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Exhibit 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
ALLIED WASTE INDUSTRIES, INC.
(SELLER)
AND
STERICYCLE, INC.
(BUYER)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of April 14, 1999,
between ALLIED WASTE INDUSTRIES, INC., a Delaware corporation or its subsidiary
nominee ("Seller"), and STERICYCLE, INC., a Delaware corporation ("Buyer").
WHEREAS, a component of Seller's current business operations is the
provision of regulated medical waste collection, transportation and disposal
services within the United States, and Seller owns certain assets utilized in
the provision of such services (such business operations and assets are
referred to herein, collectively, as the "Allied Medical Waste Operations");
and
WHEREAS, Seller has entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Xxxxxxxx-Xxxxxx Industries, Inc. ("BFI"), dated March
7, 1999, whereby a wholly-owned subsidiary of Seller will be merged with and
into BFI, with BFI surviving as a wholly-owned subsidiary of Seller (the "BFI
Merger"); and
WHEREAS, a component of BFI's current business operations is the provision
of regulated medical waste collection, transportation and disposal services
within the United States and Puerto Rico, and BFI owns certain assets utilized
in the provision of such services (such business operations and assets are
referred to herein, collectively, as the "BFI Medical Waste Operations" and,
together with the Allied Medical Waste Operations, as the "Business"); and
WHEREAS, in anticipation of the BFI Merger, and to consolidate its medical
waste operations, Seller intends to: (i) cause BFI to transfer to a
newly-formed Delaware corporation which will be a wholly-owned subsidiary of
BFI (the "Company"), the BFI Medical Waste Operations, and (ii) concurrently
with the closing of the BFI Merger, transfer the Allied Medical Waste
Operations to the Company (unless the context requires otherwise, all
references in this Agreement to the Company assume the Company's ownership and
operation of the Business at all relevant times); and
WHEREAS, concurrently with the closing of the BFI Merger and the
consolidation of the medical waste operations described in the preceding
paragraph, Buyer desires to acquire from Seller its entire consolidated medical
waste operations, including the Allied Medical Waste Operations and the BFI
Medical Waste Operations obtained by Seller through the BFI Merger, through the
purchase from Seller or its subsidiary nominee of all of the issued and
outstanding shares of capital stock of the Company (the "Company Shares"), and
Seller desires to sell the Company Shares to Buyer, all in accordance with the
terms and conditions set forth in this Agreement; and
WHEREAS, the respective Boards of Directors of Seller and Buyer have each
approved the purchase and sale of the Company Shares on the terms and subject
to the conditions set forth in this Agreement; and
WHEREAS, concurrently with the transactions contemplated by this
Agreement, Seller is selling to Buyer all of BFI's medical waste operations in
Canada (the "Canadian Medical Waste Operations") pursuant to an Asset Purchase
Agreement between Seller and Buyer of even date herewith (the "Simultaneous
Asset Transaction").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF SHARES
Section 1.1 DELIVERY OF COMPANY SHARES. On the terms and subject to the
conditions of this Agreement, Seller shall, on the Closing Date, transfer,
assign and deliver to Buyer certificates representing the Company Shares, duly
endorsed or accompanied by appropriate stock transfer powers duly executed.
Section 1.2 PURCHASE PRICE; PAYMENT. Subject to adjustment as provided in
this Article 1, the total purchase price for the Company Shares will be US
$436,000,000 (the "Purchase Price"). At the Closing, and concurrently with the
delivery by Seller to Buyer of certificates representing the Company Shares,
Buyer shall make payment of the Purchase Price by wire transfer of immediately
available funds pursuant to the written directions of Seller.
Section 1.3 ADJUSTMENT TO PURCHASE PRICE BASED ON AUDITED FINANCIAL
STATEMENTS.
(a) As soon as practical after the date of this Agreement, Buyer at its
expense shall engage Xxxxxx Xxxxxxxx, LLP to prepare and audit the balance sheet
(if able to be audited in accordance with generally accepted accounting
principles ("GAAP"), otherwise a statement of assets and liabilities) of the BFI
Medical Waste Operations in North America and Puerto Rico (collectively, the
"Audited Operations") at September 30, 1998 and 1997, and at December 31, 1998
and March 31, 1999 and the statement of operations of the Audited Operations for
the fiscal years ended September 30, 1998, 1997 and 1996, and for the three and
six months ended December 31, 1998 and March 31, 1999 (the "Financial
Statements"), and to render its report thereon. The Financial Statements will be
prepared in accordance with GAAP applied on a consistent basis and the
procedures set forth on EXHIBIT A hereto. Seller shall use its reasonable best
efforts to provide Buyer and Xxxxxx Xxxxxxxx, LLP access to the books and
records of the Audited Operations and BFI personnel to prepare the Financial
Statements in accordance with the foregoing standards.
(b) If the gross operating profit before depreciation and amortization
("GOPDA") for the six months ended March 31, 1999, as shown in the audit report
rendered by Xxxxxx Xxxxxxxx, LLP or calculated by Xxxxxx Xxxxxxxx LLP from the
Financial Statements, annualized (the "Annualized GOPDA"), is less $75,510,960,
the Purchase Price will be adjusted downward by $5.71 for each $1.00 that the
Annualized GOPDA is less than $75,510,960.
Section 1.4 WORKING CAPITAL ADJUSTMENT.
(a) On or before 60 days following the Closing Date, Buyer shall calculate
and deliver to Seller a written statement (the "Settlement Statement") setting
forth the amount of the working capital of the BFI Medical Waste Operations in
North America and Puerto Rico and the Allied Medical Waste Operations
(collectively, the "Medical Waste Operations") as of the Closing Date (the
"Closing Date Working Capital"). "Closing Date Working Capital" shall mean the
difference obtained by subtracting (i) the amount that would be reflected in
accordance with GAAP as accounts payable of the Medical Waste Operations as of
the Closing Date, from (ii) the amount that would be reflected in accordance
with GAAP as accounts receivable of the Medical Waste Operations as of the
Closing Date. The Settlement Statement shall be calculated by Buyer and
certified in writing by the Chief Financial Officer of Buyer.
(b) The Settlement Statement shall be final and binding on Seller unless
within 30 days following its receipt of the Settlement Statement, Seller
notifies Buyer in writing (a "Notice of Objection") that Seller does not accept
as correct the amount of any calculation reflected in the Settlement Statement.
If Seller timely delivers a Notice of Objection to Buyer, then Seller and Buyer
shall respectively instruct Xxxxxx Xxxxxxxx, LLP and Ernst & Young, LLP to
attempt to reach agreement as to each disputed calculation made in the
Settlement Statement. If within ten days after the matter has been referred to
such accounting firms they have not reached agreement as to all disputed
calculations, then Xxxxxx Xxxxxxxx, LLP and Ernst & Young, LLP shall promptly
designate a third accounting firm of internationally recognized standing, which
(acting as experts and not as arbitrators) shall be instructed to make, as soon
as practical after
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such matter has been referred to such firm, all calculations which are in
dispute, and the determination of such third accounting firm in the matter will
be final and binding on all parties.
(c) If the Closing Date Working Capital is a positive number, then Buyer
shall pay cash to Seller in an amount equal to the positive Closing Date Working
Capital within five days after the Settlement Statement has been finally
determined as provided in Section 1.4(b). If the Closing Date Working Capital is
a negative number, then Seller shall pay cash to Buyer in an amount equal to the
negative Closing Date Working Capital within five days after the Settlement
Statement has been finally determined as provided in Section 1.4(b). Each of
Seller and Buyer shall pay its own fees and expenses associated with the
preparation of the Settlement Statement and any calculations made thereunder.
Section 1.5 ADJUSTMENT TO PURCHASE PRICE FOR ACQUISITIONS AND DISPOSITIONS
PENDING THE CLOSING. The Purchase Price shall be increased by an amount equal
to the cash portion of the purchase price paid prior to the Closing Date for any
businesses or assets acquired by the Company after the date hereof pursuant to
Section 6.1 of this Agreement, and reduced by an amount equal to the cash
portion of the purchase price received prior to the Closing Date for any
businesses or assets disposed of by the Company after the date hereof pursuant
to Section 6.1 of this Agreement. Seller shall provide written notice to Buyer
of any purchase or disposition giving rise to a Purchase Price adjustment,
including the amount of the adjustment specified in reasonable detail.
ARTICLE 2
CLOSING
Section 2.1 TIME AND PLACE OF CLOSING. Unless otherwise agreed to by the
parties in writing, the closing of the transactions contemplated by this
Agreement (the "Acquisition") shall take place concurrently with the closing of
the BFI Merger and the Simultaneous Asset Transaction at the executive offices
of Seller, 00000 Xxxxx Xxxxxxxx-Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000 (the "Closing"). The date on which the Closing occurs is referred to as
the "Closing Date." Notwithstanding the foregoing, without the prior consent of
Buyer, which may be granted or withheld in Buyer's sole discretion, the Closing
Date shall be not fewer than two months following delivery of the Financial
Statements pursuant to Section 1.3(a) hereof so long as Buyer has not caused the
delay by changing the scope of the audit set forth on EXHIBIT A or otherwise.
Section 2.2 DELIVERIES BY SELLER AND BUYER. At the Closing, Buyer and
Seller shall deliver to the other:
(a) fully executed counterparts of the First Rights Agreement, in the form
of EXHIBIT B hereto, wherein for a period of ten years following the Closing (i)
Seller and its affiliates will have the first right to bid on the disposal of
the residual, non-hazardous waste generated by the processing activities of the
Allied Medical Waste Operations and the BFI Medical Waste Operations, (ii) Buyer
and its affiliates will have the first right to bid with Seller and its
affiliates on contracts that include both solid waste and medical waste, and
(iii) Seller and its affiliates will have the first right to bid with Buyer and
its affiliates on contracts that include both medical waste and solid waste; and
(b) fully executed counterparts of the Transition Agreement, in the form of
EXHIBIT C hereto, wherein Seller will provide certain operational and
administrative support and make certain facilities available to Buyer following
the Closing.
Section 2.3 DELIVERIES BY SELLER. At the Closing, Seller shall deliver to
Buyer:
(a) certificates representing the Company Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(b) the Closing Certificate required by Section 7.3(a) hereof; and
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(c) such other documents as Buyer shall reasonably request.
Section 2.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
Seller:
(a) the Purchase Price;
(b) the Closing Certificate required by Section 7.2(a) hereof; and
(c) such other documents as Buyer shall reasonably request.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that, except as set forth in the
Disclosure Schedule dated as of the date hereof and signed by an authorized
officer of Buyer (the "Buyer Disclosure Schedule"), it being agreed that
disclosure of any item on the Buyer Disclosure Schedule shall be deemed
disclosure with respect to all Sections of this Article if the relevance of such
item is reasonably apparent from the face of the Buyer Disclosure Schedule:
Section 3.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted. Buyer is qualified to transact business and is in good standing
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of Buyer and its subsidiaries,
taken as a whole (a "Buyer Material Adverse Effect") or prevent or materially
delay the consummation of the Acquisition.
Section 3.2 AUTHORITY, NON-CONTRAVENTION, APPROVALS.
(a) Buyer has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby, including
without limitation, the consummation of the financing of the Acquisition
pursuant to the Financing Assurances defined in Section 3.3 (the "Financing").
This Agreement has been approved by the Board of Directors of Buyer, and no
other corporate proceedings on the part of Buyer, including without limitation
the vote of Buyer's stockholders, are necessary to authorize the execution and
delivery of this Agreement or the consummation by Buyer of the transactions
contemplated hereby, except that the Financing may require approval of Buyer's
stockholders. This Agreement has been duly executed and delivered by Buyer and,
assuming the due authorization, execution and delivery hereof by Seller,
constitutes a valid and legally binding agreement of Buyer enforceable against
Buyer in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) The execution, delivery and performance of this Agreement by Buyer and
the consummation of the Acquisition and the transactions contemplated hereby,
including without limitation the Financing, do not and will not violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or,
other than in the case of the Financing, result in the creation of any lien,
security interest or encumbrance upon any of the properties or assets of Buyer
or any of its subsidiaries under any of the terms, conditions or provisions of
(i) the certificates of incorporation or bylaws of Buyer or any of its
subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment
decree, order, injunction, writ, permit or license
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of any court or governmental authority applicable to Buyer or any of its
subsidiaries or any of their respective properties or assets, subject, in the
case of consummation, to obtaining (prior to the Closing Date) the Buyer
Required Statutory Approvals (as defined in Section 3.2(c)), or (iii) any note,
bond, mortgage, indenture, deed of trust license, franchise, permit,
concession, contract lease or other instrument, obligation or agreement of any
kind (each a "Contract" and collectively "Contracts") to which Buyer or any of
its subsidiaries is now a party or by which Buyer or any of its subsidiaries or
any of their respective properties or assets may be bound or affected, subject
in the case of consummation, to obtaining (prior to the Closing Date) consents
required from commercial lenders, lessors or other third parties as specified
in Section 3.2(b) of the Buyer Disclosure Schedule. Excluded from the foregoing
sentence of this paragraph (b), insofar as it applies to the terms, conditions
or provisions described in clauses (ii) and (iii) of this paragraph (b), are
such violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests or encumbrances that would not
reasonably be expected to have a Buyer Material Adverse Effect and would not
prevent or materially delay the consummation of the Acquisition.
(c) Except for (i) the filings by Buyer required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) applicable
filings, if any, with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933, as amended (the "Securities Act") or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) any
required filings with or approvals from authorities of Canada or any other
foreign country or Puerto Rico in which Buyer or its subsidiaries or affiliates
conduct (or by virtue of the Acquisition intend to conduct) any business or own
(or by virtue of the Acquisition intend to own) any assets, and (iv) any
required filings with or approvals from applicable environmental authorities,
public service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Buyer Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby, including without limitation, the Financing,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not reasonably be expected to have a Buyer Material Adverse Effect and would not
prevent or materially delay the consummation of the Acquisition.
Section 3.3 FINANCING. Buyer has obtained preliminary assurances (the
"Financing Assurances") from a nationally-recognized investment banking firm to
the effect that such firm has high confidence that the debt and/or equity
Financing necessary to consummate the Acquisition and to pay all associated
costs and expenses (including any refinancing of indebtedness of Buyer required
in connection therewith), will be available to Buyer on commercially reasonable
terms for transactions like the Acquisition, and has provided true, accurate and
complete copies of such Financing Assurances to Seller. Buyer shall use its
reasonable best efforts to obtain the Financing described in the Financing
Assurances.
Section 3.4 BROKERS AND FINDERS. Except as disclosed in the Buyer
Disclosure Schedule, Buyer has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Seller or the Company to pay any investment banking fees, finder's fees,
brokerage or agent commissions or other like payments in connection with the
transactions contemplated in this Agreement.
Section 3.5 SEC DOCUMENTS. Buyer has filed all statements, reports,
schedules, registration statements, definitive proxies and information
statements with the SEC that Buyer was required to file with the SEC (the "Buyer
SEC Documents") pursuant to the Securities Act and the Exchange Act. As of their
respective filing dates, the Buyer SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Buyer SEC Documents, and none of the Buyer SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Section 3.6 NO MATERIAL ADVERSE CHANGE. Since January 1, 1999, Buyer has
conducted its business in
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the ordinary course and to Buyer's knowledge there has not been any Buyer
Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as set forth in the
disclosure schedule dated as of the date hereof and signed by an authorized
officer of Seller (the "Seller Disclosure Schedule"), it being agreed that
disclosure of any item on the Seller Disclosure Schedule shall be deemed
disclosure with respect to all Sections of this Article if the relevance of such
item is reasonably apparent from the face of the Seller Disclosure Schedule:
Section 4.1 ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted.
Section 4.2 ORGANIZATION AND QUALIFICATION OF THE COMPANY. As of the
Closing Date, the Company will be a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and will have the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on the Business. The Company will be qualified to
transact business and will be in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company (a "Company Material Adverse Effect"). True, accurate
and complete copies of the Company's Certificate of Incorporation and bylaws,
including all amendments thereto, will be delivered to Buyer. The Company will
be formed for the sole purpose of obtaining ownership of the Business, and will
at all times conduct its business consistent with such purpose.
Section 4.3 CAPITALIZATION OF THE COMPANY.
(a) The authorized equity securities of the Company will consist of 1,000
shares of common stock, par value $0.01 per share, of which 1,000 shares will be
issued and outstanding and constitute the Company Shares. The Company Shares
will be validly issued and will be fully paid, nonassessable and free of
preemptive rights.
(b) As of the Closing Date there will be no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security instrument or other agreement and also including
any rights plan or other anti-takeover agreement, obligating the Company or any
subsidiary of the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of the Company or
obligating the Company or any subsidiary of the Company to grant, extend or
enter into any such agreement or commitment. There will be no obligations,
contingent or otherwise, of the Company to (i) repurchase, redeem or otherwise
acquire any shares of Company common stock or other capital stock of the
Company, or the capital stock or other equity interests of any subsidiary of the
Company; or (ii) provide material funds to, or make any material investment in
(in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any subsidiary of the Company or
any other person. There will be no outstanding stock appreciation rights or
similar derivative securities or rights of the Company. There will be no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which the stockholder of the Company may vote. There will be
no voting trusts, irrevocable proxies or other agreements or understandings to
which the Company is a party or is bound with respect to the voting of any
shares of capital stock of the Company.
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Section 4.4 AUTHORITY, NON-CONTRAVENTION, APPROVALS.
(a) Seller has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been approved by the Board of Directors of Seller, and no other corporate
proceedings on the part of Seller are necessary to authorize the execution and
delivery of this Agreement or the consummation by Seller of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller and, assuming the due authorization, execution and delivery hereof by
Buyer, constitutes a valid and legally binding agreement of Seller enforceable
against Seller in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles.
(b) The execution, delivery and performance of this Agreement by Seller and
the consummation of the Acquisition and the transactions contemplated hereby, do
not and will not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest or
encumbrance upon any of the properties or assets of Seller or the Company, or
any of Seller's subsidiaries under any of the terms, conditions or provisions of
(i) the certificates of incorporation or bylaws of Seller, the Company or any of
Seller's subsidiaries, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to Seller, the Company or any of Seller's
subsidiaries or any of their respective properties or assets, subject, in the
case of consummation, to obtaining (prior to the Closing Date) the Seller
Required Statutory Approvals (as defined in Section 4.4(c)), or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind (each a "Contract" and collectively "Contracts") to which Seller, the
Company or any of Seller's subsidiaries is now a party or by which Seller, the
Company or any of Seller's subsidiaries or any of their respective properties or
assets may be bound or affected, subject in the case of consummation, to
obtaining (prior to the Closing Date) consents required from commercial lenders,
lessors or other third parties as specified in Section 4.2(b) of the Seller
Disclosure Schedule. Excluded from the foregoing sentence of this paragraph (b),
insofar as it applies to the terms, conditions or provisions described in
clauses (ii) and (iii) of this paragraph (b), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests or encumbrances that would not reasonably be expected to have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Acquisition.
(c) Except for (i) the filings by Seller required by the HSR Act, (ii)
applicable filings, if any, with the SEC pursuant to the Exchange Act, (iii) any
required filings with or approvals from authorities of Canada or any other
foreign country or Puerto Rico in which Seller, the Company or Seller's
subsidiaries or affiliates conduct any business or own any assets, and (iv) any
required filings with or approvals from applicable environmental authorities,
public service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Seller Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not reasonably be expected to have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Acquisition.
Section 4.5 BROKERS AND FINDERS. Neither Seller nor the Company has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Company to pay any investment banking
fees, finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER TO BE MADE AS OF CLOSING
Seller represents and warrants to Buyer that:
Section 5.1 SUBSIDIARIES. The Company has no direct or indirect
subsidiaries.
Section 5.2 [Intentionally omitted].
Section 5.3 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
March 31, 1999 balance sheet or statement of assets and liabilities, as the case
may be (the "Balance Sheet"), to Seller's knowledge the Medical Waste Operations
did not have at March 31, 1999, and have not incurred since that date and as of
the date hereof, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (a) liabilities, obligations or
contingencies (i) which are accrued or reserved against in the Balance Sheet or
reflected in the notes thereto or (ii) which were incurred after March 31, 1999
in the ordinary course of business and consistent with past practices, (b)
liabilities, obligations or contingencies which (i) would not reasonably be
expected to have a Company Material Adverse Effect, or (ii) have been discharged
or paid in full prior to the Closing Date, and (c) liabilities, obligations and
contingencies which are of a nature not required to be reflected in the
financial statements of the Medical Waste Operations prepared in accordance with
GAAP consistently applied. In any event, as of the Closing Date, the Company
shall not have any liabilities or obligations other than: (i) current accounts
payable; (ii) liabilities under real property, equipment and other operating
leases entered into in the ordinary course of business on commercially
reasonable terms, none of which is delinquent as of the Closing Date; (iii)
liabilities (other than current accounts payable) for which adequate cash
reserves have been provided; and (iv) liabilities for the unpaid balance of the
purchase price of any business or assets acquired by the Company after the date
hereof pursuant to Section 6.1 of this Agreement.
Section 5.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. To Seller's knowledge,
since March 31, 1999, there has not been any Company Material Adverse Effect.
Section 5.5 LITIGATION. To Seller's knowledge, except as referred to in
the BFI SEC Reports, there are no claims, suits, actions or proceedings pending
or threatened against, relating to or affecting the Company before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that would reasonably be expected to have a Company Material
Adverse Effect. To Seller's knowledge, except as referred to in the BFI SEC
Reports or as may have been entered into with Buyer's prior written consent in
connection with Section 6.1, the Company is not subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which prohibits the
consummation of the transactions contemplated hereby or would reasonably be
expected to have a Company Material Adverse Effect. "BFI SEC Reports" means the
material forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) filed by BFI with the SEC
under each of the Securities Act, the Exchange Act and the respective rules and
regulations thereunder, as amended if applicable.
Section 5.6 NO VIOLATION OF LAW. Except as disclosed in the BFI SEC
Reports, to Seller's knowledge the Company is not in violation of and has not
been given written notice of any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which would not reasonably be expected
to have a Company Material Adverse Effect. Except as disclosed in the BFI SEC
Reports, as of the date of this Agreement to the knowledge of Seller, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, would not reasonably be
expected to have a Company Material Adverse Effect. To Seller's knowledge, the
Company has all permits, licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and
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approvals necessary to conduct its business as presently conducted
(collectively, the "Company Permits"), except for permits, licenses,
franchises, variances, exemptions, orders, authorizations, consents and
approvals the absence of which would not reasonably be expected to have a
Company Material Adverse Effect. To Seller's knowledge, the Company is not in
violation of the terms of any Company Permit, except for delays in filing
reports or violations which would not reasonably be expected to have a Company
Material Adverse Effect.
Section 5.7 COMPLIANCE WITH AGREEMENTS. Except as disclosed in the BFI SEC
Reports, to Seller's knowledge, the Company is not in breach or violation of or
in default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party, would
result in a default under (a) the certificate of incorporation or bylaws of the
Company, or (b) any Contract to which the Company is a party or by which it is
bound or to which its property is subject other than, in the case of clause (b)
of this Section 5.7, breaches, violations and defaults which would not
reasonably be expected to have a Company Material Adverse Effect.
Section 5.8 TAXES.
(a) To Seller's knowledge, the Company has (i) duly filed with the
appropriate governmental authorities all Tax Returns required to be filed by it,
and such Tax Returns are true, correct and complete in all material respects,
and (ii) duly paid in full or reserved in accordance with generally accepted
accounting principles on the Financial Statements all Taxes required to be paid,
except, in each case, as would not, individually or in the aggregate, have a
Company Material Adverse Effect. To Seller's knowledge, the liabilities and
reserves for Taxes reflected in the Balance Sheet to cover all Taxes for all
periods ending at or prior to the date of the Balance Sheet have been determined
in accordance with generally accepted accounting principles, and to Seller's
knowledge there is no material liability for Taxes for any period beginning
after such date other than Taxes arising in the ordinary course of business. To
Seller's knowledge, there are no material liens for Taxes upon any property or
asset of the Company, except for liens for Taxes not yet due or Taxes contested
in good faith and reserved against in accordance with generally accepted
accounting principles. To Seller's knowledge, there are no unresolved issues of
law or fact arising out of a notice of deficiency, proposed deficiency or
assessment from the Internal Revenue Service (the "IRS") or any other
governmental taxing authority with respect to Taxes of the Company which would
reasonably be expected to have a Company Material Adverse Effect. To Seller's
knowledge, the Company has not agreed to an extension of time with respect to a
material Tax deficiency other than extensions which are no longer in effect. To
Seller's knowledge, the Company is not a party to any agreement providing for
the allocation or sharing of material Taxes with any entity that is not directly
or indirectly a parent or sister entity of the Company other than agreements the
consequences of which are fully and adequately reserved for in the Financial
Statements.
(b) To Seller's knowledge, the Company is not, and will not be as of the
Closing Date, a United States Real Property Holding Corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the
"Code"), assuming for this purpose that the date hereof and the Closing Date
constitute "determination dates" within the meaning of Treas. Reg. Section
1.897-2(c).
(c) To Seller's knowledge, the Company has withheld or collected and has
paid over to the appropriate governmental entities (or is properly holding for
such payment) all material Taxes required to be collected or withheld.
(d) For purposes of this Agreement "Tax" (including, with correlative
meaning, the terms "Taxes") includes all federal, state, local and foreign
income, profits, franchise, gross receipts, environmental, customs duty, capital
stock, communications services, severance, stamp, payroll, sales, employment,
unemployment disability, transfer, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect to such penalties and
additions, and includes any liability for Taxes of another person by contract,
as a transferee or successor, under Treas. Reg. Section 1.1502-6 or analogous
state, local or foreign law provision or otherwise, and "Tax Return" means any
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return, report or similar statement (including attached schedules) required to
be filed with respect to any Tax, including without limitation, any information
return, claim for refund, amended return or declaration of estimated Tax.
(e) Seller will indemnify Buyer for any Taxes allocable to periods ended
prior to the Closing Date and any Taxes imposed on the Company post-Closing due
to the Company's inclusion prior to the Closing as a member of a controlled
group of corporations for Tax purposes of which BFI or Seller, or a subsidiary
of either of them, was the parent corporation.
Section 5.9 EMPLOYEE BENEFIT PLANS, ERISA.
(a) To Seller's knowledge, except in its capacity as an adopting or
participating employer with respect to any "BFI Plans" (defined below) or as
disclosed in the BFI SEC Reports, at the date hereof, the Company does not
maintain or contribute to or have any obligation or liability to or with respect
to any material employee benefit plans, programs, arrangements or practices,
including severance plans or policies and employee benefit plans within the
meaning set forth in Section 3(3) of (the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or other similar material arrangements for
the provision of benefits (excluding any "Multi-employer Plan" within the
meaning of Section 3(37) of ERISA or a "Multiple Employer Plan" within the
meaning of Section 413(c) of the Code) (such plans, programs, arrangements or
practices of BFI being referred to as the "BFI Plans"). To Seller's knowledge,
the Company does not maintain or have any material liability with respect to any
Multiple Employer Plan or contribute to or is obligated to contribute to any
Multi-employer Plan. To Seller's knowledge, the Company does not have any
obligation to create or contribute to any additional, material plan, program,
arrangement or practice or to amend any such plan, program, arrangement or
practice so as to increase benefits or contributions thereunder, except as
required under the terms of the BFI Plans, under existing collective bargaining
agreements or to comply with applicable law.
(b) Except as disclosed in the BFI SEC Reports, to Seller's knowledge, (i)
there have been no prohibited transactions within the meaning of Section 406 or
407 of ERISA or Section 4975 of the Code with respect to any of the BFI Plans
that could result in penalties, taxes or liabilities which would reasonably be
expected to have a Company Material Adverse Effect, (ii) except for premiums
due, there is no outstanding liability, whether measured alone or in the
aggregate, under Title IV of ERISA with respect to any of the BFI Plans, which
would reasonably be expected to have a Company Material Adverse Effect, (iii)
neither the Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the BFI Plans subject to Title IV of
ERISA other than in a "standard termination" described in Section 4041(b) of
ERISA, (iv) none of the BFI Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
of the BFI Plans ended prior to the date of this Agreement, (v) with respect to
BFI Plans subject to Title IV of ERISA, there has been no material change in the
funded status of such plans from the status set forth most recently in the BFI
SEC Reports, (vi) each of the BFI Plans has been operated and administered in
accordance with applicable laws during the period of time covered by the
applicable statute of limitations, except for failures to comply which would not
reasonably be expected to have a Company Material Adverse Effect, (vii) each of
the BFI Plans which is intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such BFI Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, the Company has not made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and no event has
occurred or is expected to occur which presents a material risk of a complete or
partial withdrawal under such Sections 4203, 4204 and 4205, (ix) there are no
pending, threatened or anticipated claims involving any of the BFI Plans other
than claims for benefits in the ordinary course or claims which would not
reasonably be expected to have a Company Material Adverse Effect, (x) except for
premiums due, the Company has no current liability under Title IV of ERISA, and
the Company does not reasonably anticipate that
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any such liability will be asserted against the Company, except for liabilities
or anticipated liabilities which would not reasonably be expected to have a
Company Material Adverse Effect, and (xi) no act, omission or transaction
(individually or in the aggregate) has occurred with respect to any Company
Plan that has resulted or could result in any liability (direct or indirect) of
the Company or any subsidiary under Sections 409 or 502(c)(1) or (1) of ERISA
or Chapter 43 of Subtitle (A) of the Code, except for liabilities or
anticipated liabilities which would not reasonably be expected to have a
Company Material Adverse Effect.
(c) To Seller's knowledge, the BFI SEC Reports contain a true and complete
summary or list of or otherwise describe all material employment contracts and
other employee benefit arrangements with "change of control" provisions and all
severance agreements with executive officers of the Company.
(d) To Seller's knowledge, there are no agreements which will or would be
reasonably expected to provide payments by the Company to any officer, employee,
stockholder, or highly compensated individual which will be "parachute payments"
under Code Section 280G that are nondeductible to the Company or subject to tax
under Code Section 4999 for which the Company or any ERISA Affiliate would have
withholding liability.
Section 5.10 LABOR CONTROVERSIES. To Seller's knowledge, except as disclosed
in the BFI SEC Reports, (a) there are no significant controversies pending or
threatened between the Company and any representatives (including unions) of
any of its employees, and (b) there are no material organizational efforts
presently being made involving any of the presently unorganized employees of
the Company, except for such controversies and organizational efforts which
would not reasonably be expected to have a Company Material Adverse Effect.
Section 5.11 ENVIRONMENTAL MATTERS.
(a) To Seller's knowledge, except as disclosed in the BFI SEC Reports, (i)
the Company has conducted its business in compliance with all applicable
Environmental Laws, including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of its
business as presently conducted, (ii) none of the properties owned by the
Company contains any Hazardous Substance as a result of any activity of the
Company in amounts exceeding the levels permitted by applicable Environmental
Laws, (iii) since January 1, 1997, neither the Company nor BFI nor Allied nor
any affiliate of BFI or Allied has received any notices, demand letters or
requests for information from any Federal, state, local or foreign governmental
entity indicating that the Business may be in violation of, or liable under, any
Environmental Law in connection with the ownership or operation of its business,
(iv) there are no civil, criminal or administrative actions, suits, demands,
claims, hearings, investigations or proceedings pending or threatened against
the Company or the Business relating to any violation, or alleged violation, of
any Environmental Law, (v) no Hazardous Substance has been disposed of, released
or transported in violation of any applicable Environmental Law from any
properties owned by the Company or the Business as a result of any activity of
the Company during the time such properties were owned, leased or operated by
the Company or the Business, and (vi) neither the Company nor any of its
properties or properties of the Business are subject to any material liabilities
or expenditures (fixed or contingent) relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or claim asserted
or arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (vi) that would not reasonably be expected to have a Company
Material Adverse Effect.
(b) As used herein, "Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity relating to
(x) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect at the Closing Date. The term "Environ-
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mental Law" includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act and the Federal Occupational Safety and Health Act of 1970,
each as amended and as in effect at the Closing Date, and (ii) any common law
or equitable doctrine (including, without limitation, injunctive relief and
tort doctrines such as negligence, nuisance, trespass and strict liability)
that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of, effects of or exposure to any
Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance presently or
hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos, or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
Section 5.12 NON-COMPETITION AGREEMENTS. To Seller's knowledge, except as
disclosed in the BFI SEC Reports, the Company is not a party to any agreement
which (i) purports to restrict or prohibit in any material respect it from,
directly or indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, marketing or disposal of
regulated medical waste, or (ii) would restrict or prohibit Buyer or any
subsidiary of the Buyer from engaging in such business to the extent that such
restriction or prohibition could reasonably be expected to have a Company
Material Adverse Affect.
Section 5.13 TITLE TO ASSETS. On or prior to the Closing Date, all of the
BFI Medical Waste Operations will be transferred to the Company, and immediately
prior to the Closing, all of the Allied Medical Waste Operations will be
transferred to the Company; provided that Seller may at is option transfer the
BFI Medical Waste Operations in Puerto Rico either directly to Buyer at the
Closing or to a different BFI subsidiary the stock of which will be sold to
Buyer at the Closing at no additional expense to Buyer (and in such event Buyer
and Seller shall execute such additional purchase agreements to accomplish the
foregoing on terms substantially identical in form and substance to this
Agreement). To Seller's knowledge, the Company has or will have good and valid
title in fee simple to all its real property and good title to all its leasehold
interests and other properties, as reflected in the Balance Sheet, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of the Balance Sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current Taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company), or (iii) as
disclosed in the BFI SEC Reports, and except for such matters which would not
reasonably be expected to have a Company Material Adverse Effect. To Seller's
knowledge, all leases under which the Company leases any real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than failures to be in good standing, valid and effective and
defaults under such leases which would not reasonably be expected to have a
Company Material Adverse Effect.
ARTICLE 6
COVENANTS
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE ACQUISITION.
Except as otherwise contemplated by this Agreement or disclosed in Schedule 6.1,
after the date hereof and prior to the Closing Date or earlier termination of
this Agreement, unless Buyer shall otherwise agree in writing, Seller shall
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cause the Allied Medical Waste Operations to, and shall use its reasonable
efforts to cause BFI to cause the BFI Medical Waste Operations to:
(a) conduct its business in the ordinary and usual course of business and
consistent with past practice;
(b) not (i) amend or propose to amend its certificate of incorporation or
bylaws, (ii) split, combine or reclassify its outstanding capital stock or (iii)
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, except for the payment of dividends or distributions to
BFI or a wholly-owned subsidiary of BFI;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge
or dispose of, any additional shares of, or any options, warrants or rights of
any kind to acquire any shares of its capital stock of any class or any debt or
equity securities convertible into or exchangeable for such capital stock;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business (other than pursuant to credit facilities) or borrowings under the
existing credit facilities of the Company or borrowings under the credit
facilities to be entered into substantially on the terms set forth in Schedule
6.1 as such facilities may be amended in a manner that does not have a material
adverse effect on the Company (the "Existing Credit Facilities") up to the
existing borrowing limit on the date hereof, (B) borrowings to refinance
existing indebtedness on terms which are reasonably acceptable to Buyer, or (C)
borrowings in connection with acquisitions as set forth in the proviso in this
Section 6.1(d), (ii) redeem, purchase, acquire or offer to purchase or acquire
any shares of its capital stock, (iii) make any acquisition of any assets or
businesses other than expenditures for current assets in the ordinary course of
business and expenditures for fixed or capital assets in the ordinary course of
business and other than as set forth in the proviso in this Section 6.1(d), (iv)
sell, pledge, dispose of or encumber any assets or businesses other than (A)
sales of businesses or assets disclosed in Schedule 6.1, (B) pledges or
encumbrances pursuant to Existing Credit Facilities or other permitted
borrowings, (C) sales or dispositions of businesses or assets consented to in
writing by Buyer (which consent shall not be unreasonably withheld) or for which
consent is not denied within 24 hours after Seller notifies Buyer (such notice
to be delivered during business hours on a business day) in writing that it
desires to effect such sale or disposition, (D) sales of real estate, assets or
facilities for cash consideration (including any debt assumed by the buyer of
such real estate, assets or facilities) of less than $100,000 in each such case,
and (E) sales or dispositions of businesses or assets as may be required by
applicable law, or (v) except as contemplated by the following proviso, enter
into any binding contract, agreement, commitment or arrangement with respect to
any of the foregoing; provided, however that notwithstanding the foregoing, the
Company shall not be prohibited from acquiring the businesses or assets
described in Schedule 6.1;
(e) use all reasonable efforts to preserve intact its business organization
and goodwill, keep available the services of its present officers and key
employees, and preserve the goodwill and business relationships with customers
and others having business relationships with the Company other than as
expressly permitted by the terms of this Agreement;
(f) subject to restrictions imposed by applicable law, confer with one or
more representatives of Buyer to report operational matters of materiality and
the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees or with
any other persons, except pursuant to (i) applicable law, (ii) previously
existing contractual arrangements or policies disclosed pursuant to this
Agreement or (iii) employment agreements entered into with a person who is hired
by the Company to replace an employee who is terminated or voluntarily resigns
and who, at the time of termination, was party to an employment agreement with
the Company, provided that such new employment agreement shall be on terms
(including salary and benefits) comparable in all material respects to the
contract covering the terminated employee and shall not contain a change of
control provision and shall not be for a term of more than one year or provide
for severance pay
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or benefits (other than base salary and benefits payable if such contract had
not been terminated prior to the expiration of its term);
(h) not increase the salary or monetary compensation of any person except
for increases consistent with past practice or except pursuant to applicable law
or previously existing contractual arrangements;
(i) not adopt, enter into or amend to increase benefits or obligations any
pension or retirement plan, trust or fund and not adopt, enter into or amend in
any material respect any bonus, profit sharing, compensation, stock option,
deferred compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any
employees or retirees generally, other than in the ordinary course of business,
except (i) as required to comply with changes in applicable law, (ii) any of the
foregoing involving any such then existing plans, agreements, trusts, funds or
arrangements of any company acquired after the date hereof, or (iii) as required
pursuant to an existing contractual arrangement or agreement;
(j) not make expenditures, including, but not limited to, capital
expenditures, or enter into any binding commitment or contract to make
expenditures, except (i) as included in, or consistent with, BFI's Annual Budget
for fiscal 1999, (ii) for emergency repairs and other expenditures necessary in
light of circumstances not anticipated as of the date of this Agreement which
are necessary to avoid significant disruption to the Company's business or
operations consistent with past practice (and, if reasonably practicable, after
consultation with Buyer), (iii) for repairs and maintenance in the ordinary
course of business consistent with past practice, or (iv) as expressly permitted
by paragraph (d) of this Section 6.1;
(k) not enter into any contract or commitment (i) providing for the
provision of services (including, but not limited to, medical waste disposal) by
the Company that has a term of more than three years and which is reasonably
expected to generate more than $15 million in revenues over its term or (ii)
providing for the purchase of services by the Company that has a term of more
than one year and which is reasonably expected to involve payments of more than
$1 million over its term; and
(l) not make, change or revoke any material Tax election unless required by
law or make any agreement or settlement with any taxing authority regarding any
material amount of Taxes or which would reasonably be expected to materially
increase the obligations of the Company to pay Taxes in the future.
Section 6.2 CONTROL OF THE COMPANY'S OPERATIONS. Nothing contained in this
Agreement shall give to Buyer or Seller, directly or indirectly, rights to
control or direct the Company's operations prior to the Closing Date. Prior to
the Closing Date, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
Section 6.3 ACCESS TO INFORMATION.
(a) Subject to applicable law, Seller shall afford to Buyer and its
accountants, counsel, financial advisors, sources of financing and other
representatives (the "Buyer Representatives") reasonable access during normal
business hours with reasonable notice throughout the period prior to the Closing
Date to all of its properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) relating to the Allied Medical
Waste Operations and, during such period, shall furnish promptly (i) a copy of
each report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws or filed by it with the SEC in
connection with the transactions contemplated by this Agreement and (ii) such
other information concerning the Allied Medical Waste Operations and the related
properties and personnel as Buyer shall reasonably request and will use
reasonable efforts to obtain the reasonable cooperation of Seller's officers,
employees, counsel, accountants, consultants and financial advisors in
connection with the investigation of the Allied Medical Waste Operations by
Buyer and the Buyer Representatives; provided, however, that no investigation
pursuant to this Section 6.3(a) shall amend or modify any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Acquisition.
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(b) Subject to applicable law, the Company shall use reasonable efforts to
cause BFI to afford to Buyer and the Buyer Representatives reasonable access
during normal business hours with reasonable notice throughout the period prior
to the Closing Date to all of the Company's properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and, during
such period, to furnish promptly (i) a copy of each report, schedule and other
document filed or received by BFI pursuant to the requirements of federal or
state securities laws or filed by BFI with the SEC in connection with the
transactions contemplated by this Agreement and (ii) such other information
concerning the BFI Medical Waste Operations and the related properties and
personnel as Buyer shall reasonably request, and will use reasonable efforts to
cause BFI to obtain the reasonable cooperation of the Company's officers,
employees, counsel, accountants, consultants and financial advisors in
connection with the investigation of BFI Medical Waste Operations by Buyer and
the Buyer Representatives; provided, however, that no investigation pursuant to
this Section 6.3(b) shall amend or modify any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the Acquisition.
(c) All nonpublic information provided to, or obtained by, Buyer in
connection with the transactions contemplated hereby shall be "Information" for
purposes of the Confidentiality Agreement among Buyer, Seller and BFI (the
"Confidentiality Agreement"), provided that (i) Buyer and Seller may disclose
such information as may be necessary in connection with seeking the Buyer
Required Statutory Approvals and the Seller Required Statutory Approvals, and
(ii) each of Buyer and Seller may disclose any information that it is required
by law or judicial or administrative order to disclose. Notwithstanding the
foregoing, Seller shall not be required to provide any information which it
reasonably believes it may not provide to Buyer by reason of applicable law,
rules or regulations, which constitutes information protected by attorney/client
privilege, or which Seller is required to keep confidential by reason of
contract, agreement or understanding with third parties.
Section 6.4 NOTICES OF CERTAIN EVENTS.
(a) Seller shall promptly as reasonably practicable after executive
officers of Seller acquire knowledge thereof, notify Buyer of: (i) any notice or
other communication from any person alleging that the consent of such person (or
another person) is or may be required in connection with the transactions
contemplated by this Agreement which consent relates to a material Contract,
permit or authorization to which the Company is a party or of which the Company
is the holder or a beneficiary or the failure of which to obtain would prevent
or materially delay consummation of the Acquisition; (ii) any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; and (iii) any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge threatened against, relating to or involving or otherwise affecting
the Company that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Sections 5.6 or 5.7 or which relate
to the consummation of the transactions contemplated by this Agreement.
(b) Buyer shall promptly as reasonably practicable after executive officers
of Buyer acquire knowledge thereof, notify Seller of (i) any notice or other
communication from any person alleging that the consent of such person (or other
person) is or may be required in connection with the transactions contemplated
by this Agreement which consent relates to a material Contract to which Buyer or
its subsidiaries are a party or the failure of which to obtain would prevent or
materially delay the Acquisition, (ii) any notice or other communication from
any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement, and (iii) any actions, suits,
claims, investigations or proceedings commenced or, to its knowledge threatened,
against Buyer, which relate to consummation of the transactions contemplated by
this Agreement.
(c) Seller and Buyer each agree to give prompt notice to each other of, and
to use commercially reasonable efforts to remedy, (i) the occurrence or failure
to occur of any event which occurrence or failure to occur would be likely to
cause any of its representations or warranties in this Agreement to be untrue or
inaccurate at the Closing Date unless such failure or occurrence would not have
a Company Material Adverse Effect, and (ii) any failure on its part to comply
with or satisfy any covenant, condition or agreement to be
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complied with or satisfied by it hereunder unless such failure or occurrence
would not have a Company Material Adverse Effect; provided, however, that the
delivery of any notice pursuant to this Section 6.4(c) shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 6.5 EMPLOYEE BENEFITS.
(a) Although the Company will be an adopting or participating employer with
respect to the BFI Plans, the Company will cease to be an adopting or
participating employer with respect to the BFI Plans immediately prior to the
time of Closing of the Acquisition.
(b) Buyer acknowledges that for purposes of the BFI Plans, the consummation
of the Acquisition will constitute a "Change in Control" of the Company.
(c) Buyer currently intends to provide for a period of at least one year
following the Closing Date, employee benefits and incentive compensation to
active employees of the Company employed as of the Closing Date who are not
covered by any collective bargaining agreement ("Company Employees") that are no
less favorable in the aggregate than those provided to similarly situated
employees of Buyer and its subsidiaries (excluding, however, severance payments
for employees covered by paragraph (d) hereof).
(d) Buyer agrees to provide Company Employees who do not have employment
agreements and who would not otherwise receive severance pay upon termination of
employment greater than the severance pay provided under this Section 6.5(d)
with severance benefits if such employee's employment is involuntarily
terminated without cause (including termination of employment by reason of
"Constructive Discharge" which, for purposes of this Agreement, means a
reduction of base salary or wages or forced relocation of more than 30 miles)
during the period commencing upon the Closing Date and ending 12 months after
the Closing Date. The Company may, with the prior consent of Buyer (which
consent shall not be unreasonably withheld), establish such severance plan prior
to the Closing Date. The plan to be established pursuant to this Section 6.5(d)
shall provide that an eligible Company Employee shall receive severance pay
equal to two weeks of weekly base salary or wages (as in effect immediately
prior to termination) for each whole year of service with the Company, with a
minimum amount of severance pay equal to one week of weekly base salary or wages
(so long as such Company Employee has at least six months of service as of the
date of termination) and a maximum amount of severance pay equal to 52 weeks of
weekly base salary or wages. Severance pay to a Company Employee (i) shall be
net of withholding taxes, (ii) shall not be included as compensation in any
other employee benefit plan or program unless required by such plan or program,
(iii) shall be payable only upon execution by the Company Employee of a general
release in the favor of Buyer, the Company, and Buyer's subsidiaries, and (iv)
subject to clause (iii), shall be paid reasonably promptly after a qualifying
termination of employment. Any severance pay to which a Company Employee is
entitled hereunder shall be reduced by the severance pay such Company Employee
receives from any other source.
(e) Buyer and Seller each hereby acknowledge and agree that (i) at the
Closing Date, each of the executives listed in Schedule 6.5(e) (which shall not
include executives who are currently based at BFI's headquarters in Houston,
Texas or at any of BFI's area business offices) will be deemed to have
terminated his or her employment with the Company under circumstances which
entitle such executive to the severance pay required by the contracts listed in
Schedule 6.5(e); (ii) each such executive will become entitled to receive the
severance pay (and other payments) required by such contracts upon a termination
of employment following a "change of control" at the Closing Date; and (iii) any
severance pay to which such executives are entitled shall be paid at the Closing
Date or as soon as practicable after the Closing Date. Seller shall, prior to
the Closing Date, use its reasonable efforts to cause BFI or the Company to take
all action necessary such that each executive to whom this Section 6.5(e)
applies shall be deemed to have consented to the payment of severance pay in
accordance with this Section 6.5(e), notwithstanding any provision to the
contrary in such contracts. The executives listed in Schedule 6.5(e) shall
receive the coverage set forth in Section 6.5(f), subject to applicable law and
to the extent permitted by applicable insurance policies.
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(f) Buyer shall use reasonable efforts to cause any Company Employee (i)
whose employment is involuntarily terminated without cause (including by reason
of Constructive Discharge) during the 12 months following the Closing Date and
(ii) who is age 50 or older on the date of termination to be provided with
continued medical, dental and vision coverage for such Company Employee and his
or her dependents from the date of termination until age 65 at such Company
Employee's expense; provided, however, that the obligation of Buyer set forth in
this Section 6.5(f) (x) shall cease if the Company Employee becomes eligible for
coverage under any other employee benefit plan providing substantially similar
benefits and (y) shall in any event be subject to applicable law. Coverage
required by this Section 6.5(f) shall commence upon termination of the coverage
required by Section 6.5(g).
(g) Subject to applicable law and to the extent permitted by applicable
insurance policies, Buyer shall cause any Company Employee whose employment is
involuntarily terminated without cause (including by reason of Constructive
Discharge) during the 12 months following the Closing Date to be provided with
health insurance coverage at no cost to such Company Employee equal to the
number of weeks based on the calculation of severance pay in Section 6.5(d)
hereof, up to a maximum of 52 weeks. To the extent permitted by applicable
existing insurance policies of Buyer, the COBRA continuation coverage period
shall commence thereafter with coverage at Company Employee's cost.
(h) For purposes of all employee benefit plans maintained by or contributed
to by Buyer or its subsidiaries in which Company Employees participate, Buyer
shall cause each such plan to treat the prior service with the Company or BFI of
each Company Employee as service rendered to Buyer or its subsidiaries, as the
case may be, for purposes of eligibility to participate, vesting, benefit
accrual and levels of benefits under such plans; provided, that the foregoing
shall not apply to the extent that its application would result in duplication
of accrual of benefits or to newly established plans and programs for which
prior service of Buyer employees is not taken into account.
(i) Buyer shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Company Employees under any welfare benefits
plans that such Company Employees may be eligible to participate in after the
Closing Date, whether pursuant to the provisions of this Section 6.5 or
otherwise, except to the extent that any Company Employees were subject to such
preexisting conditions, exclusions and waiting periods under the Company plans,
and (ii) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Closing Date (in the calendar year of the Closing
Date) in satisfying any applicable deductible or out-of-pocket requirements
under any welfare plans that such employees are eligible to participate in after
the Closing Date.
Section 6.6 MEETING OF BUYER'S STOCKHOLDERS. If necessary or required in
connection with the Financing, Buyer shall as promptly as practicable after the
date of this Agreement take all action necessary in accordance with Delaware Law
and its certificate of incorporation and bylaws to convene a meeting of Buyer's
stockholders (the "Stockholders' Meeting") to act on this Agreement or the
Financing, as the case may be. The Board of Directors of Buyer shall, subject to
its fiduciary duties, recommend that Buyer's stockholders vote to approve the
matters contemplated by the Financing or this Agreement, and use its reasonable
best efforts to solicit from its stockholders proxies in favor of such actions
and to take all other action in its judgment necessary and appropriate to secure
the vote of stockholders required by Delaware Law to effect the Financing and
the Acquisition.
Section 6.7 PROXY STATEMENT. If and to the extent a Stockholders' Meeting
is required pursuant to Section 6.6, as promptly as practicable after execution
of this Agreement, Buyer shall prepare a Proxy Statement file it with the SEC
under the Exchange Act and use all reasonable efforts to have the Proxy
Statement cleared by the SEC. Seller shall, and shall use reasonable efforts to
cause the Company to, cooperate with Buyer in the preparation of the Proxy
Statement, and Buyer shall notify Seller of the receipt of any comments of the
SEC with respect to the Proxy Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information, and shall provide
to Seller promptly copies of all correspondence between Buyer or any
representative of Buyer and the SEC. Buyer shall give Seller and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and
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shall give Seller and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent
to, the SEC. Buyer and Seller each agrees to use its reasonable best efforts,
after consultation with the other party, to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, Buyer shall mail the Proxy Statement to
its stockholders. Prior to the date of approval of the Acquisition or the
Financing by Buyer's stockholders, each of Buyer and Seller shall correct
promptly any information provided by it to be used specifically in the Proxy
Statement that shall have become false or misleading in any material respect
and Buyer shall take all steps necessary to file with the SEC and have cleared
by the SEC any amendment or supplement to the Proxy Statement so as to correct
the same and to cause the Proxy Statement as so corrected to be disseminated to
the stockholders of Buyer, in each case to the extent required by applicable
law.
Section 6.8 PUBLIC ANNOUNCEMENTS. Buyer and Seller will consult with each
other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
as may be required by applicable law or any listing agreement with the New York
Stock Exchange or the Nasdaq Stock Market, will not issue any such press release
or make any such public statement prior to such consultation.
Section 6.9 EXPENSES AND FEES.
(a) All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) Seller agrees to pay to Buyer a fee equal to $5 million if Buyer
terminates this Agreement pursuant to Section 8.1(iv) on account of a breach by
Seller of any representation, warranty, covenant or agreement of Seller set
forth herein or in the Asset Purchase Agreement for the Simultaneous Asset
Transaction, provided that at the time it terminated this Agreement Buyer was
not then in default hereunder or under the Asset Purchase Agreement for the
Simultaneous Asset Transaction.
(c) Buyer shall pay to Seller a fee equal to $5 million if Seller
terminates this Agreement pursuant to Section 8.1(iv) on account of a breach by
Buyer of any representation, warranty, covenant or agreement of Buyer set forth
herein or in the Asset Purchase Agreement for the Simultaneous Asset
Transaction, provided that at the time it terminated this Agreement Seller was
not then in default hereunder or under the Asset Purchase Agreement for the
Simultaneous Asset Transaction.
Section 6.10 AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions of this Agreement, including
Section 6.3, each of the parties hereto shall use all reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable best efforts to obtain all necessary or
appropriate waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of Buyer and the Company, all
necessary or appropriate waivers, consents and approvals and SEC "no-action"
letters to effect all necessary registrations, filings and submissions and to
lift any injunction or other legal bar to the Acquisition (and, in such case, to
proceed with the Acquisition as expeditiously as possible). In addition, subject
to the terms and conditions herein provided and subject to the fiduciary duties
of the respective boards of directors of Seller and Buyer, neither of the
parties hereto shall knowingly take or cause to be taken any action (including,
but not limited to, in the case of Buyer, (x) the incurrence of material debt
financing, other than the Financing in connection with the Acquisition and
related transactions and other than debt financing incurred in the ordinary
course of business, and (y) the acquisition of businesses or assets) which would
reasonably be expected to materially delay or prevent consummation of the
Acquisition. Buyer shall use its reasonable best efforts to cause the
satisfaction of any conditions to the receipt of funds arising from or related
to the Financing Assurances.
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(b) Without limitation of the foregoing, each of Buyer and Seller
undertakes and agrees to file as soon as practicable, and in any event prior to
15 days after the date hereof, a Notification and Report Form under the HSR Act
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division").
Each of Buyer and Seller shall (i) respond as promptly as practicable to any
inquiries received from the FTC or the Antitrust Division for additional
information or documentation and to all inquiries and requests received from any
State Attorney General or other governmental authority in connection with
antitrust matters, and (ii) not extend any waiting period under the HSR Act or
enter into any agreement with the FTC or the Antitrust Division not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other party hereto. Buyer shall use its reasonable
best efforts to avoid or eliminate impediments under any antitrust, competition,
or trade regulation law that may be asserted by the FTC, the Antitrust Division,
any State Attorney General or any other governmental entity with respect to the
Acquisition so as to enable the Closing Date to occur prior to September 15,
1999 (the "Outside Date"). Without limiting the foregoing, Buyer shall agree to
negotiate the sale, divestiture or disposition of such assets or businesses of
Buyer or, effective as of the Closing Date, the Company, or any of Buyer's
subsidiaries, or agree to negotiate limits on its freedom of action with respect
to any of the businesses, services or assets of Buyer, the Company or any of
Buyer's subsidiaries, as reasonably may be required to avoid delaying the
Closing Date beyond the Outside Date. At the request of Buyer, Seller shall use
its reasonable efforts to cause the Company to agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, services, or
assets of the Company, provided that any such action may be conditioned upon the
consummation of the Acquisition and the transactions contemplated hereby. Each
party shall (i) promptly notify the other party of any written communication to
that party from the FTC, the Antitrust Division, any State Attorney General or
any other governmental entity and, subject to applicable law, permit the other
party to review in advance any proposed written communication to any of the
foregoing; (ii) not agree to participate in any substantive meeting or
discussion with any governmental authority respect of any filings, investigation
or inquiry concerning this Agreement or the Acquisition unless it consults with
the other party in advance and, to the extent permitted by such governmental
authority, gives the other party the opportunity to attend and participate
thereat; and (iii) furnish the other party with copies of all correspondence,
filings, and communications (and memoranda setting forth the substance thereof)
between them and their affiliates and their respective representatives on the
one hand, and any government or regulatory authority or members or their
respective staffs on the other hand, with respect to this Agreement and the
Acquisition. If Buyer shall have complied with all of its obligations under this
Section 6.10, but there is no action that Buyer or Seller can undertake or offer
to undertake that would eliminate the impediment asserted by the FTC, Antitrust
Division, or State Attorney General or other order in any suit or proceeding, in
order for the Closing Date to occur prior to the applicable date specified in
Section 8.1(ii), assuming all conditions other than those relating to such
impediment or order have been satisfied or waived, then Buyer shall not be
deemed to have breached its obligations under this Section 6.10.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, Buyer shall have
the right, at its own expense, to participate therein, and Seller will not
settle any such litigation without the consent of Buyer, which consent will not
be unreasonably withheld.
(d) In connection with the consummation of the Financing contemplated by
the Financing Assurances, at the reasonable request of Buyer, Seller (i) agrees
to enter into such agreements, to use reasonable best efforts to deliver such
officers' certificates and opinions as are customary in financing of this type
and as are, in the good faith determination of the persons executing such
officers' certificates or opinions, accurate and (ii) will provide to the
lenders who have issued financing commitments to Buyer for the Acquisition
financial and other information in Seller's possession with respect to the
Acquisition, use reasonable efforts to make the Company's senior officers
available to assist such lenders, and otherwise cooperate in connection with the
consummation of the Financing.
(e) Buyer shall provide Seller any certificates from Buyer relating to the
solvency and adequate capitalization of Buyer and Buyer's ability to pay its
debts that are given to any banks, other lenders in
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connection with the Financing or the independent evaluation firm as may be
reasonably requested by Seller. Any such certificate, opinion or other
statement will be provided to Seller at the time it is provided to such banks
or other lenders.
(f) At Buyer's request, Seller shall, at no additional expense to Seller,
cause the BFI Medical Waste Assets to be transferred to two or more entities,
including the Company, in which event all references in this Agreement to the
"Company" shall include all such entities that hold the BFI Medical Waste
Assets.
(g) From and after the Closing Date, Seller will cooperate with Buyer in
taking such actions as may be necessary to fully vest in the Company or in Buyer
title to the assets that comprise the Business.
Section 6.11 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) The indemnification provisions of the certificate of incorporation and
bylaws of the Company as in effect at the Closing Date shall not be amended,
repealed or otherwise modified for a period of six years from the Closing Date
in any manner that would adversely affect the rights thereunder of individuals
who at the Closing Date were directors, officers, employees or agents of the
Company. Buyer shall assume, be jointly and severally liable for, and honor,
guaranty and stand surety for, and shall cause the Company to honor, in
accordance with their respective terms each of the covenants contained in this
Section 6.11 without limit as to time.
(b) Without limiting Section 6.11(a), after the Closing Date, each of Buyer
and the Company shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer, employee
and agent of the Company (each, together with such person's heirs, executors or
administrators, an "Indemnified Party" and collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of, relating to or in connection with any action or omission occurring or
alleged to occur prior to the Closing Date (including, without limitation, acts
or omissions in connection with such persons serving as an officer, director or
other fiduciary in any entity if such service was at the request or for the
benefit of the Company) and the Acquisition and the other transactions
contemplated by this Agreement or arising out of or pertaining to the
transactions contemplated by this Agreement. In the event of any such actual or
threatened claim, action, suit proceeding or investigation (whether arising
before or after the Closing Date), (i) the Company or Buyer, as the case may be,
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to Buyer,
promptly after statements therefor are received and shall pay all other
reasonable expenses in advance of the final disposition of such action, (ii)
Buyer and the Company will cooperate and use all reasonable efforts to assist in
the vigorous defense of any such matter, and (iii) to the extent any
determination is required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the Delaware Law and
Buyer's or the Company's respective certificate of incorporation or bylaws, such
determination shall be made by independent legal counsel acceptable to the Buyer
or the Company, as the case may be, and the Indemnified Party; provided,
however, that neither Buyer nor the Company shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld) and, provided further, that if Buyer or the Company advances or pays
any amount to any person under this paragraph (b) and if it shall thereafter be
finally determined by a court of competent jurisdiction that such person was not
entitled to be indemnified hereunder for all or any portion of such amount, to
the extent required by law, such person shall repay such amount or such portion
thereof, as the case may be, to Buyer or the Company, as the case may be. The
Indemnified Parties as a group may not retain more than one law firm to
represent them with respect to each matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties.
(c) In the event the Company or Buyer or any of their successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such
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consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Company or
Buyer shall assume the obligations of the Company or the Buyer, as the case may
be, set forth in this Section 6.11.
(d) Buyer shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this Section 6.11.
(e) The rights of each Indemnified Party hereunder shall be in addition to,
and not in limitation of, any other rights such Indemnified Party may have under
the charter or bylaws of the Company, any indemnification agreement, under the
Delaware Law or otherwise. The provisions of this Section 6.11 shall survive the
consummation of the Acquisition and expressly are intended to benefit each of
the Indemnified Parties.
Section 6.12 SECTION 338(H)(10) ELECTION. Seller and Buyer each agree to
make timely Section 338(h)(10) elections pursuant to Regulation
1.338(h)(10)-1(d) with respect to the acquisition of the Company Shares on Form
8023 and in accordance with the instructions to such Form. Seller agrees to
report on its tax return the deemed sale gain resulting from such election in
accordance with Code Section 338 and Regulation 1.338(h)(10)-1(e). Buyer shall
submit to Seller for its review and approval a proposed valuation of the assets
of the Company deemed to have been sold at least 120 days prior to the due date
for the filing of any tax return reporting such deemed sale gain. The parties
agree to negotiate in good faith such valuation. Buyer shall pay to Seller at
the Closing an amount equal to the net increase in state income taxes payable by
Seller by reason of the Section 338(h)(10) election or the transfers described
in the recitals to this Agreement, as jointly determined for the parties by
Xxxxxx Xxxxxxxx, LLP (for Seller) and Ernst & Young, LLP (for Buyer).
Section 6.13 OTHER FINANCIAL STATEMENTS. Through the Closing Date, Seller
shall use its reasonable best efforts to cause BFI to provide to Buyer, within
45 days following the end of each calendar quarter, beginning with the quarter
ended June 30, 1999, an unaudited balance sheet and statement of operations at
the end of the quarter and for the three month and fiscal year-to-date period
then ended. If the Closing Date extends beyond September 30, 1999, then Seller
will use its reasonable best efforts to cause BFI to assist and cooperate with
Buyer in the engagement of Xxxxxx Xxxxxxxx, LLP to perform a year-end audit of
the balance sheet of the BFI Medical Waste Operations in North America and
Puerto Rico at September 30, 1999 and the statement of operations for the fiscal
year then ended.
Section 6.14 COVENANT NOT TO COMPETE. Seller agrees that for a period of
five years from and after the Closing Date, Seller shall not directly or
indirectly engage in any business involving the collection, interim storage,
transfer, recovery, processing, treatment or disposal of regulated medical
waste, or the marketing of regulated medical waste services, within the
following geographical areas: (i) in the case of collection, interim storage or
transfer of regulated medical waste or the marketing of regulated medical waste
services, anywhere within a radius of 50 miles of any customer of the Company or
Buyer as of the Closing Date; and (ii) in the case of recovery, processing,
treatment or disposal of regulated medical waste, anywhere within a radius of
350 miles of any treatment or disposal facility or transfer station of the
Company or Buyer as of the Closing Date. Notwithstanding the foregoing, Seller
shall not be prohibited from acquiring any solid waste or other business (which
is not primarily a medical waste business) or assets that include a medical
waste operation, provided that during the five year term of the covenant not to
compete, if Seller determines to divest any such medical waste operations,
Seller offers to Buyer the first right to acquire the same on generally the same
terms and under the same time parameters as established in the First Rights
Agreement.
Section 6.15 CONDUCT OF BUSINESS BY BUYER PENDING THE ACQUISITION. Except
as otherwise contemplated by this Agreement, after the date hereof and prior to
the Closing Date or earlier termination of this Agreement, Buyer shall conduct
its business in the ordinary course consistent with past practice.
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Section 6.16 CLOSING OF BFI MERGER. Seller will use its best efforts,
subject to the provisions of the Merger Agreement, to cause the BFI Merger to
close as provided in the Merger Agreement.
Section 6.17 LANDFILL DISPOSAL PRICES. For a period of one year following
the Closing Date, Seller will honor the disposal rate currently charged by BFI
to the BFI Medical Waste Operations for residual waste disposed of at BFI
landfills.
Section 6.18 SHARED ASSETS. Buyer acknowledges that certain of the assets
included within the Business are currently utilized by BFI in the BFI Medical
Waste Operations and other BFI operations. From the date hereof through the
Closing Date, Seller and Buyer shall identify the mixed-use assets and negotiate
in good faith how those assets will be allocated after the Closing Date. In this
regard, Seller and Buyer agree that (i) mixed use office space will be retained
by Seller; (ii) mixed use equipment will be retained by Seller or transferred to
the Company based on where such equipment is predominantly used; and (iii) other
mixed-use assets will be subject to good faith negotiations.
Section 6.19 LIABILITIES. For a period of five years following the Closing
Date, Seller shall retain all liabilities of the Company relating to the
Business and its assets that relate to or arise out of occurrences prior the
Closing Date, except for (i) closure/post-closure obligations and (ii) the
liabilities described in the second sentence of Section 5.3. Buyer shall be
responsible for all liabilities of the Company relating to the Business and its
assets that relate to or arise out of occurrences from and after the Closing
Date, and (i) all closure/post-closure obligations, (ii) the liabilities
described in the second sentence of Section 5.3, and (iii) beginning on the
fifth anniversary of the Closing Date, all liabilities of the Company relating
to the Business that relate to or arise out of occurrences prior to the Closing
Date.
Section 6.20 PAYROLL TAX RETURNS. Seller and Buyer shall cooperate in
exploring whether to cause BFI to cause the Company to file federal and state
payroll tax returns on the basis that the Company is the successor employer in
respect of the Business (as contemplated by Revenue Procedure 84-77), provided
that there would be no additional cost to Seller, BFI or the Company to do so.
ARTICLE 7
CONDITIONS TO THE ACQUISITION
Section 7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of Seller and Buyer to consummate the Acquisition are subject to the
satisfaction of the following conditions:
(a) No provision of any applicable domestic (whether federal, state or
local) or foreign law or regulation and no judgment, injunction, order or decree
of a court or governmental agency or authority of competent jurisdiction shall
be in effect which has the effect of making the Acquisition or the Financing
illegal or shall otherwise restrain or prohibit the consummation of the
Acquisition or the Financing (each party agreeing to use its best efforts,
including appeals to higher courts, to have any judgment, injunction, order or
decree lifted), except for any law or regulation the violation of which would
not, singly or in the aggregate, reasonably be expected to (i) have a Company
Material Adverse Effect (after giving effect to the Acquisition), (ii) result in
a criminal violation (other than a misdemeanor the only penalty for which is a
monetary fine), or (iii) result in Buyer or its subsidiaries failing to meet the
standards for licensing, suitability or character set by any foreign, federal,
state or local authority relating to the conduct of Buyer's or the Company's
business which (after taking into account the anticipated impact of such failure
to so meet such standards on other authorities) could reasonably be expected to
have a Company Material Adverse Effect (after giving effect to the Acquisition);
(b) the waiting period applicable to consummation of the Acquisition and
the Financing under the HSR Act shall have expired or been terminated;
(c) the BFI Merger shall have been declared effective; and
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(d) the Simultaneous Asset Transaction shall be prepared to close.
Section 7.2 CONDITIONS TO OBLIGATION OF SELLER TO EFFECT THE ACQUISITION.
Unless waived by Seller, the obligation of Seller to effect the Acquisition
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Buyer shall have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the representations
and warranties of Buyer contained in this Agreement shall be true and correct on
and as of the Closing Date as if made at and as of such date (except to the
extent that such representations and warranties speak as of an earlier date),
except for such failures to perform or to be true and correct that would not
reasonably be expected to have a Buyer Material Adverse Effect, and Seller shall
have received a certificate of the Chief Executive Officer, the President or a
Vice President of Seller to that effect;
(b) Buyer shall have delivered a certificate to Seller, in form and
substance reasonably satisfactory to Seller, to the effect that, at the Closing
Date, after giving effect to the Acquisition and the transactions contemplated
hereby, including without limitation, the Financing, Buyer and its subsidiaries,
taken as a whole, will not (i) be insolvent (either because its financial
condition is such that the sum of its debts is greater than the fair value of
its assets or because the present fair salable value of its assets will be less
than the amount required to pay its probable liability on its debts as they
become absolute and matured), (ii) have unreasonably small capital with which to
engage in its business or (iii) have incurred or plan to incur debts beyond its
ability to pay as they become absolute and matured; and
(c) Seller shall have received a solvency letter in form and substance
reasonably satisfactory to Seller.
Section 7.3 CONDITIONS TO OBLIGATIONS OF BUYER TO EFFECT THE ACQUISITION.
Unless waived by Buyer, the obligations of Buyer to effect the Acquisition shall
be subject to the fulfillment at or prior to the Closing Date of the additional
following conditions:
(a) Seller shall have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the representations
and warranties of Seller contained in this Agreement shall be true and correct
on and as of the Closing Date as if made at and as of such date (except to the
extent that such representations and warranties speak as of an earlier date),
except for such failures to perform and to be true and correct that would not
reasonably be expected to have a Company Material Adverse Effect, and Buyer
shall have received a Certificate of the Chief Executive Officer, the President
or a Vice President of Seller to that effect;
(b) all Buyer Statutory Approvals and Company Statutory Approvals required
to be obtained in order to permit consummation of the Acquisition under
applicable law shall have been obtained, except for any such Buyer Statutory
Approvals or Company Statutory Approvals the failure of which to obtain would
not, singly or in the aggregate, reasonably be expected to (i) have a Buyer
Material Adverse Effect (after giving effect to the Acquisition), (ii) result in
a criminal violation (other than a misdemeanor the only penalty for which is a
monetary fine), or (iii) result in Buyer or its subsidiaries failing to meet the
standards for licensing, suitability or character set by any foreign, federal,
state or local authority relating to the conduct of Buyer's or the Company's
business which (after taking into account the anticipated impact of such failure
to so meet such standards on other authorities) could reasonably be expected to
have a Buyer Material Adverse Effect (after giving effect to the Acquisition);
(c) all consents, approvals or authorizations required to be obtained
pursuant to any Contract or permit to which the Company is a party or of which
the Company is a beneficiary in order to avoid a Company Material Adverse Effect
(after giving effect to the Acquisition) shall have been obtained; and
(d) Buyer shall have received Financing for the Acquisition on commercially
reasonable terms for transactions like the Acquisition consistent with the
Financing Assurances.
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ARTICLE 8
TERMINATION
Section 8.1 TERMINATION. This Agreement maybe terminated and the
Acquisition may be abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and Buyer;
(ii) by either Seller or Buyer, if the Acquisition has not been consummated
by September 15, 1999 (or such later date as may be agreed to by Seller and BFI
pursuant to the Merger Agreement), provided that (x) if the Financial Statements
have not been delivered at least two months prior to such date and Buyer did not
cause the delay by changing the scope of the audit set forth on EXHIBIT A or
otherwise, such date shall automatically be extended to a date that is two
months following the date of delivery of the Financial Statements, and (y) such
date shall automatically be extended until December 31, 1999 (or such later date
as may be agreed to by Seller and BFI pursuant to the Merger Agreement) if, on
September 15, 1999 (or such later date as may be agreed to by Seller and BFI
pursuant to the Merger Agreement), the waiting period under the HSR Act has not
expired or been terminated or any injunction, order or decree shall prohibit or
restrain consummation of the Acquisition; and provided further, that the right
to terminate this Agreement under this clause (ii) shall not be available to any
party whose failure to fulfill any of its obligations under this Agreement has
been the cause of or resulted in the failure to consummate the Acquisition by
such date;
(iii) by either Seller or Buyer if any judgment, injunction, order or
decree of a court or governmental agency or authority of competent jurisdiction
shall prohibit the consummation of the Acquisition, and such judgment,
injunction, order or decree shall become final and nonappealable and was not
entered at the request of the terminating party;
(iv) by either Seller or Buyer, if (x) there has been a breach by the other
party of any representation or warranty contained in this Agreement or in the
Asset Purchase Agreement for the Simultaneous Asset Transaction which would
reasonably be expected to have a Buyer Material Adverse Effect or a Company
Material Adverse Effect, as the case may be, or prevent or delay the
consummation of the Acquisition beyond the date specified in Section 8.1(ii),
and which has not been cured in all material respects within 30 days after
written notice of such breach by the terminating party, or (y) there has been a
breach of any of the covenants or agreements set forth in this Agreement or in
the Asset Purchase Agreement for the Simultaneous Asset Transaction on the part
of the other party, which would reasonably be expected to have a Buyer Material
Adverse Effect or a Company Material Adverse Effect, as the case may be, or
prevent or delay the consummation of the Acquisition beyond the date specified
in Section 8.1(ii), and which breach is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by the terminating
party to the other party;
(v) by Seller, if a Buyer Stockholder Meeting is required and the Board of
Directors of Buyer shall have failed to recommend, or shall have withdrawn,
modified or amended in any material respects its approval or recommendation of
the Acquisition or the Financing or shall have resolved to do any of the
foregoing;
(vi) by Buyer or Seller if a Buyer Stockholder Meeting is required and the
stockholders of Buyer fail to approve the Acquisition or the Financing at a duly
held meeting of stockholders called for such purpose or any adjournment or
postponement thereof; or
(vii) by Buyer or Seller if the Acquisition has not been consummated by
January 1, 2000; provided that the right to terminate this Agreement under this
clause (vii) shall not be available to any party whose failure to fulfill any of
its obligations under this Agreement has been the cause of or resulted in the
failure to consummate the Acquisition by such date.
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ARTICLE 9
MISCELLANEOUS
Section 9.1 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Buyer or Seller pursuant to the provisions of Section 8.1,
this Agreement shall forthwith become void and there shall be no liability or
further obligation on the part of Buyer or Seller or their respective officers
or directors (except as set forth in this Section 9.1, and in Sections 6.3(c),
6.9 and 9.5, all of which shall survive the termination). Nothing in this
Section 9.1 shall relieve any party from liability for any breach of any
representation, warranty, covenant or agreement of such party contained in this
Agreement, except that the payment of the fees contemplated by Section 6.9(b) or
(c) shall relieve the paying party from all liability on account of its breach
of this Agreement.
Section 9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for
(i) the First Rights Agreement and the Transition Agreement, (ii) the
representations and warranties in Section 5.8(e) (which shall survive until
30 days following the expiration of each applicable Tax statute of limitations)
and (iii) the representations and warranties in the second sentence of
Section 5.3 and in Section 5.13 (which each shall survive until the fifth
anniversary of the Closing Date), no representations, warranties or agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Acquisition, and after effectiveness of the Acquisition
neither Seller nor Buyer nor their respective officers or directors shall have
any further obligation with respect thereto except for the agreements contained
in Article 9 and Sections 6.5, 6.11, 6.14, 6.17, 6.18 and 6.19.
Section 9.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Seller, to:
Allied Waste Industries, Inc.
00000 Xxxxxxxx-Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Vice President, Legal
Facsimile: (000) 000-0000
with copies to:
Xxxxxxxxx Xxxxx, P.C.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. XxXxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer, to:
Stericycle, Inc.
00000 X. Xxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, President and CEO
Facsimile: (000) 000-0000
with a copy to:
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Xxxxxxx and Colmar
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Section 9.4 INTERPRETATION. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement unless a contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) "knowledge" shall mean actual
knowledge of the executive officers of Seller or Buyer, as the case may be, and
(iii) reference to any Article or Section means such Article or Section hereof.
No provision of this Agreement shall be interpreted or construed against any
party hereto solely because such party or its legal representative drafted such
provision. For purposes of determining whether any fact or circumstance involves
a material adverse effect on the results of operations of a party, any special
transaction charges incurred by such party as a result of the consummation of
transactions contemplated by this Agreement shall not be considered.
Section 9.5 MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) shall not be assigned by operation of law or
otherwise. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY,
INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. THE EXCLUSIVE
VENUE FOR THE ADJUDICATION OF ANY DISPUTE OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR THE PERFORMANCE THEREOF SHALL BE THE COURTS LOCATED IN THE STATE OF
DELAWARE AND THE PARTIES HERETO AND THEIR AFFILIATES EACH CONSENT TO AND HEREBY
SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED IN THE STATE OF DELAWARE.
Section 9.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.7 AMENDMENTS, NO WAIVERS.
(a) Any provision of this Agreement maybe amended or waived prior to the
Closing Date if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment by Seller and Buyer or, in the case of a waiver, by
the party against whom the waiver is to be effective; provided that any waiver
or amendment shall be effective against a party only if the board of directors
of such party approves such waiver or amendment.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 9.8 ENTIRE AGREEMENT. This Agreement, including the Exhibits
hereto, and the Confidentiality Agreement constitute the entire agreement
between the parties with respect to the subject matter hereof, and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. Neither
this Agreement nor any provision hereof is intended to confer upon any person
other than the parties hereto any rights or remedies hereunder except for the
provisions of Section 6.11, which are intended for the benefit of the Company's
former and present officers, directors, employees and agents and the provisions
of Section 6.5, which are intended for the benefit of the parties to the
agreements or participants in the plans referred to therein.
Section 9.9 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or un-
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enforceable, all other provisions of this Agreement shall remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
Section 9.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof, and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
STERICYCLE, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------------------
Title: President
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------------------------
Title: Vice President and Chief Operating Officer
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