SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 17, 1998
WASTE CONNECTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19674
(Commission File Number)
94-3283464
(IRS Employer Identification No.)
2260 Douglas Boulevard, Suite 280, Roseville, California 95661
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (916) 772-2221
Not Applicable
(Former name or former address, if changed since last report.)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On June 17, 1998, WCI acquired the stock of Arrow
Sanitary Service, Inc., an Oregon corporation doing business as
"Oregon Paper Fiber" ("OPF"). OPF is engaged in the collection,
transportation and handling of solid waste and recyclables in Clark
County, Washington and Multnomah and Clackamas Counties, Oregon.
The purchase price consisted of approximately $7.72
million in cash (less certain indebtedness of OPF), 213,750 shares
of WCI Common Stock, and contingent payments to the selling
shareholders if certain events occur during a specified period.
On June 25, 1998, WCI acquired the stock of Curry
Transfer and Recycling ("Curry") and Oregon Waste Technology
("OWT") and certain real estate located in Curry County, Oregon and
used in those businesses. Curry and OWT are Oregon corporations
engaged primarily in the collection and transportation of solid
waste and recyclables in Brookings, Goldbeach and Port Orford,
Oregon and the unincorporated areas of Curry and Lane Counties,
Oregon.
The purchase price for the stock of Curry and OWT
consisted of approximately $6.65 million in cash (less certain
indebtedness of Curry and OWT) and contingent payments to the
selling shareholders if certain events occur during a specified
period. The purchase price for the real estate was approximately
$350,000 in cash.
WCI intends to continue to operate each of the acquired
businesses. The purchase prices of the acquisitions were
determined based on the consideration paid by WCI for similar
acquisitions in the western United States. The cash portions of
the acquisitions were funded with borrowings under WCI's credit
facility with a group of banks for which BankBoston, N.A. acts as
agent.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired. The
financial statements of OPF, Curry and OWT are not included in this
Form 8-K, but the financial statements of OPF will be filed by
amendment to this Form 8-K no later than 60 days after July 2,
1998. Pursuant to Rule 3.05(b) of Regulation S-X, the financial
statements of Curry and OWT are not required to be included in this
Form 8-K.
(b) Pro Forma Financial Information. Pro forma financial
information relating to OPF, Curry and OWT is not included in this
Form 8-K, but pro forma financial information relating to OPF will
be filed by amendment to this Form 8-K no later than 60 days after
July 2, 1998. Pursuant to Rule 3.05(b) of Regulation S-X, pro
forma financial information relating to Curry and OWT is not
required to be included in this Form 8-K.
(c) Exhibits.
10.1 Stock Purchase Agreement dated as of
June 17, 1998, by and among WCI,
Arrow Sanitary Service, Inc., Steven
Giusto, Dennis Giusto, John Giusto,
Michael Giusto and Kenneth Giusto
10.2 Stock Purchase Agreement dated as of
June 25, 1998, by and among WCI,
Curry Transfer and Recycling, Oregon
Waste Technology, Petty H. Smart and
A. Lewis Rucker
10.3 Purchase and Sale Agreement dated as
of June 25, 1998, by and between
Petty H. Smart and T.V. Skinner, as
Tenants in Common, and WCI
99.1 WCI's Press Release released
June 25, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
WASTE CONNECTIONS, INC.
(Registrant)
Date: July 1, 1998 By /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
10.1 Stock Purchase Agreement dated as of
June 17, 1998, by and among WCI,
Arrow Sanitary Service, Inc., Steven
Giusto, Dennis Giusto, John Giusto,
Michael Giusto and Kenneth Giusto
10.2 Stock Purchase Agreement dated as of
June 25, 1998, by and among WCI,
Curry Transfer and Recycling, Oregon
Waste Technology, Petty H. Smart and
A. Lewis Rucker
10.3 Purchase and Sale Agreement dated as
of June 25, 1998, by and between
Petty H. Smart and T.V. Skinner, as
Tenants in Common, and WCI
99.1 WCI's Press Release released
June 25, 1998
<PAGE>
Exhibit 10.1
STOCK PURCHASE AGREEMENT
I. PARTIES
The parties to this Agreement are Waste Connections, Inc., a
Delaware corporation (hereinafter referred to as "WCI"); Arrow
Sanitary Service, Inc., an Oregon corporation doing business under
the assumed name of Oregon Paper Fiber (hereinafter referred to as
"OPF"); and John Giusto, Dennis Giusto, Steven Giusto, Kenneth
Giusto, and Michael Giusto, individuals (hereinafter referred to
collectively as "Shareholders").
II. RECITALS OF FACT
1. OPF is engaged in business as a collector, transporter, and
handler of solid waste and recyclables primarily in the area
consisting of Multnomah, Washington, and Clackamas Counties in
Oregon and Clark County in Washington.
2. WCI, through subsidiaries, is similarly engaged in business as
a collector, transporter, and handler of solid waste and
recyclables in various locations in the states of California,
Washington, Idaho, Wyoming, South Dakota, Utah and Oklahoma.
3. Shareholders own all of the issued and outstanding capital
stock in OPF.
4. WCI wishes to purchase all of the outstanding and issued shares
of capital stock in OPF from Shareholders on the terms set forth
below.
5. Shareholders wish to sell all of the outstanding shares of
capital stock in OPF to WCI on the terms set forth below.
6. Shareholders have extensive experience in OPF's business and
are, as a material part of the consideration for this Agreement,
acquiring capital stock in WCI. Consequently, Shareholders have
agreed not to compete with WCI as provided in this Agreement in
order to promote and protect the interests of all parties to this
Agreement. Similarly, since all parties will have a financial
interest in WCI's financial success after the close of this
transaction, they have agreed that additional future consideration
will be due Shareholders for the acquisition of Shareholders'
shares of OPF stock to the extent Shareholders subsequently
identify additional businesses which WCI chooses to purchase or
acquire.
III. AGREEMENT OF THE PARTIES
In consideration of their respective promises set forth below, the
parties agree and contract as follows:
7. OPF Shares Transferred to WCI: At closing, Shareholders will
sell, deliver, and transfer to WCI all of the outstanding and
issued capital stock in OPF, (hereinafter referred to as the "OPF
Stock"), free and clear of any and all liens, security interests,
encumbrances, and claims of right, title, or interest by or through
any other person or entity.
8. Payment of Purchase Price: At closing, WCI will pay to
Shareholders the purchase price for its acquisition of the OPF
stock and for Shareholders' agreement not to compete. The purchase
price will be paid, subject to the adjustments described below, as
follows:
Cash Consideration: The sum of seven million seven hundred twenty
thousand dollars ($7,720,000), as adjusted pursuant to the
provisions of this section 8 and as subsequently adjusted pursuant
to the provisions of section 9 of this Agreement, to be paid in
cash by wire transfer or by cashier's or certified check at the
time of closing.
(1) The cash consideration payable at closing in the sum of
$7,720,000 will be increased to the extent that OPF's current
assets as of the balance sheet date exceed current liabilities,
excluding the current portion of long term debt, as of the balance
sheet date. The cash consideration payable at closing will,
conversely, be decreased to the extent that OPF's current
liabilities, excluding the current portion of long term debt, as of
the balance sheet date exceed current assets as of the balance
sheet date.
The cash consideration payable at closing will be reduced to the
extent of OPF's long term debt as of the effective date (including
lease obligations). The long term debt to be paid at closing will
be paid by wire transfer or otherwise in accordance with written
pay-off instructions from the respective creditors, copies of which
are attached as Schedule Seven.
(3) The OPF long term debt which will not be paid in full at
closing, consisting of the contract payable to Loffink, will be
reduced to present value, including accrued interest as of the
effective date. The debt described in Section 8(a)(2) and (3)
constitutes all of the long term debt of OPF. Notwithstanding any
other provision to the contrary, any OPF indebtedness owing to U.S.
Bank secured by real property in Clatsop County, Oregon, will not
be treated as OPF debt for purposes of this Agreement nor deducted
from the price paid to Shareholders.
(i) Additional Cash Consideration to Steven Giusto: In addition
to the cash consideration described above, WCI will pay the sum of
$80,000 to Steven Giusto, Inc., an Oregon corporation, for
organization of this transaction.
b. Non-Cash Stock Consideration: At closing, WCI will deliver to
Shareholders 213,750 shares of WCI common stock.
(1) The shares of WCI common stock to be delivered to Shareholders
as consideration will either be registered securities or subject to
a registration rights agreement in the form attached hereto as
Exhibit A, and incorporated by reference herein, to be executed
contemporaneously with the execution of this Agreement. Any such
registration rights agreement will, among other things,
specifically provide that WCI will pay, indemnify, and hold
Shareholders free and harmless with respect to all costs and
expenses incurred in the registration of their shares of WCI stock.
c. Shareholders' Representations Concerning Non-Cash
Consideration: Each Shareholder represents that:
(1) Each Shareholder is an "accredited investor" within the
definition of that term in Rule 501(a) of the Securities Act of
1933 as amended.
(2) Each Shareholder is a resident of the state of Oregon.
(3) Each Shareholder has made a voluntary and informed investment
decision based on due and diligent inquiry concerning his
acquisition of capital stock in WCI as provided in this Agreement.
Each Shareholder is able to bear the economic risk necessarily
attendant on his acquisition of WCI capital stock in accordance
with the terms of this Agreement.
Each of the Shareholders has such knowledge and experience in
financial matters, either alone or with his professional advisors,
that he is capable of evaluating the merits and risks of his
investment in the capital stock of WCI.
Each of the Shareholders has had access to such information
relating to WCI as he feels is reasonably necessary to make an
informed investment decision with respect to the shares. Each
Shareholder acknowledges receipt of WCI's Prospectus dated May 22,
1998 and his understanding that the shares of WCI stock he acquires
pursuant to this Agreement are not covered by that Prospectus.
Each Shareholder acknowledges that he has had the opportunity to
make all inquiries he has deemed prudent or necessary concerning
his acquisition of capital stock in WCI and that WCI has provided
all such information as requested.
Each Shareholder is acquiring capital stock in WCI pursuant to this
Agreement for his own account and not as a nominee or agent for any
other person or entity. No other person other than each individual
Shareholder has any beneficial or other interest in any of the
shares of capital stock in WCI they acquire pursuant to the terms
of this Agreement.
Each of the Shareholders understands and agrees that each
certificate or other instrument representing the shares will bear
a legend on the face thereof (or on the reverse thereof with a
reference to such legend on the fact thereof) which legend
restricts the sale, transfer, or other disposition of the shares
otherwise that in accordance with this Agreement provided, however,
that WCI shall, on the request of any of the Shareholders, cause
such legends to be removed from the certificates or other
instrument evidencing the shares if such Shareholder has held such
shares for the period contemplated by Rule 144(k) under the Act and
if the Shareholder is not then and has not been during the three
months preceding such request an affiliate of WCI (as defined in
Rule 144 under the Act).
Each of the Shareholders understands and agrees that the shares
will be "restricted securities" as that term is defined in Rule 144
under the Act and, accordingly, that the shares must be held
indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
9. Adjustments to Purchase Price: The following adjustments will
be made to the purchase price within 90 days after the closing date
by WCI and Shareholders' representatives:
Current Liabilities and Assets: The cash consideration WCI pays to
Shareholders at closing will be increased or decreased, as the case
may be, by the amount, if any, by which the difference between
OPF's current liabilities, excluding the current portion of long
term debt, and OPF's current assets on the effective date has
changed since the balance sheet date. To the extent OPF's net
current assets on the effective date, after deducting current
liabilities excluding the current portion of long term debt,
exceeds the amount of such net current assets as of the balance
sheet date, WCI will pay the difference to Shareholders. To the
extent OPF's net current liabilities on the effective date,
excluding the current portion of long term debt, exceeds the amount
of such net current assets as of the balance sheet date,
Shareholders will pay the difference to WCI.
b. Long Term Liabilities: The cash consideration WCI pays to
Shareholders on the closing date will be adjusted to the extent
there is a difference between OPF's estimated long term liabilities
as of the closing date and OPF's actual long term liabilities as of
the closing date. To the extent estimated long term liabilities as
of the closing date are less than actual long term liabilities on
the balance sheet date, WCI will pay that amount to Shareholders as
additional consideration for their shares of capital stock in OPF.
To the extent estimated long term liabilities as of the closing
date are greater than actual long term liabilities as of the
balance sheet date, Shareholders will remit that difference to WCI.
(1) The parties will cooperate and jointly participate in the
determination of any adjustments to current liabilities and assets
following the closing date such that any claim of right to such an
adjustment after closing will be asserted and resolved within 90
days following closing.
c. Additional Contingent Purchase Price: The parties acknowledge
their shared intent to increase and enlarge the business of WCI and
of OPF as a WCI subsidiary after the closing date since all parties
would benefit from the increased value to WCI resulting from such
increase. Consequently, if any one or more of the Shareholders
successfully assist WCI in acquiring any other waste collection
operation or business by the introduction of WCI to such operation
or business within 24 months following the closing date, WCI will
pay Shareholders, as additional consideration for the acquisition
of their capital stock in OPF pursuant to this Agreement, an amount
equal to 3 percent of the projected pro forma gross revenue (less
any franchise fees) for the acquired business during the first year
following WCI's acquisition of that business. Any such amount will
be due and payable to Shareholders within 30 days following closing
of such an acquisition by WCI.
(1) For purposes of this provision, Shareholders will have
successfully assisted WCI in the acquisition of any waste
collection operation or business if one or more Shareholders locate
or introduce any such operation or business to WCI within 24 months
after the closing date and WCI or one of its subsidiaries
subsequently acquires such business or operation.
(2) WCI will have no duty or obligation to investigate or to
acquire any other waste collection operation or business
Shareholders may identify, locate, or introduce to WCI pursuant to
this provision. WCI will not be liable to any of the Shareholders
if for any reason WCI does not acquire any such business or
operation.
d. Effective Date of Agreement: The "effective date" of this
Agreement is June 1, 1998 regardless of the closing date.
e. Balance Sheet Date: The "balance sheet date" for purposes of
this Agreement is March 31, 1998.
f. Excluded Assets: At the closing of this Agreement, OPF will
transfer, assign, and convey to Shareholders, or to any entity or
person Shareholders may designate, all of its right, title, and
interest in and to the following:
One 16' Wilson trailer, one toolbox and contents having a value of
approximately $6,500, and one 1990 Chevrolet Corsica automobile
driven by Steven Giusto having a fair market value of $1,000.
All life insurance policies which OPF owns insuring the lives of
any Shareholder.
g. Allocation of Purchase Price: The purchase price for
Shareholders' agreement not to compete and capital stock in OPF is
$10,365,000, subject to the adjustments described above. Any
adjustments made to the purchase price pursuant to this Agreement
will be added to or subtracted from the consideration paid for
acquisition of Shareholders' capital stock in OPF and will not
affect the consideration paid for Shareholders' agreement not to
compete. The purchase price will be allocated as follows:
(1) Value of Shareholders' capital stock in OPF: $10,235,000.00
(2) Value of agreement not to compete: $ 50,000.00
(3) Additional cash consideration to
Steven Giusto, Inc.: $ 80,000.00
Total Value: $10,365,000.00
10. Representations and Warranties of Shareholders and of OPF:
Shareholders and OPF jointly and severally represent and warrant
that the following representations are true in all respects:
Corporate Status of OPF: OPF is a corporation duly organized,
validly existing and in good standing under the laws of the state
of Oregon. OPF has all requisite corporate power and authority to
enter into this Agreement, to own and lease its properties, and to
conduct its business. OPF is duly authorized to do business in any
jurisdiction in which it operates as of the closing date.
Capitalization: Schedule One sets forth, as of the closing date,
the authorized and outstanding capital of OPF, the names, addresses
and social security numbers of the record and beneficial owners
thereof, the number of shares so owned, the allocation of the cash
and shares among the Shareholders as agreed to among themselves,
and wire transfer instructions for each Shareholder relating to the
bank account to which the purchase price and the contingent
purchase price, if any, should be sent. On the closing date, all
of the issued and outstanding shares of the capital stock of OPF
are owned of record and beneficially by the Shareholders, as set
forth in Schedule One, and are free and clear of all liens,
security interests, encumbrances and claims of every kind except as
set forth in Schedule One. Each share of the capital stock of OPF
is duly and validly authorized and issued, fully paid and
nonassessable, and was not issued in violation of any preemptive
rights of any past or present shareholder of OPF. No option,
warrant, call, conversion right or commitment of any kind
(including any of the foregoing created in connection with any
indebtedness of OPF) exists which obligates OPF to issue any of its
authorized but unissued capital stock or other equity interest or
which obligates any Shareholder to transfer OPF stock to any
person.
All Stock Being Acquired: The OPF stock being acquired by WCI
pursuant to this Agreement constitutes all of the outstanding
capital stock of OPF which is validly issued when delivered to WCI
pursuant to the terms of this Agreement.
d. Capacity to Execute this Agreement: The execution, delivery,
and performance of this Agreement have been duly authorized and
approved by OPF's Board of Directors and Shareholders. Each
Shareholder has the legal right and capacity to enter into and
perform his obligations pursuant to this Agreement. This Agreement
constitutes a legal, valid and binding agreement of both OPF and
Shareholders enforceable against them in accordance with its terms.
Execution, delivery, and performance of their obligations pursuant
to the terms of this Agreement by OPF and its Shareholders does not
require the authorization, consent, or approval of any third party,
including any governmental entity or regulatory agency, except as
set forth on Schedule Four. The parties acknowledge that the
execution, delivery, and performance of this Agreement may be
subject to approval by the City of Portland with respect to OPF's
franchise rights in that city. Notwithstanding any other provision
in this Agreement to the contrary, WCI assumes the risk that such
approval is required and, if required, will be obtained.
e. No Consequent Breach of Other Obligations: Execution,
delivery, and performance of this Agreement by OPF and Shareholders
does not constitute a breach or default by them of any obligation,
license, or agreement.
No Consequent Violation of Law: Execution, delivery, and
performance of this Agreement by OPF and Shareholders does not
constitute a violation of any law, rule, regulation, judicial, or
administrative order.
Subsidiaries: Schedule Six lists any and all subsidiaries and any
securities of any other corporation or any securities or other
interest in any other business entity owned by OPF or by any of its
subsidiaries.
Accuracy of Books and Records: The books and records of OPF
accurately state the present financial condition and prior business
activities of OPF. OPF has delivered to WCI copies of OPF's
financial statements (hereinafter referred to as "the OPF financial
statements") for its three most recent fiscal years, compiled by
Robert Campbell & Co., CPA, and unaudited interim financial
statements for the period ending March 31, 1998 ("the balance sheet
date"). The financial statements are true and correct and fairly
present:
The financial position of OPF as of the respective dates of the
balance sheets included in said statements; and
The results of operations for the respective periods indicated.
The financial statements have been prepared consistently with prior
periods. Except to the extent reflected or reserved against in
OPF's balance sheet as of the balance sheet date, or as disclosed
on the schedules attached hereto, OPF had and has as of the closing
date no liabilities of any nature, whether accrued, absolute,
contingent, or otherwise, including any tax liabilities due or
which will become due.
Compliance with Laws and Regulations: OPF has, to Shareholders'
knowledge, made and maintained all leasehold improvements and
conducted all of its business operations in compliance with all
applicable building codes, fire regulations, building restrictions,
zoning ordinances, and environmental laws and regulations. OPF has
been and is in compliance with all applicable laws concerning the
operation of its business including all federal, state, and local
laws (including, but not limited to, the Americans with
Disabilities Act, the Federal Occupational Safety and Health Act,
and Laws relating to the public health, safety, or protection of
the environment), ordinances, codes, rules, regulations,
governmental permits, orders, judgments, awards, decrees, consent
judgments, and consent orders. Notwithstanding the foregoing,
Shareholders and OPF make no warranty or representation that OPF is
in compliance with the City of Gresham's solid waste ordinance.
Hazardous Materials: OPF has not accepted, processed, handled,
transferred, generated, or disposed of any hazardous material
except as permitted by applicable laws and regulations. No
hazardous materials have been accepted, processed, handled,
transferred, generated, disposed of, or released on real property
leased or operated by OPF, nor has OPF otherwise participated in
the acceptance, processing, handling, transfer, generation,
disposal, or release of any hazardous materials except in
compliance with all applicable laws and regulations governing such
activities. There are no pending or, to the knowledge of
Shareholders and OPF, threatened actions or proceedings by any
governmental or other entity concerning remediation of any
environmental condition on any real property OPF leases or
occupies.
(1) For purposes of this Agreement "hazardous materials" means
"hazardous waste" as defined in 40 CFR 261 and includes all
materials defined as "hazardous" in any analogous Oregon statute or
administrative regulation.
Title to Assets: OPF has good and marketable title to all of the
assets listed on Schedule Five used in its business subject only to
the outstanding security interests listed on Schedule Five. Except
as described in Schedule Five all of OPF's containers, vehicles,
machinery, and equipment necessary for the operation of its
business are in operable condition and all of its of motor vehicles
and other rolling stock are in material compliance with all
applicable laws, rules, and regulations, and are all of the assets
necessary to conduct OPF's business as presently conducted.
No Adverse Changes to Business: Neither OPF nor its Shareholders
have any knowledge of any fact or circumstance which would result
in a material adverse change in the value of OPF's business
operations or assets after the closing date. Since the balance
sheet date there has not been:
Any material change in OPF's financial condition, assets,
liabilities (contingent or otherwise), income, operations, or
business which would have a material adverse effect on its
financial condition, assets, liabilities (contingent or otherwise),
income, operations, or business;
Any material damage, destruction, or loss (whether or not covered
by insurance) adversely affecting any material portion of its
properties or business;
Any declaration, agreement to pay, or payment of any distribution
or dividend not provided for in this Agreement;
Any change or agreement to change the terms and conditions of
employment of any employee except pursuant to the terms of the
contract between OPF and Teamster Union Local No. 305 the terms of
which have been previously disclosed to WCI; and
No other agreement, event, or action on the part of OPF or its
Shareholders which would materially diminish the value of OPF's
operations and business.
All Leases and Contracts are Valid and Enforceable by their Terms:
All leases and contracts currently in effect between OPF and any
third person or entity are valid and enforceable according to their
terms. All leases of fixed assets are in full force and effect and
binding on the parties to such leases. To the knowledge of
Shareholders and OPF neither OPF nor any other party to such leases
is in breach of any material provision of such a lease.
Real Property: The only real property OPF leases is located at
12820 NE Marx, Portland, Oregon. OPF will own no real property nor
have any equity interest in any real property on the closing date
other than its leasehold interest in the property at 12820 NE Marx,
Portland, Oregon, (hereinafter the "Marx Ave property") and real
property in Clatsop County, Oregon which OPF has sold, transferred,
and conveyed to Shareholders in partial redemption of Shareholders'
OPF stock prior to the closing of this transaction. WCI is
assuming or acquiring OPF's interest in the Marx Ave property
pursuant to the terms of this Agreement. To the knowledge of OPF
and its Shareholders:
All operations on the Marx Ave property have been in compliance
with all applicable legal requirements including, but not limited
to, all applicable federal and state statutes, city or county
ordinances, zoning restrictions, and land use and other
administrative rules and regulations.
There are no circumstances, conditions, or reasons for revocation
of any license, permit, consent, authorization, zoning or land use
permit, variances, or approvals with respect to the conduct of
OPF's business on the Marx Ave property.
OPF's lease for the Marx Ave property is in full force and effect
and binding on the parties thereto in accordance with its terms.
Neither OPF nor any other party to that lease is in breach of any
material provision of that lease. The landlord's interest in that
lease has not been assigned to any third party, nor has OPF
previously assigned any of its rights pursuant to that lease or
sublet any portion of the property it leases.
o. Employees: OPF is not in breach of any contract or agreement
to which it is a party including, but not limited to, any contract
between OPF and any union with respect to the terms and conditions
of employment with OPF. OPF has complied in all material respects
with all applicable federal and state laws pertaining to employment
including, but not limited to, all laws governing the terms and
conditions of employment, nondiscrimination in employment, wages,
and hours of employment. There is no charge pending nor does OPF
or its Shareholders know of any threatened charge against OPF
before any court or agency alleging any unlawful act of
discrimination by OPF in its employment practices. There is no
charge or proceeding against OPF pending before the National Labor
Relations Board. There is no actual or threatened labor strike,
dispute, slow down, or work stoppage as of the closing date. There
is no effort by any union to organize all or any portion of the OPF
employees who are not subject to a collective bargaining agreement
as of the closing date. No one is now petitioning for union
representation of nonunion employees of OPF.
p. ERISA Issues: Except for the employee benefit plans described
on Schedule Six, OPF has no other pension, retirement, welfare,
profit sharing, deferred compensation, stock option, employee stock
purchase, or other employee benefit plans or arrangements with any
party. All employee benefit plans listed on Schedule Six are fully
funded and in substantial compliance with all applicable federal,
state, and local statutes, ordinances, and regulations. All such
plans that are intended to qualify under Section 401(a) of the
Internal Revenue Code have been established under an IRS approved
standard prototype plan. All reports and other documents required
to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to,
actuarial reports, audits, or tax returns) have been timely filed
or distributed, and copies thereof are included as part of Schedule
Six. All employee benefit plans listed on such schedule have been
operated in accordance with the terms and provision of the plan
documents and all related documents and policies. OPF has not
incurred any liability for excise tax or penalty due to the
Internal Revenue Service or US Department of Labor nor any
liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, nor has OPF, nor party-in-interest, or
disqualified person engaged in any transaction or other activity
which would give rise to such liability. OPF has participated in
or made contributions to a "multi-employer plan" as defined in the
Employee Retirement Income Security Act of 1974 ("ERISA"), but OPF
would not be subject to any withdrawal liability with respect to
such a plan if it withdrew from such a plan immediately prior to
the closing date. No employee pension benefit plan is under funded
on a termination basis as of the date of this Agreement.
q. Compliance with Obligations Concerning Taxes: OPF has complied
with all applicable federal, state, and local tax laws and
regulations; has made all requisite withholdings and deposits from
payroll; and has otherwise fulfilled all of its legal obligations
with respect to the filing of returns and payment or withholding of
any tax. There are no open years (other than those within the
statute of limitations), examinations in progress, extensions of
any statute of limitations or claims against OPF relating to
federal, state, local, or other taxes (including penalties and
interest) for any period or periods prior to and including the
closing date and no notice of any claim for taxes has been
received. The reserves for taxes contained in OPF's financial
statements are adequate to cover its tax liability as of the
closing date.
r. No Pending Claims or Litigation Against OPF: There are no
legal, administrative, arbitration, or other actions, suits,
investigations, or proceedings pending against OPF to the knowledge
of either OPF or its Shareholders.
s. No Finder or Broker: Neither OPF nor its Shareholders have
employed any broker or finder in connection with this Agreement and
the transaction among the parties which this Agreement evidences.
Neither OPF nor its Shareholders have taken any action that would
give rise to a valid claim against any party for a brokerage
commission, finder's fee, or other similar charge.
t. Disclosures to WCI: Attached hereto are the following
schedules, each of which has attached to it, copies of the
documents described thereon. Each of the attached schedules is
accurate and complete, describes all of the items and documents
required to be described, and includes copies of all of the
documents required to be included. All copies of documents
attached to such schedules are true, complete, and correct copies
of the originals of the documents copied. None of such schedules
misstates a material fact or omits to state a material fact
required to be stated therein in order to make the statements made
not misleading.
(1) Schedule One - A summary of the capitalization and ownership
of all outstanding and issued capital stock in OPF as described in
paragraph 10b above.
(2) Schedule Two - OPF Financial Statements: Unaudited balance
sheet, income statement, and statement of cash flow with supporting
schedules for the fiscal years ending September 30, 1995; September
30, 1996; September 30, 1997; and for the period ending March 31,
1998.
(3) Schedule Three - OPF Tax Returns: Copies of all federal and
state income tax returns filed by OPF for the fiscal years ending
September 30, 1995; September 30, 1996; September 30, 1997; and any
and all informational returns filed since September 30, 1997.
(4) Schedule Four - OPF Permits, Licenses, Franchises, and
Collection Agreements: All permits, licenses, franchises, and
written agreements pursuant to which OPF collects, hauls, or
disposes of industrial, commercial, or residential solid waste and
recyclables or which are material to the conduct of its business,
including, without limitation:
(i) All permits;
(ii) All licenses;
(iii) All franchises;
(iv) All private contracts for the collection, hauling, or
disposal of wastes and recyclables; and
(v) All fuel permits.
(5) Schedule Five - OPF Equipment and Inventory: All of the
following:
(i) Certificates of Registration to all motor vehicles owned by
OPF; and
(ii) An itemized list of all fixed assets, machinery, equipment,
parts, supplies, and inventory belonging to or used by OPF.
(6) Schedule Six - OPF Leases and Contracts: All leases and
contracts to which OPF is a party, excluding those contained in
Schedule Four, including without limitation:
(i) All leases for real property;
(ii) All leases for personal property;
(iii) All loan agreements;
(iv) All security agreements;
(v) All promissory notes;
(vi) All installment sale or purchase agreements;
(vii) All contracts for the acquisition of any other business by
OPF;
(viii) All contracts for the disposition of any business or asset
by OPF;
(ix) All union contracts to which OPF is a party;
(x) All written contracts with any OPF employee and a written
summary of any oral agreement with any OPF employee;
(xi) All employee benefit plans of OPF;
(xii) All insurance policies pursuant to which OPF or any officer,
director, or employee of OPF acting on behalf of OPF is a named
insured;
(xiii) All agreements pursuant to which OPF is authorized to act
as agent or representative for any other person or entity;
(xiv) All agreements pursuant to which any other person or entity
is authorized to act on behalf of OPF;
(xv) All records, notifications (including all notifications from
any governmental agency), reports, permit and license applications,
engineering and geologic studies, and environmental impact reports,
tests or assessments that are material to OPF's operation of its
business, pertain in any way to the discharge or handling of
hazardous materials or to the protection of the public health, or
were filed with or submitted to any governmental agency within 24
months prior to the closing date;
(xvi) A complete list as of the closing date of all OPF officers,
directors, and employees (by type or classification), including
their respective rates of compensation; any portion of their
compensation attributable to bonuses; any additional expectation
each employee may reasonably anticipate from additional salary,
bonus, stock option, equity participation, or otherwise;
(xvii) An accurate and complete aging of all accounts and notes
receivable from customers as of June 10, 1998. Accounts receivable
aging statements as of June 10, 1998;
(xviii) A complete and accurate list of all bank accounts and
safety deposit boxes owned by OPF as of the closing date including
the name of the bank; the branch where the account or box is
located; the name in which the accounts or boxes are owned; the
type of account; and the name of each person authorized to make
withdrawals from such an account or to enter such a box;
(xix) A complete and accurate list of all credit cards and charge
accounts issued to OPF and the name of each person to whom such
credit cards or charge accounts have been issued;
(xx) A summary description of any oral agreements to which OPF is
a party as of the closing date not contained in any other schedule;
and
(xxi) All securities, stocks or other evidence of any ownership
interest OPF has in any other business entity, corporation, or
partnership.
(7) Schedule Seven: Pay off instructions from creditors and
Shareholders to be paid from closing as described in paragraph
8a(2) above.
11. Representations and Warranties of WCI: WCI warrants that the
following representations are true in all material respects:
a. Corporate Status of WCI: WCI is a corporation duly organized
and validly existing under the laws of the state of Delaware. WCI
has all requisite corporate power and authority to enter into this
Agreement.
b. Capacity to Execute this Agreement: The execution, delivery,
and performance of this Agreement have been duly authorized and
approved by WCI's Board of Directors. This Agreement constitutes
a valid and binding agreement of WCI in accordance with its terms.
Execution of this Agreement by WCI does not require the
authorization, consent, or approval of any third party, including
any governmental entity or regulatory agency, except as otherwise
provided in this Agreement.
c. No Consequent Breach of Other Obligations: Execution of this
Agreement by WCI does not constitute a breach or default by WCI of
any other obligation, license, or agreement except as otherwise
disclosed herein.
d. No Consequent Violation of Law: Execution of this Agreement by
WCI does not constitute a violation of any law, rule, regulation,
or judicial or administrative order except as otherwise disclosed
herein.
e. No Finder or Broker: WCI has not employed any broker or finder
in connection with this Agreement and the transaction among the
parties which this Agreement evidences. WCI has not taken any
action that would give rise to a valid claim against any party for
a brokerage commission, finder's fee, or other similar charge.
f. Status of Shares: All shares of capital stock in WCI delivered
to Shareholders at closing are duly authorized, and when issued and
delivered in exchange for the OPF stock will be validly issued,
fully paid, and nonassessable shares of capital stock in WCI.
g. No Election Under Section 338 of Internal Revenue Code: WCI
will make no election under Section 338 of the Internal Revenue
Code with respect to OPF.
12. Closing: Closing of this Agreement will occur in the offices
of Hunt & Associates, PC, 101 SW Main Street, Suite 805, Portland,
Oregon, at a date and time to be agreed upon by the parties. The
purchase and sale of capital stock in OPF will be effective
immediately on closing.
Conditions to Closing: Each Shareholder will repay any
indebtedness he owes to OPF on or before the time of closing. OPF
will repay any indebtedness it owes to any Shareholder on or before
the time of closing. The repayment of any such indebtedness will
not be any part of the consideration for this transaction but will
be a condition to the closing of this transaction.
13. Documents to Be Delivered at Closing:
a. Documents to be Delivered by OPF and Shareholders to WCI at
Closing: At the time of closing, OPF and Shareholders will deliver
to WCI the following:
(1) Certificates evidencing ownership of all outstanding and
issued shares of capital stock in OPF free and clear of all liens,
security interests, claims, and encumbrances. Each Shareholder
will also deliver a stock power executed in blank.
(2) The written resignation of each Shareholder as an officer,
director, and employee of OPF effective as of closing.
(3) Each Shareholder's written release of any and all claims or
causes of action of any kind accruing against OPF on or before the
time of closing, in the form attached as Exhibit B and incorporated
by reference herein.
(4) The fully executed registration rights agreement in the form
attached as Exhibit A.
(5) The written agreement of each Shareholder not to compete in
the form attached as Exhibit C and incorporated by reference
herein.
(6) The executed consulting agreement between WCI and Steven
Giusto in the form attached as Exhibit D and incorporated by
reference herein.
(7) A written opinion from legal counsel for OPF in the form
attached hereto as Exhibit E.
b. Deliveries by WCI to Shareholders at Closing: At the time of
closing, WCI will deliver the following to Shareholders:
(1) The cash portion of the adjusted purchase price in the form of
cashier's or certified check or deposited in Shareholders' accounts
by wire transfer pursuant to written instructions.
(2) The shares of WCI stock due to Shareholders. The shares WCI
delivers to Shareholders at closing will be fully paid and
nonassessable.
(3) The fully executed registration rights agreement in the form
attached as Exhibit A.
(4) The executed consulting agreement between WCI and Steven
Giusto in the form attached as Exhibit D and incorporated by this
reference herein.
(5) A written opinion from legal counsel for WCI in the form
attached as Exhibit F.
14. Shareholders' Representative: Shareholders designate and
appoint Dennis Giusto and Steven Giusto to jointly represent all
Shareholders with respect to the resolution of any disputes or
claims and with respect to the execution of any documents requiring
Shareholders' written consent after closing. The designation and
appointment of Dennis Giusto and Steven Giusto pursuant to this
provision will survive the death or incapacity of any Shareholder
unless and until written notice of revocation of the designation
and appointment for any deceased or incapacitated Shareholder is
received by WCI from the personal representative or conservator of
such deceased or incapacitated Shareholder. The written agreement
of both Dennis Giusto and Steven Giusto will be required on any
document to be legally effective pursuant to this provision as to
the Shareholders as a whole. Any Shareholder may revoke the
authority of either or both Dennis Giusto and Steven Giusto to act
on their behalf pursuant to this provision by giving written notice
of such revocation to WCI and such revocation will be effective on
WCI's receipt of such notice only as to the individual Shareholder
who gives such notice.
15. Tax Issues: Within 120 days following the closing date
Shareholders will prepare all legally required short year federal,
state, and local tax returns for the period beginning on the first
day of OPF's current fiscal year and ending on the effective date.
Shareholders will deliver such returns, prepared at Shareholders'
expense, to WCI within 120 days following the closing date together
with checks payable to the respective taxing authorities to which
any tax in excess of the reserves established for the payment of
such obligations as of the effective date is owing. Any refunds
received from any taxing authority pursuant to the filing of such
short year tax returns will be the property of Shareholders. WCI
will sign and promptly and properly file such returns after receipt
thereof from Shareholders. All returns prepared and filed pursuant
to this provision will be prepared in a manner consistent with the
preparation of such tax returns by OPF prior to the closing date.
16. Allocation of Uninsured Risk: Shareholders will pay and
indemnify WCI against any casualty or other loss with respect to
OPF accruing prior to the effective date to the extent such loss is
not subject to an insurance policy pursuant to which the insurer
must indemnify OPF against such loss. WCI and OPF will pay and
indemnify Shareholders against any casualty or other loss they
suffer with respect to OPF accruing after the effective date to the
extent such loss is not subject to an insurance policy pursuant to
which the insurer must indemnify OPF against such loss.
17. Indemnification of WCI by Shareholders: Shareholders, jointly
and severally, agree to indemnify, hold harmless, and defend WCI
from and against all demands, claims, actions or causes of action,
liability, loss, damages, and all reasonable costs and expenses
(including reasonable attorney fees and litigation costs) relating
to, imposed on, or incurred by WCI as a result of any one or more
of the following:
a. A breach of any representation, covenant, or agreement by
Shareholders made in or made pursuant to this Agreement;
b. A breach of any warranty by Shareholders made in or made
pursuant to this Agreement;
c. Any liability for which, as between the parties, Shareholders
remain liable and responsible pursuant to the terms of this
Agreement;
d. Enforcement by WCI of this indemnity provision;
e. Any liability of OPF for violation of any environmental laws
prior to the effective date; and
f. Any claim, liability, loss, damage, or expense arising from any
claim that any plan or arrangement adopted by OPF which was called
or characterized as a simplified employee pension under Section
408(k) of the Internal Revenue Code of 1986 failed to meet any
requirements for a simplified employee pension under said section,
or that OPF did not comply with any provision of ERISA with respect
to any such plan or arrangement prior to the effective date.
18. Limitation on Shareholders' Indemnities: Shareholders will
have no obligation to indemnify WCI or to otherwise pay any amount
to or on behalf of WCI pursuant to the provisions of section 17a-d
above except to the extent that the aggregate amount of such
obligations exceeds the sum of $75,000. Additionally, the maximum
amount which WCI can recover from Shareholders pursuant to the
provisions of section 17a-d above will not exceed:
Eighty percent of the purchase price, as adjusted after closing in
accordance with this Agreement, for the period ending on and
including the first anniversary date of the closing date.
Seventy-five percent of the purchase price, as adjusted after
closing in accordance with this Agreement, for the period beginning
on the day after the first anniversary of closing and ending at
midnight on the second anniversary of the closing date.
Sixty-five percent of the purchase price, as adjusted after closing
in accordance with this Agreement, for the period beginning on the
day after the second anniversary of the closing date and ending at
midnight on the third anniversary of the closing date.
The provisions of this paragraph 18 are not applicable to
Shareholders' duty defined in paragraph 17e concerning liabilities
incurred with respect to the ownership and sale of the Clatsop
County property described in paragraph 8d.
19. Notice of Indemnity Claim: WCI will give written notice to
Shareholders' representatives within 60 days following WCI's
receipt of notice or knowledge giving rise to any claim subject to
Shareholders' duty of indemnification. Upon receipt of such
notice, Shareholders will have the right to defend any such claim
at their own expense provided the Shareholders' representatives
give written notice of such election to WCI within 30 days
following Shareholders receipt of notice from WCI concerning the
existence of the claim. Regardless of any such election by
Shareholders, both parties will keep the other reasonably informed
concerning the nature, progress, and resolution of any such claim.
Each party will cooperate with the other in the defense of any such
claim. WCI may participate, at the WCI indemnitee's own expense,
in the defense of any claim assumed by the Shareholders. Without
the written approval of the WCI, which approval shall not be
unreasonably withheld, the Shareholders shall not agree to any
compromise of a claim defended by them.
20. Indemnification of Shareholders by WCI: WCI agrees to
indemnify, hold harmless and defend Shareholders from and against
all demands, claims, actions or causes of action, liability, loss,
damages, and all reasonable costs and expenses (including attorney
fees and litigation costs) relating to, imposed on, or incurred by
Shareholders as a result of any one or more of the following:
a. A material breach of any representation, covenant, or agreement
by WCI made in or made pursuant to this Agreement.
A breach of any warranty by WCI made in or made pursuant to this
Agreement.
Any liability for which, as between the parties, WCI remains liable
and responsible pursuant to the terms of this Agreement.
Enforcement by Shareholders of this indemnity provision.
Any election by WCI, including any election under Section 338 of
the Internal Revenue Code, which would result in additional tax to
Shareholders to the extent of the additional tax obligation and
professional fees Shareholders reasonably incur as a result of such
election by WCI.
21. Survival of Representations and Warranties: The parties agree
that all representations and warranties in this Agreement will
survive the closing of this transaction and will not merge or be
affected by any document executed to consummate this transaction.
No party may bring any action or assert any claim against the other
for breach of any representation or warranty in this Agreement
unless such action or claim is commenced or asserted in writing
delivered to the other parties within three years following the
closing date. All representations and warranties contained in this
Agreement will lapse, expire, and be wholly without legal effect if
not asserted within three years of the closing date in compliance
with this provision. Any claim asserted within three years of the
closing date will survive the expiration of said three year period
until that claim is finally resolved.
22. Cooperation: Following the closing date Shareholders and WCI
agree to cooperate with each other in investigating, defending, or
prosecuting any claims by or against the other with respect to any
third person or entity, not a party to this Agreement, with respect
to the business operations, assets, or liabilities of OPF. Each
party will reimburse the other for their reasonable and necessary
expenses incurred in providing such cooperation. Such cooperation
will be limited to that reasonably necessary for the defense or
prosecution of the claim but will include cooperation in the
furnishing of information, documents and records, testimony, and
such other aid as either party may require under the circumstances.
23. Access to OPF Books and Records After Closing: After the
closing date WCI will make all books, records, and documents of OPF
pertinent to any period prior to the closing date available to
Shareholders for review and copying, at Shareholders' expense, to
the extent Shareholders may request for any purpose reasonably
related to any Shareholder's position as a former shareholder,
officer, or employee of OPF. WCI will make such books, records,
and documents available for review and copying either in WCI's
principal offices or in such other place as the parties may agree
after reasonable notice from Shareholders for a period of no less
than five years following the closing date.
24. Confidential Information: Shareholders agree that they will
not use or disclose any confidential, trade secret, or other
information in which OPF or WCI claim a proprietary interest
including without limitation customer lists, details of contracts,
pricing policies, operational methods, marketing plans or
strategies, bidding information, practices, policies or procedures,
product development techniques or plans, and technical processes.
It is, however, agreed that the following information is excluded
from the scope of this provision:
Information generally available to the public not through the
wrongful disclosure of such information by any Shareholder in
violation of the terms of this provision; and
Knowledge generally known in the solid waste collection and
disposal industry and in the recycling industry and is not specific
or unique to OPF or to WCI.
25. OPF Property: All memoranda, notes, lists, records, and other
documents or papers (including all copies of such documents or
papers) relating to OPF, including such items stored in computer
memories, on microfiche, or by any other means, made or compiled by
or on behalf of the Corporation or for any person acting as an
officer, agent, or employee of the Corporation will become or
remain the sole property of the Corporation and will be delivered
to the Corporation at the time of closing. Excluded from the
documents to be delivered to WCI pursuant to this provision are all
materials maintained by any attorneys for OPF or the Shareholders
prior to closing which will not become the property of the
Corporation nor be delivered to the Corporation except for OPF's
corporate minute book and any corporate records that are not
subject to the attorney/client privilege of which the Corporation
does not have a copy.
26. No Disparagement: Shareholders will not denigrate, disparage,
or derogate WCI, its subsidiaries, its officers, agents, employees,
products, or services nor will Shareholders make any statement
following the closing date which would be reasonably likely to
adversely affect the regard or esteem of a lender, investor,
governmental body or agency, or any other reasonable person for
WCI, its subsidiaries, officers, agents, employees, products, or
services. Shareholders will not take any position adverse to WCI
or its subsidiaries with any person, entity, governmental or
regulatory body or agency with which WCI or any of its subsidiaries
has or is reasonably likely to have any relationship in the ongoing
course of its business provided that the terms of this provision
will not interfere or limit any Shareholder's right to act in the
best legitimate business interests of any person or entity for
which a shareholder may work pursuant to the terms of this
Agreement and the Shareholders' agreement not to compete
incorporated herein or for whom they may work after the term of the
Shareholders' agreement not to compete incorporated herein expires.
Likewise, no director or executive officer of WCI or of OPF will
make any statement following the closing date which would be
reasonably likely to adversely affect the regard or esteem of a
reasonable person for one or more of the Shareholders.
27. General Provisions:
a.Rules of General Construction and Severability of Terms:
(1) Whole Agreement: The parties intend that this Agreement be
construed as a whole. The headings of each paragraph are not part
of this Agreement but are only inserted to assist in referring to
the agreement itself.
(2) Complete Agreement: This Agreement contains the complete
embodiment of the terms of agreement between the parties concerning
the subject matter of this Agreement. This Agreement supercedes
any prior or contemporaneous agreements between the parties
concerning the subject matter of this Agreement.
(3) Severability: If any provision of this Agreement is held to
be unenforceable or void by a court of competent jurisdiction, then
the remaining provisions of this Agreement will nonetheless remain
in full force and effect.
(4) Governing Law: Oregon law will control and govern the
interpretation and rights of the parties with respect to all
provisions of this Agreement.
(5) Venue: Any litigation with respect to the interpretation or
enforcement of any rights pursuant to this Agreement must be
brought in the Circuit Court of the State of Oregon for Multnomah
County or in the United States District Court for the District of
Oregon. Each party consents to venue in those courts for purposes
of any litigation between the parties.
(6) Incorporation of Schedules and Exhibits: All schedules and
exhibits to this Agreement are incorporated herein as a material
part of this Agreement.
(7) Agreement Binding on Successors: This Agreement is binding
both on the parties and on their heirs, agents, employees, assigns,
and successors in interest.
(8) Attorneys' Fees: In any legal, equitable, or arbitration
proceeding brought to enforce or interpret the terms of this
Agreement, the prevailing party will be entitled to recover their
reasonable attorney fees and costs, both at trial and on appeal.
(9) Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
(10) Notices: Notices from either party to the other will be
effective on actual delivery to the other party by personal service
or delivery, or, if sent certified mail, return receipt requested,
upon actual receipt by the other party, or three days following the
date of such mailing with all postage paid. Each party designates
the following addresses for delivery of any notice with respect to
this Agreement and further agrees to promptly advise the other
party of any change in its address for purposes of such notice.
Each party designates the following addresses for delivery of any
notice with respect to this Agreement and further agrees to
promptly advise the other party of any change in its address for
purposes of such notice:
To Shareholders:With a copy to:
Steven F. Giusto Lawrence B. Hunt
17420 SE Decker Road HUNT & ASSOCIATES, PC
Boring, OR 97009 101 SW Main Street, Suite 805
Portland, OR 97204
Dennis Giusto (503) 226-1162
241 SW LillybenFax: (503) 223-5442
Gresham, OR 97080
John Giusto
___________________________
___________________________
Kenneth Giusto
___________________________
___________________________
Michael Giusto
___________________________
___________________________
To WCI:With a copy to:
Waste Connections, Inc. Robert D. Evans
Attn: Ronald J. Mittelstaedt SHARTSIS, FRIESE & GINSBURG
2260 Douglas Blvd, Suite 280 One Maritime Plaza
Roseville, CA 95661 San Francisco, CA 94111
Fax: (916) 772-2920 Fax: (415) 421-2922
DATED this _____ day of _______________, 1998.
WASTE CONNECTIONS, INC.
By: _______________________________
Title: _____________________________
STATE OF ________________, County of _______________: ss.
On __________________, 1998, personally appeared
____________________, the ___________________________ of Waste
Connections, Inc. and acknowledged the
foregoing to be _____ voluntary act and deed.
____________________________________
Notary Public for _______________
My Commission Expires:
ARROW SANITARY SERVICE, INC.
dba Oregon Paper Fiber
By: _______________________________
Title: _____________________________
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared
____________________, the ___________________________ of Arrow
Sanitary Service, Inc. and acknowledged the foregoing to be his
voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
SHAREHOLDERS
__________________________________
John Giusto
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared John Giusto,
shareholder of Arrow Sanitary Service, Inc., and acknowledged the
foregoing to be his voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
<PAGE>
__________________________________
Dennis Giusto
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared Dennis Giusto,
shareholder of Arrow Sanitary Service, Inc., and acknowledged the
foregoing to be his voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
__________________________________
Steven Giusto
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared Steven Giusto,
shareholder of Arrow Sanitary Service, Inc., and acknowledged the
foregoing to be his voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
__________________________________
Kenneth Giusto
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared Kenneth Giusto,
shareholder of Arrow Sanitary Service, Inc., and acknowledged the
foregoing to be his voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
__________________________________
Michael Giusto
STATE OF OREGON, County of Multnomah: ss.
On __________________, 1998, personally appeared Michael Giusto,
shareholder of Arrow Sanitary Service, Inc., and acknowledged the
foregoing to be his voluntary act and deed.
____________________________________
Notary Public for Oregon
My Commission Expires:
<PAGE>
Exhibit 10.2
STOCK PURCHASE AGREEMENT
Dated as of June 25, 1998, by and among
Waste Connections, Inc.
Curry Transfer and Recycling
Oregon Waste Technology
Petty H. Smart
A. Lewis Rucker
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 25, 1998, is
entered into by and among Waste Connections, Inc., a Delaware
corporation ("WCI"), Curry Transfer and Recycling ("CT&R"), an
Oregon corporation, and Oregon Waste Technology ("OWT"), an Oregon
corporation, (the "Corporations"), and Petty H. Smart and A. Lewis
Rucker (the "Shareholders").
WHEREAS, the Corporations are engaged in the collection and
transport of solid waste and recyclables in the Cities of
Brookings, Gold Beach and Port Orford, Oregon, the unincorporated
areas of Curry County, Oregon, and other related activities;
WHEREAS, the Shareholders own all of the issued and
outstanding capital stock of the Corporations (the "Corporations'
Stock");
WHEREAS, WCI wishes to acquire from the Shareholders all of
the Corporations' Stock;
WHEREAS, WCI wishes to acquire from the Shareholders that
certain real property related to the Corporations' business for
three hundred and fifty thousand dollars ($350,000) pursuant to the
Real Estate Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and
covenants herein contained, the parties hereto, each intending to
be bound hereby, agree as follows:
I. PURCHASE OF CORPORATIONS' STOCK
A. Shares to be Purchased. At the Closing (as defined in
Section 2), the Shareholders shall sell and deliver to WCI all of
the issued and outstanding shares of the Corporations' Stock, being
the number of shares of the Corporations set forth on Schedule 3.2
opposite each Shareholder's name. At the Closing, WCI shall
purchase the Corporations' Stock and in exchange therefor shall
deliver to the Shareholders at the Closing or thereafter as
provided by this Agreement the purchase price described in Section
1.2 (the "Purchase Price"), plus any and all additions to the
Purchase Price payable pursuant to Section 1.4 (the "Contingent
Purchase Price").
B. Purchase Price. The Purchase Price is six million six
hundred and fifty thousand dollars ($6,650,000), (i) minus the
Closing Date Debt (as defined in Section 3.22(a)), (ii) plus or
minus, as the case may be, the amount by which the June 1 Current
Assets (as defined in Section 3.22(b)) are greater or less than the
June 1 Current Liabilities (as defined in Section 3.22(b)), and
(iii) minus the Unknown Debt Hold Back (as defined in Section 1.3),
payable to the Shareholders at Closing in cash by wire transfer or
check payable in clearinghouse funds in accordance with Schedule
1.2 hereto. The adjustment to the Purchase Price based on the
Closing Date Debt, the June 1 Current Assets and the June 1 Current
Liabilities shall be based on estimates of such amounts provided at
the Closing and based on each Corporation's balance sheet as of May
31, 1998 (the "Balance Sheet Date"). Within 120 days after the
Closing, WCI and the Shareholders shall determine the actual
Closing Date Debt, the June 1 Current Assets, and June 1 Current
Liabilities. If the difference between the actual amounts of such
items and the estimated amounts provided at the Closing Date (as
defined in Section 2) results in an increase in the amount that
should have been paid at the Closing over the amount that was so
paid, WCI shall promptly pay such amount to the Shareholders; if
the result is a decrease in the amount that should have been paid
at the Closing from the amount that was so paid, the Shareholders
shall promptly pay such amount to WCI;
C. Hold Back. WCI shall deduct and withhold from the
Purchase Price four hundred nine thousand and sixty-five dollars
and thirty-six cents ($409,065.36) in cash (the "Unknown Debt Hold
Back"). The purpose of the Unknown Debt Hold Back is to provide a
reserve of funds out of which to pay off the creditors (listed on
Schedule 1.3) that could not be paid off at the Closing, because
letters certifying the amount of the Closing Date Debt could not be
obtained before the Closing. Once such pay off letters are
obtained after the Closing, the Closing Date Debt will be paid off
out of the Unknown Debt Hold Back and any Unknown Debt Hold Back
that remains and is to be remitted to the Shareholders by WCI,
shall be divided among the Shareholders in accordance with Schedule
1.3 hereto.
D. Additional Contingent Purchase Price. The Purchase Price
may be increased by the additional contingent payments described in
this section. If, prior to the date that is eighteen months after
the Closing Date, the Shareholders successfully assist WCI or any
of its subsidiaries in acquiring directly or indirectly (through
asset purchase, stock purchase, merger or otherwise) the waste
collection operations of any other company providing such services
in the state of Oregon or in the portion of the state of California
that is north of San Francisco, WCI shall pay the Shareholders as
additional Contingent Purchase Price cash in an amount equal to two
percent (2%) of the "Projected Net Revenue" (after deduction of any
franchise fee) with respect to such operations during the first
year after they are acquired by WCI, which amount shall be paid on
the Closing Date if such acquisition is consummated on or prior to
the Closing Date or thirty (30) days after the date any such
acquisition is consummated if consummated after the Closing Date.
"Projected Net Revenue" means the gross revenues for the acquired
company for the twelve (12) months preceding the closing date for
such acquisition less all disposal costs, transfer fees, franchise
fees, and taxes projected for the acquired company for the twelve
(12) months following the closing date of such acquisition as
listed on WCI's pro forma financial statements for the acquired
company. WCI shall have sole discretion in determining whether and
on what terms it will consummate any such acquisition, and WCI
shall not be liable to any of the Shareholders for any decision not
to pursue any such acquisition or its failure to consummate any
such acquisition, without regard to the reason therefor.
E. Allocation of the Purchase Price. Ten thousand dollars
($10,000) of the Purchase Price shall be allocated to the covenant
not to compete as described in Section 8.1(a) hereof, and the
balance of the Purchase Price shall be allocated to the
Corporations' Stock.
F. Excluded Assets. The Assets of each Corporation listed
on Schedule 1.6 (the "Excluded Assets") shall be distributed to the
Shareholders prior to the Closing, and WCI shall acquire no
interest in or claim to any of the Excluded Assets.
II. CLOSING TIME AND PLACE
Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated herein (the "Closing")
shall take place on such date (the "Closing Date") after the
Required Governmental Consents (as defined in Section 3.10(a)) have
been obtained, as WCI and the Shareholders shall agree. The
Closing shall take place via mail, facsimile or Federal Express.
At the Closing, WCI, the Corporations and the Shareholders shall
deliver to each other the documents, instruments and other items
described in Section 8 of this Agreement. Notwithstanding the date
of the Closing, the effective date of the transactions contemplated
hereby for tax and financial reporting purposes shall be June 1,
1998.
III. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS
AND THE SHAREHOLDERS
The Corporations and the Shareholders, jointly and severally,
represent and warrant that each of the following representations
and warranties is true as of the Closing Date.
A. Organization, Standing and Qualification. Each
Corporation is duly organized, validly existing and in active on
the records of the Corporation Division of the Oregon Secretary of
State's Office under the laws of the State of Oregon. Each
Corporation has full corporate power and authority to own and lease
its properties and to carry on its business as now conducted.
Neither Corporation is required to be qualified or licensed to
conduct business as a foreign corporation in any other
jurisdiction.
B. Capitalization. Schedule 3.2 sets forth, as of the
Closing Date, the authorized and outstanding capital of the
Corporations, the names, addresses and social security numbers or
taxpayer identification numbers of the record and beneficial owners
thereof, the number of shares so owned, the allocation of the
Purchase Price among the Shareholders as agreed to among
themselves, and wire transfer instructions for each Shareholder
relating to the bank account to which the Purchase Price and the
Contingent Purchase Price, if any, should be sent. On the Closing
Date, all of the issued and outstanding shares of the capital stock
of the Corporations shall be owned of record and beneficially by
the Shareholders, as set forth in Schedule 3.2, and shall be free
and clear of all liens, security interests, encumbrances and claims
of every kind except as set forth in Schedule 3.2. As of the
Closing Date, each share of the capital stock of each Corporation
is duly and validly authorized and issued, fully paid and
nonassessable, and was not issued in violation of any preemptive
rights of any past or present shareholder of that Corporation. No
option, warrant, call, conversion right or commitment of any kind
(including any of the foregoing created in connection with any
indebtedness of a Corporation) exists which obligates either
Corporation to issue any of its authorized but unissued capital
stock or other equity interest or which obligates the Shareholders
to transfer any Corporations' Stock to any person.
C. All Stock Being Acquired. Each Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding
capital stock of that Corporation.
D. Authority for Agreement. Each Corporation and the
Shareholders have full right, power and authority to enter into
this Agreement and to perform its, his or her obligations
hereunder. The execution and delivery of this Agreement by each
Corporation and the consummation of the transactions contemplated
hereby by each Corporation has been duly authorized by that
Corporation's Board of Directors. This Agreement has been duly and
validly executed and delivered by each Corporation and the
Shareholders and, subject to the due authorization, execution and
delivery by WCI, constitutes the legal, valid and binding
obligation of each Corporation and the Shareholders enforceable
against each Corporation and the Shareholders in accordance with
its terms.
E. No Breach or Default. Except as disclosed on Schedule
3.5, the execution and delivery by the Corporations and the
Shareholders of this Agreement, and the consummation by the
Shareholders of the transactions contemplated hereby, will not:
1. result in the breach of any of the terms or
conditions of, or constitute a default under, or allow for the
acceleration or termination of, or in any manner release any party
from any obligation under, any mortgage, lease, note, bond,
indenture, or material contract, agreement, license or other
instrument or obligation of any kind or nature to which a
Corporation or any of the Shareholders is a party, or by which a
Corporation or any of the Shareholders, or any of the Corporations'
or the Shareholders' assets, is or may be bound or affected; or
2. violate any law or any order, writ, injunction or
decree of any court, administrative agency or governmental
authority, or require the approval, consent or permission of any
governmental or regulatory authority; or
3. violate the Articles of Incorporation or Bylaws of
either Corporation.
F. Subsidiaries. Schedule 3.6 lists as of the Closing Date
any and all subsidiaries of either Corporation and any securities
of any other corporation or any securities or other interest in any
other business entity owned by a Corporation or any of a
Corporation's subsidiaries.
G. Financial Statements. Each Corporation has delivered to
WCI, as Schedule 3.7, copies of financial statements ("Financial
Statements") for that Corporation's three most recent fiscal years
and interim financial statements for the Corporations for the
period ended May 31, 1998. The statements for 1995 and 1996 are
audited by McCracken, Mason and Maas PC, the statements for 1997
are reviewed by McCracken, Mason and Maas PC. The Financial
Statements are true and correct and fairly present (i) the
financial position of such Corporation in accordance with generally
accepted accounting principles, applied as of the respective dates
of the balance sheets included in said statements, and (ii) the
results of operations for the respective periods indicated. The
Financial Statements have been prepared in accordance with
generally accepted accounting principles, applied consistently with
prior periods. Except to the extent reflected or reserved against
in a Corporation's balance sheet as of the Balance Sheet Date, or
as disclosed on Schedule 3.7 or Schedule 3.8, the Corporations did
not have as of the Balance Sheet Date, nor will the Corporations
have as of the Closing Date, any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due.
H. Liabilities. Parts I, II, III and IV of Schedule 3.8,
are accurate lists and descriptions of all liabilities of the
Corporations required to be described below in the format set forth
below.
1. Part I of Schedule 3.8 lists, as of the Closing
Date, other than with respect to trade payables and as of the end
of the month prior to the Closing Date with respect to trade
payables, all indebtedness for money borrowed and all other fixed
and uncontested liabilities of any kind, character and description
(excluding all real and personal property leasehold interests
included in Part IV of Schedule 3.8), whether reflected or not
reflected on the Financial Statements and whether accrued or
absolute, and states as to each such liability the amount of such
liability and to whom payable. From the end of the month prior to
the Closing Date through the Closing Date, trade
payables have been incurred only in the ordinary course of business
consistent with comparable prior periods.
2. Part II of Schedule 3.8 lists, as of the Closing
Date, all claims, suits and proceedings which are pending against
either Corporation and, to the knowledge of the Corporations and
the Shareholders, all contingent liabilities and all claims, suits
and proceedings threatened or anticipated against a Corporation.
Part II of Schedule 3.8 includes a summary description of each such
liability, including, without limitation, (A) the name of each
court, agency, bureau, board or body before which any such claim,
suit or proceeding is pending, (B) the date such claim, suit or
proceeding was instituted, (C) the parties to such claim, suit or
proceeding, (D) a brief description of the factual basis alleged to
underlie such claim, suit or proceeding, including the date or
dates of all material occurrences, and (E) the amount claimed and
other relief sought, together with copies of all material
documents, reports and other records relating thereto to the extent
that they are in a Corporation's or a Shareholder's possession or
control.
3. Part III of Schedule 3.8 list, as of the Closing
Date and to the extent not otherwise included in Part I of Schedule
3.8, all liens, claims and encumbrances secured by or otherwise
affecting any asset of a Corporation (including any Corporate
Property, as hereafter defined), including a description of the
nature of such lien, claim or encumbrance, the amount secured if it
secures a liability, the nature of the obligation se- cured, and
the party holding such lien, claim or encumbrance.
4. Part IV of Schedule 3.8 lists, as of the Closing
Date and to the extent not otherwise included in Part I or Part III
of Schedule 3.8, all real and personal property leasehold interests
to which a Corporation is a party as lessor or lessee or, to the
knowledge of a Corporation or a Shareholder, affecting or relating
to any Corporate Property, and includes a description of the nature
and principal terms of such leasehold interest, including, without
limitation, the identity of the other party thereto, the term of
such leasehold interest (including renewal options), the base rent
and any additional rent owing thereunder (including any adjustments
thereto), security deposits, rights of first offer or first
refusal, purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule
3.8, neither Corporation nor any of the Shareholders have made any
payment or committed to make any payment since the Balance Sheet
Date on or with respect to any of the liabilities or obligations
listed on Schedule 3.8 except, in the case of liabilities and
obligations listed on Parts I, III and IV of Schedule 3.8, periodic
payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in
the ordinary course of business. Between the Balance Sheet Date
and the Closing Date, trade payables have been incurred only in the
ordinary course of business consistent with comparable prior
periods.
I. Conduct of Business. Except as set forth on Schedule
3.21, since the Balance Sheet Date:
1. The business of each Corporation has been conducted
only in the ordinary course; and
2. There has been no change in the condition (financial
or otherwise) of the assets, liabilities or operations of a
Corporation other than changes in the ordinary course of business,
none of which either singly or in the aggregate has been materially
adverse.
J. Permits and Licenses.
1. Schedule 3.10(a) is a full and complete list, and
includes copies, of all material permits, licenses, franchises, and
service agreements pursuant to which each Corporation is authorized
to collect and haul industrial, commercial and residential solid
waste (the "Collection Franchises"), and of all other material
permits, licenses, titles (including motor vehicle titles and
current registrations), fuel permits, zoning and land use approvals
and authorizations, including, without limitation, any conditional
or special use approvals or zoning variances, occupancy permits,
and any other similar documents constituting a material
authorization or entitlement or otherwise material to the operation
of the business of each Corporation (collectively the "Governmental
Permits") owned by, issued to, held by or otherwise benefitting
that Corporation or the Shareholders as of the Closing Date. The
status of the Governmental Permits related to the disposal areas
owned or used by each Corporation, including, without limitation,
any conditions thereto and, if applicable, the expiration dates
thereof, are also described in Schedule 3.10(a). Schedule 3.10(a)
also sets forth the name of any governmental agency or other third
party from whom the Shareholders, a Corporation or WCI must obtain
consent (the "Required Governmental Consents") in order to effect
a direct or indirect transfer of the Collection Franchises or other
Governmental Permits required as a result of the consummation of
the transactions contemplated by this Agreement. All such consents
have been obtained. Except as set forth on Schedule 3.10(a), all
of the Collection Franchises and other Governmental Permits
enumerated and listed on Schedule 3.10(a) are adequate for the
operation of the business of each Corporation and of each Corporate
Property as presently operated and are valid and in full force and
effect. All of said Collection Franchises and other Governmental
Permits and agreements have been duly obtained and are in full
force and effect, and there are no proceedings pending or, to the
knowledge of either Corporation or the Shareholders, threatened
which may result in the revocation, cancellation, suspension or
adverse modification of any of the same. Neither the Corporations
nor any of the Shareholders has any knowledge of any reason why all
such Governmental Permits and agreements will not remain in effect
for the period or term stated therein, subject to WCI's full
compliance therewith, after consummation of the transactions
contemplated hereby.
2. Schedule 3.10(b) includes: (i) all records,
notifications, reports, permit and license applications,
engineering and geologic studies, and environmental impact reports,
tests or assessments (collectively, "Records, Notifications and
Reports") that (A) are material to the operation of the business of
each Corporation, or (B) relate to the discharge or release of
materials into the environment and/or the handling or
transportation of waste materials or hazardous or toxic substances
or otherwise relate to the protection of the public health or the
environment, or (C) were filed with or submitted to appropriate
governmental agencies during the past 24 months by either
Corporation or the Shareholders or their agents with respect to the
business of a Corporation, and (ii) all material notifications from
such governmental agencies to a Corporation, the Shareholders or
their agents in response to or relating to any of such Records,
Notifications and Reports.
3. Schedule 3.10(c) lists, as of the Closing Date, each
facility owned, leased, operated or otherwise used by a
Corporation, the ownership, lease, operation or use of which is
being transferred to, assumed by or otherwise acquired directly or
indirectly by WCI pursuant to this Agreement (each, a "Facility"
and collectively, the "Facilities"). Except as otherwise disclosed
on Schedule 3.10(c):
a. Each Facility owned by a Corporation or owned
by any of the Shareholders or an Affiliate (as hereinafter
defined) of any of the Shareholders and leased to a Corporation is
fully licensed, permitted and authorized to carry on its current
business under all applicable federal, state and local statutes,
orders, approvals, zoning or land use requirements, rules and
regulations, and, none of such Facilities or the current use
thereof constitutes a non-conforming use or is otherwise subject to
any restrictions regarding the operation, renovation or
reconstruction thereof. To the knowledge of the Corporations and
the Shareholders, no Facility that is leased by the Corporation
from a non-Affiliate or the current use thereof constitutes a
material non-conforming use or is otherwise subject to any material
restrictions regarding the operation, renovation
or reconstruction thereof.
b. All activities and operations at each Facility
are being and have been conducted in compliance in all material
respects with the requirements, criteria, standards and conditions
set forth in all applicable federal, state and local statutes,
orders, approvals, permits, zoning or land use requirements and
restrictions, variances, licenses, rules and regulations.
c. Each Facility is located on real property
owned or leased by a Corporation (each a "Facility Property") and
each Facility Property owned by a Corporation is legally described
on the preliminary title reports, surveys or site plans attached to
Schedule 3.10(c) (the "Facility Surveys/Site Plans"), which
accurately depict the respective Facility Property.
d. There are no circumstances, conditions or
reasons which are likely to be the basis for revocation or
suspension of any Facility's site assessments, permits, licenses,
consents, authorizations, zoning or land use permits, variances or
approvals relating to any Facility owned by a Corporation or owned
by any of the Shareholders or an Affiliate (as hereinafter defined)
of any of the Shareholders and leased to a Corporation, and to the
knowledge of each Corporation and the Shareholders there are no
circumstances, conditions or reasons which are likely to be the
basis for revocation or suspension of any site assessment, permits,
licenses, consents, authorizations, zoning or land use permits,
variances or approvals relating to any Facility leased by a
Corporation from a third party who is not an Affiliate (as
hereinafter defined) of the Shareholder.
K. Certain Receivables. Schedule 3.11 is an accurate list
as of the Closing Date of the accounts and notes receivable of each
Corporation from and advances to employees, former employees,
officers, directors, the Shareholders and Affiliates of the
foregoing which have not been repaid. For purposes of this
Agreement, the term "Affiliate" means, with respect to any person,
any person that directly or indirectly through one or more
intermediaries controls or has an ownership interest in, or is
controlled or owned in whole or in part by, or is under common
control or ownership in whole or in part with such person, and in
the case of a Corporation includes directors and officers, in the
case of individuals includes the individual's spouse, father,
mother, grandfather, grandmother, brothers, sisters, children and
grandchildren and in the case of a trust includes the grantors,
trustees and beneficiaries of the trust.
L. Fixed Assets and Real Property.
1. Schedule 3.12(a) lists, as of the Closing Date,
substantially all the fixed assets (other than real estate) of each
Corporation, including, without limitation, identification of each
vehicle by description and serial number, identification of
machinery, equipment and general descriptions of parts, supplies
and inventory. Except as described on Schedule 3.12(a), all of the
Corporations' containers, vehicles, machinery and equipment
necessary for the operation of the Corporations' businesses are in
operable condition, and all of the motor vehicles and other rolling
stock of each Corporation are in material compliance with all
applicable laws, rules and regulations. All such containers,
vehicles, machinery and equipment are substantially free of known
defects that would cause them to fail. All leases of fixed assets
are in full force and effect and binding upon the parties thereto;
neither Corporation nor, to the knowledge of a Corporation or the
Shareholders, any other party to such leases is in breach of any of
the material provisions thereof.
2. Each parcel of real property leased, owned or being
purchased by a Corporation as of the Closing Date (the "Corporate
Property"), including the street address and, in the case of
Corporate Property owned or being purchased, the legal description
thereof, is listed on Schedule 3.12(b) - Part I, and attached to
said Schedule 3.12(b) - Part I are copies of all leases, deeds,
outstanding mortgages, other encumbrances and any existing title
insurance policies or lawyer's title opinions relating to each
Corporate Property, as well as a current commitment for title
insurance issued by a title insurance company satisfactory to WCI
with respect to each Corporate Property owned or being purchased by
a Corporation, together with copies of all of the title exceptions
referred to in each such commitment. All leases listed on Schedule
3.12(b) - Part I are in full force and effect and binding on the
parties thereto; neither a Corporation nor any other party to any
such lease is in breach of any of the material provisions thereof;
the landlord's interest in any such lease has not been assigned to
any third party nor has any such interest been mortgaged, pledged
or hypothecated; and neither Corporation has assigned any such
lease or sublet all or any part of the Corporate Property which is
the subject of any such lease. Except as described on Schedule
3.12(b) - Part II, there are no material physical or mechanical
defects in any Facility located on any Corporate Property and each
such Facility is in good condition and repair.
3. Each Corporation has good, valid and marketable
title to all properties and assets, real, personal, and mixed,
tangible and intangible, actually used or necessary for the conduct
of its business, free of any encumbrance or charge of any kind
except: (i) liens for current taxes not yet due; (ii) minor
imperfections of title and encumbrances, if any, that are not
substantial in amount, do not materially reduce the value or impair
the use of the property subject thereto, do not materially impair
the value of the Corporations, and have arisen only in the ordinary
course of business and consistent with past practice; and (iii) the
liens identified on Part III of Schedule 3.8 (collectively, the
"Permitted Liens"). Except as described on Schedule 3.12(b) - Part
I, there are no leases, occupancy agreements, options, rights of
first refusal or any other agreements or arrangements, either oral
or written, that create or confer in any person or entity the right
to acquire, occupy or possess, now or in the future, any Facility,
any Corporate Property, or any portion thereof, or create in or
confer on any person or entity any right, title or interest therein
or in any portion thereof.
M. Acquisition/Disposal of Assets. Except as indicated on
Schedule 3.13, since the Balance Sheet Date, neither Corporation
has acquired or sold or otherwise disposed of any properties or
assets which, singly or in the aggregate, have a value in excess of
$10,000, or which are material to the operation of either
Corporation's business as presently conducted, without the prior
written consent of WCI.
N. Contracts and Agreements; Adverse Restrictions.
1. Schedule 3.14(a) lists, as of the Closing Date, and
includes copies of, all material contracts and agreements (other
than leases and documents included with Schedule 3.12(b)) to which
either Corporation is a party or by which it or any of its property
is bound (including, but not limited to, joint venture or
partnership agreements, contracts with any labor organizations,
promissory notes, loan agreements, bonds, mortgages, deeds of
trust, liens, pledges, conditional sales contracts or other
security agreements). Except as disclosed on Schedule 3.14(a), all
such contracts and agreements included in Schedule 3.14(a) are in
full force and effect and binding upon the parties thereto. Except
as described or cross referenced on Schedule 3.14(a), neither
Corporation nor, to either Corporation's or the Shareholder's
knowledge, any other parties to such contracts and agreements is in
breach thereof, and none of the parties has threatened to breach
any of the material provisions thereof or notified either
Corporation or any of the Shareholders of a default thereunder, or
exercised any options thereunder.
2. Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against a
Corporation, the result of which could materially adversely affect
that Corporation or its business or any of the Corporate
Properties, nor has either Corporation been notified that any such
judgment, order, writ, injunction or decree has been requested.
O. Insurance. Schedule 3.15 is a complete list and includes
copies, as of the Closing Date, of all insurance policies in effect
on the Closing Date or, with respect to "occurrence" policies that
were in effect, carried by a Corporation in respect of the
Corporate Properties or any other property used by a Corporation
specifying, for each policy, the name of the insurer, the type of
risks insured, the deductible and limits of coverage, and the
annual premium therefor. Each Corporation currently carries
insurance in the type and amount ordinarily carried by owners or
corporations in similar circumstances, in respect to that
Corporation's properties, assets and business. During the last
five years, there has been no lapse in any material insurance
coverage of either Corporation. For each insurer providing
coverage for any of the contingent or other liabilities listed on
Schedule 3.8, except to the extent otherwise set forth in Part II
of Schedule 3.8, each such insurer, if required, has been properly
and timely notified of such liability, no reservation of rights
letters have been received by a Corporation and the insurer has
assumed defense of each suit or legal proceeding. All such
proceedings are fully covered by insurance, subject to normal
deductibles.
P. Personnel. Schedule 3.16 is a complete list, as of the
Closing Date, of all officers, directors and employees (by type or
classification) of each Corporation and their respective rates of
compensation, including (i) the portions thereof attributable to
bonuses, (ii) any other salary, bonus, stock option, equity
participation, or other compensation arrangement made with or
promised to any of them, and (iii) copies of all employment
agreements with non-union officers, directors and employees.
Schedule 3.16 also lists the driver's license number for each
driver of the Corporations' motor vehicles.
Q. Benefit Plans and Union Contracts.
1. Schedule 3.17(a) is a complete list as of the
Closing Date, and includes complete copies (or, in the case of oral
arrangements, descriptions), of all employee benefit plans and
agreements (written or oral) currently maintained or contributed to
by a Corporation, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement
plans, welfare benefit plans and deferred compensation agreements,
together with copies of such plans, agreements and any trusts
related thereto, and classifications of employees covered thereby
as of the Closing Date. Except for the employee benefit plans
described on Schedule 3.17(a), neither Corporation has any other
pension, retirement, welfare, profit sharing, deferred
compensation, stock option, employee stock purchase or other
employee benefit plans or arrangements with any party. Except as
disclosed on Schedule 3.17(a), all employee benefit plans listed on
Schedule 3.17(a) are and shall be fully funded and in substantial
compliance with all applicable federal, state and local statutes,
ordinances and regulations. All such plans that are intended to
qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and
copies of such determination letters are included as part of
Schedule 3.17(a). Except as disclosed on Schedule 3.17(a), all
reports and other documents required to be filed with any
governmental agency or distributed to plan participants or
beneficiaries (including, but not limited to, actuarial reports,
audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.17(a). All
employee benefit plans listed on such Schedule have been operated
in accordance with the terms and provisions of the plan documents
and all related documents and policies. Neither Corporation has
incurred any liability for excise tax or penalty due to the
Internal Revenue Service or U.S. Department of Labor nor any
liability to the Pension Benefit Guaranty Corporation for any
employee benefit plan, and neither Corporation, nor a
party-in-interest or disqualified person, has engaged in any
transaction or other activity which would give rise to such
liability. Neither Corporation has participated in or made
contributions to any "multi-employer plan" as defined in the
Employee Retirement Income Security Act of 1974 ("ERISA"), nor
would a Corporation or any affiliate be subject to any withdrawal
liability with respect to such a plan if any such employer withdrew
from such a plan immediately prior to the Closing Date. No
employee pension benefit plan is under funded on a termination
basis as of the date of this Agreement.
2. There are now no union contracts or agreements
between a Corporation and any collective bargaining group, nor have
there ever been any such contracts in effect. Each Corporation is
in compliance in all material respects with all applicable federal
and state laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not engaged in any unfair
labor practice. There is no charge pending or, to a Corporation's
or a Shareholder's knowledge, threatened, against a Corporation
before any court or agency and alleging unlawful discrimination in
employment practices and there is no charge of or proceeding with
regard to any unfair labor practice against it pending before the
National Labor Relations Board. There is no labor strike, dispute,
slow down or stoppage as of the Closing Date, existing or
threatened against a Corporation; no union organizational activity
exists respecting employees of a Corporation, and Schedule 3.17(b)
will contain as of the date it is delivered a list of all
arbitration or grievance proceedings that have occurred since the
Balance Sheet Date. No one has petitioned within the last five
years, and no one is now petitioning, for union representation of
any employees of a Corporation. Neither Corporation has
experienced any labor strike, slow-down, work stoppage, labor
difficulty or other job action during the last five years.
3. No payment made to any employee, officer, director
or independent contractor of a Corporation (the "Recipient")
pursuant to any employment contract, severance agreement or other
arrangement (the "Golden Parachute Payment") will be nondeductible
by a Corporation because of the application of Sections 280G and
4999 of the Code to the Golden Parachute Payment, nor will a
Corporation be required to compensate any Recipient because of the
imposition of an excise tax (including any interest or penalties
related thereto) on the Recipient by reason of Sections 280G and
4999 of the Code.
R. Taxes.
1. Each Corporation has timely filed or will timely
file all requisite federal, state, local and other tax and
information returns due for all fiscal periods ended on or before
the Closing Date. All such returns are accurate and complete.
Except as set forth on Schedule 3.18, there are no open years
(other than those within the statute of limitations), examinations
in progress, extensions of any statute of limitations or claims
against a Corporation relating to federal, state, local or other
taxes (including penalties and interest) for any period or periods
prior to and including the Closing Date and no notice of any claim
for taxes has been received. Copies of (i) any tax examinations,
(ii) extensions of statutory limitations and (iii) the federal
income, and state franchise, income and sales tax returns of each
Corporation for its last three fiscal years are attached as part of
Schedule 3.18. Copies of all other federal, state, local and other
tax and information returns for all prior years of each
Corporation's existence have been made available to WCI and are
among the records of that Corporation which will accrue to WCI at
the Closing. Neither Corporation has been contacted by any
federal, state or local taxing authority regarding a prospective
examination.
2. Except as set forth on Schedule 3.18 (which schedule
also includes the amount due with respect to each Corporation)
Corporation has duly paid all taxes and other related charges
required to be paid prior to the date of this Agreement. The
reserves for taxes contained in the Financial Statements of each
Corporation are adequate to cover its tax liability as of the
Closing Date.
3. Each Corporations has withheld all required amounts
from its employees for all pay periods in full and complete
compliance with the withholding provisions of applicable federal,
state and local laws. All required federal, state and local and
other returns with respect to income tax withholding, social
security, and unemployment taxes have been duly filed by each
Corporation for all periods for which returns are due, and the
amounts shown on all such returns to be due and payable have been
paid in full.
S. Copies Complete; Required Consents. Except as disclosed
on Schedule 3.19, the certified copies of the Articles of
Incorporation and Bylaws of each Corporation, as amended to the
Closing Date, and the copies of all leases, instruments,
agreements, licenses, permits, certificates or other documents that
have been delivered to WCI in connection with the transactions
contemplated hereby are complete and accurate as of the Closing
Date and are true and correct copies of the originals thereof.
Except as specifically disclosed on Schedule 3.19, the rights and
benefits of the Corporations will not be adversely affected by the
transactions contemplated hereby, and the execution of this
Agreement and the performance of the obligations hereunder will not
violate or result in a breach or constitute a default under any of
the terms or provisions thereof. None of such leases, instruments,
agreements, licenses, permits, site assessments, certificates or
other documents requires notice to, or consent or approval of, any
governmental agency or other third party to any of the transactions
contemplated hereby, except the Required Governmental Consents,
such consents and approvals as are or shall be listed on Schedule
3.19; all of which have been given or obtained.
T. Customers, Billings, Current Receipts and Receivables.
Schedule 3.20 is a current, accurate and complete list of, and
includes:
1. the customers that each Corporation serves on an
ongoing basis, including name, location and current billing rate,
as of the Closing Date;
2. an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month
preceding the month in which such Schedule is delivered, showing
amounts due in 30-day aging categories. Except to the extent of
the allowance for bad debts reflected on the Financial Statements
or otherwise disclosed on Schedules 3.11 and 3.20, each
Corporation's accounts and notes receivable are and, on the date
such Schedules are delivered shall be, collectible in the amounts
shown on Schedules 3.11 and 3.20; and
3. the average monthly revenues of each Corporation
derived from billings to its customers for each of the twelve
months preceding the Closing Date. Except as set forth on Schedule
3.20, neither Corporation nor any Shareholder has any knowledge of
any reason why a Corporation's average monthly revenues derived
from billings to its customers after the Closing Date should not
continue at approximately the same rate as before the Closing Date.
U. No Change With Respect to the Corporations. Except as
set forth on Schedule 3.21, since the Balance Sheet Date, the
business of each Corporation has been conducted only in the
ordinary course and there has been no change in the condition
(financial or otherwise) of the assets, liabilities or operations
of either Corporation other than changes in the ordinary course of
business, none of which either singly or in the aggregate has been
materially adverse. Specifically, and without limiting the
generality of the foregoing, except as set forth on Schedule 3.21,
with respect to each Corporation, since the Balance Sheet Date,
there has not been:
1. any material change in its financial condition,
assets, liabilities (contingent or otherwise), income, operations
or business which would have a material adverse effect on the
financial condition, assets, liabilities (contingent or otherwise),
income, operations or business of the Corporation, taken as a
whole;
2. any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion
of its properties or business;
3. any change in or agreement to change (i) its
shareholders, (ii) ownership of its authorized capital or
outstanding securities, or (iii) its securities;
4. any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of its
capital stock or any direct or indirect redemption, purchase or
other acquisition of any of its capital stock;
5. any material increase or bonus or promised increase
or bonus in the compensation payable or to become payable by it, in
excess of usual and customary practices, to any of its directors,
officers, employees or agents, or any accrual or arrangement for or
payment of any bonus or other special compensation to any employee
or any severance or termination pay paid to any of its present or
former officers or other key employees;
6. any labor dispute or any other event or condition of
any character with respect to the Corporation's employees,
materially adversely affecting its business or future prospects;
7. any sale or transfer, or any agreement to sell or
transfer, any of its material assets, property or rights to any
other person, including, without limitation, the Shareholders and
their Affiliates, other than in the ordinary course of business;
8. any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to it,
including, without limitation, any indebtedness or obligation of
any of the Shareholders or any Affiliate thereof;
9. any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of
its assets, property or rights or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
10. any purchase or acquisition of, or any agreement,
plan or arrangement to purchase or acquire, any of its property,
rights or assets outside the ordinary course of its business;
11. any waiver of any of its material rights or claims;
12. any new or any amendment or termination of any
existing material contract, agreement, license, permit or other
right to which it is a party; or
13. any other material transaction outside the ordinary
course of its business.
V. Closing Date Debt; June 1 Current Assets and June 1
Current Liabilities.
1. At the Closing, the Shareholders shall prepare and
deliver to WCI Schedule 3.22(a), which shall be a statement of (i)
the amount of the aggregate debt (excluding trade payables) of the
Corporations outstanding on the Closing Date required to be repaid
by WCI at or immediately after the Closing Date and all prepayment
penalties incurred or to be incurred by WCI or the Corporations in
connection with the repayment of any such debt, (ii) the amount of
the aggregate debt (excluding trade payables) of the Corporations
outstanding on the Closing Date which will remain outstanding
obligations of either Corporation after the Closing Date, and all
prepayment penalties applicable to such debt if repaid prior to
maturity, including in each case all interest accrued through and
including the Closing Date, (iii) the aggregate amount of the
present value, discounted at the lease rate factor, if known,
inherent in the lease or, if the lease rate factor is not known, at
the rate charged to the Corporations by a third party lender in
connection with its most recent borrowing to finance equipment, of
all lease obligations of the Corporations that are not capitalized
lease obligations and (iv) the aggregate amount of the present
value of all capitalized lease obligations (determined in
accordance with generally accepted accounting principles) of the
Corporations (the "Closing Date Debt"). Schedule 3.22(a) shall
include wire transfer instructions for creditors whose Closing Date
Debt WCI has designated for payment, and attached to Schedule
3.22(a) shall be pay-off letters or instructions from such
creditors in the form provided by WCI's bank.
2. At the Closing, the Shareholders shall prepare and
deliver to WCI Schedule 3.22(b), which shall be an estimate as of
the Closing Date of the amount of the aggregate current liabilities
(including any reserve for unpaid taxes and excluding the current
portion of long-term debt to the extent such current portion is
included in Closing Date Debt) and trade payables of the
Corporations as of June 1, 1998 (the "June 1 Current Liabilities")
and the amount of the aggregate cash and other current assets of
the Corporations as of June 1, 1998, including prepaid expenses the
benefit of which survives June 1, 1998 and the accounts receivable
of the Corporations earned prior to the June 1, 1998, and
collectible (less an allowance for doubtful accounts) on or after
June 1, 1998 (the "June 1 Current Assets").
W. Bank Accounts.
1. Schedule 3.23(a) is a complete and accurate list, as
of the Closing Date, of:
a. the name of each bank in which a Corporation
has accounts or safe deposit boxes;
b. the name(s) in which the accounts or boxes are
held;
c. the type of account; and
d. the name of each person authorized to draw
thereon or have access thereto.
2. Schedule 3.23(b) is a complete and accurate list, as
of the Closing Date, of:
a. each credit card or other charge account issued
to a Corporation; and
b. the name of each person to whom such credit
cards or other charge accounts have been issued.
X. Compliance With Laws. Except as disclosed on Schedule
3.24, each Corporation has complied with, and each Corporation is
presently in compliance with, federal, state and local laws,
ordinances, codes, rules, regulations, Governmental Permits,
orders, judgments, awards, decrees, consent judgments, consent
orders and requirements applicable to it (collectively "Laws"),
including, but not limited to, the Americans with Disabilities Act,
the Federal Occupational Safety and Health Act, and Laws relating
to the public health, safety or protection of the environment
(collectively, "Environmental Laws"). Except as disclosed on
Schedule 3.24, there has been no assertion by any party that a
Corporation is in violation of any Laws. Specifically and without
limiting the generality of the foregoing, except as disclosed on
Schedule 3.24:
1. Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC section 6901 et seq. ("RCRA"), neither
Corporation has accepted, processed, handled, transferred,
generated, treated, stored or disposed of any Hazardous Material
(as defined in Section 3.24(e) below) nor has either Corporation
accepted, processed, handled, transferred, generated, treated,
stored or disposed of asbestos, medical waste, radioactive waste or
municipal waste, except in compliance with Environmental Laws.
2. During each Corporation's ownership or leasing of
the Corporate Property owned or leased by it and, to the knowledge
of the Corporations and the Shareholders, prior to each
Corporation's ownership or leasing of such Corporate Property, no
Hazardous Material, other than that allowed under Environmental
Laws, including, without limitation, RCRA, has been disposed of, or
otherwise released on any Corporate Property.
3. During each Corporation's ownership or leasing of
the Corporate Property owned or leased by it and, to the knowledge
of the Corporations and the Shareholders, prior to each
Corporation's ownership or leasing of such Corporate Property, no
Corporate Property has ever been subject to or received any notice
of any private, administrative or judicial action, or notice of any
intended private, administrative or judicial action relating to the
presence or alleged presence of Hazardous Material in, under, upon
or emanating from any Corporate Property or any real property now
or previously owned or leased by a Corporation. There are no
pending and, to the Corporations' and Shareholders' knowledge, no
threatened actions or proceedings from any governmental agency or
any other entity involving remediation of any condition of the
Corporate Property, including, without limitation, petroleum
contamination, pursuant to Environmental Laws.
4. Except as allowed under Environmental Laws, neither
Corporation has knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
5. As used in this Agreement, "Hazardous Material"
means the substances (i) defined as "Hazardous Waste" in 40 CFR
261, and substances defined in any comparable Oregon statute or
regulation; (ii) any substance the presence of which requires
remediation pursuant to any Environmental Laws; and (iii) any
substance required to be disposed of in a manner expressly
prescribed by Environmental Laws.
Y. Powers of Attorney. Neither Corporation has granted any
power of attorney (except routine powers of attorney relating to
representation before governmental agencies) or entered into any
agency or similar agreement whereby a third party may bind or
commit either Corporation in any manner.
Z. Underground Storage Tanks. Except as set forth on
Schedule 3.26, no underground storage tanks containing petroleum
products or wastes or other hazardous substances regulated by 40
CFR 280 or Environmental Laws are currently or have been located on
any Corporate Property. Except as set forth on Schedule 3.26, no
Corporation has owned or leased any real property not included in
the Corporate Property having any underground storage tanks
containing petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280. As to each such underground
storage tank ("UST") identified on Schedule 3.26, each Corporation
has provided to WCI, on Schedule 3.26:
1. the location of the UST, information and material,
including any available drawings and photographs, showing the
location, and whether that Corporation currently owns or leases the
property on which the UST is located (and if that Corporation does
not currently own or lease such property, the dates on which it did
and the current owner or lessee of such property);
2. the date of installation and specific use or uses of
the UST;
3. copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each
UST;
4. a copy of each notice to or from a governmental body
or agency relating to the UST;
5. other material records with regard to the UST,
including, without limitation, repair records, financial assurance
compliance records and records of ownership; and
6. to the extent not otherwise set forth pursuant to
the above, a summary description of instances, past or present, in
which, to the Corporations', or the Shareholders' knowledge, the
UST failed to meet applicable standards and regulations for
tightness or otherwise and the extent of such failure, and any
other operational or environmental problems with regard to the UST,
including, without limitation, spills, including spills in
connection with delivery of materials to the UST, releases from the
UST and soil contamination.
Except to the extent set forth on Schedule 3.26, each
Corporation has complied with Environmental Laws regarding the
installation, use, testing, monitoring, operation and closure of
each UST described on Schedule 3.26.
AA. Patents, Trademarks, Trade Names, etc. Schedule 3.27
lists all patents, tradenames, fictitious business names,
trademarks, service marks, and copyrights owned by each Corporation
or which it is licensed to use (other than licenses to use software
for personal computer operating systems that were provided when the
computer was purchased and licenses to use software for personal
computers that are granted to retail purchasers of such software).
No patents, trade secrets, know-how, intellectual property,
trademarks, trade names, assumed names, copyrights, or designations
used by either Corporation in its business infringe on any patents,
trademarks, or copyrights, or any other rights of any person.
Neither Corporation nor any of the Shareholders knows or has any
reason to believe that there are any claims of third parties to the
use of any such names or any similar name, or knows of or has any
reason to believe that there exists any basis for any such claim or
claims.
AB. Assets, etc., Necessary to Business. Each Corporation
owns or leases all properties and assets, real, personal, and
mixed, tangible and intangible, and, except as disclosed on
Schedules 3.5, 3.10(a), 3.10(c), 3.14(a) and 3.19, is a party to
all Collection Franchises and Governmental Permits and other
agreements necessary to permit it to carry on its business as
presently conducted. All of said Collection Franchises and
Governmental Permits and agreements have been duly obtained and,
except as disclosed on Schedules 3.5, 3.8-Part II, 3.10(a), 3.10(c)
3.14(a) and 3.19, are in full force and effect and there are no
proceedings pending or threatened which may result in the
revocation, cancellation, suspension or adverse modification of any
of the same. Neither of the Corporations nor any of the
Shareholders has any knowledge of any reason why all such
Collection Franchises and Governmental Permits and agreements will
not remain in effect after consummation of the transactions
contemplated hereby.
AC. Condemnation. No Corporate Property owned or leased by
a Corporation is the subject of, or would be affected by, any
pending condemnation or eminent domain proceedings, and, to the
knowledge of the Corporations and the Shareholders, no such
proceedings are threatened.
AD. Suppliers and Customers. The relations between each
Corporation and its customers are good. Neither the Corporations
nor any of the Shareholders has knowledge of any fact (other than
general economic and industry conditions) which indicates that any
of the suppliers supplying products, components, materials or
providing use of, or access to, landfills or disposal sites to the
Corporations intends to cease providing such items to the
Corporations, nor does the Corporations or any of the Shareholders
have knowledge of any fact (other than general economic and
industry conditions) which indicates that any of the customers of
a Corporation intends to terminate, limit or reduce its business
relations with that Corporation.
AE. Absence of Certain Business Practices. Neither
Corporation nor any of the Shareholders has directly or indirectly
within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the
business of a Corporation in connection with any actual or proposed
transaction which (a) might subject a Corporation to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (b) if not given in the past, might have had an adverse
effect on the financial condition, business or results of
operations of a Corporation, or (c) if not continued in the future,
might adversely affect the financial condition, business or
operations of a Corporation or which might subject a Corporation to
suit or penalty in any private or governmental litigation or
proceeding.
AF. Related Party Transactions. None of the Shareholders or
their respective Affiliates has entered into any transaction with
or is a party to any agreement, lease or other instrument, or as of
the date of this Agreement is indebted to or is owed money by, a
Corporation not disclosed on the Financial Statements delivered to
WCI prior to the date of this Agreement. Except as disclosed in
the Financial Statements, none of the Shareholders or their
Affiliates owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee, shareholder or
partner of, or consultant or lender to or borrower from or has the
right to participate in the profits of, any Person which is a
competitor, supplier, customer, landlord, tenant, creditor or
debtor of a Corporation.
AG. Disclosure Schedules. Any matter disclosed on any
Schedule to this Agreement shall be deemed to have been disclosed
on every other Schedule that refers to such Schedule by cross
reference so long as the nature of the matter disclosed is obvious
from a fair reading of the Schedule on which the matter is
disclosed.
AH. No Misleading Statements. The representations and
warranties of the Corporations and the Shareholders contained in
this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to WCI and its representatives
pursuant hereto are complete and accurate in all material respects
and do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements made
and to be made not misleading.
AI. Accurate and Complete Records. The corporate minute
books, stock ledgers, books, ledgers, financial records and other
records of each Corporation:
1. have been made available to WCI and its agents at
the Corporation's offices or at the offices of WCI's attorneys or
the Corporation's attorneys;
2. have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
3. are accurate and complete, reflect all material
corporate transactions required to be authorized by the Board of
Directors and/or shareholders of that Corporation and do not
contain or reflect any material discrepancies.
AJ. Knowledge. Wherever reference is made in this Agreement
to the "knowledge" of the Shareholders, such term means the actual
knowledge of the Shareholders or any knowledge which should have
been obtained by the Shareholders upon reasonable inquiry by a
reasonable business person. In the case of a Shareholder that is
a trust, the term "knowledge" means the actual knowledge of the
trustee or trustees of the trust or any knowledge which should have
been obtained by the trustee or trustees upon reasonable inquiry by
a reasonable business person. Wherever reference is made in this
Agreement to the "knowledge" of the Corporations, such term means
the actual knowledge of any management employee, officer or
director of the Corporations or any knowledge which should have
been obtained by any such person upon reasonable inquiry by a
reasonable business person.
AK. Brokers; Finders. No person has acted directly or
indirectly as a broker, finder or financial advisor for a
Corporation or a Shareholder in connection with the transactions
contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in
respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of a Corporation or a
Shareholder.
AL. The Franchise Agreement. Each Shareholder represents and
warrants that he has not had any discussions to the best of his
knowledge with any representative of Curry County, Oregon regarding
that certain Franchise Agreement (the "Franchise Agreement")
between Curry County and CT&R represented by Ordinance No. 96-6
that are different than what is contained in the Franchise
Agreement.
IV. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders that each of
the following representations and warranties is true as of the
Closing Date:
A. Existence and Good Standing. WCI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. WCI has full corporate power and authority
to own and lease its properties and to carry on its business as now
conducted. WCI is not required to be qualified or licensed to
conduct business as a foreign corporation in any jurisdiction where
the failure to be so qualified would have a material adverse effect
on its financial condition.
B. No Contractual Restrictions. No provisions exist in any
article, document or instrument to which WCI is a party or by which
it is bound which would be violated by consummation of the
transactions contemplated by this Agreement.
C. Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by WCI and, subject to the due
authorization, execution and delivery by the Corporations and the
Shareholders, constitutes a legal, valid and binding obligation of
WCI. WCI has full corporate power, legal right and corporate
authority to enter into and perform its obligations under this
Agreement and to carry on its business as presently conducted. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and the fulfillment of and
compliance with the terms and conditions hereof do not and will
not, after the giving of notice, or the lapse of time or otherwise:
(a) violate any provisions of any judicial or administrative order,
award, judgment or decree applicable to WCI; (b) conflict with any
of the provisions of the Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws of WCI; or (c)
conflict with, result in a breach of or constitute a default under
any material agreement or instrument to which WCI is a party or by
which it is bound.
D. No Misleading Statements. The representations and
warranties of WCI contained in this Agreement, the Exhibits and
Schedules hereto and all other documents and information furnished
to the Shareholders pursuant hereto are materially complete and
accurate, and do not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements made not misleading.
E. Brokers; Finders. No person has acted directly or
indirectly as a broker, finder or financial advisor for WCI in
connection with the transactions contemplated by this Agreement and
no person is entitled to any broker's, finder's, financial advisory
or similar fee or payment in respect thereof based in any way on
any agreement, arrangement or understanding made by or on behalf of
WCI.
F. Disclosure Schedules. Any matter disclosed by WCI on any
Schedule to this Agreement shall be deemed to have been disclosed
on every other Schedule that refers to such Schedule by cross
reference so long as the nature disclosed is obvious from a fair
reading of the Schedule on which the matter is disclosed.
V. CLOSING DELIVERIES
At the Closing, the respective parties the deliveries
indicated:
A. WCI Deliveries.
1. WCI shall deliver the cash portion of the Purchase
Price required to be delivered on the Closing Date pursuant to
Section 1.2.
2. WCI shall deliver to the Shareholders any payments
due pursuant to Sections 1.4.
3. WCI shall execute and deliver an Employment
Agreement with Petty H. Smart substantially in the form of the
draft included in Exhibit 5.1(c).
4. WCI shall execute and deliver an Employment
Agreement with Carla Smart substantially in the form of the draft
included in Exhibit 5.1(d).
5. WCI or one of its Affiliates, shall execute and
deliver a Real Estate Purchase Agreement and all documents required
thereby for WCI's purchase of the Shareholders' real property
related to the Corporations (the "Real Estate Agreement").
6. WCI shall execute and deliver an Employment
Agreement with A. Lewis Rucker substantially in the form of the
draft included in Exhibit 5.1(f).
7. WCI shall execute and deliver a Consulting Agreement
with James Hilborn, Esq. substantially in the form of the draft
included in Exhibit 5.1(g).
8. WCI shall execute and deliver a Consulting Agreement
with Richard Demartini substantially in the form of the draft
included in Exhibit 5.1(h).
9. WCI shall execute and deliver to Richard Demartini
an Installment Note substantially in the form of the draft included
in Exhibit 5.1(i).
B. Shareholders Deliveries.
1. The Shareholders shall deliver to WCI the
certificates representing the outstanding Corporations' Stock free
and clear of all liens, security interests, claims and
encumbrances, accompanied by a stock power duly executed in blank.
2. The Shareholders shall deliver to WCI Uniform
Commercial Code financing statement searches from the State of
Oregon, dated within thirty (30) days prior to the Closing Date,
with an unofficial update on the Closing Date obtained from
Information America or another reporting service, showing that
there are no security interests, judgments, taxes, other liens or
encumbrances outstanding against the Corporations or their assets,
other than as disclosed on Part III of Schedule 3.8.
3. The Shareholders shall deliver to WCI an opinion of
counsel for the Shareholders, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit 5.2(c).
4. The Shareholders shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby, including without limitation all
Required Governmental Consents and all required consents of the
landlords under all real estate leases to which a Corporation is a
party, were obtained and the Shareholders shall deliver an estoppel
certificate from the landlords under all real estate leases to
which a Corporation is a party confirming the terms thereof and the
rental amount owing thereunder, certifying that such lease is in
full force and effect, that the Corporation is not in default under
any of the terms or conditions thereof, that there have been no
amendments or modifications to any such lease (or specifying the
same), and otherwise containing such statements and certifications
as WCI may require.
5. Each Corporation shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts
and all oral employment contracts other than those that are
terminable "at will" without payment of severance (other than
normal severance benefits approved by WCI) or other benefits with
non-union employees of that Corporation (including, without
limitation, stock options or other rights to obtain equity in that
Corporation) have been terminated, effective on or before the
Closing Date.
6. The Shareholders shall cause each officer and
director of each Corporation to deliver a resignation as an officer
and/or director of that Corporation together with a general release
releasing that Corporation from all obligations under any
indemnification agreements, the charter documents of that
Corporation, or otherwise, arising out of or relating to this
Agreement or the consummation of the transactions contemplated
thereby, other than obligations arising after the Closing Date
under this Agreement.
7. The Shareholders shall execute and deliver the Real
Estate Agreement and all documents required thereby for WCI's
purchase of the Shareholders' real property related to the
Corporations' business.
VI. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS AND THE
SHAREHOLDERS
A. Release of Guaranties. WCI shall use reasonable efforts
to obtain the termination and release promptly after the Closing
Date of the personal guaranties of the Shareholders listed on
Schedule 6.1, all of which relate to indebtedness of a Corporation
included in the Financial Statements as of the Balance Sheet Date
or WCI shall indemnify the Shareholders and hold them harmless from
and against all losses, expenses or claims by third parties to
enforce or collect indebtedness owed by a Corporation as of the
Closing Date which is personally guaranteed by the Shareholders
pursuant to such guaranties. The Shareholders may notify the
obligees under such guaranties that they have terminated their
obligations under such guaranties. The Shareholders shall
cooperate with WCI in obtaining such releases.
B. Release of Security Interests. On or after the Closing
Date, the Shareholders and their respective Affiliates shall cause
those security interests in the assets of a Corporation that have
been created in favor of financial institutions or other lenders
to secure indebtedness (other than indebtedness of that
Corporation) of the Shareholders or their respective Affiliates to
be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by a Corporation relating to the indebtedness
of the Shareholders to be released to the reasonable satisfaction
of WCI.
C. Confidentiality. Neither Corporation nor any of the
Shareholders shall disclose or make any public announcements of the
transactions contemplated by this Agreement without the prior
written consent of WCI, unless required to make such disclosure or
announcement by law, in which event the party making the disclosure
or announcement shall notify WCI at least 24 hours before such
disclosure or announcement is expected to be made. WCI shall not
disclose or make any public announcement of the transactions
contemplated by this Agreement without the prior written consent of
the Shareholders, unless in connection with the initial public
offering of WCI Common Stock or otherwise required to make such
disclosure or announcement by law, in which event WCI shall notify
the Shareholders at least 24 hours before such disclosure or
announcement is expected to be made.
D. Brokers and Finders Fees. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee
incurred by such party in connection with the transactions
contemplated by this Agreement.
E. Taxes. WCI shall reasonably cooperate, at the expense of
the Shareholders, with the Shareholders with respect to any matters
involving the Shareholders arising out of the Shareholders'
ownership of the Corporations prior to the Closing, including
matters relating to tax returns and any tax audits, appeals, claims
or litigation with respect to such tax returns or the preparation
of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and
records of the Corporations for inspection and copying as may be
reasonably requested by the Shareholders and shall cooperate with
the Shareholders with respect to retaining information and
documents which relate to such matters.
F. Short Year Tax Returns. After the Closing Date, the
Shareholders shall prepare at their sole cost and expense, all
short year federal, state, county, local and foreign tax returns
required by law for the period beginning with the first day of each
Corporation's fiscal year in which the Closing occurs and ending
with the Closing Date. Each such return shall be prepared in a
financially responsible and conservative manner and shall be
delivered to WCI together with all necessary supporting schedules
within 120 days following the Closing Date for its approval (but
such approval shall not relieve the Shareholders of their
responsibility for the taxes assessed under these returns). The
Shareholders shall be responsible for the payment of all taxes
shown to be due or that may come to be due on such returns or
otherwise relating to the period prior to the Closing Date in
excess of the amount of any reserve for taxes included in Effective
Date Current Liabilities. The Shareholders shall also be
responsible for all taxes arising from the conversion of a
Corporation from a cash to accrual basis of reporting whether or
not due on such returns or on the first return filed by that
Corporation for the period commencing after the Closing Date. At
the time of the delivery of the returns, shall contemporaneously
deliver to WCI checks payable to the respective taxing authorities
in amounts equal to the amount due. WCI shall sign tax returns and
cause such returns to be timely filed with the appropriate
authorities. The Shareholders shall be entitled to receive all
refunds shown on said returns and any such refunds received by the
Corporations or WCI shall be remitted to the Shareholders.
G. General Release by Shareholders. Each of the
Shareholders hereby fully releases and discharges each Corporation
and its directors, officers, agents and employees from all rights,
claims and actions, known or unknown, of any kind whatsoever, which
any of such Shareholders now has or may hereafter have against that
Corporation and its directors, officers, agents and employees,
arising out of or relating to events arising prior to or on the
Closing Date, except (a) as may be described in written contracts
disclosed in Schedule 6.7 and expressly described and specifically
excepted from this release in Schedule 6.7, (b) compensation as an
employee of that Corporation for current periods expressly
described and excepted from such release on Schedule 6.7, and (c)
for the obligations of that Corporation arising after the Closing
Date under this Agreement. Specifically, but not by way of
limitation, each of the Shareholders waives any right of
indemnification, contribution or other recourse against each
Corporation which he now has or may hereafter have against that
Corporation with respect to representations, warranties or
covenants made in this Agreement by that Corporation.
Each of the Shareholders hereby waives and relinquishes
all rights and benefits afforded by Section 1542 of the California
Civil Code, which states as follows:
A general release does not extend to claims to which the
creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by
him must have materially affected his settlement with the
debtor.
Each of the Shareholders understands and acknowledges the
significance and consequence of this waiver of Section 1542 and
nevertheless elects to, and does, release those claims described in
this Section 6.7, known or unknown, that it may have now or in the
future arising out of or relating to any event arising on or prior
to the date of this Agreement.
VII. INDEMNIFICATION
A. Indemnity by the Shareholders. The Shareholders, jointly
and severally, subject to the limitations set forth in Section 7.2,
covenant and agree that they will indemnify and hold harmless WCI,
the Corporations and their respective directors, officers and
agents and their respective successors and assigns (collectively
the "WCI Indemnitees"), from and after the date of this Agreement
and until the second anniversary of the Closing Date with regard to
Claims based on Sections 3.10(b), 3.24, 3.26 and 7.1(b)
("Environmental Claims"), the termination of the applicable statute
of limitations for all Claims based on Sections 3.1 through and
including Section 3.6 and Section 3.18 ("Corporate Claims") and the
second anniversary of the Closing Date for all other Claims ("Other
Claims"), against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs,
expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation),
expenditures, including, without limitation, any "Environmental
Site Losses" (as such term is hereinafter defined) identified by a
WCI Indemnitee in a Claims Notice (as defined in Section 7.3(a)),
or asserted by a WCI Indemnitee in litigation commenced against the
Shareholders provided that in either case any such Claims Notice
shall be given or the litigation commenced prior to the expiration
of the applicable period set forth above (irrespective of the date
of discovery), with respect to each of the following contingencies
(all, the "7.1 Indemnity Events"):
1. Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the
Shareholders or the Corporations pursuant to the terms of this
Agreement or any misrepresentation in or omission from any Exhibit,
Schedule, list, certificate, or other instrument furnished or to be
furnished to WCI pursuant to the terms of this Agreement,
regardless of whether, in the case of a breach of a representation
or a warranty, WCI relied on the truth of such representation or
warranty or had any knowledge of any breach thereof. 2. The
design, development, construction or operation of any Facility or
any other "Environmental Site" as hereinafter defined, or the
installation or operation of a UST during any period on or prior to
the Closing Date, in excess of the amount of liability with respect
thereto, if any, set forth on Part II of Schedule 3.8. As used in
this Agreement, "Environmental Site" shall mean any Facility, any
UST and any other waste storage, processing, treatment or disposal
facility, and any other business site or any other real property
owned, leased, controlled or operated by a Corporation or by any
predecessor thereof on or prior to the Closing Date. As used in
this Agreement, "Environmental Site Losses" shall mean any and all
losses, damages (including exemplary damages and penalties),
liabilities, claims, deficiencies, costs, expenses, and
expenditures (including, without limitation, expenses in connection
with site evaluations, risk assessments and feasibility studies)
arising out of or required by an interim or final judicial or
administrative decree, judgment, injunction, mandate, interim or
final permit condition or restriction, cease and desist order,
abatement order, compliance order, consent order, clean-up order,
exhumation order, reclamation order or any other remedial action
that is required to be undertaken under federal, state or local law
in respect of operating activities on or affecting any Facility,
any UST or any other Environmental Site, including, but not limited
to (x) any actual or alleged violation of any law or regulation
respecting the protection of the environment, including, but not
limited to, RCRA and CERCLA or any other law or regulation
respecting the protection of the air, water and land and (y) any
remedies or violations, whether by a private or public action,
alleged or sought to be assessed as a consequence, directly or
indirectly, of any "Release" (as defined below) of pollutants
(including odors) or Hazardous Substances from any Facility, any
UST or any other Environmental Site resulting from activities
thereat, whether such Release is into the air, water (including
groundwater) or land and whether such Release arose before, during
or after the Closing Date. The term "Release" as used herein means
any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing
into the ambient environment. Notwithstanding anything in this
paragraph to the contrary, it is specifically understood and agreed
that a Release composed solely of Hazardous Substances contained in
household waste lawfully disposed of in a landfill during the time
a Corporation owned and/or operated such landfill does not
constitute an Environmental Site Loss.
3. All matters on Schedule 3.8, Part II.
4. All actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees
and expenses of investigation) incident to any of the foregoing.
B. Limitations on Shareholders' Indemnities.
1. The obligations of the Shareholders to indemnify the
WCI Indemnitees as provided in Section 7.1 shall be limited as
follows:
a. the amount by which the cumulative amount of
all such liabilities, claims, damages deficiencies, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses,
expenditures and Environmental Site Losses with respect to any or
all Environmental Claims exceed one hundred thousand dollars
($100,000) with a limit on liability of five hundred thousand
dollars ($500,000);
b. the amount by which the cumulative amount of
all such liabilities, claims, damages deficiencies, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses
and expenditures with respect to any or all claims based on
Corporate Claims exceed zero dollars with no limit on liability;
and
c. the amount by which the cumulative amount of
all such liabilities, claims, damages deficiencies, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses
and expenditures with respect to Other Claims exceed zero dollars
with a limit on liability of three hundred and fifty thousand
dollars ($350,000).
C. Notice of Indemnity Claim.
1. In the event that any claim ("Claim") is hereafter
asserted against or arises with respect to any WCI Indemnitee as to
which such Indemnitee may be entitled to indemnification hereunder,
the WCI Indemnitee shall notify the Shareholders (as applicable
collectively, the "Indemnifying Party") in writing thereof (the
"Claims Notice") within 60 days after (i) receipt of written notice
of commencement of any third party litigation against such WCI
Indemnitee, (ii) receipt by such WCI Indemnitee of written notice
of any third party claim pursuant to an invoice, notice of claim or
assessment, against such WCI Indemnitee, or (iii) such WCI
Indemnitee becomes aware of the existence of any other event in
respect of which indemnification may be sought from the
Indemnifying Party (including, without limitation, any inaccuracy
of any representation or warranty or breach of any covenant). The
Claims Notice shall describe the Claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount,
if known, or an estimate, if possible, of the losses that have been
or may be incurred or suffered by the WCI Indemnitee.
2. The Indemnifying Party may elect to defend any Claim for
money damages where the cumulative total of all Claims (including
such Claims) do not exceed the limit set forth in Section 7.2 at
the time the Claim is made, by the Indemnifying Party's own
counsel; provided, however, the Indemnifying Party may assume and
undertake the defense of such a third party Claim only upon written
agreement by the Indemnifying Party that the Indemnifying Party is
obligated to fully indemnify the WCI Indemnitee with respect to
such action. The WCI Indemnitee may participate, at the WCI
Indemnitee's own expense, in the defense of any Claim assumed by
the Indemnifying Party. Without the written approval of the WCI
Indemnitee, which approval shall not be unreasonably withheld, the
Indemnifying Party shall not agree to any compromise of a Claim
defended by the Indemnifying Party.
3. If, within thirty (30) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall
not have provided the written agreement required by Section 7.3(b)
and elected to defend the Claim, the WCI Indemnitee shall have the
right to assume control of the defense and/or compromise of such
Claim, and the costs and expenses of such defense, including
reasonable attorneys' fees, shall be added to the Claim. The
Indemnifying Party shall promptly, and in any event within thirty
(30) days after demand therefor, reimburse the WCI Indemnitee for
the costs of defending the Claim, including attorneys' fees and
expenses.
4. The party assuming the defense of any Claim shall
keep the other party reasonably informed at all times of the
progress and development of its or their defense of and compromise
efforts with respect to such Claim and shall furnish the other
party with copies of all relevant pleadings, correspondence and
other papers. In addition, the parties to this Agreement shall
cooperate with each other and make available to each other and
their representatives all available relevant records or other
materials required by them for their use in defending, compromising
or contesting any Claim. The failure to timely deliver a Claims
Notice or otherwise notify the Indemnifying Party of the
commencement of such actions in accordance with this Section 7.3
shall not relieve the Indemnifying Party from the obligation to
indemnify hereunder but only to the extent that the Indemnifying
Party establishes by competent evidence that it has been prejudiced
thereby.
5. In the event both the WCI Indemnitee and the
Indemnifying Party are named as defendants in an action or
proceeding initiated by a third party, they shall both be
represented by the same counsel (on whom they shall agree), unless
such counsel the WCI Indemnitee, or the Indemnifying Party shall
determine that such counsel has a conflict of interest in
representing both the WCI Indemnitee and the Indemnifying Party in
the same action or proceeding and the WCI Indemnitee and the
Indemnifying Party do not waive such conflict to the satisfaction
of such counsel.
D. Liability for Breaches of Representations and Warranties.
The liability of a party making the representations and warranties
contained in this Agreement and in any certificate, Exhibit or
Schedule delivered pursuant hereto, or in any other writing
delivered pursuant to the provisions of this Agreement (the
"Representations and Warranties") for a breach thereof shall
survive the consummation of the transactions contemplated hereby.
The parties hereto in executing and delivering and in carrying out
the provisions of this Agreement are relying solely on the
representations, warranties, Schedules, Exhibits, agreements and
covenants contained in this Agreement, or in any writing or
document delivered pursuant to the provisions of this Agreement,
and not upon any representation, warranty, agreement, promise or
information, written or oral, made by any persons other than as
specifically set forth herein or therein.
E. No Exhaustion of Remedies or Subrogation; Right of Set
Off. The Shareholders waive any right to require any WCI
Indemnitee to (i) proceed against the Corporations; (ii) proceed
against any other person; or (iii) pursue any other remedy
whatsoever in the power of any WCI Indemnitee. WCI may, but shall
not be obligated to, set off against any and all payments due any
Shareholder any amount to which any WCI Indemnitee is entitled to
be indemnified hereunder with respect to any 7.1 Indemnity Event.
Such right of set off shall be separate and apart from any and all
other rights and remedies that the Indemnities may have against
Shareholders or their successors. Notwithstanding any other
provision of this Agreement, any amount to which any party is
entitled to be indemnified under this Agreement shall be reduced by
the amount of insurance proceeds received by that party with
respect to the same claim or circumstance, and each party claiming
a right to indemnification under this Agreement shall use
reasonable efforts in good faith to recover any insurance proceeds
to which it may be entitled. Neither party shall be obligated to
pursue recovery from an insurance provider prior to pursuing
recovery from other sources.
VIII. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND
WCI
A. Restrictive Covenants. As to the Corporations, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the
purchaser of the Corporations' Stock, is and will be engaged in the
same business as the Corporations (the "Business"); (ii) the
Shareholders and their Affiliates are intimately familiar with the
Business; (iii) the Business is currently conducted in the States
of Oregon and WCI intends to continue the Business in Oregon and
intends, by acquisition or otherwise, to expand the Business into
other geographic areas of Oregon and Washington where it is not
presently conducted; (iv) the Shareholders and their Affiliates
have had access to trade secrets of, and confidential information
concerning, the Business; (v) the agreements and covenants
contained in this Section 8.1 are essential to protect the Business
and the goodwill being acquired; and (vi) the Shareholders and
their Affiliates have the means to support themselves and their
dependents other than by engaging in a business substantially
similar to the Business and the provisions of this Section 8 will
not impair such ability. The Shareholders covenant and agree as
set forth in (a), (b) and (c) below with respect to each
Corporation:
1. Non-Compete. For a period commencing on the Closing
Date and terminating five years thereafter (the "Restricted
Period"), neither the Shareholders nor any of their Affiliates
shall, anywhere within a 150-mile radius of Brookings, Oregon,
where WCI or one of its subsidiaries owns or operates a business
similar to the Business (the "Restricted Area"), directly or
indirectly, acting individually or as the owner, shareholder,
partner, or employee of any entity, (i) engage in the operation of
a solid waste collection, transporting, disposal and/or composting
business, transfer facility, recycling facility, materials recovery
facility or solid waste landfill; (ii) enter the employ of, or
render any personal services to or for the benefit of, or assist in
or facilitate the solicitation of customers for, or receive
remuneration in the form of salary, commissions or otherwise from,
any business engaged in such activities; (iii) as owner or lessor
of real estate or personal property, rent to or lease any facility,
equipment or other assets to any business engaged in the same
business as a Corporation; or (iv) receive or purchase a financial
interest in, make a loan to, or make a gift in support of, any such
business in any capacity, including, without limitation, as a sole
proprietor, partner, shareholder, officer, director, principal,
agent, trustee or lender; provided, however, that any of the
Shareholders may own, directly or indirectly, solely as an
investment, securities of any business traded on any national
securities exchange or NASDAQ, provided none of the Shareholders is
a controlling person of, or a member of a group which controls,
such business and further provided that the Shareholders do not, in
the aggregate, directly or indirectly, own 2% or more of any class
of securities of such business. Despite the foregoing, the
"Restricted Period" as it applies to A. Lewis Rucker shall be the
longer of the period from the Closing Date until the third
anniversary thereof or the term of his employment with the
Corporation, and the "Restricted Area" as it applies to A. Lewis
Rucker shall be any geographical area in which CT&R or OWT conducts
the Business.
2. Confidential Information. During the Restricted
Period and thereafter, the Shareholders and their Affiliates shall
keep secret and retain in strictest confidence, and shall not use
for the benefit of themselves or others, all data and information
relating to the Business ("Confidential Information"), including
without limitation, know-how, trade secrets, customer lists,
supplier lists, details of contracts, pricing policies, operational
methods, marketing plans or strategies, bidding information,
practices, policies or procedures, product development techniques
or plans, and technical processes; provided, however, that the term
"Confidential Information" shall not include information that (i)
is or becomes generally available to the public other than as a
result of disclosure by the Shareholders or (ii) is general
knowledge in the solid waste handling and landfill business and not
specifically related to the Business. Notwithstanding the
foregoing, Shareholders may disclose and discuss confidential
information with their legal and tax advisors, and as is required
in connection with any legal proceedings, and the Shareholders
shall give WCI prior written notice of such disclosure at least
forty-eight (48) hours before such disclosure is made, if possible.
3. Property of the Business. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by
or on behalf of the Shareholders or a Corporation or made available
to them relating to the Business, but excluding any materials
(other than the minute books of the Corporations) maintained by any
attorneys for a Corporation or the Shareholders prior to the
Closing, are and shall be the property of WCI and have been
delivered or will be delivered or made available to WCI at the
Closing.
4. Non-Solicitation. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the
Shareholders and their Affiliates shall not solicit any employees
of a Corporation to leave the employ of that Corporation and join
the Shareholders or any Affiliate in any business endeavor owned or
pursued by the Shareholders.
5. No Disparagement. From and after the Closing Date,
none of the Shareholders shall, in any way or to any person or
entity or governmental or regulatory body or agency, denigrate or
derogate WCI or any of its subsidiaries, or any officer, director
or employee, or any product or service or procedure of any such
company whether or not such denigrating or derogatory statements
shall be true and are based on acts or omissions which are learned
by the Shareholders from and after the date hereof or on acts or
omissions which occur from and after the date hereof, or otherwise.
A statement shall be deemed denigrating or derogatory to any person
or entity if it adversely affects the regard or esteem in which
such person or entity is held by investors, lenders or licensing,
rating, or regulatory entities. Without limiting the generality of
the foregoing, none of the Shareholders shall, directly or
indirectly in any way in respect of any such company or any such
directors or officers, communicate with, or take any action which
is adverse to the position of any such company with any person,
entity or governmental or regulatory body or agency who or which
has dealings or prospective dealings with any such company or
jurisdiction or prospective jurisdiction over any such company.
This paragraph does not apply to the extent that testimony is
required by legal process, provided that WCI has received not less
than five days' prior written notice of such proposed testimony.
B. Rights and Remedies Upon Breach. If the Shareholders or
any Affiliate breaches, or threatens to commit a breach of, any of
the provisions of Section 8.1 herein (the "Restrictive Covenants"),
WCI shall have the following rights and remedies, each of which
rights and remedies shall be independent of the others and
severally enforceable, and each of which is in addition to, and not
in lieu of, any other rights and remedies available to WCI at law
or in equity:
1. Specific Performance. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause
irreparable injury to WCI and that money damages would not provide
an adequate remedy to WCI. Accordingly, in addition to any other
rights or remedies, WCI shall be entitled to injunctive relief to
enforce the terms of the Restrictive Covenants and to restrain the
Shareholders from any violation thereof.
2. Accounting. The right and remedy to require the
Shareholders to account for and pay over to WCI all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Shareholders as the result of any transactions
constituting a breach of the Restrictive Covenants.
3. Severability of Covenants. The Shareholders
acknowledge and agree that the Restrictive Covenants are reasonable
and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the
invalid portions.
4. Blue-Penciling. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall reduce the duration or scope of such provision, as the
case may be, to the extent necessary to render it enforceable and,
in its reduced form, such provision shall then be enforced.
5. Enforceability in Jurisdiction. WCI and the
Shareholders intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction
within the geographic scope of the Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of WCI and the
Shareholders that such determination not bar or in any way affect
WCI's right to the relief provided above in the courts of any other
jurisdiction within the geographic scope of the Restrictive
Covenants as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent
covenants.
IX. GENERAL
A. Additional Conveyances. Following the Closing, the
Shareholders and WCI shall each deliver or cause to be delivered at
such times and places as shall be reasonably agreed upon such
additional instruments as WCI or the Shareholders may reasonably
request for the purpose of carrying out this Agreement. The
Shareholders will cooperate with WCI and/or the Corporations on and
after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any actions,
proceedings or disputes of any nature with respect to matters
pertaining to all periods prior to the date of this Agreement.
B. Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, the successors or
assigns of WCI and the heirs, legal representatives or assigns of
the Shareholders; provided, however, that any such assignment shall
be subject to the terms of this Agreement and shall not relieve the
assignor of its or his responsibilities under this Agreement.
C. Public Announcements. Except as required by law, no
party shall make any public announcement or filing with respect to
the transactions provided for herein prior to the Closing Date
without the prior consent of the other parties hereto.
D. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same instrument.
E. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if
in writing and either delivered personally, sent by facsimile
transmission or by air courier service, or mailed by postage
prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other
addresses as may be designated in writing by notice given
hereunder, and shall be effective upon personal delivery or
facsimile transmission thereof or upon delivery by registered or
certified U.S. mail or one business day following deposit with an
air courier service:
If to the Shareholders:
at their respective addresses set forth on
Schedule 3.2
If to WCI:
Waste Connections, Inc.
2260 Douglas Boulevard, Suite 280
Roseville, California 95661
Attention: Ronald J. Mittelstaedt
Fax: (916) 772-2920
With a copy to:
Robert D. Evans, Esq.
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, California 94111
Fax: (415) 421-2922
F. Attorneys' Fees. In the event of any dispute or
controversy between WCI on the one hand and a Corporation or the
Shareholders on the other hand relating to the interpretation of
this Agreement or to the transactions contemplated hereby, the
prevailing party shall be entitled to recover from the other party
reasonable attorneys' fees and expenses incurred by the prevailing
party, as awarded by the court. Such award shall include
post-judgment attorney's fees and costs.
G. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon
without regard to its conflict of laws provisions.
H. Payment of Fees and Expenses. Whether or not the
transactions herein contemplated shall be consummated, each party
hereto will pay its own fees, expenses and disbursements incurred
in connection herewith and all other costs and expenses incurred in
the performance and compliance with all conditions to be performed
hereunder (including, in the case of the Shareholders, any such
fees, expenses and disbursements paid or accrued by, or charged to,
a Corporation).
I. Incorporation by Reference. All Schedules and Exhibits
attached hereto are incorporated herein by reference as though
fully set forth at each point referred to in this Agreement.
J. Captions. The captions in this Agreement are for
convenience only and shall not be considered a part hereof or
affect the construction or interpretation of any provisions of this
Agreement.
K. Number and Gender of Words; Corporations. Whenever the
singular number is used herein, the same shall include the plural
where appropriate, and shall apply to all of such number, and to
each of them, jointly and severally, and words of any gender shall
include each other gender where appropriate.
L. Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered
pursuant hereto constitute the entire Agreement and understanding
between the Corporations, the Shareholders and WCI and supersedes
any prior agreement and understanding relating to the subject
matter of this Agreement. This Agreement may be modified or
amended only by a written instrument executed by the Corporations,
the Shareholders and WCI acting through its officers, thereunto
duly authorized by its Board of Directors.
M. Waiver. No waiver by any party hereto at any time of any
breach of, or compliance with, any condition or provision of this
Agreement to be performed by any other party hereto may be deemed
a waiver of similar or dissimilar provisions or conditions at the
same time or at any prior or subsequent time.
N. Construction. The language in all parts of this
Agreement must be in all cases construed simply according to its
fair meaning and not strictly for or against any party. Unless
expressly set forth otherwise, all references herein to a "day" are
deemed to be a reference to a calendar day. All references to
"business day" mean any day of the year other than a Saturday,
Sunday or a public or bank holiday in Oregon or California. Unless
expressly stated otherwise, cross-references herein refer to
provisions within this Agreement and are not references to the
overall transaction or to any other document.
X. GLOSSARY
The definitions of the terms used below can be found at the
Section indicated:
Term Section
Affiliate Section 3.11
Balance Sheet Date Section 1.2(a)
business day Section 9.14
Claim Section 7.3(a)
Claims Notice Section 7.3(a)
Closing Section 2
Closing Date Section 2
Closing Date Debt Section 3.22(a)
Collection Franchises Section 3.10(a)
Confidential Information Section 8.1(b)
Contingent Purchase Price Section 1.1
Corporate Property Section 3.12(b)
Corporations Parties
Corporate Claims Section 7.1
Corporations' Stock Shareholders
CT&R Parties
Environmental Claims Section 7.1
Environmental Laws Section 3.24
Environmental Site Section 7.1(b)
Environmental Site Losses Section 7.1 and 7.1(b)
ERISA Section 3.17(a)
Excluded Assets Section 1.6
Facility Section 3.10(c)
Facilities Section 3.10(c)
Facility Property Section 3.10(c)(iii)
Facility Surveys/Site Plans Section 3.10(c)(iii)
Financial Statements Section 3.7
Golden Parachute Payment Section 3.17(c)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24(e)
Hazardous Waste Section 3.24(e)
Indemnifying Party Section 7.3(a)
Indemnity Events Section 7.1
June 1 Current Assets Section 3.22(b)
June 1 Current Liabilities Section 3.22(b)
knowledge Section 3.36
Laws Section 3.24
Other Claims Section 7.1
OWT Parties
Permitted Liens Section 3.12(c)
Projected Gross Revenue Section 1.4
Purchase Price Section 1.1
RCRA Section 3.24(a)
Real Estate Agreement Section 5.1(e)
Recipient Section 3.17(c)
Records, Notifications
and Reports Section 3.10(b)
Release Section 7.1(b)
Representations and
Warranties Section 7.4
Required Governmental
Consents Section 3.10(a)
Restricted Area Section 8.1(a)
Restricted Period Section 8.1(a)
Restrictive Covenants Section 8.2
Shareholders Parties
Unknown Debt Hold Back Section 1.3
UST Section 3.26
WCI Indemnitees Section 7.1
WCI Parties
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by persons
thereunto duly authorized as of the date first above written.
THE CORPORATIONS: CURRY TRANSFER AND RECYCLING
By:
Petty H. Smart
President
OREGON WASTE TECHNOLOGY
By:
Petty H. Smart
President
WCI: WASTE CONNECTIONS, INC.
By:
Ronald J. Mittelstaedt
Chief Executive Officer &
President
THE SHAREHOLDERS:
Petty H. Smart
A. Lewis Rucker
<PAGE>
TABLE OF CONTENTS
Page
1. PURCHASE OF CORPORATIONS' STOCK . . . . . . . . . . . . 1
1.1 Shares to be Purchased . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . 1
1.3Hold Back . . . . . . . . . . . . . . . . . . . 2
1.4 Additional Contingent Purchase Price . . . . . . . 2
1.5 Allocation of the Purchase Price . . . . . . . . . 3
1.6 Excluded Assets. . . . . . . . . . . . . . . . . . 3
2. CLOSING TIME AND PLACE. . . . . . . . . . . . . . . . . 3
3. REPRESENTATIONS AND WARRANTIES OF THE
CORPORATIONS AND THE SHAREHOLDERS . . . . . . . . . . . 3
3.1 Organization, Standing and Qualification . . . . . 3
3.2 Capitalization . . . . . . . . . . . . . . . . . . 3
3.3 All Stock Being Acquired . . . . . . . . . . . . . 4
3.4 Authority for Agreement. . . . . . . . . . . . . . 4
3.5 No Breach or Default . . . . . . . . . . . . . . . 4
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . 4
3.7 Financial Statements . . . . . . . . . . . . . . . 4
3.8 Liabilities. . . . . . . . . . . . . . . . . . . . 5
3.9 Conduct of Business. . . . . . . . . . . . . . . . 6
3.10 Permits and Licenses . . . . . . . . . . . . . . . 6
3.11 Certain Receivables. . . . . . . . . . . . . . . . 8
3.12 Fixed Assets and Real Property . . . . . . . . . . 9
3.13 Acquisition/Disposal of Assets . . . . . . . . . . 10
3.14 Contracts and Agreements; Adverse Restrictions . . 10
3.15 Insurance. . . . . . . . . . . . . . . . . . . . . 10
3.16 Personnel. . . . . . . . . . . . . . . . . . . . . 11
3.17 Benefit Plans and Union Contracts. . . . . . . . . 11
3.18 Taxes. . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Copies Complete; Required Consents . . . . . . . . 13
3.20 Customers, Billings, Current Receipts
and Receivables. . . . . . . . . . . . . . . . . . 13
3.21 No Change With Respect to the Corporations . . . . 14
3.22 Closing Date Debt; June 1 Current Assets and June 1
Current Liabilities. . . . . . . . . . . . . . . . 15
3.23 Bank Accounts. . . . . . . . . . . . . . . . . . . 16
3.24 Compliance With Laws . . . . . . . . . . . . . . . 17
3.25 Powers of Attorney . . . . . . . . . . . . . . . . 18
3.26 Underground Storage Tanks. . . . . . . . . . . . . 18
3.27 Patents, Trademarks, Trade Names, etc. . . . . . . 19
3.28 Assets, etc., Necessary to Business. . . . . . . . 19
3.29 Condemnation . . . . . . . . . . . . . . . . . . . 19
3.30 Suppliers and Customers. . . . . . . . . . . . . . 19
3.31 Absence of Certain Business Practices. . . . . . . 20
3.32 Related Party Transactions . . . . . . . . . . . . 20
3.33 Disclosure Schedules . . . . . . . . . . . . . . . 20
3.34 No Misleading Statements . . . . . . . . . . . . . 20
3.35 Accurate and Complete Records. . . . . . . . . . . 20
3.36 Knowledge. . . . . . . . . . . . . . . . . . . . . 21
3.37 Brokers; Finders . . . . . . . . . . . . . . . . . 21
3.38 The Franchise Agreement. . . . . . . . . . . . . . 21
4. REPRESENTATIONS AND WARRANTIES OF WCI . . . . . . . . . 21
4.1 Existence and Good Standing. . . . . . . . . . . . 21
4.2 No Contractual Restrictions. . . . . . . . . . . . 21
4.3 Authorization of Agreement . . . . . . . . . . . . 22
4.4 No Misleading Statements . . . . . . . . . . . . . 22
4.5 Brokers; Finders . . . . . . . . . . . . . . . . . 22
4.6 Disclosure Schedules . . . . . . . . . . . . . . . 22
5. CLOSING DELIVERIES. . . . . . . . . . . . . . . . . . . 22
5.1 WCI Deliveries . . . . . . . . . . . . . . . . . . 22
5.2 Shareholders Deliveries. . . . . . . . . . . . . . 23
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATIONS
AND THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . 24
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Release of Guaranties. . . . . . . . . . . . . . . 24
6.2 Release of Security Interests. . . . . . . . . . . 24
6.3 Confidentiality. . . . . . . . . . . . . . . . . . 25
6.4 Brokers and Finders Fees . . . . . . . . . . . . . 25
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Short Year Tax Returns . . . . . . . . . . . . . . 25
6.7 General Release by Shareholders. . . . . . . . . . 26
7. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 26
7.1 Indemnity by the Shareholders. . . . . . . . . . . 26
7.2 Limitations on Shareholders' Indemnities . . . . . 28
7.3 Notice of Indemnity Claim. . . . . . . . . . . . . 28
7.4 Liability for Breaches of Representations and
Warranties. . . . . . . . . . . . . . . . . . . . 30
7.5 No Exhaustion of Remedies or Subrogation; Right of Set
Off. . . . . . . . . . . . . . . . . . . . . . . . 30
8. OTHER POST-CLOSING COVENANTS OF THE
SHAREHOLDERS AND WCI. . . . . . . . . . . . . . . . . . 30
8.1 Restrictive Covenants. . . . . . . . . . . . . . . 30
8.2 Rights and Remedies Upon Breach. . . . . . . . . . 32
9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Additional Conveyances . . . . . . . . . . . . . . 33
9.2 Assignment . . . . . . . . . . . . . . . . . . . . 34
9.3 Public Announcements . . . . . . . . . . . . . . . 34
9.4 Counterparts . . . . . . . . . . . . . . . . . . . 34
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . 34
9.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . 34
9.7 Applicable Law . . . . . . . . . . . . . . . . . . 35
9.8 Payment of Fees and Expenses . . . . . . . . . . . 35
9.9 Incorporation by Reference . . . . . . . . . . . . 35
9.10 Captions . . . . . . . . . . . . . . . . . . . . . 35
9.11 Number and Gender of Words; Corporations . . . . . 35
9.12 Entire Agreement . . . . . . . . . . . . . . . . . 35
9.13 Waiver . . . . . . . . . . . . . . . . . . . . . . 35
9.14 Construction . . . . . . . . . . . . . . . . . . . 35
10. GLOSSARY. . . . . . . . . . . . . . . . . . . . . . . . 36
<PAGE>
Parties
Corporations
CT&R
OWT
Shareholders
WCI
Section 1.1
Contingent Purchase Price
Purchase Price
Section 1.2(a)
Balance Sheet Date
Section 1.3
Unknown Debt Hold Back
Section 1.4
Projected Gross Revenue
Section 1.6
Excluded Assets
Section 2
Closing
Closing Date
Section 3.10(a)
Collection Franchises
Governmental Permits
Required Governmental Consents
Section 3.10(b)
Records, Notifications and Reports
Section 3.10(c)
Facilities
Facility
Section 3.10(c)(iii)
Facility Property
Facility Surveys/Site Plans
Section 3.11
Affiliate
Section 3.12(b)
Corporate Property
Section 3.12(c)
Permitted Liens
Section 3.17(a)
ERISA
Section 3.17(c)
Golden Parachute Payment
Recipient
Section 3.22(a)
Closing Date Debt
Section 3.22(b)
June 1 Current Assets
June 1 Current Liabilities
Section 3.24
Environmental Laws
Laws
Section 3.24(a)
RCRA
Section 3.24(e)
Hazardous Material
Hazardous Waste
Section 3.26
UST
Section 3.36
knowledge
Section 3.7
Financial Statements
Section 5.1(e)
Real Estate Agreement
Section 7.1
Corporate Claims
Environmental Claims
Environmental Site Losses
Indemnity Events
Other Claims
WCI Indemnitees
Section 7.1(b)
Environmental Site
Environmental Site Losses
Release
Section 7.3(a)
Claim
Claims Notice
Indemnifying Party
Section 7.4
Representations and Warranties
Section 8.1(a)
Restricted Area
Restricted Period
Section 8.1(b)
Confidential Information
Section 8.2
Restrictive Covenants
Section 9.14
business day
Shareholders
Corporations' Stock
<PAGE>
Exhibit 10.3
PURCHASE AND SALE AGREEMENT
By and Between
Petty H. Smart
- -Seller-
and
Waste Connections, Inc.
- -Buyer-
June , 1998
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of June ,
1998, by and between, Petty H. Smart, an individual, ("Seller"),
and Waste Connections, Inc., a California corporation (the
"Buyer").
RECITALS
A. Buyer is entering into that certain Stock Purchase
Agreement of even date ("Stock Purchase Agreement") with Curry
Transfer and Recycling, an Oregon corporation, and Oregon Waste
Technology, an Oregon corporation (collectively the
"Corporations"), Seller, and A. Lewis Rucker (the "Shareholders"),
in order to acquire all of the Corporations' stock.
B. Seller owns all of that certain real property located in
Curry County, Oregon, as more particularly described on Exhibit A
attached hereto (the "Real Property").
C. In connection with the Stock Purchase Agreement, Seller
desires to sell to Buyer, and Buyer desires to purchase from
Seller, said Real Property and all rights and interests appurtenant
thereto, all on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the respective agreements
hereinafter set forth, Seller and Buyer agree as follows:
1. PROPERTY INCLUDED IN SALE
Seller hereby agrees to sell and convey to Buyer, and Buyer
hereby agrees to purchase from Seller, the following:
1.1. Real Property. All of the parcels of land comprising
the Real Property, as described on Exhibit A attached hereto.
1.2. Appurtenances. All rights, privileges and easements
appurtenant to the Real Property to the extent owned by Seller,
including, without limitation, all minerals, oil, gas and other
hydrocarbon substances on the Real Property, as well as all air
rights, solar rights, water, water rights and water stock relating
to the Real Property, and all easements, rights-of-way or other
appurtenances used or intended to be used in connection with the
beneficial use and enjoyment of the Real Property (the
"Appurtenances").
1.3. Improvements. All improvements and fixtures located on
the Real Property (the "Improvement").
1.4. Permits, Development Approvals and Fees. All permits
and development rights, agreements, entitlements and approvals
relating to the Real Property.
1.5. Studies and Reports. All engineering and other
studies, reports, plans and specifications with respect to the Real
Property or any improvements constructed thereon, including,
without limitation, all soils, geotechnical, hydrology, water
quality, environmental, seismic, engineering and site assessment
studies and reports.
1.6. Personal Property and Rights. All tangible and
intangible personal property of Seller used in connection with the
ownership, use and operation of the Real Property, including,
without limitation, any contract rights, agreements, utility
contracts, warranties, guaranties, general intangibles or other
rights relating to the ownership, use and operation of the
Property, as defined below.
All of the items described in Sections 1.1 through 1.6
above are hereinafter collectively called the "Property."
2. PURCHASE PRICE
The purchase price for the Property shall be $350,000.00
("Purchase Price").
3. TITLE TO THE PROPERTY
3.1. Real Property. At the Closing, Seller shall convey to
Buyer in the name of Buyer's nominee, Curry Transfer & Recycling,
Inc., an Oregon corporation, fee simple title to the Real Property,
Appurtenances and Improvements by duly executed and acknowledged
warranty deed in the form attached hereto as Exhibit B (the
"Warranty Deed"). Evidence of delivery of the fee simple title
shall be the issuance by a title insurance company approved by
Buyer ("Title Company") of an ALTA Owner's Policy of Title
Insurance (the "Title Policy") in the amount of the Purchase Price,
insuring fee simple title to the Real Property and Appurtenances in
the Buyer.
3.2. Preliminary Title Report. Buyer has been furnished a
preliminary title report showing the condition of title to the Real
Property, together with copies of all exceptions listed therein
(the "Title Report"). Buyer will have seven (7) days from receipt
of the Title Report to review the Title Report and to notify
Seller, in writing, if Buyer does not accept any one or more of the
exceptions shown in the Title Report.
The exceptions that are not acceptable to Buyer are
referred to as the "Non- Permitted Exceptions." All other
exceptions shall be deemed acceptable to Buyer and are referred to
as the "Permitted Exceptions." Taxes due and payable for the
current tax year, reservations in Federal patents and state deeds
shall also be deemed Permitted Exceptions. Seller shall have three
(3) days after receiving Buyer's notice within which to give Buyer
Seller's written notice agreeing to eliminate the Non-Permitted
Exceptions or electing to terminate this Agreement. If Seller
agrees to eliminate the Non-Permitted Exceptions, Seller shall be
obligated to do so at Seller's cost and as of the Closing Date.
The Warranty Deed and the Title Policy shall be subject to the
Permitted Exceptions.
4. CONDITIONS TO CLOSING
The following conditions are conditions precedent to Buyer's
obligation to purchase the Property:
4.1. Purchase Agreement. The occurrence of the Closing
under that certain Stock Purchase Agreement dated June , 1998
("Stock Purchase Agreement"), by and between, Waste Connections,
Inc. and Petty H. Smart and A. Lewis Rucker.
4.2. Title Policy. Title Company shall issue the Title
Policy to Buyer at the closing of the purchase and sale of the
Property.
4.3. Representations and Warranties. All of Seller's
representations and warranties contained in or made pursuant to
this Agreement shall have been true and correct when made and shall
be true and correct as of the Closing Date.
The foregoing conditions in this Section 4 are intended
solely for the benefit of Buyer. If any of the foregoing
conditions are not satisfied, Buyer shall have the right at its
sole election either to waive in writing the condition in question
and proceed with the purchase or, in the alternative, terminate
this Agreement. The Closing Date may be extended, at Buyer's
option, for a reasonable period of time if required to allow said
conditions to be satisfied, subject to Buyer's further right to
terminate this Agreement upon an expiration of the period of any
such extension if all said conditions have not been satisfied.
5. THE CLOSING
5.1. Closing Date. The Closing hereunder shall be
consummated through an escrow ("Escrow") to be opened with Title
Company. All of the documents required for the Closing and the
funds required for the payment of the Purchase Price shall be
delivered into the Escrow on or before Closing as such term is
defined in the Stock Purchase Agreement, or such other date prior
thereto as Buyer and Seller may mutually agree in writing (the
"Closing Date"). Such date may not be extended without the
approval of both Seller and Buyer, except as otherwise expressly
provided in this Agreement. The Closing shall commence on the
Closing Date and shall be completed on the Closing Date or the
business day following the Closing Date upon recordation by the
Title Company of the Warranty Deed and disbursement by the Title
Company of the Purchase Price to Seller. If the Closing does not
so commence on the Closing Date, then Title Company as escrow
holder shall, unless it is notified by both parties to the contrary
within five (5) days after the Closing Date, return to the
depositor thereof items which may have been deposited hereunder.
Any such return shall not, however, relieve either party hereto of
any liability it may have for its wrongful failure to close. Buyer
and Seller shall each submit to the Title Company, not less than
five (5) days prior to the Closing Date, escrow instructions
consistent with the provisions of this Agreement.
5.2. Seller's Documents. At the Closing, Seller shall
deliver to Buyer through escrow the following:
(a)a duly executed and acknowledged Warranty Deed;
(b)a duly executed counterpart of an Assignment of
Permits and Other Intangible Property in the form of Exhibit C
attached hereto;
(c)a duly executed Affidavit of Non-foreign Status in
the form of Exhibit D attached hereto;
(d)any other documents, instruments or agreements
called for hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any
of the foregoing items by an instrument in writing.
5.3. Buyer's Documents and Funds. At the Closing, Buyer
shall deliver to Seller through escrow the following:
(a)the Purchase Price, subject to the prorations and
credits hereinafter provided for; and
(b)any documents, instruments or agreements called for
hereunder which have not previously been delivered.
Seller may waive compliance on Buyer's part under any
of the foregoing items by an instrument in writing.
5.4. Other Documents. Seller and Buyer shall each deposit
such other instruments as are reasonably required by the escrow
holder or otherwise required to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
5.5. Prorations. Rents, real property taxes, and other
items of income and expense of ownership of the Property shall be
prorated as of 12:01 a.m. on the date the Warranty Deed is recorded
on the basis of a 365-day year.
5.6. Closing Costs. Transfer taxes applicable to the sale
of the Property, the fee for the Title Policy, escrow charges and
other costs of the Closing shall be paid by the parties in
accordance with the prevailing custom in the County in which the
Property is located. Each party shall pay its own attorneys' fees
in connection with the sale.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
6.1. There are no claims, suits and proceedings which are
pending against Seller or which relate to the Property or the use
or operation thereof and, to the knowledge of Seller, no such
claims, suits or proceedings are threatened or anticipated against
Seller.
6.2. All contracts or documents delivered by Seller to Buyer
pursuant to this Agreement or in connection with the execution
hereof are and at the time of Closing will be true, complete and
correct copies, and there do not exist, nor will there exist as of
the time of Closing, any contracts or agreements regarding the
Property entered into by Seller that have not heretofore been
disclosed by Seller to Buyer.
6.3. At the time of Closing there will be no outstanding
contracts made by Seller for any improvements to the Property which
have not been fully paid for and Seller shall cause to be
discharged all mechanics' or materialmen's liens arising from any
labor or materials furnished to the Property prior to the time of
Closing.
6.4. There are no other leases or occupancy agreements of
any kind relating to the Real Property or any portion thereof,
except for the oral rental agreement to Curry Transfer & Recycling,
Inc., and the oral rental agreement to Oregon Waste Technology,
Inc. of which the Buyer is aware.
6.5. To the knowledge of Seller, with respect to the
activities of Seller at the Property (i) such activities are fully
licensed, permitted and authorized under all applicable federal,
state and local statutes, orders, approvals, zoning or land use
requirements, rules and regulations, and (ii) such activities are
being and have been conducted in compliance in all material
respects with the requirements, criteria, standards and conditions
set forth in all applicable federal, state and local statutes,
orders, approvals, permits, zoning or land use requirements and
restrictions, variances, licenses, rules and regulations; and
Seller are not aware of any circumstances, conditions or reasons
which are likely to be the basis for revocation or suspension of
the Property's site assessment, permits, licenses, consents,
authorizations, zoning or land use permits, variances or approvals.
6.6. To the knowledge of Seller, the Property has been
operated in material compliance with, and is presently in material
compliance with, federal, state and local laws, ordinances, codes,
rules, regulations, governmental permits, orders, judgments,
awards, decrees, consent judgments, consent orders and requirements
applicable to the Property (collectively "Laws"), including, but
not limited to, Laws relating to the public health, safety or
protection of the environment (collectively, "Environmental Laws"),
and Seller are not aware of any assertion by any party that the
Property is in material violation of any Laws. Specifically and
without limiting the generality of the foregoing, to the knowledge
of Seller:
(a)Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC section 6901 et seq. ("RCRA") or as
disclosed to the Oregon Department of Environmental Quality (the
"DEQ"), the Property has not accepted, processed, handled,
transferred, generated, treated, stored or disposed of any
Hazardous Material (as defined below), except for small amounts of
Hazardous Material such as may be found in household waste, and the
Property has not accepted, processed, handled, transferred,
generated, treated, stored or disposed of asbestos, medical waste,
radioactive waste or municipal waste, except in compliance with
Environmental Laws.
(b)No Hazardous Material, other than that allowed under
Environmental Laws, including, without limitation, RCRA, has been
disposed of, or otherwise released, on the Property, except for
small amounts of Hazardous Material such as may be found in
household waste.
(c)Seller has not ever been subject to or received any
notice of any private, administrative or judicial action, or notice
of any intended private, administrative or judicial action relating
to the presence or alleged presence of Hazardous Material in,
under, upon or emanating from the Property. There are no pending
or threatened actions or proceedings from any governmental agency
or any other entity involving remediation of any condition of the
Property, including, without limitation, petroleum contamination,
pursuant to Environmental Laws.
(d)As used in this Agreement, "Hazardous Material"
shall mean the substances (i) defined as "Hazardous Waste" in 40
CFR 261, and substances defined in any comparable Oregon statute or
regulation; (ii) any substance the presence of which requires
remediation pursuant to any Environmental Laws; and (iii) any
substance disposed of in a manner not expressly prescribed by
Environmental Laws.
6.7. No underground storage tanks containing petroleum
products or wastes or other hazardous substances regulated by 40
CFR 280 or Environmental Laws are currently or to Seller's
knowledge, have been located on the Property during Seller's
ownership thereof.
6.8. The Property is not the subject of, or would be
affected by, any pending condemnation or eminent domain
proceedings, and to the knowledge of the Seller, no such
proceedings are threatened.
6.9. All documents executed by Seller which are to be
delivered to Buyer at the Closing are or at the time of Closing
will be duly authorized, executed and delivered by Seller, are or
at the time of Closing will be legal, valid and binding obligations
of Seller, and do not and at the time of Closing will not violate
any provisions of any agreement, mortgage, deed, note or other
document or instrument to which Seller is a party or to which the
Property is subject.
7. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that Buyer is
a corporation duly organized and validly existing and in good
standing under the laws of the State of Oregon, and all documents
executed by Buyer which are to be delivered to Seller at the
Closing are or at the time of Closing will be duly authorized,
executed and delivered by Buyer, and are or at the Closing will be
legal, valid and binding obligations of Buyer, and do not and at
the time of Closing will not violate any provisions of any
agreement, mortgage, deed, note or other document or instrument to
which Buyer is a party or to which it is subject.
8. INDEMNIFICATION Each party hereby agrees to indemnify the
other party and hold it harmless from and against any and all
claims, demands, liabilities, costs, expenses, penalties, damages
and losses, including, without limitation, reasonable attorneys'
fees (collectively, "Claims and Liabilities"), resulting from any
misrepresentations or breach of warranty or breach of covenant made
by such party in this Agreement or in any document, certificate, or
exhibit given or delivered to the other pursuant to or in
connection with this Agreement. The indemnification provisions of
this Section 8 shall survive beyond the delivery of the warranty
deed and transfer of title, or, if title is not transferred
pursuant to this Agreement, beyond any termination of this
Agreement.
Notwithstanding the foregoing, if Seller must indemnify
Buyer for any and all Claims and Liabilities in connection with
this Agreement, then Seller's obligations are solely pursuant to
and subject to Section 7.2 (Limitations on Shareholders'
Indemnities) of the Stock Purchase Agreement entered into
contemporaneously by the parties to this Agreement. All of
Seller's Claims and Liabilities under this Agreement and relating
to the Property are incorporated into said Section 7.2. Seller has
no separate indemnity obligation or liability under this Agreement.
Claims and Liabilities arising under Sections 6.1 through 6.5, 6.8
and 6.9 hereof will be considered "Other Claims" as defined in the
Stock Purchase Agreement, and Claims and Liabilities arising under
Sections 6.6 and 6.7 hereof will be considered "Environmental
Claims" as defined in the Stock Purchase Agreement.
9. CASUALTY OR CONDEMNATION
In the event that, prior to Closing, the Property, or any
material part thereof, is destroyed or damaged, or if condemnation
proceedings are commenced against the Property or any material part
thereof, Buyer shall have the right, exercisable by giving notice
of such decision to Seller within five (5) days after receiving
written notice from Seller of such damage, destruction or
condemnation proceedings, to terminate this Agreement, in which
case, neither party shall have any further rights or obligations
hereunder. If Buyer elects to accept the Property in its then
condition, all proceeds of insurance or condemnation awards payable
to Seller by reason of such damage, destruction or condemnation
shall be paid or assigned to Buyer.
10. POSSESSION
Possession of the Property shall be delivered to Buyer on
the Closing Date. Prior to the closing, Seller shall afford
authorized representatives of Buyer reasonable access to the
Property for the purposes of conducting soils tests, surveys or
other physical inspections of the Property. Buyer shall indemnify
Seller and hold Seller harmless against all loss, cost, damage and
expenses, including reasonable attorneys' fees arising from or
related to Buyer and its representatives entry onto the Property.
11. BUYER'S CONSENT TO NEW CONTRACTS AFFECTING THE PROPERTY
Seller shall not, after the date of Seller's execution of
this Agreement, enter into any agreement affecting the Property or
any aspect thereof without obtaining Buyer's consent thereto, which
consent Buyer may withhold in its sole discretion.
12. MISCELLANEOUS
12.1.Notices. Any notice, consent, approval, waiver or
other communication
required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered
personally or deposited with the United States Postal Service, all
charges and first class postage prepaid, addressed as follows:
If to Seller:
Petty H. Smart
17162 Parkview Drive
Brookings, Oregon 97415
(541) 469-3551
If to Buyer:
Waste Connections, Inc.
2260 Douglas Boulevard, Suite 280
Roseville, California 95661
Attention: Ronald J. Mittelstaedt
With a copy to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, California 94111
Attention: David H. Kremer, Esq.
or such other address as either party may from time to time specify
by notice hereunder to the
other.
12.2.Brokers and Finders. Neither party has had any contact
or dealings regarding the Property, or any communication in
connection with the subject matter of this transaction, through any
licensed real estate broker or other person who can claim a right
to a commission or finder's fee as a procuring cause of the sale
contemplated herein. If any broker or finder perfects a claim for
a commission or finder's fee based on any such contact, dealings or
communication, the party through whom the broker or finder makes
such claim shall be responsible for said commission or fee and all
costs and expenses (including reasonable attorneys' fees) incurred
by the other party in defending against the same.
12.3.Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors, heirs, administrators and assigns. Without being
relieved of any liability under this Agreement, Buyer reserves the
right to take title to the Property in a name or assignee other
than Buyer.
12.4.Amendments. This Agreement may be amended or modified
by, and only by, a written instrument executed by Seller and Buyer.
12.5.Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State
of Oregon.
12.6.Merger of Prior Agreements. This Agreement contains
the entire agreement of the parties and supersedes all prior
negotiations, correspondence, understandings and agreements between
the parties relating to the subject matter hereof.
12.7.Attorneys' Fees. If any party hereto fails to perform
any of its obligations under this Agreement, or if any dispute
arises between the parties hereto concerning the meaning or
interpretation of any provisions hereof, then the defaulting party
or the party not prevailing in such dispute, as the case may be,
shall pay any and all costs and expenses incurred by the other
party on account of such default and/or in enforcing or
establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees and disbursements. Any
such attorneys' fees and other expenses incurred by any party in
enforcing a judgment in its favor shall be recoverable separately
from and in addition to any other amounts included in such
judgment, and such attorneys' fees obligation is intended to be
severable from the other provisions hereof and to survive and not
be merged into any such judgment.
12.8.Time of the Essence. Time is of the essence of this
Agreement.
12.9.Specific Performance. Seller acknowledge that in the
event of a breach or default or threatened breach or default under
this Agreement by Seller prior to the Closing, damages at law will
be an inadequate remedy and, accordingly, without in any manner
limiting any other remedies available to Buyer, Seller's
obligations under this Agreement may be enforced by specific
performance.
12.10. Interpretation. Whenever used herein, the term
"including" shall be deemed to be followed by the words "without
limitation." Words used in the singular number shall include the
plural, and vice-versa, and any gender shall be deemed to include
each other gender. The captions and headings of the Articles and
Sections of this Agreement are for convenience of reference only,
and shall not be deemed to define or limit the provisions hereof.
12.11. Warning. the following statement is required by
Oregon Law: THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE
WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE
PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN
FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF
A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FOREST OR FARMING
PRACTICES AS DEFINED IN ORS 30.930 IN ALL ZONES BEFORE SIGNING OR
ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE
PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
FOR STRUCTURES.
12.12. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and
all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the
date first above written.
BUYER: WASTE CONNECTIONS, INC.,
a California corporation
By:
Its:
SELLER:
Petty H. Smart
<PAGE>
Exhibit A
DESCRIPTION OF REAL PROPERTY
All of that certain real property located in Curry County,
Oregon, described in the attached Exhibit A-1.<PAGE>
WARRANTY DEED
(Statutory Form, ORS 93.850)
Names of Guarantor: PETTY H. SMART
Names of Grantee: Curry Transfer & Recycling, Inc., an
Oregon corporation
Deliver to:
Consideration: The true consideration for this conveyance is
$350,000, which is
the whole consideration.
Tax statement address:
PETTY H. SMART, Grantor, conveys and warrants to Curry
Transfer & Recycling, Inc., an Oregon corporation, Grantee, the
following described real property free of encumbrances except as
specifically set forth herein:
All of the property in Curry County, Oregon described on the
attached Exhibit A.
The encumbrances to which the foregoing property is subject are as
follows:
[describe encumbrances]
THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN
THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND
REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE
PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE
APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED
USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR
FOREST PRACTICES AS DEFINED IN ORS 30.930.
Dated this day of , 1998.
Petty H. Smart
<PAGE>
STATE OF OREGON )
) ss.
County of Curry)
This instrument was acknowledged before me on
, 1998 by Petty
H. Smart.
Notary Public of Oregon
My commission expires: <PAGE>
Exhibit C
ASSIGNMENT OF PERMITS
AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT dated June , 1998 (the "Assignment"), is
made by Petty H. Smart, an individual ("Assignor") to Waste
Connections, Inc., a California corporation ("Assignee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, Assignor hereby assigns and transfers unto
Assignee all of its right, title, claim and interest in and under
any and all governmental permits and other intangible property
owned by Assignor in connection with that certain real property
described in Exhibit A attached hereto (the "Real Property") or any
improvements or personal property located thereon, including
without limitation, any of Assignor's interest in or rights under
licenses or planning approvals and any contract rights, agreements,
utility contracts, warranties, guaranties, general intangibles or
other rights relating to the ownership, development, use or
operation of Real Property.
Assignor warrants and represents that as of the date the
Real Property is conveyed to Assignee there are no assignments of
or agreements to assign the foregoing permits and other intangible
property to any other party.
The Assignment shall be binding on and inure to the benefit
of the parties hereto and the successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment as of the date and year first above written.
ASSIGNOR:<PAGE>
Petty H. Smart
ASSIGNEE:<PAGE>
WASTE CONNECTIONS, INC.
By:
Its: <PAGE>
Exhibit A
to Assignment of Permits and Other Intangible Property
REAL PROPERTY
<PAGE>
Exhibit D
AFFIDAVIT OF NON-FOREIGN STATUS
INTERNAL REVENUE CODE SECTION 1445
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax equal
to ten percent of the purchase price if the transferor is a foreign
person. Such transferee is exempt from such obligation to withhold
if the transferor provides the transferee an affidavit that the
transferor is not a foreign person.
To induce Waste Connections, Inc. ("Transferee"), to not
withhold tax under such Section 1445 upon the transfer by Petty H.
Smart, an individual ("Transferors"), of a U.S. real property
interest located in Curry County, Oregon, as more particularly
described in Exhibit A attached hereto, the following affidavit is
made on behalf of Transferor under penalty of perjury and with
knowledge that Transferee will rely thereon.
1. No Transferor is a foreign person or foreign
corporation, foreign partnership, foreign trust (as those terms are
defined in the Internal Revenue Code);
2. The tax identification number of each Transferor is
###-##-####; and
3. The Transferors reside at the following addresses:
17162 Parkview Drive, Brookings, Oregon 97415.
Transferors understand that this certification may be
disclosed to the Internal Revenue Service by Transferee, and that
any false statement contained herein could be punished by fine,
imprisonment, or both.
Under penalty of perjury, the undersigned declare that they
have examined this certificate and to the best of their knowledge
and belief it is true, correct and complete.
Date: June , 1998
Petty H. Smart
<PAGE>
Exhibit A-1
to Affidavit of Non-foreign Status
Internal Revenue Code Section 1445
[ATTACH LEGAL DESCRIPTION]
<PAGE>
TABLE OF CONTENTS
Page
1. PROPERTY INCLUDED IN SALE . . . . . . . . . . . . . . . . 1
1.1. Real Property. . . . . . . . . . . . . . . . . . . 1
1.2. Appurtenances. . . . . . . . . . . . . . . . . . . 1
1.3. Improvements . . . . . . . . . . . . . . . . . . . 1
1.4. Permits, Development Approvals and Fees. . . . . . 1
1.5. Studies and Reports. . . . . . . . . . . . . . . . 1
1.6. Personal Property and Rights . . . . . . . . . . . 2
2. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . 2
3. TITLE TO THE PROPERTY . . . . . . . . . . . . . . . . . . 2
3.1. Real Property. . . . . . . . . . . . . . . . . . . 2
3.2. Preliminary Title Report . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . 3
4.1. Purchase Agreement . . . . . . . . . . . . . . . . 3
4.2. Title Policy . . . . . . . . . . . . . . . . . . . 3
4.3. Representations and Warranties . . . . . . . . . . 3
5. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . 3
5.1. Closing Date . . . . . . . . . . . . . . . . . . . 3
5.2. Seller's Documents . . . . . . . . . . . . . . . . 3
5.3. Buyer's Documents and Funds. . . . . . . . . . . . 4
5.4. Other Documents. . . . . . . . . . . . . . . . . . 4
5.5. Prorations . . . . . . . . . . . . . . . . . . . . 4
5.6. Closing Costs. . . . . . . . . . . . . . . . . . . 4
6. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . 4
7. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . 6
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 6
9. CASUALTY OR CONDEMNATION. . . . . . . . . . . . . . . . . 7
10. POSSESSION. . . . . . . . . . . . . . . . . . . . . . . . 7
11. BUYER'S CONSENT TO NEW CONTRACTS AFFECTING THE
PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . 7
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 8
12.1. Notices. . . . . . . . . . . . . . . . . . . . . . 8
12.2. Brokers and Finders. . . . . . . . . . . . . . . . 8
12.3. Successors and Assigns . . . . . . . . . . . . . . 8
12.4. Amendments . . . . . . . . . . . . . . . . . . . . 8
12.5. Governing Law. . . . . . . . . . . . . . . . . . . 8
12.6. Merger of Prior Agreements . . . . . . . . . . . . 9
12.7. Attorneys' Fees. . . . . . . . . . . . . . . . . . 9
12.8. Time of the Essence. . . . . . . . . . . . . . . . 9
12.9. Specific Performance . . . . . . . . . . . . . . . 9
12.10. Interpretation . . . . . . . . . . . . . . . . . . 9
12.11. Warning. . . . . . . . . . . . . . . . . . . . . . 9
12.12. Counterparts . . . . . . . . . . . . . . . . . . . 9
List of Exhibits
Exhibit A - Description of Real Property
Exhibit B - Warranty Deed
Exhibit C - Assignment of Permits and Other Intangible Property
Exhibit D - Affidavit of Non-Foreign Status Internal Revenue Code
Section 1445
<PAGE>
Exhibit 99.1
Waste Connections, Inc. announces two new market entries,
and a significant tuck-in acquisition
For Immediate Release
Roseville, California
Waste Connections, Inc. (NASDAQ: WCNX) announces today that it has
closed the acquisition of B&B Sanitation, Red Carpet Landfill and
Darlin Equipment, three affiliated companies operating in Major
County, Oklahoma, representing a fully integrated new market entry
in western Oklahoma. The Company also closed the acquisition of
Arrow Sanitary Service, a collection company operating in the
suburban Portland, Oregon and southwestern Washington marketplaces,
the acquisition of Curry Transfer and Recycling and Oregon Waste
Technology, two affiliated solid waste collection and transfer
companies operating along the southern Oregon coast. Curry
Transfer and Recycling is the exclusive waste services provider for
Curry County, Oregon, and several coastal municipalities, including
the cities of Gold Beach, Brookings, and Port Orford. Curry
operates two collection operations and five transfer stations.
With the conclusion of these acquisitions, the company has closed
the acquisitions of nine companies, representing an aggregate of
approximately $19 million in annualized revenues, since the
beginning of the second quarter. These acquisitions represent the
entry into two new markets (western Oklahoma and southwestern
Oregon) in addition to the new market entry in Orem, Utah announced
last week.
Ron J. Mittelstaedt, President and CEO said: "We are pleased to
have these companies join the Waste Connections Inc., team. With
these new acquisitions, the Company is well on its way to
accomplishing its growth objectives for the year. In addition to
entering three new markets since the beginning of June, the company
achieved an important strategic move through the Arrow acquisition
in the Vancouver/suburban Portland market -- which is currently the
Company's largest base of operations. These transactions are
consistent with our strategy of pursuing exclusive arrangements in
those western U.S. markets that are governed by exclusive franchise
agreements, municipal contracts and governmental certificates, and
integrated operations in the balance of our targeted marketplaces."
Waste Connections, Inc. is a regional, integrated, solid waste
services company that provides solid waste collection, transfer,
disposal and recycling services in secondary markets of the Western
U.S. The company serves more than 160,000 commercial, industrial
and residential customers. Waste Connections, Inc. was founded in
September 1997 and is headquartered in Roseville, California.
This press release contains forward-looking statements that involve
risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by
such forward-looking statements are the Company's limited operating
history, the ability to manage growth, the ability to identify,
acquire and integrate acquisition targets, the potential inability
to finance the Company's growth, dependence on management and the
other risk factors detailed from time to time in the Company's
periodic reports and registration statements filed with the
Securities and Exchange Commission.
6/25/98
CONTACT:
Waste Connections, Inc., (916) 772-2221
Steven F. Bouck
Chief Financial Officer
