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) January 6, 1999
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.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On January 6, 1999, Waste Connections, Inc., a Delaware
corporation ("WCI"), acquired the stock of Butler County Landfill, Inc.
("Butler County Landfill"), and substantially all of the business assets of
Kobus Construction, Inc. ("Kobus"). Butler County Landfill is a Nebraska
corporation that provides solid waste disposal services to approximately 300
customers in eastern Nebraska. Kobus is a Nebraska corporation that provides
solid waste transportation services in eastern Nebraska. The assets acquired
from Kobus include trucks, containers, equipment, contracts, governmental
permits, intellectual property and goodwill. WCI intends to continue the
solid waste transportation and disposal business of Butler County Landfill
and Kobus in Nebraska.
The purchase price consisted of approximately $7.0 million in
cash, notes in the aggregate amount of $172,000 payable to the shareholders
of Butler County Landfill, and contingent payments to the selling
shareholders if certain events occur during a specified period.
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 BankBoston, N.A.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired. Pursuant to Rule
3.05(b) of Regulation S-X, the financial statements of Butler County Landfill
and Kobus are not required to be included in this Form 8-K.
(b) Pro Forma Financial Information. Pursuant to Rule 3.05(b) of
Regulation S-X, pro forma financial information relating to Butler County
Landfill and Kobus is not required to be included in this Form 8-K.
(c) Exhibits.
10.1 Purchase Agreement dated as of
December 11, 1998, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
10.2 Amendment No. 1 to Purchase Agreement
dated as of January 7, 1999, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
10.3 Amendment No. 2 to Purchase Agreement
dated as of January 8, 1999, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
99.1 WCI's Press Release released
January 8, 1999
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: January 13, 1999 By /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
President and Chief Executive Officer
EXHIBIT INDEX
10.1 Purchase Agreement dated as of
December 11, 1998, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
10.2 Amendment No. 1 to Purchase Agreement
dated as of January 7, 1999, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
10.3 Amendment No. 2 to Purchase Agreement
dated as of January 8, 1999, by and among
WCI, Butler County Landfill, Inc., Kobus
Construction, Inc., Tom Kobus and Debbie
Kobus
99.1 WCI's Press Release released
January 8, 1999
EXHIBIT 10.1
PURCHASE AGREEMENT
Dated as of December 11, 1998, by and among
Waste Connections, Inc.
Butler County Landfill, Inc.
Kobus Construction, Inc.
Tom Kobus
and
Debbie Kobus
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement"), dated as of December 11, 1998, is
entered into by and among Waste Connections, Inc., a Delaware corporation
("WCI"), Butler County Landfill, Inc., a Nebraska corporation (the
"Corporation"), Kobus Construction, Inc., a Nebraska corporation ("KCI"), Tom
Kobus ("Tom") and Debbie Kobus (Tom Kobus and Debbie Kobus shall
collectively be referred to as the "Shareholders").
WHEREAS, the Corporation owns and operates the Butler County Landfill in
Butler County, Nebraska and engages in other related activities;
WHEREAS, the Corporation owns all of the real estate used in connection with
the business and operations of the Corporation, including without limitation
the real property set forth on Schedule A, attached hereto;
WHEREAS, KCI is engaged in the handling and transportation of solid waste and
other related activities throughout the State of Nebraska (collectively, the
"KCI Business");
WHEREAS, the Shareholders own all of the issued and outstanding capital stock
of the Corporation (the "Corporation's Stock");
WHEREAS, WCI wishes to acquire from the Shareholders all of the Corporation's
Stock; and
WHEREAS, WCI wishes to acquire, or to cause one of its wholly owned
subsidiaries to acquire, from KCI substantially all of the assets,
properties, rights, privileges and interests owned, leased, held or used by
KCI in connection with the KCI Business, except certain non-business related
assets;
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. PURCHASE OF CORPORATION'S STOCK AND KCI'S ASSETS
1.1 Shares to be Purchased. At the Closing (as defined in Section 2), the
Shareholders shall sell and deliver to WCI all of the issued and outstanding
shares of the Corporation's Stock, being the number of shares of the
Corporation set forth on Schedule 3.2 opposite each Shareholder's name. At
the Closing, WCI shall purchase the Corporation's Stock and in exchange
therefor shall deliver to the Shareholders at the Closing or thereafter as
provided by this Agreement the purchase price as described in Section 1.5
(the "Purchase Price").
1.2 Sale and Transfer of Assets. At the Closing, KCI shall convey, transfer,
deliver and assign to WCI or, at WCI's election, one of its wholly owned
subsidiaries, and in exchange therefor, WCI shall deliver to KCI at the
Closing or thereafter as provided by this Agreement the Purchase Price and
accept from KCI, the following assets (collectively, the "Assets"):
(a) the trucks, containers, operating machinery and equipment, processing
equipment, shop tools, parts, supplies, accessories, inventory, physical
assets and other tangible personal property used primarily in connection with
the ownership, operation and management of the KCI Business, including
without limitation the items listed in Schedule 1.2(a) (the "Fixed Assets");
(b) all of KCI's right, title and interest in and to the contracts, leases,
agreements, customer accounts, commitments and arrangements specifically
identified in Schedule 1.2(b) (the "Assumed Contracts");
(c) all permits, licenses, titles (including motor vehicle titles and current
registrations), fuel permits, zoning and land use approvals or zoning
variances, occupancy permits, and any other similar documents from any and
all governmental authorities constituting a material authorization or
entitlement or otherwise material to the operation or management of the KCI
Business owned by, issued to, or held by KCI as are transferable by their
respective terms to WCI;
(d) all customer lists relating to the KCI Business;
(e) KCI's right, title and interest in and to the logos, trade names,
fictitious business names and service marks of KCI, including, without
limitation, any right KCI may have to use the name "KCI Trucking";
(f) the goodwill of the KCI Business;
(g) [Omitted];
(h) all guaranties, warranties, indemnities and similar rights in favor of
KCI with respect to any of the Assets and all books and records primarily
used in connection with the operation of the KCI Business;
(i) all operating and financial records relating to the KCI Business,
including, without limitation, all ledgers, copies (but not originals) of
books of account, depreciation schedules, inventory information, records
relating to payables and receivables, equipment records, maintenance records,
disposal records and information concerning customers; and
(j) all Effective Date Current Assets of KCI. WCI and KCI acknowledge that
KCI will have been paid before the Effective Date for certain services to be
rendered by WCI after the Effective Date with respect to KCI's prepaid
customer accounts, and KCI will have rendered services to certain customers
prior to the Effective Date who will be billed by WCI after the Effective
Date with respect to certain other of KCI's customer accounts that are paid
in arrears. Accordingly, within 30 days after the Closing Date, WCI and KCI
shall prorate these prepaid and postpaid accounts as of the Closing Date and
shall reconcile the net amount due, whereupon the party owing the other will
immediately pay the net amount due.
Notwithstanding the foregoing, WCI shall not acquire any of the assets listed
on Schedule 3.3 (the "Excluded Assets").
1.3 Assumption by WCI of Certain Debt and Certain Contracts. WCI hereby
assumes and agrees to pay, perform and discharge, after the Closing, all of
the obligations, liabilities and commitments of KCI accruing from and after
the Closing under or with respect to each Assumed Contract, but not including
any obligation or liability for any breach thereof occurring prior to the
Closing, and all of the debt of KCI included in the Closing Date Debt and all
of the current liabilities of KCI included in the Effective Date Current
Liabilities.
1.4 Excluded Liabilities. Except as expressly set forth herein, WCI shall
not assume or be bound by any other duties, responsibilities, obligations,
indebtedness or other liabilities of KCI or to which KCI or any of the Assets
or the KCI Business may be bound or affected, of whatever kind or nature,
whether known, unknown, contingent or otherwise, arising before, on or after
the Closing Date (including without limitation taxes arising from the
operation of the KCI Business prior to the Closing) except those obligations,
liabilities and commitments expressly assumed by WCI pursuant to Section 1.3
(the "Excluded Liabilities").
1.5 Purchase Price. The Purchase Price is:
(a) eight million one hundred thousand dollars ($8,100,000), (i) minus the
Closing Date Debt (as defined in Section 3.23(a)), (ii) plus or minus, as the
case may be, the amount by which the Effective Date Current Assets (as
defined in Section 3.23(b)) are greater or less than the Effective Date
Current Liabilities (as defined in Section 3.23(b)), (iii) plus or minus, as
the case may be, the amount of the Net Profit or Net Loss (as hereinafter
defined) of the Corporation and the KCI Business for the period from the
Effective Date through the Closing Date, and (iv) minus the Post Closure
Liability (as hereafter defined). The Closing Date Debt shall be based on
pay-off letters obtained from the Corporation's and KCI's lenders. The
Effective Date Current Assets, Effective Date Current Liabilities, the Net
Profit, the Net Loss and the Post Closure Liability shall be based on
estimates of such amounts delivered to WCI by the Corporation and KCI at
Closing. As used herein, the term "Net Profit" or "Net Loss" shall mean the
net profit or net loss of the Corporation and the KCI Business calculated in
materially the same manner that net profit and net loss were calculated for
the Corporation and the KCI Business for the periods prior to the Effective
Date, and which profits or losses shall be incurred in compliance with
Section 5 herein. The term "Post Closure Liability" shall mean the amount by
which the Corporation's estimated closure and post closure liabilities with
respect to the landfill set forth on Schedule A (based on engineering
estimates taking into account the airspace depleted prior to the Effective
Date) exceeds the reserves established therefor (the "Reserves"), all as more
specifically set forth on Schedule 1.5(a)(iv).
At Closing, the following portion of the Purchase Price shall be paid to the
Shareholders and KCI in immediately available funds by wire transfer: eight
million one hundred thousand dollars ($8,100,000) (v) minus the Closing Date
Debt, (w) plus or minus, as the case may be, any estimated Net Loss or Net
Profit (x) minus the Post Closure Liability, and (y) plus or minus, as the
case may be, the amount by which the estimated Effective Date Current Assets
are greater or less than the estimated Effective Date Current Liabilities.
Within ninety (90) days after the Closing, WCI and the Shareholders shall
determine the actual Closing Date Debt, Effective Date Current Assets,
Effective Date Current Liabilities, Net Profit or Net Loss, and Post Closure
Liability. If the difference between the actual amounts of such items and
the estimated amounts provided at Closing results in an increase in the
amount that should have been paid at the Closing over the amount that was so
paid, WCI shall promptly pay such amount to the Shareholders or KCI, as the
case may be; if the result is a decrease in the amount that should have been
paid at the Closing from the amount that was so paid, the Shareholders or
KCI, as the case may be, shall promptly pay such amount to WCI (the "Post
Closing Adjustment.").
(b) A non-interest bearing promissory note (the "Tom Kobus Note") from WCI
to Tom Kobus in the principal amount of one hundred thirty-five thousand
dollars ($135,000), which Note shall be subordinate to WCI's senior debt and
paid to Tom Kobus in twelve (12) equal quarterly installments of eleven
thousand two hundred fifty dollars ($11,250) and shall be in form and
substance reasonably satisfactory to the parties. A non-interest bearing
promissory note (the "Debbie Kobus Note") from WCI to Debbie Kobus in the
principal amount of forty-four thousand dollars ($44,000), which Note shall
be subordinate to WCI's senior debt and paid to Debbie Kobus in twelve (12)
equal quarterly installments of three thousand six hundred sixty-six dollars
and 66/100 ($3,666.66) and shall be in form and substance reasonably
satisfactory to the parties.
1.6 Allocation of the Purchase Price. The Shareholders acknowledge that WCI
is purchasing the entire business of the Corporation and KCI, other than the
Excluded Assets, for the aggregate Purchase Price provided herein, and agree
that they shall allocate the Purchase Price among themselves as they shall
agree. WCI shall pay the Purchase Price as allocated among the Shareholders
as set forth on Schedule 1.6 which Schedule shall set forth the allocation of
the Purchase Price among the Assets and among the assets of the Corporation
for purposes of the election described in Section 9.8 (the "Allocation")
provided that twenty thousand dollars ($20,000) of the Purchase Price shall
be allocated to the covenants not to compete as described in Section 11.1(a)
hereof. The parties hereto agree that the Allocation will be used by them
for tax reporting purposes. Each party hereto agrees that it will report the
transaction completed pursuant to this Agreement in accordance with the
Allocation, including any report made under Section 1060 of the Internal
Revenue Code, as amended (the "Code"), and that no such party will take a
position inconsistent with the Allocation except with prior written consent
of the other parties hereto. In the event that there is a Post Closing
Adjustment, the parties hereto shall agree to an adjustment to the Allocation
and such new Allocation shall then be used for all purposes in place of the
original Allocation, provided that any Net Profit or Net Loss shall be
allocated to landfill cells.
1.7 Excluded Assets. The assets of the Corporation and KCI listed on
Schedule 3.3 (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.
2. CLOSING TIME AND PLACE
2.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated herein (the "Closing") shall take
place January 8, 1999 or on such later date as WCI and the Shareholders shall
agree (the "Closing Date"). For financial reporting purposes, the effective
date of the Closing shall be November 1, 1998 (the "Effective Date"). The
Closing shall take place at the Law Offices of Shartsis, Friese & Ginsburg
LLP, One Maritime Plaza, Suite 1800, San Francisco, California 94111 or at
such other place as WCI and the Shareholders shall agree. At the Closing,
WCI, the Corporation, KCI and the Shareholders shall deliver to each other
the documents, instruments and other items described in Section 8 of this
Agreement. At the election of WCI and the Shareholders, the Closing of this
transaction may take place through an exchange of documents using overnight
courier service or facsimile and wire transfer of funds.
2.2 Termination. Notwithstanding anything in this Agreement to the contrary,
this Agreement and the obligations of the parties hereunder may be terminated
prior to Closing as follows:
(a) By the Corporation, KCI or the Shareholders (i) in the event the
transactions contemplated by this Agreement have been prohibited or enjoined
by reason of any judgment, decree or order entered or issued by a court of
competent jurisdiction in litigation or proceedings involving any of the
parties hereto; or (ii) in the event WCI breaches or violates any material
provision of this Agreement or fails to perform any material covenant or
agreement to be performed on or prior to the Closing Date by WCI under the
terms of this Agreement, and Shareholders have provided written notice
thereof to WCI giving reasonable specificity and WCI has not cured same
within a reasonable period of time and such breach is not waived by
Shareholders in writing.
(b) By WCI (i) in the event the transactions contemplated by this Agreement
have been prohibited or enjoined by reason of any judgment, decree or order
entered or issued by a court of competent jurisdiction in litigation or
proceedings involving any of the parties hereto; (ii) in the event that the
covenants set forth in Sections 5.4, 5.6 and 5.7 have not been complied with
to the reasonable satisfaction of WCI; or (iii) in the event that the
Corporation, KCI or the Shareholders breach or violate any applicable
material provision of this Agreement or fail to perform any material covenant
or agreement to be performed on or prior to the Closing Date by the
Corporation, KCI or the Shareholders under the terms of this Agreement and
WCI has provided written notice thereof to the applicable parties giving
reasonable specificity, and such parties have not cured same within a
reasonable period of time and such breach is not waived by WCI in writing.
(c) By WCI or Shareholders if the Closing hereunder shall not have taken
place by January 31 1999, or, by such later date as shall be agreed upon by
an appropriate amendment to this Agreement, if the parties agree in writing
to an extension, provided that a party shall not have the right to terminate
under this Section 2.2(c) if the conditions precedent to such party's
obligation to close, as set forth in Sections 6 and 7 hereof, have been fully
satisfied and such party has failed or refused to close after being requested
in writing to close by the other party.
2.3 Notice and Effect of Termination. On termination of this Agreement, the
transactions contemplated herein shall forthwith be abandoned and all
continuing obligations and liabilities of the parties under or in connection
with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained
in this Agreement prior to such termination unless WCI terminates this
Agreement pursuant to Section 2.2(b)(ii), in which case the Corporation,
Shareholders and KCI shall have no continuing liability related to any
matters disclosed in the Schedules or information provided to WCI as
contemplated in Section 5.4 which caused WCI to so terminate.
Notwithstanding the foregoing, Sections 2.4, 3.36, 4.5, 9.5 and 12.8 and the
confidentiality obligations set forth in Sections 5.4 and 9.4 shall survive
the termination of this Agreement for any reason.
2.4 Break-Up Fee. If WCI elects to terminate this Agreement pursuant to
Section 2.2 herein for reasons other than those set forth in (w) Section
2.2(b)(i), (x) Section 2.2(c), (y) the failure to fulfill the conditions set
forth in Sections 6.1 through 6.5 and 6.7, or (z) the failure of the
Shareholders and KCI to make the deliveries described in Section 8.2(a), (b),
(c), (e), (f) and (i) (the foregoing subsections w, x, y and z shall
collectively be referred to as the "Exceptions"), WCI shall promptly pay to
the Shareholders a sum equal to one hundred thousand dollars ($100,000) (the
"Break-Up Fee"), and upon such payment, WCI shall have, except as otherwise
set forth in Section 2.3, no further liability or obligation to the
Corporation, KCI or the Shareholders under this Agreement. Notwithstanding
the above or anything in this Agreement seemingly to the contrary, the
parties hereto intend that WCI shall be obligated to pay to Shareholders the
Break Up Fee if WCI terminates this Agreement pursuant to Section 2.2, due to
one of the Exceptions or otherwise, and the root cause for such termination
is WCI's dissatisfaction with any matter disclosed in the Schedules to this
Agreement from and after the date of this Agreement (other than Schedules
1.5(a)(iv), 1.6 and 3.3, which have been agreed to by the parties), or any
due diligence information provided to WCI from and after the date of this
Agreement.
2.5 Exclusive Negotiations. Following execution of this Agreement until
January 31, 1999, the Corporation, KCI and the Shareholders shall not, and
the Shareholders shall not permit the Corporation's or KCI's officers,
directors, employees or agents to, initiate, negotiate or discuss with any
other person or entity the possible sale of all or substantially all of the
assets, business or stock of the Corporation or KCI, or to effect the merger
of the Corporation or KCI with any party other than WCI or one of its
Affiliates. The Shareholders hereby confirm that no person or entity
presently has or may acquire any rights to purchase or otherwise acquire the
assets or the stock of either the Corporation or KCI.
2.6 Corrections to Due Diligence and Schedules. Pursuant to Sections 5.4 and
5.6 of this Agreement, Shareholders, the Corporation and KCI have agreed to
deliver to WCI or its agents the Schedules to this Agreement in final form,
and all reasonably requested due diligence material, by no later than
December 22, 1998. If, prior to the Closing Date, the Shareholders, the
Corporation or KCI determine that any Schedule, document or other information
provided to WCI or its agents by the Shareholders, the Corporation or KCI is
incomplete, inaccurate or misleading, the Shareholders, the Corporation or
KCI shall promptly give WCI written notice and correct such Schedule,
document or information. In addition, the Corporation and KCI shall provide
WCI with such additional information in their control concerning such
correction as WCI shall reasonably request. If such correction does not
represent a material adverse change in the information previously provided to
WCI, WCI shall not have the right to terminate this Agreement based upon such
correction. If such correction does represent a material adverse change in
the information previously provided to WCI or its agents and WCI reasonably
determines that such correction is unacceptable, such correction shall be
deemed to be a failure of the conditions set forth in Sections 5.4 and 5.6,
as applicable, and WCI shall have the right to terminate this Agreement after
receipt of the corrected information; provided that the Corporation and KCI
shall first have an opportunity to cure such matter to the reasonable
satisfaction of WCI prior to the Closing Date, and provided that on WCI's
election to terminate WCI shall be obligated to pay the break-up fee as
provided in Section 2.4.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION, KCI AND THE
SHAREHOLDERS.
The Corporation, KCI and the Shareholders, jointly and severally, represent
and warrant to WCI, which representations and warranties are true and
correct, as follows:
3.1 Organization, Standing and Qualification. Each of the Corporation and
KCI is duly organized, validly existing and in good standing under the laws
of the State of Nebraska. Each of the Corporation and KCI has full corporate
power and authority to own and lease its properties and to carry on its
business as now conducted. 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 the authorized and outstanding
capital of the Corporation, the names and addresses of the record and
beneficial owners thereof, the number of shares so owned, the allocation of
the Purchase Price among the Shareholders and KCI as agreed to among
themselves, and wire transfer instructions for each Shareholder and KCI
relating to the bank account to which the cash portion of the Purchase Price
should be sent. All of the issued and outstanding shares of the capital
stock of the Corporation are owned of record and beneficially by the
Shareholders, as set forth in Schedule 3.2, and are and will be free and
clear of all liens, security interests, encumbrances, restrictions, pledges
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.
To the knowledge of Shareholders, the Corporation's Stock has been issued in
accordance with all applicable federal and state securities laws.
3.3 All Stock and Assets Being Acquired. The Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporation. The assets of the Corporation listed on Schedule 3.3 shall
be distributed to the Shareholders prior to the Closing, and WCI shall
acquire no interest in or claim to any of such assets. The Assets being
acquired by WCI hereunder constitute substantially all of the assets of the
KCI Business used in and necessary to conduct and operate the KCI Business as
presently conducted and operated (other than certain Excluded Assets set
forth on Schedule 3.3).
3.4 Authority for Agreement. The Corporation, KCI and the Shareholders have
full right, power and authority to enter into this Agreement and all
documents and agreements necessary to give effect to the provisions of this
Agreement, and to perform its, his or her obligations hereunder. The
execution and delivery of this Agreement by the Corporation and KCI and the
consummation of the transactions contemplated hereby by the Corporation and
KCI has been duly authorized by the Board of Directors of the Corporation or
KCI, as the case may be. This Agreement and all other agreements and
documents executed in connection herewith have been and will be, as the case
may be, duly and validly executed and delivered by the Corporation and KCI
and the Shareholders and, subject to the due authorization, execution and
delivery by WCI, constitute the legal, valid and binding obligations of the
Corporation, KCI and the Shareholders enforceable against the Corporation,
KCI 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, KCI and the Shareholders of this Agreement,
and the consummation by the Corporation, KCI and the Shareholders of the
transactions contemplated hereby, will not, after the giving of notice, or
the lapse of time or otherwise:
(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 contract, agreement, license or other instrument or
obligation of any kind or nature to which the Corporation, KCI or any of the
Shareholders is a party, or by which the Corporation, KCI or any of the
Shareholders, or any of the Corporation's assets or the Assets, is or may be
bound or affected; or
(b) violate any law, rule or regulation, 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 or
KCI.
3.6 Subsidiaries. Schedule 3.6 lists 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 and KCI have delivered to WCI, as
Schedule 3.7, copies of the compiled financial statements ("Financial
Statements") for the Corporation's and KCI's three most recent fiscal years
and interim financial statements for the Corporation and KCI for the period
ended October 31, 1998 (the "Balance Sheet Date"). The Financial Statements
are true and correct and fairly present (i) the financial position of the
Corporation and the KCI Business as of the respective dates of the balance
sheets included in said statements, and (ii) the results of operations for
the respective periods indicated. The Financial Statements have been
prepared consistently with prior periods. Except to the extent reflected or
reserved against in the Corporation's or KCI's balance sheet as of the
Balance Sheet Date, or as disclosed on Schedule 3.7 or Schedule 3.8, neither
the Corporation nor KCI had as of the Balance Sheet Date, nor will the
Corporation or KCI have as of the Closing Date, any material liabilities of
any nature, whether accrued, absolute, contingent or otherwise, including,
without limitation, tax liabilities due.
3.8 Liabilities. Parts I, II, III and IV of Schedule 3.8 are accurate lists
and descriptions of all liabilities of (i) the Corporation and (ii) KCI
relating to the KCI Business, required to be described below in the format
set forth below.
(a) Part I of Schedule 3.8 lists, as of the date hereof other than with
respect to trade payables, and as of the Effective Date with respect to trade
payables, all indebtedness for money borrowed and all other fixed and
uncontested liabilities of any kind, character and description (excluding all
real and personal property leasehold interests included in Part IV of
Schedule 3.8), whether reflected or not reflected on the Financial Statements
and whether accrued or absolute, and states as to each such liability the
amount of such liability and to whom payable. From the end of the Effective
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 all claims, suits and proceedings which are
pending against the Corporation or against KCI relating to the KCI Business
and, to the knowledge of the Corporation, KCI and the Shareholders, all
contingent liabilities and all claims, suits and proceedings threatened or
anticipated against the Corporation or against KCI relating to the KCI
Business. 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.
(c) Part III of Schedule 3.8 lists, 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) or secured by any of the Assets, 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, 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 or KCI is a party as lessor or lessee or,
to the knowledge of the Corporation, KCI or a Shareholder, affecting or
relating to any Corporate Property or KCI Property.
Except as described on the applicable part of Schedule 3.8, none of the
Corporation, KCI or 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 in all material respects, reflect all material
corporate transactions required to be authorized by the Board of Directors
and/or shareholders of that Corporation and do not contain or reflect any
material discrepancies.
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 or KCI 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 or the KCI
Business (collectively the "Governmental Permits") owned by, issued to or
held by the Corporation, KCI or the Shareholders. Schedule 3.10(a) also sets
forth the name of any governmental agency or other third party from whom the
Shareholders, the Corporation, KCI or WCI must obtain consent (the "Required
Governmental Consents") in order to effect a direct or indirect transfer of
the Collection Franchises or other Governmental Permits required as a result
of the consummation of the transactions contemplated by this Agreement.
Except as set forth on Schedule 3.10(a), all of the Collection Franchises and
other Governmental Permits enumerated and listed on Schedule 3.10(a) are
adequate for the operation of the business of the Corporation and the KCI
Business and of each Corporate Property and KCI Property as presently
operated and are valid and in full force and effect. All of said Collection
Franchises and other Governmental Permits and agreements have been duly
obtained and are in full force and effect, and there are no proceedings
pending or, to the knowledge of the Corporation, KCI or the Shareholders,
threatened which may result in the revocation, cancellation, suspension or
material adverse modification of any of the same. Neither the Corporation
nor KCI nor any of the Shareholders has any knowledge of any reason why all
such Governmental Permits and agreements will not remain in effect for the
period or term stated therein, subject to WCI's full compliance therewith,
after consummation of the transactions contemplated hereby.
(b) Prior to Closing, the Corporation, KCI and the Shareholders shall have
made available to WCI: (i) all material records, notifications, reports,
permit and license applications, engineering and geologic studies, and
environmental impact reports, tests or assessments (collectively, "Records,
Notifications and Reports") that (A) are material to the operation of the
business of the Corporation or the KCI Business, or (B) relate to the
discharge or release of materials into the environment and/or the handling or
transportation of waste materials or hazardous or toxic substances or
otherwise relate to the protection of the public health or the environment,
or (C) were filed with or submitted to appropriate governmental agencies
during the past twenty-four (24) months by the Corporation, KCI or the
Shareholders or their agents with respect to the business of the Corporation
or the KCI Business, and (ii) all material notifications from such
governmental agencies to the Corporation, KCI, 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 or by KCI for the KCI Business, or owned by any of
the Shareholders or an Affiliate of any Shareholder and leased to the
Corporation or KCI, 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 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, KCI and the Shareholders, no Facility that is leased by the
Corporation or KCI 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 reasonably
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 KCI or owned by any of the Shareholders or an Affiliate (as
hereinafter defined) of any of the Shareholders and leased to the Corporation
or KCI, and to the knowledge of the Corporation, KCI and the Shareholders
there are no circumstances, conditions or reasons which are reasonably 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 or KCI 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 of the accounts
and notes receivable of the Corporation or KCI from and advances to
employees, former employees, officers, directors, the Shareholders and
Affiliates of the foregoing which have not been fully 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 or KCI 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 all of the material Fixed Assets (other than real
estate) of the Corporation or of KCI used in the KCI Business, 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 and KCI's containers, vehicles, machinery and equipment
necessary for the operation of the Corporation's businesses or the operation
of the KCI Business are in operable condition, ordinary wear and tear
excepted, and all of the motor vehicles and other rolling stock of the
Corporation and of KCI used in the KCI Business are in material compliance
with all applicable laws, rules and regulations. Except as otherwise
specifically set forth in this Agreement, the Fixed Assets and the assets
owned or held for use by the Corporation are being sold to WCI on an "AS-IS,
WHERE-IS" basis without warranty. Except as set forth in this Agreement, the
Corporation and KCI hereby disclaim all other warranties, express or implied,
including the implied warranties of merchantability and fitness for a
particular purpose. All leases of fixed assets are in full force and effect
and binding upon the parties thereto; neither the Corporation nor KCI nor, to
the knowledge of the Corporation or KCI or 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 or owned by the Corporation (the
"Corporate Property") and each parcel of real property leased or owned by KCI
and used in the KCI Business (the "KCI Property"), including the street
address and, in the case of Corporate Property or KCI Property owned, the
legal description thereof, is listed on Schedule 3.12(b). Each parcel of
real property being purchased by the Corporation is listed and described on
Schedule 3.12(b). 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, each KCI Property and the real property being purchased
by the Corporation. Except as set forth on Schedule 3.12(b), the Corporation
and KCI represent that there are no agreements (written or oral), nor are
there current negotiations or discussions with third parties, to purchase
real property for the Corporation or KCI. All leases listed on Schedule
3.12(b) are in full force and effect and binding on the parties thereto;
neither the Corporation nor KCI nor, to the knowledge of the Corporation, KCI
or Shareholders, any other party to any such lease is in breach of any of the
material provisions thereof; to the knowledge of the Corporation, KCI and the
Shareholders, the landlord's interest in each such lease has not been
assigned to any third party nor has any such interest been mortgaged, pledged
or hypothecated; and neither the Corporation nor KCI has assigned any such
lease or sublet all or any part of the Corporate Property or the KCI Property
that is the subject of any such lease.
(c) Each of the Corporation and KCI possesses good, valid and marketable
title to all properties and assets, real, personal, and mixed, tangible and
intangible, actually used or necessary for the conduct of its business, free
of any encumbrance or charge of any kind except: (i) liens for current taxes
not yet due; (ii) minor imperfections of title and encumbrances, if any, that
are not substantial in amount, do not materially reduce the value or impair
the use of the property subject thereto, do not materially impair the value
of the Corporation or KCI, 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), neither the Corporation, KCI nor the
Shareholders is a party to any 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, any KCI 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. 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 is indebted to or is owed money
by the Corporation or KCI not disclosed in the Financial Statements. Except
as disclosed in the Financial Statements, none of the Shareholders or their
Affiliates owns any direct or indirect interest of any kind in, or controls
or is a director, officer, employee, shareholder or partner of, or consultant
or lender to or borrower from or has the right to participate in the profits
of, any Person which is a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Corporation or KCI.
3.14 Acquisition/Disposition of Assets. Except as indicated on Schedule
3.14, since the Balance Sheet Date, neither the Corporation nor KCI has
acquired or sold or otherwise disposed of any properties or assets that,
singly or in the aggregate, have a value in excess of $10,000, or which are
material to the operation of the Corporation's business or the KCI Business
as presently conducted, without the prior written consent of WCI.
3.15 Contracts and Agreements; Adverse Restrictions.
(a) Schedule 3.15(a) lists and includes copies of, all material contracts and
agreements, and written summaries of key terms of all oral contracts, to
which the Corporation or KCI is a party or by which it or any of its property
is bound (other than leases and documents included with Schedule 3.12(b))
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. Schedule 1.2(b) lists all of the Assumed
Contracts. Except as disclosed on Schedule 3.15(a), all contracts and
agreements included in Schedule 3.15(a) and Schedule 1.2(b) are in full force
and effect and binding upon the parties thereto. Except as described or
cross referenced on Schedule 3.15(a), neither the Corporation nor KCI nor, to
the Corporation's or KCI'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, KCI or any of the Shareholders of a default
thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.15(b), there is no outstanding
judgment, order, writ, injunction or decree against the Corporation or KCI,
the result of which could materially adversely affect the Corporation or its
business, or the KCI Business or any of the Assets, or any of the Corporate
Properties or KCI Properties, nor has the Corporation or KCI been notified
that any such judgment, order, writ, injunction or decree has been requested.
3.16 Insurance. Schedule 3.16 is a complete list and includes copies of all
insurance policies currently in effect or, with respect to "occurrence"
policies that were in effect, 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. All such proceedings are fully covered by
insurance, subject to normal deductibles.
3.17 Personnel. Schedule 3.17 is a complete list of all officers, directors
and employees (by type or classification) of the Corporation and KCI 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 3.17 also lists the driver's
license number for each driver of the Corporation's motor vehicles and each
motor vehicle used in the KCI Business.
3.18 Benefit Plans and Union Contracts.
(a) Schedule 3.18(a) is a complete list, and includes complete copies (or, in
the case of oral arrangements, descriptions), of all employee benefit plans
and agreements (written or oral) currently maintained or contributed to by
the Corporation or KCI, 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. Except for the employee
benefit plans described on Schedule 3.18(a), neither the Corporation nor KCI
has any other pension, retirement, welfare, profit sharing, deferred
compensation, stock option, employee stock purchase or other employee benefit
plans or arrangements with any party. Except as disclosed on Schedule
3.18(a), all employee benefit plans listed on Schedule 3.18(a) are fully
funded and in substantial compliance with all applicable federal, state and
local statutes, ordinances and regulations. All such plans that are intended
to qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and copies of
such determination letters are included as part of Schedule 3.18(a). Except
as disclosed on Schedule 3.18(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 3.18(a). All employee benefit plans listed on
such Schedule have been operated in accordance with the terms and provisions
of the plan documents and all related documents and policies. Neither the
Corporation nor KCI has incurred any liability for excise tax or penalty due
to the Internal Revenue Service or U.S. Department of Labor nor any liability
to the Pension Benefit Guaranty Corporation for any employee benefit plan,
and neither the Corporation nor KCI, nor a party-in-interest or disqualified
person, has engaged in any transaction or other activity which would give
rise to such liability. Neither the Corporation nor KCI has participated in
or made contributions to any "multi-employer plan" as defined in the Employee
Retirement Income Security Act of 1974 ("ERISA"), nor would the Corporation,
KCI 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 or
KCI and any collective bargaining group, nor have there ever been any such
contracts in effect. The Corporation and, in the operation of the KCI
Business, KCI, are in compliance in all material respects with all applicable
federal and state laws respecting employment and employment practices, terms
and conditions of employment, wages and hours, and nondiscrimination in
employment, and is not engaged in any unfair labor practice. There is no
charge pending or, to the Corporation's or KCI's or any Shareholder's
knowledge, threatened, against the Corporation or KCI 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, existing or threatened against
the Corporation or KCI; no union organizational activity exists respecting
employees of the Corporation or KCI, and Schedule 3.18(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
or KCI. Neither the Corporation nor KCI has experienced any labor strike,
slow-down, work stoppage, labor difficulty or other job action during the
last five years.
3.19 Taxes.
(a) Each of the Corporation and KCI 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 in all material respects. Except as set forth on
Schedule 3.19, 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 the Corporation or KCI 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 and KCI for their
last three fiscal years are attached as part of Schedule 3.19. Copies of all
other federal, state, local and other tax and information returns for all
prior years of the Corporation's and KCI's existence have been made available
to WCI and are among the records of the Corporation and KCI that will accrue
to WCI at the Closing. Neither the Corporation nor KCI has been contacted by
any federal, state or local taxing authority regarding a prospective
examination.
(b) Except as set forth on Schedule 3.19 (which schedule also includes the
amount due with respect to the Corporation and KCI) the Corporation and KCI
have 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 and KCI are adequate to cover the
Corporation's and KCI's respective tax liabilities as of the Closing Date.
(c) The Corporation and KCI have 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 or KCI 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.
3.20 Copies Complete; Required Consents. Except as disclosed on Schedule
3.20, the certified copies of the Articles of Incorporation and Bylaws of the
Corporation and KCI, as amended, and the copies of all leases, instruments,
agreements, licenses, permits, certificates, site assessments or other
documents included in the Schedules to this Agreement are complete and
accurate and are true and correct copies of the originals thereof. Except as
specifically disclosed on Schedule 3.20, any rights and benefits the
Corporation or KCI may have under any of the foregoing documents will not be
materially adversely affected by the transactions contemplated hereby, and
the execution of this Agreement and the performance of the obligations
hereunder will not materially violate or result in a material breach or
constitute a material default under any of the terms or provisions thereof.
Except for any consents and approvals listed on Schedule 3.20 and except for
Required Governmental Consents (all of which have been given or obtained
prior to the Closing), none of the documents mentioned in this Section 3.20
requires notice to, or consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby.
3.21 Customers, Billings, Current Receipts and Receivables. Schedule 3.21 is
a current, accurate and complete list of, and includes:
(a) the customers that each of the Corporation and KCI serves on an ongoing
basis, including name, location and current billing rate;
(b) an accurate and complete aging of all accounts and notes receivable from
customers of the Corporation and the KCI Business as of the Effective Date,
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 3.12 or 3.21, the Corporation's and KCI's accounts and
notes receivable are fully collectible in the amounts shown on Schedules 3.12
and 3.21; and
(c) the average monthly revenues of each of the Corporation and KCI derived
from billings to its customers for each of the twelve months preceding the
date hereof.
3.22 No Change With Respect to the Corporation or the Business. Except as
set forth on Schedule 3.22, since the Balance Sheet Date, the Corporation's
business and the KCI Business have 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 or the KCI Business,
other than changes in the ordinary course of business, 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
3.22, with respect to each of the Corporation and the KCI Business, 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
or the KCI Business, taken as a whole;
(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 with
respect to the Corporation's or KCI'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,
other than in the ordinary course of business.
3.23 Closing Date Debt; Effective Date Current Assets and Effective Date
Current Liabilities.
(a) When delivered at the Closing, Schedule 3.23(a) shall list (i) the amount
of the aggregate debt (excluding trade payables) of the Corporation and of
KCI outstanding on the Closing Date required to be repaid by WCI or the
Corporation at or immediately after the Closing Date and all prepayment
penalties incurred or to be incurred by WCI or the Corporation in connection
with the repayment of any such debt; provided, however, that the parties
hereto agree that such debt of KCI and associated prepayment penalties to be
paid by WCI shall not exceed $350,000 in the aggregate, and provided further
that those certain short-term renewable rental arrangements marked as such on
Schedule 3.23(a) shall not be included in the definition of Closing Date
Debt, (ii) the amount of the aggregate debt (excluding trade payables) of the
Corporation outstanding on the Closing Date which will remain outstanding
obligations of the 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 or KCI 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 all lease obligations of KCI that are not
capitalized lease obligations and that are included in the Assumed contracts
or encumbering the Assets, 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
and all capitalized lease obligations of KCI that are included in the Assumed
Contracts or encumbering the Assets (the "Closing Date Debt"). Schedule
3.23(a) includes wire transfer instructions for creditors who hold Closing
Date Debt. Pay-off letters or instructions from such creditors in the form
provided by WCI's bank or acceptable to WCI shall be attached to Schedule
3.23(a).
(b) When delivered at the Closing, Schedule 3.23(b) shall be an estimate as
of the Effective 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 or KCI as of the Effective Date
(the "Effective Date Current Liabilities") and the amount of the aggregate
cash and other current assets of the Corporation and KCI as of the Effective
Date, including prepaid expenses the benefit of which survives the Effective
Date and the accounts receivable of the Corporation and KCI earned prior to
the Effective Date, and collectible on or after the Effective Date (the
"Effective Date Current Assets"). Notwithstanding the foregoing, Effective
Date Current Assets shall not include the Reserves. 3.24 Bank Accounts.
(a) Schedule 3.24(a) is a complete and accurate list of:
(i) the name of each bank in which the Corporation or KCI 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 3.24(b) is a complete and accurate list of:
(i) each credit card or other charge account issued to the Corporation or
KCI; and
(ii) the name of each person to whom such credit cards or other charge
accounts have been issued.
3.25 Compliance With Laws. Except as disclosed on Schedule 3.25, the
Corporation and KCI have complied with, and the Corporation and KCI are
presently in compliance with all material 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 3.25, there has been no assertion by any party that
the Corporation or KCI is in violation of any Laws. Specifically and without
limiting the generality of the foregoing, except as disclosed on Schedule
3.25:
(a) Except as permitted under applicable laws and regulations and in
compliance therewith, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), neither the
Corporation nor KCI nor the KCI Business has accepted, processed, handled,
transferred, generated, treated, stored or disposed of any Hazardous Material
(as defined in Section 3.25(e) below) nor has the Corporation or KCI or the
KCI Business 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 KCI's ownership or leasing of the KCI Property
owned or leased by it, to the knowledge of the Corporation, KCI and the
Shareholders, prior to the Corporation's or KCI's ownership or leasing of
such Corporate Property or KCI 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 or KCI
Property.
(c) During the Corporation's ownership or leasing of the Corporate Property
owned or leased by it and KCI's ownership or leasing of the KCI Property
owned or leased by it and, to the knowledge of the Corporation, KCI and the
Shareholders, prior to the Corporation's ownership or leasing of such
Corporate Property and prior to KCI's ownership or leasing of the KCI
Property, no Corporate Property or KCI 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 KCI Property or any real property
now or previously owned or leased by a Corporation or KCI. There are no
pending and, to the Corporation's, KCI'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 or
the KCI Property, including, without limitation, petroleum contamination,
pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, neither the Corporation nor
KCI has 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; provided however, that the term Hazardous Waste shall not
include any substances disposed of in compliance with any material
Governmental Permits.
3.26 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.
3.27 Underground Storage Tanks. No underground storage tanks containing
petroleum products or wastes or other hazardous substances regulated by 40
CFR 280 or Environmental Laws are currently or, to the knowledge of the
Corporation, KCI or Shareholders, have been located on any Corporate Property
or KCI Property. The Corporation has not to its knowledge 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.
3.28 Patents, Trademarks, Trade Names, etc. Schedule 3.28 lists all patents,
tradenames, fictitious business names, trademarks, service marks, and
copyrights owned by the Corporation or KCI 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, KCI and the Shareholders, no
patents, trade secrets, knowledge intellectual property, trademarks, trade
names, assumed names, copyrights, or designations used by the Corporation or
KCI in its business infringe on any patents, trademarks, or copyrights, or
any other rights of any person. Neither the Corporation nor KCI 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.
3.29 Assets, etc., Necessary to Business. Each of the Corporation and KCI
owns or leases all material properties and assets, real, personal, and mixed,
tangible and intangible, necessary to permit it to carry on its business and
operations as presently conducted, and, except as disclosed on Schedules 3.5,
3.10(a), 3.10(c), 3.15(a) or 3.20, is a party to all Collection Franchises
and Governmental Permits and other agreements necessary to permit it to carry
on its business as presently conducted. All of said Collection Franchises
and Governmental Permits and agreements have been duly obtained and, except
as disclosed on Schedules 3.5, 3.8-Part II, 3.10(a), 3.10(c) 3.15(a) or 3.20,
are in full force and effect and there are no proceedings pending or, to the
knowledge of the Corporation, KCI and the Shareholders, threatened which may
result in the revocation, cancellation, suspension or adverse modification of
any of the same. Neither the Corporation nor KCI nor any of the Shareholders
has any knowledge of any reason why all such Collection Franchises and
Governmental Permits and agreements will not remain in effect after
consummation of the transactions contemplated hereby.
3.30 Condemnation. No Corporate Property owned or leased by the Corporation,
and no KCI Property owned or leased by KCI is the subject of, or would be
affected by, any pending condemnation or eminent domain proceedings, and, to
the knowledge of the Corporation, KCI and the Shareholders, no such
proceedings are threatened.
3.31 Suppliers and Customers. To the knowledge of the Corporation, KCI and
the Shareholders, the relations between the Corporation and KCI and each of
their respective customers are good. Neither the Corporation, KCI 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 or KCI intends to cease providing such
items to the Corporation or KCI, nor does the Corporation, KCI 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 or KCI intends to terminate, limit or reduce its business
relations with the Corporation or KCI.
3.32 Absence of Certain Business Practices. Neither the Corporation, KCI 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 or KCI in
connection with any actual or proposed transaction which (a) may reasonably
subject the Corporation or KCI to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (b) if not given in the
past, might have had a material adverse effect on the financial condition,
business or results of operations of the Corporation or the KCI Business, or
(c) if not continued in the future, might materially adversely affect the
financial condition, business or operations of the Corporation or the KCI
Business or which might subject the Corporation or WCI to suit or penalty in
any private or governmental litigation or proceeding.
3.33 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 reasonably apparent from a fair reading of the Schedule
on which the matter is disclosed.
3.34 No Misleading Statements. The representations and warranties of the
Corporation, KCI and the Shareholders contained in this Agreement, the
Exhibits and Schedules 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.
3.35 Knowledge. Wherever reference is made in this Agreement to the
"knowledge" of the Shareholders, such term means the actual knowledge of the
Shareholders. 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 or
KCI, such term means the actual knowledge of Tom Kobus, Debbie Kobus and
Kelly Danielson.
3.36 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Corporation, KCI 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, KCI or a
Shareholder.
3.37 S Corporation. The Corporation has elected to be treated as an S
Corporation within the meaning of the Code for the years listed on Schedule
3.37.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders and KCI, which
representations and warranties are true and correct, as follows:
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. Any wholly owned
subsidiary of WCI which acquires the Assets of KCI shall be, as of Closing,
qualified to do business in Nebraska.
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.
4.3 Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by WCI and, subject to the due authorization,
execution and delivery by the Corporation, KCI and the Shareholders,
constitutes a legal, valid and binding obligation of WCI enforceable against
WCI in accordance with its terms. WCI has full corporate power, legal right
and corporate authority to enter into and perform its obligations under this
Agreement and to carry on its business as presently conducted. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of and compliance with the terms and
conditions hereof do not and will not, after the giving of notice, or the
lapse of time or otherwise: (a) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to WCI; (b)
conflict with any of the provisions of the Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws of WCI; or (c) conflict with,
result in a breach of or constitute a default under any material agreement or
instrument to which WCI is a party or by which it is bound.
4.4 No Misleading Statements. The representations and warranties of WCI
contained in this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to the Shareholders pursuant hereto are
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.
4.5 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI in connection with the
transactions contemplated by this Agreement and no person is entitled to any
broker's, finder's, financial advisory or similar fee or payment in respect
thereof based in any way on any agreement, arrangement or understanding made
by or on behalf of WCI.
4.6 Disclosure Schedules. Any matter disclosed by WCI on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature
disclosed is obvious from a fair reading of the Schedule on which the matter
is disclosed.
5. COVENANTS FROM SIGNING TO CLOSING DATE
5.1 Operations. Between the date hereof (the "Signing Date") and the Closing
Date, the Corporation and KCI will, and the Shareholders will cause the
Corporation and KCI to:
(a) carry on each respective business in substantially the same manner as
heretofore and not introduce any material new method, or discontinue any
existing material method, of operation or accounting;
(b) maintain the properties and facilities of the Corporation and KCI,
including those held under leases, in as good working order and condition as
at present, ordinary wear and tear excepted;
(c) perform all material obligations under agreements relating to or
affecting the assets, properties, business operations and rights of the
Corporation and KCI;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage, provided that WCI shall reimburse the
Shareholders for that portion of the premiums which relate to periods
following the Closing Date with respect to policies issued or renewed and
paid for on or after the Effective Date and prior to the Closing Date;
(e) use reasonable efforts to maintain and preserve the business organization
of the Corporation and KCI intact, retain present employees and maintain
relationships with suppliers, customers and others having business relations
with the Corporation and KCI on a basis consistent with past practice;
(f) file on a timely basis all notices, reports or other filings required to
be filed with or reported to any federal, state, municipal or other
governmental department, commission, board, bureau, agency or any
instrumentality of any of the foregoing wherever located with respect to the
continuing operations of the Corporation;
(g) maintain compliance with all Collection Franchises and Governmental
Permits and all laws, rules, regulations and consent orders consistent with
past practice;
(h) file on a timely basis all complete and correct applications or other
documents necessary to maintain, renew or extend any permit, license,
variance or any other approval required by any governmental authority
necessary and/or required for the continuing operation of the Corporation's
and KCI's business operations, whether or not such approval would expire
before or after the Closing; and
(i) advise WCI promptly in writing of any material change in any document,
Schedule, Exhibit, or other information delivered pursuant to this Agreement.
5.2 No Change. Between the Signing Date and the Closing Date, the
Corporation and KCI will not, and the Shareholders will not permit the
Corporation to, take any action described below without the prior written
consent of WCI:
(a) make any change in the Articles of Incorporation or Bylaws of the
Corporation and KCI;
(b) authorize, issue, transfer, pledge, distribute or sell any of the
Corporation's Stock or any other securities of the Corporation or KCI;
(c) except as set forth on Schedule 3.3 with respect to Excluded Assets,
declare or pay any dividend or make any distribution in respect of the
capital stock of the Corporation or KCI whether now or hereafter outstanding,
or purchase, redeem or otherwise acquire or retire for value any shares of
the capital stock or the Corporation or KCI;
(d) enter into any contract or commitment or incur or agree to incur any
liability other than in the ordinary course of business other than the
transactions contemplated by this Agreement or make any single capital
expenditure in excess of $10,000 or in excess of $25,000 in the aggregate
during any consecutive thirty (30) day period without regard to whether such
capital expenditure is in the ordinary course of business;
(e) except as set forth on Schedules 3.17 and 3.22, change or promise to
change the compensation payable or to become payable to any director,
officer, employee or agent, or make or promise to make any bonus payment to
any such person;
(f) create, assume or otherwise permit the imposition of any mortgage, pledge
or other lien or encumbrance upon or grant any option or right of first
refusal with respect to any assets or properties whether now owned or
hereafter acquired;
(g) except as set forth on Schedule 3.3 with respect to Excluded Assets,
sell, assign, lease or otherwise transfer or dispose of any property or
equipment other than in the ordinary course of business;
(h) merge or consolidate or agree to merge or consolidate with or into any
firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend, terminate or enter into any material agreement or any site
assessment, permit, license or other right, without the prior written consent
of WCI other than in the ordinary course of business;
(k) enter into any other transaction outside the ordinary course of the
Corporation's or KCI's business or prohibited hereunder; or
(l) take any action or suffer or permit any event to occur that would cause
any representation or warranty of the Corporation, KCI or the Shareholders to
become untrue as of the Closing Date.
5.3 Obtain Consents. Promptly after the Signing Date, the Corporation and KCI
will, and the Shareholders shall cause the Corporation and KCI to, make all
filings and take all steps reasonably necessary to obtain all consents and
approvals, if any, of each other party whose consent or approval is necessary
to permit the consummation of the transactions contemplated in this Agreement
pursuant to, or required to prevent the breach of or permit the assignment
of, any material Collection Franchises, Governmental Permits, or Governmental
Consents (the "Necessary Consents"), and shall take all steps necessary to
obtain all other non-material approvals and non-material consents required to
be obtained by the Corporation, KCI or the Shareholders to consummate the
transactions contemplated by this Agreement.
5.4 Access; Confidential Information. Between the Signing Date and the
Closing Date, the Shareholders, the Corporation and KCI will, and the
Shareholders will cause the Corporation and KCI to, afford to the officers
and authorized representatives of WCI, including, without limitation, its
engineers, counsel, independent auditors and investment bankers, reasonable
access to the Facilities, plants, Corporate Property, KCI Property and other
properties, books and records of the Corporation and KCI, and will furnish
WCI with such additional financial and operating data and other information
as to the business and properties of the Corporation and KCI as WCI may from
time to time reasonably request. The Shareholders will and will cause the
Corporation and KCI to cooperate with WCI, its representatives and counsel in
the preparation of any documents or other material which may be required by
any governmental agency. The Shareholders, the Corporation and KCI shall
provide to WCI such information and materials regarding the Corporation or
the KCI business, as WCI may reasonably request on or before December 22,
1998. WCI will cause all information obtained from the Shareholders, the
Corporation or KCI, in connection with WCI's due diligence review and the
negotiation and performance of this Agreement to be treated as confidential
(except such information which is in the public domain or which WCI may be
required to disclose to any governmental agency, or pursuant to any court or
regulatory agency order) and will not use, and will not knowingly permit
others to use, any such confidential information in a manner detrimental to
the Corporation, the Shareholders or KCI. Each party hereto shall not
disclose to any third person other than their accountants, bankers or legal
counsel any of the terms or provisions of this Agreement prior to or after
the Closing Date without prior written consent of WCI (in the case of
disclosures by the Corporation (prior to Closing), or the Shareholders or
Tom), or of the Shareholders or Tom (in the case of disclosures by the
Corporation (after the Closing) or WCI).
5.5 Notice of Material Adverse Change. The Corporation, KCI and the
Shareholders shall promptly notify WCI of any material adverse change in the
business or financial condition of the Corporation or KCI, including any
lawsuit, claim, audit, investigation, or other proceeding, between the date
of this Agreement and the Closing Date.
5.6 Completion of Schedules. The Corporation, Shareholders and KCI, as
applicable, shall prepare and submit to WCI the Schedules to this Agreement
in a form reasonably acceptable to WCI no later than December 22, 1999.
5.7 Title Commitment. On or before December 22, 1998, Shareholders and the
Corporation shall deliver to WCI, at WCI's expense, a current ALTA
preliminary title commitment issued by a nationally recognized title company,
which title commitment shall be acceptable to WCI.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE
The obligations of WCI under this Agreement are subject to the satisfaction,
at or before Closing, of all of the following conditions precedent, unless
waived in writing by WCI:
6.1 Representations and Warranties. All representations and warranties of
the Corporation, KCI and the Shareholders contained in this Agreement or in
any Exhibit, Schedule, certificate or document delivered by the Corporation,
KCI or the Shareholders under this Agreement shall be true, correct and
complete on and as of the date when made in all material respects, and
(except to the extent that such representations and warranties speak of an
earlier date) shall be deemed to be made again on the Closing Date, and shall
then be true, correct and complete in all material respects as of the Closing
Date.
6.2 Conditions. The Corporation, KCI and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by them on or before the Closing Date.
6.3 No Material Adverse Change. Since the Signing Date, there shall not have
been any material adverse change in the condition (financial or otherwise) of
the business, properties or assets of the Corporation or KCI.
6.4 Certificates. The President of the Corporation and KCI shall have
delivered to WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI and the Shareholders, certifying to the
fulfillment of the conditions set forth in Sections 6.1, 6.2 and 6.3, and the
Shareholders shall have delivered to WCI a certificate dated as of the
Closing Date, in form and substance satisfactory to WCI and the Shareholders,
certifying to the fulfillment of the conditions set forth in Section 6.1, 6.2
and 6.3 applicable to the Shareholders.
6.5 No Litigation. None of the transactions contemplated hereby shall have
been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened
or instituted and no investigative or other demand shall have been made by
any federal or state governmental branch, agency, commission or regulatory
authority.
6.6 Other Deliveries. The Shareholders shall have delivered the items which
they are required to deliver under Section 8 of this Agreement.
6.7 Necessary Consents . All Necessary Consents shall have been obtained.
6.8 Due Diligence. WCI and its representatives have and shall continue to
have reasonable rights of inspection of the Corporation's and KCI's
businesses and assets in connection with WCI's due diligence review, and the
results of WCI's due diligence review shall be reasonably acceptable to it.
WCI shall have reviewed all of the schedules to this Agreement and all
documents related to any of the Corporation's benefits plans, and all such
schedules and documents shall be reasonably satisfactory to WCI or any
problems reflected in, or indicated by, such schedules or documents shall
have been resolved to the reasonable satisfaction of WCI.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS THE CORPORATION AND
KCI TO CLOSE
The obligations of the Corporation, KCI and Shareholders under this Agreement
are subject to the satisfaction, at or before Closing, of all of the
following conditions precedent, unless waived in writing by the Shareholders:
7.1 Representations and Warranties. All representations and warranties of
WCI contained in this Agreement or in any statement, Exhibit, Schedule,
certificate or document delivered by WCI under this Agreement shall be true,
correct and complete on and as of the date when made in all material
respects, and (except to the extent that such representations and warranties
speak of an earlier date) shall be deemed to be made again on the Closing
Date, and shall then be true, correct and complete in all material respects
as of the Closing Date.
7.2 Conditions. WCI shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by it on or before the Closing Date.
7.3 Certificate. WCI shall have delivered to the Shareholders a certificate,
dated as of the Closing Date, in form and substance satisfactory to the
Shareholders, certifying to the fulfillment of the conditions set forth in
Sections 7.1 and 7.2.
7.4 No Litigation. None of the transactions contemplated hereby shall have
been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened
or instituted and no investigative or other demand shall have been made by
any federal or state governmental branch, agency, commission or regulatory
authority.
7.5 Other Deliveries. WCI shall have delivered the items which it is
required to deliver under Section 8 of this Agreement.
7.6 Necessary Consents . All Necessary Consents shall have been obtained.
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries indicated:
8.1 WCI Deliveries.
(a) WCI shall deliver to the Shareholders and KCI the Purchase Price required
to be delivered on the Closing Date pursuant to Section 1.5.
(b) WCI shall execute and deliver a Consulting Agreement with Tom Kobus in
form and substance reasonably satisfactory to the parties.
(c) WCI shall execute and deliver a Consulting Agreement with Debbie Kobus in
form and substance reasonably satisfactory to the parties.
(d) WCI shall execute and deliver an Employment Agreement with Kelly
Danielson in form and substance reasonably satisfactory to the parties.
(e) WCI shall execute and deliver the License Agreement and the Declaration
of Access, Ingress, and Egress Agreement, each in form and substance
reasonably satisfactory to the parties.
(f) WCI shall execute and deliver a Stock Option Agreement for Terry Hottovy
in form and substance reasonably satisfactory to the parties.
(g) WCI shall execute and deliver to KCI an Assignment and Assumption
Agreement in form and substance reasonably satisfactory to the parties.
(h) WCI shall deliver to the Shareholders an opinion of counsel for WCI dated
as of Closing in form and substance reasonably satisfactory to the parties.
(i) WCI shall execute and deliver to the Shareholders and KCI the certificate
set forth in Section 7.3.
(j) WCI shall deliver to Shareholders certified copies of the Amended and
Restated Certificate of Incorporation and Amended and Restated By-laws of
WCI, and a certified copy of the resolutions of the Executive Committee of
the Board of Directors of WCI authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby.
(k) WCI shall deliver such other documents and instruments as are reasonably
requested by the Shareholders, the Corporation and KCI to consummate the
transactions contemplated by this Agreement.
8.2 Shareholders' and KCI's Deliveries.
(a) The Shareholders shall deliver to WCI the certificates representing the
outstanding Corporation's Stock free and clear of all liens, security
interests, encumbrances, restrictions, pledges and claims, accompanied by a
stock power duly executed in blank.
(b) Each of the Shareholders, as a group, and KCI shall deliver to WCI an
opinion of counsel for the Shareholders and an opinion of counsel for KCI,
respectively, dated as of the Closing Date, in form and substance reasonably
satisfactory to the parties.
(c) All Necessary Consents shall have been obtained.
(d) The Shareholders shall cause each officer and director of the
Corporation to deliver a resignation as an officer and/or director of the
Corporation.
(e) KCI shall deliver to WCI an executed bill of sale and other instruments
of transfer and conveyance for the full and complete transfer, conveyance,
assignment and delivery to WCI on the Closing Date of all of KCI's right,
title and interest in and to all of the Assets in form and substance
reasonably satisfactory to the parties.
(f) Shareholders and KCI shall execute and deliver to WCI an Assignment and
Assumption Agreement in form and substance reasonably satisfactory to the
parties.
(g) KCI shall deliver to WCI all motor vehicle registrations and ownership
documents for the motor vehicles being acquired from KCI by WCI.
(h) The Shareholders, the Corporation and KCI shall deliver such other
documents and instruments as are reasonably requested by WCI to consummate
the transactions contemplated by this Agreement.
(i) The Corporation, KCI and the Shareholders shall execute and deliver to
WCI the certificates set forth in Section 6.4.
(j) [OMITTED]
(k) Shareholders, the Corporation and KCI shall deliver to WCI certified
copies of the Articles of Incorporation and Bylaws of the Corporation and
KCI, and a certified copy of the resolutions of the Board of Directors of
each of the Corporation and KCI authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby.
(l) Shareholders shall deliver to WCI a bill of sale executed by Kobus (as
defined below) or other instruments of transfer and conveyance for the full
and complete transfer, conveyance, assignment and delivery to WCI on the
Closing Date of Kobus' right, title and interest to that certain bulldozer
set forth in Exhibit 8.2(l) in form and substance reasonably satisfactory to
the parties.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION, KCI AND THE SHAREHOLDERS
9.1 No Delay. The Corporation, KCI, the Shareholders and WCI covenant and
agree from and after the date hereof not to hinder in any way or unreasonably
delay the Closing Date and to use their respective reasonable efforts to
obtain required Governmental Consents and otherwise to cause the Closing Date
to occur as soon as reasonably practicable after the date of this Agreement,
provided, however, that in using its reasonable efforts WCI shall not be
required to take any action or to agree to any condition, including without
limitation any condition imposed by any government authority with respect to
the transfer of any Governmental Permit, that, in WCI's reasonable judgment,
imposes a materially adverse financial burden or operating condition on WCI.
9.2 Release of Guaranties. WCI shall use reasonable efforts to obtain the
termination and release promptly after the Closing Date of the personal
guaranties of the Shareholders listed on Schedule 9.2. If WCI is unsuccessful
in its efforts to obtain such termination and release, 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 or KCI (to the extent assumed by WCI pursuant to this Agreement)
as of the Closing Date which is personally guaranteed by the Shareholders
pursuant to such guaranties. The Shareholders may notify the obligees under
such guaranties that they have terminated their obligations under such
guaranties. The Shareholders shall cooperate with WCI in obtaining such
releases.
9.3 Release of Security Interests. Between the Signing Date and the Closing
Date, 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 the 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 (other than the indebtedness of the Corporation) of the
Shareholders to be released to the reasonable satisfaction of WCI. On or
after the Closing Date, KCI, the Shareholders and their respective Affiliates
shall cause those security interests in the Assets that have been created in
favor of financial institutions or other lenders to secure indebtedness
(other than indebtedness of KCI), the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI.
9.4 Confidentiality. No party hereto shall disclose or make any public
announcements of the transactions contemplated by this Agreement without the
prior written consent of the others; provided, however, any party may make
such disclosure or announcement required by law, including any applicable
securities laws or disclosures required thereunder, in which event the party
making the disclosure or announcement shall notify the others at least
twenty-four (24) hours before such disclosure or announcement is expected to
be made.
9.5 Broker's and Finder's 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.
9.6 Taxes. WCI shall reasonably cooperate with the Shareholders, at the
Shareholders expense, with respect to any matters involving the Shareholders
arising out of the Shareholders' ownership of the Corporation prior to the
Closing, including matters relating to tax returns and any tax audits,
appeals, claims or litigation with respect to such tax returns or the
preparation of such tax returns. In connection therewith, WCI shall make
available to the Shareholders such files, documents, books and records of the
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.
9.7 Short Year Tax Returns. After the Closing Date, the Shareholders shall
prepare at their sole cost and expense all short year federal, state, county,
local and foreign tax returns for the Corporation 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 Closing Date. Each such return shall
be prepared in a financially responsible and conservative manner and shall be
delivered to WCI, together with all necessary supporting schedules within 120
days following the Closing Date or at least sixty (60) days prior to the
required filing date, whichever is earlier, for WCI's approval (such
approval, however, shall not relieve the Shareholders of their responsibility
for the taxes assessed under these returns). The Shareholders shall be
responsible for the payment of all taxes shown to be due or that may come to
be due on such returns or otherwise relating to the period prior to the
Closing Date in excess of the amount of any reserve for taxes included in
Effective Date Current Liabilities and shall be responsible for any taxes
incurred on the Net Profits. The Shareholders shall also be responsible for
all taxes arising from the conversion of the Corporation from a cash to an
accrual basis of reporting whether or not due on such returns or on the first
return filed by that Corporation for the period commencing after the Closing
Date. At the time of the delivery of the returns, the Shareholders shall
contemporaneously deliver to WCI checks payable to the respective taxing
authorities in amounts equal to the amount due. WCI shall sign tax returns
and cause such returns to be timely filed with the appropriate authorities.
The Shareholders shall be entitled to receive all refunds shown on said
returns and any such refunds received by the Corporation or WCI shall be
remitted to the Shareholders.
9.8 Certain Tax Matters. The Shareholders acknowledge that WCI has indicated
its intention to make an election under Section 338(h)(10) of the Code. 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 at the Closing;
and
WCI and the Shareholders shall agree upon the allocation of the portion of
the Purchase Price allocated to WCI's purchase of the Corporation's Stock
among the assets (including intangible assets) of the Corporation as set
forth on Schedule 1.6.
9.9 Continued Employment. WCI shall offer all employees of the Corporation
continued employment after the Closing on substantially the same terms and
conditions as they were employed by the Corporation immediately prior to the
Closing; provided, however, that WCI shall offer such employees the same
benefits (including, but not limited to, medical and disability insurance,
vacation and sick leave, and retirement benefits) that WCI offers to its
other employees with similar responsibilities.
9.10 Covenants of WCI.
(a) WCI hereby agrees to cause the Corporation to offer to Kobus
Earth Moving, Inc. ("Kobus") on the same terms and conditions as any third
party, an opportunity to bid and to match the lowest bid on any contracts, on
the same terms and conditions as any third party, involving any earth moving
operations at the Butler County Landfill that Kobus is able to perform within
its traditional business capabilities.
(b) If within two (2) years immediately following the Closing Date,
WCI or any of its Affiliates, sells any or all of the Corporation's stock or
the assets of the Corporation to any party other than a party to this
agreement or any Affiliate of WCI, WCI agrees to pay to Tom and Debbie Kobus,
jointly, a sum equal to twenty percent (20%) of (a) the purchase price
received for such stock or assets minus (b) the following: (i) the
consideration received by the Shareholders under this Agreement so allocated
to such stock, (ii) all capital expenses made by the Corporation since the
Closing Date, and (iii) all net losses incurred by the Corporation since the
Closing Date. The provisions of this Section 9.10(b) shall not apply to any
transaction which results in a change of control of WCI.
(c) WCI agrees to maintain, at Shareholders' expense, any pollution
liability or other insurance reasonably requested by Shareholders, covering
the assets, business or operations of the Corporation or KCI. WCI agrees to
provide to Shareholders, upon request, evidence that such insurance continues
to be in effect and that all premiums due have been paid.
9.11 Closing Date Debt. WCI shall, on or promptly after the Closing Date,
pay or satisfy the Closing Date Debt.
10. INDEMNIFICATION
10.1 Indemnity by the Shareholders. The Shareholders and KCI, jointly and
severally, subject to the limitations set forth in Section 10.2, covenant and
agree that they will indemnify and hold harmless WCI, the Corporation and
their respective directors, officers and agents and their respective
successors and assigns (collectively the "WCI Indemnitees"), from and after
the Closing Date, against any and all losses, damages, assessments, fines,
penalties, adjustments, liabilities, claims, deficiencies, costs, expenses
(including specifically, but without limitation, reasonable attorneys' fees
and expenses of investigation), expenditures, including, without limitation,
any Environmental Site Losses (as such term is hereinafter defined)
identified by a WCI Indemnitee in a Claims Notice (as defined in Section
10.4(a)), provided that any such Claims Notice shall be given prior to (i)
for tax related Claims, the expiration of the third anniversary of the date
of filing of the Corporation's federal, and Nebraska income tax returns for
the fiscal year ending on the Closing Date, (ii) for all other Claims, the
third anniversary of the Closing Date, or (iii) in the case of Fraud (as
defined below) prior to ninety (90) days following the expiration of the
applicable statute of limitations (irrespective of the date of discovery),
with respect to each of the following contingencies (the "10.1 Indemnity
Events"):
(a) Any misrepresentation, breach of warranty, or nonfulfillment of any
agreement or covenant on the part of the Shareholders, KCI 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 of a representation or a
warranty, WCI relied on the truth of such representation or warranty or had
any knowledge of any breach thereof.
(b) Any Environmental Site Losses. 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 the
Corporation or KCI 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 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 prior to Closing, whether such Release is into the air, water
(including groundwater) or land, and whether such Release is discovered
before or after the Closing Date. The term "Release" as used herein means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the ambient
environment. Notwithstanding anything in this paragraph to the contrary, it
is specifically understood and agreed that a Release composed solely of any
substance disposed of in compliance with any material Governmental Permits or
Hazardous Substances contained in household waste lawfully disposed of in a
landfill during the time the Corporation or KCI owned and/or operated such
landfill does not constitute an Environmental Site Loss; and it is further
understood that an Environmental Site Loss shall not include any loss arising
from the intentional or negligent acts or omissions of WCI or the Corporation
which occur after the Closing Date.
(c) All matters required to be described on Schedule 3.8, Part II, of which
the Corporation, KCI or any of the Shareholders have knowledge on the Closing
Date and which are not so described.
(d) 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.
10.2 Indemnification by WCI. WCI, subject to the limitations set forth in
Section 10.2, covenants and agrees that it shall indemnify the Shareholders,
KCI and their respective directors, officers, agents, heirs, trustees,
beneficiaries, successors and assigns (collectively, "Shareholder
Indemnitees"), from and after the Closing Date against any and all losses,
damages, assessments, fines, penalties, adjustments, liabilities, claims,
deficiencies, costs, expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation),
expenditures identified by a Shareholder Indemnitee in a Claims Notice;
provided that any such Claims Notice shall be given prior to the third
anniversary of the Closing Date, or in the case of Fraud, prior to ninety
(90) days following the expiration of the applicable statute of limitations
irrespective of the date of discovery with respect to each of the following
contingencies (the "10.2 Indemnity Events"):
(a) Any misrepresentation, breach of warranty or nonfulfillment of any
agreement or covenant on the part of WCI 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 or KCI pursuant to the terms of this Agreement, regardless of
whether, in case of a breach of a representation or warranty, Shareholders or
KCI relied on the truth of such representation or warranty or had any
knowledge of any breach thereof.
(b) Any breach or failure of WCI to pay or perform any of the Assumed
Contracts from and after the Closing Date.
(c) Any obligations and liabilities in respect of the Corporation, and any
obligations and liabilities of the KCI Business assumed pursuant to this
Agreement.
(d) All actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorney's fees and expenses of investigation) incident to any of the
foregoing.
10.3 Limitations on Indemnities.
(a) The obligations to indemnify as provided in this Section 10 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 10.1 Indemnity Events or any or all
10.2 Indemnifying Events exceeds one hundred thousand dollars ($100,000) (the
"General Deductible Amount"); provided, that the amount of any obligation of
indemnity arising with respect to any representation, warranty or covenant
contained in Sections 3.1 through 3.4, 3.23, 4.1 through 4.4, 9.2, 9.7 9.10
and 9.11 hereof and pursuant to Section 10.2(b) (the "Absolute Covenants")
shall not be subject to the General Deductible Amount.
(b) Absent Fraud and except with respect to Claims based on the breach of any
of the Absolute Covenants, the maximum amount that any party hereto can
recover as a result of one or more 10.1 or 10.2 Indemnity Events pursuant to
the provisions hereof for Claims shall not in the aggregate exceed 70% of
the Purchase Price with respect to Claims made prior to the first anniversary
of the Closing Date, 55% of the Purchase Price with respect to Claims made on
or after the first anniversary of the Closing Date and prior to the second
anniversary of the Closing Date, and 40% of the Purchase Price with respect
to Claims made on or after the second anniversary of the Closing Date and
prior to the third anniversary of the Closing Date, and thereafter nothing in
the absence of Fraud or Claims with respect to any of the Absolute Covenants.
The amount any party can recover as a result of a 10.1 or 10.2 Indemnity
Event shall also be net of any tax benefit received by such party as a result
of such Indemnity Event. Notwithstanding the foregoing, Claims for breach of
any of the Absolute Covenants shall not exceed the total aggregate Purchase
Price received by Shareholders pursuant to this Agreement. For the purposes
of this Section 10, "Fraud" shall mean fraud, fraudulent inducement or
intentional misrepresentation or concealment.
(c) Except to the extent the same shall directly result in a material
increase in insurance premiums on a prospective basis, the Shareholders shall
not be required to indemnify any WCI Indemnitee, nor shall WCI be required to
indemnify any Shareholder Indemnitee, for any Claim to the extent that such
Claim has been reimbursed or is reimbursable through insurance proceeds
received or receivable by the Indemnitee. The Indemnitee shall allow the
Indemnifying Party to pursue such insurance proceeds and shall reasonably
cooperate with the Indemnifying Party in connection therewith. 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 Indemnifying Party 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.
(d) The WCI Indemnitee or the Shareholder Indemnitee, as the case may be,
shall use reasonable efforts to mitigate any damages to which they are
entitled to Indemnification under this Section 10. The indemnification
provisions of this Section 10 shall be the exclusive remedy in respect of any
breach of warranty, representation or covenant by any party hereto, and for
any Claim for monetary damages arising under this Agreement or from the
transactions contemplated hereby, except for Fraud, provided that nothing in
this Section 10 shall be deemed to be the exclusive remedy or shall limit the
remedies of any party with respect to the breach or nonfulfilllment of the
covenants set forth in Section 11.1 hereof required to be satisfied or
fulfilled after the Closing Date. In addition, the parties shall be entitled
to pursue any claims for non-monetary relief to which they may be entitled at
law or equity.
10.4 Notice of Indemnity Claim.
(a) In the event that any claim ("Claim") is hereafter asserted against or
arises with respect to any WCI Indemnitee or Shareholder Indemnitee as to
which such Indemnitee may be entitled to indemnification hereunder, the WCI
Indemnitee shall notify the Shareholders and KCI, or the Shareholder
Indemnitee shall notify WCI (as applicable collectively, the "Indemnifying
Party") in writing thereof (the "Claims Notice") within 30 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) does not
exceed the limit set forth in Section 10.3(b) at the time the Claim is made
by the Indemnifying Party's own counsel. The Indemnitee may participate, at
the Indemnitee's own expense, in the defense of any Claim assumed by the
Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying Party's receipt of a
Claims Notice, the Indemnifying Party shall have failed to defend a 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.
(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 10.4 shall
not relieve the Indemnifying Party from the obligation to indemnify hereunder
except 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.
10.5 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 for the time
periods set forth in Section 10.1. Unless specifically provided otherwise in
this Agreement, the covenants contained in this Agreement shall survive the
consummation of the transactions contemplated hereby for a period of three
(3) years following the Closing.
10.6 No Exhaustion of Remedies or Subrogation; Right of Setoff. The
Shareholders and KCI 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 or KCI any amount to which any WCI Indemnitee is entitled
to be indemnified hereunder with respect to any 10.1 Indemnity Event. Such
right of set off shall be separate and apart from any and all other rights
and remedies that the WCI Indemnitees may have against the Shareholders, KCI
or their successors.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS, KCI AND WCI
11.1 Restrictive Covenants. The Shareholders and KCI acknowledge that (i)
WCI, as the purchaser of the Corporation's Stock and the Assets, is and will
be engaged in the same business as the Corporation and KCI (the "Business");
(ii) the Shareholders and KCI 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 where it is not
presently conducted; (iv) the Shareholders and KCI have had access to trade
secrets of, and confidential information concerning, the Business; (v) the
agreements and covenants contained in this Section 11.1 are essential to
protect the Business and the goodwill being acquired; and (vi) the
Shareholders 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 11 will not impair such ability. The Shareholders
and KCI covenant and agree as set forth in (a), (b) and (c) below with
respect to the Corporation and the Business:
(a) Non-Compete. For a period commencing on the Closing Date and terminating
five years thereafter (the "Restricted Period"), neither the Shareholders nor
KCI shall, anywhere within a 200-mile radius of David City, Nebraska (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 such a business; 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 or KCI 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 or KCI is a controlling person of, or a member of a group
which controls, such business and further provided that the Shareholders and
KCI do not, in the aggregate, directly or indirectly, own 5% or more of any
class of securities of such business.
(b) Confidential Information. During the Restricted Period and thereafter,
the Shareholders and KCI 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, knowledge, 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 KCI in breach of this
or any other Agreement with WCI, (ii) is general knowledge in the solid waste
handling and landfill business and not specifically related to the Business,
(iii) is independently developed by KCI or the Shareholders after the date
hereof, or (iv) is disclosed to KCI or the Shareholders by a third party
lawfully in possession of such information. Notwithstanding the foregoing,
Shareholders and KCI may disclose and discuss confidential information with
their legal and tax advisors, and as is required in connection with any legal
proceedings.
(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 KCI or made available to them relating to the Business (other
than those relating to Excluded Assets or Excluded Liabilities), but
excluding any materials (other than the minute books of the Corporation)
maintained by any attorneys for the Corporation or KCI or the Shareholders
prior to the Closing, shall be the property of WCI and have been delivered or
will be delivered or made available to WCI at the Closing. WCI shall not
destroy or dispose of any such memoranda, notes, lists, records and other
documents or papers, including such items stored in computer memories, on
microfiche or by any other means, for a period of seven (7) years after the
Closing Date without first giving the Shareholders thirty (30) days prior
written notice of such planned disposal and the opportunity to receive and
retain such records, subject to the Shareholders' duties of confidentiality
hereunder. Following the Closing, for a reasonable period, WCI shall permit
Shareholder reasonable access to WCI's personnel as is reasonably necessary
to assist Shareholders in the transition of ownership in connection with this
Agreement.
(d) Non-Solicitation. For a period commencing on the date hereof and
terminating three (3) years from the Closing Date, without the consent of
WCI, which may be granted or withheld by WCI in its discretion, the
Shareholders and KCI shall not solicit any employees of the Corporation or
WCI to leave the employ of the Corporation or WCI and join the Shareholders
or KCI in any business endeavor owned or pursued by the Shareholders or KCI.
Notwithstanding the foregoing, it shall not be deemed a violation of this
subsection 11.1(d) for Shareholders or KCI to place advertisements in general
circulation announcing general employment opportunities with Shareholders,
KCI or their Affiliates. If an employee of WCI or the Corporation responds
to such general advertisement, and if the Shareholders or KCI interview or
employ such person, the Shareholders or KCI, as the case may be, shall not be
in breach of this subsection 11.1(d).
(e) No Disparagement. For a period commencing on the date hereof and
terminating five (5) years from the Closing Date, none of the Shareholders or
KCI 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 whether or not such statements are
based on acts or omissions which are learned by the Shareholders or KCI 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. This paragraph does not apply to
the extent that testimony or disclosure is required or necessitated by legal
process.
11.2 Rights and Remedies Upon Breach. If the Shareholders or KCI breaches,
or threatens to commit a breach of, any of the provisions of Section 11.1
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 and KCI
from any violation thereof.
(b) Accounting. The right and remedy to require the Shareholders and KCI to
account for and pay over to WCI all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Shareholders or KCI
as the result of any transactions constituting a breach of the Restrictive
Covenants.
(c) Severability of Covenants. The Shareholders and KCI 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 and KCI 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 and KCI 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.
12. GENERAL
12.1 Additional Conveyances. Following the Closing, the Shareholders, KCI
and WCI shall each deliver or cause to be delivered at such times and places
as shall be reasonably agreed upon such additional instruments as WCI or the
Shareholders may reasonably request for the purpose of carrying out this
Agreement. The parties hereto agree to cooperate with each other 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, except that each party will not be required to
furnish information or render assistance with respect to any Claim for
indemnification brought pursuant to Section 10 hereof.
12.2 Assignment. No party hereto may assign or transfer its rights and
obligations under this Agreement without the prior written approval of the
other parties hereto, which consent shall not be unreasonably withheld;
provided, however, WCI may assign WCI's rights under this Agreement to a
wholly owned subsidiary of WCI or as security to any of WCI's lenders without
obtaining the consent of any other party hereto. This Agreement shall inure
only to the benefit of and be binding upon the parties hereto and their
respective heirs, successors and representatives and permitted assigns.
12.3 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.
12.4 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.
12.5 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:
If to KCI:
at their respective addresses set forth on Schedule 3.2
Kobus Construction, Inc.
P.O. Box 126
David City, NE 68632
Fax: (402) 367-4079
With a copy to:
Steven P. Case, Esq.
McGrath, North, Mullin & Kratz, P.C.
One Central Park Plaza, Suite 1400
Omaha, NE 68102
Fax: (402) 341-0216
If to WCI:
Waste Connections, Inc.
2260 Douglas Boulevard, Suite 280
Roseville, California 95661
Attention: Ronald J. Mittelstaedt
Fax: (916) 772-2920
With a copy to: Robert D. Evans, Esq.
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, California 94111
Fax: (415) 421-2922
12.6 Applicable Law; Attorneys' Fees. 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. In the event of any dispute or
controversy between WCI on the one hand and the Corporation, KCI 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.
12.7 No waiver Relating to Claims for Fraud . Notwithstanding anything
herein to the contrary, the liability of any party under this Agreement shall
be in addition to, and not exclusive of any other liability that such party
may have at law or equity based on such party's Fraud. Notwithstanding
anything in this Agreement to the contrary, none of the provisions set forth
in this Agreement, including, but not limited to, the provisions set forth in
Sections 7.1 or 7.2, shall be deemed a waiver by any party to this Agreement
of any right or remedy which such party may have at law or equity based on
any other party's Fraud, nor shall any such provisions limit, or be deemed to
limit, (a) the amounts of recovery sought or awarded in any such claim for
Fraud, (b) the time period during which such a claim for Fraud may be
brought, or (c) the recourse which any such party may seek against another
party with respect to such a claim for Fraud.
12.8 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). State and local sales taxes or transfer
fees arising from the sale of the Assets shall be paid by WCI.
12.9 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.
12.10 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.
12.11 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.
12.12 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, KCI, 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,
KCI, the Shareholders and WCI acting through its officers, thereunto duly
authorized by its Board of Directors.
12.13 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.
12.14 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.
12.15 Rights of Offset. In the event that there is a Post Closing Adjustment
in favor of WCI and the Shareholders or KCI, as the case may be, fail to pay
the amount due to WCI as provided in Section 1.5, WCI may, but shall not be
obligated to, reduce the principal amount due under either or both of the Tom
Kobus Note or the Debbie Kobus Note by an amount equal to the sum owed to WCI
by Shareholders, KCI or both.
13. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
Absolute Covenants Section 10.2
Affiliate Section 3.11
Agreement Page 1
Allocation Section 1.6
Assets Section 1.2
Assumed Contracts Section 1.2(b)
at will Section 8.2
Balance Sheet Date Section 3.7
Break-Up Fee Section 2.4
Business day Section 12.14
Business Section 11.1
Claim Section 10.3
Claims Notice Section 10.3
Closing Date Debt Section 3.23
Closing Date Current Liabilities Section 3.23
Closing Section 2
Closing Date Section 2
Closing Date Current Assets Section 3.23
Code Section 3.11
Collection Franchises Section 3.10
Company Parties
Confidential Information Section 11.1
Corporate Property Section 3.12
Corporation Parties
Corporation's Stock Recitals
Day Section 12.14
Delivered Documents Section 3.20
Environmental Site Section 10.1
Environmental Site Losses Section 10.1
Environmental Laws Section 3.25
ERISA Section 3.18
Exceptions Section 2.4
Excluded Assets Section 1.2
Excluded Liabilities Section 1.4
Facility Section 3.10
Financial Statements Section 3.7
Fixed Assets Section 1.2
Fraud Section 7.2
General Deductible Amount Section 10.2
Golden Parachute Payment Section 3.18
Governmental Consents Section 3.10
Governmental Permits Section 3.10
Hazardous Material Section 3.25
Hazardous Waste Section 3.25
Indemnifying Party Section 10.3
KCI Recitals
KCI Business Recitals
KCI Property Section 3.12
Kobus Section 8.2
Knowledge Section 3.35
Laws Section 3.25
Debbie Korbus Note Section 1.5
Tom Kobus Note Section 1.5
Necessary Consents Section 5.3
Permitted Liens Section 3.12
Post Closing Adjustment Section 1.5
Purchase Price Section 1.1
RCRA Section 3.25
Recipient Section 3.18
Records, Notifications and Reports Section 3.10
Release Section 10.1
Representations and Warranties Section 10.4
Required Governmental Consents Section 3.10
Reserves Section 1.5
Restricted Area Section 11.1
Restricted Period Section 11.1
Restrictive Covenants Section 11.2
Tom Page 1
Indemnity Events Section 10.1
Shareholder Indemnitees Section 10.7
Shareholders Parties
Shares Section 1.5
Signing Date Section 5
Value of the Shares Section 1.5
WCI Parties
WCI Indemnitees Section 10.1
WCI Stock Section 1.5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
CORPORATION: BUTLER COUNTY LANDFILL, INC.
By: ________________________
Its: ________________________
KCI: KOBUS CONSTRUCTION, INC.
By: ________________________
Its: ________________________
WCI: WASTE CONNECTIONS, INC.
By: /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
Chief Executive Officer & President
SHAREHOLDERS:
/s/ Tom Kobus
Tom Kobus
/s/ Debbie Kobus
Debbie Kobus
EXHIBIT 10.2
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO PURCHASE AGREEMENT (the "Amendment"), dated as of
January 7, 1999, to be effective as of January 6, 1999, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), Butler
County Landfill, Inc., a Nebraska corporation ("Butler"), Kobus Construction,
Inc., a Nebraska corporation ("KCI") and Tom Kobus and Debbie Kobus
("Shareholders").
WHEREAS, the parties hereto (the "Parties") have entered into a Purchase
Agreement dated December 11, 1998 (the "Purchase Agreement");
WHEREAS, the Parties desire to amend the Purchase Agreement as contemplated
and agreed to in that certain Agreement among the Parties dated as of January
6, 1999 (the "January Agreement");
WHEREAS, this Amendment shall constitute the first of two amendments to the
Purchase Agreement and contains items numbers 1 and 2 that were to be agreed
upon pursuant to the January Agreement;
WHEREAS, all capitalized terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein and in the Purchase Agreement, the parties hereto, each intending to
be bound hereby, agree as follows
1. Section 1.5 (a) is amended to read in its entirety as follows:
(a) eight million one hundred thousand dollars ($8,100,000), (i) minus the
Closing Date Debt (as defined in Section 3.23(a)), (ii) plus or minus, as the
case may be, the amount by which the Effective Date Current Assets (as
defined in Section 3.23(b)) are greater or less than the Effective Date
Current Liabilities (as defined in Section 3.23(b)), (iii) plus or minus, as
the case may be, the amount of the Net Profit or Net Loss (as hereinafter
defined) of the Corporation and the KCI Business for the period from the
Effective Date through the Closing Date, (iv) minus the Post Closure
Liability (as hereafter defined) and (v) plus $104,213.25 related to the
purchase by the Corporation of approximately 80 acres of land adjacent to the
landfill and that shall be included on Schedule 3.23(a) as Closing Date Debt.
The Closing Date Debt shall be based on pay-off letters obtained from the
Corporation's and KCI's lenders. The Effective Date Current Assets,
Effective Date Current Liabilities, the Net Profit, the Net Loss and the Post
Closure Liability shall be based on estimates of such amounts delivered to
WCI by the Corporation and KCI at Closing. As used herein, the term "Net
Profit" or "Net Loss" shall mean the net profit or net loss of the
Corporation and the KCI Business calculated in materially the same manner
that net profit and net loss were calculated for the Corporation and the KCI
Business for the periods prior to the Effective Date, and which profits or
losses shall be incurred in compliance with Section 5 herein. The term "Post
Closure Liability" shall mean the amount by which the Corporation's estimated
closure and post closure liabilities with respect to the landfill set forth
on Schedule A (based on engineering estimates taking into account the
airspace depleted prior to the Effective Date) exceeds the reserves
established therefor (the "Reserves"), all as more specifically set forth on
Schedule 1.5(a)(iv).
At Closing, the following portion of the Purchase Price shall be paid to the
Shareholders and KCI in immediately available funds by wire transfer: eight
million one hundred thousand dollars ($8,100,000) (v) minus the Closing Date
Debt, (w) plus or minus, as the case may be, any estimated Net Loss or Net
Profit (x) minus the Post Closure Liability, (y) plus or minus, as the case
may be, the amount by which the estimated Effective Date Current Assets are
greater or less than the estimated Effective Date Current Liabilities, and
(z) plus $104,213.25 included in Closing Date Debt as set forth above.
Within ninety (90) days after the Closing, WCI and the Shareholders shall
determine the actual Closing Date Debt, Effective Date Current Assets,
Effective Date Current Liabilities, Net Profit or Net Loss, and Post Closure
Liability. If the difference between the actual amounts of such items and
the estimated amounts provided at Closing results in an increase in the
amount that should have been paid at the Closing over the amount that was so
paid, WCI shall promptly pay such amount to the Shareholders or KCI, as the
case may be; if the result is a decrease in the amount that should have been
paid at the Closing from the amount that was so paid, the Shareholders or
KCI, as the case may be, shall promptly pay such amount to WCI (the "Post
Closing Adjustment").
2. A new Section 1.8 is added to read in its entirety as follows:
1.8 Additional Contingent Purchase Price. If within twelve (12)
months following the Closing Date, the Corporation receives a final and
unappealable permit to expand its municipal solid waste landfill beyond its
current existing total permitted air space by a minimum of 6,500,000 cubic
yards, WCI shall pay to Shareholders as additional contingent purchase price
a number of shares of WCI's Common Stock, par value $0.01 ("WCI Stock"),
which shall be delivered by WCI to the Shareholders within fifteen (15) days
following the date WCI receives notice that such permit is final and
unappealable (the "Final Date") determined as follows: The number of shares
of WCI Stock to be delivered pursuant to this Section 1.8 shall be an amount
equal to one million three hundred thousand dollars ($1,300,000) divided by
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 following the Final Date (the "Average Closing Price"). The Average
Closing Price and the number of shares of WCI Stock to be delivered pursuant
hereto shall be appropriately adjusted in the event of any change in WCI
Stock during the period used in determining the Average Closing Price,
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 multiplied by the fraction of a share of WCI Stock
that would otherwise be issued. WCI shall have sole discretion in
determining whether and on what terms it will pursue such permit, and WCI
shall not be liable to any of the Shareholders for any decision not to pursue
such permit or its failure to obtain such permit, without regard to the
reason therefor. Notwithstanding anything in this Section 1.8 to the
contrary, WCI reserves the right to, at its option or if applicable
securities laws will not permit the issuance of WCI Stock to Shareholders as
contemplated herein, pay such additional contingent purchase price to
Shareholders in cash.
Shareholders acknowledge that the WCI Stock issued pursuant to this Section
1.8 will be unregistered stock and Shareholders shall, as a condition to the
receipt thereof, execute any such documents as WCI shall reasonably request.
Each Shareholder further represents that:
(a) Each of the Shareholders is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933, as amended (the "Act"). Each of the
Shareholders has such knowledge and experience in financial matters, either
alone or with the Shareholder's professional advisors, that he or she is
capable of evaluating the merits and risks of the investment in the WCI
Stock.
(b) Each of the Shareholders is a resident of the State of Nebraska.
(c) Each of the Shareholders has had access to such information relating to
WCI as such Shareholder feels is reasonably necessary to make an informed
investment decision with respect to the WCI Stock.
(d) Each of the Shareholders has had the opportunity to ask questions and
receive answers concerning the terms and conditions of this Section 1.8 and
to obtain additional information that WCI possesses or can obtain without
unreasonable effort or expense that is necessary to verify the accuracy of
the information provided with respect to the potential issuance of the WCI
Stock.
(e) In the event the conditions set forth in this section 1.8 are met, each
of the Shareholders will acquire the WCI Stock pursuant to this Agreement for
his or her own account, not as a nominee or agent. No one else will have any
interest, beneficial or otherwise, in any of the WCI Stock issued to such
Shareholder.
(f) Each of the Shareholders is able to bear the economic risk of such an
investment in the WCI Stock, is aware that he or she must be prepared to hold
such WCI Stock for an indefinite period and is aware that the WCI Stock has
not been registered under the Act, or registered or qualified under the
securities laws of any state, on the ground, among others, that no
unregistered distribution or public offering of the WCI Stock is to be
effected and the WCI Stock is to be issued by WCI without any public offering
within the meaning of section 4(2) of the Act.
(g) Without in any way limiting the representations herein, each of the
Shareholders further agrees that such Shareholder shall not encumber, pledge,
hypothecate, sell, transfer, assign or otherwise dispose of, or receive any
consideration for, any of the WCI Stock or any interest in them, unless and
until prior to any proposed encumbrance, pledge, hypothecation, sale,
transfer, assignment or other disposition, (i) a registration statement on
Form S-1 or S-3 (or any other form appropriate for the purpose of replacing
such form) under the Act with respect to the WCI Stock proposed to be
transferred or otherwise disposed of shall be then effective, (ii)(a) he or
she shall have furnished WCI with a detailed statement of the circumstances
of the proposed disposition, and (b) he or she shall have furnished WCI with
an opinion of counsel or no-action letter issued by the Staff of the SEC
(obtained at the Shareholders' expense) in form and substance satisfactory to
WCI to the effect that such disposition will not require registration of any
such WCI Stock under the Act or qualification of any such WCI Stock under any
other securities law; or (iii) Rule 144 is available with respect to such
transaction.
(h) Each of the Shareholders understands and agrees that each certificate or
other instrument representing WCI Stock will bear a legend on the face
thereof (or on the reverse thereof with a reference to such legend on the
face thereof) which legend restricts the sale, transfer or other disposition
of the WCI Stock otherwise than in accordance with Section 1.8(g) of this
Agreement; provided, however, that WCI shall, on the request of any of the
Shareholders, cause such legends to be removed from the certificates or other
instrument evidencing the WCI Stock if such Shareholder has held such WCI
Stock for the period contemplated by Rule 144(k) under the Act and if the
Shareholder is not then and has not been during the three months preceding
such request an affiliate of WCI (as defined in Rule 144 under the Act).
Each of the Shareholders understands and agrees that the WCI Stock will be
"restricted securities" as that term is defined in Rule 144 under the Act
and, accordingly, that the WCI Stock must be held indefinitely unless
subsequently registered under the Act or an exemption from such registration
is available.
3. Except as specifically amended hereby, the provisions of the Purchase
Agreement shall remain in full force and effect.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
CORPORATION: BUTLER COUNTY LANDFILL, INC.
By: ________________________
Its: ________________________
KCI: KOBUS CONSTRUCTION, INC.
By: ________________________
Its: ________________________
WCI: WASTE CONNECTIONS, INC.
By: /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
Chief Executive Officer & President
SHAREHOLDERS:
/s/ Tom Kobus
Tom Kobus
/s/ Debbie Kobus
Debbie Kobus
EXHIBIT 10.3
AMENDMENT NO. 2
TO
PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO PURCHASE AGREEMENT (the "Amendment"), dated as of
January 8, 1999, to be effective as of January 6, 1999, is entered into by
and among Waste Connections, Inc., a Delaware corporation ("WCI"), Butler
County Landfill, Inc., a Nebraska corporation ("Butler"), Kobus Construction,
Inc., a Nebraska corporation ("KCI") and Tom Kobus and Debbie Kobus
("Shareholders").
WHEREAS, the parties hereto (the "Parties") have entered into a Purchase
Agreement dated December 11, 1998 (the "Purchase Agreement");
WHEREAS, the Parties desire to amend the Purchase Agreement as contemplated
and agreed to in that certain Agreement among the Parties dated as of January
6, 1999 (the "January Agreement");
WHEREAS, this Amendment shall constitute the second of two amendments to the
Purchase Agreement and contains, among other provisions, item numbers 3
through 7, to the extent that these remain outstanding obligations, that were
to be agreed upon pursuant to the January Agreement;
WHEREAS, all capitalized terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein and in the Purchase Agreement, the parties hereto, each intending to
be bound hereby, agree as follows
1. Section 11.1(d) is amended to read in its entirety as follows:
(d) Non-Solicitation. During the Restricted Period and thereafter for a
period of three (3) years, without the consent of WCI, which may be granted
or withheld by WCI in its discretion, the Shareholders and KCI shall not
solicit any employees of the Corporation or WCI to leave the employ of the
Corporation or WCI and join the Shareholders or KCI in any business endeavor
owned or pursued by the Shareholders or KCI. Notwithstanding the foregoing,
it shall not be deemed a violation of this subsection 11.1(d) for
Shareholders or KCI to place advertisements in general circulation announcing
general employment opportunities with Shareholders, KCI or their Affiliates.
If an employee of WCI or the Corporation responds to such general
advertisement, and if the Shareholders or KCI interview or employ such
person, the Shareholders or KCI, as the case may be, shall not be in breach
of this subsection 11.1(d). In addition, it shall not be deemed a violation
of this Section 11.1(d) for Shareholders or KCI to solicit for employment or
employ Brenda Albright and/or Paul Albright in any business endeavor owned or
pursued by the Shareholders or KCI.
2. A new Section 9.12 is added to read in its entirety as follows:
9.12 Covenants of Shareholders and KCI. Shareholders and KCI hereby
covenant and agree that within thirty (30) days following the Closing,
Shareholders and KCI shall deliver to WCI and the Corporation written
evidence satisfactory to WCI that the consents and approvals required by this
Agreement have been obtained. Shareholders further agree that they shall
cooperate with the Corporation and WCI in obtaining all necessary UCC-3
termination statements and shall obtain, to WCI's reasonable satisfaction,
all other releases and filings contemplated by this Agreement.
3. Section 5.6 is amended to read in its entirety as follows:
5.6 Completion of Schedules. The Corporation, Shareholders and KCI,
as applicable, shall prepare and submit to WCI the Schedules to this
Agreement in a form reasonably acceptable to WCI no later than December 22,
1998. The parties hereto agree that any amendments to such Schedules
submitted to WCI after December 22, 1998 shall be to the mutual satisfaction
of the parties and shall, after such approval, replace the Schedules
previously submitted.
4. A new Section 8.1(l) is added to read in its entirety as follows:
(l) WCI shall execute and deliver a Finders Agreement with Kelly
Danielson in form and substance reasonably satisfactory to the parties.
5. Except as specifically amended hereby, the provisions of the Purchase
Agreement shall remain in full force and effect.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
CORPORATION: BUTLER COUNTY LANDFILL, INC.
By: ________________________
Its: ________________________
KCI: KOBUS CONSTRUCTION, INC.
By: ________________________
Its: ________________________
WCI: WASTE CONNECTIONS, INC.
By: /s/ Ronald J. Mittelstaedt
Ronald J. Mittelstaedt
Chief Executive Officer & President
SHAREHOLDERS:
/s/ Tom Kobus
Tom Kobus
/s/ Debbie Kobus
Debbie Kobus
EXHIBIT 99.1
Waste Connections, Inc. Announces $13 Million of Tuck-in Acquisitions
and a Strategic Landfill
Roseville, California
Waste Connections, Inc. (NASDAQ: WCNX) announces today that it has closed or
signed definitive agreements for the acquisition of ten companies with
annualized revenues of approximately $13 million. These transactions include
two collection tuck-in acquisitions to Eastern Idaho, four collection tuck-in
acquisitions to coastal Oregon, one collection tuck-in acquisition to
suburban Portland Oregon, a collection tuck-in to western Oklahoma, a
collection and transfer company in central California which will be operated
as a satellite to Madera Disposal Systems, and a municipal solid waste
landfill located in Butler County, Nebraska. The Butler County landfill is
currently handling roughly 350 tons per day and has in excess of twenty-five
years of permitted capacity. This landfill makes Waste Connections a fully
integrated company in Eastern Nebraska.
Ron J. Mittelstaedt, President and CEO said: "With the completion of this
round of $13 million in acquisition revenues and including the pending
Murrey's Companies transaction, the Company will have completed acquisitions
representing approximately $100 million in revenues in 1998, including over
$80 million since our initial public offering on May 22,1998. We believe we
have now established our position as the preeminent solid waste services
company in Eastern Idaho and Coastal Oregon. The Butler County landfill
should allow us to leverage our margins throughout Eastern Nebraska. Over
the course of 1999 we expect to increase daily tonnage at the landfill as we
redirect certain collection volumes. Upon the closing of these transactions
and the Murrey's Companies transaction, the Company will have an annualized
revenue run rate of approximately $125 million."
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 200,000 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.
12/7/98
CONTACT:
Waste Connections, Inc., (916) 772-2221
Steven F. Bouck
Chief Financial Officer
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