SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
AUGUST 30, 1997
Date of Report (Date of earliest event reported)
WASTE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
0-22417 56-0954929
(COMMISSION FILE NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
3949 BROWNING PLACE, RALEIGH, NORTH CAROLINA 27609
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(919) 782-0095
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 2. Acquisition or Disposition of Assets.
Pursuant to a Sale of Assets Agreement dated as of August 30, 1997 (the
"Agreement"), by and among the Registrant and Browning Ferris Industries of
South Atlantic, Inc. ("BFI"), the Registrant acquired the assets of BFI's Rocky
Mount and Kinston, North Carolina waste hauling and recycling operations,
excluding BFI's medical waste business, for $11.4 million in cash. The source of
funds for this acquisition was the Registrant's $25.0 million revolving credit
facility with Branch Banking and Trust Co., $20.0 million of which is for
acquisitions and capital expenditures.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. At the time of the filing
of this Report, it is impracticable for the Registrant to provide
any of the financial statements for the acquired business required
by Item 7 of Form 8-K promulgated by the Commission under the
Securities and Exchange Act of 1934, as amended (the "Act").
Accordingly, the Registrant will file the required financial statements,
if any, as soon as practicable, but not later than November 14, 1997, as
required by Item 7.
(b) Pro Forma Financial Information. At the time of the filing of this
Report, it is impracticable for the Registrant to provide any of the
pro forma financial information required by Item 7 of Form 8-K
promulgated by the Commission under the Act. Accordingly, the
Registrant will file the required financial statements as soon
as practicable, but not later than November 14, 1997, as required
by Item 7.
(c) Exhibits.
2.1 Sale of Assets Agreement dated as of August 30, 1997, by and among
the Registrant and BFI.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASTE INDUSTRIES, INC.
By: /s/ Robert H. Hall
Robert H. Hall
Vice President and Chief Financial Officer
Date: September 15, 1997
SALE OF ASSETS AGREEMENT
THIS AGREEMENT, dated as of the 30th day of August, 1997, between
BROWNING-FERRIS INDUSTRIES OF SOUTH ATLANTIC, INC. , a North Carolina
corporation ("BFI"), and WASTE INDUSTRIES, INC., a North Carolina corporation
(the "Buyer").
W I T N E S S E T H:
WHEREAS, BFI desires to sell certain assets solely for cash, and Buyer desires
to purchase such assets solely for cash, pursuant to the terms and conditions
set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1.
TRANSFER OF ASSETS AND PURCHASE PRICE
1.1 Assets. Subject to the terms and conditions of this Agreement and in
consideration of the obligations of Buyer herein, BFI agrees to sell,
convey, transfer and deliver to Buyer at the Closing (as defined in
Section 2) all right, title and interest of BFI in and to the following
assets ("Assets") employed or arising in connection with BFI's solid
waste and recycling business in and around Rocky Mount, Sharpsburg and
Kinston, North Carolina comprising what is known by BFI as the "Rocky
Mount District including its satellites" (collectively the "BFI
Business") and specifically excluding BFI's medical waste and Special
Waste (as defined in Section 12.16) business:
(a) Those certain motor vehicles, containers and other equipment
listed on SCHEDULE 1.1 (A) ("Equipment");
(b) The "Contracts" which means all of the Material Contracts
listed on SCHEDULE 1.1 (B) and Other Contracts as such terms
are defined in Section 3.7 (such Material Contracts and Other
Contracts which provide for waste and/or recycling services by
BFI to customers are herein collectively called the "Customer
Contracts");
(c) The permits, licenses, consents and authorizations listed on
SCHEDULE 1.1 (C) (collectively the "Permits");
(d) The "Leases" which means all of the Material Leases listed on
SCHEDULE 1.1 (D) and Other Leases as such terms are defined in
Section 3.8;
(e) The accounts receivable existing on the Closing Date arising
from the BFI Business for which there was a billing for
services rendered by BFI within sixty (60) days prior to the
Closing Date (the "Accounts Receivable") excluding
specifically those accounts receivable from sales of recycled
product;
(f) The spare parts, tires, fuel, recyclables and any other
similar inventory related to the BFI Business existing on the
Closing Date ("Inventory");
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(g) The real property in Rocky Mount and Sharpsburg, North
Carolina described on SCHEDULE 1.1 (G) and all improvements
thereon (collectively "Real Property") and the real estate
leasehold interests in Kinston, North Carolina used in the BFI
Business (the improvements used in the BFI Business on the
Real Property and on the Kinston, North Carolina leased
property are herein called the "Facilities"); and
(h) All customer lists and routing information relating to the BFI
Business ("Customer List and Routing Information").
1.2 Consideration. In consideration of such sale and transfer of the
Assets, Buyer shall:
(a) pay BFI in immediately available funds by wire transfer to the
BFI account designated below an amount at the Closing equal to
Eleven Million Three Hundred Fifty-Nine Thousand Five Hundred
Nine and No/100 Dollars ($11,359,509.00) plus the Estimated
Working Capital (as defined in Section 1.6), plus or minus, as
the case may be, any other amounts delineated on the Closing
Statement for this transaction and subject to adjustment
pursuant to Section 1.6 and within the 90 day limitation
period set forth therein, 3.13 hereof (collectively the
"Purchase Price"); and
(b) assume, perform and discharge after the Closing Time the
following liabilities and obligations of BFI:
(i) obligations to be performed with respect to the
period after the Closing Time under all the Contracts
and Leases;
(ii) obligations to be performed with respect to the
period after the Closing Time under the Material
Contracts and Material Leases entered into prior to
the Closing Time but after the date hereof in
compliance with Section 5.2 (d) and Other Contracts
and Other Leases entered into prior to the Closing
Time but after the date hereof; and
(iii) all other liabilities and obligations described on
SCHEDULE 1.2 (B);
provided, however, Buyer shall not assume any of the following
liabilities or obligations of BFI:
(i) federal, state or local tax liabilities, except for
(x) (as of the Closing Date) the prorated amount
of ad valorem or other property taxes or
assessments related to the Assets
(including, but without limitation, real
estate Leases and the Real Property) and
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(y) the sales, transfer, registration and use
taxes arising out of the sale and transfer
of the Assets (excluding the Real Property
as to which BFI shall pay all transfer
taxes) to Buyer, all of which Buyer hereby
agrees to pay; or
(ii) liabilities or obligations arising at or prior to the
Closing Time.
The BFI account to which the Purchase Price should be wired as
described in Subsection 1.2 (a) above is:
NationsBank of Texas, N.A.
Dallas, Texas
ABA #111000012
CR: Browning-Ferris Financial
ACCT: 3750487491
1.3 Assignment. At the Closing, BFI shall deliver to Buyer such
assignments, bills of sale, certificates of title for vehicles, general
warranty deeds for the Real Property and other good and sufficient
instruments of conveyance and transfer as shall be effective to vest in
Buyer all title of BFI to the Assets. Simultaneously with such
delivery, BFI will take all such other steps reasonably requested by
Buyer to put Buyer in actual possession and operating control of such
Assets. At the Closing, Buyer shall deliver to BFI such instruments as
BFI may reasonably require confirming Buyer's assumption of such
liabilities and obligations of BFI as set forth in this Agreement.
1.4 Further Cooperation. From time to time after the Closing Date without
further consideration, BFI will execute and deliver such other
instruments of conveyance and transfer and take such other action, as
Buyer reasonably may request, to more effectively convey and transfer
to and vest in Buyer and to put Buyer in possession of the Assets, and
in the case of contracts and rights, if any, for which the consents of
third parties required for assignment hereunder cannot be obtained, to
use its reasonable business efforts to provide Buyer with the benefits
thereof by subcontracting, where permitted, or in some other manner,
not to include, however, any obligation to contact or sue such third
parties. BFI will furnish Buyer with such information and documents in
BFI's possession or under BFI's control or which BFI can execute or
cause to be executed as will enable Buyer to prosecute any and all
pending claims, applications and the like which may be assigned
hereunder.
1.5 Excluded Assets. The Assets to be conveyed by BFI to Buyer hereunder
shall not include (i) any deposits or prepaid items, except to the
extent such items are reflected in the Working Capital Calculation
defined in Section 1.6, (ii) any corporate record books or similar
records related to the corporate existence of BFI, (iii) cash, (iv)
financial or tax records of BFI, (v) the use of the names "BFI",
"Browning-Ferris" or any name similar or related thereto, (vi) other
than the Real Property, any and all other real estate owned by BFI,
(vii) computer equipment and software and other proprietary, intangible
assets, (viii) all BFI medical waste business and assets and Special
Waste business and assets and (ix) any other assets of BFI not
specifically described to be conveyed to Buyer by this Agreement and
the schedules hereto.
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1.6 Post-Closing Adjustment of the Purchase Price. The Purchase Price shall
be adjusted in accordance with the following provisions:
(a) On the Closing Date, BFI shall deliver to Buyer an estimate
("Estimated Working Capital") as of the Closing Time of the
sum of:
(i) all Accounts Receivable at ninety percent (90%) of
the amount of all such Accounts Receivable with
balances aged (using the date of invoice as a measure
for aging) one hundred twenty (120) days or less as
of the Closing Time PLUS
(ii) the book value of all Inventory (book value for
recyclables shall be determined based upon BFI's
current contract price to unaffiliated third parties
in the locale, less twenty percent (20%)) PLUS
(iii) any deposits or prepaid items of BFI related to the
BFI Business which will not be refunded to BFI and
which will benefit Buyer MINUS
(iv) the amount of all charges billed to customers of the
BFI Business prior to the Closing Time for which
Buyer will provide the service ("Deferred Revenues").
On the Closing Date, BFI shall also deliver to Buyer a
schedule of the items included in the Estimated Working
Capital; and
(b) Within seventy-five (75) days after the Closing Date, BFI
shall deliver to Buyer a final schedule and calculation
("Final Working Capital") as of the Closing Time of the items
previously estimated in the Estimated Working Capital; and
(c) Within ten (10) days thereafter, BFI shall deliver to Buyer in
immediately available funds in the amount by which the Final
Working Capital is less than the Estimated Working Capital or
Buyer shall deliver to BFI in immediately available funds in
the amount by which the Final Working Capital exceeds the
Estimated Working Capital, as the case may be.
ARTICLE 2.
CLOSING
The transfer of Assets and payment of the Purchase Price referred to in Article
1 hereof (the "Closing") shall take place at 2:00 p.m. at the law offices of
Buyer's counsel, Wyrick, Robbins, Yates & Ponton, L.L.P., 4101 Lake Boone Trail,
Suite 300 in Raleigh, North Carolina 27619, on August 30, 1997, provided,
however, this transaction shall be effective as of 5:00 p.m. (or such other time
as BFI's close of business occurs if not 5:00 p.m.) on Saturday, August 30, 1997
(such time is referred to herein as the "Closing Time" and Saturday, August 30,
1997 is referred to herein as the "Closing Date").
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ARTICLE 3.
BFI'S REPRESENTATIONS AND WARRANTIES
BFI represents and warrants to Buyer as follows:
3.1 Existence and Qualification. BFI is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
North Carolina with all requisite power and authority, corporate and
otherwise, to carry on the BFI Business.
3.2. Authority. BFI has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement have been duly
and validly authorized by all necessary corporate action on the part of
BFI. This Agreement constitutes a valid and binding obligation of BFI
enforceable against BFI in accordance with its terms except as the
enforcement thereof may be affected by bankruptcy or other laws
affecting the rights of creditors generally.
3.3. No Conflicts. Neither the execution, delivery and performance of this
Agreement, nor the consummation of the transactions provided for
herein, will conflict with or result in a breach of the charter or
bylaws of BFI or any of the terms, conditions or provisions of any
agreement or instrument to which BFI is a party or by which it is bound
(except for any consents required for the assignment of any Contract,
Lease or Permit) or will result in a violation of any applicable law,
ordinance, regulation, permit, authorization or decree or order of any
court or other governmental agency applicable to BFI.
3.4. Litigation. BFI is not engaged in and, to the best of BFI's knowledge,
is not threatened with any litigation or other proceeding which may
give rise to any claim against or dispute involving any of the Assets
or the BFI Business.
3.5. Title. BFI has good and indefeasible title to all of the Assets subject
to no lien, encumbrance, security interest or claim except for those on
the Real Property liens for taxes not yet due, utility and other
easements and rights-of-way and other title exceptions which are
customary in real estate transfers and which do not materially detract
from the value or use of the Real Property. With respect to the Rocky
Mount Real Property, to the best of BFI's knowledge, there are no
encroachments (on existing easements, rights-of-way or adjacent
properties) or set-back violations that would be revealed by a current
and accurate survey for which Buyer cannot obtain affirmative title
coverage.
3.6 Accounts Receivable. All of the Accounts Receivable will have arisen
out of services performed in the ordinary course of BFI's Business and,
to the best of BFI's knowledge, no account debtor will have any right
of set-off against any such Account Receivable; provided that BFI makes
no representation with respect to the collectibility of any Accounts
Receivable.
3.7 Material Contracts. SCHEDULE 1.1 (B) lists all customer service
contracts, office supply contracts, maintenance contracts, consulting
agreements and any other service contracts or other agreements for the
purchase or sale of goods or services relating to the BFI Business
("Material Contracts") (excluding Leases) except for those which:
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(i) may be cancelled by BFI without penalty on 90 days or
less notice,
(ii) provide for the payment by BFI of less than $25,000
annually or
(iii) provide for the receipt by BFI of less than $50,000
annually.
Such contracts and agreements relating to the BFI Business not meeting
the foregoing requirements to be a "Material Contract" are herein
called "Other Contracts". BFI is not in default in any material respect
under any such Material Contract nor is BFI in default under any
Customer Contracts the result of which defaults would in the aggregate
have a material adverse effect on the BFI Business. To the best of
BFI's knowledge, no other party to any Material Contract is in default
in any material respect thereunder, nor are there defaults by the other
parties to the Customer Contracts which would in the aggregate have a
material adverse effect on the BFI Business. BFI makes no
representation with respect to the assignability of any Contract.
3.8 Material Leases. SCHEDULE 1.1 (D) lists all leases of personal property
and real property relating to the BFI Business ("Material Leases")
except for those which:
(i) may be cancelled by BFI without penalty on 90 days or
less notice, or
(ii) provide for annual lease payments by BFI of less than
$25,000.
Such leases relating to the BFI Business not meeting the foregoing
requirements to be a "Material Lease" are herein called "Other Leases".
BFI is not in default in any material respect under any Material Lease
nor is BFI in default under any other Leases the result of which
defaults in the aggregate would have a material adverse effect on the
BFI Business. To the best of BFI's knowledge, no other party to any
Material Lease is in default in any material respect thereunder nor are
there defaults by the other parties to the other Leases which would in
the aggregate have a material adverse effect on the BFI Business. BFI
makes no representation with respect to the assignability of any Lease.
3.9 Permits. To the best of its knowledge, (i) BFI is not in default in any
material respect under any Permit and (ii) each Permit is in full force
and effect. BFI makes no representation with respect to the
assignability of any Permit.
3.10 Laws and Regulations. Except as set forth on SCHEDULE 3.10 and to the
best of BFI's knowledge,
(a) BFI is not in violation of or default under any material law
or regulation, or any order of any court or federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over BFI
in connection with operation of the BFI Business.
(b) With respect to the BFI Business for the last five years, BFI
has complied in all material respects and is in compliance in
all material respects with all local, state and federal laws,
statutes, ordinances, rules and regulations dealing with the
protection of the environment or public health and safety,
including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act (codified as amended,
42 U.S.C. section 9601 et seq.) ("CERCLA") and
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the Resource Conservation and Recovery Act (codified as
amended, 42 U.S.C. section 6901 et seq.) ("RCRA")
(collectively, Environmental Laws").
(c) With respect to the BFI Business for the last five years, BFI
has obtained all required material local, state and federal
permits, licenses, certificates and approvals, if any,
relating to: (i) air emissions; (ii) discharges to surface
water or groundwater; (iii) noise emissions; (iv) solid or
liquid waste disposal; (v) the use, generation, storage,
transportation or disposal of toxic or hazardous substances or
wastes (intended hereby and hereafter to include any and all
such materials listed in any local, state or federal statute,
ordinance or regulation); (vi) the use, storage,
transportation or disposal of petroleum or petroleum products;
or (vii) other environmental, health and safety matters.
(d) With respect to the BFI Business for the last five years, BFI
has not caused, suffered, permitted or sustained any material
emission, spill, release or discharge of any toxic or
hazardous substances or wastes, or any petroleum products, in
any reportable quantities, into or upon: (i) the air; (ii)
soils or any improvements located thereon, whether on the Real
Property or elsewhere; (iii) surface water or groundwater; or
(iv) a sewer, septic system or waste treatment, storage or
disposal system except in accordance with applicable law or a
valid government permit, license, certificate or approval.
(e) With respect to the BFI Business for the last five years, none
of the officers, directors or shareholders (including
employees responsible for environmental matters) of BFI has
received oral or written notice of any material actual or
potential claims, orders, directives, citations or causes of
action based on actual or alleged violations of any local,
state or federal statutes, ordinances or regulations dealing
with the protection of the environment or public health and
safety, including, but not limited to, CERCLA or RCRA, or oral
or written notice of any material actual or potential common
law claims or causes of action based upon BFI's actual or
alleged involvement with or use of any substance regulated by
local, state or federal statutes, ordinances or regulations
dealing with the protection of the environment or public
health and safety.
(f) With respect to the BFI Business for the last five years, none
of the officers, directors or shareholders (including
employees responsible for environmental matters) of BFI has
received oral or written notice of any material actual or
potential claims, orders, directives, citations or causes of
action under any local, state or federal statutes, ordinances
or regulations dealing with the protection of the environment
or public health and safety, including, but not limited to,
CERCLA and RCRA, based upon or arising out of its actual or
alleged disposal of hazardous wastes or substances, whether on
or off real property being operated by BFI.
(g) With respect to the BFI Business for the last five years, none
of the officers, directors or shareholders (including
employees responsible for environmental matters) of BFI has
any knowledge of any condition on the Real Property or any of
the real property leased by BFI which may reasonably be
expected to give rise to any material claim, order, directive,
citation or cause of action based on any local, state or
federal statute, ordinance or regulation dealing with
protection of the environment or public health and safety,
including, but not limited to, CERCLA or RCRA.
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(h) Set forth on SCHEDULE 3.10 (H) is, to the best of BFI's
knowledge, a complete and accurate list of locations
(identified by address, type of facility and type of waste) to
which BFI has, in connection with the BFI Business,
transported, or caused to be transported or arranged for any
third party to transport any type of waste material generated
by BFI's customers or BFI relating to the BFI Business, for
storage, treatment, burning or disposal activities which BFI
has undertaken at any time within the past three (3) years.
3.11 Access to Records. BFI has made available to Buyer complete and
accurate copies of all records of BFI requested by Buyer, including,
without limitation, all Customer Contracts, Leases, Permits and records
pertaining to environmental matters.
3.12 "AS-IS" CONVEYANCE; DISCLAIMER. ALL OF THE ASSETS ARE CONVEYED TO BUYER
BY BFI "AS-IS" WITH NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
MADE WITH RESPECT THERETO (EXCEPT AS TO TITLE AS DESCRIBED IN SECTION
3.5 ABOVE), INCLUDING, BUT WITHOUT LIMITATION, THE IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR TRADE CUSTOMS
AND PRACTICES.
3.13 Shortfall in Containers. In the event that the solid waste containers
and compactors Equipment listed on SCHEDULE 1.1 (A) are less than the
numbers listed thereon, then BFI shall pay Buyer fifty percent (50%) of
the new cost of such missing containers and compactors less (but not
below zero) fifty percent (50%) of the new cost of any solid waste
containers and compactors Equipment which are greater (the "Surplus")
in number than the numbers listed on SCHEDULE 1.1 (A) (the "Shortfall
Payment"). In lieu of paying the Shortfall Payment, BFI may, at its
option, replace such containers and compactors with like kind
containers and compactors reasonably satisfactory to Buyer. Such
replacement option shall also be subject to Surplus valuation
reduction. Notwithstanding any of the foregoing, BFI shall have no
obligation to Buyer under this Section 3.13 if it is not notified by
Buyer of any such shortfall within ninety (90) days after the Closing
Date.
ARTICLE 4.
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to BFI as follows:
4.1 Existence and Qualification. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
North Carolina with all requisite power and authority, corporate and
otherwise, to carry on the BFI Business upon consummation of the
transactions contemplated by this Agreement.
4.2. Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement have been duly
and validly authorized by all necessary corporate and other action on
the part of Buyer, including obtaining all necessary consents or
waivers. This Agreement constitutes a valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms except as
the enforcement thereof may be affected by bankruptcy or other laws
affecting the rights of creditors generally.
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4.3. No Conflicts. Neither the execution, delivery and performance of this
Agreement, nor the consummation of the transactions provided for
herein, will conflict with or result in a breach of the charter or
bylaws of Buyer or any of the terms, conditions or provisions of any
agreement or instrument to which Buyer is a party or by which it is
bound or will result in a violation of any applicable law, ordinance,
regulation, permit, authorization or decree or order of any court or
other governmental agency applicable to Buyer.
4.4. Access to Records. Buyer acknowledges that BFI has provided access to
all records of BFI requested by Buyer, including, without limitation,
all Customer Contracts, Leases, Permits and records pertaining to
environmental matters.
ARTICLE 5.
COVENANTS PRIOR TO CLOSING
Between the date of this Agreement and the Closing Date:
5.1 Access. BFI will afford to the officers and authorized representatives
of Buyer such access to the Assets as Buyer may from time to time
reasonably request. BFI will cooperate with Buyer, its representatives
and counsel, in the preparation of any documents or other material
which may be required by any governmental agency in connection with
approvals for consummation of the transactions contemplated by this
Agreement.
5.2 Operations. BFI will:
(a) carry on the BFI Business in substantially the same manner as
currently existing;
(b) maintain the Equipment and the Facilities in their present
condition, ordinary wear and tear excepted;
(c) perform all its obligations under any agreements to be
assigned and assumed hereunder by Buyer; and
(d) not enter into any Material Contract or Material Lease without
the consent of Buyer.
ARTICLE 6.
INDEMNIFICATION
6.1 Indemnity By BFI. BFI covenants and agrees that it will indemnify and
hold harmless the Buyer and its affiliates, successors and assigns (a
"Buyer Indemnified Party"), after the Closing Time, against any and all
losses, damages, actions, suits, proceedings, demands, assessments,
investigations, liabilities, claims, deficiencies, costs, expenses,
expenditures, including, without limitation, reasonable attorney's
fees, court costs and the costs of successful enforcement of this
Article 6, (collectively, "Indemnity Losses") arising with respect to
each of the following ("Indemnity Event"):
(a) any federal, state or local tax liability (except for the
exclusions contained in Section 1.2 (b)) of BFI arising out of
any events occurring during any period ended at or before the
Closing Time;
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(b) any liability or obligation not expressly assumed by Buyer
pursuant to this Agreement;
(c) any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant to be performed by BFI under this
Agreement or in any writing delivered pursuant to the
provisions of this Agreement; and
(d) any and all actions, suits, claims or legal administrative,
arbitration, governmental or other proceedings or
investigations against any Buyer Indemnified Party that
related to BFI or the BFI Business in which the principal
event giving rise thereto occurred at or prior to the Closing
Time or which result from or arise out of any action or
inaction at or prior to the Closing Time of BFI or any
director, officer, employee, agent, representative or
subcontractor of BFI, except for those Buyer specifically
assumes pursuant to this Agreement.
6.2 Indemnity By Buyer. Buyer covenants and agrees that it will indemnify
and hold harmless BFI and its affiliates, successors and assigns (a
"BFI Indemnified Party"), after the Closing Time, against any and all
Indemnity Losses arising with respect to each of the following
Indemnity Events:
(a) any sales, transfer, registration or use tax liability arising
out the sale and transfer of the Assets to Buyer;
(b) any liability or obligation of BFI expressly assumed by Buyer
pursuant to this Agreement;
(c) any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant to be performed by Buyer under
this Agreement or in any writing delivered pursuant to the
provisions of this Agreement; and
(d) any and all actions, suits, claims or legal, administrative,
arbitration, governmental or other proceedings or
investigations against any BFI Indemnified Party that relates
to Buyer or the BFI Business in which the principal event
giving rise thereto occurs after the Closing Time or which
result from or arise out of any action or inaction after the
Closing Time of Buyer, or any director, officer, employee,
agent, representative or subcontractor of Buyer, except for
those retained by BFI pursuant to this Agreement.
6.3 Limitations on Indemnities. The obligations of indemnity provided above
in Sections 6.1 and 6.2 are subject to the following terms, conditions
and limitations:
(a) The aggregate obligation of indemnity of BFI pursuant to
Section 6.1 shall not exceed Six Million Dollars
($6,000,000.00); provided, however, such limitation shall not
apply in the case of actual fraud by BFI.
(b) BFI shall have no obligation for Indemnity Events described in
Section 6.1 (c) (other than for failure to transfer all of the
Equipment or a misrepresentation under Section 3.5 and within
the 90 day limitation period set forth therein, 3.13) until
the aggregate amount of Indemnity Losses for the cumulative
Indemnity
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Events exceeds one percent (1%) of the Purchase Price (the
"Basket"). Once the Basket is exceeded, BFI's obligation shall
include not only the excess over the Basket, but also the
Basket itself.
(c) The obligations of indemnity described in Sections 6.1 (a) and
6.2 (a) shall survive the Closing Date for the applicable
statute of limitations period, the obligation of indemnity
described in Sections 6.1 (b), 6.1 (d), 6.2 (b) and 6.2 (d)
shall survive indefinitely, and the obligation of indemnity
described in Sections 6.1 (c) and 6.2 (c) shall survive the
Closing Date for two (2) years.
(d) The obligation of indemnity for any Indemnity Event in
Sections 6.1 and 6.2 shall be reduced by the amount of any
actual recovery by the Indemnified Party for such Indemnity
Event under policies of insurance maintained by it or its
affiliates with third parties less all reasonable
out-of-pockets costs or expenses incurred by the Indemnified
Party (excluding overhead costs) in recovering such amount
under any such insurance policy.
6.4 Sole Remedy. The sole remedy of Buyer and BFI for breach of the
representations, warranties, covenants and agreements set forth herein
shall be pursuant to the sections in this Article 6.
6.5 Notice of Indemnity Claim. A party seeking indemnity hereunder
("Indemnified Party") shall notify the other party ("Indemnifying
Party") of the Indemnity Event in question within a reasonable time
after the Indemnified Party becomes aware of the existence of such
Indemnity Event, but in no event more than thirty (30) days; provided,
that the failure so to timely notify shall relieve the Indemnifying
Party from the obligation to indemnify against the liability respecting
such Indemnity Event only to the extent the Indemnifying Party
establishes by competent evidence that it is prejudiced thereby. In any
case, if any such action shall be brought, and the Indemnified Party
shall notify the Indemnifying Party of the commencement thereof, such
Indemnified Party shall be entitled to participate in the defense
thereof at his own expense; provided, however, that the Indemnifying
Party shall have sole discretion to determine whether to contest,
compromise, enter pleas, or settle any action brought against the
Indemnified Party.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are, at its option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
7.1 Accuracy of Representations; Performance of Covenants. The
representations and warranties of BFI contained in Article 3 of this
Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date; each and all of the
agreements of BFI to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed in all material
respects; and BFI shall have delivered to Buyer a certificate dated the
Closing Date so stating that such representations and warranties are
true in all material respects, or stating to the extent they are not,
and that such agreements have been performed in all material respects,
or stating to the extent they have not.
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7.2 Governmental Consents; Landlord Consent; No Litigation. All necessary
consents of any governmental authority or agency relating to the
consummation of the transactions contemplated in this Agreement shall
have been obtained, including, but not limited to, consent to use all
Permits, or obtainment of a permit in Buyer's own name if such Permit
is not transferable, necessary, in any case, for Buyer to provide
service contemplated by the Customer Contracts. The consent of the
landlord to the assignment of the real estate lease on which BFI's
Kinston, North Carolina operations are conducted shall have been
obtained. Further, no action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to
restrain or prohibit Buyer's acquisition of the Assets.
7.3 No Material Adverse Change. Since the date of this Agreement, there
shall have occurred no material adverse change in the Assets or the BFI
Business, and Buyer shall have received a certificate dated the Closing
Date to such effect from BFI.
7.4 Updated Customer Contracts. BFI shall have updated, if necessary,
SCHEDULE 1.1 (B) as of the Closing Time.
7.5 Noncompete and Nonsolicitation Agreement. Buyer and BFI shall have
entered into a noncompete and nonsolicitation agreement in
substantially the form of EXHIBIT "A" attached hereto (the "Noncompete
Agreement").
7.6 Hart-Scott-Rodino. All waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Hart-Scott-Rodino
Act") shall have expired or been terminated.
7.7 Conveyance Documents. Buyer shall have received the conveyance
documents described in Section 1.3 conveying to and vesting in Buyer
all right, title and interest of BFI in the Assets in proper form for
recording if required.
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BFI
The obligations of BFI hereunder are, at its option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions that:
8.1 Accuracy of Representations; Performance of Covenants. The
representations and warranties of Buyer contained in Article 4 of this
Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date; each and all of the
agreements of Buyer to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed in all material
respects; and Buyer shall have delivered to BFI a certificate dated the
Closing Date so stating that such representations and warranties are
true in all material respects, or stating to the extent they are not,
and that such agreements have been performed in all material respects,
or stating to the extent they have not.
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8.2 Governmental Consents; Landlord Consent; No Litigation. All necessary
consents of any governmental authority or agency relating to the
consummation of the transactions contemplated in this Agreement shall
have been obtained, including, but not limited to, consent to use all
Permits, or obtainment of a permit in Buyer's own name if such Permit
is not transferable, necessary, in any case, for Buyer to provide
service contemplated by the Customer Contracts. The consent of the
landlord to the assignment of the real estate lease on which BFI's
Kinston, North Carolina operations are conducted shall have been
obtained. Further, no action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to
restrain or prohibit Buyer's acquisition of the Assets.
8.3 Hart-Scott-Rodino. All waiting periods under the Hart-Scott-Rodino Act
shall have expired or been terminated.
8.4 Medical Waste Lease. BFI and Buyer shall have executed the lease in
substantially the form of EXHIBIT "B" attached hereto.
ARTICLE 9.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NO PUBLIC DISCLOSURE
OF PROPOSED TRANSACTION
9.1 Customer Names. BFI agrees that it will not disclose the customer names
and addresses and material terms of the BFI Business in the Customer
Contracts to any person, firm, corporation, association or other entity
not affiliated with BFI for any purpose or reason whatsoever for five
(5) years after the Closing Date, except to authorized representatives
of Buyer, or as required by applicable law. In the event of a breach or
threatened breach of the provisions of this Article 9, Buyer shall be
entitled to an injunction restraining BFI from disclosing, in whole or
in part, such information. Nothing herein shall be construed as
prohibiting Buyer from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
9.2 Confidentiality.
(a) At all times hereafter until the consummation of this
transaction on the Closing Date, Buyer shall hold in
confidence and not disclose to any person for any purpose the
information received from BFI, except that Buyer may disclose
to its representative officers, directors, employees, agents
and consultants ("Buyer Representatives") who need to evaluate
the information on Buyer's behalf for the purposes described
herein; provided, however, that Buyer may disclose the
information in response to any legally enforceable summons or
subpoena or in order to comply with any order, law, ruling, or
regulation applicable to Buyer. If Buyer becomes legally
compelled to disclose such confidential information, Buyer
shall provide BFI with prompt notice of such requirement so
that BFI may seek a protective order or other appropriate
remedy. Buyer shall take all steps necessary to assure
adherence by Buyer's Representatives to the provisions of this
Agreement respecting the confidentiality of information and
Buyer shall be
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responsible for such adherence by Buyer's Representatives. The
obligation of Buyer to keep information confidential shall not
apply to any information which:
(i) is known to Buyer prior to its disclosure by BFI;
(ii) is in general use by competitors of Buyer;
(iii) is or becomes part of the public domain without any
breach by Buyer of any obligation of confidentiality
set forth herein; or
(iv) is communicated to Buyer by a third party who is not
bound by a confidentiality agreement with BFI with
respect to such information.
Further, at all times until consummation of the Closing
contemplated hereby, Buyer will not use, and will not
knowingly permit others to use, any such confidential
information.
(b) At all times hereafter until the Closing Date, both Buyer and
BFI agree not to make any public disclosure of the transaction
contemplated hereby or any part thereof except (i) as they may
mutually agree, (ii) in order to obtain, where necessary,
municipal or county consents to assignment of Customer
Contracts with such entities, (iii) in order to obtain the
landlord's consent for the lease in Kinston, North Carolina,
(iv) in order to obtain, if necessary, consent to assignment
of Permits and (v) as required by the Hart-Scott-Rodino Act
filings or other applicable law.
(c) Upon termination of this Agreement, Buyer will, upon request
of BFI, return to BFI or provide evidence satisfactory to BFI
that it has destroyed all information received from BFI in
connection with the transactions contemplated by this
Agreement.
ARTICLE 10.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the parties contained in this Agreement or
in any writing delivered pursuant to the provisions of this Agreement shall
survive the consummation of the transactions contemplated hereby and any
examination on behalf of the parties in accordance with the terms of this
Agreement; provided, that the right of BFI or Buyer to bring any action or make
any claim for breach of any representation or warranty or default in the
performance of any covenant or agreement shall be limited as set forth in
Sections 6.3 and 6.4 hereof.
ARTICLE 11.
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior to the
Closing Time:
(a) by mutual written consent of Buyer and BFI;
(b) by either Buyer or BFI:
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(i) if any court of competent jurisdiction or other
governmental agency shall have issued an order,
decree or ruling or taken any other action
permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions
contemplated hereby and such order, decree, ruling or
other action shall have become final and
nonappealable; or
(ii) if the transactions contemplated hereby have not been
consummated on or before September 15, 1997, unless
the failure to consummate the transactions is the
result of a material breach of this Agreement by the
party seeking to terminate this Agreement.
(c) by Buyer if BFI breaches in any material respect any of its
representations or warranties herein or BFI fails to perform
in any material respect any of its covenants, agreements or
obligations under this Agreement, and any such breach or
failure is not cured within thirty (30) days after written
notice from Buyer; or
(d) by BFI if Buyer breaches any of its representations or
warranties in any material respect herein or fails to perform
in any material respect any of its covenants, agreements, or
obligations under this Agreement, and any such breach or
failure is not cured within thirty (30) days after written
notice from BFI.
11.2 Effect of Termination. In the event of termination of this Agreement by
either BFI or Buyer as provided in Section 11.1, this Agreement shall
forthwith become void and have no effect, without any liability or
obligation on the part of BFI or Buyer, other than the provisions of
Sections 9.2, 12.12 and 12.13, and except to the extent that such
termination results from the breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement as provided in Sections 11.1 (c) and 11.1 (d). The
termination of this Agreement shall not terminate the Confidentiality
Agreement between BFI and Buyer.
ARTICLE 12.
GENERAL
12.1 Employees. If Buyer hires BFI employees ("Hired Employees") working for
the BFI Business, it shall waive any waiting period applicable to
Buyer's then existing benefit plans, including, but not limited to,
medical, dental, disability, life insurance, vacation, sick pay or
other employee benefit programs for employees of Buyer such that Hired
Employees have such benefits from the first day they are hired by Buyer
other than the required waiting period under Buyer's 401(k) plan. Buyer
shall further apply each respective Hired Employee's years of service
with BFI, any BFI affiliate or any company acquired by BFI or any BFI
affiliate for purposes of calculating benefits under all of Buyer's
benefit plans. Notwithstanding any of the foregoing, the Buyer shall
not be required to waive any waiting period for Buyer's "Years of
Service Recognition Awards" Program. In the event Buyer terminates any
Hired Employees, other than for good cause, within one hundred eighty
(180) days following the date of hiring of such Hired Employee, Buyer
shall, in addition to any severance package, if any, deemed appropriate
by Buyer pay such formerly Hired Employee an amount (the "Guaranteed
Severance") equal to one-half of the greater of (i) four (4) weeks of
such employee's
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gross pay with Buyer or (ii) two (2) weeks of such employee's gross pay
with Buyer multiplied by the number of such employee's combined years
of service with BFI, Buyer, any BFI affiliate and any company acquired
by BFI or any BFI affiliate. BFI shall pay the other half of the
Guaranteed Severance.
12.2 BFI Name and Logos. As soon as practicable (but in any event within
ninety (90) days) after the Closing Date with respect to all non-truck
Equipment and immediately after the Closing Date with respect to all
trucks (except that with respect to trucks serving pursuant to
municipal or county contracts, the Buyer shall have fourteen (14)
days), Buyer, at its expense, shall remove or permanently cover up all
BFI names and logos from all Equipment. Nothing in this Agreement shall
constitute a license or authorization for Buyer to use in any manner
any name, logo or mark owned by or licensed to BFI and its affiliates
except during such ninety (90) day period.
12.3 Purchase Price Allocation. At Closing, the parties will allocate the
Purchase Price among the Assets as set forth on the completed Buyer's
and Seller's Internal Revenue Service forms 8594, attached hereto as
SCHEDULE 12.3. Further, BFI and the Buyer agree that the Purchase Price
shall be further broken down into the following allocation:
Real Estate $ 680,000.00
Trucks, Trailers 820,000.00
Containers and Other Equipment 1,450,000.00
Non-Compete 1,000.00
Goodwill 8,408,509.00
---------------
TOTAL $11,359,509.00
12.4 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in a manner as to be effective and valid under
applicable law. If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in full
force and effect and this Agreement shall be construed in all respects
as if such invalid, illegal and unenforceable provisions were omitted.
If any provision is inapplicable to any person or circumstance, it
shall, nevertheless, remain applicable to all other persons and
circumstances.
12.5 National Accounts. BFI's "national accounts" are listed on SCHEDULE
12.5. On the Closing Date, the Buyer and BFI shall enter into a
National Accounts Subcontract Agreement in the form attached hereto as
EXHIBIT "C".
12.6 Assignment. This Agreement and the rights of the parties hereunder may
not be assigned (except by operation of law) and shall be binding upon
and shall inure to the benefit of the parties hereto and the successors
the parties hereto. Any party may assign its rights, but not delegate
its duties or obligations, to its respective affiliates.
12.7 Arbitration. Any controversy or claim arising out of or related to this
Agreement, or any transactions contemplated herein, that cannot be
amicably resolved, including, without limitation, whether such
controversy or claim is subject to arbitration, shall be resolved by
binding arbitration held in Wake County, North Carolina, in accordance
with the rules of the American Arbitration Association, subject to this
Section. Arbitration proceedings
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shall be conducted by a panel of three (3) persons selected as follows:
The party initiating arbitration shall select one qualified arbitrator
and the other party shall select a second qualified arbitrator, both
within ten (10) days of any written notice to arbitrate The two
arbitrators shall select a third qualified arbitrator as soon as
possible; provided, that if the two arbitrators cannot agree on a third
arbitrator within twenty (20) days of the first two arbitrators'
appointments, the parties shall ask the Presiding Judge in Wake County,
North Carolina to appoint the third arbitrator. No arbitrator shall
have or previously have had any significant relationship with any of
the parties. The decision of any two (2) of the arbitrators on any
submitted matter shall be final and nonappealable. Notwithstanding the
foregoing, if the controversy or claim in question is not resolved by
the arbitrators as provided herein within one hundred fifty (150) days
after selection of the first arbitrator, either party may pursue any
remedy with respect hereto provided by law.
12.8 Customer Letter. Prior to the Closing, Buyer and BFI shall jointly
prepare a letter to be sent by Buyer, on or after the Closing Date and
at Buyer's expense, informing the customers sold pursuant to this
Agreement of the sale contemplated by this Agreement.
12.9 Replacement of Bonds, Letters of Credit, Etc. Buyer shall forthwith,
after the Closing Date, replace all BFI bonds, letters of credit and
other financial assurances posted by BFI in connection with the BFI
Business with any city, county or other governmental agency or pursuant
to any Customer Contract, including, but not limited to, those
specified in SCHEDULE 12.9.
12.10 Transition Assistance. Chris Pulley, with his consent, shall be
available to assist in the orderly transition of the BFI Business for a
period of ninety (90) days from the Closing Date. Chris Pulley shall
remain, however, an at-will BFI employee and shall only be employed by
Buyer with Chris Pulley's consent.
12.11 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
12.12 Brokers. Each party agrees to indemnify the other against all loss,
cost, damage or expense arising out of claims for fees or commissions
of brokers or agents employed or alleged to have been employed by such
indemnifying party.
12.13 Fees and Expenses. Whether or not the transactions herein contemplated
shall be consummated, (i) BFI will pay the fees, expenses and
disbursements of BFI and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this
Agreement and any amendments hereto, and (ii) Buyer will pay the fees,
expenses and disbursements of Buyer and its agents, representatives,
accountants and counsel incurred in connection with the subject matter
of this Agreement and any amendments hereto. Buyer shall immediately
order, and Buyer and BFI shall each pay one-half of, each "Phase One
Environmental Assessment" performed on the Real Estate and on the
leased real estate in Kinston, North Carolina and Buyer shall provide
to BFI a copy of such Assessment at least seven (7) days prior to the
Closing Date.
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12.14 Notices. Any notice or communication required or permitted hereunder
shall be sufficiently given if sent by first class mail, postage
prepaid:
(a) If to BFI, addressed to it at
P.O. Box 3151
Houston, Texas 77253
Attention: Secretary
(b) If to Buyer, addressed to it at
Waste Industries, Inc.
P. O. Box 20366
Raleigh, North Carolina 27609
Attention: President
With a copy to its counsel at
Wyrick, Robbins, Yates & Ponton, L.L.P.
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27619
Attention: James M. Yates, Jr., Esq.
12.15 Vacation Accruals. BFI shall pay all vacation accruals of its employees
working for the BFI Business which have accrued through the day before
the Closing Date.
12.16 Special Waste; Carolina Project. The term "Special Waste" as used
herein shall mean waste that requires special handling at the landfill,
manifesting or disposal methods, including but without limitation,
soils, ash, sludge, tires, asbestos and powders. Notwithstanding the
foregoing, there is one piece of BFI's Special Waste business which may
be included in the BFI Business being sold depending on if the work can
be assigned or subcontracted to the Buyer as described herein. To wit,
BFI and Sampson County Disposal, Inc. ("SCDI"), an affiliate of BFI,
are parties to a Transportation and Disposal Agreement (Carolina
Project) dated March 10, 1995 with Carolina Energy Limited Partnership
("CELP") (the "Carolina Project T&D Agreement"), a copy of which is
attached as Exhibit "B" to the Noncompete Agreement. The Carolina
Project T&D Agreement is not currently in effect, but should it become
effective, BFI will exercise its best efforts (which shall not require
BFI to pay any extra money to effect any such assignment or subcontract
unless Buyer agrees to reimburse BFI for any such extra payment) to
have the transportation portion of Acceptable Waste (as that term is
defined therein) pursuant to the Carolina Project T&D Agreement
assigned or subcontracted to Buyer. If such consent is not obtained,
BFI shall have the right to perform such services under the Carolina
Project T&D Agreement as an exception to the Noncompete and
Nonsolicitation Agreement if BFI is unable to assign or subcontract the
transportation portion of the Carolina Project T&D Agreement to a
reasonably qualified, unaffiliated service provider.
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12.17 Recyclables. From and after the Closing Date for a five (5) year term,
BFI shall offer the Buyer the ability to participate through BFI in
selling Buyer's recyclables at BFI's then current contract price less
Five Dollars ($5.00) per ton with a floor price on corrugated cardboard
of Fifty-Five Dollars ($55.00) per ton and with no floor price on other
recyclables. After the Closing Date, BFI and Buyer shall work in good
faith to execute a written agreement as soon as possible regarding the
matters discussed in this Section 12.17. Further, BFI will coordinate
with Buyer immediately following the Closing Date such participation in
such recyclables sales program so that there is no interruption of the
BFI Business contemplated to be sold hereby.
12.18 Definition of Affiliate. As used herein, the term "affiliate" of BFI or
Buyer, as the case may be, shall mean any person, corporation or other
entity controlling, controlled by or under common control with BFI or
Buyer, as the case may be.
12.19 Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of North Carolina.
12.20 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.
12.21 Entire Agreement. This Agreement (including the schedules and annexes
hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding between BFI and Buyer and supersede
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 BFI and Buyer acting through their duly
elected officers.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
BROWNING-FERRIS INDUSTRIES OF
SOUTH ATLANTIC, INC.
By:
------------------------------
Name: William Rudolph Winders, Jr.
Title: Vice President
("BFI")
WASTE INDUSTRIES, INC.
By:
------------------------------
Name: Jim W. Perry
Title: President
("Buyer")
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