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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
Dated as of October 22, 1998, by and among
Waste Connections, Inc.
WCI Acquisition Corporation I
WCI Acquisition Corporation II
WCI Acquisition Corporation III
WCI Acquisition Corporation IV
Xxxxxx'x Disposal Company, Inc.
American Disposal Company, Inc.
X. X. Disposal Co., Inc.
Tacoma Recycling Company, Inc.
The Xxxxxx Trust
Xxxxxx X. Xxxxxxx
and
Xxxxxxx X. Xxxxxx
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TABLE OF CONTENTS
1. MERGERS2
1.1 The Mergers. 2
1.2 Effective Time2
1.3 Effects of the Mergers 2
1.4 Articles of Incorporation and Bylaws of the
Surviving Corporation 2
1.5 Directors 3
1.6 Officers 3
1.7 Closing Time and Place 3
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES;
DISSENTING SHARES 3
2.1 Merger Consideration 3
2.2 Allocation of Aggregate WCI Stock 4
2.3 Conversion of Capital Stock 4
2.4 Exchange of Certificates. 5
2.5 Distributions; Right to Vote5
2.6 No Further Ownership Rights in Any
Corporations' Stock 6
2.7 Lost Certificates 6
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS
AND THE SHAREHOLDERS 6
3.1 Organization, Standing and Qualification 6
3.2 Capitalization7
3.3 No Change in Stock Ownership and Other Pooling
Representations 7
3.4 Authority for Agreement and Filed Plans 7
3.5 No Breach or Default 8
3.6 Subsidiaries 9
3.7 Financial Statements 9
3.8 Liabilities 9
3.9 Accurate and Complete Records 10
3.10 Permits and Licenses 11
3.11 Certain Receivables 13
3.12 Fixed Assets and Real Property 13
3.13 Related Party Transactions 14
3.14 Contracts and Agreements; Adverse Restrictions 15
3.15 Insurance 15
3.16 Personnel 16
3.17 Benefit Plans and Union Contracts 16
3.18 Taxes 18
3.19 Copies Complete; Required Consents 18
3.20 Customers, Xxxxxxxx, Current Receipts and
Receivables 19
3.21 No Change With Respect to the Corporations 19
3.22 Balance Sheet Date Debt; Balance Sheet Date
Current Assets and Balance Sheet Date Current
Liabilities 21
3.23 Bank Accounts 22
3.24 Compliance With Laws 22
3.25 Powers of Attorney 24
3.26 Underground Storage Tanks 24
3.27 Patents, Trademarks, Trade Names, etc. 25
3.28 Assets, etc. Necessary to Business 26
3.29 Condemnation 26
3.30 Suppliers and Customers 26
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3.31 Absence of Certain Business Practices 26
3.32 No Misleading Statements 27
3.33 Brokers; Finders 27
3.34 S Corporation Matters27
3.35 Registration Statements 27
3.36 Accredited Investors.27
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER
SUBS 27
4.1 Existence and Good Standing 28
4.2 No Contractual Restrictions 28
4.3 Authorization of Agreement 28
4.4 Status of Shares 28
4.5 Governmental Authorities; Consents 29
4.6 SEC Documents 29
4.7 Capital Stock 30
4.8 No Misleading Statements 30
4.9 Brokers; Finders 30
4.10 Disclosure Schedules 30
5. COVENANTS OF THE CORPORATIONS AND THE SHAREHOLDERS
PRIOR TO EFFECTIVE TIME 30
5.1 Access; Confidential Information. 30
5.2 Operations. 31
5.3 No Change. 32
5.4 Obtain Consents. 34
5.5 No Change in Relative Ownership. 34
5.6 Control of the Corporations' Operations. 34
5.7 Acquisition Transactions. 34
5.8 Xxxxxx Trust Approval. 34
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI AND THE
MERGER SUBS. TO CLOSE 35
6.1 Representations and Warranties. 35
6.2 Conditions. 35
6.3 No Material Adverse Change. 35
6.4 Certificates. 35
6.5 No Litigation.35
6.6 Other Deliveries. 35
6.7 Governmental Approvals. 35
6.8 Consents to Transfer.36
6.9 Opinion of Independent Public Accountants. 36
6.10 WCI Shareholders Approval. 36
6.11 NASDAQ Listing. 36
6.12 HSR Waiting Period. 36
6.13 Registration Statements. 36
6.14 Dissenting Shares. 36
6.15 Title Insurance. 36
6.16 Termination of Employment Agreements 37
6.17 LeMay Agreement 37
6.18 All Mergers to Occur 37
6.19 Disposal Arrangements37
6.20 Xxxxxx Trust Approval37
6.21 Real Estate Due Diligence 37
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE
CORPORATIONS AND THE SHAREHOLDERS TO CLOSE 37
7.1 Representations and Warranties 37
7.2 Conditions 38
7.3 No Material Adverse Change. 38
7.4 Certificate. 38
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7.5 No Litigation.38
7.6 Other Deliveries. 38
7.7 Consents to Transfer.38
7.8 NASDAQ Listing. 38
7.9 HSR Waiting Period. 38
7.10 Registration Statements. 38
7.11 Governmental Approvals. 39
7.12 Opinion of Independent Public Accountants. 39
7.13 LeMay Agreement 39
7.14 All Mergers to Occur 39
7.15 Tax Matters 39
7.16 Disposal Arrangements39
7.17 Xxxxxx Trust Approval. 39
8. CLOSING DELIVERIES 40
8.1 WCI Deliveries40
8.2 Shareholders' Deliveries 40
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS AND
THE SHAREHOLDERS 41
9.1 Release of Guaranties41
9.2 Release of Security Interests 42
9.3 Confidentiality 42
9.4 Brokers and Finders Fees 42
9.5 Taxes 42
9.6 Short Year Tax Returns 42
9.7 Matters Related to Pooling. 43
9.8 Representation Letter43
9.9 WCI Shareholders' Approval 43
9.10 Nasdaq Listing. 44
9.11 Agreement to Cooperate. 44
9.12 Notification of Certain Matters. 45
9.13 Corrections to Registration Statements and
Proxy Statement. 45
10. INDEMNIFICATION 45
10.1 Indemnification Covenants 45
10.2 Limitations on Indemnities 47
10.3 Notice of Indemnity Claim 49
10.4 Survival of Representations and Warranties.51
10.5 No Exhaustion of Remedies or Subrogation; Right
of Set Off 51
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND
WCI 51
11.1 Restrictive Covenants51
11.2 Rights and Remedies Upon Breach 53
11.3 Termination Date. 55
11.4 Effect of Termination56
11.5 Corrections to Schedules 56
12. GENERAL57
12.1 Additional Conveyances 57
12.2 Assignment 57
12.3 No Waiver Relating to Claims for Fraud 57
12.4 Counterparts 58
12.5 Notices58
12.6 Disclosure Schedules 58
12.7 Knowledge 58
12.8 Attorneys' Fees 59
12.9 Applicable Law59
12.10 Payment of Fees and Expenses59
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12.11 Incorporation by Reference 59
12.12 Captions 59
12.13 Number and Gender of Words 60
12.14 Entire Agreement 60
12.15 Waiver 60
12.16 Construction 60
13. GLOSSARY 60
EXHIBIT AND SCHEDULE LIST
Exhibit 1.2 Filed Plan
Exhibit 6.19 Disposal Agreement
Exhibit 8.1(b) Employment Agreements
Exhibit 8.1(c) Opinion of Counsel for WCI
Exhibit 8.1(f) Common Stock Agreement
Exhibit 8.2(b) Opinion of Counsel for Shareholders
Exhibit 8.2(g) Affiliate Letter
Schedule 3.2 Authorized Capital of Corporations
Schedule 3.3 Pooling Affiliates of the
Corporations
Schedule 3.5 No Breach or Default
Schedule 3.6 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8 Liabilities
Schedule 3.10(a) Permits and Licenses
Schedule 3.10(b) Records, Notifications and
Reports
Schedule 3.10(c) Facilities
Schedule 3.11 Certain Receivables
Schedule 3.12(a) Fixed Assets
Schedule 3.12(b) Corporate Property
Schedule 3.13 Related Party Transactions
Schedule 3.14(a) Material Contracts and
Agreements
Schedule 3.14(b) Adverse Judicial Restrictions
Schedule 3.14(c) Adverse Contractual Restrictions
Schedule 3.15 Insurance
Schedule 3.16 Personnel
Schedule 3.17(a) Benefit Plans
Schedule 3.17(b) Union Contracts, Agreements and
Labor Disputes
Schedule 3.17(c) Golden Parachute Payments
Schedule 3.18 Taxes
Schedule 3.19 Copies Complete
Schedule 3.20 Customers, Xxxxxxxx, Current Receipts
and Receivables
Schedule 3.21 No Change
Schedule 3.22(a) Balance Sheet Date Debt
Schedule 3.22(b) Balance Sheet Date Current
Assets and Liabilities
Schedule 3.23(a) Bank Accounts
Schedule 3.23(b) Credit Card Accounts
Schedule 3.24 Compliance with Laws
Schedule 3.26 Underground Storage Tanks
Schedule 3.27 Patents, Trademarks, Trade Names,
Etc.
Schedule 3.29 Condemnation Proceedings
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Schedule 3.30 Suppliers and Customers
Schedule 3.34 S Corporation Matters
Schedule 5.3 Changes in Compensation
Schedule 9.1 Release of Guaranties
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 22, 1998,
is entered into by and among Waste Connections, Inc., a Delaware
corporation ("WCI"), WCI Acquisition Corporation I, a Washington
corporation ("Merger Sub. I"), WCI Acquisition Corporation II, a
Washington corporation ("Merger Sub. II"), WCI Acquisition
Corporation III, a Washington corporation ("Merger Sub. III"),
WCI Acquisition Corporation IV, a Washington corporation
("Merger Sub. IV" and collectively with Merger Sub. I, Merger
Sub II. and Merger Sub. III, the "Merger Subs." and individually
without designation a "Merger Sub."), Xxxxxx'x Disposal Company,
Inc., a Washington corporation ("MDC"), American Disposal
Company, Inc., a Washington corporation ("AD"), X. X. Disposal
Co., Inc., a Washington corporation ("DM"), Tacoma Recycling
Company, Inc. ("TR" and collectively with MDC, AD and DM, the
"Corporations" and individually without designation a
"Corporation"), The Xxxxxx Trust UTA August 5, 1993, as amended
(the "Xxxxxx Trust"), Xxxxxx X. Xxxxxxx ("Xxxxxx") and Xxxxxxx
X. Xxxxxx ("Xxxxxxx" and collectively with the Xxxxxx Trust,
Xxxxxx and, on compliance with Section 5.8 of this Agreement,
the Xxxxxx Trust (as defined below), the "Shareholders" and
individually without designation a "Shareholder").
WHEREAS, MDC, AD and DM are engaged in the collection and
transport of solid waste and recyclables in State of Washington,
and TR is engaged in the recycling business in the State of
Washington;
WHEREAS, the Xxxxxx Trust, Xxxxxx and Xxxxxxx own all of
the issued and outstanding capital stock of MDC and AD , and the
Xxxxxx Trust, the Xxxxxx X. Xxxxxx Revocable Trust UTA August 5,
1993, as amended (the "Xxxxxx Trust"), Xxxxxx and Xxxxxxx own
all of the issued and outstanding capital stock of DM and TR,
all as set forth on Schedule 3.2;
WHEREAS, at the Closing on the Closing Date (as defined
below), WCI will contribute as a capital contribution to Merger
Sub. I, Merger Sub. II, Merger Sub. III and Merger Sub. IV
sufficient shares of WCI Common Stock, $0.01 par value (the "WCI
Stock"), to consummate the transactions contemplated by this
Agreement in exchange for all of the outstanding capital stock
of Merger Sub. I, Merger Sub. II, Merger Sub. III and Merger
Sub. IV;
WHEREAS, Merger Sub. I, Merger Sub. II, Merger Sub. III and
Merger Sub. IV will use such shares of WCI Stock to effect the
merger of Merger Sub. I into MDC, the merger of Merger Sub. II
into AD, the merger of Merger Sub. III into DM, and the merger
of Merger Sub. IV into TR in accordance with the terms and
subject to the conditions of this Agreement (individually, a
"Merger" and collectively, the "Mergers") in a transaction that
qualifies as a pooling of interests under generally accepted
accounting principles and as a tax-free reorganization under
section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and
covenants herein contained, the parties hereto, each intending
to be bound hereby, agree as follows:
1. MERGERS
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1.1 The Mergers. In accordance with the
Washington Business Corporation Act (the "Washington Law"), at
the Effective Time (as defined in Section 1.2), Merger Sub. I
shall be merged with and into MDC, Merger Sub. II shall be
merged with and into AD, Merger Sub. III shall be merged with
and into DM and Merger Sub. IV shall be merged with and into TR,
in a transaction intended to qualify as tax-free reorganizations
under Section 368(a) of the Code and a "pooling of interests"
under generally accepted accounting principles. Immediately
following each Merger, the separate existence of each of the
applicable Merger Subs. shall cease and the applicable
Corporation into which such Merger Sub. (each, a "Surviving
Corporation" and collectively the "Surviving Corporations")
merged shall continue to exist under and be governed by the
Washington Law as a direct, wholly-owned subsidiary of WCI.
1.2 Effective Time . As soon as practicable
after the date of this Agreement (the "Signing Date") and the
satisfaction or waiver of all of the conditions to the Mergers,
at the Closing (as defined in Section 1.7), the parties shall
cause the Mergers to be consummated by causing separate Plans of
Merger (the "Filed Plans") substantially in the form of Exhibit
1.2 to be executed and filed in accordance with the relevant
provisions of the Washington Law. Each Merger shall become
effective at the time specified in the Filed Plans related to
such Merger, which specified time shall be the same in each of
the Filed Plans (the "Effective Time").
1.3 Effects of the Mergers . The Mergers shall
have the effect set forth in Section 23B.11.060 of the
Washington Law. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights,
privileges, powers and franchises of each Merger Sub. shall vest
in the respective Surviving Corporation into which it is merged,
and all debts, liabilities and duties of each Corporation and
each Merger Sub. shall become the debts, liabilities and duties
of the respective Surviving Corporation in the same manner as if
the applicable Surviving Corporation had itself incurred them.
All rights of creditors and all liens upon the property of each
Merger Sub. shall thereafter be preserved unimpaired.
1.4 Articles of Incorporation and Bylaws of the
Surviving Corporation . The Articles of Incorporation of
each of the Corporations, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the
respective Surviving Corporations, until thereafter amended in
accordance with the provisions thereof and applicable law. The
Bylaws of each of the Corporations in effect at the Effective
Time shall be the Bylaws of the respective Surviving
Corporations until amended in accordance with the provisions
thereof and applicable law.
1.5 Directors . The directors of the Merger
Subs. immediately prior to the Effective Time shall be the
directors of the respective Surviving Corporations and shall
hold office until their respective successors are duly elected
and qualified, or their earlier death, resignation or removal.
The Board of Directors of WCI shall take such action as may be
necessary to cause a nominee of the Shareholders to be elected
to WCI's Board of Directors effective as of the Effective Time
with a term of office expiring at WCI's annual meeting of
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stockholders in 2001.
1.6 Officers . The officers of Merger Subs.
immediately prior to the Effective Time of each Merger shall be
the officers of the respective Surviving Corporations and shall
hold office until their respective successors are duly elected
and qualified, or their earlier death, resignation or removal.
1.7 Closing Time and Place . Subject to the
terms and conditions of this Agreement, the closing of the
transactions contemplated herein (the "Closing") shall take
place as promptly as practicable (but in any event within five
business days) following the date on which the last of the
conditions set forth in Sections 6 and 7 is fulfilled or waived,
or on such other date as WCI and the Corporations shall agree
(the "Closing Date"). The Closing shall take place at the law
offices of Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, Suite 500, 0000 0xx
Xxx., Xxxxxxx, Xxxxxxxxxx 00000. At the Closing, WCI, the
Merger Subs., the Corporations and the Shareholders shall
deliver to each other the documents, instruments and other items
described in Section 8 of this Agreement. At the election of
WCI and the Corporations, the Closing may take place through an
exchange of consideration and documents using overnight courier
service or facsimile.
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES;
DISSENTING SHARES
2.1 Merger Consideration . The aggregate
merger consideration (the "Aggregate Merger Consideration") is
two million seven hundred fifty thousand (2,750,000) shares of
WCI Stock (the "Aggregate WCI Stock"), subject to adjustment as
follows: (i) the number of shares of Aggregate WCI Stock issued
in the Mergers shall be reduced by one share for each $20.50 by
which the Balance Sheet Date Debt (as hereinafter defined)
exceeds six million dollars ($6,000,000); and (ii) if the
closing price of WCI Stock as quoted on the NASDAQ Stock Market
on the last trading day before the Closing Date (the "Closing
Price") is less than $20.50, then as of the Effective Time the
number of shares of Aggregate WCI Stock to be issued in the
Mergers shall be increased by fifty five thousand five hundred
fifty five (55,555) shares for each whole dollar by which the
Closing Price is less than $20.50 but more than $15.99 and by
eighty three thousand three hundred thirty three and one-third
(83,333 1/3) shares for each whole dollar by which the Closing
Price is less than $13.00 but more than $9.99, and shall be
proportionately increased for any such amount less than one
whole dollar, provided that no more than two hundred fifty
thousand (250,000) additional shares shall be issued if the
Closing Price is less than $16.00 but more than $13.00 and
provided further in no event shall the number of Aggregate WCI
Shares to be issued in the Mergers exceed three million two
hundred fifty thousand (3,250,000) shares. The Closing Price
and the number of shares of WCI Stock to be delivered after the
Effective Time shall be appropriately adjusted in the event of
any change in WCI Stock between the Signing Date and the
Effective Time, including without limitation any stock dividend,
stock split, reverse stock split, recapitalization,
reorganization, merger or consolidation. WCI shall not be
obligated to issue any fractional shares of WCI Stock, but
instead the Shareholders shall be paid cash in lieu of any
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fractional share equal to the Closing Price multiplied by the
fraction of a share of WCI Stock that would otherwise have been
issued to such Shareholder. The Shares shall be covered by one
or more Registration Statements on Form S-4 (the "Registration
Statements"), each of which is effective under the Securities
Act of 1933 (the "Act") as of the Signing Date. The shares of
Aggregate WCI Stock shall be freely tradable, subject to the
restrictions set forth in Section 9.7 and in the Affiliate
Letter (as hereinafter defined). WCI shall maintain the
Registration Statements effective for resales of the WCI Stock
received by the Shareholders for a period of one year after the
Effective Time pursuant to the terms of the Common Stock
Agreement (as hereinafter defined).
2.2 Allocation of Aggregate WCI Stock . The
percentage of the Aggregate WCI Stock to be received by the
Shareholders of each Corporation upon conversion of the
Corporations' Stock shall be as follows: 42% to MDC, 13% to AD,
28% to DM and 17% to TR.
2.3 Conversion of Capital Stock . As of the
Effective Time, by virtue of the Mergers and without any action
on the part of the holder thereof:
(a) All of the shares of common stock of each
Merger Sub. issued and outstanding immediately prior to the
Effective Time shall be converted into and become the number of
fully-paid and nonassessable shares of common stock of the
Surviving Corporation into which the Merger Sub. is merging as
shall equal the number of shares of the common stock of such
Corporation (individually, the "Corporation's Stock" and
collectively the "Corporations' Stock") issued and outstanding
immediately prior to the Effective Time.
(b) Subject to Section 2.7, the aggregate shares
of each Corporation's Stock issued and outstanding immediately
prior to the Effective Time shall be converted into a portion of
the Aggregate WCI Stock. The actual conversion ratio for each
Merger shall be set forth in the Filed Plans for that Merger.
2.4 Exchange of Certificates.
(a) After the Effective Time, WCI shall deliver
to the Shareholders in accordance with this Section 2
certificates representing the Shares of WCI Stock issuable
pursuant to Section 2.3(b) in exchange for issued and
outstanding shares of each Corporation's Stock as contemplated
by that Section. The WCI Stock into which each Corporation's
Stock shall be converted pursuant to each Merger shall be deemed
to have been issued at the Effective Time.
(b) At the Closing, each Shareholder shall
deliver to WCI certificates evidencing the shares of
Corporations' Stock owned by such Shareholder that are to be
converted pursuant to Section 2.3(b) into the right to receive
WCI Stock (for each Corporation, the "Corporation's
Certificates" and collectively for all Corporations, the
"Corporations' Certificates"). Promptly after the Effective
Time, each Shareholder who has surrendered the Corporation's
Certificates registered in the name of such Shareholder to WCI,
together with such documents as WCI shall reasonably request,
shall be entitled to receive in exchange therefor certificates
representing that number of shares (rounded down to the nearest
whole number) of WCI Stock which such Shareholder has the right
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to receive as a result of such Merger pursuant to this Section 2
(together with any cash in lieu of fractional shares of WCI
Stock pursuant to Section 2.7). Each of the Corporation's
Certificates so surrendered shall be canceled immediately after
the Effective Time. Until surrendered as contemplated by this
Section 2.4, each of the Corporations' Certificates shall be
deemed canceled as of the Effective Time and at any time after
the Effective Time shall be deemed to represent only the right
to receive upon such surrender (i) the certificates representing
shares of WCI Stock as contemplated by this Section 2.4, (ii) a
cash payment in lieu of any fractional shares of WCI Stock as
contemplated by Section 2.1 and (iii) any dividends or
distributions with a record date after the Effective Time
theretofore paid or payable with respect to WCI Stock as
contemplated by Section 2.5.
2.5 Distributions; Right to Vote . Dividends
and other distributions declared or made after the Effective
Time with respect to WCI Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered
Corporations' Certificates with respect to the WCI Stock
represented thereby. Further, the holder of any unsurrendered
Corporations' Certificates shall have the right to vote with
respect to the WCI Stock represented thereby on all matters on
which the shareholders of WCI vote after the Effective Time.
2.6 No Further Ownership Rights in Any Corporations'
Stock . All shares of WCI Stock issued upon the surrender
for exchange of shares of the Corporations' Stock in accordance
with the terms hereof (including any cash paid pursuant to
Section 2.5 or 2.1) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of such
Corporations' Stock, and, at and after the Effective Time, there
shall be no further registration of transfers on the stock
transfer books of the Surviving Corporations of shares of the
Corporation's Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, any of the
Corporation's Certificates are presented to the applicable
Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Section 2.
2.7 Lost Certificates . In the event any of
the Corporations' Certificates shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Shareholder claiming such certificate to be lost, stolen or
destroyed, WCI will issue in exchange for such lost, stolen or
destroyed certificate the shares of WCI Stock (and any dividends
or distributions with respect thereto pursuant to Section 2.5
and any cash pursuant to Section 2.1) deliverable in respect
thereof as determined in accordance with Section 2.4. When
authorizing such payment in exchange for any lost, stolen or
destroyed Corporations' Certificate, the Shareholder to whom the
WCI Stock is to be issued shall, as a condition precedent to the
issuance thereof, give WCI a bond satisfactory to WCI in such
sum as it may direct or otherwise indemnify WCI in a manner
reasonably satisfactory to WCI against any claim that may be
made against WCI or the Surviving Corporation with respect to
the Certificate alleged to have been lost, stolen or destroyed.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS AND
THE SHAREHOLDERS
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Each Corporation, severally as to itself, and the
Shareholders, jointly and severally as to each Corporation of
which they are shareholders, represent and warrant that each of
the following representations and warranties is true as of the
Signing Date and will be true as of the Closing Date.
3.1 Organization, Standing and Qualification .
Each of the Corporations is duly organized, validly existing and
in good standing under the laws of the State of Washington. Each
of the Corporations has full corporate power and authority to
own and lease its properties and to carry on its business as now
conducted. None of the Corporations is required to be qualified
or licensed to conduct business as a foreign corporation in any
other jurisdiction.
3.2 Capitalization . Schedule 3.2 sets forth,
as of the Signing Date, the authorized and outstanding capital
of each of the Corporations, the names, addresses and social
security numbers or taxpayer identification numbers of the
record and beneficial owners thereof, the number of shares so
owned, and the allocation of the Aggregate Merger Consideration
and the shares of the Aggregate WCI Stock among the
Shareholders. All of the issued and outstanding shares of the
capital stock of each Corporation are as of the Signing Date,
and will be as of the Effective Time, owned of record and
beneficially by the Shareholders, as set forth in Schedule 3.2,
and are as of the Signing Date, and will be as of the Effective
Time, free and clear of all liens, security interests,
encumbrances and claims of every kind except as set forth in
Schedule 3.2. Each share of the capital stock of each of the
Corporations is duly and validly authorized and issued, fully
paid and nonassessable, and was not issued in violation of any
preemptive rights of any past or present shareholder of any of
the Corporations. No option, warrant, call, conversion right or
commitment of any kind (including any of the foregoing created
in connection with any indebtedness of any of the Corporations)
exists which obligates any of the Corporations to issue any of
its authorized but unissued capital stock or other equity
interest or which obligates any Shareholder to transfer any
Corporations' Stock to any person, except as set forth on
Schedule 3.2.
3.3 No Change in Stock Ownership and Other Pooling
Representations . Since January 1, 1996, no Corporation
has acquired any of its own stock. Neither the voting stock
structure of any Corporation, nor the relative ownership of
shares among any of their respective Shareholders has been
altered or changed within two years preceding the Signing Date.
No Corporation has ever been a subsidiary or division of another
corporation nor been a part of an acquisition that was later
rescinded. No Corporation has any treasury stock. The
statements relating to the Corporations in the representation
letter to be delivered to Ernst & Young LLP pursuant to Section
9.8 will be true and correct as of the date such letter is
executed and delivered by the Corporations and the Shareholders.
Upon consummation of the Mergers, WCI will acquire or have the
right to lease all of the assets of the Corporations necessary
to the conduct of the business of the Corporations as conducted
on the Signing Date and all assets owned, directly or
indirectly, by the Shareholders and used or involved in the
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business of collecting and transporting solid waste, operating
the solid waste transfer stations owned by the Corporations, and
recycling. None of the Corporations nor any of their Affiliates
has taken or agreed or intends to take any action or has any
knowledge of any fact or circumstance that is reasonably likely
to prevent any Merger from qualifying as a reorganization within
the meaning of section 368(a) of the Code or would prevent any
Merger from being treated for financial accounting purposes as a
pooling of interests. Schedule 3.3 identifies all persons who,
to the knowledge of the Corporations and the Shareholders, may
be deemed to be "affiliates" ("Pooling Affiliates") of the
Corporations, as that term is used in Accounting Series Releases
No. 130 and No. 135 of the Securities and Exchange Commission
("SEC").
3.4 Authority for Agreement and Filed Plans .
MDC and AD have obtained, and on approval of this Agreement
solely by the Xxxxxx Trust (the "Xxxxxx Trust Approval") DM and
TR will have obtained, the approval of the percentage of the
holders of the outstanding Corporation's Stock of each
Corporation required by Section 23B.11.030 of the Washington Law
(the "Corporations' Shareholders Approval"). Subject, in the
case of DM and TR, to obtaining the Xxxxxx Trust Approval, the
Corporations and the Shareholders have full right, power and
authority to enter into this Agreement and to perform its, his
or her obligations hereunder. Subject, in the case of DM and
TR, to obtaining the Xxxxxx Trust Approval, the Corporations
have full right, power and authority to enter into the Filed
Plans and to perform their respective obligations thereunder.
The execution and delivery of this Agreement and the Filed Plans
by the Corporations and the consummation of the transactions
contemplated hereby by the Corporations have been duly
authorized by each of the Corporations' Board of Directors.
This Agreement has been duly and validly executed and delivered
by the Corporations and the Shareholders other than the Xxxxxx
Trust and, subject to the due authorization, execution and
delivery by WCI, the Merger Subs. and the Xxxxxx Trust,
constitutes the legal, valid and binding obligations of the
Corporations and the Shareholders, other than the Xxxxxx Trust,
enforceable against the Corporations and such Shareholders in
accordance with its terms. Subject, in the case of DM and TR,
to obtaining the Xxxxxx Trust Approval, when executed and
delivered by the Xxxxxx Trust, this Agreement will have been
duly and validly executed and delivered by the Xxxxxx Trust and,
subject to the due authorization, execution and delivery by WCI
and the Merger Subs., will constitute the legal, valid and
binding obligation of the Xxxxxx Trust, enforceable against the
Xxxxxx Trust in accordance with its terms. When executed and
delivered by the Corporations, the Filed Plans will have been
duly and validly executed and delivered by the Shareholders and,
subject to the due authorization, execution and delivery by WCI
and the Merger Subs., will constitute the legal, valid and
binding obligation of the Corporations, enforceable against the
Corporations in accordance with their respective terms.
3.5 No Breach or Default . Except as disclosed
on Schedule 3.5, the execution and delivery by the Corporations
and the Shareholders of this Agreement and the Filed Plans, and
the consummation by the Corporations and the Shareholders of the
14
transactions contemplated hereby and thereby, will not:
(a) Result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any
party from any obligation under, any mortgage, lease, note,
bond, indenture, or material contract, agreement, license or
other instrument or obligation of any kind or nature to which
any of the Corporations or any of the Shareholders is a party,
or by which any of the Corporations or any of the Shareholders,
or any of the Corporations' or the Shareholders' assets, is or
may be bound or affected; or
(b) Violate any law or any order, writ,
injunction or decree of any court, administrative agency or
governmental authority, or require the approval, consent or
permission of any governmental or regulatory authority
applicable to the Corporations or the Shareholders; or
(c) Violate the Articles of Incorporation or
Bylaws of any of the Corporations.
3.6 Subsidiaries . Schedule 3.6 lists as of
the Signing Date any and all subsidiaries of the Corporations
and any securities of any other corporation or any securities or
other interest in any other business entity owned by the
Corporations or any of the Corporations' subsidiaries.
3.7 Financial Statements . The Corporations
have delivered to WCI, as Schedule 3.7, copies of combined
financial statements ("Financial Statements") for the
Corporations' three most recent fiscal years and interim
financial statements for the Corporations for the period ended
September 30, 1998 (the "Balance Sheet Date"). Such financial
combined statements (other than the interim financial
statements) have been audited by Ernst & Young LLP. In the
opinion of Ernst & Young LLP, the Financial Statements for the
three most recent fiscal years present fairly, in all material
respects, the financial positions of the respective Corporations
as at the end of such fiscal years and the results of their
operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles, and
neither the Corporations nor the Shareholders have any knowledge
that such opinion is incorrect. The interim Financial
Statements are correct and complete and fairly present the
financial position of each of the Corporations as of Balance
Sheet Date, and the results of operations for the period then
ended, subject to normal year-end adjustments. Except to the
extent reflected or reserved against in any of the Corporations'
balance sheets as of the Balance Sheet Date, or as disclosed on
Schedule 3.7 or Schedule 3.8, none of the Corporations had as of
the Balance Sheet Date, nor will any of the Corporations have as
of the Closing Date, any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due other than
liabilities incurred in the ordinary course of business since
the Balance Sheet Date.
3.8 Liabilities . Parts I, II, III and IV of
Schedule 3.8, are accurate lists and descriptions of all
liabilities of each of the Corporations required to be described
below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the
15
Balance Sheet Date, all indebtedness for money borrowed and all
other fixed and uncontested liabilities of any kind, character
and description (excluding Balance Sheet Date Debt (as defined
in Section 3.22(a)) and all real and personal property leasehold
interests included in Part IV of Schedule 3.8), whether
reflected or not reflected on the Financial Statements and
whether accrued or absolute, and states as to each such
liability the amount of such liability and to whom payable.
From the Balance Sheet Date through the Signing Date, trade
payables have been incurred only in the ordinary course of
business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists, as of the
Signing Date, all claims, suits and proceedings which are
pending against any of the Corporations and, to the knowledge of
the Corporations and the Shareholders, all contingent
liabilities and all claims, suits and proceedings threatened or
anticipated against any of the Corporations. Part II of
Schedule 3.8 includes a summary description of each such
liability, including, without limitation, (A) the name of each
court, agency, bureau, board or body before which any such
claim, suit or proceeding is pending, (B) the parties to such
claim, suit or proceeding, (C) the amount claimed and other
relief sought, and (D) whether such claims are covered by
insurance and whether any insurance carrier has undertaken
defense of such claims subject to a reservation of rights,
together with copies of all material documents, reports and
other records relating thereto to the extent that they are in
any of the Corporations' or a Shareholder's possession or
control.
(c) Part III of Schedule 3.8 lists, as of the
Signing Date and to the extent not otherwise included in Part I
of Schedule 3.8 or Schedule 3.22(a), all liens, claims and
encumbrances secured by or otherwise affecting any asset of any
of the Corporations (including any Corporate Property, as
hereafter defined), including a description of the nature of
such lien, claim or encumbrance, the amount secured if it
secures a liability, the nature of the obligation secured, and
the party holding such lien, claim or encumbrance.
(d) Part IV of Schedule 3.8 lists, as of the
Signing Date and to the extent not otherwise included in Part I
or Part III of Schedule 3.8 or Schedule 3.22(a), all real and
material personal property leasehold interests to which any of
the Corporations is a party as lessor or lessee or, to the
knowledge of any of the Corporations or a Shareholder, affecting
or relating to any Corporate Property, and includes a
description of the nature and principal terms of such leasehold
interest, including, without limitation, the identity of the
other party thereto, the term of such leasehold interest
(including renewal options), the base rent and any additional
rent owing thereunder (including any adjustments thereto),
security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule
3.8, neither any of the Corporations nor any of the Shareholders
has made any payment or committed to make any payment since the
Balance Sheet Date on or with respect to any of the liabilities
or obligations listed on Schedule 3.8 or Schedule 3.22(a)
16
except, in the case of liabilities and obligations listed on
Parts I, III and IV of Schedule 3.8 and Balance Sheet Date Debt,
periodic payments required to be made under the terms of the
agreements or instruments governing such obligations or
liabilities or made in the ordinary course of business.
3.9 Accurate and Complete Records . The
corporate minute books, stock ledgers, books, ledgers, financial
records and other records of the Corporations:
(a) Have been made available to WCI and its
agents (which for this purpose includes Ernst & Young LLP) at
the respective Corporations' offices or at the offices of WCI's
attorneys or the respective Corporations' attorneys;
(b) Have been, in all material respects,
maintained in accordance with all applicable laws, rules and
regulations, except that annual meetings of shareholders and
directors were not held in each year of the existence of each of
the Corporations; and
(c) Are accurate and complete and reflect either
by general or specific resolution all material corporate
transactions authorized by the Board of Directors and/or
shareholders of the Corporations.
3.10 Permits and Licenses .
(a) Schedule 3.10(a) is a full and complete
list, and includes copies, of all material permits, licenses,
franchises and service agreements pursuant to which each of the
Corporations is authorized to collect and haul industrial,
commercial and residential solid waste (the "Collection
Franchises"), and of all other material permits, licenses,
titles (excluding motor vehicle titles and current
registrations), fuel permits, zoning and land use approvals and
authorizations, including, without limitation, any conditional
or special use approvals or zoning variances, occupancy permits,
and any other similar documents constituting a material
authorization or entitlement or otherwise material to the
operation of the business of each of the Corporations
(collectively the "Governmental Permits") owned by, issued to,
held by or otherwise benefiting one or more of the Corporations
or the Shareholders as of the Signing Date. The status of the
Governmental Permits related to the disposal areas owned or
operated by the Corporations, including, without limitation, any
conditions thereto and, if applicable, the expiration dates
thereof, are also described in Schedule 3.10(a). Schedule
3.10(a) also sets forth the name of any governmental agency or
other third party from whom the Shareholders, the Corporations
or WCI must obtain consent (the "Required Governmental
Consents") in order to effect a direct or indirect transfer of
the Collection Franchises or other Governmental Permits required
as a result of the consummation of the transactions contemplated
by this Agreement. Except for any filings by the Corporations
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx"), the filing of the Filed Plans with the
Secretary of State of Washington in connection with the Mergers
and the Required Governmental Consents, no declaration, filing
or registration with, or notice to, or authorization, consent or
approval or permit of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this
Agreement or the Filed Plans by any Corporation or the
17
consummation by any Corporation of the transactions contemplated
hereby or thereby. Except as set forth on Schedule 3.10(a), all
of the Collection Franchises and other Governmental Permits
enumerated and listed on Schedule 3.10(a) are valid and in full
force and effect and have been duly obtained, no other
Collection Franchises or Governmental Permits or other
agreements are required to operate the business of any of the
Corporations or any Corporate Property as presently operated,
and there are no proceedings pending or, to the knowledge of the
Corporations or the Shareholders, threatened which may result in
the revocation, cancellation, suspension or adverse modification
of any of the same. Neither any of the Corporations nor any of
the Shareholders has any knowledge of any reason why all such
Collection Franchises and Governmental Permits will not remain
in effect for the period or term stated therein, subject to
WCI's full compliance therewith, after consummation of the
transactions contemplated hereby.
(b) Schedule 3.10(b) includes (i) all
notifications, reports, permit and license applications (other
than items included in Schedule 3.10(a)), engineering and
geologic studies, and environmental impact reports, tests or
assessments applicable to Corporate Property (collectively,
"Records, Notifications and Reports") that are material to the
operation of the business of each of the Corporations, and (A)
relate to the discharge or release of materials into the
environment and/or the handling or transportation of waste
materials or hazardous or toxic substances or otherwise relate
to the protection of the public health or the environment, or
(B) were filed with or submitted to appropriate governmental
agencies during the 24 months prior to the Signing Date by any
of the Corporations or the Shareholders or their agents with
respect to the business of any of the Corporations, and (ii) all
material notifications from such governmental agencies to the
Corporations, the Shareholders or their agents in response to or
relating to any of such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists each facility owned,
leased, operated or otherwise used by the Corporations, the
ownership, lease, operation or use of which is being transferred
to, assumed by or otherwise acquired directly or indirectly by
WCI pursuant to this Agreement (each, a "Facility" and
collectively, the "Facilities"). Except as otherwise disclosed
on Schedule 3.10(c):
(i) Each Facility owned by any of the
Corporations or owned by any of the Shareholders or an Affiliate
(as hereinafter defined) of any of the Shareholders and leased
to one of the Corporations is fully licensed, permitted and
authorized to carry on its current business under all applicable
federal, state and local statutes, orders, approvals, zoning or
land use requirements, rules and regulations, and, none of such
Facilities or the current use thereof constitutes a non-
conforming use or is otherwise subject to any restrictions
regarding the operation, renovation or reconstruction thereof,
except for restrictions of general application under applicable
laws, rules and regulations. To the knowledge of the
Corporations and the Shareholders, no Facility that is leased by
any of the Corporations from a non-Affiliate or the current use
thereof constitutes a material non-conforming use or is
18
otherwise subject to any material restrictions regarding the
operation, renovation or reconstruction thereof, except for
restrictions of general application under applicable laws, rules
and regulations.
(ii) To the knowledge of the Corporations
and the Shareholders, there are no circumstances, conditions or
reasons which will cause the revocation or suspension of any
Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or
approvals relating to any Facility owned by any of the
Corporations or owned by any of the Shareholders or an Affiliate
of any of the Shareholders and leased to any of the
Corporations, and to the knowledge of the Corporations and the
Shareholders there are no circumstances, conditions or reasons
which will cause the revocation or suspension of any site
assessment, permits, licenses, consents, authorizations, zoning
or land use permits, variances or approvals relating to any
Facility leased by any of the Corporations from a third party
who is not an Affiliate of the Shareholders.
3.11 Certain Receivables . Schedule 3.11 is an
accurate list as of the Signing Date of the accounts and notes
receivable of the Corporations from and advances to employees,
former employees, officers, directors, the Shareholders and
Affiliates of the foregoing which have not been repaid. For
purposes of this Agreement, the term "Affiliate" means, with
respect to any person, any person that directly or indirectly
through one or more intermediaries controls or has an ownership
interest in, or is controlled or owned in whole or in part by,
or is under common control or ownership in whole or in part with
such person, and in the case of a corporation includes its
directors and officers, in the case of individuals includes the
individual's spouse, father, mother, grandfather, grandmother,
brothers, sisters, children and grandchildren and in the case of
a trust includes the grantors, trustees and beneficiaries of the
trust.
3.12 Fixed Assets and Real Property .
(a) Schedule 3.12(a) lists, as of the Signing
Date, substantially all the fixed assets (other than real estate
included in Corporate Property (as defined below)) of the
Corporations, including, without limitation, identification of
each vehicle by description and serial number, identification of
machinery, equipment and general descriptions of parts, supplies
and inventory. Except as described on Schedule 3.12(a), all of
the Corporations' containers, vehicles, machinery and equipment
necessary for the operation of the Corporations' businesses are
in operable condition, ordinary wear and tear excepted, and all
of the motor vehicles and other rolling stock of the
Corporations are in material compliance with all applicable
laws, rules and regulations. All leases of such fixed assets
are in full force and effect and binding upon the parties
thereto; neither any of the Corporations nor, to the knowledge
of the Corporations or any of the Shareholders, any other party
to such leases is in breach of any of the material provisions
thereof.
(b) Each parcel of real property leased, owned
or being purchased by any of the Corporations as of the Signing
Date (the "Corporate Property"), including the street address
19
thereof, is listed on Schedule 3.12(b), and attached to said
Schedule 3.12(b) are copies of all leases, deeds, outstanding
mortgages, other encumbrances and any existing title insurance
policies or lawyer's title opinions relating to each Corporate
Property. At least twenty (20) days prior to the Closing Date,
the Corporations shall deliver to WCI a current commitment for
title insurance issued by a title insurance company satisfactory
to WCI (the "Title Reports") with respect to each Corporate
Property owned or being purchased by any of the Corporations or
leased by the Corporations at 0000 00xx Xxxxxx, Xxxx,
Xxxxxxxxxx, together with copies of all of the title exceptions
referred to in each such commitment. All leases listed on
Schedule 3.12(b) are in full force and effect and binding on the
parties thereto; neither any of the Corporations nor any other
party to any such lease that is an Affiliate of any of the
Corporations or any of the Shareholders, nor, to the knowledge
of the Corporations and the Shareholders, any other party to any
such lease is in breach of any of the material provisions
thereof; to the knowledge of the Corporations and the
Shareholders, the landlord's interest in each such lease has not
been assigned to any third party nor, except as provided in
Schedule 3.12(b), has any such interest been mortgaged, pledged
or hypothecated; and none of the Corporations has assigned any
such lease or sublet all or any part of the Corporate Property
which is the subject of any such lease. Except as described on
Schedule 3.12(b), to the knowledge of the Corporations and the
Shareholders, there are no material physical or mechanical
latent defects not apparent on visual inspection in any Facility
located on any Corporate Property.
(c) Each of the Corporations has or prior to the
Closing will have good, valid and marketable title to, or the
right to lease, all of its properties and assets, real,
personal, and mixed, tangible and intangible, actually used or
necessary for the conduct of its business, free of any
encumbrance or charge of any kind except: (i) liens for current
taxes not yet due; (ii) minor imperfections of title and
encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the use of the property
subject thereto, and do not materially impair the value of the
Corporations; (iii) the liens identified on Parts I and III of
Schedule 3.8 and Schedule 3.22(a); and (iv) such other
covenants, conditions, easements, reservations and restrictions
of record as appear on the Title Reports (collectively, the
"Permitted Liens"). Except as described on Schedule 3.12(b),
there are no leases, occupancy agreements, options, rights of
first refusal or any other agreements or arrangements, either
oral or written, that create or confer in any person or entity
the right to acquire, occupy or possess, now or in the future,
any Facility, any Corporate Property, or any portion thereof, or
create in or confer on any person or entity any right, title or
interest therein or in any portion thereof.
3.13 Related Party Transactions . Except as
disclosed on Schedule 3.13, none of the Shareholders or their
respective Affiliates has entered into any transaction with or
is a party to any agreement, lease or other instrument, or as of
the date of this Agreement is indebted to or is owed money by,
any of the Corporations not disclosed or reflected in the
20
Financial Statements. Except as disclosed on Schedule 3.13,
none of the Shareholders or their Affiliates owns any direct or
indirect interest of any kind in, or controls or is a director,
officer, employee, shareholder or partner of, or consultant or
lender to or borrower from or has the right to participate in
the profits of, any Person which is a competitor, supplier,
customer, landlord, tenant, creditor or debtor of the
Corporations, other than interests as a record or beneficial
owner of less than five percent (5%) of a class of capital stock
of a corporation listed on a national securities exchange or on
the NASDAQ Stock Market.
3.14 Contracts and Agreements; Adverse Restrictions.
(a) Schedule 3.14(a) lists, as of the Signing
Date, and includes copies of, all material contracts and
agreements (other than leases and documents included with
Schedule 3.12(b) and contracts and agreements that are listed on
other Schedules to this Agreement) to which each of the
Corporations is a party or by which it or any of its property is
bound. Except as disclosed on Schedule 3.14(a) or such other
Schedules, all such contracts and agreements included in
Schedule 3.14(a) or such other Schedules are in full force and
effect and binding upon the parties thereto. Except as
described or cross referenced on Schedule 3.14(a) or such other
Schedules, none of the Corporations nor, to the Corporations' or
any Shareholder's knowledge, any other parties to such contracts
and agreements is in breach thereof; and to the Corporation's or
any Shareholder's knowledge none of the parties has threatened
to breach any of the material provisions thereof or notified the
Corporations or any of the Shareholders of a default thereunder,
or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b),
there is no outstanding judgment, order, writ, injunction or
decree against any of the Corporations, the result of which
could materially adversely affect any of the Corporations or its
business or any of the Corporate Properties, nor has any of the
Corporations been notified that any such judgment, order, writ,
injunction or decree has been requested.
(c) Except as set forth on Schedule 3.14(c),
none of the Corporations is a party to any agreement which
(i) purports to restrict or prohibit in any material respect any
of them or any Affiliate corporation from, directly or
indirectly, engaging in any business currently engaged in by the
Corporations or any Affiliate corporation or (ii) would restrict
or prohibit WCI or any subsidiary of WCI from engaging in such
business. None of the Corporations' officers, directors or key
employees is a party to any agreement which, by virtue of such
person's relationship with any Corporation, restricts in any
material respect any Corporation or any Affiliate of any
Corporation from, directly or indirectly, engaging in any such
business.
3.15 Insurance . Schedule 3.15 is a complete
list, and includes copies, as of the Signing Date, of all
insurance policies in effect on the Signing Date or, with
respect to "occurrence" policies that were in effect, carried by
any of the Corporations in respect of the Corporate Properties
or any other property used by the Corporations specifying, for
each policy, the name of the insurer, the type of risks insured,
21
the deductible and limits of coverage, and the annual premium
therefor. During the last five years, there has been no lapse
in any material insurance coverage of any of the Corporations.
For each insurer providing coverage for any of the contingent or
other liabilities listed on Schedule 3.8, except to the extent
otherwise set forth in Part II of Schedule 3.8, each such
insurer, if required, has been properly and timely notified of
such liability, no reservation of rights letters have been
received by any of the Corporations and the insurer has assumed
defense of each suit or legal proceeding. To the knowledge of
the Corporations and the Shareholders, all such proceedings are
fully covered by insurance, subject to normal deductibles.
3.16 Personnel . Schedule 3.16 is a complete
list, as of the Signing Date, of all officers, directors and
employees (by type or classification) of each of the
Corporations and their respective rates of compensation,
including (i) the portions thereof attributable to bonuses, (ii)
any other salary, bonus, stock option, equity participation, or
other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with non-
union officers, directors and employees. Schedule 3.16 also
lists the driver's license number for each driver of each of the
Corporations' motor vehicles. Except as set forth on Schedule
3.16, all written or oral employment contracts with employees of
the Corporations are terminable "at will" without payment of
severance or other benefits (including, without limitation,
stock options or other rights to obtain equity in the
Corporations).
3.17 Benefit Plans and Union Contracts .
(a) Schedule 3.17(a) is a complete list as of
the Signing Date, and includes copies (or, in the case of oral
arrangements, descriptions) of, all employee benefit plans and
agreements (written or oral) currently maintained or contributed
to by each of the Corporations (other than union contracts and
agreements between a Corporation and any collective bargaining
group ("Union Contracts")), including employment agreements and
any other agreements containing "golden parachute" provisions,
retirement and welfare benefit plans (including those provided
for in or pursuant to all Union Contracts) and deferred
compensation agreements, together with copies of such plans,
agreements and any trusts related thereto, and classifications
of employees covered thereby as of the Signing Date. Except for
the employee benefit plans described on Schedule 3.17(a), none
of the Corporations has any other pension, retirement, welfare,
profit sharing, deferred compensation, stock option, employee
stock purchase or other employee benefit plans or arrangements
with any party other than those arising under a Union Contract.
Except as disclosed on Schedule 3.17(a), all employee benefit
plans listed on Schedule 3.17(a) are fully funded and in
substantial compliance with all applicable federal, state and
local statutes, ordinances and regulations. Except as disclosed
on Schedule 3.17(a), all such plans that are intended to qualify
under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such
determination letters are included as part of Schedule 3.17(a).
Except as disclosed on Schedule 3.17(a), all reports and other
documents required to be filed with any governmental agency or
22
distributed to plan participants or beneficiaries (including,
but not limited to, actuarial reports, audits or tax returns)
under such plans (other than plans provided for in or pursuant
to all Union Contracts) have been timely filed or distributed,
and copies thereof for the period from January 1, 1996, to the
Signing Date, are included as part of Schedule 3.17(a). All
employee benefit plans listed on such Schedule other than those
provided for in or pursuant to Union Contracts have been
operated substantially in accordance with the terms and
provisions of the plan documents and all related documents and
policies. None of the Corporations has incurred any liability
for excise tax or penalty due to the Internal Revenue Service or
U.S. Department of Labor nor any liability to the Pension
Benefit Guaranty Corporation for any employee benefit plan, and
none of the Corporations and, to the knowledge of the
Corporations and the Shareholders, no party-in-interest or
disqualified person, has engaged in any transaction or other
activity which would give rise to such liability. None of the
Corporations has participated in or made contributions to any
"multi-employer plan" as defined in the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor would any of the
Corporations or any Affiliate be subject to any withdrawal
liability with respect to such a plan if any such employer
withdrew from such a plan immediately prior to the Effective
Time. No employee pension benefit plan listed on Schedule 3.17
is under funded on a termination basis as of the date of this
Agreement.
(b) Schedule 3.17(b) is a complete list, and
includes copies, of all Union Contracts. Except as set forth on
Schedule 3.17(b), each of the Corporations is in compliance in
all material respects with all Union Contracts and all
applicable federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages
and hours, and nondiscrimination in employment, and none of the
Corporations is engaged in any unfair labor practice. Except as
set forth on Schedule 3.17(b), there is no charge pending or, to
any of the Corporations' or any Shareholder's knowledge,
threatened, against any of the Corporations before any court or
agency and alleging unlawful discrimination in employment
practices and there is no charge of or proceeding with regard to
any unfair labor practice against any of the Corporations
pending before the National Labor Relations Board. There is no
labor strike, dispute, slow down or stoppage as of the Signing
Date, existing or to the knowledge of the Corporations or the
Shareholders threatened, against any of the Corporations; no
union organizational activity exists respecting employees of any
of the Corporations who are not currently subject to a Union
Contract, and Schedule 3.17(b) contains a list of all
arbitration or grievance proceedings that have occurred since
the Balance Sheet Date. No one is now petitioning for union
representation of any employees of any of the Corporations who
are not currently subject to a Union Contract. Except as set
forth on Schedule 3.17(b), none of the Corporations has
experienced any labor strike, slow-down, work stoppage or labor
difficulty during the last five years.
(c) Except as set forth on Schedule 3.17(c), no
payment made to any employee, officer, director or independent
23
contractor of any of the Corporations (the "Recipient") pursuant
to any employment contract, severance agreement or other
arrangement (the "Golden Parachute Payment") will be
nondeductible by any of the Corporations because of the
application of Sections 280G and 4999 of the Code to the Golden
Parachute Payment, nor will any of the Corporations be required
to compensate any Recipient because of the imposition of an
excise tax (including any interest or penalties related thereto)
on the Recipient by reason of Sections 280G and 4999 of the
Code.
3.18 Taxes .
(a) Each of the Corporations has timely filed or
will timely file all requisite federal, state, local and other
tax and information returns due for all fiscal periods ended on
or before the Closing Date. All such returns are accurate and
complete. Except as set forth on Schedule 3.18, there are no
open years (other than those within the statute of limitations),
examinations in progress, extensions of any statute of
limitations or claims against any of the Corporations relating
to federal, state, local or other taxes (including penalties and
interest) for any period or periods prior to and including the
Signing Date and no notice of any claim for taxes has been
received that remains open. Copies of (i) any tax examinations,
(ii) extensions of statutory limitations, and (iii) the federal
income tax returns of each of the Corporations for its last
three fiscal years, are attached as part of Schedule 3.18. The
Corporations are not required to file state income tax returns
or to pay state income tax. Copies of all other federal, state,
local and other tax and information returns for all prior years
of each of the Corporations' existence have been made available
to WCI and are among the records of each of the Corporations
that will accrue to WCI at the Closing. Except as set forth in
Schedule 3.18, none of the Corporations has been contacted by
any federal, state or local taxing authority regarding a
prospective examination.
(b) Except as set forth on Schedule 3.18 (which
schedule also includes the amount due with respect to each of
the Corporations) each of the Corporations has duly paid all
taxes and other related charges required to be paid prior to the
Signing Date. The reserves for taxes contained in the Financial
Statements of each of the Corporations are adequate to cover its
tax liability as of the Signing Date.
(c) Each of the Corporations has withheld all
required amounts from its employees for all pay periods in full
and complete compliance with the withholding provisions of
applicable federal, state and local laws. All required federal,
state and local and other returns with respect to income tax
withholding, social security, and unemployment taxes have been
duly filed by the Corporations for all periods for which returns
are due, and the amounts shown on all such returns to be due and
payable have been paid in full.
3.19 Copies Complete; Required Consents .
Except as disclosed on Schedule 3.19, the certified copies of
the Articles of Incorporation and Bylaws of the Corporations, as
amended to the Signing Date, and the copies of all leases,
instruments, agreements, licenses, permits, certificates or
other documents that have been delivered to WCI in connection
24
with the transactions contemplated hereby are complete and accurate as of the
Signing Date and are true and correct copies of the originals thereof. Except
as specifically disclosed on Schedule 3.19, the rights and benefits of the
Corporations under such leases, instruments, agreements, licenses, permits,
certificates or other documents will not be materially adversely affected by the
transactions contemplated hereby. None of such leases, instruments, agreements,
licenses, permits, site assessments, certificates or other documents requires
notice to, or consent or approval of, any governmental agency or other third
party to any of the transactions contemplated hereby, except the Required
Governmental Consents and such consents and approvals as are listed on Schedule
3.19.
3.20 Customers, Xxxxxxxx, Current Receipts and Receivables . The Corporations
have made available to WCI a current, accurate and complete list, or computer
disk listing, customers that each of the Corporations serves on an ongoing
basis, including name, location and current billing rate, as of the Balance
Sheet Date and an accurate and complete aging of all accounts and notes
receivable from customers as of the Balance Sheet Date, showing amounts due in
30-day aging categories. Except to the extent of the allowance for bad debts
reflected on the Financial Statements or otherwise disclosed on Schedules 3.11
and 3.20, to the knowledge of the Corporations and the Shareholders, each of the
Corporations' accounts and notes receivable are collectible in the amounts shown
on Schedules 3.11 and 3.20. Schedule 3.20 includes the average monthly revenues
of each of the Corporations derived from xxxxxxxx to its customers for the
twelve months preceding the Signing Date. Except as set forth on Schedule 3.20,
none of the Corporations nor any of the Shareholders has knowledge of any fact
(other than general economic and industry conditions) which indicates that any
of the Corporations' average monthly revenues derived from xxxxxxxx to its
customers after the Closing Date should not continue at approximately the same
rate as before the Closing Date.
3.21 No Change With Respect to the Corporations . Except as set forth on
Schedule 3.21, since the Balance Sheet Date, the business of each of the
Corporations has been conducted only in the ordinary course and there has been
no change in the condition (financial or otherwise) of the assets, liabilities
or operations of the Corporations other than changes in the ordinary course of
business, none of which either singly or in the aggregate has been materially
adverse. Specifically, and without limiting the generality of the foregoing,
except as set forth on Schedule 3.21, with respect to each of the Corporations,
since the Balance Sheet Date, there has not been:
(a) Any material change in its financial condition, assets, liabilities
(contingent or otherwise), income, operations or business which would have a
material adverse effect on the financial condition, assets, liabilities
(contingent or otherwise), income, operations or business of such Corporation,
taken as a whole (a "Material Adverse Effect");
(b) Any material damage, destruction or loss (whether or not covered by
insurance) adversely affecting any material portion of its properties or
business;
25
(c) Any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or
outstanding securities, or (iii) its securities;
(d) Any declaration or payment of, or any
agreement to declare or pay, any dividend or distribution in
respect of its capital stock or any direct or indirect
redemption, purchase or other acquisition of any of its capital
stock;
(e) Any increase or bonus or promised increase
or bonus in the compensation payable or to become payable by it,
in excess of usual and customary practices, to any of its
directors, officers, employees or agents, or any accrual or
arrangement for or payment of any bonus or other special
compensation to any employee or any severance or termination pay
paid to any of its present or former officers or other key
employees;
(f) Any labor dispute or any other event or
condition of any character (other than general economic
conditions) with respect to any of its employees which could
have a Material Adverse Effect;
(g) Any sale or transfer, or any agreement to
sell or transfer, any of its material assets, property or rights
to any other person, including, without limitation, the
Shareholders and their Affiliates, other than in the ordinary
course of business;
(h) Any cancellation, or agreement to cancel,
any material indebtedness or other material obligation owing to
it, including, without limitation, any indebtedness or
obligation of any of the Shareholders or any Affiliate thereof;
(i) Any plan, agreement or arrangement granting
any preferential rights to purchase or acquire any interest in
any of its assets, property or rights or requiring consent of
any party to the transfer and assignment of any such assets,
property or rights;
(j) Any purchase or acquisition of, or any
agreement, plan or arrangement to purchase or acquire, any of
its property, rights or assets outside the ordinary course of
its business;
(k) Any waiver of any of its material rights or
claims;
(l) Any new or any amendment or termination of
any existing material contract, agreement, license, permit or
other right to which it is a party; or
(m) Any other material transaction outside the
ordinary course of business.
3.22 Balance Sheet Date Debt; Balance Sheet Date
Current Assets and Balance Sheet Date Current Liabilities .
(a) Schedule 3.22(a) lists, and includes copies
of the related notes, loan agreements, security agreements,
pledge agreements, mortgages and other instruments giving rise
to any lien on any Corporation's assets, leases and other
instruments, (i) the amount of the aggregate debt (other than
trade payables) of each of the Corporations outstanding on the
Balance Sheet Date to be repaid by WCI or one of the Surviving
Corporations at or immediately after the Effective Time and all
prepayment penalties incurred or to be incurred by WCI or one of
the Surviving Corporations in connection with the repayment of
26
any such debt, (ii) the amount of the aggregate debt (other than
trade payables) of the Corporations outstanding on the Balance
Sheet Date which will remain outstanding obligations of one of
the Surviving Corporations after the Effective Time, and all
prepayment penalties applicable to such debt if repaid prior to
maturity, including in each case all interest accrued through
and including the Balance Sheet Date, (iii) the aggregate amount
of the present value as of the Balance Sheet Date, discounted at
the lease rate factor, if known, inherent in the lease or, if
the lease rate factor is not known, at the rate charged to each
of the Corporations by a third party lender in connection with
its most recent borrowing to finance equipment, of all equipment
lease obligations of the Corporations that are not capitalized
lease obligations, and (iv) the aggregate amount of the present
value as of the Balance Sheet Date of all capitalized equipment
lease obligations (determined in accordance with generally
accepted accounting principles) of each of the Corporations (the
"Balance Sheet Date Debt").
(b) Schedule 3.22(b) sets forth the amount of
the aggregate current liabilities (including any reserve for
unpaid taxes and excluding the current and other portions of
long-term and other debt to the extent such portions are
included in Balance Sheet Date Debt) and trade payables of each
of the Corporations as of the Balance Sheet Date (the "Balance
Sheet Date Current Liabilities") and the amount of the aggregate
cash and other current assets of each of the Corporations as of
the Balance Sheet Date, including prepaid expenses the benefit
of which will survive the Effective Time and the accounts
receivable of the Corporations earned prior to the Balance Sheet
Date, and collectible (less an allowance for doubtful accounts)
on or after the Balance Sheet Date (the "Balance Sheet Date
Current Assets").
3.23 Bank Accounts .
(a) Schedule 3.23(a) is a complete and accurate
list, as of the Signing Date, of:
(i) the name of each bank in which each of
the Corporations has accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or
boxes are held;
(iii) the type of account; and
(iv) the name of each person authorized to
draw thereon or have access thereto.
(b) Schedule 3.23(b) is a complete and accurate
list, as of the Signing Date, of:
(i) each credit card or other charge
account issued to each of the Corporations; and
(ii) the name of each person to whom such
credit cards or other charge accounts have been issued.
3.24 Compliance With Laws . Except as disclosed
on Schedule 3.24, each of the Corporations has complied with,
and each of the Corporations is presently in compliance with,
federal, state and local laws, ordinances, codes, rules,
regulations, Governmental Permits, orders, judgments, awards,
decrees, consent judgments, consent orders and requirements
applicable to it (collectively "Laws"), including, but not
limited to, the Americans with Disabilities Act, the Federal
Occupational Safety and Health Act, and Environmental Laws (as
27
defined below). Except as disclosed on Schedule 3.24, there has
been no assertion to the knowledge of the Corporations or the
Shareholders by any party that any of the Corporations is in
violation of any Laws. Specifically and without limiting the
generality of the foregoing, except as disclosed on Schedule
3.24:
(a) Except as permitted under applicable laws
and regulations, including, without limitation, Environmental
Laws, none of the Corporations has accepted, processed, handled,
transferred, generated, treated, stored or disposed of any
Hazardous Substances (as defined below) nor has any of the
Corporations accepted, processed, handled, transferred,
generated, treated, stored or disposed of asbestos, medical
waste, radioactive waste or municipal waste, except in
compliance with Environmental Laws.
(b) During each of the Corporations' ownership
or leasing of the Corporate Property owned or leased by it and,
to the knowledge of the Corporations and the Shareholders, prior
to the Corporations' ownership or leasing of such Corporate
Property, no Hazardous Substances, other than that allowed under
Environmental Laws, has been disposed of, or otherwise released
on any Corporate Property.
(c) During each of the Corporations' ownership
or leasing of the Corporate Property owned or leased by it and,
to the knowledge of the Corporations and the Shareholders, prior
to each of the Corporations' ownership or leasing of such
Corporate Property, no Corporate Property has ever been subject
to or received any notice of any private, administrative or
judicial action, or notice of any intended private,
administrative or judicial action relating to the presence or
alleged presence of any Hazardous Substance in, under, upon or
emanating from any Corporate Property or any real property now
or previously owned or leased by any of the Corporations. There
are no pending and, to the Corporations' and Shareholders'
knowledge, no threatened actions or proceedings from any
governmental agency or any other entity involving remediation of
any condition of the Corporate Property, including, without
limitation, petroleum contamination, pursuant to Environmental
Laws.
(d) Except as allowed under Environmental Laws,
none of the Corporations has knowingly sent, transported or
arranged for the transportation or disposal of any Hazardous
Substance, to any site, location or facility.
(e) As used herein, "Environmental Law" means
any federal, state, local or foreign law, statute, ordinance,
rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental
entity applicable to the Corporations relating to (x) the
protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource) or to
human health or safety or (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal
of Hazardous Substances. The term "Environmental Law" includes,
28
without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto (the "RCRA")), the Federal Solid Waste Disposal Act and
the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal
Occupational Safety and Health Act of 1970, each as amended, and
(ii) any common law or equitable doctrine applicable to the
Corporations (including, without limitation, injunctive relief
and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
(f) As used herein, "Hazardous Substance" means
any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive, or dangerous, or
otherwise regulated, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated
by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or petroleum or any derivative or
by-product thereof, radon, radioactive material, asbestos, or
asbestos containing material, urea formaldehyde foam insulation,
lead or polychlorinated biphenyls.
(g) With respect to the disclosure on Schedule
3.24 that the Hidden Valley Landfill is a federal Superfund
site, to the knowledge of the Corporations and the Shareholders
Xxxxxx County is responsible for closure and post-closure costs
relating to the closure of such landfill and such costs have
been fully funded. None of the Corporations has been notified
that it is a potentially responsible party under Environmental
Laws with respect to any clean-up, closure or post-closure costs
relating to such landfill, and none of the Corporations has
entered into any written or oral agreement or understanding to
bear any portion of such costs.
3.25 Powers of Attorney . None of the
Corporations has granted any power of attorney (except routine
powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar
agreement whereby a third party may bind or commit any of the
Corporations in any manner.
3.26 Underground Storage Tanks . Except as set
forth on Schedule 3.26, no underground storage tanks containing
petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280 or other Environmental Laws have been
put on or under any Corporate Property by the Corporations or
the Shareholders or, to the knowledge of the Corporations or the
Shareholders, any other party, and are currently or have been
located on any Corporate Property. Except as set forth on
Schedule 3.26, none of the Corporations has owned or leased any
real property not included in the Corporate Property having any
underground storage tanks containing petroleum products or
wastes or other hazardous substances regulated by 40 CFR 280 or
29
other Environmental Laws that were put on or under any such real
property by the Corporations or the Shareholders, or, to the
knowledge of the Corporations or the Shareholders, any other
party and are currently on such real property. As to each such
underground storage tank ("UST") identified on Schedule 3.26,
each of the Corporations has provided to WCI, on Schedule 3.26:
(a) The location of the UST, information and
material, including any available drawings and photographs,
showing the location, and whether any of the Corporations
currently owns or leases the property on which the UST is
located (and if one of the Corporations does not currently own
or lease such property but did own or lease such property at
some time, the dates on which it did and the current owner or
lessee of such property);
(b) The date of installation and specific use or
uses of the UST;
(c) Copies of tank and piping tightness tests
and cathodic protection tests and similar studies or reports for
each UST;
(d) A copy of each notice to or from a
governmental body or agency relating to the UST;
(e) Other material records with regard to the
UST, including, without limitation, repair records, financial
assurance compliance records and records of ownership; and
(f) To the extent not otherwise set forth
pursuant to the above, a summary description of instances, past
or present, in which, to any of the Corporations' or the
Shareholders' knowledge, the UST failed to meet applicable
standards and regulations for tightness or otherwise and the
extent of such failure, and any other operational or
environmental problems with regard to the UST, including,
without limitation, spills, including spills in connection with
delivery of materials to the UST, releases from the UST and soil
contamination. Except to the extent set forth on Schedule 3.26,
each of the Corporations has complied with Environmental Laws
regarding the installation, use, testing, monitoring, operation
and closure of each UST described on Schedule 3.26.
3.27 Patents, Trademarks, Trade Names, etc.
Schedule 3.27 lists all patents, trade names, fictitious
business names, trademarks, service marks, and copyrights owned
by each of the Corporations or which it is licensed to use
(other than licenses to use software for personal computer
operating systems that were provided when the computer was
purchased and licenses to use software for personal computers
that are granted to retail purchasers of such software). Except
as set forth on Schedule 3.27, to the knowledge of each of the
Corporations and each of the Shareholders, no trade secrets,
know-how, intellectual property, trademarks, trade names,
assumed names, copyrights, or designations used by any of the
Corporations in its business infringe on any patents,
trademarks, or copyrights, or any other rights of any person.
Except as set forth on Schedule 3.27, none of the Corporations
nor any of the Shareholders knows or has any reason to believe
that there are any claims of third parties to the use of any
such names or any similar name, or knows of or has any reason to
believe that there exists any basis for any such claim or
claims.
30
3.28 Assets, etc. Necessary to Business . Each
of the Corporations owns or leases all properties and assets,
real, personal, and mixed, tangible and intangible, that are
necessary for it to carry on its business as presently
conducted.
3.29 Condemnation . Except as set forth on
Schedule 3.29, no Corporate Property owned or leased by any of
the Corporations is the subject of, or to the knowledge of the
Corporations and the Shareholders would be affected by, any
pending condemnation or eminent domain proceedings, and, to the
knowledge of the Corporations and the Shareholders, no such
proceedings are threatened.
3.30 Suppliers and Customers . Except as set
forth on Schedule 3.30, none of the Corporations nor any of the
Shareholders has knowledge of any fact (other than general
economic and industry conditions) which indicates that any of
the suppliers supplying products, components, materials or
providing use of, or access to, landfills or disposal sites to
any of the Corporations intends to cease providing such items,
use or access to any of the Corporations, nor does any of the
Corporations or any of the Shareholders have knowledge of any
fact (other than general economic and industry conditions) which
indicates that any of the customers of any of the Corporations
intends to terminate, limit or reduce its business relations
with any of the Corporations.
3.31 Absence of Certain Business Practices .
Other than lobbying activities permitted under applicable law
and except for gifts of nominal value to public officials during
the holiday season, none of the Corporations nor any of the
Shareholders has directly or indirectly within the past five
years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who is
or may be in a position to help or hinder the business of any of
the Corporations in connection with any actual or proposed
transaction which (a) might subject any of the Corporations to
any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (b) if not given in the past, might
have had an adverse effect on the financial condition, business
or results of operations of any of the Corporations, or (c) if
not continued in the future, might adversely affect the
financial condition, business or operations of any of the
Corporations or which might subject any of the Corporations to
suit or penalty in any private or governmental litigation or
proceeding.
3.32 No Misleading Statements . The
representations and warranties of the Corporations and the
Shareholders contained in this Agreement, the Exhibits and
Schedules hereto and all other documents and information
furnished to WCI and its representatives pursuant hereto are
complete and accurate in all material respects and do not
include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made not
misleading.
3.33 Brokers; Finders . No person has acted
directly or indirectly as a broker, finder or financial advisor
for any of the Corporations or a Shareholder in connection with
the transactions contemplated by this Agreement and no person is
31
entitled to any broker's, finder's, financial advisory or
similar fee or payment in respect thereof based in any way on
any agreement, arrangement or understanding made by or on behalf
of any of the Corporations or a Shareholder.
3.34 S Corporation Matters . Each of the
Corporations listed on Schedule 3.34 has elected to be treated
as an S Corporations within the meaning of the Code for the
years listed on Schedule 3.34. Schedule 3.34 includes an
accurate disclosure of taxable income reported by each of the
Corporations and of all distributions made by each of the
Corporations from January 1, 1993, through the Signing Date.
3.35 Registration Statements . None of the
information to be supplied by the Corporations or the
Shareholders for inclusion in the Registration Statements or the
Proxy Statement (the "Proxy Statement") of WCI prepared in
connection with the WCI Shareholders Approval (as defined below)
when used in a manner approved in writing by the Shareholders
will, at the time of the filing of the Registration Statements
or Proxy Statement and any amendments or supplements thereto,
and at the time of the meeting of stockholders of WCI and the
Shareholders of the Corporations to be held in connection with
the transactions contemplated by this Agreement, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
3.36 Accredited Investors. Each of the
Shareholders is an "accredited investor" as defined in Rule
501(a) under the Act.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND THE MERGER
SUBS .
WCI and the Merger Subs, jointly and severally, represent
and warrant to the Corporations and the Shareholders that each
of the following representations and warranties is true as of
the Signing Date and will be true as of the Closing Date:
4.1 Existence and Good Standing . WCI is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. WCI has full
corporate power and authority to own and lease its properties
and to carry on its business as now conducted. WCI is not
required to be qualified or licensed to conduct business as a
foreign corporation in any jurisdiction where the failure to be
so qualified would have a Material Adverse Effect. Each Merger
Sub. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington. Each
Merger Sub. has full corporate power and authority to own and
lease its properties and to carry on its business as now
conducted. No Merger Sub. is required to be qualified or
licensed to conduct business as a foreign corporation in any
jurisdiction where the failure to be so qualified would have a
Material Adverse Effect.
4.2 No Contractual Restrictions . No
provisions exist in any article, document or instrument to which
WCI is a party or by which it is bound that would be violated by
consummation of the transactions contemplated by this Agreement
or the Filed Plans, other than provisions in WCI's Credit
Agreement with its banks, which have been complied with prior to
32
the Signing Date. No provisions exist in any article, document
or instrument to which any Merger Sub. is a party or by which
any of them is bound that would be violated by consummation of
the transactions contemplated by this Agreement or the Filed
Plans.
4.3 Authorization of Agreement . Subject to
obtaining the approval of the percentage of holders of the
outstanding Shares of WCI required by NASDAQ Rule
4310(c)(25)(H)C.2 the ("WCI Shareholders Approval"), this
Agreement and the Filed Plans have been duly authorized,
executed and delivered by WCI and each Merger Sub., and, subject
to the due authorization, execution and delivery by the
Corporations and the Shareholders, constitutes a legal, valid
and binding obligation of WCI and each Merger Sub. Each of WCI
and the Merger Subs. has full corporate power, legal right and
corporate authority to enter into and perform its obligations
under this Agreement and the Filed Plans and to carry on its
business as presently conducted. The execution and delivery of
this Agreement and the Filed Plans and the consummation of the
transactions contemplated hereby and thereby and the fulfillment
of and compliance with the terms and conditions hereof and
thereof do not and will not, after the giving of notice, or the
lapse of time or otherwise: (a) violate any provisions of any
law, regulation, judicial or administrative order, writ, award,
judgment or decree applicable to WCI or any Merger Sub.; (b)
conflict with any of the provisions of the Amended and Restated
Certificate of Incorporation or Amended and Restated Bylaws of
WCI; (c) conflict with any of the provisions of the Articles of
Incorporation or Bylaws of any Merger Sub.; or (d) conflict
with, result in a breach of or constitute a default under any
material agreement or instrument to which either WCI or any
Merger Sub. is a party or by which it is bound.
4.4 Status of Shares . When delivered to the
Shareholders after the Effective Time in accordance with the
terms and conditions of this Agreement, the Aggregate WCI Stock
shall have been duly authorized and delivered shares of WCI,
shall be fully paid and nonassessable, and shall have been
registered under the Act.
4.5 Governmental Authorities; Consents .
Except for (i) the filing of the Filed Plans with the Secretary
of State of the State of Washington, (ii) any filings by WCI and
the Merger Subs. required by the HSR Act, (iii) the filing of
the Proxy Statement with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and any
necessary filings with various state securities commissions,
(iv) any required filings with or approvals from The Nasdaq
Stock Market, Inc. ("Nasdaq"), and (v) any required filings with
applicable state regulatory authorities, neither WCI nor any
Merger Sub. is required to submit any notice, report or other
filing with any governmental authority in connection with the
execution or delivery by it of this Agreement, the Filed Plans
or the consummation of the transactions contemplated hereby or
thereby, and no consent, approval or authorization of any
governmental or regulatory authority or any other party or
person is required to be obtained by either WCI or any Merger
Sub. in connection with its execution, delivery and performance
of this Agreement and the Filed Plans or the transactions
33
contemplated hereby or thereby, except such as shall have been
obtained by the Closing Date.
4.6 SEC Documents . WCI has filed all required
reports, schedules, forms, statements, and other documents with
the Securities and Exchange Commission ("SEC") since May 22,
1998, has filed the Registration Statements and will file the
Proxy Statement (together with later filed documents that revise
or supersede earlier filed documents, the "WCI SEC Documents").
As of their respective dates, the WCI SEC Documents complied or
will comply in all material respects with the requirements of
the Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to
such WCI SEC Documents. None of the WCI SEC Documents contained
or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were or
are made, not misleading. The financial statements of WCI
included in the WCI SEC Documents complied or will comply as of
their respective dates of filing with the SEC in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited
statements, as permitted by Regulation S-X promulgated by the
SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and are
correct and complete and fairly present the consolidated
financial position of WCI and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments).
4.7 Capital Stock .
(a) The WCI SEC Documents set forth WCI's
capitalization in all material respects. All outstanding shares
of WCI Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. WCI issued all such
shares in compliance with applicable federal and state
securities laws. The WCI Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and has been approved for
listing on the Nasdaq National Market, and the Aggregate WCI
Stock will, upon issuance, be registered under the Exchange Act
and listed on the NASDAQ Stock Market.
(b) WCI owns, beneficially and of record, all
issued and outstanding shares of the Merger Subs., which shares
are validly issued, fully paid, and non-assessable, and free and
clear of all liens, other than liens in favor of WCI's banks
pursuant to the terms of its Credit Agreement.
4.8 No Misleading Statements . The
representations and warranties of WCI and the Merger Subs.
contained in this Agreement, the Exhibits and Schedules hereto
and all other documents and information furnished to the
Corporations, the Shareholders or their representatives pursuant
hereto are accurate and complete in all material respects, and
do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements made
34
not misleading.
4.9 Brokers; Finders . No person has acted
directly or indirectly as a broker, finder or financial advisor
for WCI or any Merger Sub. in connection with the transactions
contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment
in respect thereof based in any way on any agreement,
arrangement or understanding made by or on behalf of WCI or any
Merger Sub.
4.10 Disclosure Schedules . Any matter
disclosed by WCI or any Merger Sub. on any Schedule to this
Agreement shall be deemed to have been disclosed on every other
Schedule that refers to such Schedule by cross reference so long
as the nature of the matter disclosed is obvious from a fair
reading of the Schedule on which the matter is disclosed.
5. COVENANTS OF THE CORPORATIONS AND THE SHAREHOLDERS PRIOR
TO EFFECTIVE TIME
5.1 Access; Confidential Information. Between
the Signing Date and the Effective Time, each Corporation will
afford to the officers and authorized representatives of WCI,
including, without limitation, its engineers, counsel,
independent auditors and investment bankers, access to the
Facilities, plants, Corporate Properties and other properties,
books and records of such Corporation and will furnish WCI with
such additional financial and operating data and other
information as to the business and properties of such
Corporation as WCI may from time to time reasonably request.
The Shareholders and each Corporation will cooperate with WCI,
its representatives and counsel in the preparation of any
documents or other material which may be required by any
governmental agency without undo expense to any of the
Corporations or the Shareholders. WCI will cause all
information obtained from the Shareholders and the Corporations
in connection with the negotiation and performance of this
Agreement to be treated as confidential (except such information
which is in the public domain or which WCI may be required to
disclose in the Registration Statements, the Proxy Statement,
under the Act or the Exchange Act, to any governmental agency,
or pursuant to any court or regulatory agency order) and will
not use, and will not knowingly permit others to use, any such
confidential information in a manner detrimental to any
Corporation or the Shareholders. Other than to Xxxxxx X. XxXxx
and certain key employees of Xxxxxx X. XxXxx Enterprises, Inc.,
the Corporations and the Shareholders covenant and agree not to
disclose to any third persons other than their accountants,
brokers, bankers, investment advisers or legal counsel any of
the terms or provisions of this Agreement prior to the date the
Proxy Statement is filed with the SEC without the prior written
consent of WCI.
5.2 Operations. Between the Signing Date and
the Effective Time, each Corporation will:
(a) carry on its business in substantially the
same manner as it has heretofore and not introduce any material
new method, or discontinue any existing material method, of
operation or accounting;
(b) maintain its equipment, assets, Corporate
Properties and Facilities, including those held under leases, in
35
as good working order and condition as at present, ordinary wear
and tear excepted;
(c) perform all of its material obligations
under agreements relating to or affecting its assets, Corporate
Properties, Facilities, business operations and rights;
(d) keep in full force and effect present
insurance policies or other comparable insurance coverage;
(e) use commercially reasonable efforts to
maintain and preserve its business organization intact, retain
its present employees and maintain its relationship with
suppliers, customers and others having business relations with
it;
(f) file on a timely basis all notices, reports
or other filings required to be filed with or reported to any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or any instrumentality of any
of the foregoing wherever located with respect to the continuing
operations of such Corporation;
(g) maintain material compliance with all
Governmental Permits and all laws, rules, regulations and
consent orders;
(h) file on a timely basis all complete and
correct applications or other documents necessary to maintain,
renew or extend any site assessment, permit, license, variance
or any other approval required by any governmental authority
necessary and/or required for the continuing operation of each
Corporation's business operations, whether or not such approval
would expire before or after the Effective Time; and
(i) advise WCI promptly in writing of any
material change in any document, Schedule, Exhibit, or other
information delivered pursuant to this Agreement.
5.3 No Change. Between the Signing Date and
the Effective Time, no Corporation and, in the case of
paragraphs (m), (n) and (o) below, none of the Shareholders
will, without the prior written consent of WCI:
(a) make any change in its Articles of
Incorporation or Bylaws;
(b) authorize, issue, transfer or distribute any
of its securities (including issuance of any option, warrant or
right with respect thereto);
(c) declare or pay any dividend or make any
distribution in respect of its capital stock whether now or
hereafter outstanding, or purchase, redeem or otherwise acquire
or retire for value any shares of its or any other Corporation's
capital stock;
(d) except in accordance with any contracts or
commitments entered into prior to the Signing Date or in the
ordinary course of business after the Signing Date, enter into
any contract or commitment or incur or agree to incur any
liability other than in the ordinary course of business other
than the transactions contemplated by this Agreement, borrow
funds, or make any single capital expenditure in excess of
$10,000 or in excess of $25,000 in the aggregate during any
consecutive thirty day period without regard to whether such
capital expenditure is in the ordinary course of business;
(e) except as set forth on Schedule 5.3, change
or promise to change the compensation payable or to become
36
payable to any director, officer, employee or agent, or make or
promise to make any bonus payment to any such person;
(f) create, assume or otherwise permit the
imposition of any mortgage, pledge or other lien (except for
current property taxes) or encumbrance upon or grant any option
or right of first refusal with respect to any assets or
properties whether now owned or hereafter acquired;
(g) sell, assign, lease or otherwise transfer or
dispose of any property or equipment other than in the ordinary
course of business;
(h) merge or consolidate or agree to merge or
consolidate with or into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend or terminate any material agreement or
any site assessment, permit, license or other right;
(k) enter into any other transaction outside the
ordinary course of such Corporation's business or prohibited
hereunder;
(l) revoke any S corporation election by any of
the Corporations;
(m) take any action or suffer or permit any
event to occur that would cause any representation or warranty
of any Corporation or any Shareholder to become untrue as of the
Closing Date;
(n) take any action that would jeopardize the
treatment of the Mergers as a pooling of interests under Opinion
No. 16 of the Accounting Principles Board ("APB No. 16"); or
(o) take or fail to take any action which action
or failure to take action is reasonably likely to cause the
Corporations or the Shareholders (except to the extent of
stockholders in special circumstances) to recognize gain or loss
for federal income tax purposes as a result of the consummation
of the Mergers or otherwise is reasonably likely to cause the
Mergers not to qualify as a reorganization under Section 368(a)
of the Code.
5.4 Obtain Consents. Promptly after the
Signing Date, the Corporations shall make all filings and take
all steps reasonably necessary to obtain all approvals and
consents required to be obtained by the Corporations or the
Shareholders to consummate the transactions contemplated by this
Agreement and otherwise to satisfy the conditions of Sections
6.7 and 6.8.
5.5 No Change in Relative Ownership. Between
the Signing Date and the Effective Time, there will be no change
in voting structure or relative ownership of any Corporation
without the prior consent of WCI.
5.6 Control of the Corporations' Operations.
Nothing contained in this Agreement shall give to WCI, directly
or indirectly, rights to control or direct any Corporation's
operations prior to the Effective Time. Prior to the Effective
Time, each Corporation shall exercise, consistent with the terms
and conditions of this Agreement, complete control and
supervision of its operations.
5.7 Acquisition Transactions. From the
Signing Date to the Effective Time, or earlier termination of
this Agreement, no Corporation nor any Shareholder shall
initiate, solicit, negotiate, encourage or provide information
37
to facilitate, and each of the Corporations and the Shareholders
shall not, and shall use his, her or its reasonable efforts to
cause any officer, director or employee of each Corporation, or
any attorney, accountant, investment banker, financial advisor
or other agent retained by him, her or it not to, initiate,
solicit, negotiate, encourage or provide information to
facilitate, any proposal or offer to acquire all or any
substantial part of the business or properties of any
Corporation or any capital stock (including without limitation
the Corporation's Stock) of any Corporation, whether by merger,
purchase of assets or otherwise, whether for cash, securities or
any other consideration or combination thereof (any such
transactions being referred to herein as an "Acquisition
Transaction"). Each Corporation and Shareholder shall
immediately notify WCI after receipt of any proposal for an
Acquisition Transaction, indication of interest or request for
information relating to any Corporation in connection with an
Acquisition Transaction or for access to the properties, books
or records of any Corporation by any person or entity that
informs the Board of Directors of any Corporation that it is
considering making, or has made, a proposal for an Acquisition
Transaction. Such notice to WCI shall be made orally and in
writing.
5.8 Xxxxxx Trust Approval. The Corporations
shall seek to obtain the Xxxxxx Trust Approval prior to the
Closing Date. Upon execution of a counterpart of the signature
page of this Agreement in the space provided thereon or a
separate instrument agreeing to be bound to the terms and
conditions of this Agreement, the Xxxxxx Trust shall be bound by
such terms and conditions and shall be deemed a Shareholder for
all purposes of this Agreement.
6. The obligations of WCI and the Merger Subs. under this
Agreement are subject to the satisfaction, at or before Closing,
of all of the following conditions precedent, unless waived in
writing by WCI:
6.1 Representations and Warranties. All
representations and warranties of the Corporations and the
Shareholders contained in this Agreement or in any Exhibit,
Schedule, certificate or document delivered by the Corporations
and the Shareholders under this Agreement shall be true, correct
and complete on and as of the date when made and at all times
prior to the Closing Date, shall be deemed to be made again on
the Closing Date, and shall then be true, correct and complete
as of the Closing Date.
6.2 Conditions. The Corporations and the
Shareholders shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by them on
or before the Closing Date.
6.3 No Material Adverse Change. Since the
Signing Date, there shall not have been any material adverse
change in the financial condition, business, properties or
assets of any Corporation.
6.4 Certificates. The President and Chief
Financial Officer of each Corporation shall have delivered to
WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI, certifying to the fulfillment of
38
the conditions set forth in Sections 6.1, 6.2 and 6.3, and the
Shareholders shall have delivered to WCI a certificate dated as
of the Closing Date, in form and substance satisfactory to WCI,
certifying to the fulfillment of the conditions set forth in
Section 6.1 and 6.2 applicable to the Shareholders.
6.5 No Litigation. None of the transactions
contemplated hereby shall have been enjoined by any court or by
any federal or state governmental branch, agency, commission or
regulatory authority and no suit or other proceeding challenging
the transactions contemplated hereby shall have been threatened
or instituted and no investigative or other demand shall have
been made by any federal or state governmental branch, agency,
commission or regulatory authority concerning the transactions
contemplated hereby.
6.6 Other Deliveries. The Corporations and
Shareholders shall have delivered the items which they are
required to deliver under Section 8.2 of this Agreement.
6.7 Governmental Approvals. All governmental
consents and approvals, if any, necessary to permit the
consummation of the transactions contemplated by this Agreement,
including without limitation those contemplated by Sections 6.12
and 6.13, shall have been received.
6.8 Consents to Transfer. Each party whose
consent is required to the transactions contemplated by this
Agreement, including without limitation each party to any
contract with any Corporation and each Required Governmental
Consent shall have been obtained.
6.9 Opinion of Independent Public Accountants.
WCI shall have received a letter from Ernst & Young LLP, its
independent auditors, regarding that firm's concurrence with
WCI's management's conclusions as to the appropriateness of
pooling of interests accounting for the Mergers under XXX Xx. 00
if closed and consummated in accordance with this Agreement.
6.10 WCI Shareholders Approval. The WCI
Shareholders Approval by the requisite vote of the Shareholders
of WCI under applicable law and applicable NASDAQ requirements
shall have been obtained.
6.11 NASDAQ Listing. An additional listing
application shall have been filed with NASDAQ with respect to
the shares of Aggregate WCI Stock.
6.12 HSR Waiting Period. The waiting period
applicable to the consummation of the Mergers under the HSR Act,
if any, shall have expired or been terminated.
6.13 Registration Statements. The Registration
Statements shall then be effective under the Act.
6.14 Dissenting Shares. No Shareholder shall
have exercised appraisal rights in accordance with Section
23B.13.010 et seq. of the Washington Law with respect to any
shares of any Corporation's Stock.
6.15 Title Insurance. First American Title
Insurance Company shall be irrevocably committed to issue,
within three business days after the Effective Time, at WCI's
cost and expense, an ALTA Owner's Standard Policy of title
insurance for each Corporate Property owned by any of the
Corporations insuring fee simple title to such Corporate
Property in the Surviving Corporation succeeding to such
Corporate Property, subject only to current real property taxes
39
and assessments, standard printed conditions and exceptions, and
such title exceptions as shall have been accepted in writing by
WCI, containing such endorsements as WCI may reasonably require.
6.16 Termination of Employment Agreements . The
current employment agreements between MDC, on the one hand, and
Xxxxxx and Xxxxxxx, on the other hand, shall have been
terminated effective as of the Closing Date.
6.17 LeMay Agreement . Should the Corporations
determine that any additional waiver is required from Xxxxxx
XxXxx Enterprises, Inc., relating to that certain Agreement
dated December 11, 1974, MDC, AD and certain other persons, such
waiver shall have been obtained.
6.18 All Mergers to Occur . All of the Mergers
shall occur at substantially the same time and no Merger shall
be deemed closed unless all have closed.
6.19 Disposal Arrangements . The Corporation's
shall have entered into the Agreement Regarding Future Disposal
(the "Disposal Agreement") substantially in the form of Exhibit
6.19 attached hereto.
6.20 Xxxxxx Trust Approval . The Xxxxxx Trust
Approval shall have been obtained and the Xxxxxx Trust shall
have satisfied its obligations pursuant to Section 5.8.
6.21 Real Estate Due Diligence . WCI shall have
reviewed all of the Schedules to this Agreement relating to the
Corporate Property and all documents related to each parcel of
real property leased, owned or being purchased by any of the
Corporations, and all such Schedules and documents shall be
reasonably satisfactory to WCI or any problems reflected in, or
indicated by, such Schedules or documents shall have been
resolved to the reasonable satisfaction of WCI.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE CORPORATIONS
AND THE SHAREHOLDERS TO CLOSE . The obligations of the
Corporations and the Shareholders under this Agreement are
subject to the satisfaction, at or before Closing, of all of the
following conditions precedent, unless waived in writing by the
Corporations and the Shareholders:
7.1 Representations and Warranties . All
representations and warranties of WCI and the Merger Subs.
contained in this Agreement or in any statement, Exhibit,
Schedule, certificate or document delivered by WCI under this
Agreement shall be true, correct and complete on and as of the
date when made and at all times prior to the Closing Date, shall
be deemed to be made again on the Closing Date, and shall then
be true, correct and complete in all respects as of the Closing
Date.
7.2 Conditions . WCI and the Merger Subs.
shall have each performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by them on or before
the Closing Date.
7.3 No Material Adverse Change. Since the
Signing Date, there shall not have been any material adverse
change in the condition (financial or otherwise), business,
properties or assets of WCI.
7.4 Certificate. The President of WCI shall
have delivered to the Corporations and the Shareholders a
certificate dated as of the Closing Date, in form and substance
40
satisfactory to the Corporations and the Shareholders,
certifying to the fulfillment of the conditions set forth in
Sections 7.1, 7.2 and 7.3.
7.5 No Litigation. None of the transactions
contemplated hereby shall have been enjoined by any court or by
any federal or state governmental branch, agency, commission or
regulatory authority and no suit or other proceeding challenging
the transactions contemplated hereby shall have been threatened
or instituted and no investigative or other demand shall have
been made by any federal or state governmental branch, agency,
commission or regulatory authority concerning the transactions
contemplated hereby.
7.6 Other Deliveries. WCI shall have
delivered the items which it is required to deliver under
Section 8.1 of this Agreement.
7.7 Consents to Transfer. Each party whose
consent is required to the transactions contemplated by this
Agreement, including without limitation each party to any
contract with any Corporation and all Required Governmental
Consents shall have been obtained.
7.8 NASDAQ Listing. An additional listing
application shall have been filed with NASDAQ with respect to
the shares of Aggregate WCI Stock.
7.9 HSR Waiting Period. The waiting period
applicable to the consummation of the Mergers under the HSR Act,
if any, shall have expired or been terminated.
7.10 Registration Statements. The Registration
Statements shall then be effective under the Act.
7.11 Governmental Approvals. All governmental
consents and approvals, if any, necessary to permit the
consummation of the transactions contemplated by this Agreement,
including without limitation those contemplated by Sections 6.12
and 6.13, shall have been received.
7.12 Opinion of Independent Public Accountants.
WCI shall have received a letter from Ernst & Young LLP, its
independent auditors, regarding that firm's concurrence with
WCI's management's conclusions as to the appropriateness of
pooling of interests accounting for the Mergers under XXX Xx. 00
if closed and consummated in accordance with this Agreement.
7.13 LeMay Agreement . Should the Corporations
determine that any additional waiver is required from Xxxxxx
XxXxx Enterprises, Inc., relating to that certain Agreement
dated December 11, 1974, MDC and AD and certain other persons
(the "LeMay Agreement"), such waiver shall have been obtained.
7.14 All Mergers to Occur . All of the Mergers
shall occur at substantially the same time and no Merger shall
be deemed closed unless all have closed.
7.15 Tax Matters . The Shareholders shall be
reasonably satisfied that the Mergers will constitute
reorganizations within the meaning of Section 368(a) of the Code
and no gain or loss will be recognized by the Shareholders upon
the exchange of their Corporations' Stock solely for shares of
Aggregate WCI Stock.
7.16 Disposal Arrangements . The Corporations
shall have entered into the Disposal Agreement.
7.17 Xxxxxx Trust Approval. The Xxxxxx Trust
Approval shall have been obtained and the Xxxxxx Trust shall
41
have satisfied its obligations pursuant to Section 5.8.
8. CLOSING DELIVERIES
At the Closing or at or after the Effective Time, as the
case may be, the respective parties shall make the deliveries
indicated:
8.1 WCI Deliveries .
(a) At or promptly after the Effective Time of
each of the Mergers, WCI shall deliver to the Shareholders
certificates for the shares of WCI Stock in accordance with
Section 2.4.
(b) WCI shall execute and deliver to Xxxxxx and
Xxxxxxx counterparts of Employment Agreements substantially in
the form of Exhibits 8.1(b) and 8.1(b).2, respectively (the
"Employment Agreements").
(c) At the Closing, WCI shall deliver to the
Shareholders an opinion of counsel for WCI dated as of the
Closing Date in substantially the form attached hereto as
Exhibit 8.1(c).
(d) At the Closing, WCI shall deliver the Filed
Plans, duly executed by WCI and the respective Merger Subs.
(e) At the Closing, WCI and the Merger Subs.
shall execute and deliver such other instruments and items as
the Corporations or the Shareholders shall reasonably request
relating to the transactions contemplated by this Agreement.
(f) WCI shall execute and deliver to the
Shareholders counterparts of a Common Stock Agreement
substantially in the form of Exhibit 8.1(f) (the "Common Stock
Agreement").
8.2 Shareholders' Deliveries .
(a) At or promptly after the Effective Time, the
Shareholders shall deliver to WCI in accordance with Section 2.4
the certificates representing the outstanding Corporations'
Stock free and clear of all liens, security interests, claims
and encumbrances, accompanied by a stock power duly executed in
blank.
(b) At the Closing, the Shareholders shall
deliver to WCI an opinion of one or more counsel for the
Shareholders, dated as of the Closing Date, covering in
substance the matters described in Exhibit 8.2(b).
(c) At the Closing, the Shareholders shall
deliver evidence reasonably satisfactory to WCI that all
required third-party consents to the transactions contemplated
hereby, including without limitation all Required Governmental
Consents, were obtained and the Corporations or the Shareholders
shall deliver an estoppel certificate from the landlords under
all real estate leases to which each of the Corporations is a
party confirming the terms thereof and the rental amount owing
thereunder, certifying that such lease is in full force and
effect, that the Corporation is not in default under any of the
terms or conditions thereof, that there have been no amendments
or modifications to any such lease (or specifying the same), and
otherwise containing such statements and certifications as WCI
may reasonably require.
(d) At the Closing, the Shareholders shall cause
each officer and director of each of the Corporations to deliver
a resignation as an officer and/or director of that Corporation,
together with a general release releasing the Corporations from
42
all obligations under any indemnification agreements, the
charter documents of the Corporations, or otherwise, to
indemnify such officers and directors for liabilities and
expenses arising out of or relating to this Agreement or the
consummation of the transactions contemplated thereby, other
than obligations arising after the Closing Date under this
Agreement.
(e) At the Closing, the Shareholders shall
deliver the Filed Plans duly executed by the respective
Corporations.
(f) At the Closing, the Shareholders shall
execute and deliver such other instruments and items as WCI
shall reasonably request relating to the transactions
contemplated by this Agreement.
(g) At the Closing, the Shareholders shall
execute and deliver the Affiliate Letter (the "Affiliate
Letter") substantially in the form of Exhibit 8.2(g).
(h) Xxxxxx and Xxxxxxx shall execute and deliver
to WCI counterparts of their respective Employment Agreements.
(i) The Shareholders shall execute and deliver
to WCI the Common Stock Agreement.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS AND THE
SHAREHOLDERS
9.1 Release of Guaranties . WCI shall use
reasonable efforts to obtain the termination and release
promptly after the Effective Time of the personal guaranties of
the Shareholders listed on Schedule 9.1, all of which relate to
indebtedness of the Corporations included in the Financial
Statements as of the Balance Sheet Date, and WCI shall indemnify
the Shareholders and hold them harmless from and against all
losses, expenses or claims by third parties to enforce or
collect indebtedness owed by each Corporation as of the
Effective Time that is personally guaranteed by the Shareholders
pursuant to such guaranties. The Shareholders may notify the
obligees under such guaranties that they have terminated their
obligations under such guaranties. The Shareholders shall
cooperate with WCI in obtaining such releases.
9.2 Release of Security Interests . After the
Effective Time, the Shareholders and their respective Affiliates
shall cause those security interests in the assets of the
Corporations that have been created in favor of financial
institutions or other lenders to secure indebtedness (other than
indebtedness of that Corporation) of the Shareholders or their
respective Affiliates to be released in a manner reasonably
satisfactory to WCI, and shall cause all guaranties by the
Corporations relating to the indebtedness of the Shareholders to
be released to the reasonable satisfaction of WCI.
9.3 Confidentiality . Neither WCI, the
Corporations nor any of the Shareholders shall disclose or make
any public announcements of the transactions contemplated by
this Agreement except as required by the Act, the Exchange Act,
the HSR Act or in the Registration Statements or the Proxy
Statement, without the prior written consent of the other
parties, unless required to make such disclosure or announcement
by law, in which event the party making the disclosure or
announcement shall notify the other parties at least 24 hours
before such disclosure or announcement is expected to be made
43
and allow review and input as to the form and content of the
same.
9.4 Brokers and Finders Fees . Each party
shall pay and be responsible for any broker's, finder's or
financial advisory fee incurred by such party in connection
with the transactions contemplated by this Agreement.
9.5 Taxes . WCI shall reasonably cooperate, at
the expense of the Shareholders, with the Shareholders with
respect to any matters involving the Shareholders arising out of
the Shareholders' ownership of the Corporations prior to the
Effective Time, including matters relating to tax returns and
any tax audits, appeals, claims or litigation with respect to
such tax returns or the preparation of such tax returns. In
connection therewith, WCI shall make available to the
Shareholders such files, documents, books and records of the
Corporations for inspection and copying as may be reasonably
requested by the Shareholders and shall cooperate with the
Shareholders with respect to retaining information and documents
which relate to such matters.
9.6 Short Year Tax Returns . After the
Effective Time, the Shareholders shall prepare at their sole
cost and expense, all short year federal, state, county, local
and foreign tax returns required by law for the period beginning
with the first day of the applicable Corporation's fiscal year
in which the Effective Time occurs and ending with the Effective
Time. Each such return shall be prepared in a financially
responsible and conservative manner and drafts shall be
delivered to WCI together with all necessary supporting
schedules within 120 days following the Effective Time for its
approval, which shall not be unreasonably withheld or delayed.
The Shareholders shall each be responsible for all taxes arising
from the conversion of the Corporations from a cash to accrual
basis of reporting whether or not due on such returns or on the
first return filed by a Corporation for the period commencing
after the Effective Time. Each such return shall be prepared in
a financially responsible and conservative manner and drafts
shall be delivered to the Shareholders together with all
necessary supporting schedules within 120 days following the
Effective Time for their approval, which shall not be
unreasonably withheld or delayed. At the time of the approval
of the returns for each Corporation, the Shareholders shall
contemporaneously deliver to WCI checks payable to the
respective taxing authorities in amounts equal to the amount due
from the Shareholders under this section. WCI shall, upon
receipt from the Shareholders, cause the Corporations to sign
tax returns and cause such returns to be timely filed with the
appropriate authorities.
9.7 Matters Related to Pooling. The parties
acknowledge that the ability of WCI to account for the
transactions contemplated herein as a "pooling of interests" is
of the essence of the contract. In addition to XXX Xx. 00, the
SEC has issued Accounting Series Release Nos. 130 and 135, as
amended (collectively the "ASRs") setting forth certain
restrictions applicable to the availability of "pooling-of-
interests" accounting treatment in transactions of the type
contemplated by this Agreement. No Shareholder and no Pooling
Affiliate of any Corporation or WCI shall take any action
44
subsequent to the Effective Time to sell or in any other way
reduce such person's risk (including, by way of example and not
limitation, engaging in any put, call, short-sale, straddle or
similar market transactions) relative to any shares of WCI Stock
held at the Effective Time or received pursuant to this
Agreement in such a manner as would cause the transactions
contemplated hereby not to be accounted for as a "pooling of
interests," until such time as financial results covering at
least 30 days of post-Closing combined operations of WCI and the
Surviving Corporations have been published.
9.8 Representation Letter . Prior to the
Closing, the Corporations and the Shareholders shall deliver a
representation letter to Ernst & Young LLP, to enable Ernst &
Young LLP to deliver the letter contemplated by Section 6.10.
The representation letter provided for in this section will
relate to the criteria for the "pooling of interests" method of
accounting and their relevance to the Mergers as they relate to
the Corporations.
9.9 WCI Shareholders' Approval . WCI shall
call a shareholders' meeting to be held as soon as reasonably
practicable after the definitive Proxy Statement is first sent
to WCI's Stockholders, for the purpose of voting upon and
obtaining the WCI Shareholder Approval.
9.10 Nasdaq Listing. WCI shall file, at its
expense, at or before the Effective Time, an additional listing
application with Nasdaq with respect to the Aggregate WCI Stock
to be issued pursuant to the Mergers.
9.11 Agreement to Cooperate.
(a) Subject to the terms and conditions herein
provided and subject to the fiduciary duties of the respective
boards of directors of the Corporations and WCI, each of the
parties hereto shall use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its
reasonable efforts to obtain all necessary or appropriate
waivers, consents or approvals of third parties required in
order to preserve material contractual relationships of WCI and
the Corporations, all necessary or appropriate waivers, consents
and approvals and SEC "no-action" letters to effect all
necessary registrations, filings and submissions and to lift any
injunctive or other legal bar to the Mergers (and, in such case,
to proceed with the Mergers as expeditiously as possible). At or
immediately after the Closing, WCI, the Mergers Subs., the
Corporations and the Shareholders shall cause the Filed Plans to
be filed with the Secretary of State of the State of Washington.
(b) Without limitation of the foregoing, if
required by applicable law, each of WCI and the Corporations
undertakes and agrees to file as soon as practicable, and in any
event prior to 15 days after the Signing Date, a Notification
and Report Form under the HSR Act with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department
of Justice (the "Antitrust Division"). Each of WCI and the
Corporations shall (i) respond as promptly as practicable to any
inquiries received from the FTC or the Antitrust Division for
additional information or documentation and to all inquiries and
45
requests received from any State Attorney General or other
governmental authority in connection with antitrust matters and
(ii) not extend any waiting period under the HSR Act or enter
into any agreement with the FTC or the Antitrust Division not to
consummate the transactions contemplated by this Agreement,
except with the prior consent of the other parties hereto. Each
party shall promptly notify the other party of any communication
to that party from the FTC, the Antitrust Division, any State
Attorney General or any other governmental entity and permit the
other party to review in advance any proposed communication to
any of the foregoing.
(c) In the event any litigation is commenced by
any person or entity relating to the transactions contemplated
by this Agreement, including any Acquisition Transaction, WCI
shall have the right, at its own expense, to participate
therein, and the Corporations will not settle any such
litigation without the consent of WCI, which consent will not be
unreasonably withheld.
9.12 Notification of Certain Matters. Each of
the Corporations, WCI and the Shareholders agrees to give prompt
notice to each other of, and to use commercially reasonable
efforts to remedy, (i) the occurrence or failure to occur of any
event which occurrence or failure to occur would be likely to
cause any of its representations or warranties in this Agreement
to be untrue or inaccurate in any material respect at the
Effective Time and (ii) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this
Section 9.12 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
9.13 Corrections to Registration Statements and Proxy
Statement. Prior to the Effective Time, each of the
Corporations, WCI and the Shareholders shall correct promptly
any information provided by it to be used specifically in the
Registration Statements or the Proxy Statement that shall have
become false or misleading in any material respect and WCI shall
take all steps necessary to file with the SEC and (in the case
of the Registration Statements) have declared effective by the
SEC any amendment or supplement to the Registration Statements
or Proxy Statement so as to correct the same and to cause the
Registration Statements or Proxy Statement as so corrected to be
disseminated to the stockholders of WCI, the Shareholders or to
other persons, in each case to the extent required by applicable
law.
10. XXXXXXXXXXXXXXX
00.0 Xxxxxxxxxxxxxxx Xxxxxxxxx .
(x) Indemnity by the Shareholders. The
Shareholders, jointly and severally, as to each of the
Corporations (in which they are shareholders), severally,
subject to the limitations set forth in Section 10.2, covenant
and agree that they will indemnify and hold harmless WCI, the
Surviving Corporations and their respective directors, officers
and agents and their respective successors and assigns
(collectively the "WCI Indemnitees"), from and after the date of
this Agreement against any and all losses, damages, assessments,
fines, penalties, adjustments, liabilities, claims,
46
deficiencies, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of
investigation), including, without limitation, any
"Environmental Site Losses" (as such term is hereinafter
defined) resulting from activities prior to the Closing Date
(but not necessarily identified or determined prior to the
Closing Date), identified by a WCI Indemnitee in a Claims Notice
(as defined in Section 10.3(a)), or asserted by a WCI Indemnitee
in litigation commenced against the Shareholders provided that
in either case any such Claims Notice shall be given or the
litigation commenced prior to the expiration of the applicable
period set forth in Section 10.2(c) (irrespective of the date of
discovery), with respect to each of the following contingencies
(all, the "10.1(a) Indemnity Events"):
(i) Any misrepresentation, breach of
warranty, or nonfulfillment of any agreement or covenant on the
part of the Shareholders or the Corporations required to be
fulfilled pursuant to the terms of this Agreement on or before
the Closing Date or any misrepresentation in or omission from
any Exhibit, Schedule, list, certificate, or other instrument
furnished or to be furnished to WCI pursuant to the terms of
this Agreement, regardless of whether, in the case of a breach
of a representation or a warranty, WCI relied on the truth of
such representation or warranty or had any knowledge of any
breach thereof.
(ii) The design, development, installation,
construction or operation by the Corporations of any
Environmental Site (as hereinafter defined) during any period on
or prior to the Effective Time, in excess of the amount of
liability with respect thereto, if any, set forth on Part II of
Schedule 3.8. As used in this Agreement, "Environmental Site"
shall mean any Facility, any UST and any other waste storage,
processing, treatment or disposal facility, and any other
business site or any other real property owned, leased,
controlled or operated by a Corporation or by any predecessor
thereof on or prior to the Closing Date. As used in this
Agreement, "Environmental Site Losses" shall mean any and all
losses, damages (including exemplary damages and penalties),
liabilities, claims, deficiencies, costs, expenses, and
expenditures (including, without limitation, expenses in
connection with site evaluations, risk assessments and
feasibility studies) arising out of or required by an interim or
final judicial or administrative decree, judgment, injunction,
mandate, interim or final permit condition or restriction, cease
and desist order, abatement order, compliance order, consent
order, clean-up order, exhumation order, reclamation order or
any other remedial action that is required to be undertaken
under federal, state or local law in respect of operating
activities prior to the Closing Date on or affecting any
Environmental Site, including, but not limited to (x) any actual
or alleged violation of any Environmental Law or any other law
or regulation respecting the protection of the air, water and
land prior to the Closing Date and (y) any remedies or
violations, whether by a private or public action, alleged or
sought to be assessed as a consequence, directly or indirectly,
of any "Release" (as defined below) of pollutants (including
odors) or Hazardous Substances from any Environmental Site
47
resulting from activities thereat prior to the Closing Date,
whether such Release is into the air, water (including
groundwater) or land and, in the case of any Release caused by
defective design, development, construction or operation of an
Environmental Site, or other circumstance within the control of
the Shareholders, whether such Release arose before, during or
after the Closing Date from activities thereat prior to the
Closing Date. The term "Release" as used herein means any
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing
into the ambient environment. Notwithstanding anything in this
paragraph to the contrary, it is specifically understood and
agreed that a Release composed solely of Hazardous Substances
contained in mixed municipal solid waste lawfully disposed of in
a landfill during the time a Corporation owned and/or operated
such landfill does not constitute an Environmental Site Loss.
(iii) Any claim that the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby did not comply with or is otherwise in
breach of the XxXxx Agreement.
(iv) All actions, suits, proceedings or
demands incident to any of the foregoing.
(b) Indemnity by WCI. WCI, subject to the
limitations set forth in Section 10.2, covenants and agrees that
it will indemnify and hold harmless the Shareholders and their
respective heirs, trustees, beneficiaries, successors and
assigns (collectively the "Shareholder Indemnitees"), from and
after the date of this Agreement against any and all losses,
damages, assessments, fines, penalties, adjustments,
liabilities, claims, deficiencies, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees
and expenses of investigation), identified by a Shareholder
Indemnitee in a Claims Notice (as defined in Section 10.3(a)),
or asserted by a Shareholder Indemnitee in litigation commenced
against WCI provided that in either case any such Claims Notice
shall be given or the litigation commenced prior to the
expiration of the applicable period set forth in Section 10.2(c)
(irrespective of the date of discovery), with respect to each of
the following contingencies (all, the "10.1(b) Indemnity
Events"):
(i) Any misrepresentation, breach of
warranty, or nonfulfillment of any agreement or covenant on the
part of WCI or any Merger Sub. required to be fulfilled pursuant
to the terms of this Agreement on or before the Closing Date or
any misrepresentation in or omission from any Exhibit, Schedule,
list, certificate, or other instrument furnished or to be
furnished to the Shareholders pursuant to the terms of this
Agreement, regardless of whether, in the case of a breach of a
representation or warranty, the Shareholders relied on the truth
of such representation or warranty or had any knowledge of any
breach thereof.
(ii) All actions, suits, proceedings or
demands incident to any of the foregoing.
10.2 Limitations on Indemnities .
(a) The obligations of the Shareholders to
indemnify the WCI Indemnitees, and the obligation of WCI to
indemnify the Shareholder Indemnitees, as provided in Section
48
10.1 shall be equal to the amount by which the cumulative amount
of all such losses, damages, assessments, fines, penalties,
adjustments, liabilities, claims, deficiencies, costs and
expenses, (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) and
Environmental Site Losses with respect to any or all 10.1(a) and
10.1(b) Indemnity Events exceed, in the case of the obligations
of the Shareholders, one million dollars ($1,000,000) in the
aggregate with respect to all of the Corporations; and in the
case of the obligations of WCI, one million dollars
($1,000,000); provided, that the amount of any obligation of
indemnity arising pursuant to Section 10.1(a)(iii) or pursuant
to Section 10.1 with respect to any representation, warranty or
covenant contained in Sections 2.1, 3.1 through 3.5; 3.22, 4.4,
4.5, 4.6, 4.7, 9.6 and 9.11 hereof shall not be subject to the
foregoing.
(b) The maximum amount which the Shareholder
Indemnitees can recover as a result of all 10.1(b) Indemnity
Events, pursuant to the provisions hereof for Claims shall not
in the aggregate exceed fifty percent (50%) of the Aggregate
Merger Consideration, and the maximum amount that WCI can
recover as a result of all 10.1(a) Indemnity Events pursuant to
the provisions hereof for Claims relating to each Corporation
shall not exceed the following percentages of the Aggregate
Merger Consideration: MDC-21%); AD-6.5%; DM-14%; and TR-8.5%.
(c) The obligations of the Shareholders under
Section 10.1(a) with respect to all Claims, other than Claims
arising under Section 10.1(a)(iii), shall expire unless a Claims
Notice with all information required by Section 10.3(a) is given
or litigation is commenced by filing a complaint on or prior to
the earlier to occur of (irrespective of the date of discovery
of the Indemnity Event) (i) the first anniversary of the
Effective Time; or (ii) the date of issuance of the first audit
report after the Effective Time of the financial statements that
contain the combined results of WCI and the Surviving
Corporations. The obligations of WCI under Section 10.1(b) with
respect to all Claims, other than Claims arising from breach of
any covenants contained in Sections 2.1, 4.4, 4.5, 4.6, 4.7 or
the Common Stock Agreement, shall expire unless a Claims Notice
with all information required by Section 10.3(a) is given or
litigation is commenced by filing a complaint on or prior to the
earlier to occur of (irrespective of the date of discovery of
the Indemnity Event) (i) the first anniversary of the Effective
Time; or (ii) the date of issuance of the first audit report
after the Effective Time of the financial statements that
contain the combined results of WCI and the Surviving
Corporations.
(d) Except to the extent the same shall directly
result in a material increase in insurance premiums on a
prospective basis, the Shareholders shall not be required to
indemnify any WCI Indemnitee, nor shall WCI be required to
indemnify any Shareholder Indemnitee, for any Claim to the
extent that such Claim has been reimbursed or is reimbursable
through insurance proceeds received or receivable by the
Indemnitee. The Indemnitee shall allow the Indemnifying Party
to pursue such insurance proceeds and shall reasonably cooperate
with the Indemnifying Party in connection therewith. In the
49
event the insurance does not cover the full amount of the Claim,
or in the event the Claim shall directly result in an increase
in insurance premiums on a prospective basis, the Indemnifying
Party shall remain liable for the difference in the insurance
payment and the amount of the Claim, or in the case of an
increase in insurance premiums, the amount of such increase
directly attributable to the Claim, subject to the other
limitations set forth herein.
(e) All claims for which indemnification payment
shall be due shall be deemed adjustments of the Aggregate Merger
Consideration.
(f) Any obligation of indemnity of the
Shareholders established pursuant to the terms of this Agreement
shall be expressed in dollar amounts but shall be satisfied
first by the delivery to WCI of a number of shares of WCI Stock
(properly endorsed, with signatures guaranteed by a national
bank, and with respect to which all transfer or other taxes have
been paid), each of which shall be deemed to have a value equal
to its closing price as quoted on the NASDAQ Stock Market on the
Closing Date (or the last trading day before the Closing Date if
the Closing Date is not a trading day), adjusted for any stock
splits, stock dividends or other capital adjustments after the
Closing Date. To the extent the Shareholders then own an
insufficient quantity of WCI Stock to satisfy any obligation of
indemnity of the Shareholders established pursuant to the terms
of this Section 10.2(f), such obligation of indemnity shall be
satisfied by the payment of cash by the Shareholders.
(g) The indemnification provisions of this
Section 10 shall be the exclusive remedy for any Claim for
monetary damages arising under this Agreement or from the
transactions contemplated hereby, except for Fraud, provided
that nothing in this Section 10 (including with out limitation
Section 10.2(c)) shall be deemed to be the exclusive remedy or
shall limit the remedies of any party with respect to the breach
or nonfulfillment by any party of any obligation or covenant in
this Agreement or any of the agreements contemplated hereby or
entered into pursuant hereto required to be satisfied or
fulfilled after the Closing Date. In addition, the parties
shall be entitled to pursue any claims for non-monetary relief
to which they may be entitled at law or in equity.
10.3 Notice of Indemnity Claim .
(a) In the event that any claim ("Claim") is
hereafter asserted against or arises with respect to any WCI
Indemnitee or Shareholder Indemnitee as to which such WCI
Indemnitee or Shareholder Indemnitee (an "Indemnitee") may be
entitled to indemnification hereunder, the Indemnitee shall
notify the Shareholders or WCI (as applicable collectively, the
"Indemnifying Party") in writing thereof (the "Claims Notice")
within 60 days after (i) receipt of written notice of
commencement of any third party litigation against such
Indemnitee, (ii) receipt by such Indemnitee of written notice of
any third party claim pursuant to an invoice, notice of claim or
assessment, against such Indemnitee, or (iii) such Indemnitee
becomes aware of the existence of any other event in respect of
which indemnification may be sought from the Indemnifying Party
(including, without limitation, any inaccuracy of any
representation or warranty or breach of any covenant). The
50
Claims Notice shall describe the Claim and the specific facts
and circumstances in reasonable detail, and shall indicate the
amount, if known, or an estimate, if possible, of the losses
that have been or may be incurred or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend
any Claim for money damages where the cumulative total of all
Claims (including such Claim) do not exceed the limit set forth
in Section 10.2(b) at the time the Claim is made, by the
Indemnifying Party's own counsel. The Indemnitee may
participate, at the Indemnitee's own expense, in the defense of
any Claim assumed by the Indemnifying Party. Without the
written approval of the Indemnitee, which approval shall not be
unreasonably withheld, the Indemnifying Party shall not agree to
any compromise of a Claim defended by the Indemnifying Party;
provided, however, that if the Indemnitee does not consent to a
compromise and the ultimate indemnity obligation of the
Indemnifying Party would be greater than the amount of the
proposed compromise, the Indemnifying Party's total liability to
the Indemnitee under this Section 10 shall be limited to the
amount of the proposed compromise and costs through that date.
(c) If, within twenty (20) days of the
Indemnifying Party's receipt of a Claims Notice, the
Indemnifying Party shall not have elected to defend the Claim,
the Indemnitee shall have the right to assume control of the
defense and/or compromise of such Claim, and the costs and
expenses of such defense, including reasonable attorneys' fees,
shall be added to the Claim. The Indemnifying Party shall
promptly, and in any event within ten (10) days after demand
therefor, reimburse the Indemnitee for the costs of defending
the Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim
shall keep the other party reasonably informed at all times of
the progress and development of its or their defense of and
compromise efforts with respect to such Claim and shall furnish
the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to
this Agreement shall cooperate with each other and make
available to each other and their representatives all available
relevant records or other materials required by them for their
use in defending, compromising or contesting any Claim. If the
Claims Notice is given prior to the expiration of the
obligations of the Indemnifying Party under Section 10.2(c), the
failure to timely deliver a Claims Notice or otherwise notify
the Indemnifying Party of the commencement of such actions in
accordance with this Section 10.3 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder
except to the extent that the Indemnifying Party establishes by
competent evidence that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the
Indemnifying Party are named as defendants in an action or
proceeding initiated by a third party, they shall both be
represented by the same counsel (on whom they shall agree),
unless such counsel, the Indemnitee, or the Indemnifying Party
shall determine that such counsel has a conflict of interest in
representing both the Indemnitee and the Indemnifying Party in
the same action or proceeding and the Indemnitee and the
Indemnifying Party do not waive such conflict to the
51
satisfaction of such counsel.
10.4 Survival of Representations and Warranties.The representations and
warranties of the parties contained
in this Agreement and in any certificate, Exhibit or Schedule
delivered pursuant hereto, or in any other writing delivered
pursuant to the provisions of this Agreement and the liability
of the party making such representations and warranties for
breaches thereof shall survive the consummation of the
transactions contemplated hereby until the later of the
expiration of the period set forth in Section 10.2(c), or the
final resolution of all Claims for which a Claims Notice is
given prior to the expiration of the obligations of the
Indemnifying Party under Section 10.2(c) but only as to the
representations and warranties relevant to such Claims, provided
that the representations and warranties shall survive until
expiration of the applicable statute of limitations with respect
to any Claim based in whole or in part on Fraud (as defined in
Section 12.3) solely as to the portion of such Claim found to be
Fraud, provided further that the representations and warranties
of the Shareholders set forth in Sections 3.2, 3.3 and 3.4 shall
survive until the later of expiration of the applicable statute
of limitations or the resolution of all Claims to the extent the
representations and warranties are relevant to such Claims. The
parties hereto in executing and delivering and in carrying out
the provisions of this Agreement are relying solely on the
representations, warranties, Schedules, Exhibits, agreements and
covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement,
and not upon any representation, warranty, agreement, promise or
information, written or oral, made by any person other than as
specifically set forth herein or therein.
10.5 No Exhaustion of Remedies or Subrogation; Right
of Set Off . Except as otherwise provided herein, the
Shareholders waive any right to require any WCI Indemnitee to
(i) proceed against any Corporation; (ii) proceed against any
other person; or (iii) pursue any other remedy whatsoever in the
power of any WCI Indemnitee.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND
WCI
11.1 Restrictive Covenants . As to each
Surviving Corporation, the Shareholders and their Affiliates
acknowledge that (i) WCI, as the ultimate purchaser of the
Corporations' Stock, is and will be engaged in the same business
as the Corporations were prior to the Closing Date (the
"Business"); (ii) the Shareholders and their Affiliates are
intimately familiar with the Business; (iii) the Business is
currently conducted in the State of Washington and WCI intends
to continue the Business in Washington and intends, by
acquisition or otherwise, to expand the Business into other
geographic areas of Washington where it is not presently
conducted; (iv) the Shareholders and their Affiliates have had
access to trade secrets of, and confidential information
concerning, the Business; (v) the agreements and covenants
contained in this Section 11.1 are essential to protect the
Business and the goodwill being acquired; and (vi) the
Shareholders and their Affiliates have the means to support
themselves and their dependents other than by engaging in a
52
business substantially similar to the Business and the
provisions of this Section 11 will not impair such ability. The
Shareholders covenant and agree as set forth in (a), (b) and (c)
below with respect to the Corporations:
(a) Non-Compete. For a period commencing on the
Closing Date and terminating five years thereafter (the
"Restricted Period"), neither the Shareholders nor any of their
Affiliates shall, anywhere within the State of Washington, (the
"Restricted Area"), directly or indirectly, acting individually
or as the owner, shareholder, partner, or employee of any entity
other than WCI or one of its subsidiaries, (i) engage in the
Business, including without limitation in the operation of a
solid waste collection, transporting, disposal and/or composting
business, transfer facility, recycling facility, materials
recovery facility or solid waste landfill; (ii) enter the employ
of, or render any personal services to or for the benefit of, or
assist in or facilitate the solicitation of customers for, or
receive remuneration in the form of salary, commissions or
otherwise from, any business engaged in the same business as the
Business; (iii) as owner or lessor of real estate or personal
property, rent to or lease any facility, equipment or other
assets to any business engaged in the same business as the
Business; or (iv) receive or purchase a financial interest in,
make a loan to, or make a gift in support of, any such business
in any capacity, including, without limitation, as a sole
proprietor, partner, shareholder, officer, director, principal,
agent, trustee or lender; provided, however, that (i) any of the
Shareholders may own, directly or indirectly, shares of stock in
Land Recovery, Inc., a Washington corporation, or Resource
Investments, Inc., a Washington corporation, and may participate
as a director, officer or employee of either or both of such
corporations, or (ii) any of the Shareholders may own, directly
or indirectly, solely as an investment, securities of any
business traded on any national securities exchange or NASDAQ,
provided none of the Shareholders is a controlling person of, or
a member of a group which controls, such business and further
provided that the Shareholders do not, in the aggregate,
directly or indirectly, own 5% or more of any class of
securities of such business.
(b) Confidential Information. During the
Restricted Period and thereafter, the Shareholders and their
Affiliates shall keep secret and retain in strictest confidence,
and shall not use for the benefit of themselves or others, all
data and information relating to the Business ("Confidential
Information"), including without limitation, know-how, trade
secrets, customer lists, supplier lists, details of contracts,
pricing policies, operational methods, marketing plans or
strategies, bidding information, practices, policies or
procedures, product development techniques or plans, and
technical processes; provided, however, that the term
"Confidential Information" shall not include information that
(i) is or becomes generally available to the public other than
as a result of disclosure by the Shareholders or (ii) is general
knowledge in the solid waste handling and landfill business and
not specifically related to the Business or (iii) is disclosed
to the Shareholders or their Affiliates by a third party (other
than an agent or representative of WCI) legally entitled to
53
disclose the same. Notwithstanding the foregoing, (y) the
Shareholders may disclose and discuss confidential information
with their legal and tax advisors, or as is required in
connection with any legal proceedings, and the Shareholders
shall give WCI prior written notice of such disclosure at least
forty-eight (48) hours before such disclosure is made, if
possible; and (z) during the time that the Shareholders are
employed by WCI or a Surviving Corporation, the Shareholders may
disclose confidential information as required in the ordinary
course and proper performance of their employment duties, to
persons who need to know such information to perform services
for or receive services from WCI or the Surviving Corporation.
(c) Property of the Business. All memoranda,
notes, lists, records and other documents or papers (and all
copies thereof) relating to the Business, including such items
stored in computer memories, on microfiche or by any other
means, made or compiled by or on behalf of the Shareholders or
the Corporations or made available to them relating to the
Business, but excluding any materials (other than the minute
books of the Corporations) maintained by any attorneys for the
Corporations or the Shareholders prior to the Closing, are and
shall be the property of WCI and have been delivered or will be
delivered or made available to WCI at the Closing.
(d) Non-Solicitation. Without the consent of
WCI, which may be granted or withheld by WCI in its discretion,
the Shareholders and their Affiliates shall not solicit any
employees of the Surviving Corporations to leave the employ of
the Surviving Corporations and join the Shareholders or any
Affiliate in any business endeavor owned or pursued by the
Shareholders.
(e) No Disparagement. From and after the
Closing Date, none of the Shareholders shall, in any way or to
any person or entity or governmental or regulatory body or
agency, denigrate or derogate WCI or any of its subsidiaries, or
any officer, director or employee, or any product or service or
procedure of any such company whether or not such denigrating or
derogatory statements shall be true and are based on acts or
omissions which are learned by the Shareholders from and after
the date hereof or on acts or omissions which occur from and
after the date hereof, or otherwise. A statement shall be
deemed denigrating or derogatory to any person or entity if it
adversely affects the regard or esteem in which such person or
entity is held by investors, lenders or licensing, rating, or
regulatory entities. Without limiting the generality of the
foregoing, none of the Shareholders shall, directly or
indirectly in any way in respect of any such company or any such
directors or officers, communicate with, or take any action
which is adverse to the position of any such company with any
person, entity or governmental or regulatory body or agency who
or which has dealings or prospective dealings with any such
company or jurisdiction or prospective jurisdiction over any
such company. This paragraph does not apply to the extent that
testimony is required by legal process, provided that WCI has
received not less than five days' prior written notice of such
proposed testimony, if possible.
11.2 Rights and Remedies Upon Breach . If the
Shareholders or any Affiliate breaches, or threatens to commit a
54
breach of, any of the provisions of Section 11.1 herein (the
"Restrictive Covenants"), WCI shall have the following rights
and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights
and remedies available to WCI at law or in equity:
(a) Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any
court of competent jurisdiction, it being agreed that any breach
or threatened breach of the Restrictive Covenants would cause
irreparable injury to WCI and that money damages would not
provide an adequate remedy to WCI. Accordingly, in addition to
any other rights or remedies, WCI shall be entitled to
injunctive relief to enforce the terms of the Restrictive
Covenants and to restrain the Shareholders from any violation
thereof.
(b) Accounting. The right and remedy to require
the Shareholders to account for and pay over to WCI all
compensation, profits, monies, accruals, increments or other
benefits derived or received by the Shareholders as the result
of any transactions constituting a breach of the Restrictive
Covenants.
(c) Severability of Covenants. The Shareholders
acknowledge and agree that the Restrictive Covenants are
reasonable and valid in geographical and temporal scope and in
all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) Blue-penciling. If any court determines
that any of the Restrictive Covenants, or any part thereof, is
unenforceable because of the duration or geographic scope of
such provision, such court shall reduce the duration or scope of
such provision, as the case may be, to the extent necessary to
render it enforceable and, in its reduced form, such provision
shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the
Shareholders intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction
within the geographic scope of the Restrictive Covenants. If
the courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of WCI and the
Shareholders that such determination not bar or in any way
affect WCI's right to the relief provided above in the courts of
any other jurisdiction within the geographic scope of the
Restrictive Covenants as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to
each jurisdiction being, for this purpose, severable into
diverse and independent covenants.
11.3 Termination Date.
(a) If the Effective Date has not occurred by
March 31, 1999, this Agreement shall be terminated on that date
or thereafter (the "Termination Date"), unless the Corporations
have not then obtained all of the consents required by Sections
6.7 and 6.8, in which event this Agreement shall terminate 10
55
days after written notice from WCI to the Corporations or 10
days after the later of (i) if any such consent is denied, the
latest time for filing any appeal or further appeal of such
denial has lapsed; and (ii) if any such consent is denied and
such denial is appealed, the day the last appeal of such denial
has been dismissed, refused or decided adversely to the
Corporation, provided that the Termination Date shall, at the
option of WCI, be extended to May 31, 1999, if the Xxxxxx Trust
Approval has not been obtained on or before March 31, 1999.
(b) The Corporations and the Shareholders shall
have the right to terminate this Agreement:
(i) Upon a breach of a representation or
warranty of WCI or the Merger Subs. contained in this Agreement
which has not been cured in all material respects and which has
had or is likely to have a Material Adverse Effect and is
incapable of being satisfied by the Termination Date;
(ii) If one or more of the Mergers are
enjoined by a final, unappealable court order not entered at the
request or with the support of any Corporation and if the
Corporation against which such order is entered shall have used
reasonable efforts to prevent the entry of such order;
(iii) If WCI (A) fails to perform in any
material respect any of its covenants in this Agreement and (B)
does not cure such default in all material respects within 30
days after written notice of such default specifying such
default in reasonable detail is given to WCI by the Corporation;
or
(iv) If WCI fails to obtain the WCI
Shareholders Approval prior to January 31, 1999.
(c) WCI shall have the right to terminate this
Agreement:
(i) Upon a breach of a representation or
warranty of the Corporation or the Shareholders contained in
this Agreement which has not been cured in all material respects
and which has had or is likely to have a material adverse effect
and is incapable of being satisfied by the Termination Date;
(ii) If one or more of the Mergers is
enjoined by a final, unappealable court order not entered at the
request or with the support of WCI and if WCI shall have used
reasonable efforts to prevent the entry of such order; or
(iii) If any of the Corporations or the
Shareholders (A) fails to perform in any material respect any of
its, his or her covenants in this Agreement and (B) does not
cure such default in all material respects within 30 days after
written notice of such default specifying such default in
reasonable detail is given to such person by WCI; or
(iv) If WCI fails to obtain the WCI
Shareholders Approval prior to January 31, 1999.
(d) WCI and the Corporations shall have the
right to terminate the Agreement by mutual consent.
11.4 Effect of Termination . On termination of
this Agreement, the transactions contemplated herein shall
forthwith be abandoned and all continuing obligations and
liabilities of the parties under or in connection with this
Agreement shall be terminated and of no further force or effect;
provided, however, that subject to Section 11.5 nothing herein
shall relieve any party from liability for any
56
misrepresentation, breach of warranty or breach of covenant
contained in this Agreement prior to such termination or release
any party from the obligations under Sections 5.2 and 9.3; and
provided further that, if the reason for such termination is the
failure of the conditions set forth in Sections 6.20, 6.21, or
7.17, then the Shareholders and the Corporations shall not have
any liability to WCI or any other party to this Agreement.
11.5 Corrections to Schedules . If, up to
fifteen (15) days prior to the Closing Date, the Shareholders or
the Corporations determine that any Schedule, document or other
information provided to WCI or its agents by the Shareholders or
the Corporations is incomplete, inaccurate or misleading, the
Shareholders or the Corporations shall promptly give WCI written
notice and correct such Schedule, document or information. In
addition, the Corporations shall provide WCI with such
additional information in their control concerning such
correction as WCI shall reasonably request. If such correction
does not represent a material change in the information
previously provided to WCI, WCI shall not have the right to
terminate this Agreement based upon such correction. If such
correction does represent a material change in the information
previously provided WCI or its agents and WCI determines that
such correction is unacceptable, such correction shall be deemed
to be a failure of the conditions set forth in Section 6.1 and
WCI shall have the right to terminate this Agreement within five
(5) days after receipt of the corrected information; provided
that the Corporations shall first have an opportunity to cure
such matter to the reasonable satisfaction of WCI prior to the
later of November 30, 1998 or the then scheduled Closing Date.
Upon any such termination, the transactions contemplated herein
shall forthwith be abandoned and all continuing obligations and
liabilities of the parties under or in connection with this
Agreement shall be terminated and of no further force or effect
and, notwithstanding Section 11.4, the Shareholders and the
Corporations shall not have any liability to WCI or any other
party to this Agreement.
12. GENERAL
12.1 Additional Conveyances . Following the
Closing, the Shareholders and WCI shall each deliver or cause to
be delivered at such times and places as shall be reasonably
agreed upon such additional instruments as WCI, the Surviving
Corporations or the Shareholders may reasonably request for the
purpose of carrying out this Agreement. The Shareholders will
cooperate with WCI and/or the Surviving Corporations on and
after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions,
proceedings or disputes of any nature with respect to matters
pertaining to all periods prior to the date of this Agreement.
WCI or the Surviving Corporations will reimburse the
Shareholders for all reasonable expenses incurred by them in
providing such information, testimony, evidence or assistance.
12.2 Assignment . This Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto, the successors or assigns of WCI and the Surviving
Corporations and the heirs, legal representatives or assigns of
the Shareholders; provided, however, that any such assignment
shall be subject to the terms of this Agreement and shall not
57
relieve the assignor of its or his responsibilities under this
Agreement.
12.3 No Waiver Relating to Claims for Fraud .
Notwithstanding anything herein to the contrary, the liability
of any party under Section 10 shall be in addition to, and not
exclusive of any other liability that such party may have at law
or equity based on such party's fraud, fraudulent inducement or
intentional misrepresentation or concealment ("Fraud").
Notwithstanding anything herein to the contrary, none of the
provisions set forth in this Agreement, including, but not
limited to, the provisions set forth in Sections 10.1 or 10.2
shall be deemed a waiver by any party to this Agreement of any
right or remedy which such party may have at law or equity based
on any other party's Fraud, nor shall any such provisions limit,
or be deemed to limit, (a) the amounts of recovery sought or
awarded in any such claim for Fraud, (b) the time period during
which such a claim for Fraud may be brought, or (c) the recourse
which any such party may seek against another party with respect
to such a claim for Fraud.
12.4 Counterparts . This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute
one and the same instrument.
12.5 Notices . All notices, requests, demands
and other communications hereunder shall be deemed to have been
duly given if in writing and either delivered personally, sent
by facsimile transmission or by air courier service, or mailed
by postage pre-paid registered or certified U.S. mail, return
receipt requested, to the addresses designated below or such
other addresses as may be designated in writing by notice given
hereunder, and shall be effective upon personal delivery or
facsimile transmission thereof or upon delivery by registered or
certified U.S. mail or one business day following deposit with
an air courier service:
If to the Shareholders: At their respective addresses
set forth on Schedule 3.2
With a copy to: Xxxxx X. Xxxx, Xx.
Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxxxx, 0000 Xxxxxx
Xxxxxx
Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to WCI: Waste Connections, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
12.6 Disclosure Schedules . Any matter
disclosed on any Schedule to this Agreement shall be deemed to
have been disclosed on every other Schedule that refers to such
Schedule by cross reference so long as the nature of the matter
58
disclosed is obvious from a fair reading of the Schedule on
which the matter is disclosed.
12.7 Knowledge . Wherever reference is made in
this Agreement to the "knowledge" of the Shareholders, such term
means the actual knowledge of the Shareholders or any knowledge
which should have been obtained by the Shareholders from
information and documentation in his, her or its possession or
control. In the case of a Shareholder that is a trust, the term
"knowledge" means the actual knowledge of the trustee or
trustees of the trust or any knowledge which should have been
obtained by the trustee or trustees from information and
documentation in his, her or its possession or control.
Wherever reference is made in this Agreement to the "knowledge"
of any of the Corporations, such term means the actual knowledge
of any of the Shareholders, or any current officer, director or
management employee of any Corporation, or any knowledge which
should have been obtained by such person from information and
documentation in his, her or its possession or control.
12.8 Attorneys' Fees . In the event of any
dispute or controversy between WCI on the one hand and the
Corporations or the Shareholders on the other hand relating to
the interpretation of this Agreement or to the transactions
contemplated hereby, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and
expenses incurred by the prevailing party, as awarded by the
court. Such award shall include post-judgment attorney's fees
and costs.
12.9 Applicable Law . This Agreement shall be
governed by and construed in accordance with the laws of the
State of Washington without regard to its conflict of laws
provisions. Any action or proceeding relating to this Agreement
or the transactions contemplated hereby shall be instituted in a
state or federal court located in Kings County, Washington. The
parties hereby consent to the jurisdiction of such courts and
waive any objection to venue laid therein.
12.10 Payment of Fees and Expenses .
Whether or not the transactions herein contemplated shall be
consummated, each party hereto will pay its own fees, expenses
and disbursements incurred in connection herewith and all other
costs and expenses incurred in the performance and compliance
with all conditions to be performed hereunder (including, in the
case of the Shareholders, any such fees, expenses and
disbursements paid or accrued by, or charged to, the
Corporations); provided that WCI shall pay for the audit of the
Corporations by Ernst & Young LLP as contemplated by Section 3.7
and shall pay all filing fees under the Act, the Exchange Act
and the HSR Act.
12.11 Incorporation by Reference . All
Schedules and Exhibits attached hereto are incorporated herein
by reference as though fully set forth at each point referred to
in this Agreement.
12.12 Captions . The captions in this
Agreement are for convenience only and shall not be considered a
part hereof or affect the construction or interpretation of any
provisions of this Agreement.
12.13 Number and Gender of Words . Whenever
the singular number is used herein, the same shall include the
59
plural where appropriate, and shall apply to all of such number,
and to each of them, jointly and severally, and words of any
gender shall include each other gender where appropriate.
12.14 Entire Agreement . This Agreement
(including the Schedules and Exhibits hereto) and the other
documents delivered pursuant hereto constitute the entire
Agreement and understanding between the Corporations, the
Shareholders, the Merger Subs. and WCI and supersedes any prior
agreement and understanding relating to the subject matter of
this Agreement. This Agreement may be modified or amended only
by a written instrument executed by the Corporations, the
Shareholders and WCI acting through its officers, thereunto duly
authorized by its Board of Directors.
12.15 Waiver . No waiver by any party
hereto at any time of any breach of, or compliance with, any
condition or provision of this Agreement to be performed by any
other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any
prior or subsequent time.
12.16 Construction . The language in all
parts of this Agreement must be in all cases construed simply
according to its fair meaning and not strictly for or against
any party. Unless expressly set forth otherwise, all references
herein to a "day" are deemed to be a reference to a calendar
day. All references to "business day" mean any day of the year
other than a Saturday, Sunday or a public or bank holiday in
Washington or California. Unless expressly stated otherwise,
cross-references herein refer to provisions within this
Agreement and are not references to the overall transaction or
to any other document.
13. GLOSSARY
The definitions of the terms used below can be found at the
Section indicated:
Term Section
10.1(a) Indemnity Events Section 7.1(a)
10.1(b) Indemnity Events Section 7.1
Acquired Operations Section 2.2
Acquisition Transaction Section 5.7
Act Section 2.1
AD Parties
Affiliate Section 3.11
Affiliate Letter Section 8.2(f)
Aggregate Adjusted Purchase Price Section 2.1
Aggregate Merger Consolidation Section 2.1
Aggregate WCI Stock Section 2.1
Antitrust Division Section 9.11(b)
XXX Xx. 00 Section 5.2
Balance Sheet Date Section 3.7
Balance Sheet Date Current Assets Section 3.22
Balance Sheet Date Current Liabilities Section 3.22
Balance Sheet Date Debt Section 3.22
Xxxxxx Trust Recitals
Xxxxxx Trust Approval Section 3.4
Business Section 8.1
business day Section 9.14
Cash Section 2.1(a)
Claim Section 7.3
60
Claims Notice Section 7.3
Claim Section Section 10.3(a)
Closing Section 1.7
Closing Date Section 1.7
Closing Price Section 2.1
Code Section 3.36
Collection Franchises Section 3.10
Common Stock Agreement Section 8.1(f)
Confidential Information Section 8.1
Contingent Merger Consideration Section 2.2
Contingent Shares Section 2.2
Corporate Property Section 3.12
Corporations Parties
Corporations' Certificates Section 2.4
Corporations Shareholders Approval Section 3.4
Corporations' Stock Recitals
Day Section 9.14
Disposal Agreement Section 6.19
DM Parties
Xxxxxx Parties
Effective Time Section 1.2
Employment Agreement Section 8.1(b)
Environmental Laws Section 3.24
Environmental Site Section 10.1
Environmental Site Losses Section 10.1
ERISA Section 3.17
Exchange Act Section 4.5
Facilities Section 3.10
Facility Section 3.10
Filed Plans Section 1.2
Financial Statements Section 3.7
FTC Section 9.11(b)
Fraud Section 12.3
Golden Parachute Section 3.17
Golden Parachute Payment Section 3.17
Governmental Permits Section 3.10
Hazardous Substance Section 3.24
HSR Act Section 3.10
Indemnifying Party Section 10.3
Indemnitee Section 10.3
Xxxxxxx Parties
Knowledge Section 3.34
Laws Section 3.24
LeMay Agreement Section 7.13
Material Adverse Effect Section 3.21
MDC Parties
Merger Recitals
Merger Sub. I Parties
Merger Sub. II Parties
Merger Sub. III Parties
Merger Sub. IV Parties
Merger Subs. Parties
multi-employer plan Section 3.17
Xxxxxx Trust Parties
Nasdaq Section 4.5
occurrence Section 3.15
Permitted Liens Section 3.12
61
Pooling Affiliates Section 3.3
Proxy Statement Section 3.35
Recipient Section 3.17
Records, Notifications and Reports Section 3.10
Registration Statements Section 2.1(b)
Release Section 10.1
Representations and Warranties Section 10.4
Required Governmental Consents Section 3.10
Restricted Area Section 11.1
Restricted Period Section 11.1
Restrictive Covenants Section 11.2
SEC Section 4.6
Shareholder Indemnitees Section 10.1
Shareholders Parties
Signing Date Section 1.2
Surviving Corporation Section 1.1
10.1(a) Indemnitee Events Section 10.1(a)
10.1(b) Indemnitee Events Section 10.1(b)
Termination Date Section 11.3(a)
Title Reports Section 3.12(a)
TR Parties
Union Contracts Section 3.17(a)
UST Section 3.26
Washington Law Section 1.1
WCI Parties
WCI Indemnitees Section 7.1
WCI SEC Documents Section 4.6
WCI Shareholders Approval Section 4.3
WCI Stock Recitals
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement by persons thereunto duly authorized as of the
date first above written.
THE CORPORATIONS:
XXXXXX'X DISPOSAL COMPANY,
INC.
By:
Name:
Its:
AMERICAN DISPOSAL COMPANY, INC.
By:
Name:
Its:
X. X. DISPOSAL CO., INC.
By:
Name:
62
Its:
RECYCLING COMPANY, INC.
By:
Name:
Its:
WCI:
WASTE CONNECTIONS, INC.
By:
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
& President
MERGER SUB. I:
WCI Acquisition Corporation I
By:
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
& President
MERGER SUB. II:
WCI Acquisition Corporation
II
By:
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
& President
MERGER SUB. III:
WCI Acquisition Corporation III
By:
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
& President
MERGER SUB. IV:
63
WCI Acquisition Corporation IV
By:
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer
& President
THE SHAREHOLDERS:
THE XXXXXX TRUST UTA
dated August 5, 1993
Xxxxxx X. Xxxxxxx, Trustee
Xxxxxxx X. Xxxxxx, Trustee
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
In accordance with Section 5.8 of the foregoing Agreement and
Plan of Merger, the undersigned shareholder of X. X. Disposal
Co., Inc. and Tacoma Recycling Company, Inc., hereby approves
the transactions contemplated by such agreement and agrees to be
bound by all of the terms and conditions thereof, and upon
execution below shall be deemed a "Shareholder" for all purposes
of the foregoing Agreement and Plan of Merger.
Dated: , 199___
THE XXXXXX X. XXXXXX REVOCABLE
TRUST UTA dated August 5, 1993,
as amended
_________________________,
Trustee
_________________________,
Trustee
