1
EXHIBIT 10.1
EXCHANGE AGREEMENT
BETWEEN
3CI COMPLETE COMPLIANCE CORPORATION
AND
WASTE SYSTEMS, INC.
DATED AS OF JUNE 24, 1997
2
CONTENTS
PAGE
----
ARTICLE 1
THE EXCHANGE
1.1. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIESOF THE COMPANY
2.1. Representations and Warranties of the Company. . . . . . . . . . . . 2
2.1.1. Organization and Standing. . . . . . . . . . . . . . . . . . . 2
2.1.2. Agreement Authorized and its Effect on Other Obligations. . . 2
2.1.3. Validity of Stock. . . . . . . . . . . . . . . . . . . . . . 2
2.1.4. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.5. Reports and Financial Statements. . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIESOF WSI
3.1. Representations and Warranties of WSI. . . . . . . . . . . . . . . . 3
3.1.1. Organization and Standing. . . . . . . . . . . . . . . . . . 3
3.1.2. Agreement Authorized and its Effect on Other Obligations. . . 4
3.1.3. Ownership of Notes . . . . . . . . . . . . . . . . . . . . . 4
3.1.4. Investment Intent. . . . . . . . . . . . . . . . . . . . . . 4
3.1.5. Investor Sophistication. . . . . . . . . . . . . . . . . . . 4
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 5
-i-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. . . . . . . . . . . . . . 5
5.1.1. Representations and Warranties True at Closing Date. . . . . . 5
5.1.2. No Material Litigation. . . . . . . . . . . . . . . . . . . . 5
5.1.3. Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 5
5.2. Conditions Precedent to Obligations of the Company. . . . . . . . . . 6
5.2.1. Representations and Warranties of WSI True at Closing Date. . 6
5.2.2. No Material Litigation. . . . . . . . . . . . . . . . . . . . 6
5.2.3. Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3. Notices and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4. Termination of Representations, Warranties, etc. . . . . . . . . . . 7
6.5. Table of Contents and Captions. . . . . . . . . . . . . . . . . . . . 8
6.6. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 8
6.7. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.8. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-ii-
4
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of June 24, 1997, among
3CI Complete Compliance Corporation, a Delaware corporation (the "Company") and
Waste Systems, Inc., a Delaware Corporation ("WSI").
W I T N E S S E T H:
WHEREAS, the Company and certain of its affiliates are the Makers of (i)
a promissory note dated September 30, 1995, in the original principal amount of
$8,000,000 (the "1995 Note"), and a promissory note dated December 20, 1996, in
the original principal amount of $2,700,000 (the "1996 Note"), in each case,
payable to the order of WSI (the 1995 Note and the 1996 Note are collectively
referred to herein as the "Notes"); and
WHEREAS, all interest due under the Notes has, in accordance with the
terms of the Notes, been converted to principal; and
WHEREAS, the Company is authorized to issue up to 1,000,000 shares of
its preferred stock, without par value;
WHEREAS, the Company and WSI have agreed that the Company will issue to
WSI 1,000,000 shares of its Series A Preferred Stock in the form of the
Certificate of Designation of Series A Preferred Stock attached hereto as
Exhibit A (the "Series A Preferred Stock"), in exchange for the cancellation of
the 1996 Note and a reduction in the principal amount of the 1995 Note.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and to prescribe the terms and
conditions of the exchange contemplated hereby, the parties hereto hereby agree
as follows:
ARTICLE 1
THE EXCHANGE
1.1. Exchange. Upon the terms and subject to the conditions set forth
in this Agreement, the Company agrees to issue and deliver to WSI 1,000,000
shares of its Series A Preferred Stock, in exchange for the cancellation of the
1996 Note and a reduction of the principal amount of the 1995 Note in an amount
equal to $7,000,000 minus the principal amount of the 1996 Note as of January
1, 1997.
1.2. Closing. The closing of the transactions contemplated hereby
(the "Closing") will occur as soon as practicable after the date hereof (the
"Closing Date"). At the Closing, the Company will deliver to WSI a
certificate representing 1,000,000 shares of the Series A Preferred
5
Stock. WSI will cancel 1996 Note and reduce the outstanding principal balance
on the 1995 Note in accordance with the provisions of this Agreement.
1.3. Effective Date. The effective date of the cancellation of the
1996 Note and the reduction in the principal amount of the 1995 Note described
in Section 1.1 shall be January 1, 1997 (the "Effective Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
2.1. Representations and Warranties of the Company. The Company
hereby represents and warrants as follows:
2.1.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Delaware, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and
operate the properties currently owned and operated by it, and is duly
qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the
business conducted by it would make such qualification or licensing
necessary, except where the failure to be so qualified or licensed would
not have a material adverse effect on its financial condition,
properties or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations.
The execution and delivery of this Agreement has been authorized by the
board of directors of the Company, the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and this
Agreement is a valid and binding obligation of the Company, enforceable
against the Company (subject to normal equitable principles) in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally. The consummation of the
transactions contemplated by this Agreement will not conflict with or
result in a violation or breach of any term or provision of, nor
constitute a default under (i) the Certificate of Incorporation or
Bylaws of the Company or (ii) any obligation, indenture, mortgage, deed
of trust, lease, contract or other agreement to which the Company or any
of its subsidiaries is a party or by which any of them or their
properties are bound.
2.1.3. Validity of Stock. On the Closing Date, the Series A
Preferred Stock to be issued to WSI hereunder will be in due and proper
form, will be duly authorized by all necessary corporate action on the
part of the Company, and will be validly issued, fully paid and non-
assessable shares of Series A Preferred Stock, free of preemptive
rights. Upon delivery of the shares of Series A Preferred Stock, WSI
will acquire valid and marketable
2
6
title to such shares of Series A Preferred Stock, free and clear of any
encumbrances. The Common Stock issuable upon conversion of the Series A
Preferred Stock has been duly authorized by all the necessary corporate
acts on the part of the Company and when issued will be validly issued,
fully paid and nonassessable shares of Common Stock of the Company free
of preemptive rights. Upon delivery of the shares of Common Stock upon
conversion of the Series A Preferred Stock, WSI will acquire valid
marketable title to such Common Stock free and clear of any
encumbrances.
2.1.4. Capitalization. As of the Effective Date and the Closing
Date, the authorized capitalization of the Company will consist of
15,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, without par value ("Preferred Stock").
2.1.5. Reports and Financial Statements. The Company has
furnished to WSI true and complete copies of its annual report filed
with the Commission pursuant to the Exchange Act for the fiscal year
ended September 30, 1996 (the "10-K"), and (ii) the Company's quarterly
report filed with the Commission for the fiscal quarter ended March 31,
1997 (the "10-Q"). The consolidated financial statements of the Company
and its consolidated subsidiaries included in the 10-K and the 10-Q were
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved and fairly
present the consolidated financial position for the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and changes in financial position of the
periods then ended, and the 10-K and 10-Q did not contain any untrue
statement of a material fact or fail to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Since September 30, 1996, the Company has filed with the Commission all
material reports, registration statements and other material filings
required to be filed with the Commission under the rules and regulations
of the Commission.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF WSI
3.1. Representations and Warranties of WSI. WSI represents and
warrants as follows:
3.1.1. Organization and Standing. WSI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has full requisite corporate power and authority to
carry on its business as it is currently conducted, to own and operate
the properties currently owned and operated by it, and is duly qualified
or licensed to do business and is in good standing as a foreign
corporation authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary,
except
3
7
where the failure to be so qualified or licensed would not have a
material adverse effect on its financial condition, properties or
business.
3.1.2. Agreement Authorized and its Effect on Other Obligations.
The consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of
WSI, and this Agreement is a valid and binding obligation of WSI
enforceable (subject to normal equitable principles) in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, debtor relief or similar laws affecting the
rights of creditors generally. The consummation of the transactions
contemplated by this Agreement will not conflict with or result in a
violation or breach of any term or provision of, or constitute a default
under (i) the Certificate of Incorporation or Bylaws of WSI or (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which WSI or any of its subsidiaries is a party or by which
any of them or their properties are bound.
3.1.3. Ownership of Notes. WSI owns the Notes free and clear of
any encumbrances or rights of any third parties and has the full right
and authority to cancel the indebtedness represented thereby as
contemplated by this Agreement. Upon consummation of the transactions
contemplated hereby, the portion of the debt evidenced by the Notes
repaid upon issuance of the Series A Preferred Stock shall no longer be
outstanding.
3.1.4. Investment Intent. WSI is acquiring the shares of Series
A Preferred Stock solely for its own account and not with a view to the
public distribution thereof. WSI acknowledges that the shares of Series
A Preferred Stock being issued hereunder will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"), and
agrees that it will only re-offer or resell the shares of Series A
Preferred Stock in compliance with the requirements of Rule 144
promulgated under the Securities Act, in accordance with any other
available exemption from the registration requirements of the Securities
Act, or pursuant to a valid registration statement under the Securities
Act. WSI acknowledges that upon acquisition of the shares of Series A
Preferred Stock (other than in connection with a registered offering
thereof), and until such time, if any, as WSI has received an opinion of
counsel to WSI, in form and substance satisfactory to the Company, that
it is no longer necessary or advisable, the certificate(s) representing
such Series A Preferred Stock shall bear a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS."
4
8
3.1.5. Investor Sophistication. WSI acknowledges and
understands that it must bear the economic risk of this investment for
an indefinite period of time. WSI has experience in analyzing and
investing in entities like the Company, can bear the economic risk of
its investment, including the full loss of its investment, and by reason
of its business or financial experience, has the capacity to evaluate
the merits and risks of its investment and to protect its own interests
in connection with the purchase of Series A Preferred Stock from the
Company.
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. The Company hereby covenants and agrees to
take all actions within its power after the date hereof to effect the
transactions contemplated by this Agreement, including but not limited to the
filing with the Delaware Secretary of State of a certificate of designations
relating to the Series A Preferred Stock.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. The obligation of
WSI to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction of the following conditions or to the waiver
thereof by WSI:
5.1.1. Representations and Warranties True at Closing Date. The
representations and warranties of the Company herein contained shall be,
in all material respects, true as of and at the Closing Date with the
same effect as though made at such date; and the Company shall have
performed and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by the
Company before the Closing Date.
5.1.2. No Material Litigation. No suit, action or other
proceeding shall be pending or threatened before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
5.1.3. Opinion of Counsel. WSI shall have received a favorable
opinion, dated as of the Closing Date, from Xxxxxx & Xxxxxx, L.L.P.,
counsel for the Company, in form and substance satisfactory to WSI, to
the effect that (i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware; (ii) all proceedings required to be taken by or on
the part of the Company to authorize the execution of this Agreement and
the implementation of the transactions contemplated hereby have been
taken; (iii) this Agreement has been duly executed and
5
9
delivered by, and is the legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its
terms, except as enforceability may be limited by (a) equitable
principles of general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting the
rights of creditors generally; and (iv) the Series A Preferred Stock,
when issued, will have been duly authorized by all necessary corporate
action on the part of the Company, and will be validly issued, fully
paid and nonassessable shares of Series A Preferred Stock, free of
preemptive rights. Such opinion also shall cover such other matters
incident to the transactions herein contemplated as WSI may reasonably
request.
5.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated hereby
shall be subject to the satisfaction of the following conditions or to the
waiver thereof by the Company.
5.2.1. Representations and Warranties of WSI True at Closing
Date. The representations and warranties of WSI herein contained shall
be, in all material respects, true as of and at the Closing Date with
the same effect as though made at such date; and WSI shall have
performed and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it before
the Closing Date.
5.2.2. No Material Litigation. No suit, action or other
proceeding shall be pending or threatened before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
5.2.3. Opinion of Counsel. The Company shall have received a
favorable opinion, dated the Closing Date, from Blanchard, Walker,
X'Xxxxx & Xxxxxxx, counsel to WSI, in form and substance satisfactory to
the Company, to the effect that (i) WSI has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Delaware; (ii) all corporate or other proceedings required
to be taken by or on the part of WSI to authorize the execution of this
Agreement and the implementation of the transactions contemplated hereby
have been taken; (iii) this Agreement has been duly executed and
delivered by, and is the legal, valid and binding obligation of WSI, and
is enforceable against WSI in accordance with its terms, except as
enforceability may be limited by (a) equitable principles of general
applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally.
Such opinion shall also cover such other matters incident to the
transactions herein contemplated as the Company and its counsel may
reasonably request.
6
10
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
6.2. Counterparts. Any number of counterparts of this Agreement may
be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
6.3. Notices and Waivers. Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered by courier, sent by
facsimile transmission or first class registered or certified mail, postage
prepaid, return receipt requested as follows:
IF TO THE COMPANY
Addressed to: With a copy to:
3CI Complete Compliance Corporation Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxxx, Xxxxx 000 700 Louisiana, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Crochet Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
IF TO WSI
Waste Systems, Inc. Blanchard, Walker, X'Xxxxx & Xxxxxxx
000 Xxxxxxxxxx, Xxxxx 000 Bank Xxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000 P.O. Drawer 1126
Attn: Xx. Xxxxxxx Pues Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile: (000) 000 0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business
hours on any business day.
6.4. Termination of Representations, Warranties, etc. The respective
representations and warranties of the Company and WSI contained herein shall
expire on the Closing Date.
7
11
6.5. Table of Contents and Captions. The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.
6.6. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and assigns
of the parties hereto.
6.7. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
6.8. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
3CI COMPLETE COMPLIANCE CORPORATION
By: /s/ Xxxxxxx X. Crochet
----------------------------------
Xxxxxxx X. Crochet, President
WASTE SYSTEMS, INC.
By: /s/ Xx. Xxxxxxx Pues
----------------------------------
Xx. Xxxxxxx Pues
8
