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Exhibit 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is executed and
delivered as of May 25, 2001, among Allied Waste North America, Inc., a Delaware
corporation ("Parent"); Sage Acquisition Corporation, a Florida corporation and
a direct or indirect wholly-owned subsidiary of Parent ("Purchaser"); and Star
Services Group, Inc., a Florida corporation (the "Company").
RECITALS
A. The Boards of Directors of Purchaser and the Company have approved
the merger of the Company with and into Purchaser on the terms set forth in this
Agreement (the "Merger").
B. Parent desires the Company to merge with and into Purchaser on the
terms set forth in this Agreement.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. Capitalized terms shall have the meanings
assigned to them in EXHIBIT A.
ARTICLE 2
THE MERGER AND THE SURVIVING CORPORATION
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, Purchaser shall be merged with and
into the Company and the separate existence of Purchaser shall cease. The
Company shall be the surviving corporation in the Merger and is sometimes
referred to in this Agreement as the "Surviving Corporation."
2.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as shall be stated in articles of merger, in a
form mutually acceptable to Parent and the Company, to be filed with the
Secretary of State of the State of Florida in accordance with the Florida Law
(the "Merger Filing"). The Merger Filing shall be made simultaneously with or as
soon as practicable after the closing of the Transactions. The parties
acknowledge that it is their mutual desire and intent to consummate the Merger
as soon as practicable after the date of this Agreement. Accordingly, the
parties shall, subject to the provisions of this Agreement and to the fiduciary
duties of their respective boards of directors, use all reasonable efforts to
consummate, as soon as practicable, the Transactions.
2.3 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Purchaser as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time,
except that they shall be amended to indicate that the name
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of the Surviving Corporation is Star Services Group, Inc., and thereafter may be
amended in accordance with their terms and as provided in the Florida Law.
2.4 BYLAWS. The Bylaws of Purchaser as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time, except that they shall be amended to indicate that the name of
the Surviving Corporation is Star Services Group, Inc., and thereafter may be
amended in accordance with their terms and as provided by the Articles of
Incorporation of the Surviving Corporation and the Florida Law.
2.5 DIRECTORS. The directors of Purchaser in office immediately prior
to the Effective Time shall be the directors of the Surviving Corporation after
the Effective Time, and such directors shall serve in accordance with the Bylaws
of the Surviving Corporation until their respective successors are duly elected
or appointed and qualified.
2.6 OFFICERS. The officers of Purchaser in office immediately prior to
the Effective Time shall be the officers of the Surviving Corporation after the
Effective Time, and such officers shall serve in accordance with the Bylaws of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
ARTICLE 3
CONVERSION OF SHARES; DISSENTING SHARES; PAYMENT
3.1 CONVERSION OF COMPANY SHARES IN THE MERGER. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Parent as the sole shareholder of Purchaser:
3.1.1 Subject to Sections 3.2, 3.3 and 3.4, at the Effective
Time, by virtue of the Merger and without any action on the part of the holders
thereof, each share of the common stock, par value $0.01 per share, of the
Company (the "Company Stock" or the "Shares") issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Parent, Purchaser,
any wholly-owned subsidiary of Parent or Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company, which Shares, by
virtue of the Merger and without any action on the part of the holder thereof,
shall be cancelled and retired and shall cease to exist with no payment being
made with respect thereto, and other than Dissenting Shares), shall be converted
into the right to receive, and become exchangeable for, upon the surrender of
the certificates formerly representing such shares, an amount in cash (the
"Share Price") equal to (x) $34,000,000 (the "Merger Consideration") plus (y)
the aggregate exercise price of all of the Company's ITM Options; divided by (z)
the number of Shares and ITM Options issued and outstanding immediately prior to
the Effective Time.
3.1.2 Subject to Sections 3.2 and 3.3, at the Effective Time,
all outstanding options (regardless of whether or not such options have vested)
(the "Options") granted pursuant to the Company's 1999 Stock Option Plan (the
"Option Plan") shall be cancelled and each holder of an Option listed on
SCHEDULE 3.1.2 (the "ITM Options") shall be entitled to receive, in
consideration for the cancellation of such ITM Option, an amount in cash equal
to the product of (x) the number of Shares previously subject to such ITM Option
and (y) the excess, if any, of the
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Share Price over the exercise price per Share previously subject to such ITM
Option (such payment to be net of taxes and other amounts required by law to be
withheld with respect thereto). Effective as of the Effective Time, the Company
shall take all action as is necessary prior to the Effective Time to terminate
the Option Plan so that on and after the Effective Time no current or former
employee, director, consultant or other person shall have any option to purchase
Shares or any other equity interests in the Company under the Option Plan.
3.1.3 Each share of capital stock of the Company, if any,
owned by Parent, Purchaser, any wholly-owned subsidiary of Parent or Purchaser,
or held in treasury by the Company or any wholly-owned subsidiary of the Company
immediately prior to the Effective Time shall be canceled by virtue of the
Merger and without any action on the part of the holders thereof. No
consideration shall be paid in exchange for such share and such share shall
cease to exist from and after the Effective Time.
3.1.4 Each issued and outstanding share of common stock, no
par value, of Purchaser shall be converted into one share of common stock, par
value $.01 per share, of the Surviving Corporation.
3.2 MERGER CONSIDERATION ADJUSTMENTS.
3.2.1 DEBT ADJUSTMENT. The Merger Consideration shall be
reduced on a dollar-for-dollar basis if and to the extent that the Long-Term
Debt of the Company as of the Closing exceeds $15,270,000. This adjustment is
referred to as the "Debt Adjustment." "Long-Term Debt" means indebtedness of the
Company for borrowed money having a maturity or due date in excess of one year,
including the current and long-term portions of bank debt, mortgages,
shareholder loans or notes payable, other notes or loans payable, and remaining
principal amounts on capitalized equipment leases, but shall exclude the
purchase price of real property pursuant to the Purchase and Sale Agreement
between Charade Properties, II, Inc. and the Company dated February 7, 2001 (the
"Charade Agreement")
3.2.2 WORKING CAPITAL ADJUSTMENT.
3.2.2.1 The Company's ratio of Current Assets to
Current Liabilities (exclusive of current portions of Long-Term Debt) shall not
be less than 1.0 to 1.0 as of the Closing. The terms "Current Assets" and
"Current Liabilities" shall have the meanings assigned to them under generally
accepted accounting principles. Notwithstanding the foregoing, "Current
Liabilities" shall include any bonuses set forth on SCHEDULE 6.19.8 that are
accrued but not yet paid, the Company's expenses pursuant to Section 13.7.1, and
any severance obligations or termination payments to employees as a result of
the Transactions or the termination of such employees following the Transactions
and during the term of their existing employment agreements (without renewals),
but shall exclude the purchase price of real property pursuant to the Charade
Agreement. If, based on the May 31 Balance Sheet, Current Liabilities exceed
Current Assets (a "Working Capital Deficit"), the amount of such Working Capital
Deficit shall be deducted from the Merger Consideration. If, based on the May 31
Balance Sheet, Current Assets exceed Current Liabilities (a "Working Capital
Surplus"), the amount of such Working Capital Surplus shall be added to the
Merger Consideration. If, as of the Closing, the amount of the Working Capital
Deficit exceeds a Working Capital Deficit based on the May 31 Balance
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Sheet, or if the amount of the Working Capital Surplus is less than a Working
Capital Surplus based on the May 31 Balance Sheet, the amount of such excess or
deficit shall be deducted from the Merger Consideration. If, as of the Closing,
the amount of the Working Capital Surplus exceeds a Working Capital Surplus
based on the May 31 Balance Sheet, or if the amount of a Working Capital Deficit
is less than a Working Capital Deficit based on the May 31 Balance Sheet, the
amount of such excess or deficit shall be added to the Merger Consideration. Any
such adjustment based on Current Assets and Current Liabilities as of the
Closing is referred to as the "Working Capital Adjustment." Within 30 days after
the Closing, the Surviving Corporation shall deliver to Shareholders'
Representative a statement setting forth the amount of the proposed Working
Capital Adjustment (the "Settlement Statement").
3.2.2.2 The Settlement Statement shall be final and
binding on the shareholders unless, within 30 days following the date of
delivery to the Shareholders' Representative of the Settlement Statement, the
Shareholders' Representative notifies Parent in writing (a "Notice of
Objection") that the shareholders do not accept as correct the amount of any
calculation reflected in the Settlement Statement. If the Shareholders'
Representative timely delivers a Notice of Objection to Parent, then the
Shareholders' Representative and Parent shall respectively instruct Xxxxxx &
Company, L.L.C. and Xxxxxx Xxxxxxxx L.L.P. to attempt to reach mutual agreement
as to each disputed calculation made in the Settlement Statement. If such firms
reach agreement as to all disputed calculations within 10 days after the matter
has been referred to such firms, the agreement of such firms in the matter shall
be final and binding on all parties. If within 10 days after the matter has been
referred to such accounting firms they have not reached agreement as to all
disputed calculations, then Xxxxxx & Company, L.L.C. and Xxxxxx Xxxxxxxx L.L.P.
shall be promptly instructed by the Shareholders' Representative and Parent,
respectively, to designate a third accounting firm of recognized standing, which
(acting as experts and not as arbitrators) shall be instructed to make, as soon
as practicable after the matter is referred to such firm, all calculations which
are in dispute, and the determination of such third accounting firm in the
matter shall be final and binding on all parties. The shareholders shall bear
the costs of Xxxxxx & Company, L.L.C., Parent shall bear the costs of Xxxxxx
Xxxxxxxx L.L.P., and the shareholders on the one hand and Parent on the other
hand shall split the cost of any such third accounting firm.
3.2.2.3 After final determination of the Working
Capital Adjustment pursuant to Section 0.0.0.0: (a) if the Working Capital
Adjustment is a positive amount, the Surviving Corporation shall promptly pay to
the Exchange Agent such amount without any setoff for distribution to the
shareholders of the Company and ITM Option holders pro rata based on the number
of Shares and ITM Options issued and outstanding immediately prior to the
Effective Time; and (b) if the Working Capital Adjustment is a negative amount,
the Surviving Corporation shall be entitled to receive only from the Escrow
Funds the amount of the deficiency.
3.2.3 REPRESENTATIONS AND WARRANTIES ADJUSTMENT.
3.2.3.1 Upon the occurrence of the following events,
the Merger Consideration shall be reduced as follows (the "R&W Adjustment"):
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3.2.3.1.1 if any tangible assets of the
Company or a Subsidiary are missing or not in operational condition (other than
in the ordinary course of business) as of the Closing, the Merger Consideration
shall be reduced by the net book value of such assets; and
3.2.3.1.2 if any front-end loader or
compaction permanent customer accounts or contracts of the Company or any of the
Subsidiaries have been lost or are expected to be lost and have not been
replaced, the Merger Consideration shall be reduced by an amount equal to the
annual revenue under such account or contract multiplied by 30% multiplied by
5.5 with respect to each such lost account or contract.
3.2.3.2 Before the Closing, Parent shall deliver to
Shareholders' Representative a statement setting forth the amount of the
proposed R&W Adjustment (the "R&W Adjustment Statement"). The R&W Adjustment
Statement shall be final and binding on the shareholders unless, within 5
business days following the date of delivery to the Shareholders' Representative
of the R&W Adjustment Statement, the Shareholders' Representative notifies
Parent in writing (a "R&W Notice of Objection") that the shareholders do not
accept as correct the amount of the proposed R&W Adjustment. If the
Shareholders' Representative timely delivers an R&W Notice of Objection to
Parent, then the Shareholders' Representative and Parent shall negotiate in good
faith to resolve the dispute and the Closing shall be delayed pending resolution
of such dispute. If the parties are unable to resolve the dispute by September
30, 2001, either Parent and Purchaser or the Company may terminate this
Agreement pursuant to Section 13.3.
3.3 ESCROW. As soon as practicable after the Effective Time, Parent or
the Surviving Corporation shall deliver to a bank or trust company mutually
acceptable to Parent and the Company (the "Escrow Agent") $4,000,000 of the
Merger Consideration. (the "Escrow Funds") to be held and disbursed pursuant to
the provisions of Section 12.6 of this Agreement and pursuant to the provisions
of an escrow agreement substantially in the form of EXHIBIT B (the "Escrow
Agreement").
3.4 DISSENTING SHARES. Notwithstanding Section 3.1.1, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded payment of the fair value of the Shares in accordance with Sections
607.1301 through 607.1320 of the Florida Law ("Dissenting Shares") shall not be
converted into the right to receive the Share Price as provided in Section
3.1.1, unless and until such holder fails to perfect or withdraws or otherwise
loses his right to payment of the fair value of the Dissenting Shares under the
Florida Law. If, after the Effective Time, any such holder fails to perfect or
withdraws or loses his right to payment of the fair value of the Dissenting
Shares, such Dissenting Shares shall thereupon be treated as if they had been
converted as of the Effective Time into the right to receive the Share Price to
which such holder is entitled, without interest or dividends thereon. The
Company shall give Parent prompt notice of any demands received by the Company
for payment of the fair value of Shares and, prior to the Effective Time, Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
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3.5 EXCHANGE OF CERTIFICATES AND ITM OPTIONS.
3.5.1 From and after the Effective Time, a bank or trust
company mutually acceptable to Parent and the Company (which may be the same one
serving as the Escrow Agent) shall act as paying agent (the "Paying Agent") in
effecting the payment of the Share Price in respect of certificates (the "Share
Certificates") that, prior to the Effective Time, represented Shares entitled to
payment pursuant to Section 3.1.1. Promptly following the Effective Time, Parent
or the Surviving Corporation shall deposit, or cause to be deposited, in trust
with the Paying Agent the Merger Consideration to which holders of Shares shall
be entitled at the Effective Time pursuant to Section 3.1.1. The Paying Agent,
if it is the same as the Escrow Agent, shall keep such Merger Consideration in
an account separate from the account in which it holds the Escrow Funds.
3.5.2 Promptly after the Effective Time, the Paying Agent
shall mail to each record holder of Shares (other than Share Certificates
representing Dissenting Shares and Share Certificates representing Shares held
by Parent or Purchaser, any wholly-owned subsidiary of Parent or Purchaser, in
the treasury of the Company or by any wholly-owned subsidiary of the Company) a
form of letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to the Share Certificates shall pass, only
upon proper delivery of the Share Certificates to the Paying Agent and
instructions for use in surrendering such Share Certificates and receiving the
Share Price in respect thereof. Upon the surrender of each such Share
Certificate, the Paying Agent shall pay the holder of such Share Certificate the
applicable Share Price multiplied by the number of Shares formerly represented
by such Share Certificate in consideration therefor, and such Share Certificate
shall forthwith be cancelled. Until so surrendered, each such Share Certificate
(other than Share Certificates representing Dissenting Shares and Share
Certificates representing Shares held by Parent or Purchaser, in the treasury of
the Company or by any wholly-owned subsidiary of the Company) shall represent
solely the right to receive the aggregate Share Price relating thereto. No
interest or dividends shall be paid or accrued on the Share Price. If the Share
Price (or any portion thereof) is to be delivered to any person other than the
person in whose name the Share Certificate formerly representing Shares
surrendered therefor is registered, it shall be a condition to such right to
receive such Share Price that the Share Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Share Certificates shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of the Share Price to
a person other than the registered holder of the Share Certificate surrendered,
or shall establish to the satisfaction of the Paying Agent that such tax has
been paid or is not applicable.
3.5.3 Promptly after the Effective Time, the Surviving
Corporation shall pay to each holder of ITM Options the amount to which the ITM
Option holder is entitled pursuant to Section 3.1.2 for such ITM Options and
such ITM Options shall thereupon be deemed cancelled. Such amount shall be
delivered only to the person in whose name the ITM Option surrendered therefor
is registered.
3.5.4 Promptly following the date which is 120 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Share Certificates and other documents in its possession relating to the
Transactions, and the Paying Agent's duties as Paying Agent shall terminate.
Thereafter, each holder of a Share Certificate formerly
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representing a Share may surrender such Share Certificate to the Surviving
Corporation and (subject to the applicable abandoned property, escheat and
similar laws) receive in consideration therefor the aggregate Share Price
relating thereto, without any interest or dividends thereon.
3.5.5 After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Shares that were
outstanding immediately prior to the Effective Time and holders of Share
Certificates shall cease to have any rights as shareholders of the Company,
except for the right to receive Merger Consideration pursuant to this Agreement.
If, after the Effective Time, Share Certificates formerly representing Shares
are presented to the Surviving Corporation or the Paying Agent, they shall be
surrendered and cancelled in return for the payment of the aggregate Share Price
as provided in this Article 3, subject to applicable law in the case of
Dissenting Shares. Holders of Shares shall cease to have any rights as
shareholders of the Company, except for the right to receive Merger
Consideration pursuant to this Agreement.
3.5.6 None of the Paying Agent, Parent, Purchaser, the Company
or the Surviving Corporation shall be liable to a holder of Shares or Options
for any Shares, Options, money or other property delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
3.5.7 The Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares or ITM Options such amounts
as they are required to deduct and withhold with respect to the making of such
payment under the Code or other Law. To the extent that amounts are so withheld
by the Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares or ITM Options in respect of which such deduction and withholding was
made.
ARTICLE 4
CLOSING
4.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") of the
Transactions shall take place at a location mutually agreeable to Parent and the
Company as promptly as practicable (but in any event within 5 business days)
following the date on which the last of the conditions set forth in Articles 10
and 11 is fulfilled or waived, or at such other time and place as Parent,
Purchaser and the Company shall agree. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
ARTICLE 5
TITLE AND SURVEY
5.1 TITLE POLICY. The Company shall furnish to Parent for each piece of
owned Land an ALTA Extended Owner's Policy of Title Insurance from Attorneys
Title Insurance Fund, Inc. (the "Title Company") in an amount equal to the fair
market value of the owned Land as determined by Parent with each of the Title
Company's standard printed exceptions deleted and
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including the endorsements delineated below, to the extent they are available
from the Title Company without unreasonable cost in the Company's reasonable
judgment, and such endorsements reasonably requested by Parent, to the extent
they are available from the Title Company without unreasonable cost in the
Company's reasonable judgment, available in the state where the owned Land is
located, insuring marketable fee simple title to each parcel of owned Land to be
in the Company or a Subsidiary subject only to Permitted Encumbrances (the
"Title Policy"). The Company shall pay the cost of the Title Commitment, Title
Policy and the following affirmative endorsements, subject to availability as
above provided, in form reasonably acceptable to Parent: (a) an endorsement
insuring there are no violations of any restrictive covenants, conditions or
restrictions affecting the owned Land; (b) an endorsement insuring there are no
encroachments by any improvement onto the owned Land, any easements, or any
building lines or setbacks affecting the owned Land, or onto any adjacent
property; (c) if applicable, a contiguity endorsement insuring that each parcel
of the owned Land is contiguous and that the land described in the Survey is the
same as that described in the Title Commitment; (d) if applicable, survey,
patent, and water endorsements; and (e) an access endorsement insuring that the
owned Land has direct access to a public road or highway, if available. All
other endorsements that Parent requests shall be at Parent or Purchaser's cost.
The Title Policy shall insure the Company's or Subsidiary's interest in the
owned Land to be unconditionally vested in the name of the owner of the Land,
free and clear of all Encumbrances whatsoever except for the following (the
"Permitted Encumbrances"): (a) those items shown on Schedule B of the following
Title Commitments dated May 1, 2001, with Fund file Nos. 10-2001-7659-M
(excepting items 1-3, and 7-9), 00-0000-0000 (excepting items 1-3, and 6-8), and
00-0000-0000 (excepting items 1-3, and 5-7); (b) real estate Taxes and
assessments, both general and special, which are a lien but are not yet due and
payable at the Closing Date; and (c) those matters shown on the Survey(s). If
there is a discrepancy between the legal description in the Title Commitment and
the Survey, one or the other shall be changed, as applicable to reflect the
correct legal description.
5.2 SURVEY. The Company shall obtain for Parent's use and for the use
of the Title Company in connection with the issuance of the Title Policy a
current and complete ALTA/ACSM survey, or update of a prior existing survey, of
each piece of owned Land made on the ground by a competent registered surveyor,
showing: (a) the exact boundary lines of the Land; (b) the location thereon of
all, if any, buildings, improvements, roads, and easements now existing; (c) the
number of acres in the owned Land; (d) the location of any buildings, fences or
other improvements which encroach on the owned Land; (e) the location of any
improvements on the owned Land which encroach on any neighboring property; (f)
all building lines established in respect of the Land; and (g) all public access
to the owned Land, and representing that the boundaries of the owned Land are
contiguous with the boundaries of all adjoining parcels (the "Survey"). In
addition, the Survey shall comply with the additional requirements set forth on
EXHIBIT C. The Company shall deliver to Parent and the Title Company, no less
than 10 days before the Closing, a copy of the Survey complying with the above
requirements and reasonably satisfactory to Parent, together with certification
to the Parent and the land owner by the surveyor, and also together with such
additional supporting reports and other certificates as the Title Company may
require to enable the Title Company to delete its standard survey exceptions
from the Title Policy. The Company shall pay all of the costs of the Survey.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that the
statements contained in this Article 6, except as set forth in the Disclosure
Schedules: (a) are correct and complete as of the date of this Agreement; and
(b) will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article 6). The mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made in this Agreement unless (a) the
representation or warranty has to do with the existence of the document or other
item itself or (b) the Disclosure Schedule identifies the exception with
particularity (such as with a cross-reference to a section in a disclosed
agreement) and summarizes the relevant facts in reasonable detail.
Notwithstanding the foregoing, however, if an item is adequately disclosed in
one Disclosure Schedule, such item shall be deemed disclosed for purposes of any
other Disclosure Schedule to which it is applicable even if it is not listed in
such Disclosure Schedule.
Wherever a representation or warranty in this Agreement is qualified as
having been made "to the best of the Company's knowledge," such phrase shall
mean the knowledge of the Company and the executive officers of the Company and
the Subsidiaries listed on SCHEDULE 6, after reasonable inquiry.
6.1 ORGANIZATION; AUTHORITY; CAPITALIZATION; SUBSIDIARIES; BOOKS AND
RECORDS.
6.1.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and is duly authorized, qualified and licensed under all applicable Laws to
carry on its Business in the places and in the manner as presently conducted,
except for where the failure to be so authorized, qualified or licensed would
not have a Material Adverse Effect. Complete and accurate copies of the Articles
of Incorporation and Bylaws of the Company, each as in effect on the date of
this Agreement, are included in SCHEDULE 6.1.1.
6.1.2 The Company has the full legal right, power and
authority to enter into this Agreement and to consummate the Transactions. On or
before the Closing, all corporate action of the Company and its shareholders
necessary to approve the Transactions shall have been taken.
6.1.3 Except as set forth on SCHEDULE 6.1.3, the Company's
authorized capitalization consists of 30,000,000 shares of Company Stock, of
which 12,141,745 Shares are issued and outstanding. All of the Shares are
validly issued, fully paid and non-assessable, and, except as set forth on
SCHEDULE 6.1.3, were offered, issued, sold and delivered by the Company in
compliance with all applicable Laws (including state and federal securities
laws). None of such Shares was issued pursuant to awards, grants or bonuses in
violation of the preemptive rights of any past or present shareholder. Except as
set forth on SCHEDULE 6.1.3, there are no outstanding rights, warrants, options
or agreements with respect to any class of capital stock of the Company,
including agreements granting to any person rights to acquire any capital stock
or proxies or
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agreements with respect to the voting thereof. SCHEDULE 6.1.3 lists all Option
holders, the number of Options held by each and the exercise prices for all such
Options. Except for the Shares, there are no outstanding equity securities or
other interests of the Company. To the best of the Company's knowledge, the
stock transfer records provided by the Company to Parent correctly set forth all
issuances, acquisitions and retirements of the Shares since the inception of the
Company. Except as set forth on SCHEDULE 6.1.3, the Company has never acquired
treasury stock. The Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof. Except as set forth on SCHEDULE 6.1.3, the Company has not agreed to
register any securities under the Securities Act or under any state securities
law.
6.1.4 Except as set forth on SCHEDULE 6.1.4, the Company has
no subsidiaries and does not control, directly or indirectly, or have any direct
or indirect equity participation in, any other Person. Each of the subsidiaries
set forth on SCHEDULE 6.1.4 (the "Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and is duly authorized, qualified and licensed under all
applicable Laws to carry on its Business in the places and in the manner as
presently conducted, except for where the failure to be so authorized, qualified
or licensed would not have a Material Adverse Effect. Complete and accurate
copies of the Articles of Incorporation and Bylaws of each Subsidiary, each as
in effect on the date of this Agreement, are included in SCHEDULE 6.1.4. All of
the issued and outstanding shares of capital stock of each Subsidiary are owned
beneficially and of record by the Company, directly or indirectly, free and
clear of all Encumbrances. All of such shares are validly issued, fully paid and
non-assessable. None of such shares was issued pursuant to awards, grants or
bonuses in violation of the preemptive rights of any past or present shareholder
that were granted by the Company. Except as set forth on SCHEDULE 6.1.4, there
are no outstanding rights, warrants, options or agreements with respect to any
class of capital stock of any Subsidiary, including agreements granting to any
person rights to acquire any capital stock or agreements with respect to the
voting thereof. The Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof.
6.1.5 The minute books of the Company and the Subsidiaries
contain materially accurate records of all meetings and accurately reflect all
actions taken by their respective boards of directors, committees of the board
of directors and shareholders. Complete and accurate copies of all such minute
books are included in SCHEDULE 6.1.5.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and, except for approval by the Company's shareholders
in connection with the consummation of the Merger, to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized and approved by the Board and no other corporate proceedings on the
part of the Company are necessary to authorize or approve this Agreement or to
consummate the Transactions (other than the approval and adoption of the Merger
and this Agreement by holders of the Shares to the extent required by the
Company's Articles of Incorporation and by applicable Law). This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due and valid authorization, execution and delivery of this
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Agreement by Parent and Purchaser, constitutes a legally valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as may be otherwise provided by applicable bankruptcy, fraudulent
conveyance or other similar Laws relating to creditors' rights. Upon Board and
shareholder approval as contemplated by this Agreement, no state business
combination, control share acquisition, takeover or other similar state Law
applies or purports to apply to the Merger or the other Transactions.
6.3 NO CONFLICT. Except where the same will not have a Material Adverse
Effect, the execution, delivery and performance of this Agreement by the Company
and the consummation of the Transactions do not and will not: (a) violate,
conflict with or result in the breach of any provision of the Company's Articles
of Incorporation or Bylaws; (b) conflict with or violate any Law or Governmental
Order applicable to the Shares, the assets of the Company, the Business, the
Company, the Subsidiaries or any of their respective assets, properties or
Businesses; or (c) except as set forth in SCHEDULE 6.3, conflict with, result in
any breach of, constitute a default (or event which with the giving of notice or
lapse of time would become a default) under, require any Consent under, or give
to any other Person any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on the Shares, the assets or the properties of the Company or any
Subsidiary pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, sublease, license, permit, authorization, franchise or other instrument
or arrangement to which the Company or any Subsidiary is a party or by which any
of their assets are bound or affected.
6.4 GOVERNMENTAL CONSENTS AND APPROVALS. Except for the filing of a
preliminary proxy statement and the Proxy Statement with the SEC, filings with
the FCC and the filing of articles of merger with the Florida Secretary of
State, the execution, delivery and performance of this Agreement by the Company
do not and will not require any Consent or action by, filing with or
notification to, any Governmental Authority.
6.5 SEC REPORTS AND FINANCIAL STATEMENTS; PROXY STATEMENT.
6.5.1 Except as set forth on SCHEDULE 6.5.1, since June 22,
1999 the Company has filed on a timely basis with the SEC all forms, reports,
schedules, registration statements, proxy statements and other documents (as
they have been amended since the time of their filing, and including any
documents filed as exhibits thereto, collectively, the "SEC Reports") required
to be filed by the Company with the SEC. As of their respective dates, except as
set forth on SCHEDULE 6.5.1, the SEC Reports (including any financial statements
or schedules included or incorporated by reference therein) complied in all
material respects with the requirements of the Exchange Act or the Securities
Act applicable to such SEC Reports, and none of the SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. No Subsidiary
is required to file any form, report or other document with the SEC.
6.5.2 The consolidated balance sheets as of December 31, 1999
and 2000 and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31, 2000
(including the related notes and schedules thereto) of the Company contained in
the Company's Form 10-K for the year ended
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December 31, 2000 included in the SEC Reports (the "Financial Statements") (a)
present fairly, in all material respects, the consolidated financial position
and the consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved except as
otherwise noted therein.
6.5.3 The unaudited consolidated balance sheet as of March 31,
2001 (the "March 31 Balance Sheet") and the related consolidated statements of
income, shareholders' equity and cash flows for the three months then ended of
the Company (collectively, the "Most Recent Financial Statements") and the
unaudited consolidated balance sheet as of May 31, 2001 that the Company will
provide to Parent by no later than June 15, 2001 (the "May 31 Balance Sheet"),
all of which are included in SCHEDULE 6.5.3, present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries as of
the date or for the period presented therein in conformity with GAAP applied on
a consistent basis during the periods involved, except as otherwise noted
therein, except for the absence of notes in the May 31, 2001 Balance Sheet, and
subject to normal recurring adjustments consistent with past practices.
6.5.4 There are no Liabilities of the Company or the
Subsidiaries, and, to the best of the Company's knowledge, there is no basis for
any present or future Action against the Company or any Subsidiary giving rise
to any Liability, other than Liabilities (i) reflected or reserved against on
the May 31 Balance Sheet, or (ii) Liabilities which have arisen after May 31,
2001 in the ordinary course of business that do not individually exceed $100,000
or $500,000 in the aggregate.
6.5.5 The Company has furnished to Parent a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act.
6.5.6 None of the information to be supplied by the Company or
its Subsidiaries for inclusion in the Proxy Statement will, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, and at
the time of the meetings of the shareholders of the Company to be held in
connection with the Transactions, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply, as of its mailing date, as to form in all material respects with
all applicable Laws, including the provisions of the Exchange Act, except that
no representation is made by the Company with respect to information supplied by
Parent or Purchaser for inclusion therein.
6.6 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 6.25.3, all
accounts receivable reflected on the March 31 Balance Sheet and created since
that date to the Closing Date (subject to the reserves established therefor)
arise from arm's length transactions between unrelated parties and represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business.
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6.7 INVENTORIES. All parts, tires, supplies and accessories of every
kind, nature and description owned by the Company and the Subsidiaries (the
"Inventories") are in good condition, reasonable wear and tear excepted, and are
suitable and usable for the purposes for which they are intended.
6.8 INTELLECTUAL PROPERTY RIGHTS.
6.8.1 SCHEDULE 6.8.1 sets forth: (a) all the right, title and
interest of the Company and the Subsidiaries in, to and under all trademarks,
trade names, service marks, copyrights, patents, inventions, designs, industrial
designs, trade secrets, royalties, secret processes, formulae, and all
applications, registrations, renewals and other rights relating to the foregoing
(whether or not any registration or filing has been made with respect thereto)
used in the Business, including the names of the Company and the Subsidiaries
(the "Intellectual Property Rights"), and all pending registrations and
applications therefor, that the Company and the Subsidiaries own, use or license
or in which they have any interest, indicating which are owned and which are
licensed; (b) all contracts, agreements or other arrangements under which the
Company and the Subsidiaries have granted, or are obligated to grant, rights to
others to use, reproduce, market or exploit any Intellectual Property Rights;
and (c) all names, assumed or otherwise, under which the Company and the
Subsidiaries have conducted their Business since June 22, 1999.
6.8.2 To the best of the Company's knowledge, neither the
Company nor any Subsidiary is infringing upon or otherwise acting adversely to
the right or claimed right, of any Person under or with respect to any
Intellectual Property Rights, nor has the Company or any Subsidiary received
written notice of any such claim. Neither the Company nor any Subsidiary is (a)
obligated pursuant to any contract to make any payments by way of royalties,
fees or otherwise with respect to any Intellectual Property Rights, or (b) a
licensor in respect of any Intellectual Property Rights. All licensing
agreements pursuant to which the Company or any Subsidiary is a licensee of any
Intellectual Property Rights are valid and binding on the Company or such
Subsidiary and, to the best of the Company's knowledge, the other parties
thereto, in accordance with their respective terms and are in full force and
effect, and (a) no breach or default by the Company or any Subsidiary or event
which, with notice or lapse of time, could constitute a breach or default by the
Company or any Subsidiary, exists with respect thereto, and (b) no party thereto
has given notice or asserted to the Company or any Subsidiary that the Company
or any Subsidiary is in breach or default thereunder.
6.8.3 Neither the Company nor any Subsidiary is in any way
making any unlawful or wrongful use of any confidential information, customer
lists or trade secrets of any third party, including any former employer of any
present or past employee of the Company or any Subsidiary.
6.9 TANGIBLE PERSONAL PROPERTY.
6.9.1 SCHEDULE 6.9.1(A) is a substantially complete and
accurate list of all containers and other pieces of equipment owned or leased by
the Company and the Subsidiaries (the "Equipment"). SCHEDULE 6.9.1(A) lists the
manufacturers of all containers. Neither the Company nor any Subsidiary has
manufactured any of its own containers. SCHEDULE 6.9.1(B) is a
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complete and accurate list of all of the motor vehicles owned or leased by the
Company and the Subsidiaries, and all attachments, accessories and materials
handling equipment now located in or on such motor vehicles, including all
radios and the radio base stations, if any (the "Rolling Stock"), described by
manufacturer, model number and model year. SCHEDULE 6.9.1(C) is a substantially
complete and accurate list of all pieces of office equipment and furniture owned
or leased by the Company and the Subsidiaries (the "Office Equipment"). SCHEDULE
6.9.1(D) is a substantially complete and accurate list of all the manual and
automated computer, billing and accounting systems and components thereof,
including all software and programs, owned, leased or licensed by the Company
and the Subsidiaries (the "Systems"), and the Systems contain an accurate and
complete list of all customers of the Company and the Subsidiaries. The assets
of the Company and the Subsidiaries constituting tangible personal property are
in good and serviceable condition and repair (subject to normal wear and tear).
6.9.2 The Company or one of the Subsidiaries either owns all
of the assets constituting tangible personal property or leases them under an
agreement indicated on SCHEDULE 6.9.2. Except where the same is not reasonably
likely to have a Material Adverse Effect, neither the Company nor any Subsidiary
has: (a) received any notice of cancellation or termination under such lease and
no lessor has any right of termination or cancellation under such lease except
in connection with a default of the Company or Subsidiary thereunder; or (b)
received any notice of a breach or default under such lease, which breach or
default has not been cured. Neither the Company nor any Subsidiary nor, to the
best of the Company's knowledge, any other party to such lease, is in breach or
default in any material respect, and no event has occurred that, with notice or
lapse of time would constitute such a breach or default or permit termination,
modification or acceleration under such lease.
6.10 REAL PROPERTY.
6.10.1 SCHEDULE 6.10.1 sets forth a complete and accurate
street address and legal description of the owned Land and, except as described
therein, neither the Company nor any Subsidiary owns any real property. The
Company or a Subsidiary has good and marketable fee simple title to the owned
Land free and clear of any and all Encumbrances other than Permitted
Encumbrances.
6.10.2 SCHEDULE 6.10.2 sets forth a complete and accurate
street address and legal description of the leased Land and, except as described
therein, neither the Company nor any Subsidiary leases any real property. The
Company or a Subsidiary has leasehold title to the leased Land. Attached to
SCHEDULE 6.10.2 are complete and accurate copies of all leases and subleases for
leased Land (the "Real Estate Leases"). With respect to each of the Real Estate
Leases:
6.10.2.1 Subject to bankruptcy, fraudulent conveyance
or other similar Laws relating to creditors' rights, such lease is legal, valid,
binding, enforceable and in full force and effect, and represents the entire
agreement between the respective lessor and lessee with respect to such
property;
6.10.2.2 neither the Company nor any Subsidiary has:
(a) received any notice of cancellation or termination under such lease and no
lessor has any right of termination
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or cancellation under such lease except in connection with a default of the
Company or a Subsidiary thereunder, or (b) received any notice of a breach or
default under such lease, which breach or default has not been cured;
6.10.2.3 neither the Company nor any Subsidiary nor,
to the best of the Company's knowledge, any other party to such lease, is in
breach or default in any material respect, and, to the best of the Company's
knowledge, no event has occurred that, with notice or lapse of time would
constitute such a breach or default or permit termination, modification or
acceleration under such lease; and
6.10.2.4 the Company or a Subsidiary has the full
right to exercise any renewal options contained in such lease on the terms and
conditions therein and upon due exercise would be entitled to enjoy the use of
each piece of leased Land for the full term of such renewal options.
6.10.3 There is no condemnation or eminent domain proceeding
pending or, to the best of the Company's knowledge, threatened against any of
the Land.
6.10.4 Except for Consents required as set forth on SCHEDULE
6.10.4, the Surviving Corporation or a Subsidiary can use each parcel of Land
after the Closing for its current uses in the manner currently operated by the
Company or a Subsidiary, without violating any applicable Law or private
restriction, and such uses are legal conforming use(s). There are no proceedings
or amendments pending and brought by or, to the best of the Company's knowledge,
threatened by, any third party which would result in a change in the allowable
use(s) of the Land or which would modify the right of the Surviving Corporation
or a Subsidiary to use the Land for its current use(s) after the Closing Date.
6.10.5 The Company has made available to Parent all
engineering, geologic and other similar reports, documentation, plats and maps
in their possession or control relating to the Land and all plans and
specifications, as-builts, contracts and warranties in connection with the
improvements thereon.
6.10.6 During the applicable lease term and except for
landlords' rights in connection with the leased Land, no party except the
Company or a Subsidiary has a present or future right to possession of all or
any part of the Land.
6.10.7 There are no pending or, to the best of the Company's
knowledge, threatened special assessments affecting the Land, or any
contemplated improvements affecting the Land that may result in special
assessments affecting the Land.
6.10.8 To the best of the Company's knowledge, there is no
fact or condition that may result in the termination of any currently existing
access to or from the Land and any public rights of ways and roads.
6.10.9 No written or verbal commitments have been made to any
Governmental Authority or other Person relating to the Land which would impose
an obligation the Surviving Corporation or a Subsidiary or their successors or
assigns to make any contribution
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or dedication of money or Land or to construct, install, or maintain any
improvements of a public or private nature on or off the Land.
6.10.10 To the best of the Company's knowledge, all utilities
serving the Land are supplied directly to the Land by public utilities through
public or private easements benefiting the Land and are adequate to service the
normal operations of the Land and the operations of the Business.
6.10.11 To the best of the Company's knowledge, there are no
unrecorded contracts, leases, easements or other agreements, or claims of any
third party, affecting the use, title, occupancy or development of the Land, and
no Person has any right of first refusal, option or the right to acquire all or
any part of the Land.
6.10.12 Neither the Company nor any Subsidiary shall cause or
permit any Encumbrance or encroachment ("Title Defect") whatsoever to be placed
of record from the date of this Agreement to the Closing. If any Title Defect is
so placed or recorded or otherwise exists contrary to the provisions hereof, the
effect of which can be removed and/or eliminated by the payment of money, the
Company shall immediately cause sufficient monies to be deposited with Parent so
as to enable Parent to cause such Title Defect to be eliminated and/or removed
of record.
6.10.13 Except in connection with that certain lease by and
between JMA Investment, Inc. (as lessor) and Delta Recycling Corp. (as lessee),
dated September 27, 1999, the landlord's Consent is either not required under
any lease with respect to the Transactions or, if required, will be obtained by
the Company before the Closing.
6.11 MATERIAL CONTRACTS.
6.11.1 SCHEDULE 6.11.1 lists and includes complete and
accurate copies of each of the following contracts and agreements (including
oral and informal arrangements) of the Company and the Subsidiaries (listed by
entity), as amended, with such contracts and agreements being collectively
referred to as "Material Contracts":
6.11.1.1 each contract, agreement, invoice, purchase
order and other arrangement for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing of
services to the Company or the Subsidiary or otherwise related to their Business
under the terms of which they: (A) are required or likely to pay or otherwise
give consideration of more than $100,000 in the aggregate during 2001, (B) are
required or likely to pay or otherwise give consideration of more than $100,000
in the aggregate over the remaining term of such contract, or (C) cannot be
canceled by the Company or the Subsidiary without penalty of $100,000 or more in
the aggregate on 30 days' or less notice;
6.11.1.2 all contractual rights of the Company and
the Subsidiaries with their customers (whether oral or in writing), including
all disposal agreements, service agreements, customer accounts and routes (the
"Customer Contracts"), under the terms of which they: (A) are likely to receive
consideration of more than $100,000 in the aggregate during 2001 or (B) are
likely to receive consideration of more than $100,000 over the remaining term of
such contract;
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6.11.1.3 all contracts and agreements relating to the
collection, transportation or disposal of waste under the terms of which the
Company and its Subsidiaries: (A) are required or likely to pay or otherwise
give consideration of more than $100,000 in the aggregate during 2001, (B) are
likely to pay or otherwise give consideration of more than $100,000 in the
aggregate over the remaining term of such agreement, or (C) cannot be canceled
by the Company or the Subsidiary without penalty of $100,000 or more in the
aggregate on 30 days' or less notice;
6.11.1.4 all broker, franchise, agency, sales
promotion, market research, marketing consulting and advertising contracts and
agreements to which the Company or any Subsidiary is a party under the terms of
which the Company and its Subsidiaries: (A) are required or likely to pay or
otherwise give consideration of more than $100,000 in the aggregate during 2001,
(B) are likely to pay or otherwise give consideration of more than $100,000 in
the aggregate over the remaining term of such agreement, or (C) cannot be
canceled by the Company or the Subsidiary without penalty of $100,000 or more in
the aggregate on 30 days' or less notice;
6.11.1.5 all collective bargaining agreements with
any union and all employment agreements entered into by the Company and the
Subsidiaries (the "Employee Contracts") and all other management contracts and
contracts with unions (or similar arrangements) to which the Company or any
Subsidiary is a party and which are not cancelable without penalty or further
payment on 30 days' or less notice;
6.11.1.6 all contracts and agreements relating to
Indebtedness of the Company or any Subsidiary. "Indebtedness" means, with
respect to any Person, (a) all indebtedness of such Person, whether or not
contingent, for borrowed money (excluding trade accounts payable incurred in the
ordinary course of business), (b) all obligations of such Person for the
deferred purchase price of property or services, (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all obligations of such Person as lessee under leases that have been or should
be recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
indebtedness of others referred to in clauses (a) through (f) above guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (1) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (2) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (3) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered), or (4) otherwise to assure a creditor against loss, and (h) all
Indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property (including accounts and
contract rights) owned by
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such Person, even though such person has not assumed or become liable for the
payment of such Indebtedness;
6.11.1.7 all contracts and agreements that limit the
ability of the Company or any Subsidiary to compete in any line of business or
with any Person or in any geographic area or during any period of time;
6.11.1.8 all contracts and agreements between or
among the Company and any Subsidiary, Affiliate, officer, director, employee,
shareholder or "associate" (as such term is defined in Securities Exchange
Commission Rule 405) of the Company or any Subsidiary now in effect; and
6.11.1.9 all contracts and agreements relating to the
Intellectual Property Rights.
6.11.2 To the best of the Company's knowledge, each Material
Contract is valid and binding on the respective parties thereto and is in full
force and effect. Neither the Company nor any Subsidiary has received any notice
that the Company or any Subsidiary is in breach of or default under any Material
Contract or that any event has occurred or failed to occur which, with the
giving of notice or passage of time or both, would constitute a breach of or
default under any Material Contract.
6.11.3 To the best of the Company's knowledge, no other party
to any Material Contract is in breach thereof or default thereunder in any
material respect nor has any event occurred or failed to occur which, with the
giving of the notice or passage of time or both, would constitute a material
breach of or default under any Material Contract by any other party to any
Material Contract.
6.11.4 Neither the Company nor any Subsidiary has received any
notice that any Person intends or desires to amend or terminate any Material
Contract.
6.11.5 There is no contract, agreement or other arrangement
granting any person any preferential right to purchase any of the properties or
assets of the Company or any Subsidiary.
6.11.6 The Company and the Subsidiaries have billed all of
their customers in accordance with the Customer Contracts in all material
respects.
6.11.7 Except as set forth on SCHEDULE 6.11.7, no Material
Contract requires the Consent of any Person for the Transactions to be
consummated.
6.12 INSURANCE POLICIES. SCHEDULE 6.12 lists and includes complete and
accurate copies of each of all insurance policies carried by the Company and the
Subsidiaries, indicates whether such policies are retrospectively rated,
includes an accurate list of all insurance loss runs and workers' compensation
claims in the Company's and the Subsidiaries' possession for the past three
policy years, and includes a complete and correct copy of the Company's most
recent filing with the state agency responsible for administering, handling or
overseeing unemployment claims. All insurance policies are in full force and
effect and shall remain in full force and effect
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through the Closing Date. Neither the Company's nor any Subsidiary's insurance
has ever been canceled.
6.13 EMPLOYEES; EMPLOYEE BENEFITS.
6.13.1 SCHEDULE 6.13.1 is a complete and accurate list of all
employees of the Company and the Subsidiaries (by entity), their titles, their
dates of hire and their current annual rates of compensation as of the date of
this Agreement, as well as the amounts of any bonus paid, accrued or expected to
be paid or accrued with respect to the year ended December 31, 2000 and any
amounts of bonus paid, accrued or expected to be paid with respect to any
periods beginning thereafter. Except as set forth on SCHEDULE 6.13.1, each of
such employees is an employee at will.
6.13.2 Except as disclosed on SCHEDULE 6.13.2, neither the
Company nor any Subsidiary has ever established or promised to establish any
Plan for the benefit of its employees. SCHEDULE 6.13.2 lists and includes
complete and accurate copies of each such Plan and each material document
prepared in connection with each such Plan. Except as set forth in SCHEDULE
6.13.2, (i) none of such Plans is a multi-employer plan within the meaning of
ERISA; (ii) none of such Plans promises or provides retiree medical or life
insurance benefits to any person; (iii) none of such Plans promises or provides
severance benefits or benefits contingent upon a change in ownership or control,
within the meaning of Section 280G of the Code; (iv) none of such Plans is or is
required to be qualified under Section 401(a) of the Code; (v) none of such
Plans is subject to Title IV of ERISA; and (vi) the Company and the Subsidiaries
have not incurred any liability under, and have complied in all respects with,
the Worker Adjustment Retraining Notification Act of 1988 and any state
counterpart, and no fact or event exists that could give rise to liability under
such Laws.
6.14 LABOR MATTERS. Except as set forth on SCHEDULE 6.14, no collective
bargaining or other labor union contracts apply to the employees or the Company
or any Subsidiary. There is not pending or, to the best of the Company's
knowledge threatened, a labor dispute, strike or work stoppage against the
Company or any Subsidiary that is reasonably likely to have a Material Adverse
Effect. To the best of the Company's knowledge, neither the Company nor any
Subsidiary, nor any of their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
Company or any Subsidiary.
6.15 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 6.15, the
Company and the Subsidiaries comply in all material respects with all Laws,
Permits and Governmental Orders applicable to them, their assets or their
Business (including Environmental Laws, Tax Laws, zoning and land use
restrictions, and Laws relating to the employment of labor). Neither the Company
nor any Subsidiary is in material violation of any such Law, Permit or
Governmental Order. SCHEDULE 6.15 identifies each Governmental Order applicable
to the Company, any Subsidiary, their assets or their Business, and no such
Governmental Order has a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any citation or notice that the Company or any
Subsidiary is under investigation or other form of review with respect to any
applicable Law, the results of which if determined adversely are reasonably
likely to have a Material Adverse Effect.
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6.16 TAXES.
6.16.1 Each of the Company and each Subsidiary has filed, or
will file, in a timely manner all requisite Tax returns due (including estimated
tax returns) for all fiscal periods ended on or before the date hereof and as of
the Closing shall have filed in a timely manner all such returns due for all
periods ended on or before the Closing Date. No Tax returns or reports filed by
either the Company or any Subsidiary (whether filed prior to, on or after the
date hereof) will result in any Taxes upon the assets of the Company or any
Subsidiary where such Taxes would have a Material Adverse Effect. All Taxes due
and payable with respect to each of the Company and each Subsidiary have been
paid. All Taxes required to be withheld, collected or deposited by each of the
Company and each Subsidiary have been timely withheld, collected or deposited
and to the extent required, have been paid to the relevant Tax authority. There
are no agreements to extend the statutory period for the assessment of any
Taxes, examinations in progress or claims against the Company or any Subsidiary
for Taxes for any period or periods prior to and including the date of this
Agreement (and as of the Closing Date) and no notice of any claim, whether
pending or threatened, for Taxes has been received. There are no liens for Taxes
on any assets.
6.17 LITIGATION. Except as set forth on SCHEDULE 6.17, no Action is
pending or, to the best of the Company's knowledge, threatened, against the
Company or any Subsidiary at law or in equity, the results of which if
determined adversely are reasonably likely to have a Material Adverse Effect.
Neither the Company nor any Subsidiary has received notice of any of the above.
Also listed on SCHEDULE 6.17 are all instances in which the Company or any
Subsidiary is the plaintiff, or complaining or moving party, in any Action
(other than collection cases in the ordinary course of business). Also listed on
SCHEDULE 6.17 are all employees who are on workers' compensation or who, to the
best of the Company's knowledge, have workers' compensation claims, in each case
regardless of the amount.
6.18 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Except as stated in
SCHEDULE 6.18, neither the Company nor any Subsidiary is a party to any
governmental contracts that are subject to price redetermination or
renegotiation.
6.19 CONDUCT OF THE BUSINESS. Since March 31, 2001, except for the
execution and delivery of this Agreement or as disclosed on SCHEDULE 6.19, the
Company and the Subsidiaries have conducted their Business in all material
respects in the ordinary course and consistent with past practice, and there has
not been any:
6.19.1 change in the authorized capital or equity ownership of
the Company or any Subsidiary or issuance or sale of any capital stock, notes,
bonds or other securities, or any option, warrant or other right to acquire the
same, of the Company or any Subsidiary, other than pursuant to the exercise of
outstanding options in accordance with their terms;
6.19.2 redemption of any of the capital stock or declaration,
making or paying of dividends or distributions (whether in cash, securities or
other property) by the Company or any Subsidiary;
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6.19.3 work interruption, labor grievance or unfair labor
practice claim filed that might reasonably be expected to have a Material
Adverse Effect;
6.19.4 any plan, agreement or arrangement granting any
preferential right to purchase or acquire any interest in any of their assets,
or requiring Consent of any party to the transfer and assignment of any of their
assets;
6.19.5 waiver of any material rights or claims of the Company
or any Subsidiary;
6.19.6 material breach, amendment or termination of any
Material Contract the result of which would have a Material Adverse Effect;
6.19.7 transaction by the Company or any Subsidiary outside
the ordinary course of business;
6.19.8 (a) increase, or announcement of any increase, in the
wages, salaries, compensation, bonuses, incentives, pension, severance or other
benefits payable by the Company or any Subsidiary to any of their employees or
consultants other than in the ordinary course of business consistent with past
practices, (b) establishment of any benefits under any Plan other than the
establishment or payment of the bonuses set forth on SCHEDULE 6.19.8;
6.19.9 material write down or write up of the value of any
inventories or accounts receivable or revaluation of any assets or properties of
the Company or any Subsidiary;
6.19.10 sale, transfer, lease, sublease, license or other
disposal of any properties or assets of the Company, other than (a) sales in the
ordinary course of business consistent with past practice or (b) the sale of
equipment which is no longer used or useful in or which is promptly replaced
with equipment of equivalent or better kind, condition and value;
6.19.11 material changes in the customary methods of
operations of the Company or any Subsidiary, including practices and policies
relating to routes, purchasing, inventories, contracts, marketing, selling and
pricing;
6.19.12 any express or deemed election or settlement or
compromise of any Liability with respect to the Taxes of the Company or any
Subsidiary;
6.19.13 any other material occurrence, event, incident, action
or failure to act outside the ordinary course of business; or
6.19.14 any action by the Company or any Subsidiary, or any
employee, officer of any of them, committing to do any of the foregoing.
6.20 ENVIRONMENTAL AND OTHER PERMITS; HAZARDOUS MATERIALS; DISPOSAL
SITES.
6.20.1 Except for Permits the absence of which are not
reasonably likely to have a Material Adverse Effect, the Company and the
Subsidiaries hold all Environmental Permits, other permits, licenses (including
FCC licenses), franchises, consents and approvals of
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every kind necessary to operate the Business (collectively, the "Permits")
necessary for the current use, occupancy and operation of each of their assets
and properties and the conduct of their Business, and all such Permits are in
full force and effect. Except as set forth on SCHEDULE 6.20.1, neither the
Company nor any Subsidiary has received any notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying or refusing to
renew any Permit or providing written notice of violations under any
Environmental Law that have not been resolved. SCHEDULE 6.20.1 identifies all
Permits and identifies those that will require the Consent of any Governmental
Authority to consummate the Transactions.
6.20.2 Except for waste materials included in residential or
commercial waste that have in all respects been Handled in substantial
compliance with all applicable Laws (including applicable Environmental Laws
relating to the permissible types and quantities of such waste materials), and
except as disclosed on SCHEDULE 6.20.2 or in oral or written reports to Parent
by EMCON, the Company and the Subsidiaries have never Handled any Hazardous
Materials. Except as disclosed on SCHEDULE 6.20.2, there have been no Releases
into the Environment or onto or under the Land or any other real property now or
in the past owned, leased or used by the Company or any Subsidiary of any
Hazardous Materials. No Encumbrance with respect to Environmental Liability has
been imposed against the Company or any Subsidiary or any of their assets under
any Environmental Law or other applicable Law, and, to the best of the Company's
knowledge, no facts or circumstances exist that would give rise to the same.
Further, except as disclosed on SCHEDULE 6.20.2, no portion of the Land or any
other real property now or in the past owned, leased or used by the Company or
any Subsidiary is listed on the CERCLIS list or the National Priorities List of
Hazardous Waste Sites or any other similar list maintained by any Governmental
Authority, and neither the Company nor any Subsidiary: (a) is listed as a
potentially responsible party under any Environmental Law or other applicable
Law, (b) has received a notice of such listing, or (c) has knowledge of any
facts or circumstances which could give rise to such a listing.
6.20.3 SCHEDULE 6.20.3 is a complete list of the names and
addresses of all disposal sites now or at any time in the past utilized by the
Company or any Subsidiary or any of their predecessors. Except as disclosed on
SCHEDULE 6.20.3, no such disposal site is listed on the CERCLIS list or the
National Priorities List of Hazardous Waste Sites or any similar list maintained
by any Governmental Authority
6.20.4 Except as disclosed on SCHEDULE 6.20.4, any underground
or above-ground storage tanks, and piping associated with such tanks, containing
Hazardous Materials, petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280 or other Environmental Law or other applicable Law
located on the Land or any other real property now or in the past owned, leased
or used by the Company or any Subsidiary, have been used and maintained in
material compliance with all Environmental Laws and other applicable Laws.
6.20.5 The Company and the Subsidiaries have at all times
produced or received and retained all transportation documentation, including
all appropriate trip tickets, required by any applicable Laws in connection with
the hauling or disposal of municipal solid waste, and no such document indicates
that the Company or any Subsidiary has ever hauled or transported Hazardous
Materials.
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6.21 CORRUPT PRACTICES. Neither the Company nor any Subsidiary has ever
made, offered or agreed to offer anything of value to any employees of any of
their customers for the purpose of attracting business or to any foreign or
domestic governmental official, political party or candidate for government
office or any of their employees or representatives, nor have they taken any
other action that would cause the Company or any Subsidiary to be in violation
of the Foreign Corrupt Practices Act of 1977, as amended.
6.22 REPRESENTATION CONCERNING TOTALITY OF ASSETS. Except as disclosed
on SCHEDULE 6.22, the Company or a Subsidiary has good and marketable title to,
or, in the case of leased or subleased properties or assets, valid and
subsisting leasehold interests in, all such assets and properties, free and
clear of all liens and security interests other than Permitted Encumbrances, and
such assets and properties constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and necessary in the
conduct of, the Business.
6.23 POWERS OF ATTORNEY. Except as disclosed on SCHEDULE 6.23, there
are no outstanding powers of attorney executed on behalf of the Company or any
Subsidiary.
6.24 GUARANTIES, PERFORMANCE BONDS AND LETTERS OF CREDIT. Except as set
forth on SCHEDULE 6.24, (a) neither the Company nor any Subsidiary is a
guarantor or otherwise liable for any Liability or obligation (including
Indebtedness) of any Person, and (b) there are no performance bonds or letters
of credit outstanding with respect to the operation of the Business.
6.25 AFFILIATES' RELATIONSHIPS.
6.25.1 All contractual arrangements between the Company or any
Subsidiary and any Affiliate are described on SCHEDULE 6.25.1.
6.25.2 Except as disclosed on SCHEDULE 6.25.2, no Affiliate
has any direct or indirect interest in (i) any entity that is competitive with
the Company or any Subsidiary or the Business, or (ii) any assets used by the
Company or any Subsidiary.
6.25.3 All obligations of any Affiliate to the Company or any
Subsidiary and all obligations of the Company or any Subsidiary to any Affiliate
are listed on SCHEDULE 6.25.3, which sets forth a complete and accurate schedule
of payments relating thereto.
6.26 FAIRNESS OPINION. The financial advisor of the Company,
Capitalink, LC, has rendered an opinion to the Board to the effect that, as of
the date thereof, the Merger Consideration is fair to the holders of Shares.
6.27 COMPLETE DISCLOSURE. This Agreement, the Disclosure Schedules, and
all other documents and written information furnished to Parent and its
representatives by the Company, any Subsidiary or their respective
representatives, taken as a whole, do not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. If the Company or any Subsidiary becomes
aware of any fact or circumstance that would change a representation or warranty
of the Company in this Agreement or any other statement made or document
provided to Parent, the party with such knowledge shall promptly give notice of
such fact or circumstance to Parent. None of (a) such notification, (b) any
pre-closing investigation by Parent of the Company, the Subsidiaries, their
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respective assets or the Business, or (c) the Closing, shall relieve the
Company's shareholders of their indemnification or other obligations under this
Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company that the
statements contained in this Article 7: (a) are correct and complete as of the
date of this Agreement; and (b) will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article 7).
7.1 ORGANIZATION; AUTHORITY. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, and is duly authorized, qualified and
licensed under all applicable Laws to carry on its business in the places and in
the manner presently conducted, except for where the failure to be so
authorized, qualified or licensed would not have a Material Adverse Effect. Each
of Parent and Purchaser has the full legal right, power and authority to enter
into this Agreement and to consummate the Transactions. On or before the
Closing, all corporate action of each of Parent and Purchaser necessary to
approve the Transactions shall have been taken.
7.2 NO CONFLICT. The execution, delivery and performance of this
Agreement by each of Parent and Purchaser and the consummation of the
Transactions do not and will not violate, conflict with, or result in a breach
of any provision of its Articles of Incorporation or Bylaws.
7.3 GOVERNMENTAL CONSENTS AND APPROVALS. Except for the filing of
articles of merger with the Florida Secretary of State, filings with the FCC and
filings with the Department of Justice and the Florida Attorney General, the
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not require any Consent or other action by, filing with, or
notification to, any Governmental Authority.
7.4 BINDING AGREEMENT. Each of Parent and Purchaser has duly executed
and delivered this Agreement, and (assuming due authorization, execution and
delivery by the Company) this Agreement constitutes a legal, valid and binding
obligation of Parent and Purchaser enforceable against them in accordance with
its terms.
ARTICLE 8
COVENANTS OF THE COMPANY BEFORE CLOSING
8.1 ACCESS TO LAND AND RECORDS. Between the date of this Agreement and
the Closing Date, the Company shall, and shall cause the Subsidiaries to: (a) at
all times grant Parent and its representatives access to all of the offices of
the Company, the Subsidiaries, the Land, and the books and records of the
Company and the Subsidiaries (including for the purpose of performing all
testing, inspections and other procedures considered desirable by Parent, for
the purpose of monitoring compliance with the covenants of the Company in this
agreement, for purposes of monitoring the accuracy of the representations and
warranties of the Company in this Agreement, and for the purpose of determining
the amount, if any, of the R&W Adjustment);
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and (b) furnish Parent with such additional financial and operating data and
other information as to the Company, the Subsidiaries, their respective assets
and the Business as Parent may reasonably request. The Company shall, and shall
cause the Subsidiaries to, cooperate with Parent and its representatives in the
preparation of any documents or other material that may be required by any
Governmental Authority.
8.2 ACTIVITIES OF THE COMPANY BEFORE CLOSING. Until the Closing, the
Company shall, and shall cause the Subsidiaries to:
8.2.1 maintain their assets in as good working order and
condition as at present, ordinary wear and tear excepted;
8.2.2 perform in all material respects all of their
obligations under the Permits, Material Contracts, and its debt instruments;
8.2.3 keep in full force and effect present or similar
substitute insurance policies, bonds, letters of credit or other insurance
coverage with reputable insurers and issuers;
8.2.4 use their reasonable efforts to preserve intact their
assets and to keep available the services of their officers and employees and
maintain good relationships with suppliers, customers and others having business
relationships with them;
8.2.5 maintain material compliance with all applicable Laws;
8.2.6 maintain and perform debt and lease instruments
materially in accordance with their terms and not enter into new or amended debt
or lease instruments;
8.2.7 cooperate with Parent to promptly prepare the necessary
documents so that the Transactions may be closed, if possible on or before July
2, 2001 and in any event before the date set forth in Section 13.3; and
8.2.8 provide all reasonable assistance to Parent to provide
for an orderly transfer of the Company, the Subsidiaries and the Business.
8.3 PROHIBITED ACTIVITIES BEFORE CLOSING. Until the Closing, the
Company shall not, and shall cause the Subsidiaries not to, without the prior
written consent of Parent:
8.3.1 change the authorized capital, issue shares of capital
stock (other than pursuant to the exercise of Options), or grant any options,
warrants, puts, calls, conversion rights or commitments relating to equity
interests in the Company or the Subsidiaries;
8.3.2 except as required by the Charade Agreement, purchase,
lease or incur an obligation to purchase or lease any fixed assets in excess of
an aggregate of $100,000;
8.3.3 permit any new Encumbrance upon any of their assets
other than Permitted Encumbrances;
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8.3.4 breach, amend or terminate any Material Contract or
Permit in any material manner or fail to maintain the Business, their assets or
the quality of customer service consistent with past practice;
8.3.5 enter into any transaction outside the ordinary course
of the Business or otherwise prohibited under this Agreement; 8.3.6 allow any
other action or omission, or series of actions or omissions, that would cause a
representation or warranty of the Company made in Section 6.19 to be untrue on
the Closing Date; or
8.3.7 except as required by the Charade Agreement, allow a
Working Capital Deficit, if any, to increase or a Working Capital Surplus, if
any, to decrease by more than $50,000 from the May 31 Balance Sheet; provided,
however, that if such increase or decrease is greater than $50,000, the Escrow
Funds shall be increased by the amount of such excess and Parent shall not be
entitled to terminate this Agreement as a result of the representation and
warranty in this Section 8.3.7 being breached.
8.4 NO SOLICITATION.
8.4.1 The Company, the Subsidiaries and their respective
Affiliates, officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition or exchange of all
or any material portion of the assets of, or any equity interest in, the Company
or any of the Subsidiaries or any business combination with the Company or any
of the Subsidiaries. The Company agrees that, prior to the Effective Time, it
shall not, and shall not authorize or permit any of its Subsidiaries or any of
its or its Subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate or encourage, or
furnish or disclose non-public information in furtherance of, any inquiries or
the making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its Subsidiaries or the acquisition of any capital stock or any
material portion of the assets of the Company or its Subsidiaries, or any
combination of the foregoing (other than the Merger) (an "Acquisition
Transaction"), or negotiate, explore or otherwise engage in discussions with any
Person (other than Parent, Purchaser or their respective directors, officers,
employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate, delay or fail to consummate the Merger or any other
Transactions; provided, however, that the Company may, in response to an
unsolicited proposal with respect to an Acquisition Transaction from a third
party, furnish information to, and negotiate, explore, enter into an agreement
with or otherwise engage in substantive discussions with a third party who
delivers a written proposal for an Acquisition Transaction if the Board
determines in good faith, upon written advice of its outside legal counsel, that
failing to take such action would reasonably be expected to result in a breach
of the fiduciary duties of the Board to the Company's stockholders, and prior to
furnishing non-public information to any such party, the Company shall have
entered into a confidentiality agreement containing terms at least as favorable
to the Company as those of the confidentiality agreement entered into by Parent
or Purchaser or their Affiliates with
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respect to the maintenance of confidentiality and the permitted use of
information provided by or on behalf of the Company.
8.4.2 From and after the execution of this Agreement, the
Company shall immediately advise Parent and Purchaser in writing of the
occurrence or receipt, directly or indirectly, of any discussions, negotiations
or proposals relating to an Acquisition Transaction, identify the offeror and
furnish to Parent and Purchaser a copy of any such proposal if it is in writing,
or a written summary of any such proposal relating to an Acquisition Transaction
if it is not in writing. The Company shall promptly advise Parent and Purchaser
in writing of any development relating to such proposal, including the results
of any discussions or negotiations with respect thereto.
8.5 SHAREHOLDERS' MEETING; PROXY STATEMENT. Subject to the fiduciary
obligations of the Board under applicable Law as advised in writing by outside
counsel, the Company, acting through its Board, shall, in accordance with its
Articles of Incorporation and Bylaws and applicable Law:
8.5.1 give notice of, convene and hold a special meeting of
its shareholders (the "Special Meeting") as soon as practicable following the
execution of this Agreement for the purpose of considering and taking action
upon the Merger and this Agreement;
8.5.2 prepare and file with the SEC within 10 business days
after the execution of this Agreement a preliminary proxy statement relating to
the Merger and this Agreement and use its best efforts (x) to obtain and furnish
the information required to be included by the SEC in the Proxy Statement (as
defined below) and, after consultation with Parent, to respond within 5 business
days to any comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy Statement") to be
mailed to its shareholders and (y) to obtain the necessary approvals of the
Merger and this Agreement by its shareholders; and
8.5.3 include in the Proxy Statement the recommendation of the
Board that shareholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
ARTICLE 9
ADDITIONAL AGREEMENTS OF PARTIES
9.1 AGREEMENT TO COOPERATE.
9.1.1 Subject to the terms and conditions herein provided,
each of the parties hereto shall use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Transactions contemplated by this Agreement, including using its
reasonable efforts to obtain all necessary or appropriate waivers, consents or
approvals of third parties required to preserve material contractual
relationships of the Company and the Subsidiaries, all necessary or appropriate
waivers, consents and approvals to effect all necessary
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registrations, filings and submissions and to lift any injunction or other legal
bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible).
9.1.2 In the event any litigation is commenced by any Person
relating to the Transactions, including any Acquisition Transaction, Parent
shall have the right, at its own expense, to participate therein, and the
Company will not settle any such litigation without the consent of Parent, which
consent will not be unreasonably withheld.
9.1.3 The Company shall permit Parent a reasonable opportunity
to review and comment on the preliminary proxy statement and the Proxy Statement
and any responses to any SEC comments before they are filed with the SEC or
distributed to the Company's shareholders.
9.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Parent, Purchaser and the Company agree to consult promptly with each other
before issuing any press release or otherwise making any public statement with
respect to the Transactions, agree to provide to the other party for review a
copy of any such press release or public statement, and shall not issue any such
press release or make any such public statement prior to such consultation and
review, unless required by applicable law or any listing agreement with a
securities exchange. Notwithstanding the foregoing, however, Parent and
Purchaser may give notice of the Transactions and this Agreement to the United
States Department of Justice and the Florida Attorney General.
9.3 CHARADE AGREEMENT. Prior to the Closing, the Company shall use its
best efforts to amend the Charade Agreement to extend the Closing Date (as
defined in the Charade Agreement) to September 28, 2001. Parent shall have the
right to participate in any negotiations with respect thereto and to approve any
such amendment before it is executed. If the Company is not able to so amend the
Charade Agreement, the Company and Parent shall negotiate in good faith another
alternative reasonably acceptable to the Company and Parent.
9.4 REPRESENTATIONS AND WARRANTIES. Through the Closing Date, each of
the parties shall refrain from taking any action that would render any of its
representations or warranties in this Agreement inaccurate as of the Closing
Date.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
completion, satisfaction, or at its option, waiver, on or before the Closing
Date, of the following conditions:
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Purchaser contained in this Agreement shall be accurate in all
material respects on and as of the Closing Date; provided, however, that if any
such representation or warranty is inaccurate in a material respect, the Company
shall nonetheless be entitled to indemnification for the breach thereof as
provided in Article 12 of this Agreement.
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10.2 COVENANTS. Parent and Purchaser shall have duly complied with or
performed each of the covenants of this Agreement to be complied with or
performed by Subsidiary on or before the Closing Date.
10.3 NO ADVERSE PROCEEDING. No Action before a Governmental Authority
shall have been instituted to restrain or prohibit any of the Transactions.
10.4 SHAREHOLDER APPROVAL. This Agreement and the Transactions shall
have been approved and adopted by the requisite vote of the shareholders of the
Company under applicable Law and applicable listing requirements.
10.5 INJUNCTIONS; ILLEGALITY. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such injunction, order
or decree lifted). No Governmental Authority shall have enacted any statute,
rule or regulation that would prevent the consummation of the Merger or make the
Merger illegal.
10.6 LONG-TERM DEBT. Parent shall cause the Long-Term Debt to be
satisfied concurrently with the Closing.
ARTICLE 11
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND PURCHASER
The obligations of Parent and Purchaser under this Agreement are
subject to the completion, satisfaction or, at their option, waiver, on or
before the Closing Date, of the following conditions:
11.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be accurate in all material
respects on and as of the Closing Date; provided, however, that if any such
representation or warranty is inaccurate in a material respect, Parent shall
nonetheless be entitled to indemnification for the breach thereof as provided in
Article 12 of this Agreement.
11.2 COVENANTS. The Company shall have duly complied with or performed
each of the terms, covenants and conditions of this Agreement to be complied
with or performed by the Company on or before the Closing Date.
11.3 NO ADVERSE PROCEEDING. No Action shall have been instituted to
restrain or prohibit any of the Transactions. No Governmental Authority shall
have taken any other action or made any request of Parent or Purchaser as a
result of which Parent or Purchaser deems it inadvisable to proceed with the
Transactions.
11.4 SHAREHOLDER APPROVAL. This Agreement and the Transactions shall
have been approved and adopted by the requisite vote of the shareholders of the
Company under applicable Law and applicable listing requirements.
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11.5 INJUNCTIONS; ILLEGALITY. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such injunction, order
or decree lifted). No statute, rule or regulation shall have been enacted by any
Governmental Authority that would prevent the consummation of the Merger or make
the Merger illegal.
11.6 TRANSFERABILITY OF PERMITS. The Transactions shall not affect the
validity of any of the Permits set forth on SCHEDULE 6.20.1 or as a result of
the Transactions all of the Permits required for the operation of the Business
shall be appropriately vested in the Company or a Subsidiary without the need
for any public hearing or other regulatory re-approval process.
11.7 CONSENTS. All necessary notices to, Consents of and filings with
any Governmental Authority relating to the consummation of the Transactions to
be made or obtained by the Company shall have been made and obtained by it, and
Parent and Purchaser shall have received all the Consents necessary under any
Material Contract or Permit requiring consent to assignment.
11.8 TITLE AND SURVEY. Parent shall have received a Survey(s) in form
and substance provided for in Article 5 and otherwise acceptable to it, and the
Title Company shall have issued the preliminary title commitments and shall have
agreed to issue the Title Policy in each case in accordance with Article 5 and
otherwise acceptable to Parent.
11.9 CLOSING CERTIFICATE. Parent and Purchaser shall have received a
certificate signed by the chief executive officer and the chief financial
officer of the Company, dated the Closing Date, to the effect that, to the best
of such officers' knowledge, the conditions set forth in Sections 11.1 and
Section 11.2 have been satisfied.
11.10 LEGAL OPINION. Parent and Purchaser shall have received an
opinion of the Company's outside counsel, reasonably satisfactory in form and
substance to Parent and Purchaser.
11.11 NONCOMPETITION AGREEMENTS. Each of Xxxx X. Xxxxxxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxx X. Xxxxxxx, and Xxxx Xxxxxxxxxx (the "Major Shareholders") shall
have entered into a 7-year noncompetition agreement covering the Counties of
Collier, Monroe, Dade, Broward, Palm Beach, Brevard and St. Lucie, Florida, and
each of Xxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx shall have
entered into a 7-year consulting agreement, with each such noncompetition and
consulting agreement to be in form and substance reasonably satisfactory to
Parent and Purchaser. The aggregate consideration payable for such agreements
shall be $2,000,000 for the noncompetition agreements and $3,000,000 for the
consulting agreements.
11.12 DELROCK ENVIRONMENTAL AGREEMENT. The Major Shareholders shall
have entered into an agreement (the "Delrock Agreement"), in form and substance
reasonably satisfactory to Parent and Purchaser, by which they will: (a) buy the
Delrock lakefill facility and assume the Eastern Recycling Corporation lease
from the Company or its Subsidiary concurrently with the Closing on an "as is,
where is" basis for the net book value of such property (minus Encumbrances);
(b) agree that they shall promptly provide Parent with copies of all sampling
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information received by the Major Shareholders with respect to the facility; (c)
agree that Parent may cause monitoring xxxxx to be installed at the facility
whenever and wherever it reasonably deems appropriate based on the sampling
information provided by the Major Shareholders or based on other information
regarding the facility received by Parent; (d) agree that Parent may report any
Environmental issues it or its representatives identify to any Governmental
Authority; (e) agree to indemnify the Purchaser Indemnified Parties with respect
to Environmental issues raised by Governmental Authorities or Actions brought by
third-parties (fines, remediation or cleanup costs, etc.) at such facility for a
period of 10 years after the Closing, up to a maximum amount of $3,000,000; and
(f) agree that Parent may retain the $3,000,000 otherwise due the Major
Shareholders under the consulting agreements for a period of five years (or
until the environmental issues raised by Governmental Authorities or Actions
brought by third parties have been resolved if they remain pending at the end of
such five-year period) to secure such indemnification obligations, with the
Major Shareholders to receive annual payments of interest only at the rate of
5.5% per annum on such amounts from the times when they become payable under the
consulting agreements. The Delrock Agreement will permit the Major Shareholders
to access $500,000 of such amounts as reasonably necessary to address the
environmental issues pursuant to their indemnification obligations and to access
amounts in excess of $500,000 only from the times when they become payable under
the consulting agreements as reasonably necessary to address the environmental
issues pursuant to their indemnification obligations. The Delrock Agreement also
will provide for the release of amounts due under the consulting agreements as
scheduled under such agreements and without being retained pursuant to this
Section 11.12 if the Major Shareholders provide evidence acceptable to Parent in
its sole and absolute discretion that there are no remaining environmental
issues or if the Major Shareholders provide Parent an insurance policy
acceptable to Parent in its sole and absolute discretion to provide coverage
with respect to environmental issues. In addition, the Delrock Agreement will
provide for the Major Shareholders to have a right of first refusal to purchase
any material assets that the Company or its Subsidiaries desire to sell during
the five years after the Closing.
11.13 PEERLESS AGREEMENT. The Company shall have amended its agreement
with Peerless Dade, Inc. d/b/a Dade Recycling & Disposal and/or its Affiliates
(collectively, "Peerless") to require Peerless to remove 160,000 cubic yards of
material from the site, to require Peerless to reimburse the Company for the
costs of the $1,600,000 bond required by Miami-Dade County with respect to the
removal of such materials, and to provide the Company with a mortgage on the
real property to secure such agreements, with such amendment to be in form and
substance reasonably satisfactory to Parent and Purchaser and such mortgage to
be in form customary for the county in which the property is located.
11.14 WASTE MANAGEMENT AGREEMENT. The Company shall have provided
notice of termination of its Disposal Agreement with Waste Management Inc. of
Florida, dated July 26, 1999, as amended.
11.15 ESCROW AGREEMENT. Parent, Shareholders' Representative and the
Escrow Agent shall have entered into the Escrow Agreement.
11.16 DISSENTERS' RIGHTS. Dissenters' rights shall not have been
exercised with respect to more than 10% of the issued and outstanding Shares.
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11.17 GENERAL. All actions taken by the Company in connection with the
consummation of the Transactions and all certificates, opinions and other
documents required to effect the Transactions shall be reasonably satisfactory
in form and substance to Parent and Purchaser.
ARTICLE 12
INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of the
representations, warranties and covenants in this Agreement and the obligations
of the parties with respect thereto shall survive the Closing.
12.2 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS OF THE
COMPANY. From the date hereof until the Effective Time, the Company shall, and
after the Effective Time, the shareholders of the Company shall, indemnify,
defend (as to third party claims only), protect and hold harmless Parent,
Purchaser, and their respective officers, directors, divisions, subdivisions,
Affiliates (including, after the Effective Time, the Surviving Corporation),
shareholders, agents, employees, successors and assigns (collectively, the
"Purchaser Indemnified Parties") at all times from and after the Effective Time
from and against all Losses that arise as a result of or incident to: (a) any
breach of, misrepresentation in, untruth in or inaccuracy in the representations
and warranties by the Company set forth in this Agreement or in the Disclosure
Schedules or in any other document delivered pursuant to this Agreement; (b)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of the Company made in this Agreement or in any other document delivered
pursuant to this Agreement; (c) fines or construction, improvement or other
costs reasonably anticipated by Parent to be necessary to bring such facility
into compliance (to the extent they exceed amounts included as Current
Liabilities for purposes of the Working Capital Adjustment) with respect to
being out of compliance with certain code requirements at the Pompano Beach MRF
located at 0000 X. Xxxxxxxxx Xxxx; (d) fines or construction, improvement or
other costs reasonably anticipated by Parent to be necessary to remediate or
cleanup Environmental issues at the Delta Transfer Corp. property located at
0000 X. Xxxxxxxxx Xxxx and to bring it into compliance with Environmental Laws
and Environmental Permits; (e) fines or construction, improvement or other costs
reasonably anticipated by Parent to be necessary to comply with the consent
order relating to the Delta Resources C&D Landfill (a/k/a Royal Oak Ranch C&D
Landfill); or (f) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in subsection (a) through (e) of this
Section 12.2 had been satisfied. Notwithstanding the foregoing, however, such
indemnification obligations shall in all events be limited solely to the extent
of the Escrow Funds, and the shareholders (other than the Major Shareholders)
shall have no obligation to indemnify with respect to the matters described in
Section 11.12). In connection with the above, Parent and the Company may report
any Environmental issues it or its representatives identify to any Governmental
Authority.
12.3 INDEMNIFICATION BY PARENT AND PURCHASER. Parent and Purchaser
shall indemnify, defend (as to third party claims only), protect and hold
harmless the Company and its partners, officers, directors, divisions,
subdivisions, Affiliates, agents, employees, successors and assigns
(collectively, the "Company Indemnified Parties"), from the date hereof until
the Effective Time, and the shareholders of the Company, at all times after the
Effective Time, from and against all
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Losses that arise as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties by Parent or Purchaser set forth in this Agreement; (b)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of Parent or Purchaser made in this Agreement; and (c) any claim by a third
party that, if true, would mean that a condition for indemnification set forth
in subsection (a) or (b) of this Section 13.2 had been satisfied.
Notwithstanding the foregoing, however, such indemnification obligations shall
in all events be limited to $3,000,000.
12.4 INDEMNIFICATION PROCEDURE. Upon the occurrence of any claim for
which indemnification is believed to be due under this Agreement, the party
seeking indemnification (the "Indemnified Party") shall provide notice of such
claim (a "Claim Notice") to the party from whom indemnification is sought (the
"Indemnifying Party"). The Claim Notice shall state in general terms the
circumstances giving rise to the claim, specify the amount of the claim (or an
estimate thereof), and make a request for any payment then believed due. A Claim
Notice shall be conclusive against the Indemnifying Party in all respects 20
days after receipt by the Indemnifying Party unless, within such period, the
Indemnifying Party sends the Indemnified Party a notice disputing the propriety
or amount of the claim (a "Dispute Notice"). Any Dispute Notice shall describe
the basis for such objection and the amount of the claim that the Indemnifying
Party does not believe should be subject to indemnification. Upon receipt of any
Dispute Notice, the Indemnified Party and the Indemnifying Party shall use
reasonable efforts to cooperate and arrive at a mutually acceptable resolution
of the dispute within the next 30 days. If a resolution is not reached within
the 30-day period, either party may submit the dispute for resolution by a panel
of three arbitrators selected from the panels of arbitrators of the American
Arbitration Association in a city mutually selected by the Indemnifying Party
and the Indemnified Party (or, if no city can be mutually agreed upon within 15
days, then in Dallas, Texas). The Indemnified Party shall select one arbitrator,
the Indemnifying Party shall select the second arbitrator, and the two
previously selected arbitrators shall select the third arbitrator. In all
respects, the American Arbitration Association's then existing Commercial
Arbitration Rules shall govern such panel. The arbitrators' decision shall be
binding and conclusive on the parties. If it is finally determined (through
either agreement of the parties, arbitration or a Claim Notice becoming
conclusive) that all or a portion of the claim amount is owed to the Indemnified
Party, the Indemnifying Party shall, within 10 days of such determination, pay
the Indemnified Party such amount owed, together with interest from the date of
the Claim Notice until the date of actual payment at the rate earned on the
Escrow Funds (the "Applicable Rate"). The non-prevailing party in any
arbitration shall pay all costs of the arbitration and all of the prevailing
party's reasonable attorneys' fees and expenses of investigation. The
arbitrators shall specify in their decision which party (i.e., Parent or the
shareholders of the Company as a group) is the prevailing party and the amount
of the costs, fees and expenses to be paid by the non-prevailing party.
12.5 INDEMNIFICATION PROCEDURE WITH RESPECT TO THIRD PARTY CLAIMS.
12.5.1 If any third party shall notify an Indemnified Party
pursuant to this Agreement with respect to any matter (a "Third Party Claim")
that may give rise to a claim for indemnification against any Indemnifying
Party, or if an Indemnified Party otherwise becomes aware of any matter that may
give rise to such a claim or wishes to make such a claim (whether or not related
to a Third Party Claim), then the Indemnified Party shall promptly notify each
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Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation under this Agreement unless, and then
solely to the extent that, the Indemnifying Party is thereby prejudiced.
12.5.2 Any Indemnifying Party will have the right to defend
the Indemnified Party against a Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as: (a) the Indemnifying Party
notifies the Indemnified Party in writing within a reasonable time after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses the Indemnified Party may suffer that arise as a result
of or incident to the Third Party Claim; (b) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations under this Agreement;
(c) the Third Party Claim involves only monetary damages and does not seek an
injunction or equitable relief or involve the possibility of criminal penalties;
(d) settlement of or adverse judgment with respect to the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (e) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
12.5.3 So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 12.5.2, (a) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (b) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (which will not be unreasonably withheld), and (c) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (which will not be unreasonably withheld).
12.5.4 If or to the extent that any of the conditions set
forth in Section 12.5.2 is or becomes unsatisfied: (a) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim and any matter it may deem
appropriate in its sole discretion and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection therewith
(but will keep the Indemnifying Party reasonably informed regarding the progress
and anticipated cost thereof); (b) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the cost of defending against
the Third Party Claim (including attorneys' fees and expenses); (c) the
Indemnifying Party will remain responsible for any Losses the Indemnified Party
may suffer that arise as a result of or incident to the Third Party Claim to the
fullest extent provided in this Article 13; and (d) the Indemnifying Party shall
be deemed to have waived any claim that its indemnification obligations should
be reduced because of the manner in which counsel for the Indemnified Party
handled the Third Party Claim.
12.6 ESCROW FUNDS. The Escrow Funds shall be the only source
available to satisfy Working Capital Adjustments pursuant to Section 3.2.2.3(b)
and indemnification claims of the
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Purchaser Indemnified Parties pursuant to this Article 12. The costs of the
Shareholders' Representative in complying with the provisions of Sections
3.2.2.2, 3.2.3.2 and 12.5 may be satisfied from the Escrow Funds; provided,
however, that the amount of such costs which may be satisfied from the Escrow
Funds shall not exceed $200,000. Parent and Shareholders' Representative shall,
from time to time, direct the Escrow Agent to deliver to Parent or the Surviving
Corporation an amount(s) equal to the Working Capital Adjustment to which Parent
is entitled pursuant to Section 3.2.2.3(b) and Losses for which the Purchaser
Indemnified Parties are entitled to be indemnified pursuant to this Article 12.
On the 120th day after the Closing Date, Parent and Shareholders' Representative
shall direct the Escrow Agent to distribute all of the Escrow Funds then held in
the escrow to the Company shareholders and ITM Option holders pro rata based on
the number of Shares and ITM Options issued and outstanding immediately prior to
the Effective Time. Notwithstanding the foregoing, to the extent the Working
Capital Adjustment has not yet been finally determined pursuant to Section
3.2.2.2 or Parent or Purchaser has properly asserted an indemnification claim on
or before such 120th day after the Closing Date, Escrow Funds equal in amount to
the amount of the Working Capital Adjustment set forth in the Settlement
Statement and/or the amount of such claim shall remain in escrow until the same
are finally resolved. Upon the satisfaction in full of the same, Parent and
Shareholders' Representative shall direct the Escrow Agent to distribute the
Escrow Funds still held pursuant to such claim after satisfaction of the same to
the Company shareholders and ITM Option holders pro rata based on the number of
Shares and ITM Options issued and outstanding immediately prior to the Effective
Time.
12.7 BASKET. Notwithstanding the foregoing provisions of this Article
12, neither party shall be required to indemnify the other party until the
aggregate of the indemnifiable Losses reaches $25,000, in which case such party
shall indemnify for all indemnifiable Losses, including the initial $25,000.
12.8 OTHER INDEMNIFICATION PROVISIONS. The indemnification provisions
in this Article 12 are the exclusive remedies of the parties for breach of any
representation, warranty or covenant in this Agreement.
ARTICLE 13
TERMINATION OF AGREEMENT
13.1 TERMINATION BY PARENT AND PURCHASER. Parent and Purchaser, by
notice in the manner provided in Section 14.6 on or before the Effective Time,
may terminate this Agreement if any of the conditions set forth in Article 11
shall not have been satisfied on or before September 30, 2001 or in the event of
a breach by the Company in the observance or in the due and timely performance
of any of the agreements or conditions contained in this Agreement on its part
to be performed, and the Company shall not have commenced to cure such breach
within 15 days after notice to the Company and cured such breach on or before
September 30, 2001.
13.2 TERMINATION BY THE COMPANY. The Company, by notice in the manner
provided in Section 14.6 on or before the Effective Time, may terminate this
Agreement if any of the conditions set forth in Article 10 shall not have been
satisfied on or before September 30, 2001 or in the event of a breach by Parent
or Purchaser in the observance or in the due and timely
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performance of any of the covenants, agreements or conditions contained in this
Agreement on its part to be performed, and Parent or Purchaser shall not have
commenced to cure such breach within 15 days after notice to Parent and
Purchaser and cured such breach on or before September 30, 2001.
13.3 TERMINATION FOR FAILURE TO CLOSE. Either Parent and Purchaser or
the Company, by notice in the manner provided in Section 14.6, may terminate
this Agreement if the Effective Time has not occurred on or before September 30,
2001; provided, however, that no party in default under this Agreement shall
have the right to terminate pursuant to this Section 13.3.
13.4 TERMINATION FOR COMPETING PROPOSAL. Either Parent and Purchaser or
the Company, by notice in the manner provided in Section 14.6 on or before the
Effective Time, may terminate this Agreement if a third party, including any
group, shall have made a proposal in respect of an Acquisition Transaction which
the Board has determined in good faith (A) after consultation with a recognized
investment banking firm, to be more favorable to the Company and its
shareholders than the Transactions, and (B) upon written advice of outside legal
counsel, that failure to approve such proposal and terminate this Agreement
would reasonably be expected to result in a breach of the fiduciary duties of
the Board under applicable law; provided, however, that the termination
described in this Section 13.4 by the Company shall not be permissible unless
and until the Company shall have provided Parent and Purchaser prior written
notice at least two business days prior to such termination that the Board has
authorized and intends to effect the termination of this Agreement pursuant to
this Section 13.4, including copies of all proposed written agreements,
arrangements or understandings, including the forms of any agreements supplied
by third parties, with respect to such Acquisition Transaction (and a
description of all material oral agreements with respect thereto).
13.5 TERMINATION FOR CERTAIN BREACHES OR BOARD WITHDRAWAL OF
RECOMMENDATION. Parent and Purchaser, by notice in the manner provided in
Section 14.6 on or before the Effective Time, may terminate this Agreement if:
(i) the Company breaches any covenant in Section 8.4; (ii) the Board or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
and Purchaser its approval, adoption or recommendation of this Agreement or the
Merger, shall have approved or recommended an Acquisition Transaction, or shall
have resolved to effect any of the forgoing; (iii) if the Company shall have
entered into a definitive agreement, letter of intent, agreement in principle or
other similar document relating to an Acquisition Transaction with a person
other than Parent, Purchaser or an Affiliate of either; or (iv) an Acquisition
Transaction shall have been commenced, publicly proposed or communicated to the
Company and its Board shall not have rejected such proposal within 5 business
days of the earlier to occur of (A) the Company's receipt of such Acquisition
Transaction and (B) the date on which such Acquisition Transaction first becomes
publicly disclosed.
13.6 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to this Article 13, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
Affiliates, directors, officers or stockholders, other than pursuant to the
provisions of this Section 13.6 and Section 13.7, which shall survive any such
termination. Nothing contained in this Section 13.6 shall relieve any party from
liability for any breach of this Agreement.
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13.7 FEES AND EXPENSES.
13.7.1 Whether or not the Merger is consummated, except as
otherwise provided herein, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses.
13.7.2 In the event this Agreement is terminated pursuant to
Section 13.4 or Section 13.5, then the Company shall promptly (and, in any
event, within five business days after such termination by the Parent and
Purchaser or, in the case of any termination by the Company, prior to such
termination) reimburse Parent for the fees and expenses of Parent and Purchaser
related to this Agreement and the Transactions (subject to a maximum of $100,000
(the "Parent Expenses") and pay Parent a termination fee of $1,000,000 (the
"Termination Fee").
ARTICLE 14
GENERAL PROVISIONS
14.1 ASSIGNMENT. This Agreement may not be assigned by any of the
parties hereto (except by operation of Law) or otherwise transferred without the
express written consent of the other party (which may be granted or withheld in
the sole and absolute discretion of such party); provided, however, that Parent
and Purchaser may assign this Agreement to an Affiliate of theirs without the
consent of the Company.
14.2 BINDING EFFECT; NO THIRD PARTY BENEFICIARIES. This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns. Nothing in this Agreement is intended to or shall confer upon
any other Person, including any employee or former employee of the Company, any
legal or equitable right, benefit or remedy of any nature whatsoever, including
any rights of employment for any specified period.
14.3 AMENDMENT. This Agreement may be amended by the Company, Parent
and Purchaser at any time before or after any approval of this Agreement by the
shareholders of the Company but, after any such approval, no amendment shall be
made which decreases the Merger Consideration or which adversely affects the
rights of the Company's shareholders hereunder without the approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
14.4 ENTIRE AGREEMENT. This Agreement (together with the other
agreements contemplated by this Agreement) is the final, complete and exclusive
statement of the agreement among the parties with relation to the subject matter
of this Agreement. There are no oral representations, understandings or
agreements covering the same subject matter as this Agreement. This Agreement
supersedes and cannot be varied, contradicted or supplemented by evidence of,
any prior or contemporaneous discussions, correspondence, or oral or written
agreements or arrangements of any kind.
14.5 COUNTERPARTS. This Agreement may be executed in two or more
original or facsimile counterparts, each of which shall be deemed an original
and all of which together shall constitute but one and the same instrument.
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14.6 NOTICES. All notices or other communications required or permitted
under this Agreement shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, by overnight
courier, or by delivering the same in person to such party, addressed as
follows:
If to the Company (before the Effective Time) or to Shareholders'
Representative (after the Effective Time), addressed to Shareholders'
Representative at:
0000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
with a copy to:
Atlas Xxxxxxxx, P.A.
Suite 1700
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx
and with a copy to:
Xxxxx & Xxxxxxxx LLP
00 Xxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx
If to Parent or Purchaser, addressed to it at:
c/o Allied Waste Industries, Inc.
00000 X. Xxxxxxxx-Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Vice President - Mergers
and Acquisitions
with a copy to:
Allied Waste Industries, Inc.
00000 X. Xxxxxxxx-Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Vice President and General Counsel
and a copy to:
Xxxxxxxxx Xxxxx, P.C.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: X. X. Xxxxxxxxx, Xx.
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Notice shall be deemed given and effective the day personally delivered, the day
sent by overnight courier, subject to signature verification, and the day sent
by deposit in the U.S. mail of a writing addressed and sent as provided above.
Any party may change the address for notice by notifying the other parties of
such change in accordance with this Section.
14.7 APPOINTMENT AND DUTIES OF SHAREHOLDERS' REPRESENTATIVE.
14.7.1 The Company hereby irrevocably appoints Xxxx X.
Xxxxxxxxxx to act as "Shareholders' Representative" on behalf of the
shareholders under this Agreement and all other agreements, certificates and
documents contemplated by this Agreement (including the Escrow Agreement), and
to perform his obligations hereunder and thereunder. The Company hereby
irrevocably authorizes Shareholders' Representative to take such actions on
behalf of the shareholders and to exercise such powers as are designated to
Shareholders' Representative by the terms and provisions of this Agreement,
together with such actions as are reasonably incidental thereto. Xxxx X.
Xxxxxxxxxx has accepted such appointment as Shareholders' Representative.
14.7.2 Purchaser, Parent, the Company and the Escrow Agent
shall be entitled to rely upon instructions from Shareholders' Representative,
and shall be entitled to give any notice required to be given to the
shareholders under this Agreement and all other agreements, certificates and
documents contemplated by this Agreement (including the Escrow Agreement) solely
to Shareholders' Representative. Neither Purchaser, Parent, the Company nor the
Escrow Agent shall be liable for any acts or omissions of Shareholders'
Representative in connection with the performance by Shareholders'
Representative of his obligations under this Agreement. By approval of this
Agreement, each shareholder hereby irrevocably appoints Shareholders'
Representative as his agent for purposes of the first sentence of this Section
14.7.2, for purposes of acting on behalf of the shareholders in connection with
any indemnification matter pursuant to Article 12, and for all other purposes
contemplated by this Section 14.7.
14.7.3 If Shareholders' Representative resigns from such
position, the resulting vacancy shall be filled by Xxxxxxx X. Xxxxxxx and, in
such case, if he resigns or declines to accept such appointment of the resulting
vacancy, the position may be filled by approval of the beneficial holders of a
majority of the Shares immediately before the Closing.
No bond shall be required of Shareholders' Representative.
Shareholders' Representative shall not be liable to the Shareholders for any act
taken or omitted under this Agreement as Shareholders' Representative while
acting in good faith and in accordance with this Agreement. Subject to the
$200,000 limitation set forth in Section 12.6, any costs incurred by
Shareholders' Representative in carrying out its duties under this Agreement,
including the costs of counsel, accountants or other experts hired by
Shareholders' Representative, shall be paid or Shareholders' Representative
shall be reimbursed from the Escrow Funds.
14.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida, without giving
effect to any choice or
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conflict of law provision or rule (whether of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida.
14.9 WAIVER. At any time before the Closing, any party may (a) extend
the time for the performance of any of the obligations or other acts of any
other party, (b) waive any inaccuracies in the representations and warranties of
any other party contained in this Agreement or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions of any other party contained in this Agreement. No delay of or
omission in the exercise of any right, power or remedy accruing to any party as
a result of any breach or default by any other party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed as a waiver of
or acquiescence in any such breach or default, or of or in any similar breach or
default occurring later. No waiver of any single breach or default shall be
deemed a waiver of any other breach or default occurring before or after that
waiver.
14.10 SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not possible, such
provision shall be severed from this Agreement. In either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
14.11 CONSTRUCTION. The headings in this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any of its provisions. The parties have participated
jointly in negotiating and drafting this Agreement. If a question of
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement. Any reference to any statute shall be deemed to refer to the statute,
as amended, and to all rules and regulations promulgated thereunder, as amended,
unless the context requires otherwise. The word "include" or "including" means
include or including, without limitation. The representations, warranties and
covenants in this Agreement shall have independent significance. Accordingly, if
any party has breached any representation, warranty or covenant contained in
this Agreement in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.
14.12 ATTORNEYS' FEES. If any legal action or any other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
14.13 NO BROKERS. The Company represents to Parent and Purchaser and
Parent and Purchaser represents to the Company Sellers that the warranting party
has had no dealings with any broker, agent or other Person so as to entitle such
Person to a commission or fee in connection with the Transactions. If for any
reason a commission or fee becomes or is claimed
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to be due with respect to dealings by Parent or Purchaser, Parent and Purchaser
shall indemnify and hold harmless the Company's shareholders from all Losses
relating to such claim. If for any reason a commission or fee becomes or is
claimed to be due with respect to dealings by the Company, the shareholders of
the Company shall indemnify and hold harmless Parent and Purchaser from all
Losses relating to such claim.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PARENT:
Allied Waste North America, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Vice President
PURCHASER:
Sage Acquisition Corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Authorized Officer
THE COMPANY:
Star Services Group, Inc.
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Its: Chief Executive Officer
42
43
INDEX OF EXHIBITS AND SCHEDULES
Exhibits
--------
A Definitions
B Escrow Agreement
C Survey Requirements
Schedules
---------
3.1.2 ITM Options
6 Executive Officers for Purposes of Knowledge Definition
6.1.1 Company's Articles of Incorporation and Bylaws
6.1.3 Company's Capitalization
6.1.4 Subsidiaries
6.1.5 Minute Books
6.3 Conflicts
6.5.1 SEC Reports
6.5.3 Financial Statements
6.8.1 Intellectual Property
6.9.1(A) Equipment
6.9.1(B) Rolling Stock
6.9.1(C) Office Equipment
6.9.1(D) Systems
6.9.2 Personal Property Leases
6.10.1 Description of Owned Land
6.10.2 Description of Leased Land; Leases
6.11.1 Material Contracts
6.11.7 Material Contract Consents
6.12 Insurance Policies
6.13.1 Employees
6.13.2 Employee Benefit Plans
6.14 Labor Matters
6.15 Compliance with Laws; Governmental Orders
6.17 Litigation
6.18 Price Renegotiation Contracts
6.19 Conduct of the Business
6.19.8 Bonuses
6.20.1 Permits
6.20.2 Environmental
6.20.3 Disposal Sites
6.20.4 Storage Tanks
6.22 Title to Assets
6.23 Powers-of-Attorney
6.24 Guaranties, Performance Bonds and Letters of Credit
6.25.1 Affiliate Contracts
6.25.2 Competition by Affiliates
6.25.3 Obligations to and from Affiliates
11.14 Noncompete Agreements
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44
EXHIBIT A
"ACQUISITION TRANSACTION" has the meaning specified in Section 8.4.1.
"ACTION" means any claim, action, suit, formal or informal arbitration
or mediation, inquiry, proceeding or investigation by or before any Governmental
Authority or private authority.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AGREEMENT" means this Agreement and Plan of Merger among Parent,
Purchaser and the Company (including the Exhibits and the Disclosure Schedules),
and all amendments to this Agreement made in accordance with Section 14.3.
"APPLICABLE RATE" has the meaning specified in Section 12.4.
"BOARD" means the Board of Directors of the Company.
"BUSINESS" means the business of the Company and the Subsidiaries.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System, as updated through the date of this Agreement
and the Closing Date.
"CHARADE AGREEMENT" has the meaning specified in Section 3.2.1.
"CLAIM NOTICE" has the meaning specified in Section 12.4.
"CLOSING" and "CLOSING DATE" have the meanings specified in Section
4.1.
"CODE" means the Internal Revenue Code of 1986.
"COMPANY" has the meaning specified in the introductory paragraph of
the Agreement.
"COMPANY INDEMNIFIED PARTIES" has the meaning specified in Section
12.3.
"COMPANY STOCK" has the meaning specified in Section 3.1.1.
"CONSENTS" means those authorizations, consents, waivers, orders,
approvals and clearances of Governmental Authorities and officials and other
Persons which are reasonably necessary for the consummation of the Transactions
(including the continuation of Material Contracts and Permits) where the
approval of any other Person may be required.
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45
"CURRENT ASSETS" and "CURRENT LIABILITIES" have the meanings specified
in Section 3.2.2.1.
"CUSTOMER CONTRACTS" has the meaning specified in Section 6.11.1.2.
"DEBT ADJUSTMENT" has the meaning specified in Section 3.2.1.
"DELROCK AGREEMENT" has the meaning specified in Section 11.12.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules that shall be
prepared by the Company and delivered to Parent and Purchaser.
"DISPUTE NOTICE" has the meaning specified in Section 12.4.
"DISSENTING SHARES" has the meaning specified in Section 3.4.
"EFFECTIVE TIME" has the meaning specified in Section 2.2.
"EMPLOYEE CONTRACTS" has the meaning specified in Section 6.11.1.5.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including Environmental and Tax liens), charge, judgment, encumbrance, adverse
claim, preferential arrangement, or material restriction of any kind, including
any restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership.
"ENVIRONMENT" or "ENVIRONMENTAL" means matters relating to surface
waters, groundwaters, soil, subsurface strata and ambient air.
"ENVIRONMENTAL LAWS" means any Law and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the Environment, health, safety or Hazardous
Materials, including CERCLA; the Resource Conservation and Recovery Act; the
Hazardous Materials Transportation Act; the Clean Water Act; the Toxic
Substances Control Act; the Clean Air Act; the Safe Drinking Water Act; the
Atomic Energy Act; the Federal Insecticide, Fungicide and Rodenticide Act; and
the Federal Food, Drug and Cosmetic Act; and the state or local equivalents of
these laws.
"ENVIRONMENTAL PERMITS" means all Permits and identification numbers
required under any applicable Environmental Law.
"EQUIPMENT" has the meaning specified in Section 6.9.1(A).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ESCROW AGENT," "ESCROW AGREEMENT," and ESCROW FUNDS" have the meaning
specified in Section 3.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FCC" means the Federal Communications Commission of the United States.
A-2
46
"FINANCIAL STATEMENTS" has the meaning specified in Section 6.5.2.
"FLORIDA LAW" means the Florida 1989 Business Corporation Act.
"GOVERNMENTAL AUTHORITY" means the FTC or the DOJ or any other United
States federal, state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HANDLED" means owned, leased, had an interest in, collected,
generated, transported, stored, handled, recycled, reclaimed, processed,
disposed of, or contracted for the disposal of.
"HAZARDOUS MATERIALS" means: (a) petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas; or (b) any other chemicals, materials
or substances defined as or included in the definition of "hazardous materials,"
"hazardous wastes," "hazardous substances," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic wastes," "toxic
pollutants," "contaminants," "pollutants," "infectious wastes," "medical
wastes," "radioactive wastes," "sewage sludges" or words of similar import under
any applicable Environmental Law.
"INCLUDE" or "INCLUDING" has the meaning specified in Section 14.10.
"INDEBTEDNESS" has the meaning specified in Section 6.11.1.6.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" have the meanings
specified in Section 12.4.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning specified in Section
6.8.1.
"INVENTORIES" has the meaning specified in Section 6.7.
"IRS" means the Internal Revenue Service of the United States.
"ITM OPTIONS" has the meaning specified in Section 3.1.2.
"LAND" means the real property owned or leased by the Company or any
Subsidiary, including all credits, buildings, fixtures, personalty and
improvements located thereon, easements, interests, rights, tenements,
hereditaments, and appurtenances held by the Company or any Subsidiary that in
any way benefit the Land or the improvements thereon or related to the Business,
all mineral, water, and irrigation rights, and the Company's and the
Subsidiaries' interests in any roadway adjoining the Land and any rights or
interests that may accrue to the benefit of the Company or any Subsidiary or the
Land as a result of the abandonment thereof.
A-3
47
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, Governmental Order, requirement or rule of
common law, including any Environmental Law.
"LIABILITIES" means all debts, liabilities and obligations, whether
legal or equitable, accrued or fixed, absolute or contingent, matured or
unmatured, determined or determinable, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, including those arising under any Law
(including any Environmental Law) or Action and those arising under any
contract, agreement, arrangement, commitment or undertaking.
"LONG-TERM DEBT" has the meaning specified in Section 3.2.1.
"LOSSES" means Liabilities, claims, damages, Actions, demands,
assessments, adjustments, penalties, losses, costs and expenses whatsoever
(including court costs, reasonable attorneys' fees and expenses of
investigation), whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent,
other than those that are paid or entitled to be paid by insurers (provided,
however, that no party shall have any obligation to initiate litigation to
establish that a claim is entitled to be paid by insurers).
"MAJOR SHAREHOLDERS" has the meaning specified in Section 11.11.
"MARCH 31 BALANCE SHEET" and "MAY 31 BALANCE SHEET" have the meanings
specified in Section 6.5.3.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect
on, the Company, any Subsidiary, the assets or the Business that, individually
or in the aggregate with any other circumstances, changes in, or effects
thereon: (i) is or could reasonably be expected to be materially adverse to the
assets or to the business, financial condition, assets or Liabilities (including
contingent Liabilities), customer or supplier relationships, value, results of
operations or the condition (financial or otherwise) of the Company, any
Subsidiary or the Business; or (ii) could reasonably be expected to materially
adversely affect the ability of the Company or any Subsidiary to use its assets
or operate the Business in the manner in which they are currently used or
operated by the Company or such Subsidiary. For purposes of the foregoing, such
an effect is materially adverse to the financial condition if, individually or
in the aggregate with any other circumstances, changes in, or effects thereon,
it exceeds $50,000.
"MATERIAL CONTRACTS" has the meaning specified in Section 6.11.1.
"MERGER" has the meaning specified in Recital A.
"MERGER CONSIDERATION" has the meaning specified in Section 3.1.1.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified in Section
6.5.3.
"NOTICE OF OBJECTION" has the meaning specified in Section 3.2.2.2.
"OFFICE EQUIPMENT" has the meaning specified in Section 6.9.1(C).
A-4
48
"OPTION PLAN" and "OPTIONS" have the meanings specified in Section
3.1.2.
"PARENT" has the meaning specified in the introductory paragraph of the
Agreement.
"PARENT EXPENSES" has the meaning specified in Section 13.7.2.
"PAYING AGENT" has the meaning specified in Section 3.5.1.
"PEERLESS" has the meaning specified in Section 11.13.
"PERMITS" has the meaning specified in Section 6.20.
"PERMITTED ENCUMBRANCES" has the meaning specified in Section 5.1.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization, Governmental
Authority or other entity.
"PLAN" means: (i) any employee benefit plan, employee welfare benefit
plan, employee benefit pension plan, multi-employer plan or multiple-employer
welfare arrangement (within the meaning of Section 3 of ERISA) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical, dental or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and all
employment, termination, severance, "golden parachute" or other contracts or
agreements, formal or informal, legally binding or not, with respect to which
the Company is a party, with respect to which the Company has or could have any
obligation (whether primary or secondary) or which are maintained, contributed
to or sponsored by the Company or any member of its controlled group of
organizations within the meaning of Section 414 of the Code for the benefit of
any current or former employee, officer or director of the Company; and (ii)
each employee benefit plan for which the Company could incur Liability under
Section 4069 of ERISA if such plan were terminated, or under Section 4212(c) of
ERISA, or in respect of which the Company remains secondarily liable under
Section 4204 of ERISA.
"PROXY STATEMENT" has the meaning specified in Section 8.5.2.
"PURCHASER" has the meaning specified in the introductory paragraph of
the Agreement.
"PURCHASER INDEMNIFIED PARTIES" has the meaning specified in Section
12.2.
"REAL ESTATE LEASES" has the meaning specified in Section 6.10.2.
"RELEASE" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing or otherwise
releasing into, upon or under any land, water or air or otherwise entering into
the Environment.
"REMEDIATION" or "REMEDIATE" means actions to respond to, investigate,
clean-up, move, and otherwise remediate Hazardous Materials.
"ROLLING STOCK" has the meaning specified in Section 6.9.1(B).
A-5
49
"R&W ADJUSTMENT" has the meaning specified in Section 3.2.3.1.
"R&W ADJUSTMENT STATEMENT" and "R&W NOTICE OF OBJECTION" have the
meanings specified in Section 3.2.3.2.
"SCHEDULE B" means the list of exceptions that appear on the page of
the Title Commitment entitled "Schedule B."
"SEC" means the Securities and Exchange Commission of the United
States.
"SEC REPORTS" has the meaning specified in Section 6.5.1.
"SECURITIES ACT" means the Securities Act of 1933.
"SETTLEMENT STATEMENT" has the meaning specified in Section 3.2.2.1.
"SHARE CERTIFICATES" has the meaning specified in Section 3.5.1.
"SHAREHOLDERS' REPRESENTATIVE" has the meaning specified in Section
14.7.
"SHARE PRICE" has the meaning specified in Section 3.1.1.
"SHARES" has the meaning specified in Section 3.1.1.
"SPECIAL MEETING" has the meaning specified in Section 8.5.1.
"SUBSIDIARIES" has the meaning specified in Section 6.1.4.
"SURVEY" has the meaning specified in Section 5.2.
"SURVIVING CORPORATION" has the meaning specified in Section 2.1.
"SYSTEMS" has the meaning specified in Section 6.9.1(D).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges or assessments of any kind (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Authority or taxing authority,
including: taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, minimum, alternative
minimum, estimated, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges.
"TERMINATION FEE" has the meaning specified in Section 13.7.2.
"THIRD PARTY CLAIM" has the meaning specified in Section 12.5.1.
"TITLE DEFECT" has the meaning specified in Section 6.10.14.
A-6
50
"TITLE COMPANY," "TITLE POLICY" and "TITLE COMMITMENT" have the
meanings specified in Section 5.1.
"TO THE BEST OF THE COMPANY'S KNOWLEDGE" has the meaning specified in
Article 6.
"TRANSACTIONS" means the transactions contemplated by this Agreement.
"WORKING CAPITAL ADJUSTMENT," "WORKING CAPITAL DEFICIT" and "WORKING
CAPITAL SURPLUS" have the meanings specified in Section 3.2.2.1.
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51
EXHIBIT B
ESCROW AGREEMENT
B-1
52
EXHIBIT C
SURVEY REQUIREMENTS
1. The survey(s) must be prepared in accordance with the "Minimum
Standard Detail Requirements and Classifications for ALTA/ACSM Land Title
Surveys" as adopted by ALTA and ACSM in 1997, and shall include all items as
follows, in addition to those mentioned in the attached certification which must
appear on the survey. If there is a discrepancy between the legal description in
the Title Commitment and the Survey, one or the other shall be changed, as
applicable to reflect the correct legal description.
2. The survey(s) must show the full legal description of the Land by
metes and bounds. If described in title commitment by "lot and block", surveyor
should include the title commitment description, followed by "more particularly
described as follows", followed by the metes and bounds description prepared by
surveyor. The legal description must match and agree with the courses and
distances as shown on the physical drawing. If there are differences between
"record" and "measured" distances, please note these differences as such.
If the survey(s) is/are described in "lot and block", please show and
label interior lots, and include reference to filed map's recording information.
3. The survey(s) must contain a note below the legal description that
states, "Property surveyed and shown hereon is the same property as described in
title commitment number ________________, dated _______________, prepared by,
[insert name of Title Company]."
4. The survey(s) must show/label the point of beginning, (POB), and the
relationship of the POB to the monument by which it is referenced.
5. The survey(s) must include and identify by labeling/notes the
following:
a) Location dimensions and square footages of
buildings/structures.
b) Location of all substantial visible improvements, (in
addition to buildings/structures), such as signs, parking areas, (include
striping and count), trash enclosures, party walls, etc.
c) Survey(s) must show all driveways/curb cuts, and label
same. Additionally, please show note of "ACCESS" where access is gained to
subject property.
d) Utilities, and include any visibly available water and
sewer mains, utility lines, manholes, catch basins, overhead wires, etc.
e) Encroachments must be shown and listed as encroachments by
note, including those that affect subject property and those that encroach from
subject property onto adjoining property.
f) All easements/exception items as appear in the title
commitment must be plotted and labeled with recording information, (volume and
page), on drawing giving corresponding exception item number from the title
commitment, and survey must include a list of all exceptions with a note, either
"affects subject property and is plotted and shown hereon", or "does not affect
subject property."
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53
g) All roads and rights of way must be shown and streets
labeled. Widths and centerline of roads must be shown. h) The location of any
waterways, wetlands must be noted and shown. i) Monuments must be placed in all
major corners of boundary or referenced where "found".
6. Whether or not the Property, and, specifically, the Improvements are
located within a federally-designated Special Flood Hazard Area, as determined
by reference to Federal Flood Insurance Rate Maps, (survey must contain Flood
Zone in which property falls, and an explanation of that Flood Zone, for
example, "100 Year", etc.).
7. The survey(s) must be drawn at no smaller than 1" = 20.00'.
8. The survey(s) must contain the address in the title block (which
will be provided).
9. The survey(s) must contain the total land area, both in square
footage and acreage.
10. The survey(s) must contain a legend of all symbols and
abbreviations used.
11. The survey(s) must include a Vicinity Map showing the location of
the property surveyed and nearby highways or major street intersections.
12. The survey(s) must include the attached certification, and appear
on the survey in exact form as shown, including all entities listed in the
certification attached.
13. The survey(s) must be signed, sealed and dated, (not more than
thirty (30) days prior to the date of closing).
14. The survey(s) must contain a directional north arrow.
15. The survey(s) must contain identification of the current record
ownership of property landowners of all parcels adjacent to the subject property
(to the extent available).
16. Zoning information must appear on the survey and include:
a) Zone.
b) Setback lines, listed in note form and plotted on drawing.
c) Building height restrictions, if any should be noted.
Parking requirements should also be noted.
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54
SURVEY CERTIFICATION
To:
-----------------------------------------
This is to certify that this map or plat and the survey on which it is
based were made (i) in accordance with the "Minimum Standard detail Requirements
for ALTA/ACSM Land Title Surveys," jointly established and adopted by ALTA and
ACSM in 1997, includes items 1, 2, 3, 4, 6, 7(a), 7(b), 8, 9, 10, 11 and 13
through 16 of Table A thereof, and (ii) pursuant to the Accuracy Standards (as
adopted by ALTA and ACSM and in effect on the date of this certification) of an
Urban Survey.
This map or plat of survey of the premises shown hereon is the same as
that described in [insert name of title company here]) title commitment number
____________ dated _____________.
The property has direct access to and from a duly dedicated and
accepted public street or highway as shown herein.
[If applicable, subject to additional charges in the event surveying
work needs to be undertaken with respect to adjacent parcels and only if the
title company will not issue a contiguity endorsement without such additional
work] All parcels comprising the property are contiguous to each other with out
strips, gaps, gores or other separations.
Date:
----------------------------
(signed) _________________________ (seal)
Registration No. ___________
C-3
