Exhibit 2.3
EXECUTION COPY
PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT (the "Agreement") is executed and delivered as
of May ___, 2000, among Waste Industries, Inc., a North Carolina corporation
("Buyer"); BFI Waste Systems of North America, Inc., a Delaware corporation
("Seller"); and Allied Waste Industries, Inc., a Delaware corporation
("Parent").
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of Sampson County Disposal, Inc., a North Carolina corporation
(the "Company");
WHEREAS, the Company owns or leases real property located in Sampson
County, North Carolina and more fully described in Section 1.1(a) and on Exhibit
A attached hereto on which it operates a fully-permitted solid waste landfill
known as the BFI Sampson County Landfill and a borrow pit used for clay mining
(the "Borrow Pit") (with such real property collectively referred to as the
"Land" and such landfill referred to as the "Business" or the "Landfill");
WHEREAS, Parent owns (directly or indirectly) all of the issued and
outstanding shares of the capital stock of Seller and the Company;
WHEREAS, Buyer is unwilling to enter into this Agreement without the
covenants and promises of Seller and Parent set forth herein; and
WHEREAS, Parent desires that Seller sell all of the issued and
outstanding capital stock of the Company to Buyer upon the terms and subject to
the conditions set forth in this Agreement and, in order to induce Buyer to
enter into this Agreement, is willing to make the covenants and promises set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, received to the full
satisfaction of each of them, the parties hereby agree as follows:
ARTICLE 1
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DESCRIPTION OF ASSETS
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Section 1.1 Purchase and Sale of Stock; Description of Assets. Based
upon the representations and warranties contained in this Agreement and subject
to the terms and conditions set forth herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, an aggregate of 1,000 shares of common
stock of the Company, being all of the issued and outstanding capital stock of
the Company (the "Shares"). Set forth below is a list of assets, properties and
contractual rights of the Company, Parent and/or Seller with respect to the
Company or the Business as of the Closing Date, wherever located:
(a) the Land (including all buildings, fixtures, personalty and
improvements located thereon, easements, interests, rights, tenements,
hereditaments, and appurtenances held by the Company or Seller that in any way
benefit the Land or the improvements thereon or related to the Business, all
mineral, water, and irrigation rights, and the Company's interests in any
roadway
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adjoining the Land and any rights or interests that may accrue to the benefit of
the Business, the Company or the Land as a result of the abandonment thereof or,
if the Land is leased, all of the Company's leasehold interest in and to the
Land and improvements thereon that are the subject of the Real Estate Leases (as
defined in Section 5.5(b)(iv)) (the "Leased Land");
(b) all permits (including any interim permits), licenses, consents and
approvals of every kind necessary to operate the Business (the "Permits"),
including the Permits listed on Schedule 1.1(b), attached hereto and made a part
hereof;
(c) all equipment, including carts and containers, used or for use
principally in the Business and owned or leased by the Company (the
"Equipment"), including the Equipment listed on Schedule 1.1(c), attached hereto
and made a part hereof;
(d) all of the motor vehicles used or for use principally in the
Business and owned or leased by the Company, and all attachments, accessories
and materials handling equipment now located in or on such motor vehicles,
including all radios and the radio base station, if any (the "Rolling Stock"),
as the same are more completely described by manufacturer, model number, model
year and vehicle identification number on Schedule 1.1(d), attached hereto and
made a part hereof;
(e) all manual, automated and computerized billing systems and
components thereof, including all computer hardware, transferable software and
transferable programs used or for use principally in the Business;
(f) all supplies, parts, tires and accessories of every kind, nature,
and description used or for use principally in the Business (the "Inventory");
(g) all right, title and interest of the Company in and to all trade
secrets, proprietary rights, symbols, trademarks, service marks, logos and trade
names used principally in the Business, except those symbols, trademarks,
service marks, logos and trade names that include the names of or otherwise
identify Seller or Parent or any non-Company affiliate thereof;
(h) all contractual rights of Seller or the Company relating to the
Business, including with the customers of the Business (whether oral or in
writing) (the "Customer Contracts"), all commitments, lists, leases, Permits and
other instruments relating to the Customer Contracts (the "Related Approvals"),
and all employment contracts and collective bargaining agreements with any union
(but excluding employee benefit plans) (the "Employee Contracts") (a complete
and accurate list of all of the Customer Contracts, the Related Approvals and
the Employee Contracts is set forth on Schedule 1.1(h), attached hereto and made
a part hereof);
(i) all right, title and interest of Seller and the Company in and to
the name "Sampson County Disposal" in the State of North Carolina and the right
to use such name and all similar names;
(j) all right, title, and interest of Seller and the Company in and to
the telephone number(s) used principally in the operation of the Business;
(k) all shop tools, nuts and bolts relating principally to the
Business;
(l) all recycling equipment used principally in the Business, if any;
(m) all accounts receivable related principally to the Business
("Accounts Receivable") as of the close of business on the Closing Date
(hereinafter defined);
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(n) all books, records and data relating principally to the Business,
including customer lists and vendor lists, productivity reports, customer
records and data, volume records and operational history, whether or not
computerized;
(o) all litigation rights to which the Company is a plaintiff as
described in Schedule 5.11;
(p) all prepaid expenses and deposits listed on Schedule 1.1(p);
(q) all of the goodwill of the Business;
(r) all engineering work product for engineering work performed in
relation to the Business, which work product shall be in electronic format to
the extent possible;
(s) all cash on hand, cash reserves and cash on deposit of the Company,
if any;
(t) all stock and corporate records of the Company;
(u) all other assets of the Company; and
(v) all other assets of Parent and Seller that are used principally in
the Business, if any.
All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets."
Section 1.2 Non-Transfer of Certain Customer Contracts, Related
Approvals and Permits. Notwithstanding anything to the contrary in this
Agreement, to the extent that any of the Customer Contracts, Related Approvals
or Permits shall require the consent of any third party as a result of the
transactions contemplated by this Agreement, neither this Agreement nor any
action taken pursuant to its provisions shall constitute a transfer or an
agreement to transfer if such transfer or attempted transfer would constitute a
breach thereof or result in the loss or diminution thereof; provided, however,
that in each such case, Seller and Buyer shall each use best efforts to obtain
the consent of such third party as soon as possible after the date of this
Agreement; provided, however, this provision shall not require Buyer to pay any
amount to receive such third party consent and shall not relieve Seller of its
obligations pursuant to Section 7.4.
Section 1.3 Intentionally Omitted.
Section 1.4 Intentionally Omitted.
Section 1.5 Allocation of Purchase Price. Not later than sixty (60)
days following the Closing Date, Buyer will prepare and deliver to Seller a
schedule (the "Price Allocation Schedule"), allocating the appropriate Modified
Aggregate Deemed Sales Price (as defined in Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code")) of the Company among the assets
of the Company in accordance with the regulations promulgated under Section
338(h)(10) of the Code. Thereafter, Buyer and Seller will negotiate in good
faith any disputes concerning the Price Allocation Schedule. Buyer and Seller
agree that the Price Allocation Schedule, adjusted as necessary to reflect the
outcome of the negotiations pursuant to the preceding sentence, will reflect
accurate fair market values for the assets of the Company and this Agreement,
and Buyer and Seller agree to use such negotiated values for all tax purposes
and the 338(h)(10) Election (as defined in Section 4.5), including for purposes
of completing and filing Internal Revenue Service Form 8023 as contemplated in
Section 4.5.
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ARTICLE 2
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PURCHASE PRICE
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Section 2.1 Purchase Price. Subject to the remainder of this Article 2,
at the Closing, Buyer shall pay to Seller for the Shares the aggregate sum of
$27,395,000 (the "Purchase Price"). The parties acknowledge that the Purchase
Price reflects a reduction of $1,600,000 to enable Buyer and/or the Company to
purchase additional real property for necessary clay cover for the Landfill.
Section 2.2 Intentionally Omitted.
Section 2.3 Holdback. Seller agrees that the aggregate sum equal to
$1,725,000 (the "Holdback Funds") otherwise payable to Seller for the Shares on
the Closing Date and for certain assets pursuant to the Fayetteville Asset
Purchase Agreement shall be retained by Buyer for a period of three months after
the Closing Date (the "Holdback Period"). Buyer shall be entitled to commingle
the Holdback Funds with its general accounts. If Buyer discovers the absence or
nonconforming condition of any of the Assets, or if Buyer determines that it is
entitled to indemnification pursuant to Article 11, then Buyer shall be entitled
to deduct an equitable amount from the Holdback Funds for each such absence,
nonconforming condition, undisclosed liability or indemnification obligation.
Except as set forth below, upon the expiration of the three-month period, all
remaining Holdback Funds shall be delivered to Seller plus accrued simple
interest thereon at the rate of 6.25% per annum.
At any time or from time to time during the Holdback Period, Buyer
shall notify Seller of the amount, if any, that Buyer wishes to deduct from the
Holdback Funds; provided, however, that Buyer shall not be entitled to withhold
any of the Holdback Funds unless (a) the aggregate amount of the deduction
equals or exceeds the minimum amount set forth in Section 11.4 or (b) the amount
of the deduction relates to a Title Defect (as defined in 5.5(b)(xiv) or was
discovered in connection with title or survey reviews permitted under Section
3.8. If Seller disagrees with the amount Buyer wishes to deduct, then Seller
shall so notify the Buyer in writing, and the parties will have 45 days from the
date of such notice to resolve the dispute among themselves. If the parties have
not resolved such dispute within such 45-day period, then Buyer and Seller shall
submit the dispute to arbitration as provided in Section 14.13 of this
Agreement. The parties each agree to be bound by the decision reached in such
arbitration. All costs of the arbitration shall be split equally between Buyer
and Seller. To the extent that the Holdback Funds are insufficient to remove a
Title Defect, Seller shall immediately cause sufficient additional monies to be
deposited with Buyer so as to enable Buyer to cause such Title Defect to be
eliminated and/or removed of record.
Section 2.4 Intentionally Omitted.
Section 2.5 Post-Closing Adjustment.
(a) Preparation of Closing Date Balance Sheet. Within 60 days after the
Closing Date, Seller shall prepare an audited balance sheet for the Company as
of the Closing Date, together with the notes thereto, prepared as if it were a
fiscal year end balance sheet (the "Closing Date Balance Sheet"). The Closing
Date Balance Sheet shall be prepared in accordance with GAAP, certified by
Arthur Andersen LLP, Parent's auditors, and shall present fairly the Company's
financial position as of the Closing Date and shall not be adjusted to reflect
the 338(h)(10) Election, any corresponding elections under state, local or
foreign tax law where
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applicable, or any federal, state, local and foreign income tax liabilities
associated therewith. Upon completion of the Closing Date Balance Sheet, copies
thereof shall promptly be provided to Buyer. Buyer and Buyer's independent
accounting firm will also be entitled to review financial statements and
workpapers utilized or compiled in preparation of the Closing Date Balance
Sheet.
(b) Resolution of Disputes. If Buyer shall notify Seller within 15 days
after receipt of the Closing Date Balance Sheet ("Dispute Notice") that it
disputes any matter with respect to such Closing Date Balance Sheet, then the
parties shall attempt in good faith to reach agreement resolving all of the
disputes set forth in the Dispute Notice ("Disputed Matters") within thirty (30)
days after the Dispute Notice is given, in which event the Closing Date Balance
Sheet, as amended to the extent necessary to reflect the resolution of all such
disputes, shall be final and shall be conclusive and binding on the parties. If
the parties are unable to resolve any or all of such disputes within such 30-day
period, the parties shall, promptly after the expiration of such time period,
submit for resolution all unresolved disputes to PriceWaterhouseCoopers LLP as
arbiter (the "Arbiter") for resolution. If PriceWaterhouseCoopers LLP declines
to accept its appointment as Arbiter and the parties cannot agree on the
selection of another independent accounting firm to act as Arbiter, either party
may request the American Arbitration Association to appoint such a firm, and
such appointment shall be conclusive and binding on the parties. Promptly, but
not later than thirty (30) days after its acceptance of its appointment as
Arbiter, the Arbiter shall determine, based solely on presentation by Buyer and
Seller, and not by independent review, those items in dispute on the Closing
Date Balance Sheet and shall render a written report as to the resolution of
each dispute and the resulting calculation of the final Closing Date Balance
Sheet, the Closing Net Working Capital (as defined below) and the Closing Net
Book Value (as defined below). In resolving any disputed item, the Arbiter may
not assign a value to such item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed by
either party. The Arbiter shall have exclusive jurisdiction over, and resort to
the Arbiter as provided in this Section 2.5(b) shall be the sole recourse and
remedy of the parties against one another or any other person with respect to,
any disputes arising out of or relating to the Closing Date Balance Sheet and
the Arbiter's determination shall be conclusive and binding on the parties and
shall be enforceable in a court of law. Buyer and Seller will each bear 50% of
the fees of the Arbiter for such determination.
(c) Determination of Closing Net Working Capital. The Purchase Price
has been determined on the assumption, and the parties have entered into this
Agreement with the reasonable expectation, that the difference between (i) the
net book value of those categories of current assets listed on Schedule 2.5(c),
less (ii) the net book value of those categories of current liabilities listed
on Schedule 2.5(c), as such values are determined pursuant to this Section 2.5
and set forth in the Closing Date Balance Sheet (the "Closing Net Working
Capital"), will be at least $0.00.
(d) Adjustment of Purchase Price. The Purchase Price shall be adjusted
by the amount by which the Closing Net Working Capital is less than $0.00
(including any negative amount) or greater than $0.00 (the "Purchase Price
Adjustment"). Within 15 days after receipt by Buyer of the Closing Date Balance
Sheet, Seller shall pay the net amount of any negative Purchase Price Adjustment
to Buyer or Buyer shall pay the net amount of any positive Purchase
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Price Adjustment to Seller, as calculated in accordance with this Section 2.5,
in cash without interest; provided, however, that if there are any Disputed
Matters, any payment finally determined to be due by agreement or by arbitration
shall be made by Buyer or Seller, as appropriate, within 10 days after such
determination without interest.
ARTICLE 3
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CLOSING
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Section 3.1 Time and Place of Closing. The transactions contemplated by
this Agreement shall be consummated on or about May 23, 2000 or such other date
as the parties may agree (the "Closing"). The Closing shall take place at the
offices of Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Raleigh,
North Carolina 27607-7506. The date on which the Closing occurs shall be
referred to as the "Closing Date." Notwithstanding the Closing Date, provided
that the Closing Date is on or before May 31, 2000, the transactions
contemplated by this Agreement shall be effective for accounting purposes at
12:01 a.m. on May 15, 2000 for the convenience of all parties.
Section 3.2 Deliveries by Seller and Parent. At the Closing, Seller and
Parent shall deliver to Buyer, all duly executed:
(a) all certificates representing the Shares, duly endorsed in blank or
with appropriate stock powers;
(b) resignations of the officers and directors of the Company effective
as of the Closing;
(c) a sworn affidavit stating, under penalty of perjury, that neither
Seller nor the Company is a "foreign person" as defined under the Internal
Revenue Code of 1986, as amended ("Code") or other appropriate evidence that
Buyer is not required to withhold taxes under Section 1445(a) of the Code;
(d) certified copies of resolutions of the board of directors (and
stockholders, if required) of Seller authorizing the execution of this
Agreement, the sale of the Shares to Buyer, and the consummation of the
transactions contemplated herein, along with an incumbency certificate of
Seller;
(e) evidence of the payment in full of all debts, judgments, liens,
financing statements or deeds of trust encumbering the Assets, and releases and
satisfactions thereof, excluding any obligations under any operating leases for
any of the Assets;
(f) a non-solicitation agreement in the form attached as Exhibit B (the
"Non-Solicitation Agreement"); and
(g) such other separate documents or instruments of sale, assignment,
or transfer reasonably required by Buyer or the Title Company to consummate the
transactions contemplated by this Agreement, including titles and registrations
for the Rolling Stock and the release or termination of all liens, claims and
encumbrances held by lenders and/or creditors of Parent, Seller and/or the
Company or letters from such lenders and/or creditors, in form and substance
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satisfactory to Buyer, in its sole discretion, that such lenders and/or
creditors will release or terminate all liens, claims and encumbrances within 30
days after Closing.
Section 3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller, all duly and properly executed (where applicable):
(a) the purchase price provided in Section 2.1 (less the Holdback
Funds) and the payments for prepaid expenses and deposits provided in Section
2.2 (the "Purchase Price"), by wire transfer of immediately available funds;
(b) a certified copy of resolutions of the board of directors of Buyer
authorizing the execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, along with an incumbency certificate of
Buyer;
(c) the Non-Solicitation Agreement; and
(d) such other separate documents or instruments of sale, assignment,
or transfer reasonably required by Seller or the Title Company to
consummate the transactions contemplated by this Agreement.
Section 3.4 Title Policy. Seller shall be financially responsible for
furnishing Buyer with an A.L.T.A. Extended Owner's Policy of Title Insurance
from a title company selected by Buyer and reasonably acceptable to Seller (the
"Title Company") in the amount to be agreed upon between Buyer and Seller with
each of the Title Company's standard printed exceptions deleted and including
the endorsements hereinafter delineated and such endorsements reasonably
requested by Buyer and that are available in the state where the Land is
located, insuring marketable leasehold or marketable fee simple title, whichever
is applicable, to the Land to be in the Company subject only to the Permitted
Exceptions (as defined in Section 3.5) (the "Title Policy"). As soon as
reasonably practicable, but in any event, not later than 30 days after execution
of this Agreement but at least three business days prior to Closing, Buyer shall
have obtained an unconditional irrevocable commitment ("Title Commitment"), by
the Title Company together with complete and legible copies of all instruments
and documents referenced in the Title Policy or Title Commitment and other
documents affecting the Land which are in the possession of, or known to, the
Company or Seller. Seller shall pay the cost of the Title Commitment and/or
Title Policy attributable to the issuance of standard owner's coverage (up to
$5,000,000 in value) and, to the extent applicable and available in the states
where the Land is located, the following affirmative endorsements in form
reasonably acceptable to Buyer: (a) an endorsement insuring that the Land or
Leased Land described in the Title Policy is the same real estate as shown on
the Survey (as defined below) delivered with respect to such property; (b) an
endorsement insuring that each street adjacent to the Land or Leased Land is a
public street and that there is direct and unencumbered vehicular access to such
street from the Land or Leased Land; (c) if the Land or Leased Land consists of
more than one record parcel, contain a "contiguity" endorsement ensuring that
all of the record parcels are contiguous to one another; and (d) contain a
"non-imputation" endorsement to the effect that title defects known to the
officers, directors, and stockholders of the owner prior to the Closing shall
not be deemed "facts known to the insured" for purposes of the policy. All other
endorsements that Buyer shall reasonably request shall be at Buyer's cost. Buyer
and Seller shall split equally the cost and expense of the extended owner's
coverage under the Title Policy. The Title Policy shall insure Buyer that the
Land is unconditionally vested in the name of the Company, free and clear of all
debts and encumbrances whatsoever except: (i) zoning ordinances and regulations
which do not, in Buyer's judgment, adversely affect Buyer's use of the Land for
its
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current uses after Closing; (ii) real estate taxes and assessments, both general
and special, which are a lien but are not yet due and payable at the Closing
Date and which shall be prorated at Closing; and (iii) easements, encumbrances,
covenants, conditions, reservations, restrictions and other matters of record,
if any, as have been approved in writing by Buyer prior to the Closing Date
(collectively, the "Permitted Exceptions"). Buyer's and Seller's obligations
under this Section are subject to Sections 2.3 and 3.8.
Section 3.5 Title Review/Permitted Encumbrances. Buyer shall have 10
business days after receipt of the Title Policy or Title Commitment, items
listed as exceptions to title on the Title Policy or Title Commitment and Survey
to notify Seller in writing of any defect in the title of the Land or any other
matter unacceptable to Buyer disclosed by the Title Policy or Title Commitment
or the Survey (an "Unpermitted Exception"). Seller shall have 10 business days
after notice of any Unpermitted Exception is given by Buyer within which Seller
shall give notice to Buyer in writing as to whether Seller elects to cure any
such matter. Failure to notify Buyer in writing within such period of its
election to cure shall be deemed Seller's election to cure. Buyer shall have 15
days following receipt of Seller's notice electing not to cure in which to (a)
notify Seller that Buyer shall not elect to waive its objection to any
Unpermitted Exception which Seller does not elect to cure, or (b) amend this
Agreement to delete the parcel of Land affected by Buyer's objections and to
deduct the value of the Land from the Purchase Price, (c) effect the cure (if
possible) on behalf of Seller and to deduct the cost of cure (or if cure is not
possible, then the decreased value of the Land) from the Purchase Price, in
which event Buyer shall have a reasonable time after such notice within which to
effect such cure and, if unable to effect such cure, to provide further notice
to Seller of election of (a), (b) or (d) herein, or (d) terminate this
Agreement.
Section 3.6 Survey. Seller shall have provided to Buyer any existing
survey of the Land prior to the date hereof. As soon as reasonably practicable,
but in any event, not later than 30 days after execution of this Agreement,
Buyer shall cause to be prepared and delivered to Buyer and Title Company, at
Seller's sole cost and expense, a current A.L.T.A./A.C.S.M. Survey of the Land,
made on the ground by competent engineer or surveyor registered in the state in
which the Land is located, certified to Buyer, Buyer's lender (if any), and
Title Company, and that satisfies the standard identified on Annex II (the
"Survey"). The Survey shall contain a certification to Buyer, Buyer's lender (if
any) and Title Company by the surveyor: (a) complying with American Land Title
Association guidelines; (b) complying with such additional supporting notes,
reports and other certifications as the Title Company may require to enable the
Title Company to delete its standard survey exceptions from the Title Policy or
which Buyer may reasonably request. Seller shall pay all of the costs of the
Survey. Buyer's and Seller's obligations under this Section are subject to
Sections 2.3 and 3.8.
Section 3.7 Prorations and Charges. The parties shall prorate and
apportion, on a calendar year basis, as of the close of business on the Closing
Date, the real estate taxes and assessments, both general and special, for the
Land, based upon the last available tax statement. If the actual real estate
taxes paid by the Company or by Buyer on behalf of the Company in respect of the
period of the proration exceed the credit given Buyer at closing for such taxes,
Seller shall, upon presentation of appropriate paid tax bills, reimburse Buyer
for any amounts incurred by Buyer for such taxes in excess of prorated credit.
In addition, Seller shall be charged the cost of discharging any and all
financial encumbrances, including all deeds of trusts, mortgages and mechanics
and materialmen's liens on the Land. With respect to Leased Land, the parties
shall
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prorate rent, insurance costs, real estate taxes, operating costs (e.g., CAMs)
and any other amounts due under the applicable Real Estate Lease. If the pro
rata amounts are not known as of the Closing Date, adjustments shall be made
post closing at such time as they are known to the parties.
Section 3.8 Post Closing Title and Survey Work. Notwithstanding
anything herein to the contrary, if as of the Closing Buyer has not yet received
(a) a Title Commitment and all exceptions to title as shown in the Title
Commitment and other matters disclosed therein, and/or (b) had the time
permitted under Section 3.5 to review same, and/or (c) received a Survey (if
applicable) in form acceptable to Buyer with respect to any parcel of Land, and/
or (d) received a landlord's consent to an assignment of a Real Estate Lease,
with respect to Leased Land, and/or (e) a replatting of the Land if Seller is
conveying less than 100% of such land pursuant to this Agreement, Buyer shall
have the right to either (i) elect to close with respect to such Land; provided
Seller agrees in writing at the Closing to provide such missing items promptly
after the Closing, or (ii) delay the Closing with respect to such parcel of Land
only and close with respect to such Land when the missing items are obtained,
with (A) Buyer and Seller to execute an agreement at Closing regarding the
payment of the purchase price for such parcel(s); (B) the representations and
covenants of Seller with respect to the applicable Land continuing until the
extended closing date; and (C) Section 11.1 commencing as of the extended
Closing Date of the applicable Land.
ARTICLE 4
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POST CLOSING COVENANTS
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Section 4.1 Removal of Identification. Within three months after the
Closing with respect to all Assets that are not containers or carts, and as soon
as practicable after the Closing with respect to all containers and carts, Buyer
shall remove from the Assets all visible names, symbols, trade names, service
marks and logos of Seller or Parent other than the Business Names identified in
Section 1.1, if any.
Section 4.2 Further Assurances. From time to time on and after the
Closing and without further consideration except as provided herein, the parties
hereto shall each deliver or cause to be delivered to any other party at such
times and places as shall be reasonably requested, such additional instruments
as any of the others may reasonably request for the purpose of carrying out this
Agreement and the transaction contemplated hereby. Parent, also without further
consideration, agrees to cooperate with Buyer and to use its reasonable best
efforts to have the officers and employees of Seller cooperate on and after the
Closing Date in furnishing to Buyer information, evidence, testimony, and other
assistance in connection with obtaining all necessary permits and approvals and
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date.
Section 4.3 Transition. Neither Seller nor Parent will take any action
that is designed or intended to have the effect of discouraging any customer or
business associate of the Business from maintaining the same business
relationships with Buyer and the Company after the Closing that it maintained
with Seller or the Company before the Closing. Seller and Parent will refer all
customer inquiries relating to the Business to Buyer and/or the Company from and
after the Closing. Further, Seller and Parent agree that for a period of 90 days
following the Closing Date, they will, without additional consideration, assist
Buyer with the orderly transition of the operations of the Business from Seller
to Buyer, including customer billing and computer systems operations
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and integration for the first 90 days after Closing and thereafter for a
mutually agreed upon time if Buyer is using good faith efforts to transition
such operations.
Section 4.4 Computer Support. Seller agrees to provide to Buyer and the
Company, without additional consideration, access to and support for a period of
90 days after the Closing with respect to the customer management/billing
system. Such support shall enable Buyer and the Company to operate such systems
after the Closing in a manner consistent with the operations before the Closing.
Section 4.5 338(h)(10) Election. Seller will join with Buyer in making
the election provided by Section 338(h)(10) of the Code in accordance with
Treasury Regulation Section 1.338(h)(10)-1(T) with respect to the acquisition by
Buyer of the Shares (the "338(h)(10) Election") and, if permissible, similar
elections under any applicable state or local income tax laws. The 338(h)(10)
Election will be made on Form 8023. Such Form 8023 will be prepared by Buyer and
delivered by Buyer to Seller for Seller's consent within ninety (90) days
following the Closing Date (as defined below), which consent will not be
unreasonably withheld. Buyer will cause the Company to file the Form 8023 with
the IRS Service Center where the Federal income tax return that includes the
deemed sale gain will be filed before the fifteenth day of the ninth month
beginning after the month that includes the Closing Date. Parent and Seller will
cause the Form 8023 to be attached to the U.S. corporation income tax return
that includes the taxable income of the Company for the taxable year that
includes, and ends on, the Closing Date. Buyer will cause the Company to attach
a copy of Form 8023 to its U.S. corporation income tax return for the taxable
year beginning on the date following the Closing Date. Seller and Parent will be
responsible for any Taxes triggered by the 338(h)(10) Election, and will
indemnify Buyer and the Company against any adverse consequences arising out of
the failure of Parent and/or Seller to pay such Taxes.
Section 4.6 Employees. The following shall apply with respect to
non-union employees of the Business hired by Buyer and/or the Company within 30
days following Closing ("Hired Employees"):
(a) Buyer and/or the Company shall waive, or cause to be waived, (i)
all waiting periods for a Hired Employee to become eligible for participation in
all of the benefit plans generally available for the employees of Buyer or its
affiliates, except that Buyer and/or the Company may require compliance with
applicable waiting periods for participation in 401(k) plans, pension plans and
long-term disability plans and except that Buyer may, at its option, pay each
Hired Employee's COBRA payments for such period until the Hired Employee is
eligible to participate in Buyer's or the Company's benefit plans, and (ii)
limitations respecting "pre-existing conditions" in the applicable medical
insurance plan or plans, except for any condition of a Hired Employee which was
not covered under Seller's, Parent's or the Company's medical insurance plan
during such employee's employment with Seller or the Company. Seller will retain
all COBRA obligations existing or arising as of Closing.
(b) Buyer shall count each Hired Employee's years of continuous service
with Seller or its affiliates for purposes of determining vacation benefits
under Buyer's vacation plan. The Hired Employee shall be entitled to use any
vacation accumulated during employment with Seller and its affiliates in the
amounts set forth on Schedule 5.8; provided, however, Seller will
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reimburse Buyer in the amount of each employee's accrued vacation within 60 days
after Closing or, at Buyer's election, such amount will be deducted from the
Holdback Funds.
(c) If Buyer terminates a Hired Employee without cause within 90 days
after the Closing Date, Buyer shall pay such Hired Employee severance equal to
two weeks current base pay for every one year of such employee's continuous
service with the Seller or its affiliates.
(d) Nothing in this Agreement, express or implied, is intended to
confer upon any of the Seller's employees, former employees, collective
bargaining representatives, job applicants, any association or group of such
persons any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement, including any rights of employment.
Section 4.7 Real Property Assurance Program. In the event that any
homeowner covered by the real property assurance program, as set forth in the
Agreement for Operation of Sampson County Landfill Development and Use of BFI
Sanitary Landfill dated June 17, 1992 by and between Sampson County, North
Carolina and Browning-Ferris Industries of South Atlantic, Inc. (or any
successor in interest), claims to have suffered damage due to a reduction in
value of such homeowner's property caused by the Landfill, Buyer, Seller and
Parent agree to work together in good faith at such time to reach a mutually
beneficial result for all parties involved.
Section 4.8 Audited Financial Statements. For financial accounting
purposes, the parties acknowledge that Buyer must obtain (i) an audited balance
sheet of the Business and the Assets as of December 31, 1999, and related
audited statements of income and cash flow for the twelve months then ended (the
"Audited Financial Statements"), and (ii) unaudited balance sheets of the
Business and the Assets as of April 30, 1999 and April 30, 2000, and related
unaudited statements of income and cash flow for each such four month period on
a comparative basis (the "Unaudited Financial Statements") (the Audited
Financial Statements and the Unaudited Financial Statements are collectively
referred to herein as the "Business Financial Statements"). The Business
Financial Statements must be prepared within seventy-five (75) days following
the Closing Date. The Audited Financial Statements must be prepared in
accordance with GAAP from the books and records of Seller, the Company and the
Business, as applicable. Buyer shall be responsible for preparing the Business
Financial Statements at its expense; provided, however, Parent and Seller shall
cooperate with Buyer and Buyer's auditors and provide full and timely access to
the internal books and records and appropriate employees, as well as access to
Parent's and Seller's external auditors (in each case only to the extent related
to the Business and the Assets) at no charge to Buyer to facilitate Buyer's
preparation of the Business Financial Statements.
Section 4.9 Materialman's Lien Waivers. Within 60 days after Closing,
Seller will have obtained and provided to Buyer materialman's lien waivers from
all contractors, subcontractors and service providers involved in construction
or other service on the Land or to the Business and, if requested by the
Company, Parent and Seller will assign all of their rights to any warranties
arising out of work performed by such materialmen with respect to the Business.
Section 4.10 Financial Assurance. Seller will keep its existing Letter
of Credit from Chase in the amount of $14,087,138 (the "Letter of Credit") in
place for the benefit of the NCDENR for two weeks following the Closing Date.
Buyer and/or the Company will replace such financial assurance within two weeks
following the Closing Date.
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ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLER AND PARENT
--------------------
Seller and Parent, jointly and severally, represent and warrant to
Buyer that the statements contained in this Section 5: (i) except as set forth
in the schedules to the specific subsections of this Section 5 delivered by
Seller and Parent to Buyer pursuant to Section 9.7 (such schedules hereinafter
collectively referred to as the "Disclosure Schedules" and, individually, as a
"Disclosure Schedule") are correct and complete as of the date of this
Agreement; (ii) will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5); and (iii) shall survive the Closing in
accordance with Section 11.1 hereof.
Wherever a representation or warranty herein is qualified as having
been made "to the best of Seller's, Parent's or the Company's knowledge," such
phrase shall mean the knowledge of the officers, directors and employees of
Seller, Parent and the Company actively responsible for the operation of the
Assets or the Business, after reasonable inquiry.
Section 5.1 Organization; Authority. (a) Each of Seller, Parent and the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation and is duly authorized, and
qualified and licensed under all laws, regulations, ordinances and orders of
public authorities to carry on its businesses in the places and in the manner as
presently conducted except for where failure to be so authorized, qualified or
licensed would not have a material adverse effect on their respective business.
Copies of each of Seller's, Parent's and the Company's Certificate of
Incorporation (certified by the Secretary of State of the state of their
incorporation) and Bylaws (certified by their respective Secretaries), each as
amended, are attached hereto as Schedule 5.1.
(b) Seller and Parent each have the full legal right and power to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement.
Section 5.2 Stock Ownership; Binding Effect. All of the issued and
outstanding shares of the capital stock of the Company are owned, directly or
indirectly, of record and beneficially by Seller and, except as set forth on
Schedule 5.2, are free and clear of all liens, security interests, encumbrances,
adverse claims, pledges, equities and other restrictions whatsoever
(collectively, "Encumbrances"). This Agreement is the valid and binding
obligation of Seller and Parent, enforceable against them in accordance with its
terms. All of the Shares are duly authorized, validly issued, fully paid and
nonassessable. There are no options, warrants, conversion rights, rights of
exchange or other rights, plans, agreements or commitments of any nature
whatsoever (including, without limitation, conversion or preemptive rights)
providing for the purchase by or from the Company, Seller or Parent of any
shares of the Company's capital stock or sale by the Company of any shares of
its capital stock, or any securities convertible into or exchangeable for any
shares of capital stock of the Company.
Section 5.3 Permits; Proprietary Rights; Environmental Documents.
Attached as Schedule 5.3 is a complete and accurate list as of the date hereof
of all Permits, permit applications, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, franchises, certificates,
trademarks, trade names, service marks, patents, patent applications and
copyrights
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owned or held by the Company (collectively, the "Rights"), none of which Rights,
to the best of Seller's, Parent's and the Company's knowledge, infringe on the
rights of others and all of which are now valid, in good standing and in full
force and effect. Except as set forth on Schedule 5.3, such Rights are adequate
for the operation of the Business as presently constituted and as it was
previously operated when the Business was owned and operated by Seller. The
Company is not in default under any Permit and each Permit is in full force and
effect. The Company holds, in its name, all permits necessary for operation of
the Borrow Pit and the Landfill as a municipal solid waste and construction and
demolition waste landfill, including the permit to operate and permit to
construct issued by the State of North Carolina. Neither Parent, Seller nor the
Company has been notified (and has no reason to believe) that any governmental
agency intends to cancel, terminate or modify any Permit. Notwithstanding the
foregoing, no representation or warranty is made with respect to the continuing
validity and effectiveness of the Permits as a result of the transactions
contemplated hereby.
Section 5.4 Personal Property.
(a) Listed on Schedule 1.1(c) hereto is a complete and accurate list of
all Equipment. Seller makes no representation about the condition of the
equipment.
(b) Listed on Schedule 1.1(d) hereto is a complete and accurate list of
all Rolling Stock, which Schedule shall designate any Rolling Stock that is
inoperable pursuant to applicable Department of Transportation rules and
regulations. Except as set forth in the foregoing sentence, Seller makes no
representation about the condition of the Rolling Stock.
(c) All of the Assets are either owned by the Company or leased under
an agreement indicated on Schedule 5.4(c). Except for office equipment, none of
the Equipment is leased. All leases set forth on Schedule 5.4(c) are in full
force and effect and constitute valid and binding agreements of the parties (and
their successors) thereto in accordance with their respective terms. No default
by the Company or, to the best of Seller's, Parent's and the Company's
knowledge, any other party to any of such leases exists or would exist except
for the passage of time or delivery of a notice or both.
Section 5.4.A Title to Assets. At the Closing, the Company shall have
good and marketable title to the Assets, free and clear of all debts (except
operating lease payments for office equipment such as telephone systems copiers,
fax machines and postage meters, and closure/post-closure liabilities) and
Encumbrances. The Assets constitute all of the assets owned or leased by the
Company used in the Business, and include all of the Permits necessary to
operate the Business at or prior to Closing.
Section 5.5 Real Property.
(a) The Company has good fee simple marketable title to the Land (other
than the Leased Land), free and clear of all Encumbrances other than the
Permitted Exceptions, and marketable leasehold title to the Leased Land.
(b) Except as set forth on Schedule 5.5(b):
(i) At all times during the operation of the Business, the
Land has been licensed, permitted and authorized for the operation of the
Business under all Applicable Laws (as defined in Section 5.9) relating to the
protection of the environment, the Land and the conduct of the Business thereon
(including all zoning restrictions and land use requirements) and neither the
Company, Parent nor Seller has received any notice of any violation of any
Applicable Law.
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(ii) The Land is usable for its current uses, and the Land can
be used by Buyer and/or the Company after the Closing for its current uses in
the manner currently operated by the Company, without violating any Applicable
Law or private restriction, and such uses are legal conforming uses. There are
no proceedings or amendments pending and brought by, or threatened by, any third
party which would result in a change in the allowable uses of the Land or which
would modify the right of the Company to use the Land for its current uses after
the Closing Date.
(iii) The Company, Parent and Seller have made available to
Buyer all engineering, geologic and other similar reports, documentation, plats
and maps in the possession or control of the Company, Parent or Seller relating
to the Land and all plans and specifications, as-builts, contracts and
warranties in connection with the improvements thereon.
(iv) The Company, Parent and Seller have delivered to Buyer
all existing leases, occupancy agreements or licenses or similar agreements and
any amendment thereto in connection with the Land (collectively "Real Estate
Leases"). The Company is not in default beyond any applicable cure period under
any Real Estate Lease.
(v) Except in connection with Leased Land, no party except the
Company has a present or future right to possession of all or any part of the
Land.
(vi) There are no pending or threatened condemnation or
eminent domain proceedings affecting all or any part of the Land.
(vii) There are no pending or threatened special assessments
affecting the Land, or any contemplated improvements affecting the Land that may
result in special assessments affecting the Land.
(viii) Neither the Company, Parent nor Seller has any
knowledge of any fact or condition which will result in the termination of any
currently existing access to or from the Land and any public rights of ways and
roads.
(ix) No written or verbal commitments have been made to any
governmental authority, utility company, or any other organization, group, or
individual, relating to the Land which would impose an obligation upon Buyer or
the Company or their successors or assigns to make any contribution or
dedications of money or Land or to construct, install, or maintain any
improvements of a public or private nature on or off the Land.
(x) All utilities serving the Land are supplied directly to
the Land by public utilities through public or private easements benefiting the
Land and are adequate to service the normal operations of the Land and of the
Business, and any private easements are insurable under the Title Commitment,
subject only to the Permitted Exceptions.
(xi) Neither the Company, Parent nor Seller has failed to
disclose to Buyer any material adverse fact or condition regarding the Land.
(xii) There are no unrecorded contracts, leases, easements or
other agreements, or claims of any third party, affecting the use, title,
occupancy or development of the Land, and no person, firm or entity has any
right of first refusal, option or the right to acquire all or any part of the
Land.
(xiii) Neither the Company, Parent nor Seller is a "foreign
person" as the term is defined in Section 1445 of the Code and any applicable
regulations promulgated thereunder.
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(xiv) Neither the Company, Parent nor Seller shall cause or
permit any lien, Encumbrance, covenant, condition, restriction, assessment,
easement, right of way, obligation, encroachment or liability ("Title Defect")
whatsoever to be placed of record, affecting the title insurance to be given
Buyer pursuant to this Agreement or otherwise exist, from the date of this
Agreement to the Closing or issuance of the Title Policy if as of the Closing
the Title Policy is not issued, excepting, however, the matters permitted under
Article 3 above.
(xv) Neither Seller, Parent nor the Company has transferred,
conveyed, exchanged or granted, whether written or oral, any interest in or to
any mineral rights, to or affecting the Land, or entered into, whether written
or oral, contracts or licenses for or relating to the removal of any such
materials.
(xvi) The Land is properly zoned for operation of the Landfill
and the Borrow Pit as it is currently operated and as it was previously operated
when the Business was owned and operated by Seller, and neither the Company,
Seller nor Parent has any knowledge of any intended changes to zoning ordinances
affecting the Land.
(c) The Company, Parent and Seller have provided to the government
agencies requiring the same, all reports, notices, filings and other disclosures
required by Applicable Laws and all such reports, notices, filings and other
documents were complete and accurate in all material respects at the time
provided to such government agencies.
Section 5.6 Contracts. Listed on Schedule 1.1(h) hereto is a complete
and accurate list of the Customer Contracts, Related Approvals and Employee
Contracts as of the date hereof, true and complete copies of which have been
made available to Buyer. None of the Customer Contracts, Related Approvals and
Employee Contracts listed on Schedule 1.1(h) have been modified, altered,
terminated or otherwise amended in writing. All Customer Contracts, Related
Approvals and Employee Contracts are in full force and effect and are valid,
binding and enforceable against the respective parties thereto in accordance
with their respective provisions and Seller is not in default in, nor has there
occurred an event or condition which with the passage of time or the giving of
notice (or both) would constitute a default, with regard to the payment or
performance of any obligation under any Customer Contract, Related Approval and
Employee Contract. Neither the Company, Parent nor Seller has received, or
given, any notice that any person intends or desires to modify, waive, amend,
rescind, release, cancel or terminate any Customer Contract, Related Approval
and Employee Contract. There is no contract, agreement or other arrangement
granting any person any preferential right to purchase any of the Assets, the
Shares or the Business, or except as may be provided in any of the Customer
Contracts as set forth on Schedule 5.6, to purchase any of the disposal services
offered by the Company at less than market rates. Except as set forth on
Schedule 5.6, the consummation of the transactions contemplated hereby does not
require any consent or approval by any customer, employee or other third party
under any Customer Contracts, Related Approvals and Employee Contracts. All
Customer Contracts, Related Approvals and Employee Contracts have been assigned
by Seller to the Company and assumed by the Company. Any national accounts of
Seller which may be indirectly served by the Business are accounts with Seller's
hauling operations and not accounts of the Business. Disclosure by Seller of
required consents will not relieve Seller of its obligation to obtain all such
consents on or before Closing, or if waived as a condition to Closing by Buyer,
within ninety (90) days after Closing.
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Section 5.7 Insurance Policies. Attached as Schedule 5.7 is a complete
and accurate list as of the date hereof of all insurance policies carried by the
Company, Parent or Seller with respect to the Business or the Assets showing,
among other things, the amount of coverage, the company issuing the policy, the
expiration date of each policy and whether such coverage is on an occurrence or
claims made basis. There have been no insurance claims of any kind with respect
to the Company. All insurance policies are in full force and effect and shall
remain in full force and effect through the Closing Date. Neither the Company's,
Parent's nor Seller's insurance with respect to the Assets or the Business has
ever been canceled, and neither the Company, Parent nor Seller has been denied
coverage with respect to the Assets or the Business within the last three years.
All premiums for such insurance policies attributable to period ending on or
before the Closing Date have been paid by Company, Parent or Seller, or accrued
on the Financial Statements.
Section 5.8 Employees; Compensation; Employee Benefits.
(a) Attached as Schedule 5.8 is a complete and accurate list of all
employees of the Business and their rate of compensation as of the date hereof
(including a breakdown of the portion thereof attributable to salary, bonus and
other compensation, respectively). Also included on Schedule 5.8 is each
employee's accrued vacation. Except as set forth on Schedule 5.8, each employee
of the Business is an employee at will.
(b) Except as set forth on Schedule 5.8, neither Seller, the Company
nor any entity that is a member of a group which is under common control with
Seller or the Company, who together with Seller or the Company is treated as a
single employer within the meaning of Section 414(b), (c) and (m) of the Code
(an "ERISA Affiliate"), has (i) any deferred compensation, bonus, pension, or
any other employee benefit plan, contract, agreement, or other arrangement
providing for compensation or other benefits to employees (including officers)
or independent contractors, individually or as a group, to which the Company or
any ERISA Affiliate is a party or by which it is bound; (ii) any "employee
pension benefit plan," as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA") maintained by Seller, the Company or any
ERISA Affiliate or to which it contributes or is required to contribute,
including any multiemployer pension plan; (iii) any "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, maintained by Seller, the Company or
any ERISA Affiliate or to which the Company or any ERISA Affiliate contributes
or is required to contribute, including any multiemployer welfare plan, or any
other plan under which "fringe benefits" (including, without limitation,
vacation plans or programs, severance benefits, supplemental retirement,
sabbatical, sick leave plans or programs, dental, vision, or medical plans or
programs, disability, employee relocation, cafeteria benefit (Code Section 125)
or dependent care (Code Section 129), life insurance or accident insurance
plans, programs or arrangements, or related or similar benefits) are afforded to
employees of, or otherwise required to be provided by, the Company or any ERISA
Affiliate; or (iv) other fringe or employee benefit plans, programs, or
arrangements.
(c) Except as set forth on Schedule 5.8, neither Seller, the Company
nor any ERISA Affiliate has or maintains any benefit plan that is subject to
Title IV of ERISA, nor any "multiemployer plan" (as defined in Section 3(37) of
ERISA). Each employee plan intended to be qualified under Section 401(a) of the
Code, if any, has received a favorable determination letter from the Internal
Revenue Service (the "IRS") stating that it is so qualified and nothing has
occurred since the date of the letter that could reasonably be expected to
affect the qualified status of such employee plan. Except as set forth on
Schedule 5.8, no employee benefit plan provides medical benefits to any former
employees (including retirees) of the Business or any ERISA
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Affiliate, other than benefits required to be provided under applicable law,
including Section 4980B of the Code. To the Company's, Seller's and Parent's
knowledge, with respect to each employee plan, the Company or ERISA Affiliate of
the Company has complied with (i) the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the proposed regulations thereunder and (ii) the applicable
requirements of the Family Leave Act of 1993 and the regulations thereunder. All
former employees who have elected and are presently receiving COBRA benefits are
set forth on Schedule 5.8 or will be provided to Buyer within 60 days following
Closing; Seller will retain all COBRA obligations with respect to such former
employees.
(d) To the Company's, Seller's and Parent's knowledge, Seller and the
Company have complied with all Applicable Laws relating to employment, including
those relating to wages, hours, collective bargaining, discrimination in
employment, sexual harassment, terms and conditions of employment, occupational
safety and health and employment practices, unfair labor practices, and the
payment and withholding of taxes and other sums as required by appropriate
governmental authorities. There is no unfunded liability for accrued benefits,
whether or not vested, under any funded or unfunded employee benefit plan
(including medical plan or program reserves or self-insurance reserves), and all
contributions required to be made to or with respect to each employee benefit
plan and all costs of administering each employee benefit plan have been
completely and timely made, paid, accrued or otherwise adequately reserved in
accordance with GAAP.
Section 5.9 Compliance with Law; No Conflicts.
(a) Each of the Company, Parent and Seller has in the past complied in
all material respects with, and is now in material compliance with, all federal,
state and local statutes, laws, rules, regulations, orders, permits (including
zoning restrictions and land use requirements and environmental laws and
regulations) and licenses and all administrative and judicial judgments,
rulings, decisions and orders applicable to the Company, the Shares or the
Business (collectively, the "Applicable Laws") and Permits. Neither the Company,
Seller nor Parent now is or ever has been involved in any litigation or
administrative proceeding relating to the Assets, the Shares or the Business
seeking to impose fines, penalties or other liabilities or seeking injunctive
relief for violation of any Applicable Laws or Permits relating to the
environment. Neither the Company, Seller nor Parent has received any notice that
the Company, Parent or Seller is under investigation or other form of review
relating to the Shares, the Assets or the Business with respect to any
Applicable Law or Permit. The Company has been issued, and has kept in current
force and effect, all required Permits necessary with respect to the Assets and
the Business under Applicable Laws.
(b) The execution, delivery and performance of this Agreement, the
consummation of any transactions herein referred to or contemplated hereby and
the fulfillment of the terms hereof and thereof will not:
(i) conflict with, or result in a breach or violation of the
Certificate of Incorporation or Bylaws of the Company, Seller or Parent;
(ii) except as provided in Section 5.9(c), conflict with, or
result in a material breach under any Customer Contract, Related Approval, Real
Estate Lease or Other Material Contract or result in the creation or imposition
of Encumbrance on the Assets, the Shares or Business pursuant to: (A) any law or
regulation to which the Company, Seller or Parent, or any of
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their respective properties are subject, or (B) any judgment, order or decree to
which the Company, Seller or Parent is bound or any of their respective property
is subject; or
(iii) except for the filings by Seller required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the consents or filings required under the Permits, Customer
Contracts, Related Approvals and Real Estate Leases set forth on Schedule
5.9(c)(iii), require notice to, or the consent or approval of, any governmental
authority or agency or other third party in order to remain in full force and
effect. Disclosure by Seller of required consents will not relieve Seller of its
obligation to obtain all such consents at or before Closing.
(c) Seller, Parent and the Company have made available to Buyer copies
of all reports of Seller, Parent or the Company with respect to the Business or
the Assets for the past five years required under the Federal Occupational
Safety and Health Act of 1970, as amended, and under all other health and safety
Applicable Laws or with any order issued, entered, promulgated or approved
thereunder, or which may give rise to any liability, including any liability
under CERCLA (as defined below) or similar state or local Applicable Laws, or
otherwise form the basis of any litigation, hearing, notice of violation, study
or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling or the
emission, discharge, release or threatened release into the environment, of any
waste.
Section 5.10 Taxes. Except as set forth on Schedule 5.10, (a) the
Company, Parent and Seller have filed all requisite federal, state, local and
other tax returns relating to the Business, the Shares or the Assets that are
due for all fiscal periods ended on or before the date hereof (the "Tax
Returns") and as of the Closing shall have filed in a timely manner all such
returns due for all periods ended on or before the Closing Date; (b) no federal,
state, local or other tax returns or reports filed by the Company, Parent or
Seller (whether filed prior to, on or after the date hereof) with respect to the
Company, Parent or Seller will result in any taxes, assessments, fees or other
governmental charges upon the Assets, the Shares, the Business, the Company or
Buyer, whether as a transferee of the Assets or otherwise; (c) all federal,
state and local Taxes owed or due and payable with respect to the Assets, the
Shares and the Business (whether or not shown on any Tax Return) have been paid,
including all federal, state and local income, sales, use franchise, excise and
property taxes; (d) there are no agreements to extend the statutory period for
the assessment of any Taxes, examinations in progress or claims against the
Company, Parent or Seller for Taxes (including penalties and interest) for any
period or periods prior to and including the date hereof (and as of the Closing
Date), and no notice of any claim, whether pending or threatened, for Taxes has
been received; and (e) there are no liens for Taxes on any Assets or the Shares.
Parent and Seller will (i) include the income of the Company, the Assets and the
Business (including any deferred income triggered into income by Treasury
Regulation Sections 1.1502-13 or 1.1502-14 and any excess loss accounts taken
into income under Treasury Regulation Section 1.1502-19) on the consolidated
federal income Tax Return that includes Seller for all periods through the
Closing Date, and (ii) pay any federal income Taxes attributable to such income.
For purposes of this Agreement, the terms "Tax" and "Taxes" mean and include any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
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Section 5.11 Litigation. Except as set forth on Schedule 5.11, there is
no claim, litigation, action, suit or proceeding, formal arbitration, informal
arbitration or mediation, administrative, judicial or otherwise, pending or, to
the best of the Company's, Seller's and Parent's knowledge, threatened, against
the Company, Seller or Parent relating to the Assets, the Shares or the
Business, at law or in equity, before any federal, state or local court or
regulatory agency, or other governmental or private authority or that could
interfere with the consummation of the transaction contemplated by this
Agreement or, if adversely determined, result in an Encumbrance against the
Company, the Assets or the Shares or have a material adverse effect on the
Business; no notice of any of the above has been received by the Company, Seller
or Parent; and, to the best of the Company's, Seller's and Parent's knowledge,
no facts or circumstances exist which would give rise to any of the foregoing.
Also listed on Schedule 5.11 are all instances where the Company, Seller or
Parent is the plaintiff, or complaining or moving party in any way, related to
the Company, the Shares, the Assets or the Business.
Section 5.12 Absence of Price Renegotiation Contracts. Neither Parent,
Seller nor the Company is now a party to any governmental contracts related to
the Assets or the Business which are subject to price redetermination or
renegotiation.
Section 5.13 Conduct of the Business Since January 1, 2000. Since
January 1, 2000, except as disclosed on Schedule 5.13, Parent, Seller and/or the
Company has conducted the Business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, since January
1, 2000, there has not been any:
(a) change in the authorized capital or equity ownership of the
Company;
(b) work interruption, labor grievance or unfair labor practice claim
filed with respect to the Business;
(c) sale or transfer of, or any agreement to sell or transfer, any of
the Assets, the Shares or the Business or any plan, agreement or arrangement
granting any preferential right to purchase or acquire any interest in any of
the Assets, the Shares or the Business, or requiring consent of any party to the
transfer and assignment of any of the Assets, the Shares or the Business;
(d) waiver of any material rights or claims of Parent, Seller or the
Company related to the Assets, the Shares or the Business;
(e) material breach, amendment or termination of any Customer Contract
or Permit or loss of any material customer or Customer Contract;
(f) transaction by the Company, Parent or Seller outside the ordinary
course of its business with respect to the Assets, the Shares or the Business;
(g) amendment to the Certificate of Incorporation or Bylaws of the
Company;
(h) any other material occurrence, event, incident, action or failure
to act outside the ordinary course of business of the Company, Parent and Seller
with respect to the Assets, the Shares or the Business; or
(i) any action by the Company, Seller, Parent, or any employee, officer
or agent of the Company, Seller or Parent committing to do any of the foregoing.
Section 5.14 Hazardous Materials; Disposal Sites. With respect to
Seller's ownership and/or operation of the Business, and with respect to the
Company, neither Parent, Seller nor the
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Company has ever owned, leased, had an interest in, generated, transported,
stored, handled, recycled, reclaimed, disposed of, or contracted for the
disposal of, hazardous materials, hazardous wastes, hazardous substances, toxic
wastes or substances, infectious or medical waste, radioactive waste or sewage
sludges as those terms are defined by the Resource Conservation and Recovery Act
of 1976; the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"); the Atomic Energy Act of 1954; the Toxic Substances
Control Act; the Occupational Health and Safety Act; any comparable or similar
state statute; any other Applicable Law or the rules and regulations promulgated
under any of the foregoing, as each of the foregoing may have been from time to
time amended (collectively, "Hazardous Materials") except in material compliance
with all Applicable Laws. With respect to Seller's ownership and/or operation of
the Business, and with respect to the Company, there have been no spills, leaks,
deposits or other releases into the environment or onto or under the Land of any
Hazardous Materials except in material compliance with all Applicable Laws. With
respect to Seller's ownership and/or operation of the Business, and with respect
to the Company, no Encumbrances with respect to environmental liability have
been imposed against the Company, Parent or Seller or any of the Assets under
CERCLA, any comparable state statute or other Applicable Law, and no facts or
circumstances exist which would give rise to the same. Further, no portion of
the Land is listed on the CERCLA list or the National Priorities List of
Hazardous Waste Sites or any similar list maintained by the states in which the
Assets are located or the Business is conducted, and neither the Company, Seller
nor Parent is listed as or has been notified that it is a potentially
responsible party with respect to the Assets or the Business or as a result of
the operation of the Assets or the Business under CERCLA, any comparable state
statute or other Applicable Law, and neither the Company, Seller nor Parent has
received a notice of such listing.
Included on Schedule 5.14 is a complete list of the names and addresses
of all disposal sites at any time now or in the past utilized by the Company,
Parent or Seller or any predecessor of the Company, Parent or Seller with
respect to the Business or the Assets, none of which sites is listed on the
CERCLA list or the National Priorities List of hazardous waste sites or any
comparable state list.
Section 5.15 Underground Storage Tanks. Any underground or above-ground
storage tanks containing Hazardous Materials, petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 or other Applicable Law
located on the Land have been used and maintained in material compliance with
all Applicable Laws. All underground and above-ground storage tanks located on
the Land are set forth on Schedule 5.15.
Section 5.16 Corrupt Practices. Neither the Company, Seller nor Parent,
nor any of their respective officers, directors, employees or agents, has ever
made, offered or agreed to offer anything of value to any employees of any
customers of the Business for the purpose of attracting business to the Business
or to any foreign or domestic governmental official, political party or
candidate for government office or any of their employees or representatives,
nor have they otherwise taken any action which would cause it to be in violation
of the Foreign Corrupt Practices Act of 1977, as amended.
Section 5.17 Accounts Receivable. The Accounts Receivable are bona fide
accounts receivable incurred in the ordinary course of business in arms' length
transactions, are valid and binding obligations of the account debtors, and to
Seller's and the Company's knowledge, are without counterclaims, setoffs, or
other defenses thereto.
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Section 5.18 Affiliates' Relationships.
(a) Those Assets that include contractual arrangements between the
Company and any Affiliate or between Seller or Parent and any Affiliate relating
to the Assets or the Business, are described on Schedule 5.18.
(b) Except as provided in Schedule 5.18, no Affiliate has any direct or
indirect interest in (i) any entity which is competitive with the Business, or
(ii) any Assets used in the conduct of the Business.
(c) All obligations of any Affiliate to the Business and all
obligations of the Business to any Affiliate are listed on Schedule 5.18, which
sets forth a true, correct and complete schedule of payments relating thereto.
(d) For purposes of this Section 5.18, an "Affiliate" is a person or
entity controlled by, controlling or under common control with the Company.
Section 5.19 Performance Bonds; Letters of Credit. Except as set forth
on Schedule 5.19, there are no performance bonds or letters of credit
outstanding with respect to the operation of the Business or the Assets. The
Letter of Credit will remain in place for two weeks following the Closing Date.
Section 5.20 Employment and Labor Matters. Except as set forth in
Schedule 5.20, neither Parent, Seller nor the Company is a party to (a) any
collective bargaining agreement, (b) any agreement respecting the employment of
any officer or any other employee, or (c) any agreement for the provision of
consulting or other professional services which is not cancelable without
penalty on less than 30 days' notice, in each case with respect to the Business.
Except as set forth in Schedule 5.20, within the last five years neither Parent,
Seller nor the Company has experienced any labor disputes, union organization
attempts or any work stoppage due to labor disagreements in connection with the
Business. Except to the extent set forth in Schedule 5.20, with respect to the
Business, (a) Parent and Seller have complied, and the Company is in compliance,
in all material respects with all Applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, in connection with the
Business; (b) there is no unfair labor practice charge or complaint against
Parent, Seller or the Company pending or, to the best of the Company's, Parent's
and Seller's knowledge, threatened in connection with the Business; (c) there is
no labor strike, dispute, request for representation, slowdown or stoppage
actually pending or, to the best of the Company's, Parent's and Seller's
knowledge, threatened against or affecting the Business nor any secondary
boycott with respect to services of the Business; (d) no question concerning
representation has been raised or is threatened respecting the employees of
Seller of the Business or of the Company; (e) no grievance which has had or
could have a material adverse effect on the Business, nor any arbitration
proceedings arising out of or under collective bargaining agreements, is pending
and no such claim therefor exists; and (f) there are no administrative charges
or court complaints against Parent, Seller or the Company concerning alleged
employment discrimination or other employment related matters pending or
threatened before the U.S. Equal Employment Opportunity Commission or any other
governmental entity in connection with the Business.
Section 5.21 Complete Disclosure. This Agreement and the schedules
hereto and all other documents and written information furnished to Buyer and
its representatives pursuant hereto or pursuant to the negotiation of this
transaction or the investigations by Buyer or its employees or
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representatives, taken as a whole, do not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. If the Company, Parent or Seller becomes
aware of any fact or circumstance which would change a representation or
warranty of Seller or Parent in this Agreement or any other statement made or
document provided to Buyer, the party with such knowledge shall promptly give
notice of such fact or circumstance to Buyer. None of (a) such notification, (b)
any pre-closing investigation by Buyer of Seller, the Assets or the Business, or
(c) the Closing contemplated by this Agreement, shall cure any breach of this
Agreement caused thereby or relieve Parent or Seller of their obligations under
this Agreement, including the representations and warranties made in this
Section 5.
Section 5.22 Representation Concerning Totality of Assets. The Company
owns, leases or has the legal right to use, and on the Closing Date will own,
lease or have the legal right to use, all of the properties and assets,
including the Land, the Permits, the Customer Contracts, the Other Material
Contracts, the Rolling Stock and the Equipment, used or intended to be used in
the conduct of the Business, and, with respect to contract rights, the Company
is a party to and enjoys the benefit of all contracts, agreements and other
arrangements used or intended to be used by the Company in or relating to the
conduct of the Business. The Company has, and on the Closing Date will have,
good and marketable title to the Assets, or, in the case of leased or subleased
Assets, valid and subsisting leasehold interests in all such Assets, free and
clear of all Encumbrances except those that do not affect the use or value of
such Assets, and such Assets constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and necessary in the
conduct of, the Business. Notwithstanding the foregoing, there are no Assets
other than office equipment subject to any lease. If additional assets or rights
forming a part of, used, held or intended to be used in, and necessary in the
conduct of, the Business are identified by Buyer or Seller post-Closing as not
having been included in the Assets, Seller shall promptly transfer and assign to
the Company such assets or rights as part of the Purchase Price and without
additional consideration (and if Seller fails to do so, Buyer may equitably
adjust the Purchase Price by retaining an equivalent value out of the Holdback
Funds pursuant to Section 2.3). The Assets include all property and assets
tangible and intangible, and all leases, licenses and other agreements, which
are currently used or held for use in the Business and which are necessary to
permit the Company to carry on the Business as presently conducted (including
such Business when it was owned and/or operated by Seller).
Section 5.23 Financial Statements.
(a) Seller has delivered to Buyer (i) unaudited balance sheets of the
Business as of each of January 31, 2000, March 31, 2000 and April 30, 2000, and
the related unaudited statements of income for the respective twelve month,
three month and four month periods then ended (the "Seller Financial
Statements"), and (ii) an unaudited beginning balance sheet of the Company as of
May 14, 2000 (the "Beginning Balance Sheet"), a copy of which is attached hereto
as Exhibit C.
(b) The Seller Financial Statements and the Beginning Balance Sheet may
sometimes hereinafter be referred to collectively as the "Financial Statements".
Such Financial Statements fairly present in all material respects the financial
condition and the results of operations of the Business as at the respective
dates of and for the periods referred to in such Financial Statements, all in
accordance with GAAP applied on a basis consistent with preceding years and
throughout the periods involved, subject to normal, recurring year-end
adjustments (the effect of which will not,
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individually or in the aggregate, have a Material Adverse Effect on the Company
or the Business). All Financial Statements have been prepared from the books and
records of Seller and/or the Business, as applicable. The internal books and
records of Seller and the Business from which the Financial Statements were
prepared have been kept accurately in all material respects in the ordinary
course of business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of Seller and
the Business have been properly recorded in all material respects. No financial
statements of any individual, corporation, trust, partnership, limited liability
company, organization, association or other entity are required by GAAP to be
included in the Beginning Balance Sheet of the Business.
Section 5.24 Books and Records. The books of account, minute books,
stock record books and other records of Seller, with respect to the Business
only and to the extent applicable, and the Company, all of which have been
delivered to Buyer, are complete and correct and have been maintained in
accordance with sound business practices. The minute book of the Company
contains accurate and complete records of all meetings held of, and corporate
action taken by the shareholders, the Board of Directors and committees of the
Board of Directors of the Company and/or Seller, as applicable, and no meeting
of the shareholders, Board of Directors or committees has been held for which
minutes have not been prepared and are not contained in such minute books.
Section 5.25 No Undisclosed Liabilities. To Parent's and Seller's
knowledge, the Company has no obligations or liabilities of any nature (matured
or unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for in the Seller Financial Statements, (ii) those incurred in the
ordinary course of business since December 31, 1999 and consistent with past
practices, which in the aggregate do not exceed Fifty Thousand Dollars
($50,000); (iii) those incurred in connection with the execution of this
Agreement; and (iv) liabilities for closure, post-closure, wetlands and other
costs addressed in Article 10. Except as set forth on the Beginning Balance
Sheet, the Company has no long-term liabilities.
Section 5.26 Revenue; EBITDA.
(a) The average monthly revenue for the Business from non-affiliated
entities for the three months ended March 31, 2000, as accurately reflected on
the financial statements of the Business previously provided by Seller to Buyer,
dated as of March 31, 2000 and attached hereto as Exhibit D (the "March 31
Financial Statements") is $1,066,000 (the "Average Monthly Revenue"). If the
Average Monthly Revenue is less than the amount represented on the March 31
Financial Statements, the difference will be multiplied by twelve to produce an
annualized shortfall in Average Monthly Revenue (the "Annualized Revenue
Shortfall"). If the Annualized Revenue Shortfall is greater than the Annualized
EBITDA Shortfall (as defined below), such Annualized Revenue Shortfall will be
multiplied by 1.7 and the resulting amount will be immediately reimbursed by
Seller to Buyer or, at Buyer's election, deducted from the Holdback Funds. For
purposes of this Agreement, "monthly revenue" means total monthly revenue
derived from the operation of the Business determined on an accrual basis in
accordance with GAAP for customers who are currently receiving service and who
have outstanding accounts receivable balances no greater than sixty (60) days as
of the date such service was rendered, net of any discount, set-off, rebate or
other allowance available to such customers. All revenue reflected on
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the financial statements was validly derived in accordance with Applicable Laws.
(b) The average monthly EBITDA (as defined below) for the Business for
the three months ended March 31, 2000, as accurately reflected on the March 31
Financial Statements, is $736,292 (the "Average Monthly EBITDA"). If the Average
Monthly EBITDA is less than the amount represented on the March 31 Financial
Statements, the difference will be multiplied by twelve to produce an annualized
shortfall in Average Monthly EBITDA (the "Annualized EBITDA Shortfall"). If the
Annualized EBITDA Shortfall is greater than the Annualized Revenue Shortfall,
such Annualized EBITDA Shortfall will be multiplied by 5.25 and the resulting
amount will be immediately reimbursed by Seller to Buyer or, at Buyer's
election, deducted from the Holdback Funds. For purposes of this Agreement,
"EBITDA" means income before income taxes plus interest expense (net of interest
income) and depreciation and amortization.
ARTICLE 6
---------
REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants that the statements contained in this
Article 6: (i) are correct and complete as of the date of this Agreement; (ii)
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article 6); and (iii) shall survive the Closing in accordance
with Section 11.1.
Section 6.1 Corporate Organization. Buyer is duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation.
Buyer is duly authorized, qualified and licensed under all applicable laws,
regulations and ordinances of public authorities to carry on its businesses in
the places and in the manner as now conducted except for where the failure to be
so authorized, qualified or licensed would not have a material adverse effect on
such businesses.
Section 6.2 Corporate Authority. Buyer has the full legal right and
power to enter into this Agreement and to consummate the transactions
contemplated by this Agreement.
Section 6.3 No Conflicts. The execution, delivery and performance of
this Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not: (a) conflict with, or result in a breach or violation of, the Articles of
Incorporation or Bylaws of Buyer; (b) conflict with, or result in a material
breach under any document, agreement or other instrument to which Buyer is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer pursuant to: (i) any law or regulation to
which Buyer or any of its property is subject, or (ii) any judgment, order or
decree to which Buyer is bound or any of its property is subject; (c) result in
termination or any impairment of any material permit, license, franchise,
contractual right or other authorization of Buyer; or (d) except for the filings
by Buyer required by the HSR Act, require the consent of, or the filing with any
governmental authority or agency or any other third party in order to remain in
full force and effect.
Section 6.4 Binding Agreement. This Agreement is the binding and valid
obligation of Buyer, enforceable against it in accordance with its terms.
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ARTICLE 7
---------
COVENANTS PRIOR TO CLOSING
--------------------------
Section 7.1 Access to Land and Records. Between the date of this
Agreement and the Closing Date, Seller will and Seller will cause the Company to
afford to or obtain for the officers and authorized representatives of Buyer
access to all of the Land (including for the purpose of performing all testing,
inspections and other procedures considered desirable by Buyer), Assets, sites,
books and records of Seller and the Company, at all reasonable times and upon
reasonable notice and will furnish Buyer with such additional financial and
operating data and other information as to the Assets, the Shares and the
Business as Buyer may from time to time reasonably request. Parent and Seller
will cooperate with Buyer, its representatives, engineers, auditors and counsel
in the preparation of any documents or other material which may be required in
connection with any documents or materials required by any governmental agency.
Buyer will cause all information obtained in connection with the negotiation of
this Agreement to be treated as confidential in accordance with the provisions
of Article 13 hereof. Seller or the Company will have provided Buyer with copies
of current surveys and title policies relating to the Land prior to the
execution of this Agreement.
Section 7.2 Activities of the Company Prior to Closing. Between the
date of this Agreement and the Closing Date, Seller will and Seller will cause
the Company to:
(a) carry on the Business diligently and in substantially the same
manner as currently existing and not make or institute any material changes in
the methods of service, operation or accounting of the Business;
(b) maintain the Assets in as good working order and condition as at
present, ordinary wear and tear excepted;
(c) perform all of its obligations under the Real Estate Leases,
Permits, Customer Contracts, Related Approvals, Employee Contracts, Other
Material Contracts and other Assets;
(d) keep in full force and effect present insurance policies, bonds,
letters of credit or other insurance coverage with reputable insurers and
issuers;
(e) use reasonable efforts to maintain its relationships with
suppliers, customers, consultants, employees, independent contractors,
government agencies, communities and others having business relations with
Seller and the Company, and notify Buyer of the loss of any material customer,
vendor or other business relationship;
(f) maintain material compliance with all Applicable Laws;
(g) maintain and perform present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or lease
instruments related to the Assets or the Business, without the prior written
consent of Buyer; and
(h) provide all reasonable assistance to Buyer to provide for an
orderly transfer of the Company and the Business from Seller to Buyer.
Section 7.3 Prohibited Activities Prior to Closing. Between the date of
this Agreement and the Closing Date, Seller and the Company will not, without
the prior written consent of Buyer:
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(a) change the authorized capital, admit new shareholders or permit the
withdrawal of existing shareholders of the Company, or grant any options,
warrants, puts, calls, conversion rights or commitments relating to the
Company's equity interests of any kind;
(b) incur or agree to incur any liability or make any capital
expenditures related to the Business in excess of an aggregate of $50,000;
(c) enter into any new mortgage, pledge or other lien or encumbrance
upon any Asset;
(d) breach, amend or terminate any Real Estate Lease, Permit, Customer
Contract, Related Approval, Employee Contract, or Other Material Contract in any
material manner;
(e) enter into any transaction outside the ordinary course of the
Business or otherwise prohibited hereunder; or
(f) allow any other action or omission, or series of actions or
omissions, by the Company, Seller or Parent that would cause a representation
and warranty of Seller and Parent made in Section 5.13 of this Agreement to be
untrue on the Closing Date.
Section 7.4. Contact with Government Officials and Customers. The
Company, Seller and Parent shall each use their best efforts to cooperate with
Buyer in making contact with (a) the appropriate governmental agencies and
officials having information about or jurisdiction over the Company, Seller, the
Parent, the Business or the Land, assets or obligations or rights of Seller,
including environmental and land use agencies and officials, in order to assist
Buyer in completing its regulatory evaluation of the Business and the Assets and
to assist the Company, Seller and Parent in securing any consents necessary to
transfer the Permits or in securing new permits; and (b) the customers under the
Customer Contracts and third parties under the Other Material Contracts, in
order to assist the Company, Seller and Parent in securing any consents
necessary to transfer the Customer Contracts and the Other Material Contracts to
Buyer as contemplated by this Agreement. The Company, Seller and Parent shall
use their commercially reasonable best efforts to obtain all consents required
as a result of the transactions contemplated by this Agreement under the
Permits, the Customer Contracts, the Related Approvals, the Real Estate Leases
and the Other Material Contracts at or prior to the Closing. If the transactions
contemplated by this Agreement, without the consent of a third party, would
constitute a breach of any Customer Contract, Permit, Related Approval, Real
Estate Lease or Other Material Contract, and such consent has not been obtained
as of the Closing Date, but nevertheless Buyer elects to consummate the
transactions contemplated herein, Seller will still be obligated to obtain such
third-party consent following the Closing Date.
Section 7.5 Public Announcements. Buyer and Parent may prepare a
mutually acceptable written announcement concerning this transaction. Except for
filings under the HSR Act or as may otherwise be required by law or the rules
and regulations of the New York Stock Exchange or the NASDAQ, neither Buyer, the
Company, Parent nor Seller shall make any additional public announcements
without the prior consent of the other party.
Section 7.6 HSR Act Filings. Each of Buyer and Parent undertakes and
agrees to file as soon as practicable, and in any event prior to five days after
the date hereof, a Notification and Report Form under the HSR Act with the
United States Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "Antitrust Division"). Each of
Buyer and Parent shall (a) respond as promptly as practicable to any inquiries
received from the FTC or the Antitrust Division for additional information or
documentation and to all
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inquiries and requests received from any State Attorney General or other
governmental authority in connection with antitrust matters, and (b) 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 written consent of the other party hereto
(subject to Applicable Law). Buyer shall use its commercially reasonable best
efforts to avoid or eliminate impediments under any antitrust, competition, or
trade regulation law that may be asserted by the FTC, the Antitrust Division,
any State Attorney General or any other governmental entity with respect to the
Acquisition so as to enable the Closing Date to occur prior to May 14, 2000 (the
"Outside Date"). Each party shall (a) promptly notify the other party of any
written communication to that party from the FTC, the Antitrust Division, any
State Attorney General or any other governmental entity and, subject to
Applicable Law, permit the other party to review in advance any proposed written
communication to any of the foregoing; (b) not agree to participate in any
substantive meeting or discussion with any governmental authority respect of any
filings, investigation or inquiry concerning this Agreement or the transaction
contemplated hereby unless it consults with the other party in advance and, to
the extent permitted by such governmental authority, gives the other party the
opportunity to attend and participate thereat; and (c) furnish the other party
with copies of all correspondence, filings, and communications (and memoranda
setting forth the substance thereof) between them and their affiliates and their
respective representatives on the one hand, and any government or regulatory
authority or members or their respective staffs on the other hand, with respect
to this Agreement and the Acquisition. If Buyer shall have complied with all of
its obligations under this Section 7.6, but there is no action that Buyer can
undertake or offer to undertake in compliance with this Section that would
eliminate the impediment asserted by the FTC, Antitrust Division, or State
Attorney General or other order in any suit or proceeding, in order for the
Closing Date to occur prior to the Outside Date, assuming all conditions other
than those relating to such impediment or order have been satisfied or waived,
then Buyer shall not be deemed to have breached its obligations under this
Section 7.6.
Section 7.7 Standstill Agreement. Unless and until this Agreement is
terminated pursuant to Article 12 hereof without the Closing having taken place,
the Company, Seller and Parent will not directly or indirectly (through a
representative, agent, employee or otherwise) solicit or accept offers for the
Assets, the Shares or the Business or for a merger or consolidation involving
the Assets, the Shares or the Business, or respond to inquiries from, provide or
share information with, negotiate with or in any way facilitate inquiries or
offers from, third parties who express or who have heretofore expressed an
interest in acquiring the Assets, the Shares or the Business by merger,
consolidation or other combination, nor will Parent or Seller permit the Company
to do any of the foregoing. Parent and Seller shall promptly advise Buyer of any
proposal by a third party to acquire the Assets, the Shares or the Business.
ARTICLE 8
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF
--------------------------------------
PARENT AND SELLER
-----------------
The obligations of Parent and Seller hereunder are subject to the
completion, satisfaction, or at their option, waiver, on or prior to the Closing
Date, of the following conditions.
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Section 8.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be accurate 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; and each and all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer on or before the Closing Date shall have been duly complied with and
performed.
Section 8.2 Consents. All necessary notices to, consents of and filings
with any governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer shall have been obtained and made, including all
consents required under the HSR Act (or the expiration of the required waiting
period).
Section 8.3 No Adverse Proceeding. No action or proceeding before a
court or any other governmental agency or body shall have been instituted to
restrain or prohibit any of the transactions contemplated by this Agreement.
Section 8.4 Simultaneous Closings. The consummation of the transactions
identified on Annex I shall occur simultaneously with the Closing.
Section 8.5 Deliveries. Buyer shall be prepared to make the deliveries
described in Section 3.3.
Section 8.6 Intentionally Omitted.
ARTICLE 9
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer hereunder are subject to the completion,
satisfaction or, at its option, waiver, on or prior to the Closing Date, of the
following conditions.
Section 9.1 Representations and Warranties. The representations and
warranties of Seller and Parent contained in this Agreement shall be accurate 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.
Section 9.2 Covenants. Each and all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller and
Parent on or before the Closing Date shall have been duly complied with and
performed.
Section 9.3 No Adverse Proceeding. No action or proceeding before a
court or any other governmental agency or body shall have been instituted to
restrain or prohibit any of the transactions contemplated by this Agreement.
Section 9.4 Simultaneous Closings. The consummation of the transactions
identified on Annex I shall occur simultaneously with the Closing.
Section 9.5 No Adverse Change. No material and adverse change in the
results of operations or financial condition of the Business shall have occurred
since January 1, 2000.
Section 9.6 Consents. All necessary notices to, consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated
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herein to be made or obtained by the Company, Seller or Parent shall have been
obtained and made by the Company, Seller or Parent, including all consents
required under the HSR Act (or the expiration or early termination of the
required waiting period), and Buyer shall have determined, in its sole
discretion, that Buyer, the Company, Seller or Parent has received all of the
consents Buyer deems necessary under any Customer Contract, Related Approval or
Employee Contract requiring consent to assignment by virtue of the transaction
contemplated hereunder, or if waived as a condition to Closing by Buyer, such
consents will be obtained by Seller or Parent within 90 days following the
Closing, regardless of whether the need for such consent has been disclosed by
Seller or Parent on a Schedule or otherwise.
Section 9.7 Delivery of Disclosure Schedules. Seller shall have
delivered to Buyer complete and final Disclosure Schedules and such Disclosure
Schedules must have been determined to be acceptable by Buyer in its sole
discretion. Seller shall use its best efforts to prepare and deliver to Buyer
complete and final Disclosure Schedules within 30 days after the date of this
Agreement, and in any event not less than seven business days prior to the
scheduled date for Closing.
Section 9.8 Permits. Buyer shall have determined, in its sole
discretion, that all of the Permits required for the operation of the Business
are validly issued to and held by the Company and that such Permits will not be
affected by the transactions contemplated by this Agreement and will continue
without the need for public hearing or third party consent, and without premium,
penalty, restriction or any adverse consequences as a result of the consummation
of the transactions contemplated hereby.
Section 9.9 Surveys. Buyer shall have received the Surveys in form and
substance provided for in Article 3.
Section 9.10 Title Policies. The Title Policy shall have been issued in
accordance with Article 3 or the Title Company shall have issued the preliminary
title commitments and shall have agreed to issue the Title Policies in each case
in accordance with Article 3.
Section 9.11 Deliveries. Seller and Parent shall have made the
deliveries described in Section 3.2.
Section 9.12 Intentionally Omitted
Section 9.13 General. All actions taken by Parent and Seller in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
Section 9.14 Due Diligence. Buyer will have completed its due diligence
investigation of the Business, the Assets and the Shares confirming (i) Parent's
and Seller's representations and warranties herein and (ii) there are no
commercial, legal, environmental, ethical or financial factors which are
unacceptable to Buyer in Buyer's sole discretion.
ARTICLE 10
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OLD LANDFILL SITE; WETLANDS ISSUES; REAL PROPERTY ISSUES
--------------------------------------------------------
Section 10.1 Old Landfills; Wetlands Mitigation. Included in the
Company are two old landfill sites more fully described on Exhibit F attached
hereto and made a part hereof (the "Old
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Landfills"). The Old Landfills consist of the following: (i) the Old Site which
was operated under NCDEHNR Permit No. 1903 and closed in 1983 (the "Oldest
Site"), and (ii) Site A which is operated under NCDEHNR Permit No. 82-01, is
currently at approximately 99% of permitted capacity and will be ready for
closing and capping upon reaching 100% of permitted capacity ("Site A").
Further, a Wetlands Mitigation Plan dated October, 1998 has been prepared for
Parent and Seller by EcoScience Corporation in connection with Hazen and Sawyer,
Environmental Engineers and Scientists (the "Mitigation Plan"), which Mitigation
Plan addresses wetlands mitigation for the Old Landfills and for Site B being
operated under NCDENR Permit No. 82-02 ("Site B"). Accordingly, the parties are
making the agreements in this Article 10 with respect to, among other things,
the Closure/Post-Closure Costs (as defined below) and the Wetlands Mitigation
Costs (as defined below) with respect to the Old Landfills and any Wetlands
Impact (as defined below) at Site B.
Section 10.2 Wetlands Impact. Parent, Seller and Buyer agree to use
their commercially reasonable efforts to secure approval of the Mitigation Plan
by the Army Corps of Engineers (the "Corps"). Seller and Parent acknowledge that
a failure to secure Corps approval of the Mitigation Plan on terms reasonably
acceptable to Buyer will materially and adversely impact the available capacity
at Site B, which impact has been calculated by G.N. Richardson & Associates to
have an $8,000,000 economic impact on Landfill capacity (the "Wetlands Impact").
In the event the Corps fails to approve the Mitigation Plan on terms reasonably
acceptable to Buyer within two years following the Closing Date, Buyer will be
entitled to the amount in Section 10.4(c); provided, however, if the Mitigation
Plan as approved by the Corps and accepted by Buyer differs from the current
Mitigation Plan, the amount of the Wetlands Impact due to Buyer may be pro-rated
to reflect a different level of impact on Site B; provided, further, the total
amount of the Wetlands Impact due to Buyer hereunder will be paid by Seller at
such time as the Company opens the cell(s) of the Landfill impacted by the
acreage covered in the Mitigation Plan. Until such time, the performance bond
referenced in Section 10.4(c) will remain in place. In the event that, within
five years following payment by Seller of the Wetlands Impact amount or any
portion thereof, the Company obtains approval of the Mitigation Plan or an
alternate mitigation plan reasonably acceptable to Buyer, the Company or Buyer
will reimburse Seller a pro-rata amount of the Wetlands Impact paid by Seller
(based upon available permitted capacity as a result of the mitigation plan
approved as compared to the available permitted capacity as a result of the
current Mitigation Plan) (i) less the amount of direct and indirect costs
incurred by the Company or Buyer in getting the Mitigation Plan or an alternate
mitigation plan approved, including any increased construction costs, the effect
of inflation and the cost impact of the delay, (ii) plus simple interest at 7.5%
on the amount being repaid beginning on the date the Wetlands Impact amount is
paid by Seller.
Section 10.3 Buyer's Responsibilities. Subject to the terms and
conditions of Section 10.4 below, with respect to the Old Landfills, Buyer
and/or the Company shall be responsible for (i) performing all closure, capping
and post-closure activities necessary or required for certified closure and to
comply with all Applicable Laws and regulations, and all permit and land use
conditions (including general maintenance, groundwater, stormwater and methane
monitoring, regulatory compliance, installation, maintenance and operation of
wells, drainage facilities, landfill gas management, leachate treatment and
disposal, electrical and other systemic processes, preparation of surveys and
reports, addressing geological issues, mowing the grass and responding to storm
erosion and other conditions caused by weather) in connection therewith (the
"Closure/Post-Closure Activities") and (ii) performing all wetlands mitigation
required for
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compliance with all Applicable Laws and regulations and all permit and land use
conditions (the "Wetlands Mitigation Activities") pursuant to the Mitigation
Plan including mitigation of approximately three impacted acres located on Site
A (the "Site A Impacted Acres"), which mitigation on Site A is currently
expected to cost approximately $175,000 per impacted acre. Buyer and/or the
Company may use the remaining capacity of Site A and will commence
Closure/Post-Closure Activities for Site A within 24 months following the
Closing Date or earlier if required by Applicable Laws or the Permits. Wetlands
Mitigation Activities with respect to Site A will commence within five years
following the Closing Date for the Site A Impacted Acres or earlier if required
by Applicable Laws or the Permits.
Section 10.4 Seller's and Parent's Responsibilities. Seller and Parent
shall be jointly and severally liable for, and shall indemnify and hold Buyer
and the Company harmless from and against, all commercially reasonable costs
incurred by Buyer or the Company, or their successors or assigns, in connection
with Closure and Post-Closure Activities ("Closure/Post-Closure Costs") and
Wetlands Mitigation Activities ("Wetlands Mitigation Costs") related to the Old
Landfills. Wetlands Mitigation Costs shall include costs associated with
mitigation of the Site A Impacted Acres. Buyer will perform or contract for the
performance of the Closure/Post-Closure Activities and Wetlands Mitigation
Activities as and when due. In connection with leachate treatment and disposal,
Buyer and/or the Company will separately monitor leachate coming from the Old
Landfills and invoice Seller based on such amounts. As soon as practicable upon
receipt of invoices for the Closure/Post-Closure Costs and Wetlands Mitigation
Costs, Buyer or the Company shall submit to Seller a detailed list of costs paid
or incurred by Buyer or the Company, including administrative costs, together
with such detailed receipts or other supporting materials as Seller may
reasonably request. Any amount not paid by Seller either to Buyer or the Company
or directly to the service provider within 30 days after receipt of such list
shall be subject to a late charge equal to the lower of one and one-half percent
(1 1/2%) per month or the maximum rate permitted by applicable law. Buyer will
prepare an annual budget for anticipated Closure/Post-Closure Costs and Wetlands
Mitigation Costs (the "Budget"), which Budget will be subject to Seller's
review, and Seller and Parent shall have the right to inspect work giving rise
to costs upon reasonable notice during normal business hours. Notwithstanding
the foregoing, failure by the Company or Buyer to provide such Budget of
anticipated material expenditures shall not relieve Seller and Parent of their
obligation to pay all commercially reasonable, documented Closure/Post-Closure
Costs and Wetlands Mitigation Costs in connection with the Old Landfills upon
submission by Buyer or the Company of the aforementioned list of costs paid or
incurred by Buyer and/or the Company. At or prior to Closing, in connection with
such Closure/Post-Closure Costs, Wetlands Mitigation Costs and Wetlands Impact,
Seller or Parent will post a performance bond acceptable to Buyer, in its
reasonable discretion, with Buyer named as beneficiary, securing Seller's and
Parent's obligations under this Section 10.4, in the following amounts:
(a) $5,500,000 for costs associated with closure of Site A;
(b) $4,840,000 for costs associated with post-closure care of Site A;
(c) $8,000,000 for Wetlands Impact; and
(d) $525,000 for Wetlands Mitigation Costs.
Unless an earlier release is agreed upon by the parties: (i) the bond
for (a) above will be maintained in place until 30 days following certification
by the State of North Carolina of closure
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of Site A; (ii) the bond for (b) above will be maintained in place for 30 years
following the release of the bond for (a) above; (iii) the bond for (c) above
will be maintained in place until the earlier of (A) the date upon which the
Company opens the cell of the Landfill impacted by the acreage covered in the
Mitigation Plan or (B) approval by the Corps of the current Mitigation Plan or a
mitigation plan reasonably acceptable to Buyer (in which case the Wetlands
Impact may be pro-rated as set forth in Section 10.2); and (iv) the bond for (d)
above will be maintained in place for five years following the Closing Date. In
addition to the foregoing, in the event any remediation is required with respect
to the Old Landfills, Seller will be responsible for the performance and cost of
all such remediation. Notwithstanding the foregoing, with respect to the bonds
for (a), (c) and (d) above, Seller or Parent may provide a single performance
bond in lieu of multiple bonds, which bond will be a two year bond and will be
annually renewable following the two year period. Such bond may be decreased per
the scheduled terms set forth in items (i), (ii) and (iv) above and as
appropriate, in the reasonable determination of Buyer, to reflect the decreased
impact of any such item. The bond required in (b) above will be a one year,
annually renewable bond, the amount of which may be adjusted over time, in the
reasonable determination of Buyer, to reflect changes in the amount of projected
liability over time.
Section 10.5 9.6 Acre Parcel. Seller and Parent acknowledge that
neither of them is the record owner of a 9.6 acre parcel in the northwest
portion of the Landfill (the "9.6A Parcel"). Failure of the Company to obtain
good fee simple marketable title to the 9.6A Parcel will materially and
adversely impact the available capacity at Site B, which impact has been
calculated by G.N. Richardson & Associates to be a $1,095,000 economic impact
(the "9.6A Impact"). In the event the Company is unable to obtain fee simple
marketable title to the 9.6A Parcel within two years following the Closing Date,
Seller will pay to the Company or Buyer the amount of the 9.6A Impact. If the
Company is able to obtain fee simple marketable title to the 9.6A Parcel, Seller
will pay Buyer the documented costs of the Company or Buyer associated
therewith. The Company and Buyer will use commercially reasonable efforts to
obtain fee simple marketable title to the 9.6A Parcel within such time period.
Seller and Parent will indemnify Buyer and the Company for costs associated with
the 9.6A Parcel up to the amount of the 9.6A Impact as set forth in Section
11.2.
Section 10.6 Disputes. If Seller or Parent disputes any of the costs to
be reimbursed to Buyer pursuant to Section 10.4 or 10.5, Seller or Parent shall
nevertheless pay the amount not in dispute within such 30-day period and the
parties shall attempt to resolve their differences within 60 days after Seller's
receipt of such list of costs. If the parties are unable to resolve their
differences within such 60-day period, they shall submit the matter to binding
arbitration in accordance with Section 14.13. All costs of the arbitration shall
be paid by the party determined by the arbitrator(s) to be the non-prevailing
party.
ARTICLE 11
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INDEMNIFICATION
---------------
Section 11.1 Survival of Representations, Warranties and Covenants. All
of the representations, warranties and covenants of any party hereto contained
in this Agreement and the liabilities and obligations of the parties with
respect thereto shall survive the Closing hereunder for two years after the
Closing Date; provided, however, that (a) the representations and warranties in
Sections 5.5(b) and (c), 5.14 and 5.15 shall survive for a period of three
years, (b) the
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representations and warranties in Sections 5.1, 5.2, 5.5(a), 5.9, 5.10, 5.11,
5.16, 5.18, 6.1 and 6.2 shall survive until the expiration of the applicable
statute of limitations period, (c) the covenants in Articles 10 and 11 shall
survive indefinitely; and (d) the covenants in Sections 13.1, 13.2 and 13.3 and
Articles 3, 4, and elsewhere in this Agreement shall survive in accordance with
their terms.
Section 11.2 Indemnification by Parent and Seller.
(a) Seller and Parent agree that they will each, jointly and severally,
indemnify, defend (as to third party claims only), protect and hold harmless
Buyer, its officers, shareholders, directors, divisions, subdivisions,
affiliates, subsidiaries, parent, agents, employees, successors and assigns at
all times from and after the date of this Agreement from and against all
liabilities, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including court
costs, reasonable attorneys' and expert witness fees and expenses and expenses
of investigation) whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent,
whether arising out of occurrences prior to, at or after the date of this
Agreement, incurred as a result of or incident to: (i) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties by Seller or Parent set forth herein, or in the Schedules, Exhibits
or certificates attached hereto or delivered pursuant hereto by Seller or
Parent; (ii) nonfulfillment or nonperformance of any agreement, covenant or
condition on the part of Parent or Seller made in this Agreement; (iii) any
liability, claim or other cost or obligation arising out of the Old Landfills,
including without limitation, liabilities, claims and other costs or obligations
arising out of system failures (such as the liner, cap, sideslopes), leachate
from the Old Landfills, "hot" wells, methane gas, environmental impact arising
out of the Old Landfills, and those items set forth in Section 10.4; (iv) any
liability, claim or other cost or obligation arising out of any wells installed
at the Landfill (whether or not located in the Old Landfills) categorized as
"hot" including, without limitation, resulting impact to the Company's permits
and assessment and remediation costs; (v) any liability, claim or other cost or
obligation arising from or relating to Parent's, Sellers or the Company's
ownership or operation of the Business on or prior to the Closing Date; or (vi)
any claim by a third party that, if true, would mean that a condition for
indemnification set forth in subsections (i) through (vi) of this Section
11.2(a) had been satisfied.
(b) In addition to the indemnification provisions set forth in Section
11.2 above, from and after the Closing Date, Seller and Parent specifically
agree that they will each, jointly and severally, protect, defend, indemnify and
hold harmless Buyer and the Company from any and all Taxes that are imposed on
the Company in respect of the Business, the Shares or the Assets or for which
the Company may otherwise be liable (i) for any taxable period ending prior to
the Closing Date and, in the case of any taxable period that includes the
Closing Date, the portion of such period that includes the Closing Date and all
days before the Closing Date (a "Pre-Closing Period")l (ii) resulting by reason
of the several liability of the Company pursuant to Treasury Regulations Section
1.1502-6 or any analogous state, local or foreign law or regulations or by
reason of the Company's having been made a member of any consolidated, combined
or unitary group on or prior to the Closing Date; (iii) resulting from the
Company's ceasing to be a member of the affiliated group (within the meaning of
Section 1504(a) of the Code) that includes Seller or Parent; (iv) in respect of
any taxable period ending on or after the Closing Date (a "Post Closing Period")
attributable to events, transactions, sales, deposits, services or rentals
occurring, received or performed in a Pre-Closing Period; (v) in respect of any
Post-Closing Period, attributable to any change in accounting method employed by
the Company during any of its four previous taxable
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years; (vi) in respect of any Post-Closing Period, attributable to any items of
income or gain of a partnership reporting the Company as a partner, to the
extent such items are properly attributable to periods of the partnership ending
on or before the Closing Date; (vii) attributable to any discharge of
indebtedness that may result from any capital contributions by Seller (or an
affiliate of Seller) to the Company of any intercompany indebtedness owed by the
Company to Seller (or an affiliate of Seller); (viii) resulting from the making
of the 338(h)(10) election (or analogous provision of state, local or
territorial law); and (ix) resulting from the breach of the covenants,
representations and warranties of Parent and/or Seller set forth in Section 5.10
hereof; provided, however, that the liability of Parent and Seller under the
forgoing provisions of this paragraph shall be reduced as to any item to the
extent that such item was specifically and fully reserved for in the Closing Net
Working Capital Statement.
(c) Buyer will, as to any Taxes in respect of which Seller or Parent
has agreed to indemnify Buyer or the Company, promptly inform Seller or Parent
of, and permit the participation of Seller or Parent in, any investigation,
audit or other proceeding by or with the Internal Revenue Service or any other
taxing authority empowered to administer or enforce such a Tax and will not
consent to the settlement or final determination in such proceeding without the
prior written consent of Seller or Parent (which consent will not be
unreasonably withheld).
Section 11.3 Indemnification by Buyer. Buyer agrees that it will
indemnify, defend (as to third party claims only), protect and hold harmless
Seller and Parent at all times from and after the Closing Date from and against
all liabilities, claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, penalties, losses, costs and expenses whatsoever
(including court costs, reasonable attorneys' fees and expenses and expenses of
investigation) whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extra-ordinary, patent or latent,
incurred by Seller or Parent as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties of Buyer set forth herein, or in the Schedules, Exhibits or
certificates attached hereto or delivered pursuant hereto by Buyer; (b)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of Buyer made in this Agreement; (c) any liability, claim or other cost or
obligation assumed pursuant to Section 10.3; and (d) any claim by a third party
that, if true, would mean that a condition for indemnification set forth in
subsections (a) or (c) of this Section 11.3 had been satisfied.
Section 11.4 Limitation on Liability. The indemnification obligations
set forth in this Article 11 shall apply only if a Closing occurs, and then only
after the aggregate amount of such obligations, when aggregated with the
indemnification obligations set forth in Article 11 of the Fayetteville Asset
Purchase Agreement, exceed $125,000, at which time the indemnification
obligations shall be effective as to all amounts on a first dollar basis;
provided that only claims in excess of $10,000 shall apply toward the $125,000
basket. The foregoing indemnification threshold shall not apply to any title or
survey matters resolved under Section 3.8 hereof, any Purchase Price Adjustment
under Section 2.5, breach of Seller's obligation under Section 4.9, Parent's
and/or Seller's breach of the representation and warranty set forth in the last
sentence of Section 5.25, or to any indemnification obligations under Section
11.2(a)(iii) or (iv), or under 11.2(b). Further, the indemnification obligations
set forth in this Article 11, when aggregated with the indemnification
obligations set forth in Article 11 of the Fayetteville Asset Purchase
Agreement, shall be limited to an aggregate amount not to exceed $15,000,000;
provided further that the foregoing cap shall not apply to the indemnification
obligations under Section 10.5 or
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11.2(a)(iii) and (iv), to the actual fraud of Parent or Seller, or to Parent's
and/or Seller's breach of the representation and warranty set forth in the last
sentence of Section 5.25.
Section 11.5 Indemnification Procedure Between Buyer and Seller. Upon
the occurrence of any claim for which indemnification is believed to be due
hereunder, the party seeking indemnification (the "Indemnified Party") shall
provide notice of such claim to the party from whom indemnification is sought
(the "Indemnifying Party"), stating in general terms the circumstances giving
rise to the claim, specifying the amount of the claim (or an estimate thereof)
and making a request for any payment then believed due (subject to the
limitations herein). Any claim shall be conclusive against the Indemnifying
Party in all respects 20 days after receipt by the Indemnifying Party of such
notice, unless within such period the Indemnifying Party sends the Indemnified
Party a notice disputing the propriety or amount of the claim. Such notice of
dispute shall describe the basis for such objection and the amount of the claim
that the Indemnifying Party does not believe should be subject to
indemnification. Upon receipt of any such notice of objection, both the
Indemnified Party and the Indemnifying Party shall use all reasonable efforts to
cooperate and arrive at a mutually acceptable resolution of such dispute within
the next 30 days. If a mutually acceptable resolution cannot be reached between
the Indemnified Party and the Indemnifying Party within such 30-day period,
either party may submit the dispute for resolution in accordance with the
provisions of Section 14.13. If it is finally determined that all or a portion
of such claim amount is owed to the Indemnified Party, the Indemnifying Party
shall (subject to the terms of Section 11.4) within 10 days of such
determination, pay the Indemnified Party such amount owed in cash, together with
interest from the date that the Indemnified Party initially requested such
payment until the date of actual payment, at an annual rate equal to the prime
interest rate then generally in effect on the date of payment as set forth in
The Wall Street Journal.
Section 11.6 Procedure for Indemnification with Respect to Third Party
Claims.
(a) If any third party shall notify an Indemnified Party with respect
to any matter (a "Third Party Claim") that may give rise to a claim for
indemnification against an Indemnifying Party or if any party who may make a
claim for indemnification under this Agreement otherwise becomes aware of any
matter that may give rise to such a claim or wishes to make such a claim
(whether or not related to a Third Party Claim), then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party is
thereby prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within a reasonable time after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any adverse consequences (which will include all losses, claims,
liens, and attorneys' fees and related expenses) the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third Party
Claim involves only monetary damages and does not seek an injunction or
equitable relief or involve the possibility of criminal penalties, (iv)
settlement of, or adverse judgment with respect to
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the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 11.5(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (which will not be unreasonably withheld) and (iii) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (which will not be unreasonably withheld).
(d) In the event or to the extent that any of the conditions set forth
in Section 11.5(b) above is or becomes unsatisfied, however, (i) the Indemnified
Party may defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim and any matter it may deem
appropriate in its sole discretion and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection therewith
(but will keep the Indemnifying Party reasonably informed regarding the progress
and anticipated cost thereof), (ii) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the cost of defending against
the Third Party Claim (including attorneys' fees and expenses), (iii) the
Indemnifying Party will remain responsible for any adverse consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this Section 11, and (iv) the Indemnifying Party shall be deemed to have waived
any claim that its indemnification obligation should be reduced because of the
manner in which the counsel for the Indemnified Party handled the Third Party
Claim.
Section 11.7 Materiality Qualifiers. Solely for purposes of this
Article 11, whether a representation, warranty or covenant has been breached
will be determined without regard to any material adverse effect or materiality
qualifiers contained in such representation, warranty or covenant since the
parties have separately negotiated a materiality standard in conjunction with
Section 11.4.
ARTICLE 12
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TERMINATION OF AGREEMENT
------------------------
Section 12.1 Termination by Buyer. Buyer, by notice in the manner
hereinafter provided on or before the Closing Date, may terminate this Agreement
in the event of a material breach by Parent or Seller in the observance or in
the due and timely performance of any of the covenants or agreements contained
herein on their part to be performed, and such breach shall not have been cured,
after written notice thereof, on or before the Closing Date, or in the event of
the failure to complete or satisfy and condition set forth in Article 9, which
failure to complete or satisfy is not waived by Buyer.
Section 12.2 Termination by Seller. Seller may, by notice in the manner
hereinafter provided on or before the Closing Date, terminate this Agreement in
the event of a material breach
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by Buyer in the observance or in the due and timely performance of any of the
covenants or agreements contained herein on its part to be performed, and such
breach shall not have been cured, after written notice thereof, on or before the
Closing Date, or in the event of the failure to complete or satisfy any
condition set forth in Article 8, which failure to complete or satisfy is not
waived by Seller.
Section 12.3 Termination for Failure to Close. Either Buyer or Seller,
by notice in the manner hereinafter provided, may terminate this Agreement if
the Closing has not occurred on or before May 31, 2000; provided that no party
in default hereunder shall have the right to terminate this Agreement pursuant
to this Section 12.3.
Section 12.4 Effect of Termination for all Other Reasons. Termination
of this Agreement pursuant to this Article 12 shall not in any way terminate,
limit or restrict the rights and remedies of any party hereto against any other
party which has breached this Agreement prior to termination hereof.
Section 12.5 Simultaneous Termination. In the event of termination of
this Agreement pursuant to this Article 12, the transactions identified on Annex
I shall terminate simultaneously therewith.
Section 12.6 Transfer of Permit. Buyer, Seller and Parent acknowledge
that the NCDENR has certain requirements, including a 45-day public comment
period, associated with transfer and/or reissuance of Permit No. 82-02 to the
Company naming Buyer as the Company's parent, which permit is required for
operation of the Landfill. In the event that the NCDENR does not approve
permanent transfer of Permit No. 82-02 upon terms and conditions that are
reasonably acceptable to Buyer, Buyer shall have the right to rescind the
transactions contemplated by this Agreement, (but not the related purchase
transactions on Annex I) including repayment of the Purchase Price by Parent and
Seller, but only after the parties have explored in good faith other possible
remedies, including a life-of-the-site operating agreement.
ARTICLE 13
----------
NONDISCLOSURE
-------------
Section 13.1 Nondisclosure by Seller and Parent. The Company, Seller
and Parent recognize and acknowledge that they had in the past, currently have,
and in the future may possibly have, access to certain confidential information
of Buyer, such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of Buyer and its
businesses. The Company, Seller and Parent each agree that they will not, except
as may be required by law or valid legal process, disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except to authorized representatives of Buyer,
unless such information becomes known to the public generally through no fault
of the Company, Seller or Parent. In the event of a breach or threatened breach
by Seller or Parent of the provisions of this Section, Buyer shall be entitled
to an injunction restraining such party from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
Buyer from pursuing any other available remedy for such breach or
37
<PAGE>
threatened breach, including the recovery of damages. The provisions of this
Section shall apply at all times prior to the Closing Date and for a period of
two years following the termination of this Agreement without a Closing having
occurred.
Section 13.2 Nondisclosure by Buyer. Buyer recognizes and acknowledges
that it has in the past, currently has, and prior to the Closing Date, will have
access to certain confidential information of Seller, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Seller. Buyer agrees that it will not,
except as may be required by law or valid legal process, disclose such
confidential information to any person, firm, corporation, association, or other
entity for any purpose or reason whatsoever, prior to the Closing Date except to
authorized representatives of Seller, unless such information becomes known to
the public generally through no fault of Buyer. In the event of a breach or
threatened breach by Buyer of the provisions of this Section, Seller shall be
entitled to an injunction restraining such party from disclosing, in whole or in
part, such confidential information. Nothing contained herein shall be construed
as prohibiting Seller from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages. The provisions of this
Section shall apply at all times prior to the Closing Date and for a period of
two years following the termination of this Agreement without a Closing having
occurred.
Section 13.3 Confidential Information. Neither the Company, Parent nor
Seller (nor any of their subsidiaries or affiliated entities) shall at any time
subsequent to the Closing, except as explicitly requested by Buyer, use for any
purpose, disclose to any person, or keep or make copies of any records and files
containing, any confidential information concerning the Business, the Assets, or
the liabilities assumed by Buyer hereunder, all such information being deemed to
be transferred to Buyer hereunder. For purposes hereof, "confidential
information" shall mean and include all customer and vendor lists and related
information, all information concerning the Business' processes, products,
costs, prices, sales, marketing and distribution methods, properties and assets,
liabilities, finances, employees, all privileged communications and work
product, and any other information not previously disclosed to the public
directly by the Company, Parent or Seller. If at any time after the Closing,
Parent or Seller should discover that they are in possession of any records and
files containing the confidential information of Buyer, then the party making
such discovery shall immediately turn such records and files over to Buyer,
which shall upon request make available to the surrendering party any
information contained therein which is not confidential information. Parent and
Seller severally agree that they will not assert a waiver of loss of
confidential or privileged status of the information based upon such possession
or discovery. Parent and Seller hereby consent to Buyer's consultation with
legal, accounting and other professional advisors to Seller concerning advice
rendered to or for Seller prior to the Closing regarding the Business, the
Shares, the Assets or the liabilities assumed by Buyer, excluding, however, the
negotiation and drafting of this Agreement and the transactions entered into
pursuant hereto.
Section 13.4 Equitable Relief for Violations. The parties expressly
covenant and agree that if any of them violates, or overtly threatens to
violate, the covenants set forth in this Article 13 (the "Restrictive
Covenants"), the non-violating party shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remuneration, or benefits
which the violating party, directly or indirectly, realized and/or may realize
as the result of, arising out of, or in connection with any such violation or
threatened violation. The parties acknowledge further that an irreparable injury
may result to the non-violating party and its business in the event of a breach
by
38
<PAGE>
the violating party of the Restrictive Covenants. The parties also acknowledge
and agree that the damages or injuries which a non-violating party sustains as a
result of a breach by a violating party of the Restrictive Covenants are
difficult to ascertain and money damages alone may not be an adequate remedy to
a non-violating party. The parties therefore expressly agree that if a
controversy arises concerning the rights or obligations of a party under the
Restrictive Covenants, such rights or obligations shall be enforceable in a
court of equity by decree of specific performance and a non-violating party
shall also be entitled to any injunctive relief necessary to prevent or restrain
any violation of the Restrictive Covenants. Such relief, however, shall be
cumulative and non-exclusive and shall be in addition to any other remedy to
which the parties may be entitled. In addition, a non-violating party shall also
be entitled to actual attorney's fees and costs reasonably incurred in any
action in which it is successful in establishing a violation of the Restrictive
Covenants.
ARTICLE 14
----------
GENERAL
-------
Section 14.1 Assignment; Binding Effect; Amendment. 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 of Buyer, Seller and Parent. This Agreement, upon
execution and delivery, constitutes a valid and binding agreement of the parties
hereto enforceable in accordance with its terms and may be modified or amended
only by a written instrument executed by all parties hereto.
Section 14.2 Entire Agreement. This Agreement is the final, complete
and exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as this Agreement. This Agreement supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
Section 14.3 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.
Section 14.4 No Brokers. Seller and Parent represent and warrant to
Buyer and Buyer represents to Seller and Parent that the warranting party has
had no dealings with any broker or agent so as to entitle such broker or agent
to a commission or fee in connection with the within transaction. If for any
reason a commission or fee shall become due, the party dealing with such agent
or broker shall pay such commission or fee and agrees to indemnify and save
harmless each of the other parties from all claims for such commission or fee
and from all attorneys' fees, litigation costs and other expenses relating to
such claim.
Section 14.5 Expenses of Transaction. Whether or not the transactions
herein contemplated shall be consummated: (a) 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 and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Buyer under this
Agreement; and (b) Seller will pay the fees, expenses and disbursements of
Seller, Parent and
39
<PAGE>
the Company and their respective agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement and any
amendments hereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Parent and Seller under
this Agreement. All such fees, expenses and disbursements of Parent, Seller and
the Company shall be paid by Seller prior to the Closing so that the Company
will not be charged with or diminished by any such fee, cost or expense. Parent
and Seller represent and warrant to Buyer that Parent and Seller have relied on
their own advisors for all legal, accounting, tax or other advice whatsoever
with respect to this Agreement and the transactions contemplated hereby. Nothing
in this Section 14.5 shall limit the rights of a non-breaching party to recover
damages, including fees and expenses if so awarded, in connection with any claim
against a party in breach hereunder.
Section 14.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, by overnight courier
or by delivering the same in person to such party.
If to Seller or Parent, addressed to it at:
Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, AZ 85260
Attn: Rick Wojahn
with a copy to:
Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, AZ 85260
Attn: Steve Helm, Vice President and General Counsel
and a copy to:
Fennemore Craig, P.C.
3003 North Central Avenue
Suite 2600
Phoenix, AZ 85012
Attn: W. T. Eggleston, Jr.
If to Buyer, addressed to it at:
Waste Industries, Inc.
3301 Benson Drive, #601
Raleigh, NC 27609
Attn: Lonnie C. Poole, Jr.
40
<PAGE>
with a copy to:
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail
Suite 300
Raleigh, NC 27607
Attn: James M. Yates, Jr.
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three business days after the deposit in the U.S. mail of a writing addressed as
above and sent first class mail, certified, return receipt requested, or when
actually received, if earlier. Any party may change the address for notice by
notifying the other parties of such change in accordance with this Section.
Notwithstanding the foregoing, notices and other communications regarding title
and survey matters shall be provided only to: (a) if to Seller, addressed to it
at the above address and with a copy to Ginger Perry, Esq., Fennemore Craig,
P.C., 3003 North Central Avenue, Suite 2600, Phoenix, AZ 85012; and (b) if to
Buyer, addressed to it at the above address and with a copy to Jeff Johnson,
Esq., Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite 300,
Raleigh, North Carolina 27607.
Section 14.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina,
without giving effect to any choice or conflict of law provision or rule
(whether of the State of North Carolina or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
North Carolina.
Section 14.8 No Waiver. No delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach of default occurring before or after that waiver.
Section 14.9 Time of the Essence. Time is of the essence of this
Agreement.
Section 14.10 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
Section 14.11 Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
Section 14.12 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be
41
<PAGE>
deemed to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "include" or "including" means include or
including, without limitation. The parties intend that representations,
warranties and covenants contained herein shall have independent significance.
If any party has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the party has not breached shall not
detract from or mitigate the fact the party is in breach of the first
representation, warranty or covenant.
Section 14.13 Arbitration. Other than for a breach of Article 13, any
controversy or claim arising out of or related to this Agreement, or any
transactions contemplated herein, that cannot be amicably resolved between Buyer
and Seller, including whether such controversy or claim is subject to
arbitration, shall be resolved by binding arbitration held in Raleigh, North
Carolina, in accordance with the American Arbitration Association's then
existing Commercial Arbitration Rules in all respects, subject to this Section.
Arbitration proceedings shall be conducted by a panel of three persons selected
as follows: The party initiating arbitration shall select one arbitrator and the
other party shall select a second arbitrator. The two arbitrators shall select a
third arbitrator as soon as possible. Each party shall provide prompt written
notice of the arbitrator selected by it in accordance with the terms of this
Agreement. No arbitrator shall have or previously have had any significant
relationship with any of the parties. Notwithstanding the foregoing, if the
controversy or claim in question is not resolved by the arbitrators as provided
herein within 150 days after selection of the first arbitrator, either party may
pursue any remedy with respect hereto provided by law.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BUYER:
Waste Industries, Inc.
By:_______________________________________
Its:______________________________________
SELLER:
BFI Waste Systems of North America, Inc.
By:_______________________________________
Its:______________________________________
PARENT:
Allied Waste Industries, Inc.
By:_______________________________________
Its:______________________________________
43
<PAGE>
LIST OF SCHEDULES
-----------------
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- Legal Description of the Land
Exhibit B -- Non-Solicitation Agreement
Exhibit C -- Beginning Balance Sheet
Exhibit D -- March 31 Financial Statements
Schedule 1.1(b) -- Permits
Schedule 1.1(c) -- Equipment
Schedule 1.1(d) -- Rolling Stock
Schedule 1.1(h) -- Customer Contracts, Related Approvals and Employee Contracts
Schedule 1.1(p) -- Prepaid Expenses and Deposits
Schedule 2.2 -- Accounts Receivable - Closing Date
Schedule 2.5(c) -- Current Assets and Current Liabilities
Schedule 5.1 -- Certificate of Incorporation and Bylaws
Schedule 5.2 -- Encumbrances on Stock
Schedule 5.3 -- Permits; Proprietary Rights
Schedule 5.4(c) -- Leased Assets
Schedule 5.5(b) -- Real Property Disclosure
Schedule 5.7 -- Insurance
Schedule 5.8 -- Employees; Exceptions to "at will" Employment
Schedule 5.9(c)(iii) -- Consents
Schedule 5.10 -- Taxes
Schedule 5.11 -- Litigation
Schedule 5.13 -- Conduct of Business
</TABLE>
<PAGE>
Schedule 5.14 -- List of Disposal Sites
Schedule 5.15 -- Underground Storage Tanks
Schedule 5.18 -- Affiliate Relationships
Schedule 5.19 -- Performance Bonds; Letters of Credit
Schedule 5.20 -- Employment and Labor Matters
2
<PAGE>
ANNEX I
-------
RELATED PURCHASE TRANSACTIONS
-----------------------------
1. The purchase and sale of Seller's Fayetteville, North Carolina hauling
assets pursuant to the Asset Purchase Agreement (the "Fayetteville
Purchase Agreement").
2. The purchase and sale of Buyer's Chattanooga, Tennessee and Dalton,
Georgia hauling assets pursuant to the Asset Purchase Agreement (the
"Dalton/Chattanooga Purchase Agreement").
<PAGE>
ANNEX II
--------
SURVEY REQUIREMENTS
-------------------
1. The survey must be prepared in accordance with the "Minimum Standard
Detail Requirements and Classifications for ALTA/ACSM Land Title Surveys" as
adopted by ALTA and ACSM in 1997, and shall include all items as follows, in
addition to those mentioned in the attached certification which must appear on
the survey.
2. The survey must show the full legal description of the Land by metes
and bounds. If described in title commitment by "lot and block", surveyor should
include the title commitment description, followed by "more particularly
described as follows", followed by the metes and bounds description prepared by
surveyor. The legal description must match and agree with the courses and
distances as shown on the physical drawing. If there are differences between
"record" and "measured" distances, please note these differences as such.
If the survey is described in "lot and block", please show and label
interior lots, and include reference to filed map's recording information.
3. Additionally, the survey must contain a note below the legal
description that states, "Property surveyed and shown hereon is the same
property as described in title commitment number ________________, dated
_______________, prepared by, [insert name of Title Company]."
4. The survey must show/label the point of beginning, (POB), and the
relationship of the POB to the monument by which it is referenced.
5. The survey must include and identify by labeling/notes the
following:
(a) Location dimensions and square footages of
buildings/structures.
(b) Location of all substantial visible improvements, (in
addition to buildings/structures), such as signs, parking areas, (include
striping and count), trash enclosures, party walls, etc.
(c) Survey must show all driveways/curb cuts, and label same.
Additionally, please show note of "ACCESS" where access is gained to subject
property.
(d) Utilities, and include any visibly available water and
sewer mains, utility lines, manholes, catch basins, overhead wires, etc.
(e) Encroachments must be shown and listed as encroachments by
note, including those that affect subject property and those that encroach from
subject property onto adjoining property.
(f) All easements/exception items as appear in the title
commitment must be plotted and labeled with recording information, (volume and
page), on drawing giving corresponding exception item number from the title
commitment, and survey must include a list of all exceptions with a note, either
"affects subject property and is plotted and shown hereon", or "does not affect
subject property."
(g) All roads and rights of way must be shown and streets
labeled. Widths and centerline of roads must be shown.
1
<PAGE>
(h) The location of any waterways, wet lands must be noted and
shown.
(i) Permanent monuments must be placed in all major corners of
boundary or referenced where "found".
6. Whether or not the Property, and, specifically, the Improvements are
located within a federally-designated Special Flood Hazard Area, as determined
by reference to Federal Flood Insurance Rate Maps, (survey must contain Flood
Zone in which property falls, and an explanation of that Flood Zone, for
example, "100 Year", etc.) or within a state-designated riparian buffer area,
and showing any such areas on the survey.
7. The survey must be drawn at no smaller than 1" = 20.00'.
8. The survey must contain the address in the title block (which will
be provided).
9. The survey must contain the total land area, both in square footage
and acreage.
10. The survey must contain a legend of all symbols and abbreviations
used.
11. The survey must include a Vicinity Map showing the location of the
property surveyed and nearby highways or major street intersections.
12. The survey must include the attached certification, and appear on
the survey in exact form as shown, including all entities listed in the
certification attached.
13. The survey must be signed, sealed and dated, (not more than thirty
(30) days prior to the date of closing).
14. The survey must contain a directional north arrow
15. The survey must contain identification of the current record
ownership of property landowners of all parcels adjacent to the subject property
(to the extent available).
16. Zoning information must appear on the survey and include:
(a) Zone.
(b) Setback lines, listed in note form and plotted on drawing.
(c) Building height restrictions, if any should be noted.
(d) Parking requirements should also be noted.
2
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
Canal Industries Tracts (1, 2 & 3)
----------------------------------
All those pieces, parcels or tracts of land, Sampson County, North Carolina,
containing in the aggregate 318.16 acres, more or less, and more particularly
described in 3 maps surveyed by Owens Surveying and prepared for Browning-Ferris
Industries; said tracts more particularly shown as Tract 1 (64.16 acres, more or
less) and Tract 2 (168 acres, more or less) on Map 1 of 3 dated 6/1/92 and
revised November, 1992, Map 2 of 3 (59.23 acres, more or less) dated November,
1992 and Map 3 of 3 (26.77 acres, more or less) dated November, 1992, said Maps
being recorded December 1, 1992 in the office of the Register of Deeds of
Sampson County, North Carolina, in Plat Book 25, Pages 62, 63 and 64 and by
reference incorporated herein and made a part hereof.
Derivations: This is a portion of the property conveyed to Cape Fear Wood
Corporation (now Canal Industries, Inc. by merger dated 9/1/69) by deed from
Smith Creek Development Company recorded in Book 793, Page 351, and to Acme Wood
Corporation (now Canal Industries, Inc. by merger dated 9/1/69) by deed from
Smith Creek Development Company of even date recorded in Deed Book 793, Page
356, and being the identical property conveyed to Cape Fear Wood Corporation in
those certain deeds from Willard I. Herring and wife, Tilda G. Herring recorded
in Book 802, Page 30 and from Rufus McPhail Herring recorded in Book 805 at Page
332, and being a portion of the property conveyed to Cape Fear Wood Corporation
by deed from Maude P. Turlington recorded in Book 794, Page 494. Also being that
property conveyed by Cape Fear Wood Corporation to Sampson County Disposal, Inc.
by deed recorded in Book 1150, Page 39, Sampson County Registry.
J. Williams Tract
-----------------
Beginning at a stake, a corner with Elliot Spell, said beginning corner being
designated as corner No. 19 on a plat of survey by Stuart Gooden, R.L.S., dated
May 1967, entitled "The White Woods or John B. Williams Tract," which plat is
recorded in Map Book 7, Page 20, of the Sampson County Registry, and runs thence
from said beginning corner S. 66 deg. 55' W., 501.00 feet to a stake in the East
margin of State Road No. 1305, which is corner No. 20 on said map; thence with
the East margin of State Road No. 1305, N. 24 deg. 20' E., 691.7 feet to a stake
which is corner No. 21 on said map; thence with Canal Wood Corporation line, N.
71 deg. 20' E., 803.00 feet to a stake which is corner No. 22 on said map;
thence with Canal Wood Corporation line S. 19 deg. 20' E., 384.8 feet to a
stake, which is corner No. 23 on said map; thence with the Spell line S. 66 deg.
55' W., about 787.00 feet to the beginning, containing 10.0 acres, more or less,
and being a portion of the "White Woods" Tract, also being that certain parcel
conveyed to Sampson County Disposal, Inc. by deed dated November 9, 1992
recorded in Book 1150, Page 325, Sampson County Registry.
<PAGE>
B. Williams Tract
-----------------
Beginning at a stake in H.J. Butler line running Northeast 516 feet to a stake;
thence North 320 feet to a head of a branch on J.A. Turlington line; thence
West, 670 feet to the Vann Road; thence with said road, 362 feet to the
beginning corner, containing 8 acres, more or less, and being the same and
identical land described in a deed from H.J. Butler and wife, Amelia Butler, to
J.E. Edwards and wife, dated January 20, 1917, and being recorded in Book 295,
Page 254, in the office of the Register of Deeds of Sampson County, North
Carolina. Also being the same land conveyed to Luby Williams by deed dated March
19, 1979 and recorded in Book 943, Page 727, Sampson County Registry and
conveyed to Sampson County Disposal, Inc. by deed dated October 13, 1992 and
recorded in Book 1147, Page 632, Sampson County Registry.
Spell Tract
-----------
Adjoining the lands of J.B. Williams, formerly O.P.White, Amos Butler and others
and BEGINNING at a stake, corner of Lot No. 2, and runs thence North 64 deg.
East, 5.75 chains to a stake, corner of Lot No. 4; thence with the line of Lot
No. 4, South 2 deg. East, 9.10 chains to a stake; thence South 74 deg. West, 4.6
chains to a stake; thence South 62 deg. West, 1 chain to a stake, corner of Lot
No. 2; thence with the line of Lot No. 2, North 26 deg. West, 8.50 chains to the
BEGINNING, containing 5 acres, more or less, and being Lot No. 3 in the division
of the lands of Irvin Underwood, which division is unrecorded, and being a part
of that certain tract of land conveyed to Irvin Underwood by Isham Butler and
wife, Mary C. Butler, by deed dated November 22, 1900, and duly recorded in Book
108, Page 281, of the Sampson County Registry, and being conveyed to L.S. Spell
by Pearl McNeil Barden and others by deed dated February 7, 1956, and duly
recorded in Book 646, Page 362, Sampson County Registry. For other past
conveyances see deed from L.S. Spell to Elliott L. Spell and wife, Alease W.
Spell, recorded in Book 661, Page 32 and deed from Elliott Spell, Jr. and wife,
Patricia Ann Spell to Sampson County Disposal, Inc. recorded in Book 1148, Page
336, all in the Sampson County Registry.
Carlisle Tract
--------------
Being all that piece, parcel or tract of land, located in Sampson County, North
Carolina, containing 2.00 acres, more or less, and more particularly shown as
Tract #4 on Map 1 of 3 surveyed for Browning-Ferris Industries and prepared by
Owen Surveying dated June 1992 and recorded on December 1, 1992 in Plat Book 25,
Pages 62, 63 & 64, Sampson County Registry. Also being a portion of the tract
conveyed to Canal Industries, Inc. (formerly Cape Fear Wood Corporation) by
deeds from Willard I. Herring and wife, Tilda G. Herring recorded in Book 802,
Page 30, and Rufus McPhail Herring recorded in Book 805, Page 332, Sampson
County Registry, and being that certain tract conveyed to Sampson County
Disposal, Inc. by deed dated December 10, 1992 and recorded in Book 1150, Page
576, Sampson County Registry.
<PAGE>
Dubose-Jones Tract
------------------
BEING all of that certain tract of land containing 117.03 acres, more or less,
according to a map and survey by Owen Surveying dated December, 1991, which map
is recorded in Map Book 25, Page 68, of the Sampson County Registry, and also
being that parcel conveyed by Constance Dubose Jones and husband, Owen M. Jones
to Sampson County Disposal, Inc. by deed dated December 17, 1992 recorded in
Book 1151, Page 429, Sampson County Registry.
Fisher Tract
-------------
BEGINNING at an iron stake in the Canal Industries, Inc. line, which stake is
located N. 38 deg. 07 min. 28 sec. E., 3,666.23 feet, and N. 41 deg. 08 min. 46
sec. W. 981.28 feet and N. 42 deg. 37 min. 36 sec. W., 141.94 feet from an iron
pipe at the centerline intersection of State Road 1301 and State Road 1302 and
runs thence with the Amos Butler Heirs and the Tew line, S. 80 deg. 51 min. 00
sec. W., 2535.05 feet to an iron stake in the center of an old field road, a
joint corner with John B. Williams; thence N. 17 deg. 12 min. 39 sec. W.,
1,257.33 feet to a concrete monument, a joint corner with Canal Industries;
thence with the Canal Industries line, N. 70 deg. 58 min. 58 sec. E., 910.23
feet and N. 58 deg. 45 min. 02 sec. W., 891.70 feet and N. 56 deg. 14 min. 58
sec. E., 429 feet and N. 67 deg. 38 min. 27 sec. W., 373.39 feet to an iron
stake in the edge of small branch; thence down the run of a small branch about
N. 30 deg. 02 min. 38 sec. E., 1011.17 feet and N. 48 deg. 32 min. 38 sec. E.,
710 feet and N. 38 deg. 49 min. 58 sec. E., 368.86 feet and N. 23 deg. 46 min.
16 sec. E., 570.23 feet to a concrete monument; thence again with Canal
Industries, Inc., S. 01 deg. 48 min. 10 sec. W., 2,618.24 feet to a concrete
monument; thence again with Canal Industries, Inc., S. 20 deg. 54 min. 54 sec.
W., 60.52 feet and S. 42 deg. 37 min. 36 sec. E., 264 feet to an iron stake, a
joint corner with Causie Williams; thence with the Williams line, S. 39 deg. 22
min. 24 sec. W., 549.12 feet and S. 52 deg. 37 min. 36 sec. E., 622.01 feet and
N. 59 deg. 22 min. 24 sec. E., 445.50 feet to an iron stake in the Canal
Industries, Inc. line; thence with said line S. 42 deg. 37 min. 36 sec. E.
577.50 feet to the point of BEGINNING, containing 110.54 acres, more or less,
and being a composite description and resurvey of the Fisher lands described in
deeds recorded in Book 327 at Page 351, Book 300 at Page 460, Book 200 at Page
560, Book 167 at Page 585, and deeded to Sampson County Disposal, Inc. by deed
recorded in Book 1166, Page 740, Sampson County Registry.
Butler Tract No. 1
------------------
BEGINNING at an iron stake located North 41 deg. 08' 46" West, 471.53 feet from
the point in the centerline of State Road 1302, and runs thence the Henry line,
South 56 deg. 51' 14" West, 737.06 feet to an iron stake; thence North 41 deg.
08' 46" West, 660 feet to an iron stake; thence South 57 deg. 18' 21" West,
341.12 feet to an iron stake; thence North 23 deg. 49' 53" East, 509 feet to an
iron stake; thence North 80 deg. 51' 00" East, 710.32 feet to an iron stake;
thence South 41 deg. 08' 46" East, 509.75 feet to the point of BEGINNING,
containing 14.45 acres, more or less, and being that certain tract conveyed to
Sampson County Disposal, Inc. and described as
<PAGE>
"Tract 1" in deed recorded in Book 1180, Page 418, Sampson County Registry.
Butler Tract No. 2
------------------
BEGINNING at a concrete monument, a joint corner with Canal Industries, Inc.
(Map Book 25, Page 62), and runs thence South 17 deg. 12' 39" East, 585.75 feet
to an iron stake; thence South 73 deg. 29' 29" West, 883. 39 feet to an iron
stake; thence North 41 deg. 45' 39" West 492.15 feet to an iron stake; thence
North 54 deg. 43' 38" East, 404.25 feet to an iron stake; thence North 70 deg.
21' 23" East, 691.57 feet to the point of BEGINNING, containing 12.33 acres,
more or less, and being that certain tract conveyed to Sampson County Disposal,
Inc. and described as "Tract 2" in deed recorded in Book 1180, Page 418, Sampson
County Registry.
Williams/Godwin Tract
---------------------
BEGINNING at a stake, an old corner with that tract or parcel now or previously
owned by Richard Faircloth and runs thence with the old Faircloth dividing line,
N. 40 deg. E., 34 poles to a stake, thence S. 42 deg. E. 43 poles to a stake in
the line of that tract or parcel now or previously owned by C.A. Brown; thence
with that old line, S. 62 deg. W., 27 poles to a stake at the head of a small
branch; thence N. 50 deg. W. 331/2poles to the point of BEGINNING, containing
7.0 acres, more or less, and being that same tract or parcel of land conveyed to
C. Williams by deed dated March 6, 1908 and recorded in the Sampson County
Registry and also being that parcel conveyed to Sampson County Disposal, Inc.
identified as "First Tract" in deed recorded in Book 1168, Page 751, Sampson
County Registry.
Elijah Jones Tract
------------------
BEGINNING at a stake in the center of County Road #1302 and in the southern line
of the tract of which the lands herein conveyed are a part and runs thence with
the said original southern boundary line about North 56 deg. East 165 feet to a
stake; thence a new line in a northerly direction and parallel to County Road
#1302 132 feet to a stake, a new corner, thence a new line parallel to the first
line about South 56 deg. West 165 feet to a stake in the center line of County
Road #1302; thence with the center line of County Road #1302 in a southerly
direction 132 feet to the BEGINNING, containing one-half (1/2) of an acre, more
or less, and being the same lands conveyed to Ella Mae Jones by deed from Otto
Strickland and wife, Roxie B. Strickland, dated March 14, 1966 and duly recorded
in the Sampson County Registry in Book 781, Page 127, and also being the same
tract conveyed to Sampson County Disposal, Inc. by deed recorded in Book 1182,
Page 154A, Sampson County Registry.
<PAGE>
Godwin/Williams Tract
---------------------
BEGINNING at a black gum, the old O.P. White corner, and runs thence S. 55 deg.
E., 20 poles to a stake and stump in that tract now or previously owned by Tilda
Williams; thence S. 60 deg. W., 24 poles to a stake; thence N. 55 deg. W., 21
poles to a stake in the old dividing line with the White property; thence along
that line 25 poles to the point of BEGINNING, containing 3.25 acres, more or
less, and being that same tract or parcel conveyed to Ann Rebecca Godwin by deed
from Isham Butler and wife bearing the date of February 9, 1892 and also being
that parcel conveyed to Sampson County Disposal, Inc. identified as "Second
Tract" in deed recorded in Book 1168, Page 751, Sampson County Registry.
Thompkins Tract
---------------
Being all of Lot #4, beginning at a stake corner of Lot #3 and runs with the old
white line North 64 degrees East, 5.50 chains to a stake corner of Lot #5;
thence with the line of Lot #5 South 26 degrees East, 9.80 chains to a stake in
Isaac Fisher's line; thence South 74 degrees West 5.35 chains to a stake, corner
of Lot #3; thence with the line of Lot #3 North 26 degrees West 9.10 chains to
the beginning, containing 5.0 acres, more or less, and being the same tract or
parcel described in that certain deed dated July 1, 1960 by Harvey W. Campbell
and wife, Sarah Hunter Campbell to Odessa W. Thompkins, recorded in Book 707,
Page 478, Sampson County Registry and also being that certain tract conveyed to
Sampson County Disposal, Inc. in warranty deed recorded in Book 1181, Page 275,
Sampson County Registry.
AS TO ALL OF THE ABOVE TRACTS:
Being, collectively, the same property shown on those two plats prepared by Owen
Surveying, Incorporated entitled "Sampson County Disposal, Inc.," Map 1 of 3 and
2 of 3, dated May 2000, except for the 0.5-acre "Elijah Jones Tract" described
above, which is not shown on such plats.
<PAGE>
"BORROW PIT" TRACTS:
Merritt Tract
-------------
BEGINNING at a point in the center of Andrew's Chapel Road (S.R. 1216) which
point is located South 29 deg. 50 min. 52 sec. East, 1284.90 feet from corner
#56 on that certain map of the Sampson County Disposal Property in Map Book 25
at Page 81 in the office of the Register of Deeds of Sampson County and runs
thence with the Merritt line, North 49 deg. 29 min. 58 sec. East, 134.39 feet to
an iron stake; thence again with the Merritt/Sampson County Disposal, Inc. line,
South 40 deg. 30 min. 02 sec. East 262.26 feet to a concrete post; thence a new
line with Elwood Merritt, South 57 deg. 14 min. 58 sec. West 135.63 feet to an
iron stake in the center of Andrew's Chapel Road (S.R. 1216); thence with the
center line of Andrew's Chapel Road (S.R. 1216), North 40 deg. 30 min. 02 sec.
West 243.97 feet to the point of BEGINNING, containing 0.78 acres, more or less,
and being a portion of that tract conveyed to Elwood Merritt in Book 1064, Page
646, Sampson County Registry, and also being that tract conveyed to BFI Waste
Systems of North America, Inc. (formerly known as Sampson County Disposal, Inc.)
by deed recorded in Book 1332, Page 894, Sampson County Registry.
Brown Tract
-----------
BEGINNING at a point in the centerline of State Road 1216 (Andrews Chapel Road),
which point is a joint corner with the Perry Matthews Division, and which point
is located 0.57 of a mile south-southeast of the intersection of State Road 1216
(Andrews Chapel Road) and N.C. Highway 24, and runs thence from the highway and
the Perry Matthews Division line, North 27 deg. 13' 01" East 160.20 feet to an
iron stake, a joint corner with the Elton W. Wilson property; thence with the
Wilson line, North 69 deg. 53' 38" East, 4003.60 feet to an iron stake on the
western bank of Little Coharie Creek; thence with the western edge of Little
Coharie Creek, South 84 deg. 54' 22" East 220.37 feet, and North 79 deg. 14' 13"
East 210.87 feet, and North 55 deg. 30' 33" East 93.59 feet, and South 42 deg.
10' 53" East 550.42 feet, and South 33 deg. 41' 05" East 130.56 feet to a
concrete post, a joint corner with the Joseph and Janice Butler tract; thence
with the Butler line, South 69 deg. 53' 38" West, 2619.21 feet to an iron stake;
thence again with the Butler line, North 23 deg. 06' 22" West 396 feet to an
iron stake; thence again with the Butler line, South 69 deg. 53' 38" West,
1467.42 feet to a concrete monument, a joint corner with Elwood Merritt, Jr.;
thence with the Merritt line, South 69 deg. 53' 38" West 742.87 feet to an iron
stake in the center of State Road 1216 (Andrews Chapel Road); thence with the
centerline of State Road 1216 (Andrews Chapel Road) North 21 deg. 45' 24" West
170.45 feet and North 21 deg. 42' 27" West 67.38 feet to the point of BEGINNING,
containing 58.98 acres, more or less, exclusive of highway right-of-way,
according to a map and survey by Owen Surveying, dated February 1993, which
tract is denominated Number 1 on that certain plat
<PAGE>
thereof in Plat Book 25, Page 81, office of the Register of Deeds of Sampson
County. Also being that certain tract conveyed to Sampson County Disposal, Inc.
by deed recorded in Book 1154, Page 41, Sampson County Registry.
Butler Tract
------------
BEGINNING at an iron stake in the center of State Road 1216 (Andrews Chapel
Road), said stake being centered over an 18-inch concrete reinforced concrete
pipe running at right angles under said road, and which point is located about
0.6 of a mile southeast of the intersection of State Road 1216 (Andrews Chapel
Road) and Highway 24, and runs thence with the Elwood Merritt, Jr. line, along
the centerline of a 20-foot wide drainage easement, North 68 deg. 23' 45" East,
741.49 feet, and North 37 deg. 11' 40" East, 64.05 feet, and North 32 deg. 40'
36" West 370.77 feet to a concrete monument in the M. Howard Brown line; thence
with the Brown line, North 69 deg. 53' 38" East, 1467.42 feet to an iron stake;
thence again with the Brown line, South 23 deg. 06' 22" East, 396 feet to an
iron stake; thence again with the Brown line, North 69 deg. 53' 38" East 2619.21
feet to a concrete marker on the east side of Little Coharie Creek, South 33
deg. 41' 05" East, 123.45 feet, and South 50 deg. 31' 10" East 289.68 feet, and
South 82 deg. 09' 12" East, 133.65 feet, and South 20 deg. 04' 09" East, 308.31
feet, and South 25 deg. 15' 27" East, 243.15 feet, and South 2 deg. 15' 07"
East, 121.36 feet, and North 76 deg. 49' 45" East, 215.45 feet, and South 23
deg. 37' 38" West 177.40 feet, and South 69 deg. 45' 59" East, 230.76 feet, and
South 50 deg. 39' 23" East, 195.81 feet to an iron stake, a joint corner with
the John Jackson line on the run of Bullard Branch; thence up the run of Bullard
Branch, the following courses and distances: South 65 deg. 23' 54" West, 200.36
feet; South 74 deg. 38' 41" West, 210.60 feet; South 86 deg. 25' 08" West,
312.58 feet; South 48 deg. 14' 53" West, 434.19 feet; South 03 deg. 21' 44"
West, 254.74 feet; South 61 deg. 56' 53" West, 465.23 feet; South 82 deg. 51'
55" West, 237.63 feet; South 77 deg. 29' 22" West, 371.11 feet; North 71 deg.
57' 14" West, 114.67 feet; South 79 deg. 32' 15" West, 204.78 feet; South 25
deg. 14' 48" West, 102.78 feet; South 60 deg. 33' 23" West, 311.42 feet; South
87 deg. 18' 10" West, 344.60 feet; South 72 deg. 59' 59" West, 317.24 feet;
South 68 deg. 05' 08" West, 285.06 feet; South 61 deg. 14' 53" West, 111.05
feet; South 72 deg. 04' 35" West, 202.39 feet; and South 79 deg. 38' 48" West,
119.62 feet to a concrete monument, a corner with Albert Wesley German; thence
with the German line, North 47 deg. 30' 45" West, 655.23 feet to a concrete
monument; thence again with the German line, South 58 deg. 05' 59" West, 206.55
feet, and South 55 deg. 07' 07" West, 205.09 feet, and South 42 deg. 29' 15"
West, 29.03 feet to an iron stake in the centerline of State Road 1216 (Andrews
Chapel Road); thence with the centerline of said road, North 47 deg. 14' 55"
West, 47.19 feet to an iron stake, a corner with Elwood Merritt; thence with the
Merritt line, North 53 deg. 18' 42" East, 233.20 feet to an iron pipe; thence
again with the Merritt line, North 44 deg. 35' 56" West, 91.77 feet to an iron
pipe; thence again with the Merritt line, North 42 deg. 52' 46" West, 95 feet to
a concrete monument; thence again with the Merritt line, South 49 deg. 26' 21"
West, 230.40 feet to an iron pipe in the centerline of State Road 1216 (Andrews
Chapel Road); thence with said road, North 41 deg. 34' 51" West, 123.97 feet to
an iron stake, another corner with Elwood Merritt; thence with the Merritt line,
North 49 deg. 29' 58" East, 134.39 feet to a stake; thence North 40 deg. 30' 02"
West, 330 feet to a stake, and South 49 deg. 29' 58"
<PAGE>
West, 134.39 feet to an iron stake in the centerline of State Road 1216 (Andrews
Chapel Road); thence with the centerline of the road, North 39 deg. 39' 54"
West, 128.19 feet, and North 39 deg. 32' 18" West, 100.48 feet, and North 38
deg. 54' 48" West, 100.38 feet and North 36 deg. 54' 03" West, 100.14 feet, and
North 33 deg. 56' 08" West, 100 feet, and North 30 deg. 55' 58" West, 100.14
feet; and North 29 deg. 41' 08" West, 11.02 feet to the point of BEGINNING,
containing 199.15 acres, more or less, exclusive of highway right-of-way, and
being Tract 2 on that map by Owen Surveying dated February, 1993, which map is
recorded in Map Book 25, Page 81, in the office of the Register of Deeds of
Sampson County. Also being that certain parcel conveyed to Sampson County
Disposal, Inc. by deed recorded in Book 1153, Page 868, Sampson County Registry.
Less and except that 0.78-acre tract previously conveyed to Elwood Merritt by
BFI Waste Systems of North America, Inc. in deed recorded in Book 1332, Page
892, Sampson County Registry.
AS TO ALL OF THE ABOVE TRACTS:
Being, collectively, the same property shown on that plat prepared by Owen
Surveying, Incorporated entitled "Survey for Sampson County Disposal, Inc.,
Borrow Pit Site," dated May 2000.
<PAGE>
EXHIBIT B
---------
NON-SOLICITATION AGREEMENT
THIS NON-SOLICITATION AGREEMENT (the "Agreement") is made and entered
into as of ________, 2000 by and among BFI Waste Systems of North America, Inc.,
a Delaware corporation ("BFINA"), Allied Waste Industries, Inc., a Delaware
corporation ("Allied" and collectively with BFINA, "Sellers"), and Waste
Industries, Inc., a North Carolina corporation ("Buyer").
RECITALS
A. Sellers and Buyer are parties to that certain Stock Purchase
Agreement, dated April ___, 2000 (the "Purchase Agreement"), which provides for
the sale by BFINA to Buyer of all of the issued and outstanding capital stock of
Sampson County Disposal, Inc. (the "Company") which owns and operates a
municipal solid waste and construction and demolition waste landfill in Sampson
County, North Carolina (the "Business" or the "Landfill").
B. To induce Buyer to consummate the transactions contemplated by the
Purchase Agreement, Sellers have agreed to forego certain rights to compete with
Buyer and the Company with respect to the Business, on the terms and subject to
the conditions set forth in this Agreement.
C. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to them in the Purchase Agreement.
ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. Noncompete Definitions. For purposes of the covenants set forth in
this Agreement, the terms listed below shall have the following meanings:
(a) "Customer" means any party whose waste has been
transported to the Landfill within the last six months, including, without
limitation, special waste.
(b) "Time Period" means, with respect to (i) each Customer,
the period beginning as of the date of this Agreement and ending one year
thereafter and (ii) any written Customer Contract, upon the expiration of the
remaining term of such Customer Contract (including any extension thereof);
provided, however, that if a court of competent jurisdiction determines that
such period is unenforceable, Time Period shall mean such other period as the
court shall determine to be reasonable.
(c) "Territory" means, with respect to special waste, the area
of North Carolina east of I-85, and with respect to all other waste, the
counties of Bladen, Cumberland, Duplin , Harnett, Hoke, Johnston, Sampson and
Scotland in the State of North Carolina; provided, however, that if a court of
competent jurisdiction determines that such Territory is
1
<PAGE>
unenforceable, the Territory shall mean such other territory as the court shall
determine to be reasonable.
2. Payment. As full consideration for Sellers entering into this
Agreement, Buyer shall pay to Sellers concurrently with the execution of this
Agreement, the aggregate sum of $5,000, which sum shall be allocated among
Sellers as Sellers agree.
3. Covenant. Sellers jointly and severally covenant and agree with
Buyer that, during the Time Period and within the Territory, they shall not,
directly or indirectly, individually or as a stockholder, partner, member,
financier, agent, employee, representative or consultant for or otherwise on
behalf of or in conjunction with any individual, partnership, corporation,
limited liability company or other entity, solicit or assist in the solicitation
of any Customer with respect to waste deliverable by the Customer to the
Business.
4. Enforceability. Sellers jointly and severally represent and warrant
to and covenant with Buyer as follows:
(a) The covenants set forth in this Agreement are reasonably
necessary for the protection of the interests of Buyer, are reasonable as to
duration, scope and territory, and are not unreasonably restrictive of Sellers.
(b) If Sellers breach any covenants set forth in this
Agreement, such breach would cause irreparable harm to Buyer and, in the event
of such breach, Buyer shall be entitled, in addition to monetary damages and to
any other remedies available to Buyer under this Agreement and at law, to
equitable relief, including injunctive relief, and the payment by Sellers of all
costs incurred by Buyer in enforcing the provisions of this Agreement, including
reasonable attorneys' fees.
(c) Notwithstanding subsection (a), should any court of
competent jurisdiction determine that any covenants in this Agreement are
unreasonable as to duration, scope, or territory, the covenants shall be
enforceable as provided in this Agreement with respect to such duration, scope
and territory as the court determines to be reasonable.
5. Assignment; Binding Effect; Amendment. 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 of Buyer and Sellers. This Agreement, upon execution and
delivery, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by all parties hereto.
6. Entire Agreement. This Agreement is the final, complete and
exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as this Agreement. This Agreement supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
Notwithstanding the foregoing, this Agreement will not supersede, replace or
amend in any way the Settlement and
2
<PAGE>
Release Agreement dated August 23, 1999 by and among Sellers and certain of
their affiliates and Buyer (the "Settlement Agreement"). To the extent any of
the provisions of this Agreement are inconsistent with any provisions of the
Settlement Agreement, the provisions of the Settlement Agreement will govern.
7. 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.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
If to BFINA or Allied, addressed to it at:
Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, AZ 85260
Attn: Rick Wojahn
with a copy to:
Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, AZ 85260
Attn: Steve Helm, Vice President and General Counsel
and a copy to:
Fennemore Craig, P.C.
3003 North Central Avenue
Suite 2600
Phoenix, AZ 85012
Attn: W. T. Eggleston, Jr.
If to Buyer, addressed to it at:
Waste Industries, Inc.
3301 Benson Drive, #601
Raleigh, NC 27609
Attn: Lonnie C. Poole, Jr.
with a copy to:
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail
3
<PAGE>
Suite 300
Raleigh, NC 27607
Attn: James M. Yates, Jr.
Notice shall be deemed given and effective the day personally
delivered, the day after being sent by overnight courier, subject to signature
verification, and three business days after the deposit in the U.S. mail of a
writing addressed as above and sent first class mail, certified, return receipt
requested, or when actually received, if earlier. Any party may change the
address for notice by notifying the other parties of such change in accordance
with this Section.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of North Carolina or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of North Carolina.
10. No Waiver. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach of default occurring before or after that waiver.
11. Time of the Essence. Time is of the essence of this Agreement.
12. Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
13. Severability. In case any provision of this Agreement shall not in
any way be affected or impaired thereby.
14. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" means including, without
limitation.
15. Review by Counsel. Sellers acknowledge and agree that they have had
the opportunity to review this Agreement with legal counsel of their choosing.
[SIGNATURES ON FOLLOWING PAGE]
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
Allied Waste Industries, Inc.
By:______________________________________
Name:____________________________________
Title:___________________________________
BFI Waste Systems of North America, Inc.
By:______________________________________
Name:____________________________________
Title:___________________________________
Waste Industries, Inc.
By:______________________________________
Name:____________________________________
Title:___________________________________
5
