EXHIBIT 10.3
*** Indicates material has been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A complete copy of
this Agreement has been filed with the Securities and Exchange Commission.
--------------------------------------------------------------------------------
PURCHASE AND SALE OF ASSETS AGREEMENT
THIS PURCHASE AND SALE OF ASSETS AGREEMENT (the "Agreement") is executed
and delivered as of this 3rd day of September, 2004 between WCA OF ALABAMA,
L.L.C., a Delaware limited liability company ("Buyer"); XXXXXX RECYCLING, LLC,
an Alabama limited liability company ("Seller"); XXXXX XXXXXX, an individual
("Xxxxxx"), and XXX XXXXXXXXX, an individual ("Xxxxxxxxx") (Xxxxxx and Xxxxxxxxx
are hereinafter referred to jointly as the "Members").
P R E M I S E S:
WHEREAS, Seller currently owns the real property described on Schedule
1.1(a) attached hereto (the "Land"), located in and around Xxxxxx County,
Alabama (the "Business"); and
WHEREAS, Seller currently operates a fully-permitted construction and
demolition landfill on the Land (the "Landfill"); and
WHEREAS, Seller owns equipment currently used to operate the Landfill
(collectively, the "Equipment"), and possesses all licenses, permits, approvals
and consents (collectively, the "Permits") necessary to operate the Landfill;
and
WHEREAS, Buyer desires to purchase and acquire the Land, the Landfill, the
Equipment and the Permits (collectively, the "Business"), together with such
other properties and contractual rights of Seller used in connection with the
Business, and Seller desires to sell the Business and such other assets,
properties and contractual rights to Buyer, all in accordance with the terms and
conditions set forth in this Agreement; and
WHEREAS, Members hold all of the outstanding membership interests of
Seller and Buyer is unwilling to enter into this Agreement without the covenants
and promises of Members herein set forth; and
WHEREAS, a material condition of Buyer entering into this Agreement is
Members entering into certain agreements on behalf of Members and other
businesses of the Members, including but not limited to that certain Purchase
and Sale of Assets Agreement of even date herewith by and between Buyer,
Members, and BRC, LLC and that certain Purchase and Sale of Assets Agreement of
even date herewith by and between Buyer, Members, and Bluewater Diving, LLC
(collectively, the "Auxiliary Agreements").
NOW, THEREFORE, in consideration of Ten Dollars ($10), the mutual promises
and covenants herein contained and other good and valuable consideration,
received to the full satisfaction of each of them, the parties hereby agree as
follows:
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A G R E E M E N T:
ARTICLE 1. SALE OF ASSETS
SECTION 1.1 DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, Seller does hereby grant, convey, sell,
transfer and assign to Buyer all of its right, title and interest in and to all
of the assets, properties and contractual rights owned by Seller or used by
Seller in connection with the Business, wherever located, except for the
Excluded Assets (as hereinafter defined), including, but not limited to, the
following:
(a) the Land, as more particularly described on Schedule 1.1(a);
(b) all equipment used or for use in the operation of the Business,
including, without limitation, the equipment listed on Schedule 1.1(b)
attached hereto and made a part hereof (the "Equipment");
(c) all of the motor vehicles used or for use in the Business, and
all radios, attachments, accessories and materials handling equipment now
located in or on such motor vehicles (the "Rolling Stock"), as the same
are listed and more completely described by manufacturer, model number and
model year on Schedule 1.1(c), attached hereto and made a part hereof;
(d) all right, title and interest of Seller in, to and under (i) any
and all agreements (whether oral or in writing) with Seller's customers as
of the Closing Date which relate to the operation or conduct of the
Business (the "Customer Accounts"), and (ii) any and all leases,
contracts, advertising materials, license agreements, and other
agreements, arrangements and/or commitments which are related to the
Assets (as hereinafter defined), the Business and/or the Customer Accounts
(the "Third Party Contracts" and, together with the Customer Accounts, the
"Contracts"); and true and complete copies of each of the Contracts shall
be delivered to Buyer on or prior to the execution and delivery of this
Agreement by Seller and Member;
(e) all manual and automated gate control and billing information,
data and components thereof, including without limitation all information
and all routing and billing computer software and programs containing any
information regarding Customer Accounts;
(f) all computer hardware, software, office equipment and related
information technology assets (including licenses) specifically listed on
Schedule 1.1(f);
(g) all of Seller's inventory of parts, tires and accessories of
every kind, nature and description solely to the extent that the same is
used or for use in connection with the Assets (the "Inventory");
(h) all right, title and interest of Seller in and to any and all
customer lists, vendor lists, supplier lists, trade secrets, proprietary
rights, symbols, trademarks, service marks, logos and trade names and
other instruments used in connection with, or related to, the Business,
the Assets and/or the Customer Accounts (the "Intangible Rights") ;
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(i) all permits, qualifications, licenses, franchises, consents and
other approvals relating to the Business (the "Permits"), true and
complete copies of which are attached hereto on Schedule 1.1(i);
(j) all right, title and interest of Seller in and to the name
"Xxxxxx Recycling, LLC; Xxxxxx Recycling & Used Tire Sales LLC;
Birmingham-Midfield Recycling Center, LLC" (the "Business Name") and all
rights of Seller to use the Business Name in the conduct of the Business
or otherwise;
(k) all of Seller's existing books and records, documents, files and
other material related to all current or past customers of the Business;
(l) all right, title, and interest of Seller in and to the telephone
numbers described on Schedule 1.1(l) and which are used by Seller in the
conduct of the Business;
(m) all Post Office Boxes described on Schedule 1.1(m), together
with all keys, combinations, contractual rights, and any other of Seller's
right, title and interest thereto (the "P.O. Boxes"); and
(n) all of the goodwill of the Business.
All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets."
SECTION 1.2 EXCLUDED ASSETS. The parties agree that there shall be
excluded from the Assets the following which are not being sold to Buyer
pursuant to this Agreement (the "Excluded Assets"):
(a) all cash on hand and on deposit of Seller, except as set forth
in Section 1.4 hereof;
(b) [intentionally omitted]
(c) [intentionally omitted]
(d) all contracts and contractual rights and obligations of Seller
(whether oral or in writing) which are not related to the Customer
Accounts, the Assets and/or the Business as more specifically set forth on
Schedule 1.2(d) hereto; and
(e) all employment or consulting agreements to which Seller is a
party or by which Seller is bound.
SECTION 1.3 NON-ASSIGNMENT OF CERTAIN CONTRACTS. Notwithstanding anything
to the contrary in this Agreement, to the extent that the assignment hereunder
of any Contract shall require the consent of any third party, neither this
Agreement nor any action taken pursuant to its provisions shall constitute an
assignment or an agreement to assign if such assignment or attempted assignment
would constitute a breach thereof or result in the loss or diminution thereof;
provided, however, that in each such case, Seller shall use its reasonable best
efforts to obtain the consent of such other party to such assignment to Buyer.
If such consent is not
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obtained, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide Buyer with the benefits under any such Contract.
SECTION 1.4 PRORATION OF CASH ON HAND. The parties shall prorate, as of
the close of business on the Closing Date, all cash on hand or on deposit with
Seller consisting of sums paid to Seller pursuant to the advance billing
practice of Seller or otherwise representing a prepayment to Seller for services
to be rendered after the Closing related to the Business (the "Prepaid
Accounts"). Seller shall be entitled to all cash on hand or on deposit related
to services performed on or before the close of business on the date of Closing
and Buyer shall be entitled to all cash on hand or on deposit related to
services to be performed after the Closing Date.
SECTION 1.5 CHANGE OF NAME. On the Closing Date, Seller shall discontinue
any use of the Business Name and/or any name similar to the Business Name, or
any other symbol, trademark, service xxxx, logo or trade name now used by Seller
in the conduct of the Business. On the Closing Date, Seller shall deliver to
Buyer, in form suitable for filing, such certificates, consents and other
documents as are necessary to effect the transfer of the registration of the
Business Name to Buyer in Alabama and any other jurisdiction in which the
Business is operated on or prior to the Closing Date, and Seller shall grant to
Buyer any consents and take any other and further action, all at Seller's own
expense, requested by Buyer to enable Buyer to reserve or register any such name
for use by Buyer in Alabama or any other jurisdiction in which the Business is
operated on or prior to the Closing Date.
ARTICLE 2. PURCHASE PRICE
SECTION 2.1 CASH PURCHASE PRICE. The Total Purchase Price for the Assets
is *** Dollars ($***). Subject to Sections 2.2, 2.4 and 2.5 below, at Closing,
Buyer shall pay to Seller in immediately available funds the sum of *** Dollars
($***) (the "Cash Purchase Price").
SECTION 2.2 XXXXXXX MONEY. The parties acknowledge that Buyer has
delivered to Seller's attorneys, to hold in escrow pending the Closing, the sum
of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) (the "Xxxxxxx Money")
pursuant to that certain this Agreement and agree that the Xxxxxxx Money is
equally allocable among this Agreement and each of the Auxiliary Agreements.
SECTION 2.3 PAYMENT OF DEBTS OF SELLER. Seller agrees that on the Closing
Date all of the Assets (whether owned or leased) shall be delivered to Buyer
free of all debts, liens and other encumbrances whatsoever (including bank debt,
lease payments and lease end buy-out provisions). At Seller's request and
direction, Buyer agrees to cause a portion of the Cash Purchase Price otherwise
payable to Seller on the Closing Date to be paid directly to creditors of
Seller. Set forth on Schedule 2.3 is a list of all debts, liens and other
encumbrances relating to the Assets together with their respective payoff
amounts as of the Closing Date.
SECTION 2.4 PURCHASE PRICE ADJUSTMENT. If the Company's ratio of Current
Assets to Current Liabilities (each as defined in Section 9.19) is not 1.0 to
1.0 as of the Closing Date, then the Purchase Price will be adjusted as follows:
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(a) The Seller shall estimate the Current Assets and Current
Liabilities as of the Closing Date. In connection therewith, the Seller
shall develop a worksheet and the basis for making the computations of
Current Assets and Current Liabilities (the "Worksheet") that will also be
used to determine the Actual Working Capital Adjustment pursuant to
Section 2.4(b). If the estimated Current Liabilities exceed the estimated
Current Assets, the amount of such excess shall be deducted on a
dollar-for-dollar basis from the Cash Purchase Price. If the estimated
Current Assets exceed the estimated Current Liabilities, the amount of
such excess shall be added on a dollar-for-dollar basis to the Cash
Purchase Price. Any such adjustment is referred to as the "Working Capital
Adjustment."
(b) Within 90 days after the Closing Date, the Buyer shall deliver
to the Seller a statement (the "Statement") setting forth what it believes
are the actual Current Assets and Current Liabilities as of the Closing
Date, together with the amount of the proposed Actual Working Capital
Adjustment. The Buyer will prepare the Statement using the Worksheet in
accordance with the provisions of this Agreement. The Statement shall
contain a supporting schedule detailing the proposed Actual Working
Capital Adjustment, and be accompanied with copies of the work papers and
back up materials used by Buyer in preparing the Statement. To the extent
that the total receivables within any of the categories set forth in the
definition of "Current Assets" are collected in amounts greater than the
discount amount, such excess amount shall be made a part of the Working
Capital Adjustment. For example, if ***% of the receivables in the
category set forth in (ii) of the definition of Current Assets are
collected prior to the ninetieth day after Closing, then the additional
amounts represented by the additional ***% collected shall be made a part
of the Working Capital Adjustment. To the extent that the actual
receivables collected by Buyer during the ninety (90) days following
Closing is less than the amount given to Seller from Buyer as a credit on
the Estimated Working Capital Adjustment, the Actual Working Capital
Adjustment shall reflect the receivables amount used in the Estimated
Working Capital Adjustment and there shall be no reduction for the same.
If the Actual Working Capital Adjustment is a positive amount, the Buyer
shall pay to the Seller, within fifteen (15) days from the date of
delivery of the Statement, an amount equal to such positive amount. If the
Actual Working Capital Adjustment is a negative amount, Seller shall
promptly pay to the Buyer, within fifteen (15) days from the date of
delivery of the Statement, an amount equal to such negative amount.
If the Seller or Members disagrees with the Actual Working Capital
Adjustment proposed by Buyer, Seller and Buyer will have 45 days to
resolve the dispute between themselves. If Seller and Buyer have not
resolved any dispute within such 45-day period, they shall submit the
dispute to a mutually agreed upon independent accounting firm of
nationally recognized standing to make each disputed calculation in the
Actual Working Capital Adjustment within 20 days after the dispute is
submitted to such firm. The determination of the independent
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accounting firm on all disputed matters shall be final and binding on
Seller and Buyer.
SECTION 2.5 HOLDBACK FOR FINALIZATION OF PERMIT TRANSFERS. Seller agrees
that the Xxxxxxx Money of $100,000 (the "Holdback Funds") otherwise payable to
Seller for the Assets on the date of Closing shall be held in trust by Xxxxxx,
Xxxxxxx & Xxxxxxx, P.C, ("Escrow Agent") until such time that Buyer shall have
been able to verify the finalization of the transfer of all of the licenses,
titles, permits and other consents and approvals necessary for the operation of
the Business (the "Holdback Period").
SECTION 2.6 ALLOCATION OF CONSIDERATION BETWEEN AGREEMENTS. The parties
agree that the total consideration for the transactions contemplated in this
Agreement, together with the transactions contemplated in the Auxiliary
Agreements, is $8,950,000.00, PLUS the sum of (a) amounts paid by the Companies
after the date of this letter, (b) $*** previous paid by Seller to
Bes-Pac/Hi-Rise Recyclic for Order No. 6414 and (c) the outstanding debt (the
total of (a) and (c) not to exceed $***), all of which is associated with
the containers purchased from Bes-Pac/Hi-Rise Recycling pursuant to Order No.
6414, which containers are delivered after July 27, 2004. The Buyer and Seller
will allocate the purchase price among the agreements prior to the Closing Date.
ARTICLE 3. CLOSING
SECTION 3.1 TIME AND PLACE OF CLOSING. The closing of the transaction
contemplated herein shall take place at the offices of Xxxxxx Stotser & Xxxxxxx,
P.C. (the "Closing") on September 2, 2004 (the "Closing Date") at 10:00 a.m.
local time, or such other time and place to which the parties may agree in
writing, and shall be effective for all purposes as of 6:00 a.m., local time, on
the Closing Date.
SECTION 3.2 PAYMENT OF TAXES AND OTHER CHARGES.
(a) At the Closing, Buyer shall pay all real property transfer,
sales, value added, use, documentary stamp, recording charges and other
taxes imposed or required to be collected by any federal, state or local
taxing authority in the United States in connection with the transfer of
the Acquired Assets. Each of Buyer and Seller shall prepare and file, and
shall fully cooperate with the other party with respect to such
preparation and filing of, any returns and other filings relating to any
such taxes, fees, charges, or transfers, as may be required.
(b) For federal income tax purposes, the parties agree that the
aggregate purchase price is to be allocated as agreed upon by the parties
hereto as set forth on a Form 8594 to be delivered at Closing. The Form
8594 delivered at Closing shall be based upon the Closing Balance Sheet
and subject to post-Closing adjustments by agreement of the parties or as
directed by a "Big Four" accounting firm mutually acceptable to Seller and
Buyer. The parties agree to be bound for all purposes by such allocation
and to file the Form 8594 without change with the IRS.
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(c) Following the Closing Date, Buyer or Buyer's assignee shall be
responsible for all taxes attributable to or incurred by the Business
after the Closing.
SECTION 3.3 CONDITIONS TO CLOSING.
(a) BUYER'S CONDITIONS TO CLOSING. Buyer's obligation to close the
transaction contemplated herein shall be subject to the following
conditions precedent:
(i) The representations and warranties of Seller and Members
contained in this Agreement shall be true and correct in all
material respects on the Closing Date with the same effect as if
they were made on and as of the Closing Date, except that any such
representation and warranty made as of a specified date (other than
the date of this Agreement) shall have been true and correct in all
material respects on and as of such date;
(ii) Seller and Members shall have performed in all material
respects all obligations and agreements and complied with all
covenants contained in this Agreement, or in any documents delivered
in connection herewith, that are required to be performed and
complied with by it or him, as applicable, on or before the Closing
Date;
(iii) Buyer shall have received a certificate from Seller and
Members, executed on behalf of Seller by its duly authorized
officer, and by Members, individually, certifying that the
conditions specified in Sections 3.3(a)(i) and 3.3(a)(ii) have been
satisfied (the "Seller's Closing Certificate");
(iv) No suits, actions or other proceedings shall have been
filed by any party seeking to prevent the Closing or otherwise
restrain the transaction contemplated herein or seeking damages in
connection therewith;
(v) Buyer shall, in good faith, be satisfied with the results
of Buyer's due diligence with respect to the Assets;
(vi) Seller shall have obtained and delivered to Buyer all
written consents of the other party to each Contract which by its
terms or otherwise require the consent of such party to the
transactions contemplated by this Agreement;
(vii) Buyer shall have received approval of this Agreement by
its Board of Directors;
(viii) Buyer shall have received approval of this Agreement by
the Board of Directors of WCA Waste Corporation;
(ix) [intentionally omitted]
(x) Seller shall have provided evidence satisfactory to Buyer
that, as of the Closing Date, all permits, licenses and governmental
approvals of whatever kind and nature necessary for the operation of
the Assets shall have been granted and are in full force and effect;
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(xi) There shall have occurred no material damage,
destruction, loss, or material adverse change in the condition of
the Assets (whether or not covered by insurance) between the
execution date of this Agreement and the Closing; and
(xii) The Closing of each and every of the Auxiliary
Agreements shall have closed or be closing contemporaneously with
the Closing of this Agreement.
(b) SELLER'S CONDITIONS TO CLOSING. Seller's obligation to close the
transaction contemplated herein shall be subject to the following
conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement and in the Auxiliary Agreements shall be true and
correct in all material respects on the Closing Date with the same
effect as if they were made on and as of the Closing Date, except
that any such representation and warranty made as of a specified
date (other than the date of this Agreement) shall have been true
and correct in all material respects on and as of such date;
(ii) Buyer shall have performed in all material respects all
obligations and agreements and complied with all covenants contained
in this Agreement and in the Auxiliary Agreements, or in any
documents delivered in connection herewith, that are required to be
performed and complied with by it on or before the Closing Date;
(iii) Seller shall have received a certificate from Buyer,
executed on behalf of Buyer by its duly authorized officer,
certifying that the conditions specified in Sections 3.3(b)(i) and
3.3(b)(ii) have been satisfied (the "Buyer's Closing Certificate");
(iv) No suits, actions, or other proceedings shall have been
filed by any third party seeking to prevent the Closing or otherwise
restrain the transaction contemplated herein or seeking damages in
connection therewith: and
(v) The Closing of the Auxiliary Agreements shall have
occurred or be closing contemporaneously with the Closing of this
Agreement. SECTION
3.4 DELIVERIES BY SELLER AND MEMBERS. At the Closing, Seller and Member
shall deliver to Buyer:
(a) one or more special warranty deeds conveying the Land to Buyer
in form and substance satisfactory to Buyer, subject to the Permitted
Exceptions;
(b) all documents necessary for the transfer by Seller of the
Permits, executed by Seller in form and substance sufficient for the
transfer of Seller's interests therein;
(c) an executed Transition Agreement in the form of Exhibit 3.4(c)
for the operation of the Assets pursuant to the Permits;
(d) [intentionally omitted]
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(e) Xxxx of Sale in the form attached hereto as Exhibit B, duly
executed by Seller (the "Xxxx of Sale");
(f) An Omnibus Assignment and Assumption Agreement in the form
attached hereto as Exhibit B-1 duly executed by Seller and Buyer
("Assignment")
(g) a receipt duly executed by Seller acknowledging payment by Buyer
to Seller of the Cash Purchase Price;
(h) a release in the form attached hereto as Exhibit C-1, duly
executed by each of Seller and Members, releasing Buyer from any and all
claims it or he may have against Buyer or the Assets (exclusive of any
claims arising pursuant to this Agreement);
(i) with respect to any Contract that requires the consent of a
third party prior to the assignment thereof, a consent to assignment in a
form reasonably satisfactory to Buyer executed by such third party;
(j) the documents evidencing the change of name of Seller as
required by Section 1.5;
(k) all keys to Rolling Stock and Equipment in the Seller's
possession (properly tagged for identification);
(l) such resolutions, authorizations, certified Articles of
Organization and Operating Agreement relating to Seller as are necessary
or required by Buyer in connection with this transaction and including (i)
Seller's Articles of Organization certified by the Alabama Secretary of
State; (ii) Seller's Secretary Certificate as to incumbency and specimen
signatures, the resolutions authorizing this Agreement, its Articles of
Organization and Operating Agreement; and (iii) a Good Standing
Certificate from the Secretary of State of Alabama;
(m) [intentionally omitted]
(n) an [intentionally omitted]
(o) an instruction letter duly executed by Seller and addressed to
Postmaster, instructing the Postmaster to transfer to Buyer all right,
title and interest in and to the P.O. Boxes as of the Closing Date;
(p) the Seller's Closing Certificate, as contemplated under Section
3.3(a)(iii), duly executed by each of Seller and Members; and
(q) all other documents, instruments and writings reasonably
requested by Buyer to be delivered by Seller at or prior to the Closing.
SECTION 3.5 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
Seller:
(a) the Cash Purchase Price, less the ratable share of the Xxxxxxx
Money applicable to this Agreement pursuant to Section 2.2, the funds
payable to Seller's creditors pursuant to Section 2.3, and the Holdback
Funds pursuant to Section 2.4;
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(b) a release in the form attached hereto as Exhibit C-2, duly
executed by Buyer, releasing Seller and all Members from any and all
claims it may have against Seller or any Member or the Assets (exclusive
of any claims arising pursuant to this Agreement);
(c) such resolutions, authorizations, certified Articles of
Incorporation and Bylaws relating to Buyer as are necessary or required by
Seller in connection with this transaction and including (i) Buyer's
Certificate of Organization certified by the Delaware Secretary of State;
(ii) Buyer's Secretary Certificate as to incumbency and specimen
signatures, the resolutions authorizing this Agreement, its Certificate of
Organization and Limited Liability Company Agreement; and (iii) a Good
Standing Certificate of Buyer from the Delaware Secretary of State;
(d) the Buyer's Closing Certificate, as contemplated under Section
3.3(b)(iii), duly executed by Buyer; and
(e) all other documents, instruments and writings reasonably
requested by Seller to be delivered by Buyer at or prior to the Closing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
OF SELLER AND MEMBERS
SECTION 4.1 Seller and Members, jointly and severally, represent and
warrant to Buyer that:
(a) AUTHORITY.
(i) Seller is a duly organized and validly existing Alabama
limited liability company, duly qualified or authorized to do
business in the State of Alabama and in each jurisdiction in which
such qualification or authorization is required except where failure
to be so qualified or licensed would not have a material adverse
effect on the Assets or the Business. The execution and delivery of
this Agreement, the consummation of the transactions contemplated
hereby and the compliance by Seller and Members with the terms of
this Agreement do not and will not conflict with or result in a
breach of any terms of, or constitute a default under, the Articles
of Organization or Operating Agreement of Seller, or any instrument
or other agreement to which Seller or Members is a party or by which
Seller or Members, or any of their respective properties or assets,
is bound. This Agreement constitutes a valid obligation of Seller
and Members enforceable against Seller and Members in accordance
with its terms except as may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application
relating to or affecting creditor's rights generally and except for
the limitations imposed by general principles of equity.
(ii) Each Member is competent, under no duress or legal
restraint, and has all necessary authority to enter into this
Agreement, perform such Member's obligations hereunder and
consummate the transactions contemplated hereby.
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(iii) Seller has the full power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby. Seller has taken all action necessary to approve the sale of
the Assets to Buyer, including manager and member approvals, if
necessary, and except as otherwise set forth herein, no other
authorization or approval is required for any of the foregoing.
(iv) All of the issued and outstanding membership interests of
Seller are owned of record and beneficially by the Members, free and
clear of all liens, security interests and encumbrances whatsoever.
(v) Seller does not have any subsidiaries or any other equity
interest in any limited liability company, corporation, partnership
or similar entity.
(b) COMPLIANCE WITH LAW. To the best of Seller's and each Member's
knowledge:
(i) Neither Seller nor any Member is in default under any
applicable federal, state or local laws, statutes, ordinances,
permits, licenses, orders, approvals, variances, rules or
regulations or judicial or administrative decisions ("Applicable
Laws") which would have a material adverse effect upon the Assets or
the Business;
(ii) Seller has been granted all licenses, permits, consents,
authorizations and approvals from federal, state and local
government regulatory bodies necessary or desirable to carry on the
Business, all of which are currently in full force and effect;
(iii) The operation, conduct and ownership of the properties,
assets and Business of Seller are being, and at all times have been,
conducted in compliance with all Applicable Laws in all material
respects; and
(iv) No notice from any governmental body has been served upon
or given to Seller claiming that the Business or any of the Assets
is not in conformity with any Applicable Law.
(c) EQUIPMENT. Listed on Schedule 1.1(b) hereto is a complete and
accurate list of all Equipment used or for use in connection with the
Business and the current condition of each such item of Equipment. The
Equipment is sold AS IS, with all faults.
(d) ROLLING STOCK. Listed on Schedule 1.1(c) hereto is a complete
and accurate list of all Rolling Stock. The Rolling Stock is sold AS IS,
with all faults.
(e) CONTRACTS AND LEASES. Listed on Schedule 4.1(e) hereto is a
complete and accurate list of all of the Contracts as of the date hereof
with all Customers from which five percent (5%) or more of the Business'
average monthly revenue is derived. Also listed on Schedule 4.1(e) hereto
is a complete and accurate list of all of the leases as of the date hereof
which will be assumed by Buyer (the "Assumed Leases"). Except as set forth
on Schedule 4.1(e), all Contracts and Assumed Leases are (and will be
immediately following the Closing) in full force and effect and are valid,
binding and enforceable
11
against the respective parties thereto in accordance with their respective
provisions. Seller is not in default under any of the Contracts or Assumed
Leases; nor has there occurred an event or condition (including Seller's
execution and delivery of or performance under this Agreement) which with
the passage of time or the giving of notice (or both) would constitute a
default under any obligation under any of the Contracts or Assumed Leases;
no claim of such a default has been asserted and there is no reasonable
basis upon which such a claim could validly be made. To the best of the
Seller's and Members' knowledge, no person intends or desires to modify,
waive, amend, rescind, release, cancel or terminate any of the Contracts
or Assumed Leases. By virtue of the grant, conveyance, sale, transfer and
assignment of the Contracts and Assumed Leases by Seller to Buyer
hereunder, except as set forth on Schedule 4.1(e) Buyer shall own and hold
all right, title and interest of Seller in and to the Contracts and
Assumed Leases, without the consent or approval of any other person or
entity.
(f) TITLE TO THE ASSETS. Seller has good and marketable title to all
of the Assets, and at Closing all such Assets will be free and clear of
all liens, encumbrances, security interests, equities or restrictions
whatsoever, direct or indirect, accrued, absolute, contingent or otherwise
and, by virtue of the grant, conveyance, sale, transfer, and assignment of
the Assets hereunder, Buyer shall receive good and marketable title to the
Assets, free and clear of all liens, lease payments (including lease-end
buy-out payments), encumbrances, security interests, equities or
restrictions whatsoever. The Assets include all of the permits, licenses,
franchises, consents and other approvals necessary or desirable to conduct
the Business.
(g) TITLE TO THE LAND. Except as may be more fully set forth on
Schedule B(2) of the Title Commitment (as defined in Section 5.3 herein),
Seller owns good and marketable title to the Land, and at Closing the Land
will be free and clear of any lien, mortgage, charge, restriction, pledge,
security interest, option, lease, claim, easement, encroachment or
encumbrance ("Lien"), no person has an option to purchase the Land, and
except as set forth on Schedule 4.1(g):
(i) no person has any interest in the Land;
(ii) The Land is, and at all times during operation of the
Business has been, fully licensed, permitted and authorized for the
operation of the Business under all Applicable Laws relating to the
protection of the environment and the conduct of the Business
thereon (including, without limitation, all zoning restrictions and
land use requirements).
(iii) To the best of Seller's and each Member's knowledge,
neither Seller, any Member nor the Land now is or ever has been
involved in any litigation or administrative proceeding seeking to
impose fines, penalties or other liabilities or seeking injunctive
relief for violation of any Applicable Laws relating to the
environment.
(iv) To the best of Seller's and each Member's knowledge,
there have been no spills, leaks, deposits or other releases of
Hazardous Materials into or onto the Land.
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(v) Except as set forth on Schedule 4.1(g), the Land does not
contain any underground or above-ground storage tanks or
transformers containing Hazardous Materials, petroleum products or
wastes or other hazardous substances regulated by 40 CFR 280 or
other Applicable Laws. All above and below ground tanks currently in
use on the Land are being used and maintained in accordance with all
Applicable Laws.
(h) LITIGATION. Except as set forth on Schedule 4.1(h) hereof,
neither Seller nor any Member has any knowledge of any claim (including
Notices of Violation), litigation, action, suit or proceeding,
administrative or judicial, pending or threatened against Seller or
Member, or involving the Assets or the Business, at law or in equity,
before any federal, state or local court or regulatory agency, or other
governmental authority. Neither Seller nor any Member has any knowledge of
any facts or circumstances that exist which would, with the passage of
time or giving of notice (or both), give rise to any of the above.
(i) EMPLOYEES. Attached as Schedule 4.1(i) hereof is a complete list
of all employees of the Business and their respective rates of
compensation (including a breakdown of the portion thereof attributable to
salary, bonus and other compensation, respectively) as of the date of
Closing. Each employee is an employee at will and there are no other
collective bargaining agreements affecting any employee of Seller. To the
best of Seller's and Members' knowledge, there is no pending or threatened
labor dispute involving Seller and any group of its employees nor has
Seller experienced any labor interruptions over the past three years.
Members will cause Seller to terminate each of its employees as of the
close of business on the Closing Date. Buyer agrees to employ such former
employees of Seller as Buyer deems appropriate, provided that each such
person seeking employment meets the qualifications established by Buyer.
It is expressly understood that Buyer shall not assume or be responsible
for any severance or other employee benefit arising out of an individual's
employment by Seller prior to the Closing Date. Nothing herein will be
deemed to give any individual a right of employment and Buyer shall not be
obligated to hire any of Seller's employees.
(j) EMPLOYEE RELATIONS AND BENEFIT PLANS. Set forth on Schedule
4.1(j) is an accurate and complete list of all agreements of any kind
between Seller and its employees or group of employees, including, without
limitation, employment agreements, collective bargaining agreements and
benefit plans. Buyer shall not, by the execution and delivery of this
Agreement or otherwise, become obligated to or assume any liabilities or
contractual obligations with respect to any employee of Seller or
otherwise become liable for or obligated in any manner (contractual or
otherwise) to any employee of Seller, including, without limiting the
generality of the foregoing, any liability or obligation pursuant to any
collective bargaining agreement, employment agreement, or pension, profit
sharing or other employee benefit plan (within the meaning of Section 3(3)
of the Employment Retirement Income Security Act of 1974, as amended) or
any other fringe benefit program maintained by Seller or to which Seller
contributes or any liability for the withdrawal or partial withdrawal from
or termination of any such plan or program by Seller.
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(k) FINANCIAL STATEMENTS. Schedule 4.1(k) attached hereto contains
the following financial statements of Seller (collectively, the "Unaudited
Financials"): (a) unaudited balance sheets and statements of operations as
of and for the fiscal years ended December 31, 2001, December 31, 2002,
and December 31, 2003, and (b) the unaudited balance sheet (the "Most
Recent Balance Sheet") and statements of operations as of and for the
eight months ended August 31, 2004 (the "Balance Sheet Date"). The
Unaudited Financials have been prepared in accordance with accounting
principles consistently applied with prior periods, are complete and
correct in all material respects and fairly present the financial
condition and results of the operation of Seller as of the dates and for
the periods indicated thereon, and contain and reflect adequate reserves
for all material liabilities and obligations of Seller of any nature,
whether absolute, contingent or otherwise, except for reserves not
required to be maintained under Generally Accepted Accounting Principles
and subject in the case of Unaudited Financials covering interim periods
to year end adjustments, the net effect of which shall not be material in
nature or amount. Except as may be noted thereon, the statements of income
included in the Unaudited Financials do not contain any material items of
extraordinary or nonrecurring income or any other income not earned in the
ordinary course of business. Except as set forth on Schedule 4.1(k), the
books of account of Seller have been maintained in all material respects
in accordance with prudent business practices, and there have been no
material transactions involving Seller that properly should have been set
forth therein in accordance with GAAP that have not been accurately so set
forth.
(l) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Unaudited
Financials or on Schedule 4.7, since the Balance Sheet Date, there has not
occurred:
(i) Any adverse change in the assets, liabilities (whether
absolute, accrued, contingent or otherwise), condition (financial or
otherwise), results of operations, business or prospects of Seller
not reflected in the Unaudited Financials and that has resulted in
or to Seller's knowledge, may result in a loss to Seller of more
than $5,000;
(ii) Any material adverse change in the revenue production of
the Business due to the loss of any customer's of the Business or
the termination of any Customer Accounts;
(iii) Except for changes in the ordinary course of business
consistent with past practices, any amendment or modification of any
material Contract, or any termination of any agreement that would
have been a material Contract were such agreement in existence as of
the date hereof;
(iv) Any increase in the compensation (including, without
limitation, the rate of commissions) payable to, or any payment of a
cash bonus to, any officer, director or employee of, or consultant
to, Seller;
14
(v) Any transaction by Seller, whether or not covered by the
foregoing, not in the ordinary course of business and not consistent
with past practices;
(vi) Any alteration in the manner of keeping the books,
accounts or records of Seller, or in the accounting practices
therein reflected;
(vii) Any acquisition or redemption by Seller of any of its
equity securities or any loan by Seller to any of its security
holders or partners as applicable;
(viii) Any loss in the previous twelve months or, to Seller's
knowledge, threatened loss that exceeds $5,000;
(ix) Any damage or destruction to, or loss of, any assets or
property owned, leased or used by Seller (whether or not covered by
insurance) in excess of $5,000;
and Seller has not:
(x) created or permitted the creation or imposition of any
security interest upon any of the Assets, except for security
interests arising by operation of law or in the ordinary course of
Seller's business and which will terminate at Closing;
(xi) waived any of its rights or claims that singly or in the
aggregate are material to the Business;
(xii) postponed the payment of any Accounts Payable;
(xiii) entered into any employment agreement or modified the
terms of any existing employment agreement;
(xiv) adopted, amended, modified or terminated any collective
bargaining agreement, or pension, profit sharing or other employee
benefit plan;
(xv) canceled or terminated any Customer Accounts; or
(xvi) entered into any agreement to do any of the things
described in the preceding subsections (i) - (xv) of this Section
4.1(l).
(m) TAXES. No federal, state, local or other tax returns or reports
filed by Seller (whether filed prior to, on or after the date hereof) with
respect to the Business or the
15
Assets will result in any taxes, assessments, fees or other governmental
charges upon the Assets or Buyer, whether as a transferee of the Assets or
otherwise. All federal, state and local taxes due and payable with respect
to the Business or the Assets have been paid, including, without limiting
the generality of the foregoing, all federal, state and local income,
sales, use, franchise, excise and property taxes.
(n) HAZARDOUS MATERIALS. Except as in compliance with Applicable
Laws and the Permits, to the knowledge of Seller and each Member, neither
Seller nor any Member has ever generated, transported, stored, handled,
recycled, reclaimed, disposed of, or contracted for the disposal of: (i)
hazardous materials, hazardous wastes, hazardous substances, toxic wastes
or substances, infectious or medical waste, radioactive waste or sewage
sludges, petroleum or petroleum products, natural gas, or natural gas
products, radioactive materials, asbestos, lead, urea formaldehyde foam
insulation, transformers or other equipment that contains dielectric fluid
containing levels of polychlorinated biphenyls ("PCBs"), and radon gas;
(ii) any chemicals, materials, waste or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any Environmental Laws (as
hereinafter defined) (herein, collectively, "Hazardous Materials"); and
(iii) any other chemical, material, waste or substance which is in any way
regulated by any federal, state or local government authority, agency or
instrumentality, including mixtures thereof with other materials, and
including any materials such as asbestos and lead. The term "Environmental
Laws" includes, but is not limited to, any federal, state or local
statute, law, rule, regulation, ordinance, code, policy or rule of common
law now in effect and in each case as amended to date and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree, or judgment, relating to the
environment, human health or safety, or Hazardous Materials, including
without limitation the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801, et
seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. Sections 6901, et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Sections 1201 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Sections 2601, et seq.; the Clean Air Act, 42 U.S.C.
Sections 7401, et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections
3808, et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, as
amended, 7 U.S.C. Section 136, et seq.; applicable State law counterparts
of the foregoing, and the rules and regulations promulgated under any of
the foregoing. Seller has never owned, operated, had an interest in,
engaged in and/or leased a waste transfer, recycling, treatment, storage
or disposal facility, business or activity other than the Business. To the
bst of Seller's and each Member's knowledge, Seller has obtained and
maintained all records necessary to establish the identity of the waste
generators and the nature of the waste transported in connection with the
Business. To the best of Seller's and Members' knowledge, no employee,
contractor or agent of Seller has, in the course and scope of employment
with Seller, been harmed by exposure to Hazardous Materials. Seller has no
direct or contingent liability or obligation for or in connection with any
claimed release, discharge or leak of any substance into the environment
and no portion of the Operations Property is listed on the CERCLIS list or
the National Priorities List of Hazardous Waste Sites or
16
any similar list maintained by the State of Alabama. Attached hereto as
Schedule 4.1(n) is a complete list of the names and addresses of all
disposal sites at any time now or in the past utilized by Seller, none of
which sites is listed on the CERCLIS list or the National Priorities List
of Hazardous Waste Sites or any comparable Alabama list. Neither Seller
nor any Member is listed as a potentially responsible party under CERCLA
or any comparable or similar Alabama statute; neither Seller nor any
Member has received any notice of such a listing; and neither Seller nor
any Member knows of any facts or circumstances which could give rise to
such a listing.
(o) GOVERNMENT NOTICES; PERMITS; INTANGIBLE RIGHTS. Seller has
delivered to Buyer on Schedule 4.1(o) an accurate list and summary
description as of the date of execution of this Agreement and, at least
five (5) days prior to Closing, as of the Closing Date of all of its
certificates of need, permits, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, orders, approvals,
franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by Seller with respect to the
Assets, all of which are valid, in good standing and in full force and
effect. Except as set forth on Schedule 4.1(o), to the best of Seller's
knowledge such permits, titles, licenses, orders, approvals, franchises,
certificates, trademarks, trade names, patents, patent applications,
copyrights and similar rights of approvals are adequate for the operation
of the Assets. Except as set forth on Schedule 4.1(o), Seller has
delivered to Buyer a description and copies as of the date of this
Agreement and as of the Closing of all of its material records, reports,
notifications, certificates of need, permits, pending permit applications,
engineering studies, environmental impact studies filed or submitted or
required to be filed or submitted to governmental agencies, other
governmental approvals or applications for approval and of all material
notifications from such governmental agencies, with respect to the Assets.
All of the statements made and all of the information provided by Seller
or its agents or representatives in the permit documents with respect to
the Permits, the Land and the Landfill are true and correct.
(p) ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Seller is not now nor
has ever been a party to any governmental contracts subject to price
redetermination or renegotiation.
(q) GROSS REVENUES. The gross revenues generated by the Business for
the eight-month period ended August 31, 2004, were *** Dollars ($***).
(r) ABSENCE OF CERTAIN BUSINESS PRACTICES. Seller has not, nor has
any employee, agent or other person acting on Seller's behalf, directly or
indirectly, given or agreed to give any gift or similar benefit to any
customer, supplier, competitor or governmental employee or official
(domestic or foreign) that would subject Seller to any damage or penalty
in any civil, criminal or governmental litigation or proceeding.
(s) TRANSACTIONS WITH RELATED PARTIES. Except as set forth on
Schedule 4.1(s) attached hereto, and except for transactions with the
parties to the Auxilliary Agreements, since January 1, 2001, (i) there
have been no transactions by Seller with (x) any member of any Member's
family, (y) any person or legal entity that is directly or
17
indirectly controlled by any Member or one or more members of any Member's
family, or (z) any person or legal entity that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or
indirectly under common control with Seller (collectively, a "Related
Party"), and (ii) there are no written agreements now in effect between
Seller and any Related Party. In addition, none of the transactions with
Member or any Related Party that have occurred has provided to Seller
assets, income, financing or business on a basis significantly more or
less favorable than that available from unaffiliated persons. Schedule
4.1(s) also (i) states the amounts due from Seller to any Related Party
and the amounts due from any Related Party to Seller, (ii) describes the
transactions out of which such amounts due arose, and (iii) describes any
interest of Seller or any Related Party in any supplier or customer of, or
any other entity that has had business dealings with, Seller. After the
Closing, except as set forth on Schedule 4.1(s), there will be no
obligations or other liabilities between Buyer, on the one hand, and
Seller or any Related Party, on the other hand, other than pursuant to
this Agreement. Schedule 4.1(s) shall specifically include all Excluded
Assets located on the Operations Property, and Seller covenants to (1)
hold Buyer harmless from any and all loss suffered by Seller or any such
Related Party after the Closing, and (2) to have all Excluded Assets
removed from the Operations Property within 120 days after the Closing.
(t) INSURANCE. Attached to Schedule 4.1(t) is a complete set of
copies of all insurance policies and of all claims made by Seller on any
liability or other insurance policies during the past five years, and loss
runs for the past five years. Schedule 4.1(t) is a complete list of all
insurance currently in place over the five years preceding the Closing,
and accurately sets forth the coverages, deductible amounts, carriers and
expiration dates thereof. Except as included in Schedule 4.1(t), no notice
or other communication has been received by the Seller from any insurance
company within the three years preceding the Closing canceling or
materially amending or materially increasing the annual or other premiums
payable under any of their insurance policies, and, to the knowledge of
Seller, no such cancellation, amendment or increase of premiums is
threatened.
(u) ABSENCE OF UNDISCLOSED LIABILITIES. There are no material
liabilities of Seller, whether absolute, accrued, contingent or otherwise,
and whether due or to become due, not reflected on or reserved for in the
Unaudited Financials or the Closing Balance Sheet, as applicable, except
for executory obligations under Customer Accounts and immaterial Contracts
for the purchase of supplies or the sale of products incurred in the
ordinary course of business. There are no commitments, Contracts or
undertakings covering purchases in excess of Seller's normal operating
requirements or covering the purchases of items of Equipment in excess of
the requirements of Seller.
(v) NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on
Schedule 4.1(v), (i) Seller has not granted any general or special powers
of attorney, and (ii) Seller has no obligation or liability (whether
actual, contingent or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, indemnitor, or obligor on an asset or income
maintenance agreement or otherwise in respect of the obligation of any
person, corporation, partnership, joint venture, association, organization
or other entity.
18
(w) BROKERAGE FEES. No person or legal entity is entitled to any
brokerage or finder's fee or other commission from Seller or any Member in
connection with the Closing of this Agreement or the consummation of the
transactions contemplated hereunder.
(x) LETTERS OF CREDIT, BONDS, ETC.
(i) Except as disclosed in Schedule 4.1(x), Seller is not the
beneficiary of any letters of credit, performance or other bonds, or
any other financial instruments guaranteeing the payment or
performance of any third party under any Contract; and
(ii) Except as disclosed in Schedule 4.1(x), Seller is not
required to provide any letter of credit, performance or other bond,
or any other financial instrument for the purpose of guaranteeing
the Seller's payment or performance under any Contract.
(y) COMPLETENESS OF DISCLOSURE. This Agreement and the Schedules
hereto and all other documents and information furnished to Buyer and its
representatives pursuant hereto 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 either Seller or any Member
becomes aware of any fact or circumstance which would change a
representation or warranty of Seller or any Member in this Agreement, the
party with such knowledge shall immediately give notice of such fact or
circumstance to Buyer. However, such notification shall not relieve Seller
or any Member of his, her or its respective obligations under this
Agreement, and at the sole option of Buyer, the truth and accuracy of any
and all warranties and representations of Seller and each Member at the
date of this Agreement shall be a precondition to the consummation of this
transaction.
(z) P.O. BOXES. Schedule 1.1(m) sets forth a complete and accurate
list of all P.O. Boxes of the Business, and all correspondence related to
the Business is currently, and shall be as of the Closing Date, directed
to the P.O. Boxes. Seller has directed all correspondence related thereto
to the P.O. Boxes and Seller shall not modify, alter or terminate such
direction.
SECTION 4.2 SURVIVAL. Each of the representations and warranties set forth
in this Article 4 shall survive the Closing and the transfer of the Assets as
more fully set forth in Section 8.7 hereof.
ARTICLE 5. COVENANTS OF SELLER AND MEMBER
SECTION 5.1 TRANSITION OPERATIONS. Between the date hereof and Closing,
neither Seller nor any Member will take any action that is designed or intended
to have the effect of discouraging any customer or business associate of Seller
from maintaining the same business relationships with Buyer after the Closing
that it maintained with Seller before the Closing. Specifically, and without
limitation, Seller and each Member will:
19
(a) Refer all customer inquiries relating to the Business to Buyer
from and after the Closing;
(b) Not make long-term commitments with respect to the Assets, or
dispose of any of the Assets without Buyer's consent;
(c) Not take any action or omit to take any action that would cause
Seller's representations and warranties contained in this Agreement to be
incorrect or incomplete;
(d) Promptly notify Buyer in writing of any material adverse change
with respect to the Assets;
(e) Allow representatives of Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operation of Seller, to all premises, properties, personnel,
books, records, contracts and documents of or pertaining to the Assets;
(f) Not (i) solicit, initiate, or encourage the submission of any
proposal or offer from any person relating to the acquisition of any
membership interest or other voting securities, or any substantial portion
of the assets of, Seller (including any acquisition structured as a
merger, consolidation, or share exchange); (ii) participate in, or
facilitate in any other manner any effort or attempt by any person to do
or seek any of the foregoing; (iii) vote its Interests in favor of any
such acquisition structured as a merger, consolidation, or share exchange;
(g) Notify Buyer immediately if any person makes any proposal,
offer, inquiry, or contact with respect to (i) any acquisition described
in Section 5.1(f); or (ii) any of the Assets;
(h) Not disclose any confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except to authorized representatives of Buyer, related to the Assets.
Further, Seller and each Member agree that for a period of 90 days following the
date of Closing, they will, without additional consideration, use reasonable
efforts to assist Buyer with the orderly transition of the operations of the
Business from Seller to Buyer.
SECTION 5.2 NONCOMPETITION.
(a) For a period of *** after the Closing, except as set
forth in the following paragraph, neither (i) Seller, nor (ii) any Member,
shall for any reason whatsoever, directly or indirectly, for itself or
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever kind or nature engage, as
an officer, director, shareholder, owner, manager, member, partner, joint
venturer, lender or in any other capacity, whether as an employee,
independent contractor, consultant, advisor, agent or otherwise, or as a
sales representative, of any business in direct or indirect competition
with Buyer located or operating within a ***
20
(the "Territory"). For purposes of this Agreement, the term "Affiliate"
shall mean in respect of any specified party, any other person or legal
entity that, directly or indirectly, controls, is controlled by, or is
under common control with, such specified party or if such specified party
bears a familial relationship with such other person.
Notwithstanding the foregoing provisions of this paragraph (a) Seller and
the Member may be a passive investor owning no more than five percent (5%)
of the outstanding equity securities (including, but not limited to, debt
or other obligations that are convertible into equity securities) of any
corporation or other entity the equity securities of which are listed on a
national securities exchange or traded on the NASDAQ National Market
System and with which such persons have no other connection whatsoever.
(b) For a period of *** after the Closing Date, neither Seller nor
any Member shall, and each of Seller and each Member shall cause each of
its or his Affiliates to not, offer to employ any person who is, at that
time, or who has been within one (1) year prior to that time, an employee
of the Business, Buyer or any Affiliate of Buyer.
(c) For a period of *** after the Closing Date, neither Seller nor
any Member shall, and each of Seller and each Member shall cause its or
his Affiliates to not, engage or participate in any effort or act (i) to
solicit or induce any customer, supplier, associate, employee, sales or
other agent, independent contractor or other person that has a business
relationship with the Business, Buyer, or any Affiliate of Buyer within
the Territories, or which has been a customer, supplier, employee, sales
or other agent, independent contractor, or other person in a business
relationship with the Business, Buyer or any of Buyer's Affiliates within
the Territories within *** prior to that time to discontinue such
relationship with the Business, Buyer or Affiliate of Buyer that such
person or entity may have with the Business, Buyer, or Affiliate of Buyer,
or (ii) which might be disadvantageous to the Business, Buyer or Affiliate
of Buyer.
(d) Seller and each Member acknowledge that the damages that would
be suffered by Buyer as a result of any breach of the provisions of this
Section 5.2 may not be calculable and that an award of a monetary judgment
for such a breach would be an inadequate remedy. Consequently, Buyer shall
have the right, in addition to any other rights it may have, to obtain, in
any court of competent jurisdiction, injunctive relief to restrain any
breach or threatened breach of any provision of this Section 5.2 or
otherwise to specifically enforce any of the provisions hereof. This
remedy is in addition to damages directly or indirectly suffered by Buyer
or its Affiliate and reasonable attorneys fees.
(e) Each of Seller and each Member hereby acknowledges and agrees
that a part of the consideration for the agreements contained in this
Section 5.2 is the aggregate of the direct and indirect benefits that each
of Seller and each Member are receiving under this Agreement and the
Auxiliary Agreements, including but not limited to the Purchase Price paid
by Buyer. Each of Seller and each Member further acknowledges and agrees
that this Agreement contains reasonable limitations as to the time,
geographical area, and scope of activity to be restrained, and does not
impose a greater restraint than is
21
necessary to protect the goodwill and other legitimate business interests
of Buyer, the value of the Assets and the Business acquired by Buyer.
Therefore, each of Seller and each Member agrees that all restrictions are
fairly compensated for and that no unreasonable restrictions exist. In the
event that any court of competent jurisdiction finally determines that the
time period, scope or the geographic area of any covenant contained in
this Section 5.2 is unreasonable or excessive and any such covenant is to
that extent made unenforceable, the parties agree that the restrictions
contained in this Section 5.2 shall remain in full force and effect for
the greatest time period and scope and within the greatest geographic area
as is permissible without rendering such covenant unenforceable. The
parties intend that each of the covenants contained in Sections 5.2(a),
(b), (c) and (d) shall be deemed to constitute separate covenants. The
parties further agree that the consideration paid to the Seller hereunder
is paid for the benefit of each Member, that each Member will derive
substantial benefits therefrom and, therefore, the covenants contained in
this Section 5.2 are binding upon each Member.
(f) All of the covenants contained in this Section 5.2 shall be
construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of any of
Seller or any Member against Buyer, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by Buyer
of such covenants.
(g) Each of Seller and each Member agrees that the covenants
contained in this Section 5.2 are a material and substantial part of this
transaction.
(h) Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which it would
have no other adequate remedy, Buyer and each of Seller and each Member
agrees that, in the event of a breach by either of Seller or any Member of
any of the covenants contained in this Article 5, such covenant or
covenants may be enforced against each of Seller and each Member by
injunctions and restraining orders.
SECTION 5.3. TITLE INSURANCE. Within five (5) days from the execution of
this Agreement, Seller shall cause, at Buyer's expense, a survey of the Land to
be prepared and shall deliver to Buyer the survey and a title insurance
commitment (the "Title Commitment"). Buyer shall have five (5) business days
from the date of Seller's delivery of the later of the survey or the title
insurance commitment to object to any matter disclosed therein. Upon receipt of
Buyer's written objection, Seller shall have five (5) business days to correct
any matter so disclosed, except for liens to be discharged at Closing and ad
valorem taxes to be paid at Closing. If such items objected to are not cured
within such time or prior to Closing, whichever comes first, Buyer may terminate
this Agreement, or may elect to purchase the Assets. If Buyer fails to timely
object to any matter disclosed on the title insurance commitment, such matter
shall be deemed a Permitted Exception. Notwithstanding the foregoing, all
exceptions relating to the rights of tenants under leases, the rights of parties
in possession and visible and apparent easements shall be deleted; the standard
exceptions relating to encroachments and boundaries shall be deleted; and the
standard exception for taxes shall be limited to the year in which the Closing
Date occurs.
22
SECTION 5.4 AUDIT ASSISTANCE. Buyer, at its own cost and expense, may
engage external auditors to audit Seller's financial records relating to the
Business (including up to three years of historical data). Seller agrees to take
all commercially reasonable efforts, at Buyer's expense, to cooperate with any
such audit and to assist in the completion of such audit, including, without
limitation, by providing, executing and acknowledging all such documents that
are necessary to complete the audit (including having Seller's financial records
converted, for Buyer's use only, to accrual based accounting financials in
accordance with GAAP), and by making any representations regarding the Business
and Seller's financial records, as may be reasonably requested by Buyer or the
external auditors.
SECTION 5.5 SURVIVAL. Each of the covenants set forth in Sections 5.1, 5.3
and 5.4 shall survive the Closing, the transfer of the Assets, the Xxxx of Sale
and all other documents, instruments or agreements relating to the transactions
contemplated herein as set forth in Section 8.7. Each of the covenants set forth
in Section 5.2 shall survive the Closing, the transfer of the Assets, the Xxxx
of Sale and all other documents, instruments or agreements relating to the
transactions contemplated herein as set forth in Section 5.2.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 6.1 Buyer represents and warrants to the Seller that:
(a) Due Organization. Buyer is a duly organized and validly existing
Delaware limited liability company, duly qualified or authorized to carry
on its business in the places and in the manner as now conducted except
for where the failure to be so authorized, qualified or licensed would not
have a material adverse affect on its business.
(b) Execution. Subject to receipt of the approval of Buyer's Board
of Directors, (i) the execution, delivery and performance of this
Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite corporate action on the part of Buyer, and
(ii) this Agreement constitutes the legal, valid and binding obligation of
Buyer enforceable in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws of
general application relating to or affecting creditor's rights generally
and except for the limitations imposed by general principles of equity.
(c) Conformity with Law. Buyer has the power and right to enter into
and perform this Agreement and the transactions contemplated herein.
Neither Buyer's execution of this Agreement nor the consummation of the
transactions contemplated herein violate or conflict with (i) any law,
rule, regulation, ordinance or decree applicable to Buyer; (ii) any
provision of Buyer's Certificate of Organization or Limited Liability
Company Agreement; or (iii) any material agreement or instrument to which
Buyer is a party or by which it is bound.
SECTION 6.2 SURVIVAL. Each of the representations and warranties set forth
in this Article 6 shall survive the Closing and the transfer of the Assets.
ARTICLE 7. NON-ASSUMPTION OF LIABILITIES
23
SECTION 7.1 NON-ASSUMPTION OF LIABILITIES. Buyer does not assume and shall
not be responsible for any liabilities, indebtedness or obligations of the
Selling Parties or the Business other than the Assumed Obligations (as defined
herein). Without limiting the generality of the foregoing sentence, the Parties
hereby agree that except as expressly set forth in Section 7.2 hereof, Buyer
shall not, by the execution and performance of this Agreement or otherwise,
assume, become responsible for or incur any liability or obligation of any
nature of either Seller or any Member whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, whether arising out of occurrences prior to, at or after the
date of this Agreement, including, without limiting the generality of the
foregoing, any liability or obligation arising out of or relating to: (a) any
occurrence or circumstance (whether known or unknown) which occurs or exists on
or prior to the Closing Date and which constitutes, or which by the lapse of
time or giving notice (or both) would constitute, a breach or default under any
lease, contract, or other instrument or agreement (whether written or oral); (b)
any injury to or death of any person or damage to or destruction of any
property, whether based on negligence, breach of warranty, or any other theory
that occurs prior to the Closing; (c) a violation by Seller or any Member of any
Applicable Laws or the requirements imposed by any governmental authority or of
the rights of any third person, including, without limitation, any requirements
relating to the reporting and payment of federal, state, local or other income,
sales, use, franchise, excise or property tax liabilities of Seller; (d) the
generation, collection, transportation, storage or disposal by Seller of any
materials, including, without limitation, Hazardous Materials, prior to the
Closing Date; (e) an agreement or arrangement between Seller and its employees
or any labor or collective bargaining unit representing any such employees; (f)
the severance pay obligation of Seller or any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended) or any other fringe benefit program maintained or sponsored by
Seller or to which Seller contributes, or any contributions, benefits or
liabilities therefor, or any liability for the withdrawal or partial withdrawal
from or by reason of the termination of any such plan or program by Seller; (g)
indebtedness and all other obligations and liabilities of Seller to any bank or
other lender, except to the extent any such obligations or liability is an
Assumed Liability; (h) any liability or obligation arising as a result of or out
of any claim, legal or equitable action, proceeding or investigation pertaining
to or relating in any way to Seller initiated at any time, whether or not listed
on Schedule 4.1(h) (except for liabilities or obligations related to the
operation of the Business on or after the Closing Date, except for all such
liabilities or obligations arising out of facts and circumstances existing prior
to the Closing Date); (i) any liability, obligation, cost or expense related to
the Excluded Assets; (j) any liability, obligation, cost or expense related to
the Assets that arises out of acts or omissions of the Seller prior to the
Closing Date, including, without limitation, any liability, obligation, cost or
expense related to the environmental condition of the Assets prior to the
Closing Date; (k) the liabilities or obligations of Seller for brokerage or
other commissions relative to this Agreement or the transactions contemplated
hereunder; (l) any liability or obligation of Seller for taxes of any kind,
whether relating to periods before or after the Closing Date, or whether
incurred by Seller in connection with this Agreement, the Business or the
transactions contemplated hereby, except any taxes incurred in connection with
the operation of the Business by Buyer after the Closing; (m) any liability or
obligation to pay for any products, goods, raw materials or services delivered
or provided to Seller in respect of the Business or otherwise, except to the
extent such liability or obligation is an Assumed Liability; (n) any liability
or obligation of Seller under any guarantee
24
or any agreement to provide indemnification to any other person or entity; and
(o) any liability or obligation arising from the acts or omissions of Seller or
its Affiliates, representatives, agents or employees, except to the extent that
any such liability or obligation is an Assumed Obligation; (subsections (a)
through (o) above being referred to collectively as the "Retained Liabilities").
The Seller shall retain all of the Retained Liabilities. The assumption of the
Assumed Liabilities by Buyer hereunder shall not in any respect enlarge any
rights of third parties under contracts or arrangements with Buyer or Seller and
nothing herein shall prevent any party from contesting in good faith any of the
Assumed Liabilities with any third party. Seller agrees to indemnify Buyer and
its successors and assigns from and against any liabilities or obligations
related to any Retained Liabilities in accordance with Section 8.1 hereof.
SECTION 7.2 ASSUMPTION OF SPECIFIC LIABILITIES. At the Closing, Buyer
shall assume and shall thereafter pay, discharge and perform in the ordinary
course and without enlarging the rights of any third party, the liabilities and
obligations appearing in Schedule 7.2 and the following liabilities and
obligations (collectively, the "Assumed Obligations"):
(a) the Contracts, except that Buyer shall not be responsible for
any payments or the performance of any obligations under any such
Contracts which relate to periods prior to the Closing; and
(b) the leases listed on Schedule 7.2(b), except that Buyer shall
not be responsible for any payments under any such leases which relate to
periods prior to the Closing; and
(c) the liabilities and obligations related to the operation of the
Business after the Closing Date, except for all such liabilities and
obligations arising out of facts and circumstances existing prior to the
Closing Date.
ARTICLE 8. INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION BY SELLER AND EVERY MEMBER. Notwithstanding
any investigation at any time made by or on behalf of Buyer, Seller and every
Member, jointly and severally, agree to defend, indemnify and hold harmless
Buyer, and its officers, shareholders, directors, divisions, subdivisions,
affiliates, parent, employees, agents, successors, assigns and the Assets from
and against all losses, claims, actions, causes of action, damages, liabilities,
penalties, interest, expenses and other costs of any kind or amount whatsoever
(including, without limitation, reasonable attorneys' and accountants' fees and
other expenses), whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent,
which result, either before or after the Closing Date, from any:
(a) inaccuracy in any representation or warranty made by any of
Seller or any Member in this Agreement or pursuant hereto which materially
affects the operations or value of the Business;
(b) breach of any representation or warranty under this Agreement by
any of Seller or any Member in this Agreement or pursuant hereto which
materially affects the operations or value of the Business;
25
(c) failure of any of Seller or any Member to perform and observe
any term, provision, covenant, agreement or condition under this Agreement
or any other instrument contemplated by this Agreement, including, without
limitation, the covenants and agreements contained in Section 5.2 hereof;
(d) other than the Assumed Obligations, any liability of any of
Seller or any Member imposed upon Buyer (including, without limitation,
all liability for the generation, collection, transportation, storage or
disposal of any materials, including, without limitation, Hazardous
Materials, whether or not disclosed on Schedule 4.1(n) hereof);
(e) any misrepresentation in, or omission from, any Schedule to this
Agreement which materially affects the operations or value of the
Business;
(f) any liability, loss, cost, claim, damage or consequential damage
arising from the failure of any of Seller or any Member to provide notice
of, or obtain consent to, the Closing of the transactions contemplated
under this Agreement from a third party to a Customer Account or any other
material Contract related to the Business (including, without limitation,
reimbursement to Buyer of the value of such nonassigned Customer Account
or material Contract);
(g) any liability of any of Seller or any Member imposed upon Buyer
as a result of any of Seller or any Member's failure to qualify for an
exemption from, and obtain the protection afforded by compliance with, the
notification requirements of, the bulk transfer or sales laws in force in
such jurisdictions in which such laws may be applicable to any of Seller
or any Member or the transactions contemplated under this Agreement;
(h) any losses incurred by Buyer arising out of any liability of any
of Seller or any Member resulting from one or more pending or threatened
lawsuits, whether or not listed on Schedule 4.1(h);
(i) any liability to, or asserted by, any employee or former
employee of either Selling Party or beneficiary of any such employee or
former employee arising from events occurring on or prior to the Closing
Date or from any of Seller or any Member's alleged conduct on or prior to
the Closing Date;
(j) any liability of any of Seller or any Member to creditors of any
of Seller or any Member which liability is imposed on Buyer whether as a
result of bankruptcy proceedings or otherwise and whether as an account
payable by either Selling Party or as a claim of alleged fraudulent
conveyance or preferential payments within the meaning of the United
States Bankruptcy Code or otherwise;
(k) the existence of creditors of any of Seller or any Member which
relate to the Assets or the Business and which are not disclosed to Buyer
hereunder;
(l) all taxes of any of Seller or any Member for all taxable periods
(or parts thereof) ending on or before the Closing Date or otherwise
attributable to the operations, transactions, assets, or income of any of
Seller or any Member or its or his predecessors
26
on or prior to the Closing Date or otherwise attributable to any of Seller
or any Member as a result of the consummation of the transactions
contemplated hereunder, together with any expenses (including, without
limitation, settlement costs and any attorneys', accountants' and
consultants' fees and other expenses) incurred in connection with the
contesting, collection or assessment of such taxes; and
(m) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in this Section 8.1 had been
satisfied.
Buyer shall be deemed to have suffered such loss, claim, action, cause of
action, damage, liability, expense or other cost, or to have paid or to have
become obligated to pay any sum on account of the matters referred to in
subparagraphs (a) - (m) of this Section 8.1 if the same shall be suffered, paid
or incurred by Buyer, or any parent, subsidiary, affiliate, or successor of
Buyer, as applicable. The amount of the loss, claim, action, cause of action,
damage, liability, expense or other cost deemed to be suffered, paid or incurred
by Buyer shall be an amount equal to the loss, claim, action, cause of action,
damage, liability, expense or other cost suffered, paid or incurred by such
parent, subsidiary, affiliate, or successor.
SECTION 8.2 INDEMNIFICATION BY BUYER. Notwithstanding any investigation at
any time made by or on behalf of Buyer, Buyer agrees to defend, indemnify and
hold harmless Seller and each Member from and against all losses, claims,
actions, causes of action, damages, liabilities, expenses and other costs of any
kind or amount whatsoever (including, without limitation, reasonable attorneys'
fees), whether equitable or legal, matured or contingent, known or unknown,
foreseen or unforeseen, ordinary or extraordinary, patent or latent, which
result, either before or after the date of this Agreement, from any:
(a) inaccuracy in any representation or warranty made by Buyer in
this Agreement or pursuant hereto;
(b) breach of any representation or warranty made by Buyer under
this Agreement or pursuant hereto;
(c) failure of Buyer duly to perform and observe any term,
provision, covenant, agreement or condition under this Agreement or any
other instrument contemplated by this Agreement;
(d) misrepresentation in or omission from any of Buyer's Schedules
to this Agreement; and
(e) liabilities or obligations related to the operation of the
Business after the Closing Date, except for all such liabilities or
obligations arising out of facts and circumstances existing prior to the
Closing Date.
SECTION 8.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnified Party") shall promptly notify the party obligated to provide
indemnification (the "Indemnifying Party") of the claim and, when known, the
facts constituting the basis for such claim; provided, however, that the failure
to so notify the Indemnifying Party shall not relieve the Indemnifying Party of
its obligation hereunder to the extent such failure does not materially
prejudice the Indemnifying
27
Party. In the event of any claim for indemnification hereunder resulting from or
in connection with any claim or legal proceedings by a third-party, the notice
to the Indemnifying Party shall specify, if known, the amount or an estimate of
the amount of the liability arising therefrom.
SECTION 8.4 DEFENSE. In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to the Agreement, the Indemnifying Party at its sole
cost and expense and with counsel reasonably satisfactory to the Indemnified
Party may, upon written notice to the Indemnified Party, assume the defense of
any such claim or legal proceeding if (a) the Indemnifying Party acknowledges to
the Indemnified Party in writing, within fifteen days after receipt of notice
from the Indemnified Party, its obligations to indemnify the Indemnified Party
with respect to all elements of such claim, (b) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against such third-party claim and fulfill its indemnification obligations
hereunder, (c) the third-party claim involves only money damages and does not
seek an injunction or other equitable relief, and (d) settlement or an adverse
judgment of the third-party claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a pattern or practice adverse to the
continuing business interests of the Indemnified Party. The Indemnified Party
shall be entitled to participate in (but not control) the defense of any such
action, with its counsel and at its own expense; provided, however, that if
there are one or more legal defenses available to the Indemnified Party that
conflict with those available to the Indemnifying Party, or if the Indemnifying
Party fails to take reasonable steps necessary to diligently defend the claim
after receiving notice from the Indemnified Party that it believes the
Indemnifying Party has failed to do so, the Indemnified Party may assume the
defense of such claim; provided, further, that the Indemnified Party may not
settle such claim without the prior written consent of the Indemnifying Party,
which consent may not be unreasonably withheld. If the Indemnified Party assumes
the defense of the claim, the Indemnifying Party shall reimburse the Indemnified
Party for the reasonable fees and expenses of counsels retained by the
Indemnified Party and the Indemnifying Party shall be entitled to participate in
(but not control) the defense of such claim, with its counsel and at its own
expense. If the Indemnifying Party thereafter seeks to question the manner in
which the Indemnified Party defended such third-party claim or the amount or
nature of any such settlement, the Indemnifying Party shall have the burden to
prove by a preponderance of the evidence that the Indemnified Party did not
defend or settle such third-party claim in a reasonably prudent manner. The
parties agree to render, without compensation, to each other such assistance as
they may reasonably require of each other in order to insure the proper and
adequate defense of any action, suit or proceeding, whether or not subject to
indemnification hereunder.
SECTION 8.5 CERTAIN CLAIMS BY EACH MEMBER. Notwithstanding anything
contained in this Agreement, each Member hereby agrees that he will not make any
claim for indemnification against Buyer by reason of the fact that he was a
member, manager, director, officer, shareholder, employee or agent of Seller, or
was serving at the request of Seller as a member, manager, director, officer,
shareholder, employee or agent of another entity, whether such claim is for
judgment, damages, penalties, fines, costs, amounts paid in settlement, losses,
expenses or otherwise or whether such claim is made pursuant to any statute,
charter document, bylaw, agreement or otherwise, with respect to any action,
lawsuit, proceeding, complaint, claim or
28
demand brought by Buyer against each such Member pursuant to or arising under
this Agreement.
SECTION 8.6 INTEREST. Any amount of money owed by an Indemnifying Party to
an Indemnified Party hereunder shall be paid with interest, at an annual rate
equal to the prime rate most recently published in the Southwestern Edition of
the Wall Street Journal as the "prime rate" (the "Prime Rate") from the date
that the loss or damage was sustained or cash disbursement made by the
Indemnified Party until such amount is paid by the Indemnifying Party. All
indemnification payments hereunder shall be effected by payment of cash or
delivery of a certified or official bank check in the amount of the
indemnification liability.
SECTION 8.7 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. This
Agreement, including, but not limited to, all covenants, warranties and
representations contained herein, shall survive the Closing and the Xxxx of
Sale, and all other documents, instruments or agreements relating to the Assets
and the transactions contemplated herein, and shall not be deemed merged therein
and shall terminate *** following the Closing; provided, however, that the
covenants set forth in Section 5.2 shall survive as more fully set forth
therein.
SECTION 8.8 CAP ON LOSSES. The aggregate amount of Loss (under this
Agreement together with the Auxilliary Agreements) suffered by Buyer, on the one
hand, and Seller and the Members, jointly, on the other hand, shall in all
events be limited to ***.
ARTICLE 9. GENERAL
SECTION 9.1 FURTHER ASSURANCES. From time to time after the Closing, each
of Seller and each Member will, without further consideration, execute and
deliver such other instruments of conveyance and transfer, and take such other
action as Buyer reasonably may request to more effectively convey and transfer
to and vest in Buyer and to put Buyer in possession of the Assets to be
transferred hereunder, and in the case of contracts and rights, if any, which
cannot be transferred effectively without the consents of third parties, to
endeavor to obtain such consents promptly, and if any be unobtainable, to use
their best efforts to provide Buyer with the benefits thereof in some other
manner. Each of Seller and each Member will cooperate and use their commercially
reasonable best efforts to have the present officers, directors and employees of
Seller and any employees of BRC, LLC cooperate with Buyer after the Closing in
furnishing information, evidence, testimony and other assistance in connection
with any actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods on and prior to the Closing.
SECTION 9.2 JOINT AND SEVERAL OBLIGATIONS. All representations, warranties
and agreements of Seller and each Member under this Agreement, the Schedules and
the transactions contemplated hereby shall be joint and several.
SECTION 9.3 NO WAIVER. Except as otherwise provided herein, 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
29
any similar breach or default occurring later; not shall any waiver of any
single breach or default be deemed a waiver of any other breach of default
occurring before or after that waiver.
SECTION 9.4 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
SECTION 9.5 NOTICE. All notices or communications required or permitted
under this Agreement shall be given in writing and served either by personal
delivery, overnight courier or by deposit in the United States mail and sent by
first class registered or certified mail, return receipt requested, postage
prepaid:
If to the Seller or any
Member: Xxx Xxxxxxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxx Xxxxxx Xxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxx, P.C.
0000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to Buyer: WCA of Alabama, L.L.C.
Xxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, President
with a copy to: WCA Waste Corporation
Xxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxx Xxxxxx, Vice President & General Counsel
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three days after deposit in the U.S. mail as provided above, or when actually
received, if earlier. Either party may change the address for notices or
communications to be given to it by written notice to the other party given as
provided in this Section.
SECTION 9.6 ENTIRE AGREEMENT. This Agreement, and the Exhibits, Schedules
hereto, Auxiliary Agreements, and the other agreements referred to herein (all
of which the parties hereto acknowledge are in writing), constitute the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
SECTION 9.7 BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto
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and their respective executors, administrators, heirs, legal representatives,
successors and permitted assigns. Neither Seller nor any Member may delegate or
assign any of its or his respective duties or obligations hereunder, save and
except that Seller and the Members may assign their rights hereunder to a
qualified intermediary for purposes of consummating a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended. Buyer
will use its commercially reasonable best efforts to assist Seller, at Seller's
expense, with Seller's 1031 election. Buyer may assign this Agreement without
the consent of any of Seller or any Member; provided, however, that the assignee
under such assignment shall agree to assume the obligations of the assignor
under this Agreement.
SECTION 9.8 [INTENTIONALLY OMITTED]
SECTION 9.9 EXPENSES OF TRANSACTION. Seller and each Member shall pay all
costs and expenses incurred by them in connection with this Agreement and the
transactions contemplated hereby and thereby, including, without limitation, the
fees and expenses of the Seller's and each Member's attorneys and accountants
and will make all necessary arrangements so that the Assets will not be charged
with or diminished by any such cost or expense. Buyer shall pay all costs and
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby and thereby, including without limitation, the fees and
expenses of its attorneys and accountants, survey, title search and policy, and
permit and transfer fees.
SECTION 9.10 BROKER'S COMMISSION. Seller and each Member represents and
warrants to Buyer, and Buyer represents and warrants to each of Seller and each
Member, that the warranting party has had no dealings with any dealer, broker or
agent so as to entitle such dealer, broker or agent to a commission or fee in
connection with the sale of the Assets to Buyer hereunder. If for any reason any
commission or fee shall become due, the party dealing with such dealer, broker
or agent shall pay such commission or fee and agrees to indemnify and save the
other party harmless from all claims for such commission or fee and from all
attorneys' fees, litigation costs and other expense relating to such claim.
SECTION 9.11 MODIFICATION; REMEDIES CUMULATIVE. This Agreement may not be
changed, amended, terminated, augmented, rescinded or otherwise altered, in
whole or in part, except by a writing executed by all of the parties hereto. No
right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
SECTION 9.12 SEVERABILITY. In case 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 to most
nearly 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.
SECTION 9.13 DUE DILIGENCE INVESTIGATION; KNOWLEDGE. All representations
and warranties contained herein that are made to the knowledge of a party shall
require that such party make reasonable investigation and inquiry with respect
thereto to ascertain the correctness and validity thereof. Without limiting the
foregoing sentence, when any fact is stated to be "to the knowledge of the
Selling Parties" or "to the best of each Selling Party's knowledge," such
31
reference shall mean actual knowledge or knowledge which would have been
reasonably derived in the ordinary course of Seller's Business.The
representations, warranties and covenants of each Selling Party shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of Buyer, or its respective representatives.
SECTION 9.14 SCHEDULES. The Schedules set forth in the Agreement shall be
attached hereto and made a part hereof for all purposes on or before Closing,
and no party shall be deemed to be in violation hereof because no schedules are
attached hereto, unless and until such Schedules are not attached before the
close of business on such date. Buyer reserves the right to object to any
information contained in the Schedules and to terminate this Agreement in the
event that such information substantially impairs the value of the Assets or the
Business.
SECTION 9.15 TERMINATION. This Agreement may be terminated at any time
prior to Closing:
(a) by the written agreement of Buyer and Seller;
(b) by Buyer by written notice to Seller if the representations and
warranties of Seller or any Member shall not have been true and correct in
all material respects as of the date when made or on the Closing Date, or
Seller or any Member has breached in a material respect its covenants
hereunder;
(c) by Seller by written notice to Buyer if the representations and
warranties of Buyer shall not have been true and correct in all material
respects as of the date when made, or Buyer has breached in a material
respect its covenants hereunder; or
(d) by either party if Closing shall not have occurred on or before
September 30, 2004 (or such later Closing date to which the parties may
agree in writing); provided, however, that this Agreement may not be so
terminated by a party then in breach of its representations, warranties,
or covenants herein.
(e) In the event of the termination of this Agreement pursuant to
the provisions of this Section 9.15, this Agreement shall become void and
have no effect, without any liability to any person in respect hereof or
of the transactions contemplated hereby on the part of any Party hereto,
or any of its directors, officers, employees, agents, consultants,
representatives, advisers, managers, members, Members or affiliates,
except for any liability resulting from such Party's breach of this
Agreement. Notwithstanding the foregoing, in the event of a termination of
this Agreement pursuant to Section 9.15(b) herein, the Xxxxxxx Money shall
be fully refundable to Buyer. If this Agreement is terminated for any
other reason, then the Xxxxxxx Money, together with interest thereon,
shall be retained by Seller and the Members as liquidated damages and not
as a penalty. Negotiation of the Xxxxxxx Money by any of Seller or any
Member shall operate as a complete release of all claims against Buyer
arising out of this Agreement. Buyer and Seller shall each be responsible
for the costs incurred by third parties, on such Party's behalf, except as
otherwise allocated by this Agreement.
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SECTION 9.16 ALLOCATION OF CERTAIN EXPENSES.
(a) All Allocable Expenses (as defined below) shall be prorated
between pre-Closing and post-Closing periods, and between the Seller and
the Buyer, based on the number of days elapsed, unless it is otherwise
evident on the face of an invoice or xxxx that a particular item, service
or expense is specifically attributable to a period before or after the
Closing. Allocation and settlement of all Allocable Expenses paid by the
parties shall be made within ninety (90) days following the Closing Date.
(b) "Allocable Expenses" means and includes operating expenses of
the Business benefiting or attributable to a period beginning before and
ending after the Closing Date. Examples of Allocable Expenses include
items such as rent, electricity, water, gas and telephone service,
advertising, equipment rental, maintenance expenses, and the like.
"Allocable Expenses" shall not include payroll expense, insurance expense,
interest expense or any other expense attributable solely to the operation
of the Assets or the conduct of the Business by the Seller, nor any
property taxes or assessments prorated at Closing.
SECTION 9.17 GOVERNING LAW, JURISDICTION, VENUE AND WAIVER OF TRIAL BY
JURY. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ALABAMA AND
ANY AND ALL RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF ALABAMA AND NO OTHER JURISDICTION. IF ANY DISPUTE ARISES OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR THE TERMINATION THEREOF, OR THE RELATIONSHIP
CREATED BY OR DESCRIBED IN THIS AGREEMENT, THE PARTIES AGREE TO BRING SUIT UPON
ALL SUCH MATTERS THEN IN DISPUTE ONLY IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF ALABAMA OR, IF SAID COURT LACKS DIVERSITY JURISDICTION,
IN THE CIRCUIT COURT FOR MOBILE COUNTY, ALABAMA. THE PARTIES HERETO SHALL AND
HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY ANY OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE RELATIONSHIP OF THE
PARTIES CREATED BY THIS AGREEMENT, THE USE OR OCCUPANCY OF THE PROPERTY, AND/OR
ANY CLAIM OF BREACH, INJURY OR DAMAGE.
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SECTION 9.18 CERTAIN DEFINITIONS.
"Actual Working Capital Adjustment" means the difference (which may be
positive or negative) between the calculation set forth in Section 2.4(b) and
the amount of the Working Capital Adjustment estimated and used at the Closing
pursuant to Section 2.4(a).
"Affiliate" means (a) any entity directly or indirectly controlled by,
controlling or under common control with a Party; (b) any director or executive
officer of such party or of any entity referred to in (a) above; and (c) if any
Party in (a) above is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any person or entity who is controlled by any such member
or trust. For purposes of this definition, any person or entity which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
10% or more of the partnership or other ownership interests of any entity (other
than as a limited partner of such other entity) will be deemed to "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") such entity or person.
"Current Assets" has the meaning assigned to it under GAAP, except that
the Accounts Receivable shall be reduced for collectability pursuant to the
following formula: (i) all Accounts Receivable that are 60 days old or less as
of the Closing Date shall be credited ***; (ii) all the Accounts Receivable that
are between 61 and 90 days old as of the Closing Date shall be credited ***;
(iii) all the Accounts Receivable that are between 91 and 120 days old as of the
Closing Date shall be credited ***; and (iv) any Accounts Receivable that are
more than 120 days old as of the Closing Date shall ***; provided, however, that
no reduction shall be made with respect to any particular Accounts Receivable to
the extent of the allowance for doubtful accounts recorded therefor.
"Current Liabilities" has the meaning assigned to it under GAAP.
"GAAP" means generally accepted accounting principles.
SECTION 9.19 CONTRACT INTERPRETATION; CONSTRUCTION OF AGREEMENT.
(a) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Article, Section, Exhibit, Schedule,
preamble, Premises and party references are to this Agreement unless
otherwise stated.
(b) Each party hereto acknowledges that each party was actively
involved in the negotiation and drafting of this Agreement and, therefore,
no party, nor its respective counsel, shall be deemed the drafter of this
Agreement for purposes of construing the
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provisions of this Agreement, and all language in all parts of this
Agreement shall be construed in accordance with its fair meaning, and not
strictly for or against any party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
BUYER:
WCA OF ALABAMA, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President
SELLER:
XXXXXX RECYCLING, LLC,
a Alabama limited liability company
By: /s/ Xxx Xxxxxxxxx /s/ Xxxxx Xxxxxx
--------------------------------------
Its: Member Member
MEMBERS:
/s/ Xxxxx Xxxxxx
-------------------------------------
XXXXX XXXXXX
/s/ Xxx Xxxxxxxxx
-------------------------------------
XXX XXXXXXXXX
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