................................................................30
7.3 No Material Adverse Change..................................................30
7.4 Certificate.................................................................30
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7.5 No Litigation...............................................................30
7.6 Other Deliveries............................................................31
7.7 Consents to Transfer........................................................31
7.8 NASDAQ Listing..............................................................31
7.9 HSR Waiting Period..........................................................31
7.10 Registration Statements.....................................................31
7.11 Governmental Approvals......................................................31
8. CLOSING DELIVERIES.................................................................31
8.1 WCI Deliveries..............................................................31
8.2 Corporation's and Owner's Deliveries........................................32
9. ADDITIONAL COVENANTS OF WCI AND THE SELLING PARTIES................................33
9.1 Release of Guaranties.......................................................33
9.2 Release of Security Interests...............................................33
9.3 Confidentiality.............................................................33
9.4 Brokers and Finders Fees....................................................33
9.5 Taxes.......................................................................33
9.6 Short Year Tax Returns......................................................34
9.7 Rule 145 and Other Restrictions.............................................34
9.8 Agreement to Cooperate......................................................35
9.9 NASDAQ Listing..............................................................36
9.10 Notification of Certain Matters.............................................36
9.11 General Release by the Owner................................................36
9.12 Appointment of Director.....................................................37
9.13 Effectiveness of Registration Statements....................................37
10. INDEMNIFICATION....................................................................37
10.1 Indemnification Covenants...................................................37
10.2 Limitations on Indemnities..................................................39
10.3 Notice of Indemnity Claim...................................................39
10.4 Survival of Representations and Warranties..................................41
10.5 No Exhaustion of Remedies or Subrogation; Right of Set Off..................41
11. OTHER POST-CLOSING COVENANTS OF THE OWNERs AND WCI.................................41
11.1 Restrictive Covenants.......................................................41
11.2 Rights and Remedies Upon Breach.............................................43
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11.3 Termination Date............................................................44
11.4 Effect of Termination.......................................................45
11.5 No Disparagement by WCI.....................................................45
12. GENERAL............................................................................46
12.1 Additional Conveyances......................................................46
12.2 Assignment..................................................................46
12.3 No Waiver Relating to Claims for Fraud......................................46
12.4 Counterparts................................................................46
12.5 Notices.....................................................................46
12.6 Attorneys' Fees.............................................................47
12.7 Disclosure Schedules........................................................47
12.8 Applicable Law..............................................................47
12.9 Payment of Fees and Expenses................................................47
12.10 Incorporation by Reference..................................................47
12.11 Captions....................................................................47
12.12 Number and Gender of Words..................................................48
12.13 Entire Agreement............................................................48
12.14 Waiver......................................................................48
12.15 Construction................................................................48
13. GLOSSARY...........................................................................49
EXHIBIT AND SCHEDULE LIST
Exhibit 1.2 Filed Articles
Exhibit 8.1(e) Common Stock Agreement
Exhibit 8.2(b) Form of Opinion of Counsel for Owner
Schedule 2.2 Allocation of Merger Cash and Merger Stock
Schedule 2.8 Excluded Assets
Schedule 3.1 States Where Qualified to Do Business
Schedule 3.2 Authorized Capital of Corporation
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Schedule 3.5 No Breach or Default
Schedule 3.6 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8(a)-(d) Liabilities
Schedule 3.9 Accurate and Complete Records
Schedule 3.10(a) Permits and Licenses
Schedule 3.10(b) Required Governmental Consents
Schedule 3.10(c) Records, Notifications and Reports
Schedule 3.10(d) Facilities
Schedule 3.11(a) Fixed Assets
Schedule 3.11(b) Property
Schedule 3.13 Related Party Transactions
Schedule 3.14(a) Contracts and Agreements
Schedule 3.14(b) Adverse Restrictions
Schedule 3.14(c) Consents
Schedule 3.15 Insurance
Schedule 3.16 Personnel
Schedule 3.17(a) Benefit Plans
Schedule 3.17(b) Union Contracts, Agreements and Labor
Disputes
Schedule 3.18(a) Taxes
Schedule 3.18(b) Taxes Duly Paid
Schedule 3.19 Customers, Xxxxxxxx, Current Receipts and
Receivables
Schedule 3.20 No Change
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Schedule 3.21(a) Bank Accounts
Schedule 3.21(b) Credit Card or Charge Accounts
Schedule 3.22(a) Closing Date Debt
Schedule 3.22(b) Closing Date Current Assets; Closing Date
Current Liabilities
Schedule 3.23 Compliance with Laws
Schedule 3.25 Underground Storage Tanks
Schedule 3.26 Patents, Trademarks, Trade Names, etc.
Schedule 3.31 No Misleading Statements
Schedule 3.34 S Corporation
Schedule 5.3(d) No Liabilities; Expenditures
Schedule 5.5 No Change in Relative Ownership
Schedule 9.1 Release of Guaranties
Schedule 9.11 General Release by Owner
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