Exhibit 2.4
[Allied as Seller -
Fayetteville, North Carolina Hauling]
PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT (the "Agreement") is executed and delivered as
of May 26, 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 or leases real property located in Fayetteville,
North Carolina and more fully described in Section 1.1(a) and on Exhibit A
attached hereto on which it operates a fully-permitted hauling operation (with
such real property collectively referred to as the "Land" and such hauling
operation referred to as the "Business");
WHEREAS, Buyer desires to purchase and acquire certain assets,
properties and contractual rights of Seller used in connection with the
Business, and Seller desires to sell such assets, properties and contractual
rights to Buyer, all in accordance with the terms and conditions set forth in
this Agreement;
WHEREAS, Parent owns (directly or indirectly) all of the issued and
outstanding shares of the capital stock of Seller;
WHEREAS, Buyer is unwilling to enter into this Agreement without the
covenants and promises of Parent set forth herein; and
WHEREAS, Parent desires that Seller sell such assets, properties and
contractual rights 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. DESCRIPTION OF ASSETS
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Section 1.1. Description of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, Seller will, on the Closing Date, grant,
convey, sell, transfer and assign to Buyer the following assets, properties and
contractual rights of Seller, wherever located, subject to the exclusions set
forth in Section 1.2:
(a) the Land (including all buildings, fixtures, personalty and
improvements located thereon, easements, interests, rights, tenements,
hereditaments, and appurtenances held by Seller that in any way benefit the Land
or the improvements thereon or related to the Business, all mineral, water, and
irrigation rights, and Seller's interests in any roadway adjoining the Land and
any rights or interests that may accrue to the benefit of Seller or the Land as
a result of the abandonment thereof or, if the Land is leased, all of Seller'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");
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(b) all 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 Seller (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 Seller, 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 of Seller's inventory of 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 Seller in and to all trade
secrets, proprietary rights, symbols, trademarks, service marks, logos and trade
names used principally in the Business and owned by Seller, except those
symbols, trademarks, service marks, logos and trade names that include the names
of or otherwise identify Seller or Parent or any affiliate thereof;
(h) all contractual rights of Seller with Seller's customers (whether
oral or in writing) relating principally to the operation of the Business (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) [Intentionally Omitted];
(j) all right, title, and interest of Seller in and to the telephone
number(s) used principally in the operation of the Business;
(k) all of Seller's 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 of Seller related principally to the
Business ("Accounts Receivable") as of the close of business on the Closing Date
(hereinafter defined);
(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 Seller is a plaintiff as described
in Schedule 5.11;
(p) all prepaid expenses and deposits listed on Schedule 1.1(p); and
(q) all of the goodwill of the Business.
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All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets."
Section 1.2. Excluded Assets. The parties agree that certain assets of
Seller shall remain the property of Seller or its affiliates and shall not be
sold to Buyer as of the Closing (the "Excluded Assets"). Such Excluded Assets
are as follows: (a) all cash on hand, cash reserves and cash on deposit of
Seller, except as set forth in Section 1.4 hereof; (b) all, if any, real
property and all buildings on and fixtures to all real property of Seller other
than set forth in Section 1.1(a); (c) all contracts and contract rights and
obligations of Seller (whether oral or in writing), other than the Customer
Contracts, the Related Approvals, the Employee Contracts, the Permits, the
Leases for the Leased Land and the other contracts and contract rights and
obligations identified in Section 1.1; (d) all motor vehicles of Seller which
are not Rolling Stock and which are set forth on Schedule 1.2; (e) the stock and
corporate records of Seller and Parent; and (f) all other assets of Seller that
do not relate directly to the Business.
Section 1.3. Non-Assignment of Certain Customer Contracts, Related
Approvals and Permits. Notwithstanding anything to the contrary in this
Agreement, to the extent that the assignment hereunder of any Customer Contract,
Related Approval or Permit shall require the consent of any third party, neither
this Agreement nor any action taken pursuant to its provisions shall constitute
an assignment or an agreement to assign if such assignment or attempted
assignment would constitute a breach thereof or result in the loss or diminution
thereof; provided, however, that in each such case, Seller and Buyer shall each
use best efforts to obtain the consent of such other party to such assignment to
Buyer as soon as possible after the date of this Agreement.
Section 1.4. Proration of Cash on Hand. The parties shall prorate, as
of the close of business on the Closing Date, all cash on hand or on deposit
with Seller consisting of sums paid to Seller pursuant to the advance billing
practice of Seller or otherwise representing a prepayment to Seller of services
to be rendered after the Closing. Seller shall be entitled to all such sums
allocable to services performed on or before the close of business on the
Closing Date and Buyer shall be entitled to all such sums allocable to services
to be performed thereafter.
Section 1.5. Allocation of Purchase Price. The aggregate Purchase Price
shall be allocated among the Assets for tax purposes in accordance with Schedule
1.5. Seller and Buyer will follow and use such allocation in all tax returns,
filings or other related reports made by them to any governmental agencies. To
the extent that disclosures of this allocation are required to be made by the
parties to the Internal Revenue Service ("IRS") under the provisions of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code") or any
regulations thereunder, Buyer and the Seller will disclose such reports to the
other prior to filing with the IRS.
ARTICLE 2. 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 Assets the aggregate sum of
$1,495,000 (the "Purchase Price").
Section 2.2. Accounts Receivable and Prepaid Expenses and Deposits.
(a) In addition to the sums payable pursuant to Section 2.1 above,
Buyer shall pay to Seller on a dollar for dollar basis a sum equal to the amount
of the Accounts Receivable that are less than 60 days old; $.50 on the dollar
for all of the Accounts Receivable that are between 61 and 90 days old and zero
for any Accounts Receivable that are more than 90 days old. Within 30 days
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after the Closing, Seller shall provide to Buyer to be attached hereto as
Schedule 2.2 a true and complete list of all Accounts Receivable as of the close
of business on the Closing Date, including an aging of all Accounts Receivable
showing amounts due in 30 day aging categories. Buyer shall pay Seller for such
Accounts Receivable on the basis described above, net of amounts received and
retained by Seller after Closing attributable to the Accounts Receivable, within
45 days after the Closing Date.
(b) In addition to sums payable pursuant to Section 2.1 above, Buyer
shall pay Seller the amount of the prepaid expenses and deposits set forth on
Schedule 1.1(p).
Section 2.3. Holdback. Seller agrees that the aggregate sum equal to
$1,725,000 (the "Holdback Funds") otherwise payable to Seller for the Assets and
the Shares (as defined in the Stock Purchase Agreement among Seller, Parent and
Buyer dated as of the date hereof and relating to the purchase and sale of the
stock of Sampson County Disposal, Inc. (the "Stock Purchase Agreement")) on the
Closing Date 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 otherwise 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.
ARTICLE 3. 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.
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Section 3.2. Deliveries by Seller and Parent. At the Closing, Seller
and Parent shall deliver to Buyer, all duly executed:
(a) subject to Section 3.8, a North Carolina special warranty deed (the
"Deed") conveying to Buyer good and marketable fee simple title to the Land
subject only to the Permitted Exceptions (hereinafter defined) or, if Leased
Land, an assignment of all of Seller's rights, title and interest under any Real
Estate Lease for the Land, containing the consent of the landlord if required,
and estoppel language reasonably satisfactory to Buyer (the "Assignment,
Assumption and Consent to Leased Land"), and a memorandum of lease in recordable
form as Buyer reasonably deems appropriate;
(b) subject to Section 3.8, the Title Policy provided for below;
(c) subject to Section 3.8, the Survey provided for below;
(d) a General Conveyance, Assignment and Bill of Sale in form and
substance reasonably satisfactory to Buyer, conveying, selling, transferring and
assigning to Buyer all of the Assets (other than the Land and Leased Land) (the
"Bill of Sale");
(e) a sworn affidavit stating, under penalty of perjury, that Seller is
not 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;
(f) certified copies of resolutions of the board of directors of Seller
authorizing the execution of this Agreement, the sale of the Assets to Buyer,
and the consummation of the transactions contemplated herein, along with an
incumbency certificate of Seller;
(g) 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;
(h) a non-solicitation agreement in the form attached as Exhibit B (the
"Non-Solicitation Agreement");
(i) the National Account Subcontract Agreements (as defined in Section
5.6); and
(j) 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 security interests held
by lenders and/or creditors of Parent and/or Seller or letters from such lenders
and/or creditors, in form and substance 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, by wire transfer of immediately available funds;
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(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) Assignment, Assumption and Consent to Leased Land;
(d) the Non-Solicitation Agreement;
(e) the National Account Subcontract Agreements; and
(f) 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. Buyer shall be entitled to procure 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 Buyer 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 and not later than 3
business days before the Closing, Buyer shall obtain 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 Commitment and other documents affecting the Land which are in the
possession of, or known to, Seller. Seller shall pay the cost of the Title
Commitment and Title Policy attributable to the issuance of standard owner's
coverage 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 Buyer, 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
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"). Seller's obligations under this
Section are subject to Sections 2.3 and 3.8.
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Section 3.5. Title Review/Permitted Encumbrances. Buyer shall have 10
business days after receipt of the Title Commitment, items listed as exceptions
to title on the 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 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 before 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, Seller 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. 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 Buyer 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 following closing costs: (a) the state and local real estate
transfer and similar taxes and conveyance fees; and (b) 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 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
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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. 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 Seller from maintaining the same business relationships
with Buyer after the Closing that it maintained with Seller before the Closing.
Seller and Parent will refer all customer inquiries relating to the Business to
Buyer 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
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,
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 to operate such systems after the Closing in a manner
consistent with the operations before the Closing.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES
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OF SELLER AND PARENT.
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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 or Parent's knowledge," such phrase shall
mean the knowledge of the officers, directors and employees of Seller and Parent
actively responsible for the operation of the Assets or the Business, after
reasonable inquiry.
Section 5.1. Organization; Authority. (a) Seller and Parent each 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 and Parent'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 Seller are owned, directly or
indirectly, of record and beneficially by Parent 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. Approval of the transactions contemplated by this Agreement by the Board
of Directors of Parent is not required.
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 owned or held by Seller related to the Assets and the operation of
the Business (collectively, the "Rights"), none of which Rights, to the best of
Seller's and Parent'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. Seller is not in default under any Permit and
each Permit is in full force and effect. Seller has not 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
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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. Each piece of Equipment is being transferred to Buyer in its "as
is" condition.
(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. Each motor vehicle, attachment, accessory and piece of materials
handling equipment comprising the Rolling Stock is being transferred to Buyer in
its "as is" condition.
(c) All of the Assets are either owned by Seller 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
Seller or, to the best of Seller's and Parent'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, Seller 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 Encumbrances and, by virtue of the grant,
conveyance, sale, transfer, and assignment of the Assets hereunder, Buyer shall
receive good and marketable title to the Assets, free and clear of all debts
(except operating lease payments for periods after the Closing for office
equipment such as telephone systems, copiers, fax machines and postage meters)
and Encumbrances. The Assets constitute all of the assets owned or leased by
Seller 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) Seller has good fee simple marketable title to the owned 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 Parent
nor Seller has received any notice of any violation of any Applicable Law.
(ii) The Land is usable for its current uses, and the Land can
be used by Buyer after the Closing for its current uses in the manner currently
operated by Seller, 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
Seller to use the Land for its current uses after the Closing Date.
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(iii) 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 Parent or Seller relating to the Land and all
plans and specifications, as-builts, contracts and warranties in connection with
the improvements thereon.
(iv) 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"). Neither
Parent nor Seller is in default beyond any applicable cure period under any Real
Estate Lease.
(v) Except in connection with Leased Land, no party except
Seller 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) Seller has no 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
its 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 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) Seller is not a "foreign person" as the term is defined
in Section 1445 of the Code and any applicable regulations promulgated
thereunder.
(xiv) Seller shall not 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.
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(xv) Seller has not 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.
(c) Seller has 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 or
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 or
Employee Contract. Neither 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 or Employee
Contract. There is no contract, agreement or other arrangement granting any
person any preferential right to purchase any of the Assets. Except as set forth
on Schedule 5.6, all Customer Contracts, Related Approvals and Employee
Contracts may be assigned and transferred to Buyer without the consent of any
customer, employee or other third party. Seller has certain national accounts in
the area served by the Business that cannot be transferred and that must be
serviced by Seller. Seller may, however, subcontract its performance obligations
under such national accounts. A list of such national accounts is set forth on
Schedule 5.6. With respect to the national accounts listed on Schedule 5.6,
Seller and Buyer shall enter into a National Account Subcontract Agreement in
substantially the form of Exhibit C (the "National Account Subcontract
Agreement"). With respect to national accounts that contributed to the Average
Monthly Revenue (as defined in Section 5.22) but that cannot be subcontracted,
Seller agrees to substitute and provide to Buyer comparable volumes from other
sources. 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.
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
Seller with respect to the Business or the Assets showing, among other things,
the amount of coverage, the company issuing the policy, and the expiration date
of each policy and whether such coverage is on an occurrence or claims made
basis. All insurance policies are in full force and effect and shall remain in
full force and effect through the Closing Date. Seller's insurance with respect
to the Assets or the Business has never been canceled, and Seller has not been
denied coverage with respect to the Assets or the Business within the last three
years.
Section 5.8. Employees; Compensation. Attached as Schedule 5.8 is a
complete and accurate list of all employees of Seller employed in the Business
and their rate of compensation as of the date hereof (including a breakdown of
the portion thereof attributable to salary, bonus and
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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 Seller is an employee at will.
Section 5.9. Compliance with Law; No Conflicts.
(a) 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 Seller, the Assets or the Business (collectively, the "Applicable Laws") and
Permits. Neither Seller nor Parent now is or ever has been involved in any
litigation or administrative proceeding relating to the Assets 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 Seller nor Parent has received any notice that Seller is
under investigation or other form of review relating to the Assets or the
Business with respect to any Applicable Law or Permit. Seller 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 Seller;
(ii) except as provided in Section 5.9(c), conflict with, or
result in a material breach under any Customer Contract, Related Approval or
Real Estate Lease or result in the creation or imposition of Encumbrance on the
Assets or Business pursuant to: (A) any law or regulation to which Seller or
Parent, or any of their respective properties are subject, or (B) any judgment,
order or decree to which 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 under this Agreement.
(c) Seller has made available to Buyer copies of all reports of Seller
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) Parent
and Seller have filed all requisite federal, state, local and other tax returns
relating to the Business or the Assets which
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are due for all fiscal periods ended on or before the date hereof 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 Parent or Seller (whether filed prior to, on or
after the date hereof) with respect to Parent or Seller will result in any
taxes, assessments, fees or other governmental charges upon the Assets or Buyer,
whether as a transferee of the Assets or otherwise; (c) all federal, state and
local taxes due and payable with respect to the Assets and the Business 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 Parent or Seller for federal, state, local and other 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.
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 Seller's and Parent's knowledge, threatened, against
Seller or Parent relating to the Assets 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 Assets or have a material adverse effect on
the Business; no notice of any of the above has been received by Seller or
Parent; and, to the best of 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 Seller or Parent is the plaintiff, or
complaining or moving party in any way, related to the Assets or the Business.
Section 5.12. Absence of Price Renegotiation Contracts. Seller is not
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 Seller's Business Since January 1, 2000. Since
January 1, 2000, except as disclosed on Schedule 5.13, Seller 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 Seller;
(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 or the Business or any plan, agreement or arrangement granting any
preferential right to purchase or acquire any interest in any of the Assets or
the Business, or requiring consent of any party to the transfer and assignment
of any of the Assets or the Business;
(d) waiver of any material rights or claims of Seller related to the
Assets 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 Parent or Seller outside the ordinary course of its
business with respect to the Assets or the Business;
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(g) amendment to the Certificate of Incorporation or Bylaws of Seller;
(h) any other material occurrence, event, incident, action or failure
to act outside the ordinary course of business of Parent and Seller with respect
to the Assets or the Business; or
(i) any action by Seller, Parent, or any employee, officer or agent of
Seller or Parent committing to do any of the foregoing.
Section 5.14. Hazardous Materials; Disposal Sites. Neither Parent nor
Seller 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. 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. No
Encumbrances with respect to environmental liability have been imposed against
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 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 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 Parent or
Seller or any predecessor of 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 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 Seller for the purpose of attracting business to Seller 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, and to Seller's
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knowledge, are valid and binding obligations of the account debtors without
counterclaims, setoffs, or other defenses thereto.
Section 5.18. Affiliates' Relationships.
(a) Those Assets that include contractual arrangements between Seller
and any Affiliate, or between 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 by Seller 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 Seller.
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.
Section 5.20. Employment and Labor Matters. Except as set forth in
Schedule 5.20, Seller is not 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 Seller has not 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) Seller 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; (b) there is no unfair labor practice
charge or complaint against Seller pending or, to the best of Parent's and
Seller's knowledge, threatened; (c) there is no labor strike, dispute, request
for representation, slowdown or stoppage actually pending or, to the best of
Parent's and Seller's knowledge, threatened against or affecting Seller nor any
secondary boycott with respect to services of Seller; (d) no question concerning
representation has been raised or is threatened respecting the employees of
Seller of the Business; (e) no grievance which has had or could have a material
adverse effect on Seller, 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
Seller 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.
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 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 Parent or
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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 5.21. Representation Concerning Totality of Assets. Seller
owns, leases or has the legal right to use, and on the Closing Date Buyer 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 Rolling Stock and
the Equipment, used or intended to be used in the conduct of the Business, and,
with respect to contract rights, Seller is a party to and enjoys the benefit of
all contracts, agreements and other arrangements used or intended to be used by
Seller in or relating to the conduct of the Business. Seller has, and on Closing
Date Buyer 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, other than Excluded Assets, are
identified by Buyer or Seller post-Closing as not having been adequately
transferred to Buyer, Seller shall promptly transfer and assign to Buyer 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 (except for
the Excluded 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 Buyer to carry on the Business as presently
conducted.
Section 5.22. Revenue. The average monthly revenue for the Business 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
and for the three months ended March 31, 2000 is $229,000 (the "Average Monthly
Revenue"). If the Average Monthly Revenue is less than such amount, the
difference will be multiplied by twelve and the resulting amount will be
subtracted 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 the financial statements was validly
derived in accordance with Applicable Laws. With respect to roll-off customers
charged a per-haul non-flat rate, the roll-off disposal charges are based on
actual tons hauled.
Section 5.23. Financial Statements.
(a) Seller has delivered to Buyer unaudited balance sheets of the
Business as of August 1999 and March 31, 2000 and the related unaudited
statements of income for the twelve-
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month and three-month periods then ended, respectively (the "Seller Financial
Statements").
(b) The Seller 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
statements, all in accordance with GAAP, subject to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate,
have a material adverse effect on the Business). The Seller 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 Seller 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 the Business have been properly recorded in all material
respects.
Section 5.24. Books and Records. The books of account and other records
of Seller, with respect to the Business only, all of which have been made
available for inspection to Buyer and will be delivered to Buyer at Closing, are
complete and correct and have been maintained in accordance with sound business
practices.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER.
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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
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Section 7.1. Access to Land and Records. Between the date of this
Agreement and the Closing Date, Seller will and Parent will cause Seller 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, 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 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 will
have provided Buyer with copies of Seller's current surveys and title policies
relating to the Land prior to the execution of this Agreement.
Section 7.2. Activities of Seller Prior to Closing. Between the date of
this Agreement and the Closing Date, Seller will and Parent will cause Seller
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 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 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 Assets 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 will not, without the prior
written consent of Buyer:
(a) change the authorized capital, admit new shareholders or permit the
withdrawal of existing shareholders of Seller, or grant any options, warrants,
puts, calls, conversion rights or commitments relating to Seller's equity
interests of any kind;
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(b) incur or agree to incur any liability or make any capital
expenditures related to the Assets 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 or Employee Contract in any material manner;
(e) enter into any transaction outside the ordinary course of the
Business of Seller or otherwise prohibited hereunder; or
(f) allow any other action or omission, or series of actions or
omissions, by 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. 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 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 Seller in
securing any consents necessary to transfer the Permits or in securing new
permits; and (b) the customers under the Customer Contracts, in order to assist
Seller in securing any consents necessary to transfer the Customer Contracts to
Buyer as contemplated by this Agreement. Seller shall use its commercially
reasonable best efforts to obtain all consents necessary to transfer the Permits
(or to assist Buyer in obtaining new permits for any non-transferable Permits),
the Customer Contracts, the Related Approvals and the Real Estate Leases to
Buyer at 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 or Real Estate Lease, and such consent has
not been obtained as of the Closing Date, but nevertheless Buyer elects to
consummate the transactions contemplated herein, Parent and 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,
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 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
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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 ___, 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,
Seller and Parent will not directly or indirectly (through a representative,
agent, employee or otherwise) solicit or accept offers for the Assets or the
Business or for a merger or consolidation involving the Assets 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 or the
Business by merger, consolidation or other combination, nor will Parent permit
Seller to do any of the foregoing. Parent and Seller shall promptly advise Buyer
of any proposal by a third party to acquire the Assets 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.
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
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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. Corporate Approval. The Board of Directors and (if
required) stockholders of Seller shall have approved the transaction described
herein.
Section 8.7. GEK Waiver. At or prior to the execution of this
Agreement, Buyer shall have entered into a Waiver Agreement with Liberty Waste
Services, LLC, a Delaware limited liability company ("Liberty"), in form and
substance acceptable to Seller, Parent and Liberty, with respect to the sale by
Liberty to an affiliate of Parent of all of the membership interests in Liberty
Waste Services Holdings, LLC, a Delaware limited liability company, which owns
all of the issued and outstanding capital stock of GEK, Inc., an Alabama
corporation,
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 herein to be made or obtained by Seller or
Parent shall have been obtained and made by 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 has obtained all of the consents it deems necessary under
any Customer Contract, Related Approval or Employee Contract requiring consent
to assignment by virtue of the transaction contemplated hereunder.
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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. Transferability of Permits. Buyer shall have determined,
in its sole discretion, that as a result of this transaction all of the Permits
required for the operation of the Business have been transferred to Buyer, or
can be so transferred to Buyer without public hearing or third party consent,
and that any Permits which must be re-issued in the name of Buyer will be so
issued as of the Closing Date.
Section 9.9. Surveys. Buyer shall have procured the Surveys in form and
substance provided for in Article 3.
Section 9.10. Title Policies. 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. GEK Waiver. At or prior to the execution of this
Agreement, Buyer shall have entered into a Waiver Agreement with Liberty Waste
Services, LLC, a Delaware limited liability company ("Liberty"), in form and
substance acceptable to Seller, Parent and Liberty, with respect to the sale by
Liberty to an affiliate of Parent of all of the membership interests in Liberty
Waste Services Holdings, LLC, a Delaware limited liability company, which owns
all of the issued and outstanding capital stock of GEK, Inc., an Alabama
corporation.
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.
ARTICLE 10. LIABILITIES AND OBLIGATIONS
---------- ---------------------------
Section 10.1. Non-Assumption of Liabilities. Except as explicitly set
forth in Section 10.2 below, Buyer shall not, by the execution and performance
of this Agreement or otherwise (including under theories of successor
liability), assume, become responsible for or incur any liability or obligation
of any nature of Seller or Parent (or any other party) relating to the Business
or Assets, whether legal or equitable, matured or contingent, known or unknown,
foreseen or unforeseen, ordinary or extraordinary, patent or latent, arising out
of occurrences on or prior to the Closing Date, including any liability or
obligation arising out of or relating to: (a) any occurrence or circumstance
(whether known or unknown) which occurs or exists on or prior to the Closing
Date and which constitutes, or which by the lapse of time or giving notice (or
both) would constitute, a breach or default under any lease, contract, or other
instrument or agreement (whether written or oral); (b) injury to or death of any
person or damage to or destruction of any property arising out of an occurrence
which took place on or prior to the Closing Date, whether based on negligence,
breach of warranty, or any other theory; (c) violation of the requirements of
any governmental
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authority or of the rights of any third person, including any requirements
relating to the reporting and payment of federal, state, local or other income,
sales, use, franchise, excise or property tax liabilities of Seller or Parent
relating to the Business or Assets or otherwise; (d) the generation, collection,
transportation, storage or disposal by Seller of Hazardous Materials; (e) any
obligations of Seller arising on or prior to the Closing Date under any
agreement or arrangement between Seller and the employees of Seller or any labor
or collective bargaining unit representing any such employees; (f) any employee
benefit plan, employee welfare benefit plan, employee pension benefit plan,
multi-employer plan or multiple-employer welfare arrangements (as defined in
Sections 3(3), (1), (2), (37) and (40), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) which are currently
maintained and/or sponsored by Seller or Parent, or to which Seller or Parent
currently contributes, or has an obligation to contribute in the future
(including employment agreements and any other agreements containing "golden
parachute" provisions and deferred compensation agreements except for the
obligations under the Employee Contracts that arise after the Closing Date); (g)
any severance pay obligation of Seller or Parent or any employee benefit plan
(within the meaning of Section 3(3) of ERISA) or any other fringe benefit
program maintained or sponsored by Seller or Parent or to which Seller or Parent
contributes or any contributions, benefits or liabilities therefor or any
liability for the withdrawal or partial withdrawal from or termination of any
such plan or program by Seller; (h) any obligations related to any of the
Excluded Assets; (i) any liabilities or obligations resulting from
non-compliance with any applicable plant-closing or bulk sales laws; (j) the
ownership or operation of the Business or the Assets on or prior to the Closing
Date, except as explicitly set forth in Section 10.2; and (k) the debts of
Seller or Parent not specifically assumed by Buyer hereunder. Seller and Parent
hereby jointly and severally agree to indemnify Buyer, its successors and
assigns from and against all of the above liabilities and obligations in
accordance with Section 11.2 below
Section 10.2. Assumption of Obligations.
(a) Buyer agrees to perform all obligations under the Assets, including
the Customer Contracts, Related Approvals, Employee Contracts and Permits, to
the extent, and only to the extent, such obligations first mature and are
required to be performed by Buyer subsequent to the close of business on the
date of Closing (provided that such obligations do not arise as a result of a
breach of Seller's representations and warranties herein).
(b) Buyer agrees to assume all obligations first accruing after the
Closing Date under any Real Estate Lease assigned at the Closing (provided that
such obligations do not arise as a result of a breach of Seller's
representations and warranties herein).
(c) Buyer agrees to assume at the Closing all liability under
performance bonds and letters of credit with respect to the Assets set forth on
Schedule 5.19, and agrees to post substitute financial assurances as required
under environmental Permits within 90 days following the Closing.
(d) Buyer agrees to assume all obligations first accruing after the
Closing Date under any operating lease for office equipment such as telephone
systems, copiers, fax machines and postage meters, copies of which have been
provided by Seller to Buyer.
Section 10.3. Employees. The following shall apply with respect to
non-union employees of Seller hired by Buyer within 30 days following the
Closing Date ("Hired Employees"):
(a) Buyer 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
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the employees of Buyer or its affiliates, except that Buyer 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 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 medical insurance plan during such employee's
employment with Seller. 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
amount set forth on Schedule 5.8; provided, however Seller will 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 60 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.
ARTICLE 11. 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 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 Sections 10.1 and
10.2 and Article 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. 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:
(a) any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties by Seller or Parent set forth herein, or in the
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Schedules, Exhibits or certificates attached hereto or delivered pursuant hereto
by Seller or Parent; (b) nonfulfillment or nonperformance of any agreement,
covenant or condition on the part of Parent or Seller made in this Agreement;
(c) any liability, claim or other cost or obligation retained pursuant to
Section 10.1; or (d) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in subsections (a) through (c) of this
Section 11.2 had been satisfied.
Section 11.3. Indemnification by Buyer and Waste Industries, Inc. Buyer
and Waste Industries, Inc., jointly and severally, agree that they 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 10.2 or 10.4; 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 Stock 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 $1,000 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 or to any indemnification obligations on
account of a breach of the covenants set forth in Section 10.1 or 10.2 or the
representations set forth in Section 5.22. Further, the indemnification
obligations set forth in this Article 11, when aggregated with the
indemnification obligations set forth in Article 11 of the Stock 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 on account of a breach of the covenants set forth in Section 10.1,
10.2, 10.4 or Article 13, or to the actual fraud of Parent or Seller.
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
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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
0and 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 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).
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(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. Solely for purposes of this Article 11, a representation,
warranty or covenant will be "materially" beached for purposes of a material
adverse effect or materiality qualifier if the amount of loss with respect to
such breach is in excess of $1,000.
ARTICLE 12. 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 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.
28
<PAGE>
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.
ARTICLE 13. NONDISCLOSURE
---------- -------------
Section 13.1. Nondisclosure by Seller and Parent. 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. 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 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 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 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 Parent or Seller. The foregoing provisions shall not apply to any
information which is or relates to an "Excluded Asset" or which is or relates to
the liabilities retained by Seller hereunder. If at any time after the Closing,
Parent or
29
<PAGE>
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 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 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.
30
<PAGE>
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 and Parent 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 and Seller
shall be paid by Seller prior to the Closing so that the Assets 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
31
<PAGE>
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, North Carolina 27609
Attn: Lonnie C. Poole, Jr.
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.
32
<PAGE>
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 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.
33
<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:____________________________________
34
<PAGE>
LIST OF SCHEDULES
-----------------
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- Legal Description of the Land
Exhibit B -- Non-Solicitation Agreement
Exhibit C -- National Account Subcontract Agreement
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 1.2 -- Excluded Motor Vehicles
Schedule 1.5 -- Allocation of Purchase Price
Schedule 2.2 -- Accounts Receivable - Closing Date
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 5.6 -- Contracts
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
</TABLE>
<PAGE>
Schedule 5.13 -- Conduct of Business
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
<PAGE>
ANNEX I
-------
RELATED PURCHASE TRANSACTIONS
-----------------------------
1. The purchase and sale of all of the capital stock of Sampson County
Disposal, Inc. pursuant to the Stock Purchase Agreement.
2. The purchase and sale of the Chattanooga, Tennessee and Dalton Georgia
hauling assets.
<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.
<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.
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
TRACT ONE: BEGINNING at a point in the Southeastern edge of the right of way of
U.S. Highway 301 where its Southeastern edge intersects with the Northeastern
edge of the right of way of N.C.S.R. 2268 at an iron pin and runs thence with
the edge of the right of way of U.S. Highway 301 North 43 degrees 43 minutes
East 220.14 feet to a rebar, a corner with Tract A; thence with the line of
Tract A South 46 degrees 17 minutes 00 seconds East 196.46 feet to a point, a
corner with Tract A; thence with the line of Tract A North 43 degrees 43 minutes
East 245.10 feet to a point located in the center of a creek; thence with a
traverse line along said creek the following courses and distances: South 59
degrees 12 minutes 43 seconds East 24.12 feet, South 60 degrees 26 minutes 30
seconds East 135.61 feet and South 67 degrees 14 minutes 20 seconds East 144.34
feet, a corner with Tract C; thence leaving the creek and with the line of Tract
C South 43 degrees 33 minutes 29 seconds West 285.24 feet to a rebar in the line
of Tract C; thence continuing South 43 degrees 33 minutes 29 seconds West 268.83
feet to a rebar in the Northeastern edge of the right of way of N.C.S.R. 2268;
thence running with the Northeastern edge of the right of way of N.C.S.R. 2268
North 46 degrees 26 minutes 31 seconds West 27.00 feet to an iron pin; thence
continuing North 46 degrees 26 minutes 31 seconds West 460.78 feet to the POINT
AND PLACE OF BEGINNING, and containing 4.36 acres, more or less, and being Tract
B as shown on that Map entitled, "Property of D & H Associates", prepared by
Piedmont Surveying, Inc., and dated February 23, 1989.
TRACT TWO: BEGINNING at a rebar in the Northeastern edge of the right of way of
Secondary Road No. 2268, a corner with Tract B, said rebar being located South
46 degrees 26 minutes 31 seconds East 487.78 feet from an iron pin at the
intersection of the Southeastern edge of the right of way of U.S. Highway 301
and the Northeastern edge of the right of way of N.C.S.R. 2268, and running from
said point of beginning so located, with the line of Tract B, North 43 degrees
33 minutes 29 seconds East 268.83 feet to a rebar; thence continuing North 43
degrees 33 minutes 29 seconds East 285.24 feet to a point located in the center
of a creek; thence with a traverse line along said creek the following courses
and distances: South 67 degrees 14 minutes 20 seconds East 152.97 feet, South 83
degrees 34 minutes 02 seconds East 97.69 feet to a point in said creek; thence
leaving the creek along a 3 foot drainage ditch South 03 degrees 11 minutes 59
seconds West 387.26 feet to a found tile pipe and pointers; thence South 14
degrees 42 minutes 16 seconds East 707.67 feet to a set rebar corner located in
the Northeastern edge of the right of way of N.C.S.R. 2268; thence running with
the Northeastern edge of the right of way of said N.C.S.R. 2268 North 46 degrees
26 minutes 31 seconds West 816.84 feet to a rebar; thence continuing North 46
degrees 26 minutes 31 seconds West 256.68 feet to the POINT OF BEGINNING and
containing 8.61 acres, more or less, and being Tract C on the map. Tract C as
shown on that map entitled, "Property of D & H Associates", prepared by Piedmont
Surveying Inc., and dated February 23, 1989.
<PAGE>
EXHIBIT B
---------
NON-SOLICITATION AGREEMENT
THIS NON-SOLICITATION AGREEMENT (the "Agreement") is made and entered
into as of May 26, 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 Purchase Agreement,
dated May 26, 2000 (the "Purchase Agreement"), which provides for the sale by
BFINA to Buyer of certain assets, properties and contractual rights of BFINA
used in connection with a fully-permitted waste hauling operation located in
Fayetteville, North Carolina (the "Business").
B. To induce Buyer to consummate the transactions contemplated by the
Purchase Agreement, Sellers have agreed to forego certain rights to compete with
Buyer 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 a customer of BFINA relating principally
to the Business and potential customers for the Business in the Territory, but
excluding national accounts not subcontracted to Buyer.
(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) with respect to any written Customer Contract, the period
beginning as of the date of this Agreement and ending the later of (A) one year
thereafter or (B) upon the expiration of the remaining term of such written
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 the counties of Bladen, Cumberland,
Harnett, Hoke, and Sampson in the State of North Carolina; provided, however,
that if a court of competent jurisdiction determines that such Territory is
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
<PAGE>
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.
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 Agreement and 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.
<PAGE>
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, North Carolina 27609
Attn: Lonnie C. Poole, Jr.
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
<PAGE>
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]
<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:___________________________________
<PAGE>
EXHIBIT C
---------
NATIONAL ACCOUNT SUBCONTRACT AGREEMENT
THIS NATIONAL ACCOUNT SUBCONTRACT ("Subcontract") is effective this ___
day of ________, 2000, between BFI Waste Systems of North America, Inc., a
Delaware corporation ("Contractor"), and Waste Industries, Inc., a North
Carolina corporation ("Subcontractor").
RECITALS
WHEREAS, Contractor and _______________, a _________ corporation
("Customer"), are parties to that certain ____________________, dated
______________ (the "Master Contract"), a copy of which is attached hereto as
Exhibit A; and
WHEREAS, Contractor desires to contract with Subcontractor for the
provision of commercial hauling operations for the Customer in ______________
(the "Area"), and Subcontractor desires to contract with Contractor for the
same.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
TERMS AND CONDITIONS
1. Subcontract. Contractor hereby subcontracts to Subcontractor, and
Subcontractor hereby subcontracts from Contractor, all of Contractor's rights
and obligations to provide the services (the "Services") set forth in the Master
Contact in the Area, for the term and upon the terms and conditions set forth in
this Subcontract.
2. Term. The term of this Subcontract shall commence on the date hereof
and shall continue until such time as the Master Contract terminates (inclusive
of any and all renewal periods).
3. Rights and Obligations. Subcontractor agrees to be bound by all
provisions of the Master Contract. All rights, privileges and obligations of
Contractor pursuant to the Master Contract are intended to be available to
Subcontractor under this Subcontract, except as otherwise expressly provided
herein. Subcontractor shall be entitled to receive all of the benefits which
Contractor is entitled to receive with respect to the Services being provided in
the Area pursuant to the Master Contract.
4. Indemnification.
(a) Indemnification by Subcontractor: Subcontractor shall
indemnify, defend and hold harmless Contractor and its shareholders, partners,
directors, officers, affiliates, employees and agents (the "Contractor
Indemnified Parties") for, from and against any and all claims, actions,
proceedings, costs, fines, assessments, penalties, damages and liabilities,
including, without limitation, reasonable attorneys' fees, suffered or incurred
by any of the Contractor Indemnified Parties arising out of any act or omission
of Subcontractor and its
<PAGE>
employees or agents in the performance of work under the Master Contract from
and after the date of this Subcontract.
(b) Indemnification by Contractor: Contractor shall indemnify,
defend and hold harmless Subcontractor and its shareholders, partners,
directors, officers, affiliates, employees and agents (the "Subcontractor
Indemnified Parties") for, from and against any and all claims, actions,
proceedings, costs, fines, assessments, penalties, damages and liabilities,
including, without limitation, reasonable attorneys' fees, suffered or incurred
by any of the Subcontractor Indemnified Parties arising out of any act or
omission of Contractor and its employees and agents in the performance of work
under the Master Contract before the date of this Subcontract.
5. Pricing of Master Contract. At all times during the term of the
Master Contract when the pricing and other terms of the Master Contract are
subject to re-negotiation or modification, Contractor will consult with
Subcontractor and use commercially reasonable efforts to obtain the most
commercially favorable pricing and other terms reasonably available during such
re-negotiation or modification of the Master Contract. In the event that without
the consent of Subcontractor the price terms of the Master Contract are reduced
from those in effect on the date hereof, or the price terms become materially
less favorable to Subcontractor than the terms in effect on the date hereof,
Subcontractor may terminate this Subcontract by written notice to Contractor
within 30 days following reduction of the price terms. Any such termination
shall be effective 30 days after receipt of notice thereof by Contractor.
6. New Agreement. Notwithstanding anything in this Subcontract to the
contrary, Subcontractor shall have the right to enter into a service agreement
or make other arrangements with the party receiving Services in the Area under
the Master Contract, which service agreement or other arrangements may supersede
the Master Contract in whole or in part. This Subcontract will terminate if the
new service agreement or other arrangements supersede the Master Contract as a
whole in the Area.
7. Transfer of Master Contract. Contractor will not sell, assign,
transfer or otherwise dispose of the Master Contract, by operation of law,
merger, sale of assets, change of control or otherwise, without the consent of
Subcontractor, which consent shall not be unreasonably withheld, unless the
other party to such transaction agrees in writing to be bound by the terms of
this Subcontract.
8. Payment for Services. Subcontractor agrees to submit an invoice to
Contractor on a monthly basis, setting forth in detail the Services that
Subcontractor provided under the Master Contract during the past month.
Contractor agrees to pay Subcontractor the amount set forth in the Master
Contract for those services performed by Subcontractor within one month after
receiving the invoice.
9. 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.
<PAGE>
(a) If to Contractor, 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.
(b) If to Subcontractor, addressed to it at:
Waste Industries, Inc.
3301 Benson Drive, #601
Raleigh, North Carolina 27609
Attn: Lonnie C. Poole, Jr.
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, or
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.
10. Compliance with laws. Subcontractor agrees that it will comply with
all
<PAGE>
applicable federal, state and local laws, regulations and ordinances and the
terms of any permits and approvals issued to it or by which it is governed
relating, in any such case, to the exercise of its rights under this
Subcontract.
11. Headings. The headings in this Subcontract have been inserted for
convenience only and shall not affect the meaning or interpretation of any
provision in this Subcontract.
12. Counterparts. This Subcontract may be executed in two or more
original or facsimile counterparts, each of which shall be deemed an original
and all of which together shall constitute but one and the same instrument.
13. Amendment. This Subcontract may not be amended except by a written
instrument executed by each party to this Subcontract.
14. Entire Agreement. This Subcontract is the final, complete and
exclusive statement of the agreement among the parties with relation to the
subject matter of this Subcontract. There are no oral representations,
understandings or agreements covering the same subject matter as this
Subcontract. This Subcontract supersedes and cannot be varied, contradicted or
supplemented by evidence of, any prior or contemporaneous discussions,
correspondence, or oral or written agreements or arrangements of any kind.
15. Assignment. This Subcontract may not be assigned or otherwise
transferred without the express written consent of all the parties hereto.
16. Binding Effect. This Subcontract shall be binding upon and shall
inure to the benefit of the successors and permitted assigns of the parties.
17. Attorneys' Fees. In the event of any litigation arising out of this
Subcontract, the prevailing party shall be entitled to recover its reasonable
attorneys' fees.
18. Governing Law. This Subcontract shall be governed and construed in
accordance with the laws of the State governing the Master Contract.
IN WITNESS WHEREOF, the parties hereto have caused this Subcontract to
be executed as of the day and year first written above.
SUBCONTRACTOR: CONTRACTOR:
Waste Industries, Inc. BFI Waste Systems of North America, Inc.
By ___________________________ By:______________________________
Its___________________________ Its:_____________________________
