1
EXHIBIT 10.23
ASSET PURCHASE AGREEMENT
Dated as of April 8, 1998, by and among
Waste Connections, Inc.,
Waste Connections of Wyoming, Inc.
and
Xxxxxxxxx X. Xxxxxxxx
2
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of April 8, 1998, entered into by and
among Waste Connections, Inc., a Delaware corporation ("WCI"), Waste Connections
of Wyoming, Inc., a Delaware corporation ("WCW" or "BUYER") and Xxxxxxxxx X.
Xxxxxxxx ("SELLER").
WHEREAS, Seller is engaged in the collection and transport of solid
waste in the City of Xxxxxxxx and in certain unincorporated areas of Xxxxxxxx
County, Wyoming, and other related activities (the "BUSINESS");
WHEREAS, Seller is the sole owner of the Business;
WHEREAS, Buyer wishes to purchase, and Seller wishes to sell,
substantially all of the assets, properties, rights, privileges and interests
owned leased, held or used by Seller in connection with the operation of the
Business except certain nonbusiness related assets;
WHEREAS, Seller owns certain real estate (the "REAL PROPERTY") used in
the business, and Buyer and Seller have entered into a Real Estate Purchase and
Sale Agreement (the "REAL ESTATE AGREEMENT") of even date pursuant to which WCW
will purchase the Real Property from Seller;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. SALE AND TRANSFER OF ASSETS. Subject to and in accordance
with the terms and conditions of this Agreement, at the Closing on the Closing
Date (as defined below) Seller shall convey, transfer, deliver and assign to
Buyer, and Buyer shall accept from Seller all of the assets, rights, privileges
and interests, tangible, intangible, real, personal or mixed, and wherever
located, now or hereafter owned, leased, held or used primarily in connection
with the ownership, operation and management of the Business, including without
limitation (collectively, the "ASSETS"):
(a) the trucks, containers, operating machinery and
equipment, processing equipment, shop tools, parts, supplies,
accessories, inventory, physical assets and other tangible personal
property used primarily in connection with the ownership, operation and
management of the Business:
1
3
(b) all contracts, leases, agreements, customer
accounts, commitments and arrangements specifically identified in
Schedule 3.12(a) as contracts contemplated to be assumed by Buyer
pursuant to this Agreement (the "ASSUMED CONTRACTS");
(c) all permits, licenses, titles (including motor
vehicle titles and current registrations), fuel permits, zoning and land
use approvals and authorizations, including, without limitation, any
conditional or special use approvals or zoning variances, occupancy
permits, and any other similar documents from any and all governmental
authorities constituting a material authorization or entitlement or
otherwise material to the operation or management of the Business owned
by, issued to, or held by or otherwise benefiting Seller (the
"GOVERNMENTAL PERMITS");
(d) all customer lists of Seller relating to the
Business;
(e) the logos, trade names, fictitious business names
and service marks of Seller;
(f) the goodwill of the Business;
(g) all guarantees, warranties, indemnities and similar
rights in favor of Seller with respect to any of the Assets and all
books and records primarily in connection with the operation of the
Business; and
(h) All operating and financial records relating to the
Business, including without limitation all ledgers, books of account,
deprecation schedules, inventory information, records relating to
payables and receivables, cancelled checks, bank statements, equipment
records, maintenance records, disposal records and information
concerning customers.
Notwithstanding the foregoing, the Buyer shall not acquire any of the assets
listed on Schedule 3.2 (the "EXCLUDED ASSETS").
1.2. ASSUMPTION BY BUYER OF CERTAIN CONTRACTS. Buyer hereby
assumes and agrees to pay, perform and discharge, effective the day after the
Closing Date, all of the obligations, liabilities and commitments of Seller
accruing after the Closing Date under or with respect to each Assumed Contract,
but not including any obligation or liability for any breach thereof occurring
on or prior to the Closing Date.
1.3. EXCLUDED LIABILITIES. Notwithstanding the provisions of
Section 1.2 or any other provision hereof or any Schedule or Exhibit hereto and
regardless of any disclosure to Buyer, Buyer shall not assume or be bound by any
other duties, responsibilities, obligations, indebtedness or other liabilities
of Seller or to which Seller or any of the Assets or the Business
2
4
may be bound or affected, of whatever kind or nature, whether known, unknown,
contingent or otherwise, arising before, on or after the Closing Date (including
without limitation taxes arising from the operation of the Business or the sale
of the Assets) except, as to obligations and liabilities arising after the
Closing Date only, those obligations and liabilities expressly assumed by Buyer
pursuant to Section 1.2 (the "EXCLUDED LIABILITIES").
1.4. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE")
for the Assets shall be an amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000), (i) minus the Closing Date Debt (as defined in Section
3.19), (ii) minus the cash paid and debt assumed by Buyer in connection with the
purchase of the Real Estate under the Real Estate Agreement, (iii) minus $4,000,
reflecting the estimated cost of repair for a nonfunctional engine of a certain
truck identified as "Unit 12 - 1980 Ford LN 8000," with the difference in such
estimated cost and the actual cost of repair to be refunded to Seller within ten
(10) days after the date of repair, (iv) minus $5,000 as consideration to Xxxxx
Xxxxxxxx, Xx. for executing a Noncompete Agreement with WCI and Buyer and (v)
minus the aggregate amount of prepaid receivables for service to be provided as
listed on Schedule 1.4. The Purchase Price shall be paid as provided in Section
1.5. The cash portion of the Purchase Price paid at the Closing will be based on
Schedule 3.19 as delivered at the Closing, which the parties understand will
include only estimates of the Closing Date Debt. Within 30 days after the
Closing Date, the parties will determine the actual Closing Date Debt and will
advise Seller of such actual amount. If the Purchase Price increases, the Buyer
will promptly pay any additional amount due to Seller; if the Purchase Price
declines, Seller will promptly repay any amount due to the Buyer. If Seller
fails to do so, Buyer may offset the amount due from Seller against the next
payment due on the Note (as hereinafter defined).
1.5. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be
payable as follows: (i) One Million Dollars ($1,000,000), as adjusted pursuant
to Sections 1.4(i), (ii), (iii), (iv) and (v) shall be paid in cash at the
Closing by wire transfer or check payable in clearinghouse funds; (ii) WCI shall
pay the Closing Date Debt by wire transfer; (iii) WCI shall deliver to Seller,
in such proportions as Seller shall advise WCI at least three business days
prior to the Closing Date, 18,182 shares of WCI's Common Stock, $0.01 par value
(the "WCI STOCK"); and (iv) Three Hundred Thousand Dollars ($300,000) shall be
payable by delivery of a promissory note (the "NOTE") payable, without interest,
in two equal annual installments of One Hundred Fifty Thousand Dollars
($150,000) on the first and second anniversaries of the Closing Date. The Note
shall be secured by a lien on the assets of WCW, which lien shall be subject and
subordinate in all respects to the lien in favor of the agent for WCI's primary
bank lenders.
1.6. PRICE PROTECTION FOR SHARES OF THE WCI STOCK. If the gross
offering price of the WCI Stock in the IPO (as defined below), before
underwriting discounts and commissions and payment of expenses of the offering
(the "IPO PRICE"), is less than eleven dollars ($11.00) per share, WCI will,
within 15 days after the closing of the IPO, issue to Seller a number of
additional shares of the WCI Stock determined by dividing Two Hundred Thousand
3
5
Dollars ($200,000) by the greater of the IPO Price and nine dollars ($9.00) and
subtracting 18,182 shares. In lieu of issuing any fractional shares, WCI shall
pay cash to Seller an amount equal to the fraction of a share that would have
been delivered times the greater of the IPO Price and nine dollars ($9.00). For
purposes of this agreement, "IPO" means a public offering of the WCI Stock
registered under the Securities Act of 1933 (the "ACT") and sold through
underwriters pursuant to a firm commitment in the amount of at least five
million dollars at an IPO Price of at least five dollars ($5.00) per share.
1.7. CERTAIN TAXES. Buyer shall pay any and all sales, use,
excise, transfer and conveyance taxes payable or assessable in connection with
or as a result of the transfer of the Assets under the terms of this Agreement
and the transactions contemplated hereby. Buyer shall not be responsible for any
business, occupation, withholding, possessory interest or similar tax or
assessment or any other tax or fee of any kind relating to any period on or
prior to the Closing Date with respect to Seller, the Assets or the ownership,
operation or management of the Business.
2. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated herein (the "CLOSING") shall take place at such
time on April 8, 1998 or on such later date (the "CLOSING DATE") within ten days
after the consents required by Section 6.7 have been obtained as Buyer and
Seller shall agree, at the offices of Shartsis, Xxxxxx & Xxxxxxxx LLP, in San
Francisco, California, or through an exchange of consideration and signed
documents using overnight courier service. At the Closing, Buyer and Seller
shall deliver to each other the documents, instruments and other items described
in Section 8 of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller (i) represents and warrants that each of the following
representations and warranties is true and complete as of the date of this
Agreement (the "SIGNING DATE") with respect to Seller, the Assets and the
Business, as the case may be, and will be true as of the Closing Date, and (ii)
agrees that such representations and warranties shall survive the Closing.
3.1. STANDING AND AUTHORITY FOR BUSINESS. Seller has full power
and authority to own and lease the Assets and to carry on the Business as now
conducted.
3.2. ALL ASSETS BEING ACQUIRED. The Assets being acquired by
Buyer hereunder constitute all of the assets of Seller used and necessary to
conduct and operate the Business as presently conducted and operated (other than
certain assets set forth on Schedule 3.2, which are the Excluded Assets).
4
6
3.3. AUTHORITY FOR AGREEMENT. Seller has full right, power and
authority to enter into this Agreement and to perform her obligations hereunder.
This Agreement has been duly and validly executed and delivered by Seller and,
subject to the due authorization, execution and delivery by WCI and WCW,
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
3.4. NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.4,
the execution and delivery by Seller of this Agreement, and the consummation by
Seller of the transactions contemplated hereby, will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party from
any obligation under, any mortgage, lease, note, bond, indenture, or
material contract, agreement, license or other instrument or obligation
of any kind or nature to which Seller is a party, or by which Seller or
the Assets, are 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; or
(c) violate any agreements to which Seller is a party
relating to the Assets and the Business.
3.5. FINANCIAL STATEMENTS. Seller has delivered to Buyer, as
Schedule 3.5, copies of the financial statements ("FINANCIAL STATEMENTS") of
Seller relating to the Business for the two years ended December 31, 1997 (the
"MEASUREMENT DATE"). The Financial Statements are internally prepared, are true
and correct and fairly present the results of operations of the Business for the
respective periods indicated. Except as disclosed on Schedules 3.5, 3.6, 3.19(a)
or 3.19(b), Seller had, as of the Signing Date, and will have, as of the Closing
Date, no liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due
except, with respect to the period from the date of this Agreement through the
Closing Date, as permitted by Section 5.2(a).
3.6. LIABILITIES. Parts I, II, III and IV of Schedule 3.6, are
accurate lists and descriptions of all liabilities of Seller relating to the
Business required to be described below in the format set forth below.
(a) Part I of Schedule 3.6 lists, as of the Signing
Date, other than with respect to trade payables and as of the end of the
month prior to the Signing Date with respect to trade payables, all
indebtedness for money borrowed and all other fixed and uncontested
liabilities of any kind, character and description, whether reflected or
not reflected on the Financial Statements and whether accrued or
absolute, and states as to
5
7
each such liability the amount of such liability and to whom payable.
From the end of the month prior to the Signing Date through the Closing
Date, trade payables have been incurred only in the ordinary course of
business consistent with comparable prior periods.
(b) Part II of Schedule 3.6 lists, as of the Signing
Date, all claims, suits and proceedings which are pending against Seller
relating to the Business and, to the knowledge of Seller, all material
contingent liabilities and all material claims, suits and proceedings
threatened or anticipated against Seller relating to the Business. For
each such liability, Part II of Schedule 3.6 includes a summary
description of such liability, including, without limitation: (i) the
name of each court, agency, bureau, board or body before which any such
claim, suit or proceeding is pending, including, without limitation,
those arising under Environmental Laws (as defined in Section 3.20),
those relating to personal injury or property damage (including all
workers' compensation and occupational disease and injury claims, suits
and proceedings) and those citations arising under the Federal
Occupational Safety and Health Act or any comparable state law, (ii) the
date such claim, suit or proceeding was instituted, (iii) the parties to
such claim, suit or proceeding, (iv) a description of the factual basis
alleged to underlie such claim, suit or proceeding, including the date
or dates of all material occurrences, and (v) the amount claimed and
other relief sought.
(c) Part III of Schedule 3.6 lists, as of the Signing
Date and to the extent not otherwise included in Part I of Schedule 3.6,
all material liens, claims and encumbrances secured by any of the
Assets, including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature of
the obligation secured, and the party holding such lien, claim or
encumbrance.
(d) Part IV of Schedule 3.6 lists, as of the Signing
Date and to the extent not otherwise included in Part I or Part III of
Schedule 3.6, all real property and material personal property leasehold
interests to which Seller is a party as lessor or lessee relating to the
Business or affecting or relating to any Facility Property (as described
in Section 3.8), including a description of the nature and principal
terms of such leasehold interest and the identity of the other party
thereto.
3.7. CONDUCT OF BUSINESS. Except as set forth on Schedule 3.18,
since the Measurement Date:
(a) The Business has been conducted only in the
ordinary course; and
(b) There has been no change in the condition
(financial or otherwise) of the Assets or the liabilities or operations
of Seller relating to the Business other than changes in the ordinary
course of business, none of which either singly or in the aggregate has
been materially adverse.
6
8
3.8. PERMITS AND LICENSES.
(a) Schedule 3.8(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, titles
(including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents
constituting a material authorization or entitlement or otherwise
material to the operation of the Business by Seller (collectively the
"GOVERNMENTAL PERMITS") owned by, issued to, held by or otherwise
benefiting Seller as of the Signing Date. The status of the Governmental
Permits related to the disposal areas owned or used by Seller,
including, without limitation, any conditions thereto and, if
applicable, the expiration dates thereof, are also described in Schedule
3.8(a). Schedule 3.8(a) also sets forth the name of any governmental
agency from whom Seller or Buyer must obtain consent (the "REQUIRED
GOVERNMENTAL CONSENTS") in order to effect a direct or indirect transfer
of the Governmental Permits required as a result of the consummation of
the transactions contemplated by this Agreement. Except as set forth on
Schedule 3.8(a), all of the Governmental Permits enumerated and listed
on Schedule 3.8(a) are and will be adequate for the operation of the
Business of Seller and of each Facility Property as presently operated
and are valid and in full force and effect. All of said Governmental
Permits and agreements have been duly obtained and are in full force and
effect, and there are no proceedings pending or, to the knowledge of
Seller, threatened which may result in the revocation, cancellation,
suspension or adverse modification of any of the same. Seller has no
knowledge of any reason why all such Governmental Permits and agreements
will not remain in effect after consummation of the transactions
contemplated hereby.
(b) As part of Schedule 3.8(a), Seller has delivered to
Buyer: (i) all records, notifications, reports, permit and license
applications, engineering and geologic studies, and environmental impact
reports, tests or assessments (collectively, "RECORDS, NOTIFICATIONS AND
REPORTS") that (A) are material to the operation of the Business, or (B)
relate to the discharge or release of materials into the environment
and/or the handling or transportation of waste materials or hazardous or
toxic substances or otherwise relate to the protection of the public
health or the environment, or (C) were filed with or submitted to
appropriate governmental agencies during the past five years by Seller
or her agents, and (ii) all material notifications from such
governmental agencies to Seller or her agents in response to or relating
to any of such Records, Notifications and Reports.
(c) Schedule 3.8(c) lists, as of the Signing Date, each
facility owned, leased, operated or otherwise used by Seller for the
Business, the ownership, lease, operation or use of which is being
transferred to, assumed by or otherwise acquired directly or indirectly
by the Buyer pursuant to this Agreement or the Real Estate
7
9
Agreement (each, a "FACILITY" and collectively, the "FACILITIES").
Except as otherwise disclosed on Schedule 3.8(c):
(i) Each Facility is fully licensed, permitted
and authorized to carry on its current business under all
applicable federal, state and local statutes, orders, approvals,
zoning or land use requirements, rules and regulations and no
Facility is a non-conforming use or otherwise subject to any
restrictions regarding reconstruction.
(ii) All activities and operations at each
Facility are being and have been conducted in compliance in all
material respects with the requirements, criteria, standards and
conditions set forth in all applicable federal, state and local
statutes, orders, approvals, permits, zoning or land use
requirements and restrictions, variances, licenses, rules and
regulations.
(iii) Each Facility is located on real property
owned or leased by Seller (each a "FACILITY PROPERTY").
(iv) There are no circumstances, conditions or
reasons which are likely to be the basis for revocation or
suspension of any Facility's site assessments, permits, licenses,
consents, authorizations, zoning or land use permits, variances
or approvals relating to any Facility owned by Seller and to be
used in the Business after the Closing, and to the knowledge of
Seller there are no circumstances, conditions or reasons which
are likely to be the basis for revocation or suspension of any
site assessments, permits, licenses, consents, authorizations,
zoning or land use permits, variances or approvals relating to
any such Facility.
3.9. AFFILIATE. For purposes of this Agreement, the term
"AFFILIATE" means, with respect to any person, any person that directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with such person, 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.
8
10
3.10. FIXED ASSETS AND FACILITY PROPERTY.
(a) Schedule 3.10(a) lists, as of the Signing Date,
substantially all the fixed assets (other than real estate) of Seller
used in the Business, including, without limitation, identification of
each vehicle by description and serial number, identification of
machinery, equipment and general descriptions of parts, supplies and
inventory. Except as described on Schedule 3.10(a), all of Seller's
containers, vehicles, machinery and equipment necessary for the
operation of the Business are in good working order and condition,
normal wear and tear excepted, and all of the motor vehicles and other
rolling stock of Seller is in material compliance with all applicable
laws, rules and regulations. All such vehicles, machinery and equipment
are substantially fit for the purposes for which they are utilized and
are free from defects which could cause them to fail. All leases of
fixed assets are in full force and effect and binding upon the parties
thereto; neither Seller nor any other party to such leases is in breach
of any of the material provisions thereof.
(b) Seller has good, valid and marketable title to all
personal properties and assets, tangible and intangible, actually used
or necessary for the conduct of the Business, free of any encumbrance or
charge of any kind except: (i) liens for current taxes not yet due; and
(ii) minor imperfections of title and encumbrances, if any, that are not
substantial in amount, do not materially detract from the value of the
property subject thereto, do not materially impair the value of the
Business or the Assets, and have arisen only in the ordinary course of
business and consistent with past practice. There are and as of the
Closing Date will be no leases, occupancy agreements, options, rights of
first refusal or any other agreements or arrangements, either oral or
written, that create or confer in any person or entity the right to
acquire, occupy or possess, now or in the future, any Assets, or any
portion thereof, or create in or confer on any person or entity any
right, title or interest therein or in any portion thereof.
3.11. ACQUISITION/DISPOSAL OF ASSETS. Except as indicated on
Schedule 3.11, since the Measurement Date, Seller has not acquired or sold or
otherwise disposed of any properties or assets which, singly or in the
aggregate, have a value in excess of $5,000, or which are material to the
operation of the Business as presently conducted.
3.12. CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.12(a) lists, as of the Signing Date, and
includes copies of, all insurance policies, material contracts and
agreements relating to the Business to which Seller is a party or by
which any of the Assets is bound (including, but not limited to, joint
venture or partnership agreements, contracts with any labor
organizations, promissory notes, loan agreements, bonds, mortgages,
deeds of trust, liens, pledges, conditional sales contracts or other
security agreements). Except as
9
11
disclosed on Schedule 3.12(a), all such contracts and agreements
included in Schedule 3.12(a) are and on the Closing Date shall be in
full force and effect and binding upon the parties thereto. Except as
described or cross referenced on Schedule 3.12(a), neither Seller nor,
to Seller's knowledge, any other parties to such contracts and
agreements is in breach thereof, and none of the parties has threatened
to breach any of the material provisions thereof or notified Seller of a
default thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.12(b), there is
no outstanding judgment, order, writ, injunction or decree against
Seller, the result of which could materially adversely affect Seller,
the Business or any of the Assets, nor has Seller been notified that any
such judgment, order, writ, injunction or decree has been requested.
3.13. PERSONNEL. Schedule 3.13 is a complete list, as of the
Signing Date, of all employees (by type or classification) of Seller relating to
the Business and their respective rates of compensation, including (i) the
portions thereof attributable to bonuses, (ii) any other salary, bonus, equity
participation, or other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with employees. Schedule
3.13 also lists the driver's license number for each driver of motor vehicles
used in the Business.
10
12
3.14. BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.14(a) is a complete list as of the
Signing Date, and includes complete copies, of all employee benefit
plans and agreements currently maintained or contributed to by Seller
relating to the Business, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement plans,
welfare benefit plans and deferred compensation agreements, together
with copies of such plans, agreements and any trusts related thereto,
and classifications of employees covered thereby as of the Signing Date.
Except for the employee benefit plans described on Schedule 3.14(a),
Seller has no other pension, profit sharing, deferred compensation, or
other employee benefit plans or arrangements with any party. Except as
disclosed on Schedule 3.14(a), all employee benefit plans listed on
Schedule 3.14(a) are fully funded and in substantial compliance with all
applicable federal, state and local statutes, ordinances and
regulations. All such plans that are intended to qualify under Section
401(a) of the Internal Revenue Code have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination
letters are included as part of Schedule 3.14(a). All reports and other
documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely
filed or distributed, and copies thereof are included as part of
Schedule 3.14(a). All employee benefit plans listed on such Schedule
have been operated in accordance with the terms and provisions of the
plan documents and all related documents and policies. Seller has not
incurred any liability for excise tax or penalty due to the Internal
Revenue Service or U.S. Department of Labor nor any liability to the
Pension Benefit Guaranty Corporation for any employee benefit plan, nor
have Seller, nor party-in-interest or disqualified person, engaged in
any transaction or other activity which would give rise to such
liability. Seller has not participated in or made contributions to any
"multi-employer plan" as defined in the Employee Retirement Income
Security Act of 1974 ("ERISA"), nor would Seller be subject to any
withdrawal liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Closing Date. No
employee pension benefit plan is under funded on a termination basis as
of the date of this Agreement.
(b) Schedule 3.14(b) is a complete list, as of the
Closing Date, and includes complete copies of all union contracts and
agreements between Seller and any collective bargaining group relating
to the Business. In the operation of the Business, Seller has complied
in all material respects with all applicable federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and
are not engaged in any unfair labor practice. There is no charge pending
nor, to Seller's knowledge, is there any charge threatened against
Seller relating to the Business before any court or agency and alleging
unlawful discrimination in employment practices. There is no charge of
or
11
13
proceeding with regard to any unfair labor practice relating to the
Business that is pending before the National Labor Relations Board.
There is no labor strike, dispute, slow down or stoppage as of the
Signing Date, existing or threatened against Seller relating to the
Business; no union organizational activity exists respecting employees
of Seller relating to the Business not currently subject to a collective
bargaining agreement; except as set forth on Schedule 3.14(b), the
Business has not experienced any work stoppage or material labor
difficulty; the union contracts or other agreements delivered as part of
Schedule 3.14(b) constitute all agreements with the unions or other
collective bargaining groups relating to the Business, and there are no
other arrangements or established practices relating to the employees
covered by any collective bargaining agreement; and Schedule 3.14(b)
contains as of the Signing Date a list of all arbitration or grievance
proceedings relating to the Business that have occurred since the
Measurement Date. No one has petitioned within the last five years, and
no one is now petitioning, for union representation of any employees of
Seller relating to the Business. Seller has not experienced any labor
strike, slow-down, work stoppage, or other job action during the last
five years relating to the Business.
3.15. TAXES.
(a) Seller has timely filed all requisite federal,
state, local and other tax and information returns due for all fiscal
periods ended on or before the Signing Date. All such returns are
accurate and complete. Except as set forth on Schedule 3.15, there are
no open years, examinations in progress, extensions of any statute of
limitations or claims against Seller relating to federal, state, local
or other taxes (including penalties and interest) for any period or
periods prior to and including the 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 Seller for the last
three fiscal years are attached as part of Schedule 3.15. Seller has not
been contacted by any federal, state or local taxing authority regarding
a prospective examination.
(b) Except as set forth on Schedule 3.15 (which
schedule also includes the amount due) Seller has duly paid all taxes
and other related charges required to be paid prior to the Closing Date.
The reserves for taxes contained in the Financial Statements are
adequate to cover the tax liability of Seller as of the Closing Date.
(c) Seller has withheld all required amounts from her
employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to
income tax withholding, social security, and unemployment taxes have
been duly filed by Seller for all periods for which returns are due, and
the amounts shown on all such returns to be due and payable have been
paid in full.
12
14
3.16. COPIES COMPLETE. Except as disclosed on Schedule 3.16, the
copies of all leases, instruments, agreements, licenses, permits, certificates
or other documents that have been delivered to Buyer in connection with the
transactions contemplated hereby are complete and accurate as of the Signing
Date and are true and correct copies of the originals thereof. None of such
leases, instruments, agreements, licenses, permits, site assessments,
certificates or other documents requires notice to, or consent or approval of,
any governmental agency or other third party to any of the transactions
contemplated hereby, except such consents and approvals as are listed on
Schedule 3.16, all of which will have been obtained prior to the Closing Date.
3.17. CUSTOMERS, XXXXXXXX, CURRENT RECEIPTS AND RECEIVABLES.
Schedule 3.17 is current, accurate and complete list of, and includes:
(a) the customers of the Business that Seller serves on
an ongoing basis, including name, location and current billing rate, as
of the Signing Date; and
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month
preceding the 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 3.9 and 3.18, Seller's accounts and notes receivable are
collectible in the amounts shown on Schedules 3.9 and 3.18.
Since the Measurement Date, Seller has not lost any customers and no customers
have threatened or otherwise indicated to Seller that they intend to discontinue
doing business with Seller. Seller has no knowledge of any intention of any of
such customers that operates a coal mine to terminate or reduce the scope of its
operations at the locations served by the Business, and none of such customers
has indicated to Seller that it is considering terminating or reducing the scope
of any of its operations at any of such locations.
3.18. NO CHANGE WITH RESPECT TO SELLER. Except as set forth on
Schedule 3.18, with respect to Seller, since the Measurement Date, there has not
been, and prior to the Closing there will not be, any change in Seller's
financial condition, assets, liabilities (contingent or otherwise), income,
operations or business which would have a material adverse effect on the
financial condition, assets, liabilities (contingent or otherwise), income,
operations or the Business, taken as a whole.
13
15
3.19. CLOSING DATE DEBT. At the Closing, Seller shall prepare and
deliver to Buyer Schedule 3.19, which shall set forth the amount of (i) the
aggregate debt (excluding trade payables) of Seller outstanding on the Closing
Date relating to the Business, which debt will be repaid at or immediately after
the Closing Date, including in each case all interest accrued through and
including the Closing Date and all prepayment penalties to be incurred in
connection with the repayment of any such debt required to be repaid, plus (ii)
the present value of all capitalized lease obligations (determined in accordance
with generally accepted accounting principles) included in the Assumed Contracts
or encumbering the Assets and (iii) the present value, discounted at the lease
rate factor, if known, inherent in the lease or, if the lease rate factor is not
known, at the rate charged to Seller by a third party lender in connection with
its most recent borrowing to finance equipment, of all lease obligations that
are not capitalized lease obligations included in the Assumed Contracts or
encumbering the Assets (the "CLOSING DATE DEBT").
3.20. COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.20,
Seller has complied with, and Seller is presently in compliance with, federal,
state and local laws, ordinances, codes, rules, regulations, Governmental
Permits, orders, judgments, awards, decrees, consent judgments, consent orders
and requirements applicable to Seller relating to the Business (collectively
"LAWS"), including, but not limited to, Laws relating to the public health,
safety or protection of the environment (collectively, "ENVIRONMENTAL LAWS").
Except as disclosed on Schedule 3.20, there has been no assertion by any party
that Seller is in material violation of any Laws. Specifically and without
limiting the generality of the foregoing, except as disclosed on Schedule 3.20:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section6901 et seq. ("RCRA"), the
Business has not accepted, processed, handled, transferred, generated,
treated, stored or disposed of any Hazardous Material (as defined in
Section 3.20(e) below) nor has it accepted, processed, handled,
transferred, generated, treated, stored or disposed of asbestos, medical
waste, radioactive waste or municipal waste, except in compliance with
Environmental Laws.
(b) During Seller's ownership or leasing of the
Facility Property owned or leased by it and prior to Seller's ownership
or leasing of such Facility Property, no Hazardous Material, other than
that allowed under Environmental Laws, including, without limitation,
RCRA, has been disposed of, or otherwise released on any Facility
Property.
(c) During Seller's ownership or leasing of the
Facility Property owned or leased by it and prior to Seller's ownership
or leasing of such Facility Property, no Facility Property has ever been
subject to or received any notice of any private, administrative or
judicial action, or notice of any intended private, administrative or
14
16
judicial action relating to the presence or alleged presence of
Hazardous Material in, under, upon or emanating from any Facility
Property or any real property now or previously owned by Seller. There
are no pending and no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of any
condition of any Facility Property, including, without limitation,
petroleum contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Business has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL"
shall mean the substances (i) defined as "HAZARDOUS WASTE" in 40 CFR
261, and substances defined in any comparable applicable state statute
or regulation; (ii) any substance the presence of which requires
remediation pursuant to any Environmental Laws; and (iii) any substance
disposed of in a manner not in compliance with Environmental Laws.
3.21. PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.21 lists
all patents, tradenames, fictitious business names, trademarks, service marks,
and copyrights owned by Seller or which they are licensed to use in connection
with the Business (other than licenses to use software for personal computer
operating systems that were provided when the computer was purchased and
licenses to use software for personal computers that are granted to retail
purchasers of such software). No patents, trade secrets, know-how, intellectual
property, trademarks, trade names, assumed names, copyrights, or designations
used by Seller in the Business infringe on any patents, trademarks, or
copyrights, or any other rights of any person. Seller does not know of or have
any reason to believe that there are any claims of third parties to the use of
any such names or any similar name, or know of or have any reason to believe
that there exists any basis for any such claim or claims.
3.22. ASSETS, ETC., NECESSARY TO THE BUSINESS. Seller owns or
leases all properties and assets, real, personal, and mixed, tangible and
intangible, and, except as disclosed on Schedules 3.4, 3.8(a), 3.12(a) and 3.16,
are a party to all Governmental Permits and other agreements necessary to permit
Seller to carry on the Business as presently conducted.
3.23. SUPPLIERS AND CUSTOMERS. The relations between Seller and
the customers of the Business are good. Seller has no knowledge of any fact
(other than general economic and industry conditions) which indicates that any
of the suppliers supplying products, components, materials or providing use of,
or access to, landfills or disposal sites to Seller intends to cease providing
such items to Seller, nor does Seller have knowledge of any fact (other than
general economic and industry conditions) which indicates that any of the
customers of the Business intends to terminate, limit or reduce its business
relations with Seller relating to the Business.
15
17
3.24. ABSENCE OF CERTAIN BUSINESS PRACTICES. Seller has not
directly or indirectly within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the Business in
connection with any actual or proposed transaction which (a) might subject
Seller to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (b) if not given in the past, might have had an
adverse effect on the financial condition, business or results of operations of
the Business, or (c) if not continued in the future, might adversely affect the
financial condition, business or operations of the Business or which might
subject Buyer to suit or penalty in any private or governmental litigation or
proceeding.
3.25. DISCLOSURE SCHEDULES. Any matter disclosed by Seller on any
Schedule to this Agreement shall be deemed to have been disclosed on every other
Schedule that refers to such Schedule by cross reference so long as the nature
of the matter disclosed is obvious from a fair reading of the Schedule on which
the matter is disclosed.
3.26. NO MISLEADING STATEMENTS. The representations and
warranties of Seller contained in this Agreement, the Exhibits and Schedules
hereto and all other documents and information furnished to Buyer 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 and to be made not
misleading.
3.27. ACCURATE AND COMPLETE RECORDS. The books, ledgers,
financial records and other records of Seller relating to the Business:
(a) have been made available to Buyer and its agents at
Seller's offices or at the offices of Buyer's attorneys or Seller's
attorneys;
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material
transactions.
3.28. KNOWLEDGE. Wherever reference is made in this Agreement to
the "knowledge" of Seller, such term means the actual knowledge of Seller or any
management employee of Seller whose duties relate to the Business or any
knowledge which should have been obtained by Seller or such employee upon
reasonable inquiry by a reasonable business person.
3.29. BROKERS; FINDERS. No person has acted directly or
indirectly as a broker, finder or financial advisor for Seller in connection
with the transactions contemplated by this Agreement and no person is entitled
to any broker's, finder's, financial advisory or similar fee or payment in
respect thereof based in any way on any agreement, arrangement or understanding
made by or on behalf of Seller.
16
18
3.30. INVESTMENT REPRESENTATIONS. Seller further represents that:
(a) Seller is an "accredited investor" as defined in
Rule 501(a) under the Securities Act of 1933, as amended (the "Act").
Seller has such knowledge and experience in financial matters, either
alone or with Seller's professional advisors, that she is capable of
evaluating the merits and risks of the investment in the WCI Stock.
(b) Seller is a resident of the State of Wyoming.
(c) Seller has had access to such information relating
to WCI as Seller feels is reasonably necessary to make an informed
investment decision with respect to the WCI Stock.
(d) Seller has had the opportunity to ask questions and
receive answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain additional information that
WCI possesses or can obtain without unreasonable effort or expense that
is necessary to verify the accuracy of the information provided.
(e) Seller is acquiring the WCI Stock pursuant to this
Agreement for her own account, not as a nominee or agent. No one else
has any interest, beneficial or otherwise, in any of the WCI Stock.
(f) Seller is able to bear the economic risk of such an
investment in the WCI Stock, is aware that she must be prepared to hold
such WCI Stock for an indefinite period and is aware that the shares of
the WCI Stock have not been registered under the Act, or registered or
qualified under the California Corporate Securities Law of 1968, as
amended, or any other securities law, on the ground, among others, that
no unregistered distribution or public offering of the WCI Stock is to
be effected and that the shares of the WCI stock are being issued by WCI
without any public offering within the meaning of section 4(2) of the
Act.
(g) Without in any way limiting the representations
herein, Seller further agrees that Seller shall not encumber, pledge,
hypothecate, sell, transfer, assign or otherwise dispose of, or receive
any consideration for, any shares of the WCI Stock or any interest in
them, unless and until prior to any proposed encumbrance, pledge,
hypothecation, sale, transfer, assignment or other disposition, (i) a
registration statement on Form S-1 or S-3 (or any other form appropriate
for the purpose or replacing such form) under the Act with respect to
the shares proposed to be transferred or otherwise disposed of shall be
then effective (ii)(a) she shall have furnished WCI with a detailed
statement of the circumstances of the proposed disposition, and (b) she
shall have furnished WCI with an opinion of counsel or no-action letter
issued by the Staff of the
17
19
Securities and Exchange Commission ("SEC") (obtained at Seller's
expense) in form and substance satisfactory to WCI to the effect that
such disposition will not require registration of any such WCI Stock
under the Act or qualification of any such shares under any other
securities law; or (iii) Rule 144 is available with respect to such
transaction.
(h) Seller understands and agrees that each certificate
or other instrument representing the WCI Stock will bear a legend on the
face thereof (or on the reverse thereof with a reference to such legend
on the face thereof) which legend restricts the sale, transfer or other
disposition of the WCI Stock otherwise than in accordance with Sections
3.30(g) of this Agreement provided, however, that WCI shall, on the
request of Seller, cause such legends to be removed from the
certificates or other instrument evidencing the WCI Stock if Seller has
held such WCI Stock for the period contemplated by Rule 144(k) under the
Act and if Seller is not then and has not been during the three months
preceding such request an affiliate of WCI (as defined in Rule 144 under
the Act).
(i) Seller understands and agrees that the WCI Stock
will be "restricted securities" as that term is defined in Rule 144
under the Act and, accordingly, that the WCI Stock must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
(j) Seller hereby agrees that, during the period of
duration specified by WCI and an underwriter of the WCI Stock or other
securities of WCI, following the effective date of a registration
statement filed under the Act for the first public offering of WCI's
Common Stock, she shall not, to the extent requested by WCI and such
underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option
to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of WCI held by her at
any time during such period except the WCI Stock included in such
registration; provided, however, that:
(k) all officers and directors of WCI, enter into
similar agreements; and
(l) such market stand-off time period shall not exceed
180 days.
In order to enforce the foregoing covenant, WCI may impose
stop-transfer instructions with respect to the WCI Stock until the end of such
period.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND WCW
18
20
WCI and WCW represent and warrant to Seller that each of the following
representations and warranties is true as of the Closing Date, and agree that
such representations and warranties shall survive the Closing:
4.1. EXISTENCE AND GOOD STANDING. WCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WCW is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified to transact
business as a foreign corporation in the State of Wyoming.
4.2. AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by WCI and WCW, and, subject to the due
authorization, execution and delivery by Seller, constitutes a legal, valid and
binding obligation of WCI and WCW. Each of WCI and WCW has full corporate power,
legal right and corporate authority to enter into and perform its obligations
under this Agreement and to carry on the Business as presently conducted. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and the fulfillment of and compliance with the
terms and conditions hereof do not and will not, after the giving of notice, or
the lapse of time or otherwise: (a) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to WCW or WCI: (b)
conflict with any of the provisions of the Certificate of Incorporation or
Bylaws of WCW or WCI; or (c) conflict with, result in a breach of or constitute
a default under any material agreement or instrument to which WCW or WCI is a
party or by which either is bound.
4.3. NO MISLEADING STATEMENTS. The representations and warranties
of WCI and WCW contained in this Agreement, the Exhibits and Schedules hereto
and all other documents and information furnished to Seller pursuant hereto are
materially complete and accurate, and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
5. OPERATIONS FROM SIGNING TO CLOSING DATE
5.1. OPERATIONS. Between the Signing Date and the Closing Date,
Seller will:
(a) carry on the 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 the Assets, including those held under
leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
19
21
(c) perform all of their material obligations under
agreements relating to or affecting the Assets or the Business;
(d) keep in full force and effect present insurance
policies or other comparable insurance coverage for the Assets and the
Business;
(e) use best efforts to maintain and preserve the
Business intact, retain their present employees and maintain their
relationship with suppliers, customers and others having business
relations with the Business;
(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 the continuing operations of the Business;
(g) maintain material compliance with all Governmental
Permits and all laws, rules, regulations and consent orders applicable
to the Assets or the Business;
(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 the Business, whether or not such approval would
expire before or after the Closing; and
(i) advise Buyer promptly in writing of any material
change in any document, Schedule, Exhibit, or other information
delivered pursuant to this Agreement.
5.2. NO CHANGE. Between the Signing Date and the Closing Date,
Seller will not take any action described below without the approval of WCI:
(a) enter into any contract or commitment relating to
the Business 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 (30) day period without regard to whether such capital
expenditure is in the ordinary course of business;
(b) change or promise to change the compensation
payable or to become payable to any employee or agent, or make or
promise to make any bonus payment to any such person;
20
22
(c) create, assume or otherwise permit the imposition
of any mortgage, pledge or other lien or encumbrance upon or grant any
option or right of first refusal with respect to any of the Assets
whether now owned or hereafter acquired;
(d) sell, assign, lease or otherwise transfer or
dispose of any Assets other than in the ordinary course of business;
(e) waive any material rights or claims relating to the
Business or the Assets;
(f) amend or terminate any material agreement or any
site assessment, permit, license or other right relating to the Business
or the Assets; or
(g) enter into any other transaction outside the
ordinary course of business related to the Business or prohibited
hereunder.
5.3. OBTAIN CONSENTS. Promptly after the Signing Date, Seller
will, and the Buyer shall cooperate with Seller to, make all filings and take
all steps reasonably necessary to obtain all other approvals and consents
required to be obtained by Seller as contemplated by this Agreement.
5.4. ACCESS; CONFIDENTIAL INFORMATION. Between the Signing Date
and the Closing Date, Seller will afford to the officers and authorized
representatives of Buyer, including, without limitation, its engineers, counsel,
independent auditors and investment bankers, access to the Facilities, plants,
the Real Property and other properties, books and records of Seller relating to
the Business, and will furnish Buyer with such additional financial and
operating data and other information as to the Business and Assets as Buyer may
from time to time reasonably request. Seller will cooperate with Buyer, its
representatives and counsel in the preparation of any documents or other
material which may be required by any governmental agency. Buyer will cause all
information obtained from Seller in connection with the negotiation and
performance of this Agreement to be treated as confidential (except such
information which is in the public domain or which Buyer may be required to
disclose 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 Seller. Seller will not
disclose to any third persons other than its key employees, accountants,
bankers, financial consultants, insurance brokers or legal counsel any of the
terms or provisions of this Agreement prior to or after the Closing Date without
the prior written consent of WCI.
6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE
21
23
The obligations of the Buyer 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 Buyer:
6.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller contained in this Agreement or in any statement, Exhibit,
Schedule, certificate or document delivered by Seller 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 material respects as of the
Closing Date.
6.2. CONDITIONS. Seller shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date.
6.3. NO MATERIAL ADVERSE CHANGE. Since the date of the this
Agreement, there shall not have been any material adverse change in the
condition (financial or otherwise) in the Business or the Assets.
6.4. CERTIFICATES. Seller shall have delivered to the Buyer a
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Buyer, certifying to the fulfillment of the conditions set forth in Sections
6.1, 6.2 and 6.3.
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 shall have been
made by any federal or state governmental branch, agency, commission or
regulatory authority.
6.6. OTHER DELIVERIES. Seller shall have delivered the items that
she is required to deliver under Section 8 of this Agreement.
6.7. CONSENTS TO TRANSFER; GOVERNMENTAL APPROVALS. Each party
whose consent is required to the transactions contemplated by this Agreement,
including without limitation (if applicable) each party to any contract relating
to the Assets or the Business, each municipality or other jurisdiction that has
granted a franchise to the Corporation and each jurisdiction issuing or granting
any other Governmental Permit, shall have consented to such transactions, and
every other Required Governmental Consent shall have been obtained within sixty
(60) days after the Closing Date. If such consent is not obtained and the
failure to obtain consent is not due to WCI or Buyer, Seller agrees to pay Buyer
an amount equal to the product of 1.67 multiplied by the annual revenues
generated by the non-consenting party's account in the 1997 fiscal year.
22
24
6.8. RELEASE OF SECURITY INTERESTS. All security interests in the
Assets of Seller that have been created in favor of financial institutions or
other lenders to secure indebtedness of Seller shall have been released,
subject, where applicable to payment of the Closing Date Debt.
6.9. REAL ESTATE AGREEMENT. The Closing under the Real Estate
Agreement shall occur concurrent with the Closing hereunder.
6.10. SUBORDINATION AGREEMENT. Seller shall have entered into a
Subordination Agreement with the agent for WCI's primary bank lenders, pursuant
to which Seller agrees to subordinate her security interest in the assets of WCW
to the security interest of such banks on terms and conditions satisfactory to
such banks.
6.11. TERMINATION OF RETIREMENT PLAN. By the Closing Date, Seller
shall terminate the Simplified Employee Pension Plan provided by Fortis
Financial Group covering the following employees: Xxx Xxxxxxxxxxxxxx, Xxx
Xxxxxxxxxxxxxx and Xxxxxx Xxxxxx.
6.12. BULK SALES COMPLIANCE. If applicable, the Bulk Sales Law of
Wyoming shall have been complied with to the reasonable satisfaction of Buyer,
or such compliance shall have been waived by Buyer.
7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER TO CLOSE
The obligations of Seller under this Agreement are subject to the
satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by Seller:
7.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of WCI and WCW contained in this Agreement or in any statement,
Exhibit, Schedule, certificate or document delivered by WCI or WCW 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 material
respects as of the Closing Date.
7.2. CONDITIONS. Buyer shall have performed, satisfied and
complied 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. CERTIFICATE. Buyer shall have delivered to Seller a
certificate, dated as of the Closing Date, in form and substance satisfactory to
Seller, certifying to the fulfillment of the conditions set forth in Sections
7.1 and 7.2.
23
25
7.4. 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 shall have been
made by any federal or state governmental branch, agency, commission or
regulatory authority.
7.5. OTHER DELIVERIES. Buyer shall have delivered the items that
they are required to deliver under Section 8 of this Agreement.
7.6. REAL ESTATE AGREEMENT. The Closing under the Real Estate
Agreement shall occur concurrent with the Closing hereunder.
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
8.1. BUYER'S DELIVERIES.
(a) Buyer shall deliver the cash portion of the
Purchase Price required to be delivered on the Closing Date pursuant to
Section 1.5 and the WCI Stock to Seller.
(b) Buyer shall deliver the Note required to be
delivered pursuant to Section 1.5 to Seller.
8.2. SELLER'S DELIVERIES.
(a) Seller shall deliver to Buyer (and/or its designee)
an executed xxxx of sale and other instruments of transfer and
conveyance for the full and complete transfer, conveyance, assignment
and delivery to Buyer on the Closing Date of all of Seller's right,
title and interest in and to all of the Assets, accompanied by all third
party consents required with respect thereto, including, without
limitation, written evidence of the release of the liens and
encumbrances with respect to the Assets;
(b) Seller shall deliver to Buyer an executed
assignment or transfer of the Assumed Contracts and Governmental Permits
accompanied by all third party consents required with respect thereto;
(c) Seller shall deliver to Buyer (and/or its designee)
all motor vehicle registrations and ownership documents for the motor
vehicles being acquired by Seller;
24
26
(d) Seller shall deliver to Buyer Uniform Commercial
Code financing statement searches from the State of Wyoming, dated
within 15 days prior to the Closing Date, with an unofficial update on
the Closing Date obtained from Information America or another reporting
service, showing that there are no security interests, judgments, taxes,
other liens or encumbrances outstanding against the Assets except as
disclosed on Schedule 3.6.
(e) Seller shall deliver to Buyer an opinion of counsel
for Seller, dated as of the Closing Date, in substantially the form
attached hereto as Exhibit 8.2(e).
(f) Seller shall execute and deliver such other
documents and instruments as are reasonably requested by WCI or Buyer in
order to consummate the transactions contemplated by this Agreement.
(g) Seller shall deliver to Buyer evidence satisfactory
to Buyer showing that all written employment contracts and all oral
employment contracts other than those that are terminable "at will"
without payment of severance (other than normal severance benefits
approved by Buyer) or other benefits with non-union employees of Seller
(including, without limitation, rights to obtain equity in the Business
or Assets) have been terminated, effective on or before the Closing
Date.
9. ADDITIONAL COVENANTS OF WCI, WCW AND SELLER
9.1. CONFIDENTIALITY. Seller shall not disclose or make any
public announcements of the existence or terms of this Agreement or the
transactions contemplated by this Agreement without the prior written consent of
WCI, unless required to make such disclosure or announcement by law, in which
event Seller shall notify WCI at least 24 hours before such disclosure or
announcement is expected to be made.
9.2. 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.
9.3. PAYMENTS RECORDED BY SELLER AFTER CLOSING DATE. Seller shall
receive in trust and pay over to Buyer any payments or other moneys received by
Seller after the Closing Date that relate to the Business, the Assets or
services provided by Seller to customers identified on Schedule 3.12(a).
9.4. CONSENTS. Seller will use reasonable commercial efforts to
obtain the consents required to satisfy Section 6.7 prior to the Termination
Date. Buyer shall be under no obligation to agree to any condition imposed by
any party granting any such consent.
25
27
9.5. COLLECTION SERVICE TO BE PROVIDED TO SELLER. Until the first
anniversary of the Closing Date, WCW shall provide the following collection
services to Seller at the following rates: (i) Diamond Trailer Court: three two
yard containers twice a week--$135 per month; (ii) Pat's Liquors: one two yard
recycling container once a week--$25 per month; (iii) Northview Trailer Park:
seven two yard containers twice a week--$295 per month; and (iv) Xxxxxx Trailer
Court: one two yard and one three yard container twice a week--$95 per month.
Should Seller sell or otherwise dispose of any of such properties prior to the
first anniversary of the Closing Date, WCW's obligations hereunder shall
terminate.
9.6. MOTOR VEHICLE OWNERSHIP. Seller shall obtain lawful evidence
of Seller's ownership of a certain truck identified as "Unit 15 - 1980 Ford LN
8000" and shall transfer title to such motor vehicle to Buyer within ninety (90)
days of the Closing Date (the "90-day Period"). If proof of ownership of such
vehicle is not delivered to Buyer within the 90- day Period, Buyer has the
option to deduct from the Purchase Price the fair market value of the truck as
of the last day of the 90-day Period or to take any other action reasonably
necessary to compensate for Buyer's loss resulting from Seller's failure to
obtain title to such vehicle.
9.7. SELLER'S PERSONAL EFFECTS. Seller shall remove any and all
personal effects from the Real Property within six weeks of the Closing Date. If
any of Seller's personal property is remaining on the Real Property on the last
day of such six-week period, Buyer has Seller's consent to dispose of such
personal property in any manner, with any costs of disposal to be reimbursed by
Seller.
10. INDEMNIFICATION
10.1. INDEMNITY BY SELLER. Subject to Section 10.2, Seller
covenants and agrees that she will indemnify and hold harmless WCI and WCW and
their respective directors, officers and agents and their respective successors
and assigns (collectively the "INDEMNITEES"), from and after the date of this
Agreement, against any and all losses, damages, assessments, fines, penalties,
adjustments, liabilities, claims, deficiencies, costs, expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation), expenditures, including, without limitation, any "ENVIRONMENTAL
SITE LOSSES" (as such term is hereinafter defined) identified by a WCI
Indemnitee with respect to each of the following contingencies until the
expiration of the applicable statute of limitations (all, the "INDEMNITY
EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Seller
pursuant to the terms of this Agreement or any misrepresentation in or
omission from any Exhibit, Schedule, list, certificate, or other
instrument furnished or to be furnished to WCI or WCW pursuant to the
terms of this Agreement, regardless of whether, in the case of a breach
of a
26
28
representation or a warranty, WCI or WCW relied on the truth ofsuch
representation or warranty or had any knowledge of any breach thereof.
(b) The design, development, construction or operation
of any "ENVIRONMENTAL SITE" as hereinafter defined, or the installation
or operation of an Underground Storage Tank ("UST") during any period on
or prior to the Closing Date. As used in this Agreement, "Environmental
Site" shall mean any facility, any UST and any other waste storage,
processing, treatment or disposal facility, and any other business site
or any other real property owned, leased, controlled or operated by
Seller or by any predecessor thereof on or prior to the Closing Date and
used in the Business, provided however, as to activities of such
predecessors, only to the extent that Seller had knowledge of such
activities. As used in this Agreement, "ENVIRONMENTAL SITE LOSSES" shall
mean any and all losses, damages (including exemplary damages and
penalties), liabilities, claims, deficiencies, costs, expenses, and
expenditures (including, without limitation, expenses in connection with
site evaluations, risk assessments and feasibility studies) arising out
of or required by an interim or final judicial or administrative decree,
judgment, injunction, mandate, interim or final permit condition or
restriction, cease and desist order, abatement order, compliance order,
consent order, clean-up order, exhumation order, reclamation order or
any other remedial action that is required to be undertaken under
federal, state or local law in respect of operating activities on or
affecting any facility, any UST or any other Environmental Site,
including, but not limited to (x) any actual or alleged violation of any
law or regulation respecting the protection of the environment,
including, but not limited to, RCRA and CERCLA or any other law or
regulation respecting the protection of the air, water and land and (y)
any remedies or violations, whether by a private or public action,
alleged or sought to be assessed as a consequence, directly or
indirectly, of any "RELEASE" (as defined below) of pollutants (including
odors) or Hazardous Substances from any facility, any UST or any other
Environmental Site resulting from activities thereat, whether such
Release is into the air, water (including groundwater) or land and
whether such Release arose before, during or after the Closing Date. The
term "Release" as used herein means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the ambient environment.
(c) All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the foregoing.
10.2. LIMITATIONS ON SELLER'S INDEMNITIES. The maximum amount
which the Indemnitees can recover as a result of one or more Indemnity Events
pursuant to the provisions hereof for Claims shall not in the aggregate exceed
the Purchase Price.
27
29
10.3. NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any Indemnitee as to which
such Indemnitee may be entitled to indemnification hereunder, WCI
Indemnitee shall notify Seller (the "INDEMNIFYING PARTY") in writing
thereof (the "CLAIMS NOTICE") within 60 days after (i) receipt of
written notice of commencement of any third party litigation against
such Indemnitee, (ii) receipt by such Indemnitee of written notice of
any third party claim pursuant to an invoice, notice of claim or
assessment, against such Indemnitee, or (iii) such Indemnitee becomes
aware of the existence of any other event in respect of which
indemnification may be sought from the Indemnifying Party (including,
without limitation, any inaccuracy of any representation or warranty or
breach of any covenant). The Claims Notice shall describe the Claim and
the specific facts and circumstances in reasonable detail, and shall
indicate the amount, if known, or an estimate, if possible, of the
losses that have been or may be incurred or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend any
Claim for money damages where the cumulative total of all Claims
(including such Claims) do not exceed the limit set forth in Section
10.2 at the time the Claim is made, by the Indemnifying Party's own
counsel; provided, however, the Indemnifying Party may assume and
undertake the defense of such a third party Claim only upon written
agreement by the Indemnifying Party that the Indemnifying Party is
obligated to fully indemnify WCI Indemnitee with respect to such action.
WCI Indemnitee may participate, at WCI's Indemnitee's own expense, in
the defense of any Claim assumed by the Indemnifying Party. Without the
written approval of WCI Indemnitee, which approval shall not be
unreasonably withheld, the Indemnifying Party shall not agree to any
compromise of a Claim defended by the Indemnifying Party.
(c) If, within 30 days of the Indemnifying Party's
receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 10.3(b) and elected
to defend the Claims, WCI Indemnitee shall have the right to assume
control of the defense and/or compromise of such Claim, and the costs
and expenses of such defense, including reasonable attorneys' fees,
shall be added to the Claim. The Indemnifying Party shall promptly, and
in any event within 30 days reimburse WCI 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
28
30
to each other and their representatives all available relevant records
or other materials required by them for their use in defending,
compromising or contesting any Claim. The failure to timely deliver a
Claims Notice or otherwise notify the Indemnifying Party of the
commencement of such actions in accordance with this Section 10.3 shall
not relieve the Indemnifying Party from the obligation to indemnify
hereunder but only to the extent that the Indemnifying Party establishes
by competent evidence that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the
Indemnifying Party are named as defendants in an action or proceeding
initiated by a third party, they shall both be represented by the same
counsel (on whom they shall agree), unless such counsel, the Indemnitee,
or the Indemnifying Party shall determine that such counsel has a
conflict of interest in representing both the Indemnitee and the
Indemnifying Party in the same action or proceeding and the Indemnitee
and the Indemnifying Party do not waive such conflict to the
satisfaction of such counsel.
10.4. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties of the parties contained in this Agreement and in
any certificate, Exhibit or Schedule delivered pursuant hereto, or in any other
writing delivered pursuant to the provisions of this Agreement (the
"REPRESENTATIONS AND WARRANTIES") and the liability of the party making such
Representations and Warranties for breaches thereof shall survive the
consummation of the transactions contemplated hereby. The parties hereto in
executing and delivering and in carrying out the provisions of this Agreement
are relying solely on the representations, warranties, Schedules, Exhibits,
agreements and covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement, and not upon
any representation, warranty, agreement, promise or information, written or
oral, made by any persons other than as specifically set forth herein or
therein.
10.5. NO EXHAUSTION OF REMEDIES OR SUBROGATION; RIGHT OF SET OFF.
Seller waives any right to require any Indemnitee to (i) proceed against any
other person or (iii) pursue any other remedy whatsoever in the power of any
Indemnitee. Buyer may, but shall not be obligated to, set off against any and
all payments due Seller on the Note, any amount to which WCI, WCW or any other
WCI Indemnitee is entitled to be indemnified hereunder with respect to any
Indemnity Event. Such right of set off shall be separate and apart from any and
all other rights and remedies that the Indemnities may have against Seller or
her successors.
29
31
11. OTHER POST-CLOSING COVENANTS OF SELLER AND WCI
11.1. RESTRICTIVE COVENANTS. Seller acknowledges that (i) WCI and
Buyer, as the purchasers of the Assets (including the goodwill of the Business),
are and will be engaged in the same business as the Business; (ii) Seller is
intimately familiar with the Business; (iii) the Business is currently conducted
in the State of Wyoming and WCI and Buyer, directly and indirectly through their
Affiliates, currently conduct business in Wyoming and intend, by acquisition or
otherwise, to expand the Business into other geographic areas of Wyoming where
it is not presently conducted; (iv) Seller has 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) Seller has the means to support
herself and her 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. Seller covenant and agree as set forth in (a), (b) and (c) below
with respect to the Business:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating seven years thereafter (the "RESTRICTED PERIOD"),
Seller shall not, anywhere in the city of Gillette, Wyoming and
Campbell, Crook, Weston, Converse, Xxxxxxx and Sheridan Counties,
Wyoming, directly or indirectly, acting individually or as the owners,
shareholders, partners, or employees of any entity, (i) engage in the
operation of a solid waste collection, transporting, disposal and/or
composting business, transfer facility, recycling facility, materials
recovery facility or solid waste landfill; (ii) enter the employ of, or
render any personal services to or for the benefit of, or assist in or
facilitate the solicitation of customers for, or receive remuneration in
the form of salary, commissions or otherwise from, any business engaged
in such activities; or (iii) receive or purchase a financial interest
in, make a loan to, or make a gift in support of, any such business in
any capacity, including, without limitation, as a sole proprietor,
partner, shareholder, officer, director, principal, agent, trustee or
lender; provided, however, that Seller may (x) engage in the operation
of a septic system pumping business; and (y) own, directly or
indirectly, solely as an investment, securities of any business traded
on any national securities exchange or NASDAQ, provided Seller is not a
controlling person of, or member of a group which controls, such
business and further provided that Seller does not, in the aggregate,
directly or indirectly, own 2% or more of any class of securities of
such business.
(b) CONFIDENTIAL INFORMATION. During the Restricted
Period and thereafter, Seller shall keep secret and retain in strictest
confidence, and shall not use for the benefit of herself or others, all
data and information relating to the Business ("CONFIDENTIAL
INFORMATION"), including without limitation, the existence of and terms
of this Agreement, know-how, trade secrets, customer lists, supplier
lists, details of contracts, pricing policies, operational methods,
marketing plans or strategies, bidding practices and policies, product
development techniques or plans, and technical processes;
30
32
provided, however, that the term "Confidential Information" shall not
include information that (i) is or becomes generally available to the
public other than as a result of disclosure by Seller, or (ii) is
general knowledge in the solid waste handling and landfill business and
not specifically related to the Business.
(c) PROPERTY OF THE BUSINESS. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by or on
behalf of Seller or made available to Seller relating to the Business
(other than those relating to the Excluded Assets and the Excluded
Liabilities), but excluding any materials maintained by any attorneys
for Seller prior to the Closing, are and shall be the property of WCI or
WCW and have been delivered or will be delivered or made available to
WCI or WCW at the Closing.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, Seller shall not
solicit any employees of WCI, WCW or their Affiliates to leave the
employ of WCI, WCW or their Affiliates and join Seller in any business
endeavor owned or pursued by Seller.
(e) NO DISPARAGEMENT. From and after the Closing Date,
Seller shall not, in any way to any customer or employee of the Business
or Buyer, denigrate or derogate WCI, Buyer or any of their subsidiaries,
or any officer, director or employee, or any product or service or
procedure of any such company whether or not such denigrating or
derogatory statements shall be true and are based on acts or omissions
which are learned by Seller from and after the date hereof or on acts or
omissions which occur from and after the date hereof, or otherwise. A
statement shall be deemed denigrating or derogatory to any person if it
adversely affects the regard or esteem in which such person or entity is
held by such person. Without limiting the generality of the foregoing,
Seller 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 customer or employee of the Business or Buyer. This paragraph
does not apply to the extent that testimony is required by legal
process, provided that WCI has received not less than five days' prior
written notice of such proposed testimony, or such lesser actual notice
as Seller shall have.
11.2. RIGHTS AND REMEDIES UPON BREACH. If Seller breachs, or
threatens to commit a breach of, any of the provisions of Section 11.1(a), (b)
or (d) herein (the "RESTRICTIVE COVENANTS"), WCI and WCW shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to
Buyer at law or in equity:
31
33
(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 WCW and that money damages would not provide an adequate remedy
to WCW. Accordingly, in addition to any other rights or remedies, WCI
and WCW shall be entitled to injunctive relief to enforce the terms of
the Restrictive Covenants and to restrain Seller from any violation
thereof.
(b) ACCOUNTING. The right and remedy to require Seller
to account for and pay over to WCI or WCW all compensation, profits,
monies, accruals, increments or other benefits derived or received by
Seller as the result of any transactions constituting a breach of the
Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. Seller acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof,
is invalid or unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) BLUE-PENCILING. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because
of the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to
the extent necessary to render it enforceable and, in its reduced form,
such provision shall then be enforced.
(e) ENFORCEABILITY IN JURISDICTION. WCI, Buyer and
Seller 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, Buyer and Seller that such determination not bar
or in any way affect Buyer's right to the relief provided above in the
courts of any other jurisdiction within the geographic scope of the
Restrictive Covenants as to breaches of such covenants in such other
respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
12. TERMINATION OF AGREEMENT
32
34
12.1. TERMINATION DATE. If the Closing Date has not occurred by
June 30, 1998, this Agreement shall be terminated on June 30, 1998, unless
Seller has not then obtained all of the consents required by Section 6.7, in
which event this Agreement shall terminate 10 days after the latest of (i) if
any such consent is denied, the latest time for filing any appeal or further
appeal of such denial has lapsed; (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 Seller; and (iii) if such consent is denied,
written notification from Buyer to Seller that Buyer has elected to terminate
this Agreement.
12.2. TERMINATION BY BUYER; BY SELLER. This Agreement may be
terminated at any time prior to the Closing Date:
(a) by Buyer, by written notice to Seller if the
representations and warranties of Seller shall not have been true and
correct in all respects as of the date when made; or
(b) by Seller by written notice to WCI if the
representations and warranties of Buyer shall not have been true and
correct in all respects as of the date when made.
12.3. NOTICE AND EFFECT OF TERMINATION. On termination of this
Agreement, the transactions contemplated herein shall forthwith be abandoned and
all continuing obligations and liabilities of the parties under or in connection
with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained in
this Agreement prior to such termination.
12.4. EXCLUSIVE NEGOTIATIONS. Following execution of this
Agreement, Seller shall not, and Seller shall not permit its employees or agents
to, initiate, negotiate or discuss with any other person or entity the possible
sale of all or substantially all of the Assets or the Business with any party
other than Buyer. Seller hereby confirms that no person or entity presently has
or may acquire any rights to purchase or otherwise acquire the Assets or the
Business.
33
35
13. GENERAL
13.1. ADDITIONAL CONVEYANCES. Following the Closing, Seller and
Buyer shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon such additional instruments as Buyer or Seller
may reasonably request for the purpose of carrying out this Agreement. Seller
will cooperate with WCI and Buyer on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings or disputes of any nature with respect to matters
pertaining to all periods prior to the date of this Agreement. Without limiting
the generality of the foregoing, Seller acknowledge that WCI has filed a
registration statement with the Securities and Exchange Commission (the "SEC")
with the expectation that it will conduct an initial public offering in the near
future, and that as a public company WCI will be required to file with the SEC
and make a available to the public historical audited financial statements
which, after the Closing Date, will include the operations of the Business for
the years ended December 31, 1997, 1996, 1995, 1994 and 1993, as well as for the
period from January 1, 1998, through the Closing Date. Seller will cooperate
with WCI and its auditors, and will make available to WCI and its auditors to
the extent not included in the Assets, all records of Seller relating to the
Business to the extent necessary to enable the information included in such
records to be audited and included in WCI's consolidated financial statements or
stated separately in accordance with SEC rules.
13.2. ASSIGNMENT. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI,
WCW and Seller and Seller's heirs, legal representatives or assigns; provided,
however, that any such assignment shall be subject to the terms of this
Agreement and shall not relieve the assignor of its or his responsibilities
under this Agreement. Buyer may assign some or all of their rights hereunder to
another affiliate of WCI.
13.3. PUBLIC ANNOUNCEMENTS. Except as required by law, Seller
shall not make any public announcement or filing with respect to the
transactions provided for herein without the prior written consent of WCI.
13.4. 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.
13.5. NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if in writing
and either delivered personally, sent by facsimile transmission or by air
courier service, or mailed by postage prepaid registered or certified U.S. mail,
return receipt requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given hereunder, and shall
be effective upon personal delivery or facsimile transmission thereof or upon
delivery by registered or certified U.S. mail or one business day following
deposit with an air courier service:
34
36
If to Seller: Xxxxxxxxx X. Xxxxxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxx Xxxxxxx, Esq.
Law Offices of Xxxxxxx Xxxxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
If to Buyer: Waste Connections, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
With a copy to: Xxxxxx X. Xxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
13.6. ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI or WCW on the one hand and Seller 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 incurred by the prevailing party. Such award shall
include post-judgment attorney's fees and costs.
13.7. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wyoming without regard to
its conflict of laws provisions.
13.8. PAYMENT OF FEES AND EXPENSES. Whether or not the
transactions herein contemplated shall be consummated, each party hereto will
pay its own fees, expenses and disbursements incurred in connection herewith and
all other costs and expenses incurred in the performance and compliance with all
conditions to be performed hereunder.
13.9. INCORPORATION BY REFERENCE. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though fully set forth
at each point referred to in this Agreement.
13.10. CAPTIONS. The captions in this Agreement are for
convenience only and shall not be considered a part hereof or affect the
construction or interpretation of any provisions of this Agreement.
35
37
13.11. NUMBER AND GENDER OF WORDS. Whenever the singular number
is used herein, the same shall include the plural where appropriate, and shall
apply to all of such number, and to each of them, jointly and severally, and
words of any gender shall include each other gender where appropriate.
13.12. ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the entire Agreement and understanding between Seller, WCI and Buyer
and supersedes any prior agreement and understanding relating to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written instrument executed by Seller, WCI and Buyer acting through their
officers, thereunto duly authorized.
13.13. WAIVER. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this Agreement to
be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
13.14. CONSTRUCTION. The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Unless expressly set forth otherwise, all
references herein to a "day" are deemed to be a reference to a calendar day. All
references to "business day" mean any day of the year other than a Saturday,
Sunday or a public or bank holiday in California or Wyoming. 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.
14. GLOSSARY. The definitions of the terms used below can be found at
the Section indicated:
Term Section
---- -------
Act 1.6
Affiliate 3.9.
Assets 1.1.
Assumed Contracts 1.1.(b)
Business First Recital
Buyer Parties
Claim 10.3.(a)
Claims Notice 10.3.(a)
Closing 2.
Closing Date 2.0
Closing Date Debt 3.19.(a)
Confidential Information 11.1.(b)
Environmental Laws 3.20.
Environmental Site 10.1.
36
38
Environmental Site Losses 10.1.
Excluded Assets 1.1.
Excluded Liabilities 1.3.
Facility 3.8.(c)
Facilities 3.8.(c)
Facility Property 3.8.(c)(iii)
Financial Statements 3.5.
Governmental Permits 1.1.(c)
Hazardous Material 3.20.(e)
Hazardous Waste 3.20.(e)
Indemnifying Party 10.3.(a)
Indemnitees 10.1.
Indemnity Events 10.1.
IPO 1.6
IPO Price 1.6
Laws 3.20.
Measurement Date 3.5.
Note 1.5.
Purchase Price 1.4.
RCRA 3.20.(a)
Real Property Fourth Recital
Real Estate Agreement Fourth Recital
Records, Notifications and Reports 3.8.(b)
Release 10.1.(b)
Representations and Warranties 10.4.
Required Governmental Consents 3.8.(a)
Restrictive Covenants 11.2.
Restricted Period 11.1.(a)
Seller Parties
Signing Date 3.
WCI Parties
WCW Parties
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
SELLER:
--------------------------------
Xxxxxxxxx X. Xxxxxxxx
WCI: Waste Connections, Inc.
37
39
By:
-------------------------------------
Xxx X. Xxxxxxxxxxxx
President, Chief Executive
Officer and Chairman
WCW: Waste Connections of Wyoming,
Inc.
By:
-------------------------------------
Xxx X. Xxxxxxxxxxxx
President, Chief Executive
Officer and Chairman
38
40
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF ASSETS......................................................... 1
1.1. Sale and Transfer of Assets................................................. 1
1.2. Assumption by Buyer of Certain Contracts.................................... 2
1.3. Excluded Liabilities........................................................ 2
1.4. Purchase Price.............................................................. 2
1.5. Payment of Purchase Price................................................... 3
1.6. Price Protection for Shares of the WCI Stock................................ 3
1.7. Certain Taxes............................................................... 3
2. CLOSING TIME AND PLACE.............................................................. 4
3. REPRESENTATIONS AND WARRANTIES OF SELLER............................................ 4
3.1. Standing and Authority for Business......................................... 4
3.2. All Assets Being Acquired................................................... 4
3.3. Authority for Agreement..................................................... 4
3.4. No Breach or Default........................................................ 4
3.5. Financial Statements........................................................ 5
3.6. Liabilities................................................................. 5
3.7. Conduct of Business......................................................... 6
3.8. Permits and Licenses........................................................ 6
3.9. Affiliate................................................................... 8
3.10. Fixed Assets and Facility Property.......................................... 8
3.11. Acquisition/Disposal of Assets.............................................. 8
3.12. Contracts and Agreements; Adverse Restrictions.............................. 8
3.13. Personnel................................................................... 9
3.14. Benefit Plans and Union Contracts........................................... 9
3.15. Taxes....................................................................... 10
3.16. Copies Complete............................................................. 11
3.17. Customers, Xxxxxxxx, Current Receipts and Receivables....................... 11
3.18. No Change With Respect to Seller............................................ 12
3.19. Closing Date Debt........................................................... 12
3.20. Compliance With Laws........................................................ 12
3.21. Patents, Trademarks, Trade Names, etc....................................... 13
3.22. Assets, etc., Necessary to the Business..................................... 13
3.23. Suppliers and Customers..................................................... 13
3.24. Absence of Certain Business Practices....................................... 14
3.25. Disclosure Schedules........................................................ 14
3.26. No Misleading Statements.................................................... 14
3.27. Accurate and Complete Records............................................... 14
i
41
Page
3.28. Knowledge................................................................... 14
3.29. Brokers; Finders............................................................ 14
3.30. Investment Representations.................................................. 15
4. REPRESENTATIONS AND WARRANTIES OF WCI AND WCW....................................... 16
4.1. Existence and Good Standing................................................. 17
4.2. Authorization of Agreement.................................................. 17
4.3. No Misleading Statements.................................................... 17
5. OPERATIONS FROM SIGNING TO CLOSING DATE............................................. 17
5.1. Operations.................................................................. 17
5.2. No Change................................................................... 18
5.3. Obtain Consents............................................................. 19
5.4. Access; Confidential Information............................................ 19
6. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE................................ 19
6.1. Representations and Warranties.............................................. 19
6.2. Conditions.................................................................. 19
6.3. No Material Adverse Change.................................................. 20
6.4. Certificates................................................................ 20
6.5. No Litigation............................................................... 20
6.6. Other Deliveries............................................................ 20
6.7. Consents to Transfer; Governmental Approvals................................ 20
6.8. Release of Security Interests............................................... 20
6.9. Real Estate Agreement....................................................... 20
6.10. Subordination Agreement..................................................... 20
6.12. Bulk Sales Compliance....................................................... 21
7. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER TO CLOSE............................... 21
7.1. Representations and Warranties.............................................. 21
7.2. Conditions.................................................................. 21
7.3. Certificate................................................................. 21
7.4. No Litigation............................................................... 21
7.5. Other Deliveries............................................................ 21
7.6. Real Estate Agreement....................................................... 21
8. CLOSING DELIVERIES.................................................................. 21
8.1. Buyer's Deliveries.......................................................... 21
8.2. Seller's Deliveries......................................................... 22
9. ADDITIONAL COVENANTS OF WCI, WCW AND SELLER......................................... 23
ii
42
Page
9.1. Confidentiality............................................................. 23
9.2. Brokers and Finders Fees.................................................... 23
9.3. Payments Recorded by Seller After Closing Date.............................. 23
9.4. Consents.................................................................... 23
9.5. Collection Service to be Provided to Seller................................. 23
10. INDEMNIFICATION..................................................................... 23
10.1. Indemnity by Seller......................................................... 24
10.2. Limitations on Seller's Indemnities......................................... 25
10.3. Notice of Indemnity Claim................................................... 25
10.4. Survival of Representations, Warranties and Agreements...................... 26
10.5. No Exhaustion of Remedies or Subrogation; Right of Set Off.................. 26
11. OTHER POST-CLOSING COVENANTS OF SELLER AND WCI...................................... 27
11.1. Restrictive Covenants....................................................... 27
11.2. Rights and Remedies Upon Breach............................................. 28
12. TERMINATION OF AGREEMENT............................................................ 29
12.1. Termination Date............................................................ 29
12.2. Termination by Buyer; by Seller............................................. 29
12.3. Notice and Effect of Termination............................................ 30
12.4. Exclusive Negotiations...................................................... 30
13. GENERAL............................................................................. 30
13.1. Additional Conveyances...................................................... 30
13.2. Assignment.................................................................. 30
13.3. Public Announcements........................................................ 31
13.4. Counterparts................................................................ 31
13.5. Notices..................................................................... 31
13.6. Attorneys' Fees............................................................. 31
13.7. Applicable Law.............................................................. 32
13.8. Payment of Fees and Expenses................................................ 32
13.9. Incorporation by Reference.................................................. 32
13.10. Captions.................................................................... 32
13.11. Number and Gender of Words.................................................. 32
13.12. Entire Agreement............................................................ 32
13.13. Waiver...................................................................... 32
13.14. Construction................................................................ 32
14. GLOSSARY............................................................................ 32
iii