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) July 31, 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 July 31, 1998, WCI Acquisition Corporation, a Nebraska
corporation wholly owned by Waste Connections, Inc. ("WCI"), merged
into Shrader Refuse and Recycling Service Company, a Nebraska
corporation ("Shrader"), and Shrader acquired certain real estate
located in Lincoln and Papillion, Nebraska and used in Shrader's
business. Shrader is engaged in the collection, transportation and
handling of solid waste and recyclables in eastern Nebraska.
The consideration for the merger consisted of
approximately $6.27 million in cash, 537,566 shares of WCI Common
Stock, $420,000 in notes, and contingent payments to the selling
shareholders if certain events occur during a specified period.
The purchase price for the real estate was approximately $413,000
in cash.
WCI intends to continue to operate the acquired business.
The purchase price of the acquisition was determined based on the
consideration paid by WCI for similar acquisitions in the western
United States. The cash portion of the acquisition was 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 Shrader are not included in this Form 8-K,
but will be filed by amendment to this Form 8-K no later than 60
days after August 15, 1998.
(b) Pro Forma Financial Information. Pro forma financial
information relating to Shrader is not included in this Form 8-K,
but will be filed by amendment to this Form 8-K no later than 60
days after August 15, 1998.
(c) Exhibits.
10.1 Agreement and Plan of Merger, dated
as of July 30, 1998, by and among
Waste Connections, Inc., WCI
Acquisition Corporation, Shrader
Refuse and Recycling Service Company,
Duane E. Shrader, Myrlen A. Shrader,
Daniel L. Shrader, Mark S. Shrader,
Michael D. Shrader and Daren L.
Shrader
10.2 Purchase and Sale Agreement dated as
of July 31, 1998, by and between
Ambler Vincent Development Company
and Shrader Refuse and Recycling
Service Company
99.1 WCI's Press Release released
August 3, 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: August 11, 1998 By /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
10.1 Agreement and Plan of Merger, dated
as of July 30, 1998, by and among
Waste Connections, Inc., WCI
Acquisition Corporation, Shrader
Refuse and Recycling Service Company,
Duane E. Shrader, Myrlen A. Shrader,
Daniel L. Shrader, Mark S. Shrader,
Michael D. Shrader and Daren L.
Shrader
10.2 Purchase and Sale Agreement dated as
of July 31, 1998, by and between
Ambler Vincent Development Company
and Shrader Refuse and Recycling
Service Company
99.1 WCI's Press Release released
August 3, 1998
<PAGE>
Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
Dated as of July 30, 1998, by and among
Waste Connections, Inc.
WCI Acquisition Corporation
Shrader Refuse and
Recycling Service Company
Duane E. Shrader
Myrlen A. Shrader
Daniel L. Shrader
Mark S. Shrader
Michael D. Shrader
Daren L. Shrader
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 30, 1998, is entered
into by and among Waste Connections, Inc., a Delaware corporation
("WCI"), WCI Acquisition Corporation, a [Nebraska] corporation
("Acquisition Co.") Shrader Refuse and Recycling Service Company,
a Nebraska corporation (the "Corporation"), and Duane E. Shrader
("Duane"), Myrlen A. Shrader ("Myrlen"), Daniel L. Shrader
("Daniel"), Mark S. Shrader ("Mark"), Michael D. Shrader
("Michael") and Daren L. Shrader ("Daren" and, collectively with
Duane, Myrlen, Daniel, Mark and Michael, the "Shareholders").
WHEREAS, the Corporation is engaged in the collection and transport
of solid waste and recyclables in the Cities of Papillion, Lincoln,
Ralston and Omaha, Nebraska and in the unincorporated areas of
Douglas, Sarpy, Cass and Lancaster Counties, Nebraska and
Pottawattamie County, Iowa, and other related activities;
WHEREAS, the Shareholders own all of the issued and outstanding
capital stock of the Corporation (the "Corporation's Stock");
WHEREAS, at the Closing on the Closing Date (as defined below), WCI
will contribute as a capital contribution to Acquisition Co.
sufficient cash and shares of WCI Common Stock, $.01 par value (the
"WCI Stock"), to consummate the transactions contemplated by this
Agreement in exchange for all of the outstanding capital stock of
Acquisition Co.;
WHEREAS, Acquisition Co. will use such cash and shares of WCI Stock
to effect the merger of Acquisition Co. into the corporation, in
accordance with the terms and subject to the conditions of this
Agreement (the "Merger");
WHEREAS, on the Closing Date, the Corporation will acquire from
Ambler Vincent Development Company ("Ambler") pursuant to a Real
Estate Purchase Agreement (the "Real Estate Purchase Agreement")
that certain real property (the "Real Estate") related to the
Corporation's business for one million two hundred ninety thousand
dollars ($1,290,000) (the "Real Estate Purchase Price") 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:
1. MERGER
1.1 The Merger. In accordance with the Business General
Corporation Act (the "Nebraska Law"), at the Effective Time (as
defined in Section 1.2), Acquisition Co. shall be merged with and
into the Corporation. Immediately following the Merger, the
separate corporate existence of Acquisition Co. shall cease and the
Corporation as the surviving corporation (the "Surviving
Corporation"),shall continue to exist under and be governed by the
Nebraska Law as a direct, wholly-owned subsidiary of WCI.
1.2 Effective Time. As soon as practicable after the execution of
this Agreement and the satisfaction or waiver of all of the
conditions to the Merger, at the Closing (as defined in Section
1.7), the parties shall cause the Merger to be consummated by
causing separate Articles of Merger (the "Filed Articles")
substantially in the form of Exhibit 1.2(a), to be executed and
filed in accordance with the relevant provisions of the Nebraska
Law. The Merger shall become effective at the time of the filing
with the Secretary of State of the State of Nebraska of the Filed
Articles relating thereto in accordance with the relevant
provisions of the Nebraska Law or at such later time as is
specified in the Filed Articles (the "Effective Time").
Notwithstanding the date on which the Effective Time occurs, for
financial reporting purposes the effective date of the Merger shall
be as of July 1, 1998.
1.3 Effects of the Merger. The Merger shall have the effect set
forth in Section 21-20,133 of the Nebraska Law. Without limiting
the generality of the foregoing, at the Effective Time, all the
properties, rights, privileges, powers and franchises of
Acquisition Co. shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Corporation and the
Acquisition Co. shall become the debts, liabilities and duties of
the Surviving Corporation in the same manner as if the Surviving
Corporation had itself incurred them. All rights of creditors and
all liens upon the property of Acquisition Co. shall thereafter be
preserved unimpaired.
1.4 Articles of Incorporation and Bylaws of the Surviving
Corporation. The Articles of Incorporation of the Corporation, as
in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and
applicable law. The Bylaws of the Corporation in effect at the
Effective Time shall be the Bylaws of the respective Surviving
Corporation until amended in accordance with the provisions thereof
and applicable law.
1.5 Directors. The directors of Acquisition Co. immediately prior
to the Effective Time shall be the directors of the Surviving
Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation
or removal.
1.6 Officers. The officers of Acquisition Co. immediately prior
to the Effective Time shall be the officers of the Surviving
Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation
or removal.
1.7 Closing Time and Place. Subject to the terms and conditions
of this Agreement, the closing of the transactions contemplated
herein (the "Closing") shall take place concurrent with the
execution of this Agreement or on such other date as WCI and the
Corporation shall agree (the "Closing Date"). The Closing shall
take place at the law offices of Koley, Jessen, Daubman & Rupiper,
P.C., 1125 South 103 Street, Suite 800, Omaha, Nebraska 68124. At
the Closing, WCI, the Corporation and the Shareholders shall
deliver to each other the documents, instruments and other items
described in Section 5 of this Agreement. At the election of WCI
and the Corporation, the Closing of this transaction may take place
through an exchange of consideration and documents using overnight
courier service or facsimile.
2. MERGER CONSIDERATION; CONVERSION OF SECURITIES; DISSENTING
SHARES
2.1 Merger Consideration. The merger consideration (the "Merger
Consideration") is:
(a) Seven million dollars ($7,000,000), (i) minus the Closing Date
Debt (as defined in Section 3.22(a)) other than Closing Date Debt
described on Schedule 2.1(a), which was incurred after January 1,
1998, to acquire capital equipment that will be owned by the
Corporation immediately prior to the Effective Time and (ii) plus
or minus, as the case may be, the amount by which the Closing Date
Current Assets (as defined in Section 3.22(b)) are greater or less
than the Closing Date Current Liabilities (as defined in Section
3.22(b)) payable in cash (the "Cash"). No adjustment to the Cash
shall be made on account of the obligation of the Corporation to
pay the Real Estate Purchase Price pursuant to the Real Estate
Agreement. The Cash shall be paid to the Shareholders on
conversion of their shares of the Corporation at the Effective Time
by wire transfer. The adjustment to the Cash based on the Closing
Date Debt, the Closing Date Current Assets and the Closing Date
Current Liabilities shall be based on estimates of such amounts.
Within 120 days after the Closing, WCI and the Shareholders shall
determine the actual Closing Date Debt, Closing Date Current Assets
and Closing Date Current Liabilities. If the difference between
the actual amounts of such items and the estimated amounts provided
at the Closing results in an increase in the amount of Cash that
should have been paid at the Effective Time over the amount of Cash
that was so paid, WCI shall promptly pay such amount to the
Shareholders; if the result is a decrease in the amount of Cash
that should have been paid at the Effective Time from the amount of
Cash that was so paid, the Shareholders shall promptly pay such
amount to WCI.
(b) A number of shares (the "Shares") of WCI Stock determined as
follows: The number of Shares shall be an amount equal to eleven
million dollars ($11,000,000) divided by the Average Closing Price
(as hereinafter defined). The Average Closing Price (the "Average
Closing Price") is the average of the closing price of WCI Stock as
quoted on the NASDAQ Stock Market for the five (5) successive
trading days for which a closing price is quoted beginning on the
tenth (10th) trading day prior to the Closing Date. The Average
Closing Price and the number of shares of WCI Stock to be delivered
at the Closing shall be appropriately adjusted in the event of any
change in WCI Stock between the first day for which a closing price
is quoted in determining the Average Closing Price and the Closing
Date, including without limitation any stock dividend, stock split,
reverse stock split, recapitalization, reorganization, merger or
consolidation. WCI shall not be obligated to issue any fractional
shares of WCI Stock, but instead the Shareholders shall be paid
cash in lieu of any fractional share equal to the Average Closing
Price multiplied by the fraction of a share of WCI Stock that would
otherwise have been issued to such Shareholder. The Shares having
an aggregate value of eight million dollars ($8,000,000) (the
"Registered Shares") shall be covered by WCI's shelf registration
statement on Form S-4 (the "Registration Statement"), which shall
have been filed and declared effective under the Securities Act of
1933 (the "Act") on or before the Closing. Shares having an
aggregate value of three million dollars ($3,000,000) (the
"Unregistered Shares") shall not be covered by the Registration
Statement and the certificates for said Shares shall bear a legend
indicating that the Shares may not be sold or transferred without
the prior written consent of the Corporation until July 31, 2003,
provided, WCI agrees to cause the legend to be removed immediately
upon a Change of Control of WCI (as defined below). The
Unregistered Shares shall be subject to the terms of an Investors'
Rights Agreement in the form of Exhibit 2.1 hereto (the "Investors'
Rights Agreement") if a Change of Control occurs prior to July 31,
2003. For the purpose of this Section 2.1(b), a "Change in
Control" of WCI shall be deemed to have occurred if (i) there shall
be consummated (aa) any reorganization, liquidation or
consolidation of WCI, or any merger or other business combination
of WCI with any other corporation, other than any such merger or
other combination that would result in the voting securities of WCI
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of WCI
or such surviving entity outstanding immediately after such
transaction, or (bb) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of WCI, or if (ii) any "person"
(as defined in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of fifty percent (50%) or more during
the first two (2) years after Effective Time, thirty-five percent
(35%) or more during the third and fourth years after the Effective
Time or thirty percent (30%) or more during the fifth year after
the Effective Time of WCI's outstanding voting securities (except
that for the purpose of this definition, "person" shall not include
any person or any person that controls, is controlled by or is
under common control with such person, who as of the date of this
Agreement owns ten percent (10%) or more of the total voting power
represented by the outstanding voting securities of WCI, or a
trustee or other fiduciary holding securities under any employee
benefit plan of WCI, or a corporation that is owned directly or
indirectly by the stockholders of WCI in substantially the same
percentage as their ownership of WCI) or if (iii) during any period
of two consecutive years, individuals who at the beginning of such
period constituted the entire WCI Board shall cease for any reason
to constitute at least one-half of the membership thereof unless
the election, or the nomination for election by WCI's shareholders,
of each new director was approved by a vote of at least one-half of
the directors then still in office who were directors at the
beginning of the period or if (iv) Ronald J. Mittelstaedt shall
cease to be Chairman of the WCI Board; provided, that upon the
occurrence of an event described in one of the preceding clauses
(i), (ii) or (iii), a Change in Control shall be deemed to have
occurred only if two or all of the President, Chief Financial
Officer and Corporate Secretary of WCI immediately prior to such
event do not retain substantially similar positions.
(c) For each of Daniel, Mark, Michael and Daren, but for none of
the other Shareholders, a non-interest bearing promissory note in
the form of Exhibit 2.1(c) (the "Notes"). Each of the Shareholders
hereby acknowledges and consents that, because not every
Shareholder will receive a Note, each share of the Corporation will
not be treated equally with respect to distributions of
consideration paid in connection with the Merger.
2.2 Additional Contingent Merger Consideration. The Merger
Consideration shall be increased by the additional contingent
consideration (the "Contingent Merger Consideration") described in
this section.
(a) If, prior to December 31, 1999, the Shareholders assist WCI or
any of its subsidiaries in acquiring directly or indirectly
(through asset purchase, stock purchase, merger or otherwise) the
waste collection operations (the "Acquired Operations") of any
other company or companies providing such services in the Service
Area (as defined below) and the aggregate Projected Net Revenues
for the Acquired Operations exceed three million five hundred
thousand dollars ($3,500,000), WCI shall issue to the Shareholders
as additional Contingent Merger Consideration a number of shares of
WCI Stock determined by dividing one million dollars ($1,000,000)
by the average closing price of the WCI Stock as quoted on the
NASDAQ Stock Market for the five successive trading days beginning
on the date WCI closes the acquisition of the Acquired Operation
that causes Projected Net Revenues to exceed three million five
hundred thousand dollars ($3,500,000). If Projected Net Revenues
for all Acquired Operations that are acquired by December 31, 1999,
are less than three million five hundred thousand dollars
($3,500,000) but greater than two million five hundred thousand
dollars ($2,500,000), the one million dollar amount referred to
above shall be prorated dollar for dollar for each dollar of
Projected Net Revenues above two million five hundred thousand
dollars ($2,500,000), and such prorated amount shall then be
divided by the average closing price of the WCI Stock as quoted on
the NASDAQ for the last five trading days of 1999. The shares of
WCI Stock to be delivered hereunder shall be delivered within
twenty (20) days after the date on which the additional contingent
payment under this Section is determined. For purposes of this
Section, "Service Area" means Nebraska, Colorado, Wyoming, South
Dakota, Iowa, Missouri and Kansas, and "Projected Net Revenues"
means the gross revenues for an Acquired Operation for the twelve
(12) months preceding the closing date for such acquisition less
all disposal costs, transfer fees, franchise fees, and taxes
related to host fees or disposal taxes (excluding income and sales
taxes) projected for the Acquired Operation for the twelve (12)
months following the closing date of such acquisition as determined
from WCI's pro forma financial statements for such Acquired
Operation, but only to the extent said costs, fees and taxes exceed
twenty percent (20%) of such gross revenues of the Acquired
Operation. 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.
(b) If the Surviving Corporation's gross revenue ("Gross Revenue")
and earnings before interest, taxes, depreciation and amortization
("EBITDA") attributable to its business as constituted on the
Closing Date are eight million five hundred thousand dollars
($8,500,000) and two million seven hundred sixty five thousand
dollars ($2,765,000), respectively, for the year ended December 31,
1999, WCI shall issue to the Shareholders as additional Contingent
Merger Consideration a number of shares of WCI Stock determined by
dividing seven hundred fifty thousand dollars ($750,000) by the
average closing price of the WCI Stock as quoted on the NASDAQ
Stock Market for the last five trading days of the quarter ending
on March 31, 2000, such shares to be delivered by April 15, 2000.
If the Surviving Corporation's Gross Revenue and EBITDA
attributable to its business as constituted on the Closing Date are
ten million dollars ($10,000,000) and three million two hundred
fifty thousand ($3,250,000), respectively, for the year ended
December 31, 2000, WCI shall issue to the Shareholders as
additional Contingent Merger Consideration a number of shares of
WCI Stock determined by dividing seven hundred fifty thousand
dollars ($750,000) by the average closing price of the WCI Stock as
quoted on the NASDAQ Stock Market for the last five trading days of
the quarter ending on March 31, 2001, such shares to be delivered
by April 15, 2001. WCI shall also provide the Shareholders the
opportunity to review all accounting and other information used in
calculating Gross Revenue and EBITDA. The additional Contingent
Merger Consideration provided in this section shall also be paid,
and such shares of WCI Stock shall also be issued, if the stated
level of Gross Revenue for a year is not achieved but such level of
EBITDA is achieved for such year and EBITDA as a percentage of
Gross Revenue for said year (the "Margin") is at least 25%. In the
event that between 85% and 100% of the stated level of EBITDA is
achieved for a year and the Margin for such year is at least 32.5%,
a pro rata portion of the Contingent Merger Consideration shall
also be paid, and a pro rata number of such shares of WCI Stock
shall also be issued, even if the stated level of Gross Revenue for
such year is not achieved. Such pro rata portion shall be equal to
the quotient of (i) the percentage of the stated level of EBITDA
that was achieved (i.e., 85%-100%) minus 85% divided by (ii) 15.
The actual Revenue and EBITDA figures set forth in this Section
shall be appropriately adjusted for any Acquired Operations
acquired by the Surviving Corporation or into which the Surviving
Corporation may be merged by subtracting from such actual total
Gross Revenue and EBITDA figures of the Surviving Corporation (or
other surviving entity) the actual Gross Revenue and EBITDA figures
of the Acquired Operations. Gross Revenue and EBITDA will be
determined in conformity with generally accepted accounting
principles consistently applied based on WCI's current practices,
but subject to the following clarifications and adjustments, if
required: (i) no costs or expenses that are related to or result
from the Merger will be included as a cost or expense of the
Surviving Corporation (e.g., no amortization of goodwill, covenants
not to compete or other intangibles will be included in calculating
EBITDA); (ii) WCI shall not divert any existing business or new
business generated by the Surviving Corporation to any other
Affiliate of WCI; (iii) no amount of any of WCI's corporate or
administrative burden or overhead that may be allocated to
Surviving Corporation will be included in calculating EBITDA; and
(iv) incidental costs relating to participation by the Surviving
Corporation's management in WCI's corporate functions, activities
and meetings will not be an adjustment to EBITDA. WCI further
agrees that during the period from the Effective Time until
December 31, 2000, the Surviving Corporation shall operate as a
standalone entity and the day-to-day management of the Surviving
Corporation will be overseen by the Corporation's existing
management, subject to the direction of the Surviving Corporation's
board of directors.
(c) The average closing price and the number of shares (the
"Contingent Shares") of WCI Stock to be delivered pursuant to
Sections 2.2(a) and 2.2(b) shall be appropriately adjusted in the
event of any change in WCI Stock between the first day for which a
closing price is quoted in determining the average closing price
and the date such shares are to be delivered, including without
limitation any stock dividend, stock split, reverse stock split,
recapitalization, reorganization, merger or consolidation. WCI
shall not be obligated to issue any fractional shares of WCI Stock,
but shall instead pay the Shareholders cash in lieu of any
fractional share equal to the average closing price used in
determining the number of shares to be issued multiplied by the
fraction of a share of WCI Stock that would otherwise be issued.
The Contingent Shares shall be covered by the Investors' Rights
Agreement.
2.3 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the
holder thereof:
(a) All of the shares of common stock of Acquisition Co. (the
"Acquisition Co. Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into and become the
number of fully-paid and nonassessable shares of common stock of
the Corporation as shall equal the number of shares of the common
stock of the Corporation issued and outstanding immediately prior
to the Effective Time.
(b) Subject to Section 2.7, the aggregate shares of the
Corporation's Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the Shares of WCI Stock and
the Cash. The number of shares of WCI Stock and the amount of Cash
issued in respect of each share of the Corporation's Stock shall be
determined by dividing such number of Shares and Cash by the number
of shares of the Corporation's Stock outstanding immediately prior
to the Effective Date. In addition, the shares of the
Corporation's Stock held by Daniel, Mark, Michael and Daren shall
be converted into the Notes. One Note shall be delivered to each
of Daniel, Mark, Michael and Daren without regard to the number of
shares of the Corporation's Stock owned by each. None of the other
Shareholders shall be entitled to receive a Note or any interest
therein. The actual conversion ratio shall be set forth in the
Filed Articles.
(c) Any Contingent Merger Consideration due the Shareholders in
respect of the Merger shall be delivered in accordance with the
provisions of Section 2.2.
2.4 Exchange of Certificates.
(a) After the Effective Time, WCI shall deliver to the
Shareholders in accordance with this Section 2 certificates
representing the Shares of WCI Stock issuable pursuant to Section
2.3(b) in exchange for issued and outstanding shares of the
Corporation's Stock as contemplated by that Section. WCI Stock
into which the Corporation's Stock shall be converted pursuant to
the Merger shall be deemed to have been issued at the Effective
Time.
(b) At the Closing each Shareholder shall deliver to WCI
certificates evidencing the shares of the Corporation's Stock owned
by such Shareholder that are to be converted pursuant to Section
2.3 into the right to receive WCI Stock and Cash (the
"Corporation's Certificates"). Promptly after the Effective Time,
each Shareholder who has surrendered a Corporation's Certificate to
WCI, together with such documents as WCI shall reasonably request,
shall be entitled to receive in exchange therefor certificates
representing that number of shares (rounded down to the nearest
whole number) of WCI Stock which such Shareholder has the right to
receive pursuant to this Section 2 (together with any cash in lieu
of fractional shares of WCI Stock pursuant to Section 2.7) plus a
portion of the Cash as provided below. Each Corporation's
Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.4, each Corporation's
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender (i) the
certificates representing shares of WCI Stock as contemplated by
this Section 2.4, (ii) the payment of Cash attributable to the
shares of Corporation's stock evidenced by such a certificate,
(iii) a cash payment in lieu of any fractional shares of WCI Stock
as contemplated by Section 2.1(b) and (iii) any dividends or
distributions with a record date after the Effective Time
theretofore paid or payable with respect to WCI Stock as
contemplated by Section 2.5.
2.5 Distributions. Dividends and other distributions declared or
made after the Effective Time with respect to WCI Stock with a
record date after the Effective Time shall be paid to the holder of
any unsurrendered Corporation's Certificate with respect to the WCI
Stock represented thereby.
2.6 No Further Ownership Rights in Any Corporation's Stock. All
shares of WCI Stock issued upon the surrender for exchange of
shares of the Corporation's Stock in accordance with the terms
hereof (including any cash paid pursuant to Section 2.5 or 2.1(b)
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of such Corporation's Stock, and,
at and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of the Corporation's Stock
which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, the Corporation's Certificates are
presented to the Surviving Corporation for any reason, they shall
be canceled and exchanged as provided in this Section 2.
2.7 Lost Certificates. In the event any Corporation's Certificate
shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Shareholder claiming such certificate
to be lost, stolen or destroyed, WCI will issue in exchange for
such lost, stolen or destroyed certificate the shares of WCI Stock
(and any dividends or distributions with respect thereto and any
cash pursuant to Section 2.1(b)) deliverable in respect thereof as
determined in accordance with Section 2.4. When authorizing such
payment in exchange for any lost, stolen or destroyed Certificate,
the Shareholder to whom the WCI Stock is to be issued shall, as a
condition precedent to the issuance thereof, give WCI a bond
satisfactory to WCI in such sum as it may direct or otherwise
indemnify WCI in a manner reasonably satisfactory to WCI against
any claim that may be made against WCI or the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen
or destroyed.
2.8 Allocation of the Merger Consideration. One hundred thousand
dollars ($100,000) of the Merger Consideration shall be allocated
to the covenants not to compete as described in Section 8.1(a)
hereof, and the balance of the Merger Consideration shall be
allocated to the Corporation's Stock.
2.9 Excluded Assets. The Assets of the Corporation listed on
Schedule 2.9 (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.
30 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE
SHAREHOLDERS
The Corporation and the Shareholders, jointly and severally,
represent and warrant that each of the following representations
and warranties is true as of the Closing Date.
3.1 Organization, Standing and Qualification. The Corporation is
duly organized, validly existing and in good standing under the
laws of the State of Nebraska. The Corporation has full corporate
power and authority to own and lease its properties and to carry on
its business as now conducted. Except as disclosed on Schedule
3.1, the Corporation is not required to be qualified or licensed to
conduct business as a foreign corporation in any other
jurisdiction.
3.2 Capitalization. Schedule 3.2 sets forth, as of the Closing
Date, the authorized and outstanding capital of the Corporation,
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 Cash, the
Shares and the Contingent Shares (if any) among the Shareholders as
agreed to among themselves, and wire transfer instructions for each
Shareholder relating to the bank account to which the Cash should
be sent. All of the issued and outstanding shares of the capital
stock of the Corporation are and as of the Effective Time will be
owned of record and beneficially by the Shareholders, as set forth
in Schedule 3.2, and are and as of the Effective Time will be free
and clear of all liens, security interests, encumbrances and claims
of every kind except as set forth in Schedule 3.2. Each share of
the capital stock of the 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 the Corporation. No option, warrant, call,
conversion right or commitment of any kind (including any of the
foregoing created in connection with any indebtedness of the
Corporation) exists which obligates the Corporation to issue any of
its authorized but unissued capital stock or other equity interest
or which obligates the Shareholders to transfer any Corporation's
Stock to any person.
3.3 All Stock Being Acquired. The Corporation's Stock being
acquired by WCI hereunder pursuant to the Merger constitutes all of
the outstanding capital stock of the Corporation.
3.4 Authority for Agreement and Filed Articles. The Corporation
and the Shareholders have full right, power and authority to enter
into this Agreement and the Filed Articles and to perform its, his
or her obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Filed Articles by the
Corporation and the consummation of the transactions contemplated
hereby by the Corporation have been duly authorized by the
Corporation's Board of Directors and the Shareholders. This
Agreement and Filed Articles have been duly and validly executed
and delivered by the Corporation and the Shareholders and, subject
to the due authorization, execution and delivery by WCI and
Acquisition Co., constitute the legal, valid and binding
obligations of the Corporation and the Shareholders enforceable
against the Corporation and the Shareholders in accordance with
their respective terms.
3.5 No Breach or Default. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporation and the Shareholders
of this Agreement and the Filed Articles, and the consummation by
the Shareholders of the transactions contemplated hereby and
thereby, will not:
(a) Result in the breach of any of the terms or conditions of, or
constitute a default under, or allow for the acceleration or
termination of, or in any manner release any party from any
obligation under, any mortgage, lease, note, bond, indenture, or
material contract, agreement, license or other instrument or
obligation of any kind or nature to which the Corporation or any of
the Shareholders is a party, or by which the Corporation or any of
the Shareholders, or any of the Corporation's or the Shareholders'
assets, is or may be bound or affected; or
(b) Violate any law or any order, writ, injunction or decree of
any court, administrative agency or governmental authority, or
require the approval, consent or permission of any governmental or
regulatory authority; or
(c) Violate the Articles of Incorporation or Bylaws of the
Corporation.
3.6 Subsidiaries. Schedule 3.6 lists as of the Closing Date any
and all subsidiaries of the Corporation and any securities of any
other corporation or any securities or other interest in any other
business entity owned by the Corporation or any of the
Corporation's subsidiaries.
3.7 Financial Statements. The Corporation has delivered to WCI,
as Schedule 3.7, copies of financial statements ("Financial
Statements") for the Corporation's three most recent fiscal years
and interim financial statements for the Corporation for the period
ended May 31, 1998 (the "Balance Sheet Date"). Such financial
statements (other than the interim financial statements) have been
compiled by Grant Thornton. The Financial Statements are correct
and complete, and have been prepared on a consistent basis and
fairly present (i) the financial position of the Corporation as of
the respective dates of the balance sheets included in said
statements, and (ii) the results of operations for the respective
periods indicated. Except to the extent reflected or reserved
against in the Corporation's balance sheet as of the Balance Sheet
Date, or as disclosed on Schedule 3.7 or Schedule 3.8, the
Corporation did not have as of the Balance Sheet Date, nor will the
Corporation have as of the Closing Date, any liabilities of any
nature, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities due or to become due
other than liabilities incurred in the ordinary course of business
since the Balance Sheet Date and which will be included as part of
the Closing Date Current Liabilities.
3.8 Liabilities. Parts I, II, III and IV of Schedule 3.8, are
accurate lists and descriptions of all liabilities of the
Corporation required to be described below in the format set forth
below.
(a) Part I of Schedule 3.8 lists, as of the Closing Date, 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 provided that the trade payables are the best estimates of
the Corporation and Shareholders as of the Closing Date. 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.
(b) Part II of Schedule 3.8 lists, as of the Closing Date, all
claims, suits and proceedings which are pending against the
Corporation and, to the knowledge of the Corporation and the
Shareholders, all contingent liabilities and all claims, suits and
proceedings threatened or anticipated against the 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 the Corporation's or a Shareholder's possession or
control.
(c) Part III of Schedule 3.8 lists, 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 the 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 secured, and the party
holding such lien, claim or encumbrance.
(d) 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
the Corporation is a party as lessor or lessee or, to the knowledge
of the 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
the Corporation nor any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or
with respect to any of the liabilities or obligations listed on
Schedule 3.8 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.
3.9 Accurate and Complete Records. The corporate minute books,
stock ledgers, books, ledgers, financial records and other records
of the Corporation:
(a) 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;
(b) Have been, in all material respects, maintained in accordance
with all applicable laws, rules and regulations; and
(c) Are accurate and complete and reflect all material corporate
transactions authorized by the Board of Directors and/or
shareholders of the Corporation.
3.10 Permits and Licenses.
(a) Schedule 3.10(a) is a full and complete list, and includes
copies, of all material permits, licenses, franchises, and service
agreements pursuant to which the 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 the Corporation (collectively the "Governmental
Permits") owned by, issued to, held by or otherwise benefitting the
Corporation or the Shareholders as of the Closing Date. The status
of the Governmental Permits related to the disposal areas owned or
used by the Corporation, including, without limitation, any
conditions thereto and, if applicable, the expiration dates
thereof, are also described in Schedule 3.10(a). There are no
governmental agencies or other third parties from whom the
Shareholders, the Corporation or WCI must obtain consent in order
to effect a direct or indirect transfer of the Collection
Franchises or other Governmental Permits required as a result of
the consummation of the transactions contemplated by this
Agreement. Except as set forth on Schedule 3.10(a), all of the
Collection Franchises and other Governmental Permits enumerated and
listed on Schedule 3.10(a) are valid and in full force and effect
and have been duly obtained, no other Collection Franchises or
Governmental Permits or other agreements are required to operate
the business of the Corporation or any Corporate Property as
presently operated, and there are no proceedings pending or, to the
knowledge of the Corporation or the Shareholders, threatened which
may result in the revocation, cancellation, suspension or adverse
modification of any of the same. Neither the Corporation nor any
of the Shareholders has any knowledge of any reason why all such
Collection Franchises and Governmental Permits will not remain in
effect for the period or term stated therein, subject to WCI's full
compliance therewith, after consummation of the transactions
contemplated hereby.
(b) Schedule 3.10(b) includes (i) all notifications, reports,
permit and license applications (other than items included in
Schedule 3.10(a)), engineering and geologic studies, and
environmental impact reports, tests or assessments (collectively,
"Records, Notifications and Reports") that are material to the
operation of the business of the Corporation, and (A) relate to the
discharge or release of materials into the environment and/or the
handling or transportation of waste materials or hazardous or toxic
substances or otherwise relate to the protection of the public
health or the environment, or (B) were filed with or submitted to
appropriate governmental agencies during the past 24 months by the
Corporation or the Shareholders or their agents with respect to the
business of the Corporation, and (ii) all material notifications
from such governmental agencies to the Corporation, the
Shareholders or their agents in response to or relating to any of
such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists each facility owned, leased, operated
or otherwise used by the 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):
(i) Each Facility owned by the Corporation or owned by any of the
Shareholders or an Affiliate (as hereinafter defined) of any of the
Shareholders and leased to the 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 Corporation 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.
(ii) 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 the Corporation or owned by any
of the Shareholders or an Affiliate (as hereinafter defined) of any
of the Shareholders and leased to the Corporation, and to the
knowledge of the 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 the
Corporation from a third party who is not an Affiliate (as
hereinafter defined) of the Shareholders.
3.11 Certain Receivables. Schedule 3.11 is an accurate list as of
the Closing Date of the accounts and notes receivable of the
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 the 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.
3.12 Fixed Assets and Real Property.
(a) Schedule 3.12(a) lists, as of the Closing Date, substantially
all the fixed assets (other than real estate) of the 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
Corporation's containers, vehicles, machinery and equipment
necessary for the operation of the Corporation's businesses are in
operable condition, and all of the motor vehicles and other rolling
stock of the Corporation are in substantial compliance with all
applicable laws, rules and regulations. All leases of fixed assets
are in full force and effect and binding upon the parties thereto;
neither the Corporation nor, to the knowledge of the Corporation or
any of the Shareholders, any other party to such leases is in
breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned or being purchased
by the 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), and attached to said
Schedule 3.12(b) are copies of all leases, deeds, outstanding
mortgages, other encumbrances and any existing title insurance
policies or lawyer's title opinions relating to each Corporate
Property, 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 the
Corporation, together with copies of all of the title exceptions
referred to in each such commitment. All leases listed on Schedule
3.12(b) are in full force and effect and binding on the parties
thereto; neither the Corporation nor any other party to any such
lease that is related to the Corporation or any of the
Shareholders, nor, to the knowledge of the Corporation and the
Shareholders, any other party to any such lease is in breach of any
of the material provisions thereof; to the knowledge of the
Corporation and the Shareholders, the landlord's interest in each
such lease has not been assigned to any third party nor, except as
provided in Schedule 3.12(b), has any such interest been mortgaged,
pledged or hypothecated; and the Corporation has not assigned any
such lease or sublet all or any part of the Corporate Property
which is the subject of any such lease. Except as described on
Schedule 3.12(b), to the knowledge of the Corporation and the
Shareholders, there are no material physical or mechanical latent
defects not apparent on visual inspection in any Facility located
on any Corporate Property.
(c) The Corporation has good, valid and marketable title to all of
its properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the conduct of its
business, free of any encumbrance or charge of any kind except: (i)
liens for current taxes not yet due; (ii) minor imperfections of
title and encumbrances, if any, that are not substantial in amount,
do not materially reduce the value or impair the use of the
property subject thereto, do not materially impair the value of the
Corporation, and have arisen only in the ordinary course of
business and consistent with past practice; and (iii) the liens
identified on Parts I and III of Schedule 3.8 (collectively, the
"Permitted Liens"). Except as described on Schedule 3.12(b), there
are no leases, occupancy agreements, options, rights of first
refusal or any other agreements or arrangements, either oral or
written, that create or confer in any person or entity the right to
acquire, occupy or possess, now or in the future, any Facility, any
Corporate Property, or any portion thereof, or create in or confer
on any person or entity any right, title or interest therein or in
any portion thereof.
3.13 Related Party Transactions. Except as disclosed on Schedule
3.13, none of the Shareholders or their respective Affiliates has
entered into any transaction with or is a party to any agreement,
lease or other instrument, or as of the date of this Agreement is
indebted to or is owed money by, the Corporation not disclosed or
reflected in the Financial Statements. Except as disclosed on
Schedule 3.13, none of the Shareholders or their Affiliates owns
any direct or indirect interest of any kind in, or controls or is
a director, officer, employee, shareholder or partner of, or
consultant or lender to or borrower from or has the right to
participate in the profits of, any Person which is a competitor,
supplier, customer, landlord, tenant, creditor or debtor of the
Corporation.
3.14 Contracts and Agreements; Adverse Restrictions.
(a) 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 the
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 the Corporation
nor, to the Corporation's or any 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 the Corporation or any of the
Shareholders of a default thereunder, or exercised any options
thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporation, the result of which could materially adversely affect
the Corporation or its business or any of the Corporate Properties,
nor has the Corporation been notified that any such judgment,
order, writ, injunction or decree has been requested.
3.15 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 the Corporation in respect of the
Corporate Properties or any other property used by the 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. During the last five years, there has
been no lapse in any material insurance coverage of the
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 the Corporation and the insurer has assumed defense of each suit
or legal proceeding. To the knowledge of the Corporation and the
Shareholders, all such proceedings are fully covered by insurance,
subject to normal deductibles.
3.16 Personnel. Schedule 3.16 is a complete list, as of the
Closing Date, of all officers, directors and employees (by type or
classification) of the 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 Corporation's motor vehicles. All written or oral
employment contracts with employees of the Corporation are
terminable "at will" without payment of severance or other benefits
(including, without limitation, stock options or other rights to
obtain equity in the Corporation).
3.17 Benefit Plans and Union Contracts.
(a) Schedule 3.17(a) is a complete list as of the Closing Date,
and includes copies (or, in the case of oral arrangements,
descriptions) of, all employee benefit plans and agreements
(written or oral) currently maintained or contributed to by the
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), the Corporation 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. Except as
disclosed on Schedule 3.17(a), all employee benefit plans listed on
Schedule 3.17(a) are fully funded and, to the knowledge of the
Corporation and the Shareholders, in substantial compliance with
all applicable federal, state and local statutes, ordinances and
regulations. Except as disclosed on Schedule 3.17(a), all such
plans that are intended to qualify under Section 401(a) of the
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 substantially in accordance with the terms and
provisions of the plan documents and all related documents and
policies. The Corporation has not 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 the
Corporation, nor a party-in-interest or disqualified person, has
engaged in any transaction or other activity which would give rise
to such liability. The Corporation has not participated in or made
contributions to any "multi-employer plan" as defined in the
Employee Retirement Income Security Act of 1974 ("ERISA"), nor
would the 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.
(b) There are now no union contracts or agreements between the
Corporation and any collective bargaining group, nor have there
ever been any such contracts in effect. The 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. Except as set forth on Schedule 3.17(b), there is
no charge pending or, to the Corporation's or any Shareholder's
knowledge, threatened, against the 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 the
Corporation; no union organizational activity exists respecting
employees of the Corporation, and Schedule 3.17(b) contains 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 the Corporation. The
Corporation has not experienced any labor strike, slow-down, work
stoppage, labor difficulty or other job action during the last five
years.
(c) No payment made to any employee, officer, director or
independent contractor of the Corporation (the "Recipient")
pursuant to any employment contract, severance agreement or other
arrangement (the "Golden Parachute Payment") will be nondeductible
by the Corporation because of the application of Sections 280G and
4999 of the Code to the Golden Parachute Payment, nor will the
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.
3.18 Taxes.
(a) The 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 the
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 the
Corporation's existence have been made available to WCI and are
among the records of the Corporation that will accrue to WCI at the
Closing. The Corporation has not been contacted by any federal,
state or local taxing authority regarding a prospective
examination.
(b) Except as set forth on Schedule 3.18 (which schedule also
includes the amount due with respect to the Corporation) the
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 the
Corporation are adequate to cover its tax liability as of the
Closing Date.
(c) The Corporation has withheld all required amounts from its
employees for all pay periods in full and complete compliance with
the withholding provisions of applicable federal, state and local
laws. All required federal, state and local and other returns with
respect to income tax withholding, social security, and
unemployment taxes have been duly filed by the 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.
3.19 Copies Complete; Required Consents. Except as disclosed on
Schedule 3.19, the certified copies of the Articles of
Incorporation and Bylaws of the 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 Corporation to the knowledge of the Shareholders,
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 and such consents and approvals
as are listed on Schedule 3.19, all of which have been given or
obtained.
3.20 Customers, Billings, Current Receipts and Receivables.
Schedule 3.20 is a current, accurate and complete list of, and
includes:
(a) The customers that the Corporation serves on an ongoing basis,
including name, location and current billing rate, as of the
Closing Date;
(b) 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, to the knowledge of the
Corporation and the Shareholders, the Corporation's accounts and
notes receivable are collectible in the amounts shown on Schedules
3.11 and 3.20; and
(c) The average monthly revenues of the Corporation derived from
billings to its customers for each of the twelve months preceding
the Closing Date. Neither the Corporation nor any of the
Shareholders has knowledge of any fact (other than general economic
and industry conditions) which indicates that 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.
3.21 No Change With Respect to the Corporation. Except as set
forth on Schedule 3.21, since the Balance Sheet Date, the business
of the 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 the
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
the Corporation, since the Balance Sheet Date, there has not been:
(a) Any material change in its financial condition, assets,
liabilities (contingent or otherwise), income, operations or
business which would have a material adverse effect on the
financial condition, assets, liabilities (contingent or otherwise),
income, operations or business of the Corporation, taken as a whole
(a "Material Adverse Effect");
(b) Any material damage, destruction or loss (whether or not
covered by insurance) adversely affecting any material portion of
its properties or business;
(c Any change in or agreement to change (i) its shareholders,
(ii) ownership of its authorized capital or outstanding securities,
or (iii) its securities;
(d Any declaration or payment of, or any agreement to declare or
pay, any dividend or distribution in respect of its capital stock
or any direct or indirect redemption, purchase or other acquisition
of any of its capital stock;
(e Any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual
and customary practices, to any of its directors, officers,
employees or agents, or any accrual or arrangement for or payment
of any bonus or other special compensation to any employee or any
severance or termination pay paid to any of its present or former
officers or other key employees;
(f Any labor dispute or any other event or condition of any
character (other than general economic conditions) with respect to
the Corporation's employees, materially adversely affecting its
business or future prospects;
(g Any sale or transfer, or any agreement to sell or transfer,
any of its material assets, property or rights to any other person,
including, without limitation, the Shareholders and their
Affiliates, other than in the ordinary course of business;
(h Any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including,
without limitation, any indebtedness or obligation of any of the
Shareholders or any Affiliate thereof;
(i Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j Any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or
assets outside the ordinary course of its business;
(k Any waiver of any of its material rights or claims;
(l Any new or any amendment or termination of any existing
material contract, agreement, license, permit or other right to
which it is a party; or
(m Any other material transaction outside the ordinary course of
business.
3.22 Closing Date Debt; Closing Date Current Assets and Closing
Date Current Liabilities.
(a Schedule 3.22(a) lists (i) the amount of the aggregate debt
(excluding trade payables and debt incurred after January 1, 1998,
to purchase fixed assets and equipment after such date which are
fixed assets and equipment of the Corporation on the Closing Date)
of the Corporation outstanding on the Closing Date to be repaid by
WCI or the Surviving Corporation at or immediately after the
Closing Date and all prepayment penalties incurred or to be
incurred by WCI or the Surviving Corporation in connection with the
repayment of any such debt, (ii) the amount of the aggregate debt
(excluding trade payables and debt incurred after January 1, 1998,
to purchase fixed assets and equipment after such date which are
fixed assets and equipment of the Corporation on the Closing Date)
of the Corporation outstanding on the Closing Date which will
remain outstanding obligations of the Surviving 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 as of the Closing Date,
discounted at the lease rate factor, if known, inherent in the
lease or, if the lease rate factor is not known, at the rate
charged to the Corporation by a third party lender in connection
with its most recent borrowing to finance equipment, of all lease
obligations of the Corporation that are not capitalized lease
obligations and (iv) the aggregate amount of the present value as
of the Closing Date of all capitalized lease obligations
(determined in accordance with generally accepted accounting
principles) of the Corporation (the "Closing Date Debt"). Schedule
3.22(a) includes wire transfer instructions for creditors whose
Closing Date Debt WCI has designated for payment, and attached to
Schedule 3.22(a) are pay-off letters or instructions from such
creditors in the form provided by WCI's bank or acceptable to WCI.
WCI shall satisfy all Closing Date Debt at Closing.
(b Schedule 3.22(b) is 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 Corporation as of the Closing Date
(the "Closing Date Current Liabilities") and the amount of the
aggregate cash and other current assets of the Corporation as of
the Closing Date, including prepaid expenses the benefit of which
survives the Closing Date and the accounts receivable of the
Corporation earned prior to the Closing Date, and collectible (less
an allowance for doubtful accounts) on or after the Closing Date
(the "Closing Date Current Assets").
3.23 Bank Accounts.
(a Schedule 3.23(a) is a complete and accurate list, as of the
Closing Date, of:
(i) the name of each bank in which the Corporation has accounts or
safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
(b Schedule 3.23(b) is a complete and accurate list, as of the
Closing Date, of:
(i) each credit card or other charge account issued to the
Corporation; and
(ii) the name of each person to whom such credit cards or other
charge accounts have been issued.
3.24 Compliance With Laws. Except as disclosed on Schedule 3.24,
the Corporation has complied with in all material respects, and the
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 the Corporation is in violation of any Laws.
Specifically and without limiting the generality of the foregoing,
except as disclosed on Schedule 3.24:
(a Except as permitted under applicable laws and regulations,
including, without limitation, the federal Resource Conservation
Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"), the
Corporation has not accepted, processed, handled, transferred,
generated, treated, stored or disposed of any Hazardous Material
(as defined in Section 3.24(e) below) nor has the 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.
(b During the Corporation's ownership or leasing of the Corporate
Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the 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.
(c During the Corporation's ownership or leasing of the Corporate
Property owned or leased by it and, to the knowledge of the
Corporation and the Shareholders, prior to the 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 Corporation's and Shareholders' knowledge, no
threatened actions or proceedings from any governmental agency or
any other entity involving remediation of any condition of the
Corporate Property, including, without limitation, petroleum
contamination, pursuant to Environmental Laws.
(d Except as allowed under Environmental Laws, the Corporation
has not knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material, to any site,
location or facility.
(e 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 Nebraska 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.
3.25 Powers of Attorney. The Corporation has not 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 the Corporation in any manner.
3.26 Underground Storage Tanks. Except as set forth on Schedule
3.26, no underground storage tanks containing petroleum products or
wastes or other hazardous substances regulated by 40 CFR 280 or
Environmental Laws are currently or have been located on any
Corporate Property. Except as set forth on Schedule 3.26, the
Corporation has not 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, the Corporation
has provided to WCI, on Schedule 3.26:
(a The location of the UST, information and material, including
any available drawings and photographs, showing the location, and
whether the Corporation currently owns or leases the property on
which the UST is located (and if the Corporation does not currently
own or lease such property, the dates on which it did and the
current owner or lessee of such property);
(b The date of installation and specific use or uses of the UST;
(c Copies of tank and piping tightness tests and cathodic
protection tests and similar studies or reports for each UST;
(d A copy of each notice to or from a governmental body or agency
relating to the UST;
(e Other material records with regard to the UST, including,
without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f To the extent not otherwise set forth pursuant to the above,
a summary description of instances, past or present, in which, to
the Corporation's, 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, the Corporation
has complied with Environmental Laws regarding the installation,
use, testing, monitoring, operation and closure of each UST
described on Schedule 3.26.
3.27 Patents, Trademarks, Trade Names, etc. Schedule 3.27 lists
all patents, trade names, fictitious business names, trademarks,
service marks, and copyrights owned by the 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).
To the knowledge of the Corporation and each of the Shareholders,
no trade secrets, know-how, intellectual property, trademarks,
trade names, assumed names, copyrights, or designations used by the
Corporation in its business infringe on any patents, trademarks, or
copyrights, or any other rights of any person. Neither the
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.
3.28 Assets, etc. Necessary to Business. Except as set forth on
Schedule 3.28, the Corporation owns, leases or otherwise has the
right to use substantially all properties and assets, real,
personal, and mixed, tangible and intangible, that are necessary
for it to carry on its business as presently conducted, and, with
respect to agreements for the purchase, lease or use of any such
property and assets, such agreements have been duly entered into
and 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 such
agreement. Neither the Corporation nor any of the Shareholders has
any knowledge of any reason why any such agreement will not remain
in effect after consummation of the transactions contemplated
hereby.
3.29 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 Corporation and the Shareholders, no such proceedings are
threatened.
3.30 Suppliers and Customers. Neither the Corporation 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
Corporation intends to cease providing such items to the
Corporation, nor does the Corporation 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
the Corporation intends to terminate, limit or reduce its business
relations with the Corporation.
3.31 Absence of Certain Business Practices. Neither the
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 the Corporation in connection with any actual or
proposed transaction which (a) might subject the 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 the Corporation, or (c) if not continued in the
future, might adversely affect the financial condition, business or
operations of the Corporation or which might subject the
Corporation to suit or penalty in any private or governmental
litigation or proceeding.
3.32 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.
3.33 No Misleading Statements. The representations and warranties
of the Corporation and the Shareholders contained in this
Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to WCI and its representatives
pursuant hereto are complete and accurate in all material respects
and do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements made
not misleading.
3.34 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 Corporation, such term means
the actual knowledge of any of the Shareholders or Pam Shrader or
any knowledge which should have been obtained by such person on
reasonable inquiry by a reasonable business person.
3.35 Brokers; Finders. No person has acted directly or indirectly
as a broker, finder or financial advisor for the 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.
3.36 No Dissenting Shares. No Shareholders have exercised
appraisal rights with respect to any Corporation's Stock in
accordance with Sections 21-20,137, et seq. of the Nebraska Law.
3.37 S Corporation. The Corporation has elected to be treated as
an S Corporation within the meaning of the Federal Income Tax Code
of 1986, as amended (the "Code"), for the years listed on Schedule
3.37.
4. REPRESENTATIONS AND WARRANTIES OF WCI AND ACQUISITIONS. WCI
and Acquisition Co., jointly and severally, represent and warrant
to the Shareholders that each of the following representations and
warranties is true as of the Closing Date:
4.1 Existence and Good Standing. WCI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. WCI has full corporate power and authority
to own and lease its properties and to carry on its business as now
conducted. WCI is not required to be qualified or licensed to
conduct business as a foreign corporation in any jurisdiction where
the failure to be so qualified would have a material adverse effect
on its financial condition. Acquisition Co. is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Nebraska. Acquisition Co. has full corporate power
and authority to own and lease its properties and to carry on its
business as now conducted. Acquisition Co. 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.
4.2 No Contractual Restrictions. No provisions exist in any
article, document or instrument to which WCI is a party or by which
it is bound which would be violated by consummation of the
transactions contemplated by this Agreement or the Filed Articles.
No provisions exist in any article, document or instrument to which
Acquisition Co. is a party or by which it is bound which would be
violated by consummation of the transactions contemplated by this
Agreement or the Filed Articles.
4.3 Authorization of Agreement. This Agreement and the Filed
Articles have been duly authorized, executed and delivered by WCI
and Acquisition Co., and, subject to the due authorization,
execution and delivery by the Corporation and the Shareholders,
constitutes a legal, valid and binding obligation of WCI and
Acquisition Co. Each of WCI and Acquisition Co. has full corporate
power, legal right and corporate authority to enter into and
perform its obligations under this Agreement and the Filed Articles
and to carry on its business as presently conducted. The execution
and delivery of this Agreement and the Filed Articles and the
consummation of the transactions contemplated hereby and thereby
and the fulfillment of and compliance with the terms and conditions
hereof and thereof do not and will not, after the giving of notice,
or the lapse of time or otherwise: (a) violate any provisions of
any judicial or administrative order, award, judgment or decree
applicable to WCI or Acquisition Co.; (b) conflict with any of the
provisions of the Amended and Restated Certificate of Incorporation
or Amended and Restated Bylaws of WCI; (c) conflict with any of the
provisions of the Certificate/Articles of Incorporation or Bylaws
of Acquisition Co.; or (d) conflict with, result in a breach of or
constitute a default under any material agreement or instrument to
which either WCI or Acquisition Co. is a party or by which it is
bound.
4.4 Status of Shares. When delivered to the Shareholders after
the Effective Time in accordance with the terms and conditions of
this Agreement, the Shares and the Contingent Shares shall have
been duly authorized and delivered shares of WCI, shall be fully
paid and nonassessable, and shall have been registered under the
Act.
4.5 Governmental Authorities; Consents. Except for the filing of
the Filed Articles with the Secretary of State of the State of
Nebraska, and any consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable state and federal securities laws, (a)
neither WCI nor Acquisition Co. is required to submit any notice,
report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement,
the Filed Articles or the Employment Agreements or the consummation
of the transactions contemplated hereby or thereby, and (b) no
consent, approval or authorization of any governmental or
regulatory authority or any other party or person is required to be
obtained by either WCI or Acquisition Co. in connection with its
execution, delivery and performance of this Agreement, the Filed
Articles or the Employment Agreements or the transactions
contemplated hereby or thereby, except such as shall have been
obtained by the Closing Date.
4.6 SEC Documents. WCI has filed all required reports, schedules,
forms, statements, and other documents with the Securities and
Exchange Commission ("SEC") since May 22, 1998 and has filed the
Registration Statement (together with later filed documents that
revise or supersede earlier filed documents, the "WCI SEC
Documents"). As of their respective dates, the WCI SEC Documents
complied in all material respects with the requirements of the Act,
or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such
WCI SEC Documents. None of the WCI SEC Documents contained any
untrue statement of a material fact or omitted a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were or are made, not misleading. The financial statements of WCI
included in the WCI SEC Documents complied as of their respective
dates of filing with the SEC in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be
indicated in the notes thereto), and fairly present in all material
respects the consolidated financial position of WCI and its
consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended. Except as set forth in the WCI SEC Documents,
and except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice, neither WCI nor
any of its subsidiaries has any unrecorded liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting principles to
be set forth in a consolidated balance sheet of WCI and its
consolidated subsidiaries or in the notes thereto which,
individually or in the aggregate, would have, a material adverse
effect on the business or results of operations of WCI.
4.7 Capital Stock.
(a The WCI SEC Documents set forth WCI's capitalization in all
material respects. All outstanding shares of WCI Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable. WCI issued all such shares in compliance with
applicable federal and state securities laws. WCI Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and has
been approved for listing on the Nasdaq National Market, and the
Registered Shares of WCI Common Stock issued as part of the Merger
Consideration will, upon issuance, be registered and listed.
(b WCI owns, beneficially and of record, all issued and
outstanding shares of Acquisition Co. Stock, which shares are
validly issued, fully paid, and non-assessable, and free and clear
of all liens.
(c Except as set forth in the Registration Statement or in this
Section 4.7 and except for changes since the date of the
Registration Statement resulting from the issuance of options and
warrants in the ordinary course of business to employees, officers,
directors and consultants, and the exercise of outstanding
employee, officer, director and consultant options and warrants,
(i) no shares of WCI Common Stock or other voting securities of WCI
are outstanding, (ii) no securities of WCI convertible into or
exchangeable for shares of capital stock or voting securities of
WCI are outstanding, and (iii) no options or other rights to
acquire from WCI, and no obligation of WCI to issue, any capital
stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of WCI are
outstanding (the items in clauses (i), (ii) and (ill) being
referred to collectively as the "WCI Securities." No obligations of
WCI to repurchase, redeem or otherwise acquire any WCI Securities
are outstanding.
4.8 No Misleading Statements. The representations and warranties
of WCI and Acquisition Co. contained in this Agreement, the
Exhibits and Schedules hereto and all other documents and
information furnished to the Shareholders pursuant hereto are
accurate and complete in all material respects, and do not include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made not misleading.
4.9 Brokers; Finders. No person has acted directly or indirectly
as a broker, finder or financial advisor for WCI and Acquisition
Co. 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 and Acquisition Co.
4.10 Disclosure Schedules. Any matter disclosed by WCI or
Acquisition Co. 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.
5. CLOSING DELIVERIES
At the Closing or the Effective Time, as the case may be, the
respective parties shall make the deliveries indicated:
5.1 WCI Deliveries.
(a WCI shall deliver the Cash required to be delivered at the
Effective Time pursuant to Section 2.1(a).
(b At the Effective Time, WCI shall deliver to the Shareholders
certificates for the Shares.
(c The Surviving Corporation shall execute and deliver Employment
Agreements with the Shareholders substantially in the form of the
draft included in Exhibit 5.1(c), but with such changes therein as
are necessary to reflect the terms of employment of each
Shareholder.
(d The Surviving Corporation shall execute and deliver the Real
Estate Purchase Agreement with Ambler substantially in the form of
the draft included in Exhibit 5.1(d).
(e At the Closing, WCI shall deliver to the Shareholders an
opinion of counsel for WCI dated as of the Closing Date in
substantially the form attached hereto as Exhibit 5.1(e).
(f At the Closing, WCI shall execute and deliver the Investors'
Rights Agreement.
5.2 Shareholders' Deliveries.
(a At the Effective Time, the Shareholders shall deliver to WCI
the certificates representing the outstanding Corporation's Stock
free and clear of all liens, security interests, claims and
encumbrances, accompanied by a stock power duly executed in blank.
(b At the Closing, the Shareholders shall deliver to WCI an
opinion of counsel for the Shareholders, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit 5.2(b).
(c The Shareholders shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the
transactions contemplated hereby were obtained.
(d The Shareholders shall cause each officer and director of the
Corporation to deliver a resignation as an officer and/or director
of that Corporation.
(e The Shareholders shall execute and deliver the Real Estate
Agreement and all documents required thereby for the Corporation's
purchase of the Real Property.
(f At the Closing, Shareholders shall execute and deliver the
Investors' Rights Agreement.
6. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE
SHAREHOLDERS
6.1 Release of Guaranties. WCI shall use reasonable efforts to
obtain the termination and release promptly after the Effective
Time of the personal guaranties of the Shareholders listed on
Schedule 6.1, all of which relate to indebtedness of the
Corporation included in the Financial Statements as of the Balance
Sheet Date, and WCI shall indemnify the Shareholders and hold them
harmless from and against all losses, expenses or claims by third
parties to enforce or collect indebtedness owed by the Corporation
as of the Effective Time that is personally guaranteed by the
Shareholders pursuant to such guaranties. The Shareholders may
notify the obligees under such guaranties that they have terminated
their obligations under such guaranties. The Shareholders shall
cooperate with WCI in obtaining such releases.
6.2 Release of Security Interests. After the Effective Time, the
Shareholders and their respective Affiliates shall cause those
security interests in the assets of the 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 the Corporation relating to the indebtedness of the
Shareholders to be released to the reasonable satisfaction of WCI.
6.3 Confidentiality. Neither WCI, the 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 the other parties, unless required to make such
disclosure or announcement by law, in which event the party making
the disclosure or announcement shall notify the other parties at
least 24 hours before such disclosure or announcement is expected
to be made and allow review and input as to the form and content of
the same.
6.4 Brokers and Finders Fees. Each party shall pay and be
responsible for any broker's, finder's or financial advisory fee
incurred by such party in connection with the transactions
contemplated by this Agreement.
6.5 Taxes. WCI shall reasonably cooperate, at the expense of the
Shareholders, with the Shareholders with respect to any matters
involving the Shareholders arising out of the Shareholders'
ownership of the Corporation prior to the Effective Time, including
matters relating to tax returns and any tax audits, appeals, claims
or litigation with respect to such tax returns or the preparation
of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and
records of the Corporation 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.
6.6 Short Year Tax Returns. After the Effective Time, the
Shareholders shall prepare at their sole cost and expense, all
short year federal, state, county, local and foreign tax returns
required by law for the period beginning with the first day of the
Corporation's fiscal year in which the Closing occurs and ending
with the Effective Time. Each such return shall be prepared in a
financially responsible and conservative manner and drafts shall be
delivered to WCI together with all necessary supporting schedules
within 120 days following the Effective Time for its approval,
which shall not be unreasonably withheld or delayed. The
Shareholders shall 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 Effective Time in
excess of the amount of any reserve for taxes included in Closing
Date Current Liabilities. The Surviving Corporation and the
Shareholders shall each be responsible for fifty percent (50%) of
all taxes arising from the conversion of the 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 Effective Time. At the time of the
delivery of the returns, the Shareholders shall contemporaneously
deliver to WCI checks payable to the respective taxing authorities
in amounts equal to the amount due from the Shareholders under this
section. WCI shall, upon receipt by the Shareholders, cause the
Corporation to 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 Corporation or WCI shall be remitted to the
Shareholders.
6.7 General Release by Shareholders. Each of the Shareholders
hereby fully releases and discharges the 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 the
Corporation and its directors, officers, agents and employees,
arising out of or relating to events arising prior to or on the
Effective Time, 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 the Corporation for current periods expressly described
and excepted from such release on Schedule 6.7, and (c)
indemnification from Corporation for services rendered on behalf of
Corporation in the capacity as a director, officer or employee of
the Corporation, to the maximum extent permitted by laws, and (d)
for the obligations of the Corporation arising after the Effective
Time under this Agreement. Specifically, but not by way of
limitation, each of the Shareholders waives any right of
indemnification, contribution or other recourse against the
Corporation which he now has or may hereafter have against the
Corporation with respect to representations, warranties or
covenants made in this Agreement by the Corporation.
6.8 Certain Tax Matters. WCI, Acquisition Co., the
Corporation and the Shareholders agree that the Merger is not
intended to qualify as a tax free reorganization under Section 368
of the Code. The Shareholders acknowledge that WCI has indicated
its intention to make an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. The Shareholders agree
that WCI, in its discretion, may make such election; provided,
however, that such election shall be made no later than the due
date for such election. If such election is made by WCI:
(a WCI shall be authorized to complete Form 8023-A;
(b The Shareholders shall sign such completed Form 8023-A;
(c WCI and the Shareholders shall agree upon the allocation of
the Merger Consideration among the assets (including intangible
assets) of the Corporation; and
(d If WCI does make its election under Section 338(h)(10) of the
Internal Revenue Code of 1986 as amended, WCI shall reimburse the
Shareholders and the Corporation for any additional taxes,
penalties, interest and costs of preparation of amended income tax
returns incurred due to such election resulting solely from the
recapture of depreciation previously taken on various assets of the
Corporation at ordinary income instead of capital gain rates.
6.9 Use of Related Facilities. The Shareholders shall cause
Ambler to lease to the Corporation that certain parcel of real
property located in Papillion, Nebraska (lease lot no. 3) across
the street from the Sarpy County, Nebraska property being sold by
Ambler to the Corporation and totalling approximately 10,000 square
feet (the "Parcel"), for a period of two years commencing on the
Closing Date, which lease term shall be renewable at the option of
the parties at fair market rent as determined by the parties. The
rent shall be one dollar ($1.00) for such initial two-year term.
During such lease term, the Corporation shall be responsible for
payment of maintenance expenses and insurance with respect to the
Parcel, and Ambler shall be responsible for payment of all property
taxes with respect to the Parcel. The lease shall be in form
acceptable to WCI.
7. INDEMNIFICATION
7.1 Indemnification Covenants.
(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 Surviving Corporation and their respective directors, officers
and agents and their respective successors and assigns
(collectively the "WCI Indemnitees"), from and after the date of
this Agreement against any and all losses, damages, assessments,
fines, penalties, adjustments, liabilities, claims, deficiencies,
costs, expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation),
including, without limitation, any "Environmental Site Losses" (as
such term is hereinafter defined) resulting from activities prior
to the Closing Date (but not necessarily identified or determined
prior to the Closing Date), identified by a WCI Indemnitee in a
Claims Notice (as defined in Section 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 in Section 7.2(c) (irrespective of the
date of discovery), with respect to each of the following
contingencies (all, the "7.1(a) Indemnity Events"):
(i) Any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant on the part of the Shareholders or the
Corporation 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 or a representation or a warranty, WCI
relied on the truth of such representation or warranty or, except
as otherwise provided in Section 7.2(e) below, had any knowledge of
any breach thereof.
(ii) 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, in the case of any
Release caused to a material extent by defective design,
development, construction or operation of a Facility, Environmental
Site or UST, or other circumstance within the control of the
Shareholders, whether such Release arose before, during or after
the Closing Date provided the activities occurred on or prior to or
circumstance existed prior to or as of 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.
(iii) All matters on Schedule 3.8, Part II other than the first
$15,000 incurred in connection with the Hairston matter from and
after Closing, or required to be described on Schedule 3.8, Part
II, of which the Corporation or the Shareholders have knowledge on
the Closing Date and which are not so described.
(iv) 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 Indemnity by WCI. WCI, subject to the limitations set forth
in Section 7.2, covenants and agrees that it will indemnify and
hold harmless the Shareholders and their respective heirs,
successors and assigns (collectively the "Shareholder
Indemnitees"), from and after the date of this Agreement against
any and all losses, damages, assessments, fines, penalties,
adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation), identified by a
Shareholder Indemnitee in a Claims Notice (as defined in Section
7.3(a)), or asserted by a Shareholder Indemnitee in litigation
commenced against WCI provided that in either case any such Claims
Notice shall be given or the litigation commenced prior to the
expiration of the applicable period set forth in Section 7.2(c)
(irrespective of the date of discovery), with respect to each of
the following contingencies (all, the "7.1(b) Indemnity Events"):
(i) Any misrepresentation, breach of warranty, or nonfulfillment
of any agreement or covenant on the part of WCI or Acquisition Co.
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 Shareholders pursuant to
the terms of this Agreement.
(ii) 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.
7.2 Limitations on Indemnities.
(a The obligations of the Shareholders to indemnify the WCI
Indemnitees as provided in Section 7.1 shall be equal to 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 7.1(a)
Indemnity Events exceed seventy-five thousand ($75,000) (the
"General Deductible Amount"); provided, that the amount of any
obligation of indemnity arising pursuant to Section 7.1 with
respect to any representation, warranty or covenant contained in
Sections 3.1 through 3.5; 3.12(c), 3.18, 3.22 and 6.6 hereof or
pursuant to Section 7.1(a)(iii) ("Specific Claims") shall not be
subject to the General Deductible Amount. WCI shall not be
entitled to indemnification on account of any 7.1(a) Indemnity
Event where the amount sought to be recovered in respect of that
event is less than five thousand dollars ($5,000), but any such
7.1(a) Indemnity Event shall be considered in determining whether
the General Deductible Amount has been met.
(b The maximum amount which WCI can recover as a result of all
7.1(a) Indemnity Events pursuant to the provisions hereof for
Claims (i) with respect to any Specific Claims shall not in the
aggregate exceed the Merger Consideration as adjusted and any
portion of the Contingent Merger Consideration paid or due, and
(ii) with respect to all other Claims (including without limitation
Claims for Environmental Site Losses) shall not in the aggregate
exceed the following percentage of the Merger Consideration and any
portion of the Contingent Merger Consideration due: (x) with
respect to such Claims made on or before the first anniversary of
the date on which the Effective Time occurs, sixty five percent
(65%); (y) with respect to Claims made after the first anniversary
of the date on which the Effective Time occurs and on or before the
second anniversary of such date, fifty percent (50%) less the
amount of Claims previously made and properly payable or paid; and
(z) with respect to Claims made after the second anniversary of the
date on which the Effective Time occurs and on or before the third
anniversary of such date, forty percent (40%) less the amount of
Claims previously made and properly payable or paid.
(c The obligations of the Shareholders under Section 7.1(a) (i)
with respect to Specified Claims shall expire, unless a Claims
Notice is given or litigation is commenced on or prior to, the
expiration of the applicable statute of limitations and (ii) with
respect to all other Claims shall expire, unless a Claims Notice is
given or litigation is commenced on or prior to, the third
anniversary of the date on which the Effective Time occurs. The
obligations of WCI under Section 7.1(b) shall expire, unless a
Claims Notice is given or litigation is commenced on or prior to,
the expiration of the applicable statute of limitations.
(d) Except to the extent the same shall directly result in an
increase in insurance premiums on a prospective basis, the
Shareholders shall not be required to indemnify WCI for any Claim
to the extent that such Claim has been reimbursed or is
reimbursable through insurance proceeds received or receivable by
WCI or the Surviving Corporation. In the event the insurance does
not cover the full amount of the Claim, or in the event the Claim
shall directly result in an increase in insurance premiums on a
prospective basis, the Shareholders shall remain liable for the
difference in the insurance payment and the amount of the Claim, or
in the case of an increase in insurance premiums, the amount of
such increase directly attributable to the Claim, subject to the
other limitations set forth herein.
(e) WCI shall not be entitled to indemnification under Section
7.1(a) with respect to any Claim if Ronald J. Mittelstaedt had
actual knowledge of the facts or circumstances that constituted the
basis for the Claim at or prior to the time of Closing.
(f) The indemnification provision shall be the exclusive remedy
for any claim for monetary damages under this Agreement, except for
matters involving fraud. The parties shall be entitled to pursue
any claims for non-monetary relief to which they may be entitled at
law or in equity.
(g) All claims for which indemnification payment shall be due
shall be deemed adjustments of the Merger Consideration or
Contingent Merger Consideration.
(h) To the extent any Claims arise out of a breach of any
representation or warranty contained in Sections 3.10(c)(i),
3.10(c)(ii), 3.21(f), 3.21(k), 3.21(m), 3.24 or 3.26, and such
breach occurred without the knowledge of any of the Shareholders,
after exhaustion of the General Deductible Amount, the Shareholders
shall be responsible only for fifty percent (50%) of the amount of
such Claims in excess of the amount applied against the General
Deductible Amount until the aggregate amount of such excess Claims
exceeds One Million and No/100 Dollars ($1,000,000.00) after which
the Shareholders shall be responsible for one hundred percent
(100%) of the aggregate amount of such Claims in excess of One
Million and No/100 Dollars ($1,000,000.00).
7.3 Notice of Indemnity Claim.
(a) In the event that any claim ("Claim") is hereafter asserted
against or arises with respect to any WCI Indemnitee as to which
such Indemnitee or Shareholder Indemnitee (an "Indemnitee") may be
entitled to indemnification hereunder, the 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 Indemnitee, (ii) receipt by such
Indemnitee of written notice of any third party claim pursuant to
an invoice, notice of claim or assessment, against such Indemnitee,
or (iii) such Indemnitee becomes aware of the existence of any
other event in respect of which indemnification may be sought from
the Indemnifying Party (including, without limitation, any
inaccuracy of any representation or warranty or breach of any
covenant). The Claims Notice shall describe the Claim and the
specific facts and circumstances in reasonable detail, and shall
indicate the amount, if known, or an estimate, if possible, of the
losses that have been or may be incurred or suffered by the
Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim for money
damages where the cumulative total of all Claims (including such
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 Indemnitee with respect to such action. The
Indemnitee may participate, at the Indemnitee's own expense, in the
defense of any Claim assumed by the Indemnifying Party. Without
the written approval of the Indemnitee, which approval shall not be
unreasonably withheld, the Indemnifying Party shall not agree to
any compromise of a Claim defended by the Indemnifying Party.
(c) If, within ten (10) 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 Indemnitee shall have the right to assume
control of the defense and/or compromise of such Claim, and the
costs and expenses of such defense, including reasonable attorneys'
fees, shall be added to the Claim. The Indemnifying Party shall
promptly, and in any event within ten (10) days after demand
therefor, reimburse the Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(d) The party assuming the defense of any Claim shall keep the
other party reasonably informed at all times of the progress and
development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies
of all relevant pleadings, correspondence and other papers. In
addition, the parties to this Agreement shall cooperate with each
other and make available to each other and their representatives
all available relevant records or other materials required by them
for their use in defending, compromising or contesting any Claim.
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.
(e) In the event both the Indemnitee and the Indemnifying Party
are named as defendants in an action or proceeding initiated by a
third party, they shall both be represented by the same counsel (on
whom they shall agree), unless such counsel the Indemnitee, or the
Indemnifying Party shall determine that such counsel has a conflict
of interest in representing both the Indemnitee and the
Indemnifying Party in the same action or proceeding and the
Indemnitee and the Indemnifying Party do not waive such conflict to
the satisfaction of such counsel.
7.4 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
subject to the other limitations in this Article 7.
7.5 No Exhaustion of Remedies or Subrogation; Right of Set Off.
Except as otherwise provided herein, the Shareholders waive any
right to require any WCI Indemnitee to (i) proceed against the
Corporation; (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(a)
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.
8. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
8.1 Restrictive Covenants. As to the Surviving Corporation, the
Shareholders and their Affiliates acknowledge that (i) WCI, as the
purchaser of the Corporation's Stock, is and will be engaged in the
same business as the Surviving Corporation (the "Business"); (ii)
the Shareholders and their Affiliates are intimately familiar with
the Business; (iii) the Business is currently conducted in the
State of Nebraska and WCI intends to continue the Business in
Nebraska and intends, by acquisition or otherwise, to expand the
Business into other geographic areas of Nebraska 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 the
Corporation:
(a) Non-Compete. For a period commencing on the Closing Date and
terminating five years thereafter (the "Restricted Period"),
neither the Shareholders nor any of their Affiliates shall,
anywhere within Douglas, Sarpy and Lancaster, Counties, Nebraska,
or in an area extending one hundred (100) miles from the borders of
Douglas, Sarpy and Lancaster Counties, Nebraska, or in any county
in Nebraska where the Surviving Corporation or 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 other than WCI or one of its subsidiaries, (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 the Surviving 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.
(b) Confidential Information. During the Restricted Period and
thereafter, the Shareholders and their Affiliates shall keep secret
and retain in strictest confidence, and shall not use for the
benefit of themselves or others, all data and information relating
to the Business ("Confidential Information"), including without
limitation, know-how, trade secrets, customer lists, supplier
lists, details of contracts, pricing policies, operational methods,
marketing plans or strategies, bidding information, practices,
policies or procedures, product development techniques or plans,
and technical processes; provided, however, that the term
"Confidential Information" shall not include information that (i)
is or becomes generally available to the public other than as a
result of disclosure by the Shareholders or (ii) is general
knowledge in the solid waste handling and landfill business and not
specifically related to the Business. Notwithstanding the
foregoing, (y) the Shareholders may disclose and discuss
confidential information with their legal and tax advisors, or as
is required in connection with any legal proceedings, and the
Shareholders shall give WCI prior written notice of such disclosure
at least forty-eight (48) hours before such disclosure is made, if
possible; and (z) during the time that the Shareholders are
employed by WCI or the Surviving Corporation, the Shareholders may
disclose confidential information as required in the ordinary
course and proper performance of their employment duties, to
persons who need to know such information to perform services for
or receive services from WCI or the Surviving Corporation.
(c) Property of the Business. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof)
relating to the Business, including such items stored in computer
memories, on microfiche or by any other means, made or compiled by
or on behalf of the Shareholders or the Corporation or made
available to them relating to the Business, but excluding any
materials (other than the minute books of the Corporation)
maintained by any attorneys for the 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.
(d) Non-Solicitation. Without the consent of WCI, which may be
granted or withheld by WCI in its discretion, the Shareholders and
their Affiliates shall not solicit any employees of the Surviving
Corporation to leave the employ of the Surviving Corporation and
join the Shareholders or any Affiliate in any business endeavor
owned or pursued by the Shareholders.
(e) No Disparagement. From and after the Closing Date, none of
the Shareholders shall, in any way or to any person or entity or
governmental or regulatory body or agency, denigrate or derogate
WCI or any of its subsidiaries, or any officer, director or
employee, or any product or service or procedure of any such
company whether or not such denigrating or derogatory statements
shall be true and are based on acts or omissions which are learned
by the Shareholders from and after the date hereof or on acts or
omissions which occur from and after the date hereof, or otherwise.
A statement shall be deemed denigrating or derogatory to any person
or entity if it adversely affects the regard or esteem in which
such person or entity is held by investors, lenders or licensing,
rating, or regulatory entities. Without limiting the generality of
the foregoing, none of the Shareholders shall, directly or
indirectly in any way in respect of any such company or any such
directors or officers, communicate with, or take any action which
is adverse to the position of any such company with any person,
entity or governmental or regulatory body or agency who or which
has dealings or prospective dealings with any such company or
jurisdiction or prospective jurisdiction over any such company.
This paragraph does not apply to the extent that testimony is
required by legal process, provided that WCI has received not less
than five days' prior written notice of such proposed testimony.
8.2 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:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause
irreparable injury to WCI and that money damages would not provide
an adequate remedy to WCI. Accordingly, in addition to any other
rights or remedies, WCI shall be entitled to injunctive relief to
enforce the terms of the Restrictive Covenants and to restrain the
Shareholders from any violation thereof.
(b) Accounting. The right and remedy to require the Shareholders
to account for and pay over to WCI all compensation, profits,
monies, accruals, increments or other benefits derived or received
by the Shareholders as the result of any transactions constituting
a breach of the Restrictive Covenants.
(c) Severability of Covenants. The Shareholders acknowledge and
agree that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any
court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be
given full effect, without regard to the invalid portions.
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall reduce the duration or scope of such provision, as the
case may be, to the extent necessary to render it enforceable and,
in its reduced form, such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Shareholders
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic
scope of the Restrictive Covenants. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise,
it is the intention of WCI and the Shareholders that such
determination not bar or in any way affect WCI's right to the
relief provided above in the courts of any other jurisdiction
within the geographic scope of the Restrictive Covenants as to
breaches of such covenants in such other respective jurisdictions,
such covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
9. GENERAL
9.1 Additional Conveyances. Following the Closing, the
Shareholders and WCI shall each deliver or cause to be delivered at
such times and places as shall be reasonably agreed upon such
additional instruments as WCI, the Surviving Corporation or the
Shareholders may reasonably request for the purpose of carrying out
this Agreement. The Shareholders will cooperate with WCI and/or
the Surviving Corporation 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.
9.2 Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or
assigns of WCI and the Surviving Corporation 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.
9.3 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. Prior to making any
public announcement required by law, the party required to make
such announcement shall provide the other party a copy of the
proposed announcement and an opportunity to provide input regarding
the content of such announcement.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
9.5 Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if
in writing and either delivered personally, sent by facsimile
transmission or by air courier service, or mailed by postage
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
With a copy to:
Michael M. Hupp, Esq.
Koley, Jessen, Daubman & Rupiper
One Pacific Place, Suite 800
1125 South 103 Street
Omaha, NE 68124
Phone: (402) 390-9500
Fax: (402) 390-9005
If to WCI:
Waste Connections, Inc.
2260 Douglas Boulevard, Suite 280
Roseville, CA 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, CA 94111
Fax: (415) 421-2922
9.6 Attorneys' Fees. In the event of any dispute or controversy
between WCI on the one hand and the 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.
9.7 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska
without regard to its conflict of laws provisions. The parties
agree that all disputes in connection with this Agreement shall be
resolved in an appropriate state or federal court located in
Douglas County, Nebraska. All parties waive any objections of lack
of jurisdiction, proper venue or inconvenience of such forum.
9.8 Payment of Fees and Expenses. Whether or not the transactions
herein contemplated shall be consummated, each party hereto will
pay its own fees, expenses and disbursements incurred in connection
herewith and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed
hereunder (including, in the case of the Shareholders, any such
fees, expenses and disbursements paid or accrued by, or charged to,
the Corporation). The fees and expenses of the tax advisors and
legal counsel for the Corporation and the Shareholders relating to
the transactions contemplated herein shall be paid by the
Corporation at Closing.
9.9 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.
9.10 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.
9.11 Number and Gender of Words; Corporation. 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.
9.12 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
Corporation, 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 Corporation, the Shareholders
and WCI acting through its officers, thereunto duly authorized by
its Board of Directors.
9.13 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.
9.14 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 Nebraska 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.
10. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
7.1(a) Indemnity Events Section 7.1(a)
7.1(b) Indemnity Events Section 7.1
Acquired Operations Section 2.2
Acquisition Co. Parties
Acquisition Co. Common Stock Section 2.3
Act Section 2.1
Affiliate Section 3.11
Average Closing Price Section 2.1
Balance Sheet Date Section 3.7
Business Section 8.1
business day Section 9.14
Cash Section 2.1(a)
Change in Control Section 2.1(b)
Claim Section 7.3
Claims Notice Section 7.3
Closing Section 1.7
Closing Date Section 1.7
Closing Date Current Assets Section 3.22
Closing Date Current Liabilities Section 3.22
Closing Date Debt Section 3.22
Code Section 3.37
Collection Franchises Section 3.10
Confidential Information Section 8.1
Contingent Merger Consideration Section 2.2
Contingent Shares Section 2.2
Corporate Property Section 3.12
Corporation Parties
Corporation's Certificates Section 2.4
Corporation's Stock Recitals
Daniel Parties
Daren Parties
Day Section 9.14
Duane Parties
EBITDA Section 2.2
Effective Time Section 1.2
Environmental Laws Section 3.24
Environmental Site Section 7.1
Environmental Site Losses Section 7.1
ERISA Section 3.17
Exchange Act Section 2.1(b)
Excluded Assets Section 2.9
Facilities Section 3.10
Facility Section 3.10
Filed Articles Section 1.2
Financial Statements Section 3.7
General Deductible Amount Section 7.2
golden parachute Section 3.17
Golden Parachute Payment Section 3.17
Governmental Permits Section 3.10
Gross Revenue Section 2.2
Hazardous Material Section 3.24
Hazardous Waste Section 3.24
Indemnifying Party Section 7.3
Indemnitee Section 7.3
Investors' Rights Agreements Section 2.1(b)
Knowledge Section 3.34
Laws Section 3.24
Margin Section 2.2(b)
Mark Parties
Material Adverse Effect Section 3.21
Merger Recitals
Merger Consideration Section 2.1
Michael Parties
multi-employer plan Section 3.17
Myrlen Parties
Nebraska Law Section 1.1
occurrence Section 3.15
Permitted Liens Section 3.12
Projected Net Revenues Section 2.2
RCRA Section 3.24
Real Estate Recitals
Real Estate Purchase Agreement Recitals
Real Estate Purchase Price Recitals
Recipient Section 3.17
Records, Notifications and Reports Section 3.10
Registration Statement Section 2.1(b)
Release Section 7.1
Representations and Warranties Section 7.4
Restricted Area Section 8.1
Restricted Period Section 8.1
Restrictive Covenants Section 8.2
SEC Section 4.6
Service Area Section 2.2
Shareholder Indemnitees Section 7.1
Shareholders Parties
Shares Section 2.1
Specific Claims Section 7.2
Surviving Corporation Section 1.1
UST Section 3.26
WCI Parties
WCI Indemnitees Section 7.1
WCI SEC Documents Section 4.6
WCI Securities Section 4.7
WCI Stock Recitals
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
by persons thereunto duly authorized as of the date first above
written.
THE CORPORATION:
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
By: _________________________
Daniel L. Shrader, President
WCI:
WASTE CONNECTIONS, INC.
By: _________________________
Ronald J. Mittelstaedt
Chief Executive Officer & President
ACQUISITION CO.:
WCI Acquisition Corporation
By: _________________________
Ronald J. Mittelstaedt
Chief Executive Officer & President
THE SHAREHOLDERS:
_________________________
Duane E. Shrader
_________________________
Myrlen A. Shrader
_________________________
Daniel L. Shrader
Mark S. Shrader
_________________________
Michael D. Shrader
_________________________
Daren L. Shrader
<PAGE>
TABLE OF CONTENTS
Page
1. MERGER 1
1.1 The Merger 1
1.2 Effective Time 2
1.3 Effects of the Merger 2
1.4 Articles of Incorporation
and Bylaws of the Surviving Corporation 2
1.5 Directors 2
1.6 Officers 2
1.7 Closing Time and Place 2
2. MERGER CONSIDERATION; CONVERSION
OF SECURITIES; DISSENTING SHARES 3
2.1 Merger Consideration 3
2.2 Additional Contingent Merger Consideration 5
2.3 Conversion of Capital Stock 6
2.4 Exchange of Certificates 7
2.5 Distributions 8
2.6 No Further Ownership Rights
in Any Corporation's Stock 8
2.7 Lost Certificates 8
2.8 Allocation of the Merger Consideration 8
2.9 Excluded Assets 8
3. REPRESENTATIONS AND WARRANTIES OF
THE CORPORATION AND THE SHAREHOLDERS 8
3.1 Organization, Standing and Qualification 8
3.2 Capitalization 9
3.3 All Stock Being Acquired 9
3.4 Authority for Agreement and Filed Articles 9
3.5 No Breach or Default 9
3.6 Subsidiaries 10
3.7 Financial Statements 10
3.8 Liabilities 10
3.9 Accurate and Complete Records 11
3.10 Permits and Licenses 11
3.11 Certain Receivables 13
3.12 Fixed Assets and Real Property 13
3.13 Related Party Transactions 14
3.14 Contracts and Agreements; Adverse Restrictions 14
3.15 Insurance 15
3.16 Personnel 15
3.17 Benefit Plans and Union Contracts 15
3.18 Taxes 17
3.19 Copies Complete; Required Consents 17
3.20 Customers, Billings, Current Receipts
and Receivables 18
3.21 No Change With Respect to the Corporation 18
3.22 Closing Date Debt; Closing Date Current
Assets and Closing Date Current Liabilities 19
3.23 Bank Accounts 20
3.24 Compliance With Laws 20
3.25 Powers of Attorney 21
3.26 Underground Storage Tanks 21
3.27 Patents, Trademarks, Trade Names, etc. 22
3.28 Assets, etc. Necessary to Business 23
3.29 Condemnation 23
3.30 Suppliers and Customers 23
3.31 Absence of Certain Business Practices 23
3.32 Disclosure Schedules 23
3.33 No Misleading Statements 23
3.34 Knowledge 23
3.35 Brokers; Finders 24
3.36 No Dissenting Shares 24
3.37 S Corporation 24
4. REPRESENTATIONS AND WARRANTIES OF
WCI AND ACQUISITIONS 24
4.1 Existence and Good Standing 24
4.2 No Contractual Restrictions 24
4.3 Authorization of Agreement 24
4.4 Status of Shares 25
4.5 Governmental Authorities; Consents 25
4.6 SEC Documents 25
4.7 Capital Stock 26
4.8 No Misleading Statements 26
4.9 Brokers; Finders 26
4.10 Disclosure Schedules 26
5. CLOSING DELIVERIES 27
5.1 WCI Deliveries 27
5.2 Shareholders Deliveries 27
6. ADDITIONAL COVENANTS OF WCI,
THE CORPORATION AND THE SHAREHOLDERS 28
6.1 Release of Guaranties 28
6.2 Release of Security Interests 28
6.3 Confidentiality 28
6.4 Brokers and Finders Fees 28
6.5 Taxes 28
6.6 Short Year Tax Returns 29
6.7 General Release by Shareholders 29
6.8 Certain Tax Matters 29
6.9 Use of Related Facilities 30
7. INDEMNIFICATION 30
7.1 Indemnification Covenants 30
7.2 Limitations on Indemnities 32
7.3 Notice of Indemnity Claim 34
7.4 Liability for Breaches of
Representations and Warranties 35
7.5 No Exhaustion of Remedies or
Subrogation; Right of Set Off 35
8. OTHER POST-CLOSING COVENANTS
OF THE SHAREHOLDERS AND WCI 35
8.1 Restrictive Covenants 35
8.2 Rights and Remedies Upon Breach 37
9. GENERAL 38
9.1 Additional Conveyances 38
9.2 Assignment 38
9.3 Public Announcements 38
9.4 Counterparts 39
9.5 Notices 39
9.6 Attorneys' Fees 39
9.7 Applicable Law 39
9.8 Payment of Fees and Expenses 40
9.9 Incorporation by Reference 40
9.10 Captions 40
9.11 Number and Gender of Words; Corporation 40
9.12 Entire Agreement 40
9.13 Waiver 40
9.14 Construction 40
10. GLOSSARY 41
<PAGE>
EXHIBIT AND SCHEDULE LIST
Exhibit 1.2(a) Filed Articles
Exhibit 2.1 Investors' Rights Agreement
Exhibit 2.1(c) Form of Note
Exhibit 5.1(c) Employment Agreement
Exhibit 5.1(d) Real Estate Purchase Agreement
Exhibit 5.1(e) Opinion of Counsel for WCI
Exhibit 5.2(b) Opinion of Counsel for Shareholders
Schedule 2.1(a) Closing Date Debt
incurred after January 1, 1998
Schedule 2.9 Excluded Assets
Schedule 3.1 Exceptions to Qualification
Schedule 3.2 Authorized Capital of Corporation
Schedule 3.5 No Breach or Default
Schedule 3.6 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8 Liabilities
Schedule 3.10(a) Permits and Licenses
Schedule 3.10(b) Records, Notifications and Reports
Schedule 3.10(c) Facilities
Schedule 3.11 Certain Receivables
Schedule 3.12(a) Fixed Assets
Schedule 3.12(b) Corporate Property
Schedule 3.13 Related Party Transactions
Schedule 3.14(a) Material Contracts and Agreements
Schedule 3.14(b) Adverse Restrictions
Schedule 3.15 Insurance
Schedule 3.16 Personnel
Schedule 3.17(a) Benefit Plans
Schedule 3.17(b) Union Contracts, Agreements and Labor Disputes
Schedule 3.18 Taxes
Schedule 3.19 Copies Complete
Schedule 3.20 Customers, Billings, Current
Receipts and Receivables
Schedule 3.21 No Change
Schedule 3.22(a) Closing Date Debt
Schedule 3.22(b) Closing Date Current Assets and Liabilities
Schedule 3.23(a) Bank Accounts
Schedule 3.23.(b) Credit Card Accounts
Schedule 3.24 Compliance with Laws
Schedule 3.26 Underground Storage Tanks
Schedule 3.27 Patents, Trademarks, Trade Names, Etc.
Schedule 3.28 Assets, etc. Necessary to Business
Schedule 3.37 S Corporation
Schedule 6.1 Release of Guaranties
Schedule 6.7 General Release by Shareholders
<PAGE>
Exhibit 10.2
PURCHASE AND SALE AGREEMENT
By and Between
Ambler Vincent Development Company
- -Seller-
and
Shrader Refuse and Recycling Service Company
- -Buyer-
July __, 1998
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of July __, 1998, by
and between, Ambler Vincent Development Company, a Nebraska
corporation ("Seller"), and Shrader Refuse and Recycling Service
Company, a Nebraska corporation (the "Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns all of that certain real property located in
Papillion, Sarpy, Lindoln and Lancaster Counties in Nebraska, as
more particularly described on Exhibit A attached hereto
(collectively, the "Real Property").
WHEREAS, 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:
PROPERTY INCLUDED IN SALE
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby
agrees to purchase from Seller, the following:
Real Property. All of the parcels of land comprising the Real
Property, as described on Exhibit A attached hereto.
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").
Improvements. All improvements and fixtures located on the Real
Property (the "Improvement").
Permits, Development Approvals and Fees. All permits and
development rights, agreements, entitlements and approvals relating
to the Real Property.
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.
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."
PURCHASE PRICE
The purchase price for the Property shall be One Million Two
Hundred Ninety Thousand Dollars ($1,290,000) ("Purchase Price")
with Nine Hundred Thousand Dollars ($900,000) allocated to the
Property in Sarpy County, Nebraska and Three Hundred Ninety
Thousand Dollars ($390,000) allocated to the Property located in
Lancaster County, Nebraska.
TITLE TO THE PROPERTY
Real Property. At the Closing, Seller shall convey to Buyer
marketable and insurable fee simple title to the Real Property,
Appurtenances and Improvements by duly executed and acknowledged
warranty deeds (one for the Sarpy County Property and one for the
Lancaster County Property) in the form attached hereto as Exhibit
B (the "Warranty Deeds"). Evidence of delivery of marketable and
insurable fee simple title shall be by the issuance by a title
insurance company approved by Buyer ("Title Company") of ALTA
Owner's Policies of Title Insurance (the "Title Policies") in the
amount of the Purchase Price, insuring fee simple title to the Real
Property and Appurtenances in the Buyer.
CONDITIONS TO CLOSING
The following conditions are conditions precedent to Buyer's
obligation to purchase the Property:
Merger Agreement. The occurrence of the Effective Time under that
certain Agreement and Plan of Merger dated July __, 1998 ("Merger
Agreement"), by and among Waste Connections, Inc., Shrader Refuse
and Recycling Service Company, Duane E. Shrader, Myrlen A. Shrader
Daniel L. Shrader, Mark S. Shrader, Michael D. Shrader, and Daren
L. Shrader.
Title Policies. Title Company shall issue the Title Policies to
Buyer at the closing of the purchase and sale of the Property.
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.
THE CLOSING
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 Merger 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 Deeds 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.
Seller's Documents. At the Closing, Seller shall deliver to Buyer
through escrow the following:
duly executed and acknowledged Warranty Deeds;
a duly executed counterpart of an Assignment of Permits and Other
Intangible Property in the form of Exhibit C attached hereto;
a duly executed Affidavit of Non-foreign Status in the form of
Exhibit D attached hereto;
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.
Buyer's Documents and Funds. At the Closing, Buyer shall deliver
to Seller through escrow the following:
i. the Purchase Price, subject to the prorations and credits
hereinafter provided for; and
ii. 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.
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.
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 Deeds are recorded on the basis
of a 365-day year.
Closing Costs. Transfer taxes applicable to the sale of the
Property, the fee for the Title Policies, escrow charges and other
costs of the Closing shall be paid by the parties in accordance
with the prevailing custom in the Counties in which the Property is
located. Each party shall pay its own attorneys' fees in
connection with the sale.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
There are no claims, suits or 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 against Seller.
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.
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.
There are no other leases or occupancy agreements of any kind
relating to the Real Property or any portion thereof.
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 is 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.
To the knowledge of Seller, the Property has been operated in
compliance with, and 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 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 is 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:
Except as permitted under applicable laws and regulations,
including, without limitation, the federal Resource Conservation
Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), the Property
has not accepted, processed, handled, transferred, generated,
treated, stored or disposed of any Hazardous Material (as defined
below) 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.
No Hazardous Material, other than that allowed under Environmental
Laws, including, without limitation, RCRA, has been disposed of, or
otherwise released, on the Property.
Seller has never 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.
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 Nebraska 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 in compliance with
Environmental Laws.
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 the
Property during Seller's ownership thereof.
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.
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.
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 Nebraska, 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.
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, 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
Deeds and transfer of title for a period of two (2) years (except
with respect to matters arising under Sections 6.9 and Article 7
with respect to which the indemnification provisions shall survive
for the applicable statute of limitations), or, if title is not
transferred pursuant to this Agreement, beyond any termination of
this Agreement.
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.
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.
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.
MISCELLANEOUS
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:
Attention:
If to Buyer:
c/o 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.
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.
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 by an assignee other than Buyer.
Amendments. This Agreement may be amended or modified by, and only
by, a written instrument executed by Seller and Buyer.
Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of
Nebraska.
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.
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.
Time of the Essence. Time is of the essence of this Agreement.
Specific Performance. Seller acknowledge[s] 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[s'] obligations
under this Agreement may be enforced by specific performance.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
BUYER:
a _____________________ corporation
By: _________________________
Its: _________________________
SELLER:
<PAGE>
Exhibit A
DESCRIPTION OF REAL PROPERTY
All of that certain real property located in ________ County,
Nebraska, described in the attached Exhibit A-1.
<PAGE>
Exhibit B
WARRANTY Deeds
[TO BE INCLUDED LATER]
<PAGE>
Exhibit C
ASSIGNMENT OF PERMITS
AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT dated July __, 1998 (the "Assignment"), is made by
_____________________________________________________ ("Assignor")
to _________________________ ("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 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:
ASSIGNEE:
<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 _____________________ ("Transferee"), to not withhold tax
under such Section 1445 upon the transfer by ____________________
("Transferors"), of a U.S. real property interest located in
__________ County, Nebraska, 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);
<PAGE>
Exhibit 99.1
[WASTE CONNECTIONS INC. LETTERHEAD]
Waste Connections, Inc. Announces Second Quarter Earnings of $.08
per Share excluding Charges: Closes On Acquisitions with $11
Million in Revenues in July
For Immediate Release
Roseville, California
Waste Connections, Inc. (NASDAQ: WCNX) announces today its second
quarter earnings of $.08 per share before extraordinary and other
special charges. Revenues for the second quarter of 1998 were
$10.9 million predecessor revenue of $6.1 million. Operating
income excluding stock compensation charge for the quarter was $1.6
million or 14.4%. Earnings per share on a diluted basis for the
quarter were $.08 per share excluding non-cash stock compensation
expense of $121,000 and a one time after-tax, non-cash
extraordinary charge of $815,364 for the write-off of warrants and
expenses relating to the Company's original BankBoston credit
facility. (Which was replaced in May by an expanded credit
facility with BankBoston). After these extraordinary charges, and
the accretion to preferred stock which was converted to common
stock at the initial public offering, diluted earnings per share
were $(.07). EBITDA for the quarter was $2.4 million or 21.2% or
revenue.
Waste Connections, Inc. also announces the closing of six
acquisitions in Nebraska and Utah. These acquisitions represent a
new entry market into the eastern Nebraska market and one tuck-in
to the Company's existing Utah operations acquired in June of this
year. Combined, these companies have annualized revenue of
approximately $11 million.
In Eastern Nebraska, Waste Connections, Inc. has acquired Shrader
Refuse and Recycling Service Company, Inc. dba Papillion Sanitation
and Recycling, J&J Sanitation, Inc., Big Red Roll Off, Inc. and the
assets of J&J of South Dakota and the purchase of certain assets
from Miller Container in Orem, Utah. Combined, these companies
service over 30,000 customers throughout sixty-five municipalities
in and around O'Neil, Omaha, Papillion and Lincoln, Nebraska.
These operations deliver services through four solid waste and
recycling collection facilities, two solid waste transfer stations
and have approximately 110 employees.
Ron J. Mittelstaedt, President and CEO said: "We are pleased with
our performance for our first quarter as a public company. Since
our Initial Public Offering on May 22, 1998, the Company has
completed 12 acquisitions with approximately $27 million in
annualized revenues. Our entry into the Eastern Nebraska market
represents a continuation of our strategy of expanding in secondary
markets in the Western U.S. through the initial acquisition of a
preeminent private company, then quickly filing in around these
strategic market entries with follow-on tuck-in acquisitions such
as we are announcing in Utah. Since its founding on September 30,
1997, the Company has completed 22 acquisitions with approximately
$70 million in annualized revenues.
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 180,000 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, 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.
August 3, 1998
CONTACT:
Waste Connections, Inc. (916) 772-2221
Steven F. Bouck
Chief Financial Officer
<PAGE>
(in thousands, except share and per share data)
Waste
Connections, Inc.
Predecessors(2) Waste Quarter Ended
Combined Connections, Inc. June 30, 1998
Quarter Ended Quarter Ended Adjusted for
June 30, 1997 June 30, 1998 Extraordinary
Items(1)
Revenues $ 6,090 $ 10,919 $ 10,918
Cost of Operations 5,110 7,433 7,433
SG&A 590 1,098 1,098
Depreciation and Amortization 367 818 818
Stock Compensation 121 --
---------- ----------- ----------
Income from Operations 23 1,449 1,569
Interest Expense (152) (430) (430)
Other 4
---------- ----------- ----------
Income Before Tax (125) 1,019 1,139
Taxes 480 480
---------- ----------- ----------
Income (loss) before (125) 538 659
Extraordinary Item
Extraordinary Item, Net of Tax (815)
Net Loss (277)
Redeemable Convertible Preferred
Stock Accretion (345)
-----------
Net Loss Applicable to Common Shareholders (622)
Diluted Earnings per Common
Share before Extraordinary Item $0.02
Extraordinary Item ($0.09)
Diluted Net Earnings (Loss) per Share ($0.07) $0.08
------------ -----------
------------ -----------
Diluted Shares Outstanding 8,662,684 8,662,684
(1) Adjustment include: Stock Compensation charge ($121,000);
Write off of warrants and fees to BankBoston (($815,000) in
Connection with new credit facility; elimination of preferred stock
accretion which was converted to common stock in the initial public
offering ($345,000).
(2) Predecessors Combined represents the entities the Company
acquired in September 1997 from Browning-Ferris Industries, Inc.
8/3/98
CONTACT:
Waste Connections, Inc. (916) 772-2221
Steven F. Bouck
Chief Financial Officer
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