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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report October 31, 1995
(Date of earliest event reported)
REPUBLIC WASTE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-9787 73-1105145
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(State of other (Commission File (I.R.S. Employer
jurisdiction Number) Identification
of incorporation) No.)
200 East Las Olas Blvd.
Suite 1400
Ft. Lauderdale, Florida 33301
(Address of principal executive offices)
Registrant's telephone number, including area code (305) 627-6000
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With respect to each contract, agreement or other document referred to
herein and filed with the Securities and Exchange Commission (the "Commission")
as an exhibit to this report, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
ITEM 5. OTHER EVENTS.
PROPOSED ACQUISITION OF GARBAGE DISPOSAL SERVICE, INC.
MERGER AGREEMENT. On October 31, 1995, Republic Waste Industries,
Inc., a Delaware corporation ("Republic"), a newly-formed North Carolina
corporation and wholly-owned subsidiary of Republic ("RWI/GDS Merger Sub"),
Garbage Disposal Service, Inc., a North Carolina corporation ("GDS"), and the
shareholders of GDS, entered into a Merger Agreement (the "GDS Merger
Agreement"). The GDS Merger Agreement is attached hereto as Exhibit 2.1 and is
incorporated herein by reference for all purposes.
The GDS Merger Agreement provides for the merger of RWI/GDS Merger Sub
with and into GDS, resulting in GDS becoming a wholly-owned subsidiary of
Republic (the "GDS Merger"), on the terms set forth in the GDS Merger Agreement.
The GDS Merger will be accounted for as a pooling of interests business
combination. In exchange for all of the issued and outstanding shares of
capital stock of GDS, the shareholders of GDS will be issued an aggregate of
approximately 3.0 million shares of common stock, $0.01 par value, of Republic
("Republic Common Stock"). The terms and conditions of the GDS Merger were
determined by arm's-length negotiations between Republic and GDS. The shares of
Republic Common Stock to be issued in the GDS Merger will be restricted under
Rule 145 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and will be registered under the Securities Act for resale by
the former shareholders of GDS as soon as permitted under the terms of the GDS
Merger Agreement.
Closing of the transactions contemplated by the GDS Merger Agreement
is subject to satisfying customary closing conditions and obtaining certain
regulatory approvals, including expiration or early termination of applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended ("HSR Act"). The transactions contemplated by the GDS Merger
Agreement will close promptly when all conditions are satisfied or waived,
which is expected to occur by December 1995, and under the GDS Merger Agreement
can occur no later than April 30, 1996 unless the parties otherwise agree.
GDS is based in Hickory, North Carolina, and, through its wholly-owned
subsidiaries, provides solid waste collection and
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disposal services to residential, commercial and industrial customers
throughout western North Carolina. GDS will continue to employ its key
officers and employees after the closing of the GDS Merger, and these
individuals will be eligible to receive option grants from time to time under
Republic's employee stock option plans.
PROPOSED ACQUISITION OF J.C. DUNCAN CO., INC. AND AFFILIATES.
MERGER AGREEMENT. On November 11, 1995, Republic, several
newly-formed Texas corporations and wholly-owned subsidiaries of Republic
("RWI/Duncan Merger Subs"), J.C. Duncan Co., Inc., Arlington Disposal
Company, Inc., Grand Prairie Disposal Company, Inc., Trashaway Services, Inc.,
Tos-It Service Company, Inc., Wes Tex Waste Services, Inc., all Texas
corporations, and certain affiliated entities (collectively, the "Duncan
Companies"), and the shareholders of the Duncan Companies, entered into a
Merger Agreement (the "Duncan Merger Agreement"). The Duncan Merger Agreement
is attached hereto as Exhibit 2.2 and is incorporated herein by reference for
all purposes.
The Duncan Merger Agreement provides for the merger of the RWI/Duncan
Merger Subs with and into the Duncan Companies, resulting in the Duncan
Companies becoming wholly-owned subsidiaries of Republic (the "Duncan
Mergers"), on the terms set forth in the Duncan Merger Agreement. The Duncan
Mergers will be accounted for as pooling of interests business combinations.
In exchange for all of the issued and outstanding shares of capital stock of
the Duncan Companies, the shareholders of the Duncan Companies will be issued
an aggregate of appproximately 5.2 million shares of Republic Common Stock.
The terms and conditions of the Duncan Mergers were determined by arm's-length
negotiations between Republic and the Duncan Companies. The shares of Republic
Common Stock to be issued in the Duncan Mergers will be restricted under Rule
145 promulgated under the Securities Act, and will be registered under the
Securities Act for resale by the former shareholders of the Duncan Companies as
soon as permitted under the terms of the Duncan Merger Agreement.
Closing of the transactions contemplated by the Duncan Merger
Agreement is subject to satisfying customary closing conditions and obtaining
certain regulatory approvals, including expiration or early termination of
applicable waiting periods under the HSR Act. The transactions contemplated by
the Duncan Merger Agreement will close promptly when all conditions are
satisfied or waived, which is expected to occur by December 1995, and under the
Duncan Merger Agreement can occur no later than March 1, 1996 unless the
parties otherwise agree.
The Duncan Companies are based in Arlington, Texas, and provide solid
waste collection and disposal services to approximately 300,000 residential,
commercial and industrial
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customers in the Dallas-Fort Worth metropolitan area and throughout western
Texas. The Duncan Companies also operate two municipally-owned solid waste
landfills in west Texas. The Duncan Companies will continue to employ their
key officers and employees after the closing of the Duncan Mergers, and these
individuals will be eligible to receive option grants from time to time under
Republic's employee stock option plans.
PROPOSED ACQUISITION OF FENNELL CONTAINER CO., INC. AND AFFILIATES
MERGER AGREEMENT. On November 13, 1995, Republic, several
newly-formed North Carolina corporations and wholly-owned subsidiaries of
Republic (the "RWI/Fennell Merger Subs"), Fennell Container Co., Inc., Fennell
Waste Systems, Inc., Fenn-Vac, Inc., Pepperhill Development Co., Inc., and
GF/WWF, Inc., all North Carolina corporations (collectively, the "Fennell
Companies"), and the shareholders of the Fennell Companies, entered into a
Merger Agreement (the "Fennell Merger Agreement"). The Fennell Merger
Agreement is attached hereto as Exhibit 2.3 and is incorporated herein by
reference for all purposes.
The Fennell Merger Agreement provides for the mergers of the
RWI/Fennell Merger Subs with and into the Fennell Companies, resulting in the
Fennell Companies becoming wholly-owned subsidiaries of Republic (the "Fennell
Mergers"), on the terms set forth in the Fennell Merger Agreement. The Fennell
Mergers will be accounted for as pooling of interests business combinations.
In exchange for all of the issued and outstanding shares of capital stock of
the Fennell Companies, the shareholders of the Fennell Companies will be issued
an aggregate of approximately 3.1 million shares of Republic Common Stock. The
terms and conditions of the Fennell Mergers were determined by arm's-length
negotiations between Republic and the Fennell Companies. The shares of
Republic Common Stock to be issued in the Fennell Mergers will be restricted
under Rule 145 promulgated under the Securities Act, and will be registered
under the Securities Act for resale by the former shareholders of the Fennell
Companies as soon as permitted under the terms of the Fennell Merger Agreement.
Closing of the transactions contemplated by the Fennell Merger
Agreement is subject to satisfying customary closing conditions and obtaining
certain regulatory approvals, including expiration or early termination of
applicable waiting periods under the HSR Act. The transactions contemplated by
the Fennell Merger Agreement will close promptly when all conditions are
satisfied or waived, which is expected to occur by December 1995, and under the
Fennell Merger Agreement can occur no later than December 31, 1995 unless the
parties otherwise agree.
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The Fennell Companies are based in North Charleston, South Carolina,
and provide solid waste collection, disposal and environmental services to more
than 12,000 residential, commercial and industrial customers in and around
Charleston and Greenville, South Carolina. The Fennell Companies will continue
to employ their key officers and employees after the closing of the Fennell
Mergers, and these individuals will be eligible to receive option grants from
time to time under Republic's employee stock option plans.
ITEM 7. FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. Not applicable at this
time. Financial Statements for each of GDS, the Duncan Companies and
the Fennell Companies will be filed after the closing of each such
acquisition.
(b) Pro Forma Financial Information. Not applicable at this time. Pro
Forma Financial Information, if required, for the acquisitions of GDS,
the Duncan Companies and/or the Fennell Companies will be filed after
the closing of such acquisitions.
(c) Exhibits. The Exhibits to this Report are listed in the Exhibit Index
set forth elsewhere herein.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
REPUBLIC WASTE INDUSTRIES, INC.
Date: November 13, 1995 By: /s/ Gregory K. Fairbanks
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Gregory K. Fairbanks,
Chief Financial Officer and
Executive Vice President
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
2.1 Merger Agreement dated as of October 31, 1995 by and among
Republic Waste Industries, Inc., a Delaware corporation;
RWI/GDS Mergersub, Inc., a North Carolina corporation and
wholly-owned subsidiary of Republic; Garbage Disposal Service,
Inc., a North Carolina corporation; Lee G. Brown, a North
Carolina resident; and Mina Brown McLean, a South Carolina
resident.
2.2 Merger Agreement dated as of November 11, 1995 by and among
Republic Waste Industries, Inc., a Delaware corporation;
RWI/JCD Inc., RWI/Grand Inc., RWI/Trashaway Inc., RWI/Tos-It
Inc., RWI/WesTex Inc., RWI/Pantego I Inc., RWI/Pantego II
Inc., RWI/Trucking I Inc., RWI/Trucking II Inc., all Texas
corporations and wholly-owned subsidiaries of Republic; J.C.
Duncan Company, Inc., Arlington Disposal Company, Inc., Grand
Prarie Disposal Company, Inc., Trashaway Services, Inc.,
Tos-It Service Company, Inc., Wes Tex Waste Services, Inc.,
Pantego Service Company, Pantego I, Inc., Pantego II, Inc., E
& E Truck Leasing, Ltd., EETL I, Inc., EETL II, Inc., all
Texas corporations or partnerships and affiliates of J.C.
Duncan Company, Inc. through common ownership or management;
and Robert C. Duncan, Jannette T. Duncan, Dan R. Duncan,
Debra A. Duncan, DeeDee Duncan Elliott, George Martin Duncan,
Melinda Duncan Vince, Robert C. Duncan as Trustee of the
Robert C. Duncan Annuity Trusts No.'s One, Two, Three and
Four, and Jannette T. Duncan as Trustee of the Jannette T.
Duncan Annuity Trusts No.'s One, Two, Three and Four, each
residents of or Trusts formed under the laws of the States of
Texas or Louisiana and who constitute all of the shareholders
of one or more of the J.C. Duncan Company, Inc. and/or its
affiliated entities.
2.3 Merger Agreement dated as of November 13, 1995 by and among
Republic Waste Industries, Inc., a Delaware corporation;
RI/FCC Mergersub, Inc., RI/FWS Mergersub, Inc., RI/FV
Mergersub, Inc., RI/PD Mergersub, Inc. and RI/Investment Co.,
Inc., each a South Carolina corporation and wholly-owned
subsidiary of Republic; Fennell Waste Systems, Inc., Fennell
Container Co., Inc., Fenn-Vac, Inc., Pepperhill Development
Co., Inc., and GF/WWF, Inc., each a South Carolina
corporation; and George W. Fennell, Robert N. Shepard, G.
Scott Fennell, S. Allison Fennell, Debra A. Haschker, James R.
Bland, John H. Chapman, Jeffrey A. Forslund and Leo J.
Zolnierowicz, all of the shareholders of the Fennell Companies.
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EXHIBIT 2.1
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of October
31, 1995 by and among Republic Waste Industries, Inc., a Delaware corporation
("Republic"); RWI/GDS Mergersub, Inc., a North Carolina corporation and wholly-
owned subsidiary of Republic ("Republic Merger Sub", and together with
Republic, the "Republic Companies"); Garbage Disposal Service, Inc., a North
Carolina corporation (the "Company"); and the shareholders of the Company, Lee
G. Brown, a resident of the State of North Carolina ("Brown") and Mina Brown
McLean, a resident of the State of South Carolina ("McLean"), (together, Brown
and McLean are sometimes referred to hereinafter as the "Shareholders").
Certain other capitalized terms used herein are defined in Article XI.
RECITALS
The Boards of Directors of Republic and the Company have determined
that it is in the best interests of their respective shareholders for Republic
to acquire the Company upon the terms and subject to the conditions set forth
in this Agreement. In order to effectuate the transaction, Republic has
organized Republic Merger Sub as a wholly-owned subsidiary, and the parties
have agreed, subject to the terms and conditions set forth in this Agreement,
to merge Republic Merger Sub with and into the Company so that the Company
continues as the surviving corporation (the "Surviving Corporation"). As a
result, the Company will become a wholly-owned subsidiary of Republic.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below) Republic Merger Sub shall
be merged with and into the Company (the "Merger") on the terms and conditions
set forth in the Plan of Merger and Reorganization annexed hereto as Exhibit A
(the "Plan of Merger"). The terms and conditions of the Plan of Merger are
incorporated
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herein by reference as if fully set forth herein. As a result of the Merger,
the separate corporate existence of Republic Merger Sub shall cease and the
Company shall continue as the Surviving Corporation.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Akerman, Senterfitt & Eidson, P.A., 801 Brickell Avenue, 24th
Floor, Miami, Florida 33131, or such other place as the parties may otherwise
agree.
1.3 FILING OF ARTICLES OF MERGER. At the time of the Closing,
the parties shall cause the Merger to be consummated by filing duly executed
Articles of Merger (with the completed Plan of Merger annexed thereto) with the
Department of the Secretary of State of the State of North Carolina, in such
form as Republic determines is required by and is in accordance with the
relevant provisions of the North Carolina Business Corporation Act (the
"NCBCA") (the date and time of such filing is referred to herein as the
"Effective Date" or "Effective Time").
1.4 ISSUANCE OF REPUBLIC SHARES. At the Effective Time, by
virtue of the Merger and without any further action on the part of the parties
hereto, each share of capital stock of the Company (the "Company Stock") shall
be converted into and exchanged for such number of shares (the "Conversion
Amount") of the voting common stock, $0.01 par value per share of Republic
("Republic Common Stock"), as determined by the following formula: the
Conversion Amount shall be equal to the quotient determined by dividing (i)
$60,060,000 divided by the average closing sale price of a share of Republic
Common Stock on the Nasdaq Stock Market for the five consecutive trading days
which precede the third trading day which is immediately prior to the Effective
Date, as reported (absent manifest error in the printing thereof) by the Wall
St. Journal (Eastern Edition), by (ii) the aggregate number of shares of
Company Stock issued and outstanding on the Effective Date; provided, however,
in determining the average closing sale price in clause (i) above, if the
Closing is on or before December 31, 1995, the parties agree that the average
closing sale price is deemed to be equal to $20.00 per share of Republic Common
Stock. Republic shall issue to each shareholder of record of the Company at
the Effective Time duly executed certificates, in valid form registered in such
record holder's name, evidencing that number of shares of Republic Common Stock
determined, to the nearest whole share, by multiplying (a) the Conversion
Amount times (b) the number of shares of the Company Stock owned of record by
such shareholder.
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1.5 DELIVERY OF CERTIFICATES. At the Closing, each holder of
shares of Company Stock shall deliver the certificates representing such shares
to Republic for cancellation, and Republic shall deliver one or more
certificates representing the shares of Republic Common Stock issued pursuant
to Section 1.4 to each such holder (rounded to the nearest whole share). The
shares of Republic Common Stock issuable by Republic in exchange for the
Company Stock in the Merger are sometimes referred to herein as the "Republic
Shares," and will be validly issued, fully paid and non-assessable.
1.6 ACCOUNTING TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as a pooling
of interests combination.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to the Company and to each of the
Shareholders to enter into this Agreement and to consummate the transactions
contemplated hereby, each of the Republic Companies jointly and severally make
the following representations and warranties to the Company and the
Shareholders:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Republic Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. Republic Merger
Sub is a wholly-owned subsidiary of Republic, within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code and Rev. Rul. 74-564, 1974-2 C.B.
124.
2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic
Companies has the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. Each of the Republic Companies has taken
all action necessary to authorize its execution and delivery of this Agreement,
the performance of its respective obligations hereunder and the consummation of
the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
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generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the Merger and
the issuance and delivery of certificates representing the Republic Shares to
the Shareholders, the Republic Shares will be validly issued, fully paid and
non-assessable shares of Republic Common Stock.
2.5 NO COMMISSIONS. Neither of the Republic Companies has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
2.6 CAPITALIZATION. The authorized capital stock of Republic
consists of 350,000,000 shares of Republic Common Stock and 5,000,000 shares of
preferred stock. As of October 25, 1995, (i) 62,328,628 shares of Republic
Common Stock were validly issued and outstanding, fully paid and nonassessable
and not issued in violation of any preemptive right of any stockholder of
Republic, and (ii) no shares of preferred stock were issued and outstanding.
The Republic Shares to be issued in the Merger will be "voting stock" within
the meaning of the Internal Revenue Code.
2.7 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Republic, nor the consummation by Republic of
the transactions contemplated hereby, nor compliance by Republic with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of its First Amended and Restated Certificate of Incorporation, (b)
violate, conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of any lien, upon
any of the properties or assets of Republic or any of its subsidiaries (the
"Republic Subsidiaries") under any of the terms, conditions or provisions of
any contract or lien, to which Republic or any Republic Subsidiary is a party
or to which they or any of their respective properties or assets may be
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which,
individually or in the aggregate, will not have a Material Adverse Effect on
Republic, (c) violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Republic or any Republic subsidiary
or any of their respective properties or assets, except for such violations
which, individually or in the aggregate, will not have a Material Adverse
Effect on Republic, or (d) require any consent, approval, authorization or
permit of or from, or filing with or notification
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to, any Governmental Authority except (i) pursuant to the Exchange Act and the
Securities Act, (ii) filings required under the securities or blue sky laws of
the various states, (iii) filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iv) consents,
approvals, authorizations, permits, filings or notifications which have either
been obtained or made prior to the Closing or which, if not obtained or made,
will neither, individually or in the aggregate, have a Material Adverse Effect
on Republic nor restrict Republic's legal authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby, or (v) any
filings required to be made by the Company or the Company Shareholders.
2.8 REPORTS AND FINANCIAL STATEMENTS. Within the last three
years, except where failure to have done so did and would not have a Material
Adverse Effect on Republic, Republic has filed all reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with the SEC, including, but not limited to Forms 10-K, Forms 10-Q,
Forms 8-K and proxy statements (collectively, the "Republic Reports").
Republic has previously furnished to the Company and made available to the
Company Shareholders copies of all Republic Reports filed with the SEC since
January 1, 1995, and with respect to Republic Reports filed after the date of
this Agreement until the Effective Date, will promptly furnish to the Company
and make available to the Company Shareholders, copies of each of the Republic
Reports filed with the SEC during such period. As of their respective dates
(but taking into account any amendments filed prior to the date of this
Agreement), the Republic Reports complied, or, with respect to Republic Reports
filed after the date of this Agreement, will comply, in all material respects
with all the rules and regulations promulgated by the SEC and did not contain,
or, with respect to Republic Reports filed after the date of this Agreement,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Republic Reports filed by Republic with the SEC prior to the date of this
Agreement, since December 31, 1994 to the date of this Agreement, there has not
been any change in the financial condition, results of operations or business
of Republic and the Republic Subsidiaries that either individually or in the
aggregate would have a Material Adverse Effect on the financial condition of
Republic.
2.10 ACCOUNTING AND TAX MATTERS. Neither Republic nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to take any
action that would prevent Republic from accounting for the business combination
to be affected by the
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Merger as a "pooling of interests." Republic warrants that it has no intention
of disposing of any of the Company Stock to be received by Republic in the
Merger. Republic agrees that from and after the Effective Time, it will not
take any action to cause the Merger to lose its tax free status.
2.11 SURVIVAL. Each of the representations and warranties made
by Republic in this Agreement or pursuant hereto shall survive for a period of
one year after the Effective Time, notwithstanding any investigation at any
time made by or on behalf of the Company Shareholders, and upon expiration of
such one year period, such representations and warranties of Republic shall
expire, except that the representations and warranties of Republic contained in
Sections 2.1, 2.2, 2.3 and 2.4 shall not expire but shall continue
indefinitely.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND BROWN
As a material inducement to each of the Republic Companies to enter
into this Agreement and to consummate the transactions contemplated hereby, the
Company and Brown jointly and severally make the following representations and
warranties to the Republic Companies:
3.1 CORPORATE STATUS. The Company and each of the Company's
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina and has the requisite
power and authority to own or lease its properties and to carry on its business
as now being conducted. The Company and each of the Company's subsidiaries is
legally qualified to transact business as a foreign corporation in all
jurisdictions where the nature of its properties and the conduct of its
business requires such qualification (all of which jurisdictions are listed on
Schedule 3.1) and is in good standing in each of the jurisdictions in which it
is so qualified. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of the Company or any of
its subsidiaries.
3.2 POWER AND AUTHORITY. The Company has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Company
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. Brown is an individual residing in the
State of North Carolina and Mclean is an
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individual residing in the State of South Carolina, and each of the
Shareholders has the requisite competence and authority to execute and deliver
this Agreement, to perform his respective obligations hereunder and to
consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and each of the Shareholders and constitutes the
legal, valid and binding obligation of the Company and each of the
Shareholders, enforceable against the Company and each of the Shareholders in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 CAPITALIZATION. Schedule 3.4 sets forth, with respect to
the Company and each of its subsidiaries, (a) the number of authorized shares
of each class of its capital stock, and (b) the number of issued and
outstanding shares of each class of its capital stock. All of the issued and
outstanding shares of capital stock of the Company and each of its subsidiaries
(a) have been duly authorized and validly issued and are fully paid and
non-assessable, (b) were issued in compliance with all applicable state and
federal securities laws, and (c) were not issued in violation of any preemptive
rights or rights of first refusal, and no preemptive rights or rights of first
refusal exist, and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require the Company or any of its subsidiaries to issue or sell
any shares of its capital stock (or securities convertible into or exchangeable
for shares of its capital stock). There are no outstanding stock appreciation,
phantom stock, profit participation or other similar rights with respect to the
Company or any of its subsidiaries. There are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer of
the capital stock of the Company or any of its subsidiaries. Neither the
Company nor any of its subsidiaries is obligated to redeem or otherwise acquire
any of its outstanding shares of capital stock.
3.5 SHAREHOLDERS OF THE COMPANY. Schedule 3.5 sets forth, with
respect to the Company and each of its subsidiaries, (a) the name, address and
social security number of, and the number of outstanding shares of each class
of its capital stock owned by, each shareholder of record as of the close of
business on the date of this Agreement; and (b) the name, address and social
security number of, and number of shares of each class of its capital stock
beneficially owned by each beneficial owner of outstanding shares
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of capital stock (to the extent that record and beneficial ownership of any
such shares are different). Each of the holders of shares of capital stock of
the Company owns such shares, and the Company owns the shares of capital stock
of its subsidiaries, free and clear of all Liens, restrictions and claims of
any kind, except as set forth on Schedule 3.5.
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by the Company and each of the
Shareholders, the performance by the Company and each of the Shareholders of
its respective obligations hereunder and the consummation by the Company and
each of the Shareholders of the transactions contemplated by this Agreement
will not (i) contravene any provision of the articles of incorporation or
bylaws of the Company or any of its subsidiaries, (ii) violate or conflict with
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company
or any of its subsidiaries or any of the Shareholders except for such
violations which, individually, or in the aggregate, will not have a Material
Adverse Effect on the Company; (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or any of its
subsidiaries or any of the Shareholders except for such conflicts, breaches and
defaults which, individually or in the aggregate, will not have a Material
Adverse Effect on the Company, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
the Company or any of its subsidiaries, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any applicable
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR") and any filings required to be made by the Republic
Companies.
3.7 RECORDS OF THE COMPANY. The copies of the articles of
incorporation and bylaws of the Company and its subsidiaries which were
provided to Republic are true, accurate and complete and reflect all amendments
made through the date of this Agreement. The minute books for the Company and
its subsidiaries made available to Republic for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, such minute books contain the true
signatures of the persons purporting to have signed it, and such minute books
contain a substantially complete and accurate record of all corporate actions
of the shareholders and directors (and any committees thereof) of the Company
and its subsidiaries taken by
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<PAGE> 9
written consent or at a meeting since incorporation. All material corporate
actions taken by the Company and its subsidiaries have been duly authorized or
ratified. All accounts, books, ledgers and official and other records of the
Company have been fully, properly and accurately kept and completed in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained therein. The stock ledger of the Company, as previously
made available to Republic, contains an accurate and complete record of all
issuances, transfers and cancellations of shares of the capital stock of the
Company.
3.8 SUBSIDIARIES. Except as set forth on Schedule 3.8, the
Company does not own, directly or indirectly, any outstanding voting securities
of or other interests in, or control, any corporation, partnership, joint
venture or other business entity.
3.9 FINANCIAL STATEMENTS. The Company has delivered to
Republic the financial statements of the Company, including the notes thereto,
audited by Farris, Cooke & Associates, P.A. (the "Financial Statements"), a
copy of which is attached to Schedule 3.9 hereto. The balance sheet dated as
of September 30, 1994 of the Company is referred to herein as the "Current
Balance Sheet". The Financial Statements fairly present the financial position
of the Company at the balance sheet date and the results of operations for the
periods covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated. The books and records
of the Company fully and fairly reflect all transactions, properties, assets
and liabilities of the Company. There are no material special or non-recurring
items of income or expense during the periods covered by the Financial
Statements and the balance sheets included in the Financial Statements do not
reflect any writeup or revaluation increasing the book value of any assets,
except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 3.10, since the date of the Current Balance Sheet,
neither the Company nor any of its consolidated subsidiaries has (i) issued any
capital stock or other securities; (ii) made any distribution of or with
respect to its capital stock or other securities or purchased or redeemed any
of its securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees or amended any other
terms of employment of such persons except in the ordinary course of business
consistent with past practice; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (v) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (vi)
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<PAGE> 10
made any payment in respect of its liabilities other than in the ordinary
course of business consistent with past practice; (vii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $25,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (viii) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed, in excess of $25,000 in the aggregate; (ix) suffered any
extraordinary losses (whether or not covered by insurance); (x) waived,
cancelled, compromised or released any rights having a value in excess of
$25,000 in the aggregate; (xi) made or adopted any change in its accounting
practice or policies not consistent with GAAP; (xii) made any adjustment to its
books and records other than in respect of the conduct of its business
activities in the ordinary course consistent with past practice; (xiii) entered
into any transaction with any Affiliate other than intercompany transactions in
the ordinary course of business consistent with past practice; (xiv) entered
into any employment agreement; (xv) terminated, amended or modified any
agreement involving an amount in excess of $25,000; (xvi) imposed any security
interest or other Lien on any of its assets other than in the ordinary course
of business consistent with past practice; (xvii) delayed paying any accounts
payable which is due and payable except to the extent being contested in good
faith; (xviii) made or pledged any charitable contribution other than in the
ordinary course of business consistent with past practice; (xix) entered into
any other transaction or been subject to any event which has or may have a
Material Adverse Effect on the Company; or (xx) agreed to do or authorized any
of the foregoing.
3.11 LIABILITIES OF THE COMPANY. Except as set forth on Schedule
3.11, the Company and its consolidated subsidiaries do not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected or taken into account in the Current Balance
Sheet and not heretofore paid or discharged, (b) to the extent specifically set
forth in or incorporated by express reference in any of the Schedules attached
hereto, (c) liabilities incurred in the ordinary course of business consistent
with past practice since the date of the Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), (d) normal accruals,
reclassifications, and audit adjustments which would be reflected on an audited
financial statement and which would not be material in the aggregate, and (e)
liabilities incurred in the ordinary course of business prior to the date of
the Current Balance Sheet which, in accordance with GAAP consistently applied,
were not recorded thereon. The aggregate amount of indebtedness for borrowed
money, including principal and accrued but unpaid
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<PAGE> 11
interest, and including the net present value of remaining payments on
capitalized equipment leases, of the Company and its consolidated subsidiaries,
will not exceed $13,000,000.00, and its consolidated net worth will be no less
than $7,000,000.00, as of the Effective Time.
3.12 LITIGATION. Except as set forth on Schedule 3.12, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending, or to Brown's knowledge threatened, anticipated or
contemplated against, by or affecting the Company, or any of its subsidiaries,
or any of their properties or assets, or the Shareholders, or which question
the validity or enforceability of this Agreement or the transactions
contemplated hereby, and, to the knowledge of Brown and the Company, there is
no basis for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which
the Company or any of its subsidiaries is or was a party which have not been
complied with in full or which continue to impose any material obligations on
the Company or its subsidiaries.
3.13 ENVIRONMENTAL MATTERS. To the knowledge of Brown and the
Company, and except as set forth on Schedule 3.13:
(a) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company (i) the Company is and has at all times been in
substantial compliance with all material Environmental, Health and Safety Laws
(as defined herein) governing its business, operations, properties and assets,
including, without limitation, Environmental, Health and Safety Laws with
respect to discharges into the ground water, surface water and soil, emissions
into the ambient air, and generation, accumulation, storage, treatment,
transportation, transfer, labeling, handling, manufacturing, use, spilling,
leaking, dumping, discharging, release or disposal of Hazardous Substances (as
defined herein), or other Waste (as described herein); and (ii) the Company has
not been notified in writing by any Governmental Authority that it is liable
for any penalties, fines or forfeitures for failure to comply with any
Environmental, Health and Safety Laws; and (iii) the Company is in substantial
compliance with all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied substantially with all
informational requests or demands made of it in writing by any Governmental
Authority under the Environmental, Health and Safety Laws.
(b) The Company has obtained, or caused to be obtained,
and is in substantial compliance with, all material licenses, certificates,
permits, approvals and registrations (collectively "Licenses") required by the
Environmental, Health and Safety Laws
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<PAGE> 12
applicable to its ownership of its properties and assets and the operation of
its business as presently conducted, including, without limitation, all air
emission, water discharge, water use and solid waste and other Waste
generation, transportation, transfer, storage, treatment or disposal Licenses,
and the Company is in substantial compliance with all the terms, conditions
and requirements of such Licenses, and copies of such Licenses have been
provided to Republic. There are no material administrative or judicial
investigations, notices, claims or other proceedings pending or threatened in
writing by any Governmental Authority or third parties against the Company, its
businesses, operations, properties, or assets, which question the validity or
entitlement of the Company to any License required by the Environmental, Health
and Safety Laws for the ownership of each of the properties and assets of the
Company and the operation of its business or wherein an unfavorable decision,
ruling or finding could have a Material Adverse Effect on the Company.
(c) The Company has not received any written notice of
any non-compliance order, Potentially Responsible Party letter, notice of
violation, claim, suit, action, judgment, or administrative or judicial
proceeding pending against or involving the Company, its business, operations,
properties, or assets, issued by any Governmental Authority or third party with
respect to any Environmental, Health and Safety Laws in connection with the
ownership by the Company of its properties or assets or the operation of its
business, which if has not been resolved to the satisfaction of the issuing
Governmental Authority or third party could reasonably be expected to have a
Material Adverse Effect on the Company.
(d) The Company is in substantial compliance with, and
is not in breach of or default under any applicable writ, order, judgment,
injunction, governmental decree issued to the Company pursuant to the
Environmental, Health and Safety Laws and no event has occurred or is
continuing which, with the passage of time or the giving of notice or both,
would constitute such non-compliance, breach or default thereunder.
(e) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company:
(1) (i) the Company has not generated,
manufactured, used, transported, transferred, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed,
nor has it allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or
other waste to or at any location other than a site lawfully allowed
to receive such
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<PAGE> 13
Hazardous Substances or other waste for such purposes; and (iii) the
Company has not generated, manufactured, used, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed of,
or allowed or arranged for any third parties to generate, manufacture,
use, store, handle, treat, spill, leak, dump, discharge, release or
dispose of, Hazardous Substances or other waste upon property owned or
leased by it, except as allowed by law. For purposes of this Section
3.13, the term "Hazardous Substances" shall be construed broadly to
include any toxic or hazardous substance, material, or waste, and any
other contaminant, pollutant or constituent thereof, whether liquid,
solid, semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, by-products, pesticides, asbestos
containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires remediation
under any Environmental, Health and Safety Laws or which are
regulated, listed or controlled by, under or pursuant to any
Environmental Health and Safety Laws, including, without limitation,
by the Environmental Protection Agency as hazardous substances (40 CFR
Part 302) and any amendments thereto; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq. (hereinafter collectively "CERCLA"); the Solid Waste
Disposal Act, as amended by the Resource Conversation and Recovery Act
of 1976 and subsequent Hazardous and Solid Waste Amendments of 1984,
42 U.S.C. Section 6901 et seq. (hereinafter, collectively "RCRA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section
1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section
1311, et seq.; the Clean Air Act, as amended (42 U.S.C. Section
7401-7642); Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601 et seq; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986 as amended,
42 U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
Section 651, et seq. ("OSHA"); any similar state statute, including
without limitation, and by way of example, the North Carolina Solid
Waste Management Rules and Solid Waste Management Law (15A NCAC 13B),
as amended, the North Carolina Solid Waste Management General Statutes
(GS 130A-290), as amended, the Solid Waste Management Act of 1989 (GS
130A-309.01) and the North Carolina Scrap Tire Disposal Act (GS 130A-
309.51), or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, or which has been or shall be determined or
interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order,
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<PAGE> 14
code, rule, order, or decree. For purposes of this Section 3.13, the
term "Waste" shall have the same meaning, and be defined the same as,
the term "Solid Waste" is defined in RCRA.
(2) The Company has not caused, or allowed to
be caused a Release or Discharge, or threatened Release or Discharge,
of any Hazardous Substance on, into or beneath the surface of any
parcel of the Owned Properties or the Leased Premises that would
reasonably be expected to have a Material Adverse Effect on the
Company. There has not occurred, nor is there presently occurring, a
Release or Discharge, or threatened Release or Discharge, of any
Hazardous Substance on, into or beneath the surface of any parcel of
the Owned Properties or the Leased Premises that would reasonably be
expected to have a Material Adverse Effect on the Company. For
purposes of this Section, the terms "Release" and "Discharge" shall
have the meanings given them in the Environmental, Health and Safety
Laws.
(3) Other than is stated in Schedule 3.13, the
Company has not generated, handled, manufactured, treated, stored,
used, shipped, transported, transferred, or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any
third parties to generate, handle, manufacture, treat, store, use,
ship, transport, transfer or dispose of, any Hazardous Substance or
other Waste to or at a site which, pursuant to CERCLA or any similar
state law (i) has been placed on the National Priorities List or its
state equivalent; or (ii) the Environmental Protection Agency or the
relevant state agency has notified the Company that it has proposed or
is proposing to place on the National Priorities List or its state
equivalent. Neither the Company nor the Shareholders has received
written notice, and neither the Company nor the Shareholders has
knowledge of any facts which could give rise to any notice, that the
Company is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA, RCRA
or any other applicable Environmental Health and Safety Laws. The
Company has not submitted nor was required to submit any notice
pursuant to Section 103(c) of CERCLA with respect to the Leased
Premises or the Owned Properties. Other than is stated in Schedule
3.13, the Company has not received any written request for information
in connection with any federal or state environmental cleanup site, or
in connection with any of the real property or premises where the
Company has transported, transferred or disposed of other Wastes. The
Company has not been required to and has not undertaken any response
or remedial actions or clean-up actions of any kind at the written
request of any Governmental Authorities or at the request of any other
third party.
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<PAGE> 15
(f) Other than is stated in Schedule 3.13, the Company
does not use, nor has it used, any Aboveground Storage Tanks or Underground
Storage Tanks, and there are not now nor have there ever been any Underground
Storage Tanks on the Leasehold Premises or the Owned Properties. For purposes
of this Section 3.13, the terms "Aboveground Storage Tanks" and "Underground
Storage Tanks" shall have the meanings given them in Section 6901 et seq., as
amended, of RCRA, or any applicable state or local statute, law, ordinance,
code, rule, regulation, order ruling, or decree governing Aboveground Storage
Tanks or Underground Storage Tanks.
(g) Schedule 3.13 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by the Company or
its agents or, to the knowledge of the Company or the Shareholders, undertaken
by any Governmental Authority, or any third party, concerning the Company or
any of the Leased Premises or the Owned Properties; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken by the Company or
its agents or, to the knowledge of the Company or the Shareholders, undertaken
by any Governmental Authority or any third party, concerning the Company or
any of the Leased Premises or the Owned Properties; (iii) all written
communications between the Company and any Governmental Authority arising under
or related to Environmental, Health and Safety Laws; and (iv) all citations
issued under OSHA, or similar state or local statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, concerning either of the
Company or any of the Leased Premises or the Owned Properties.
(h) Schedule 3.13 contains a list of the assets of the
Company which contain "asbestos" or "asbestos-containing material" (as such
terms are identified under the Environmental, Health and Safety Laws).
Schedule 3.13 also identifies (i) the degree of friability of all existing
asbestos and asbestos-containing material and (ii) all documents or actions
taken by the Company, directly or indirectly, or by any of their agents,
employees, representatives or contractors with respect to asbestos or
asbestos-containing materials, including but not limited to all methods and
manner of abatement, removal, containment, encapsulation, repair, maintenance,
renovation, demolition, salvage, installation, storage, transportation,
disposal, monitoring, spill/emergency clean-up, protective health and safety
measures and training of personnel (whether employees or independent
contractors or otherwise). Except as set forth in Schedule 3.13, the Company
has operated and continues to operate in substantial compliance with all
Environmental, Health & Safety Laws governing the handling, use and exposure to
and disposal of asbestos or asbestos-containing materials. Except as set forth
in Schedule 3.13, there are no claims, actions, suits, governmental
investigations or proceedings before any Governmental Authority or third party
pending, or threatened against or directly affecting
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<PAGE> 16
the Company, or any of its assets or operations relating to the use, handling
or exposure to and disposal of asbestos or asbestos-containing materials in
connection with their assets and operations.
(i) As used in this Agreement, "Environmental, Health
and Safety Laws" means all federal, state, regional or local statutes, laws,
rules, regulations, codes, orders, injunctions, decrees, rulings, and
ordinances or judicial or administrative interpretations thereof, and that
govern (or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the
Clean Water Act, FIFRA, EPCRA, OSHA and including without limitation, and by
way of example, the North Carolina Solid Waste Management Rules and Solid Waste
Management Law (15A NCAC 13B), as amended, the North Carolina Solid Waste
Management General Statutes (GS 130A-290), as amended, the Solid Waste
Management Act of 1989 (GS 130A-309.01) and the North Carolina Scrap Tire
Disposal Act (GS 130A-309.51).
(j) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by the Company on any of the Owned Properties or the Leased Premises
which have materially involved the generation, accumulation, storage,
treatment, transportation, labelling, handling, manufacturing, use, spilling,
leaking, dumping, discharging, release or disposal of Hazardous Substances.
(k) Schedule 3.13 identifies the locations to which the
Company has transferred, transported, hauled, moved, or disposed of Waste over
the past five (5) years and the types and volumes of Waste transferred,
transported, hauled, moved, or disposed of to each such location.
(l) As used in this Section 3.13, the term "the Company"
is deemed to refer to the Company and/or any of its subsidiaries or Affiliates,
including, without limitation, D & L Waste, Inc.
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<PAGE> 17
3.14 REAL ESTATE
(a) The Company and its subsidiaries do not own any real
property or any interest therein except as set forth on Schedule 3.14(a) (the
"Owned Properties"), which Schedule sets forth the location and size of, and
principal improvements and buildings on, the Owned Properties. Except as set
forth on Schedule 3.14(a), with respect to each such parcel of Owned Property:
(i) The Company or a subsidiary thereof has good and
marketable title to the parcel of Owned Property, free and clear of
any Lien other than (x) liens for real estate taxes currently due and
payable but not yet delinquent; (y) recorded easements, covenants, and
other restrictions which do not materially impair the current useof
the property subject thereto, and (z) encumbrances and restrictions
described in the title insurance policies listed on Schedule 3.14(a),
all of which policies have been previously delivered or made available
to Republic by the Company;
(ii) there are no pending or, to the knowledge of
Brown and the Company, threatened condemnation proceedings, suits or
administrative actions relating to the Owned Properties affecting
adversely and materially the current use thereof;
(iii) the legal descriptions for the parcels of Owned
Property contained in the deeds thereof describe such parcels fully
and adequately; the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation
of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances and do not encroach on any
easement which may burden the land; the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land; and the Owned Properties are not located within any flood plain
(such that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been
obtained;
(iv) to the knowledge of the Company and Brown, all
facilities have received all approvals of Governmental Authorities
(including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained
substantially in accordance with applicable laws, ordinances, rules
and regulations;
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<PAGE> 18
(v) there are no Contracts granting to any party or
parties the right of use or occupancy of any portion of the parcels of
Owned Property, except as set forth on Schedule 3.14(a);
(vi) there are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
(vii) there are no parties (other than the Company and
its subsidiaries) in possession of the parcels of Owned Property,
other than tenants under any leases disclosed in Schedule 3.14(a) who
are in possession of space to which they are entitled;
(viii) to the knowledge of the Company and Brown, all
facilities located on the parcels of Owned Property are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules and
regulations, and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcels of Owned
Property;
(ix) each parcel of Owned Property abuts on and has
direct vehicular access to a public road, or has access to a public
road via a permanent, irrevocable, appurtenant easement benefitting
the parcel of Owned Property; access to the property is provided by
paved public right-of-way with adequate curb cuts available; and
there is no pending or threatened termination of the foregoing access
rights;
(x) except for matters or conditions which would not
reasonably, individually or in the aggregate, have a Material Adverse
Effect on the Company, all improvements and buildings on the Owned
Property are in good repair (reasonable wear and tear excepted) and
are safe for occupancy and use, free from termites or other
wood-destroying organisms; the roofs thereof are watertight; and the
structural components and systems (including plumbing, electrical, air
conditioning/heating, and sprinklers) are in good working order and
adequate for the use of such Owned Property in the manner in which
presently used; and
(xi) there are no service contracts, management
agreements or similar agreements which affect the parcels
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<PAGE> 19
of Owned Property, except as set forth on Schedule 3.14(a).
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements ("Leases") to which the Company or any of its
subsidiaries is a party (copies of which have previously been furnished to
Republic), in each case, setting forth (A) the lessor and lessee thereof and
the date and term of each of the Leases, (B) the legal description, including
street address, of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), to the knowledge of the Company and Brown, all
of which are within the property set-back and building lines of the respective
property. The Leases are in full force and effect and have not been amended
except as set forth on Schedule 3.14(b), and to the knowledge of the Company
and Brown, no party thereto is in default or breach under any such Lease. To
the knowledge of the Company and Brown, no event has occurred which, with the
passage of time or the giving of notice or both, would cause a material breach
of or default under any of such Leases. To the knowledge of the Company and
Brown, there is no breach or anticipated breach by any other party to such
Leases. Except as set forth on Schedule 3.14(b), with respect to each such
Leased Premises:
(i) The Company or a subsidiary thereof has valid
leasehold interests in the Leased Premises, free and clear of any
Liens, covenants and easements or title defects of any nature
whatsoever;
(ii) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company, theportions of the buildings
located on the Leased Premises that are used in the Company's business
are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Company's current
and reasonably anticipated normal business activities as conducted
thereat;
(iii) Each of the Leased Premises (a) has direct
access to public roads or access to public roads by means of a
perpetual access easement; and (b) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal
business activities as conducted at such parcel; and
(iv) Neither the Company nor its subsidiaries have
received notice of (a) any condemnation proceeding with respect to any
portion of the Leased Premises or any
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<PAGE> 20
access thereto; or (b) any special assessment which may affect any of
the Leased Premises.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except as set forth in Schedule 3.15(a), the Company
and its subsidiaries have good and marketable title to all of their Assets (as
hereinafter defined), free and clear of any Liens or restrictions on use. For
purposes of this Agreement, the term "Assets" means all of the properties and
assets of the Company and its subsidiaries, other than the Owned Properties and
the Leased Premises, whether personal or mixed, tangible or intangible,
wherever located.
(b) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company, theFixed Assets (as hereinafter defined)
currently in use or necessary for the business and operations of the Company
and its subsidiaries are in good operating condition, normal wear and tear
excepted. For purposes of this Agreement, the term "Fixed Assets" means all
vehicles, machinery, equipment, tools, supplies, leasehold improvements,
furniture and fixtures used by or located on the premises of the Company and
its subsidiaries or set forth on the Current Balance Sheet or acquired by the
Company or its subsidiaries since the date of the Current Balance Sheet.
Schedule 3.15 lists the vehicles owned, leased or used by the Company and its
subsidiaries, setting forth the make, model, description of body and chassis,
vehicle identification number, and year of manufacture, and for each vehicle,
whether it is owned or leased, and if owned, the name of any lienholder and the
amount of the lien, and if leased, the name of the lessor and the general terms
of the lease, and, whether owned or leased.
3.16 COMPLIANCE WITH LAWS.
(a) The Company and each of its subsidiaries is and has
been in material compliance with all laws, regulations and orders applicable to
it, its business and operations (as conducted by it now and in the past), the
Assets, the Owned Properties and the Leased Premises and any other properties
and assets (in each case owned or used by it now or in the past) the
noncompliance of with which could have a Material Adverse Effect on the
Company. Except as set forth on Schedule 3.16 or other Schedules to this
Agreement, neither the Company nor any of its subsidiaries has been cited,
fined or otherwise notified of any asserted past or present failure to comply
with any laws, regulations or orders and no proceeding with respect to any such
violation is pending or, to the knowledge of the Company and Brown, threatened.
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(b) Neither the Company, nor any of its subsidiaries,
nor any of their employees or agents, has made any payment of funds in
connection with the business of the Company which is prohibited by law, and no
funds have been set aside to be used in connection with the business of the
Company for any payment prohibited by law.
(c) The Company and each of its subsidiaries is and at
all times has been in full compliance with the terms and provisions of the
Immigration Reform and Control Act of 1986, as amended (the "Immigration Act").
With respect to each Employee (as defined in 8 C.F.R. 274a.1(f)) of the Company
and each of its subsidiaries for whom compliance with the Immigration Act by
the Company as employer is required, the Company has made available to Republic
a true, accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained by the Company or its subsidiaries
pursuant to the Immigration Act. Neither the Company nor any of its
subsidiaries has been cited, fined, served with a Notice of Intent to Fine or
with a Cease and Desist Order, nor has any action or administrative proceeding
been initiated or, to the Company and Brown's knowledge, threatened against the
Company or its subsidiaries by reason of any actual or alleged failure to
comply with the Immigration Act.
(d) Neither the Company nor any of its subsidiaries is
subject to any Contract, decree or injunction in which the Company is a party
which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of each
of the employees of the Company and each of its subsidiaries. Neither the
Company nor any of its subsidiaries is a party to or bound by any collective
bargaining agreement or any other agreement with a labor union, and there has
been no effort by any labor union during the 24 months prior to the date hereof
to organize any employees of the Company or its subsidiaries into one or more
collective bargaining units. There is no pending or to the knowledge of the
Company and Brown threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company or its subsidiaries or
which may interfere with their continued operation. Neither the Company or its
subsidiaries nor any agent, representative or employee of the Company or its
subsidiaries has within the last 24 months committed any unfair labor practice
as defined in the National Labor Relations Act, as amended, and there is no
pending or, to the knowledge of the Company and Brown, threatened charge or
complaint against the Company or its subsidiaries by or with the National Labor
Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the
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employees of the Company or its subsidiaries during the 24 months prior to the
date hereof. Neither the Company nor any Shareholder has received notice that
any executive or key employee or group of employees has any plans to terminate
his, her or their employment with the Company or its subsidiaries as a result
of the Merger or otherwise. Schedule 3.17 contains detailed information about
each contract, agreement or plan of the following nature, whether formal or
informal, and whether or not in writing, to which the Company or its
subsidiaries is a party or under which the Company or its subsidiaries has an
obligation: (i) employment agreements, (ii) employee handbooks, policy
statements and similar plans, (iii) noncompetition agreements and (iv)
consulting agreements. The Company and each of its subsidiaries has complied
in all material respects with applicable laws, rules and regulations relating
to employment, civil rights and equal employment opportunities, including but
not limited to, the Civil Rights Act of 1964, the Fair Labor Standards Act, and
the Americans with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a
list setting forth each employee benefit plan or arrangement of the Company and
each of its subsidiaries, including but not limited to employee pension benefit
plans, as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), multiemployer plans, as defined in Section
3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of
ERISA, deferred compensation plans, stock option plans, bonus plans, stock
purchase plans, hospitalization, disability and other insurance plans,
severance or termination pay plans and policies, whether or not described in
Section 3(3) of ERISA, in which employees, their spouses or dependents, of the
Company participate ("Employee Benefit Plans") (true and accurate copies of
which, together with the most recent annual reports on Form 5500 and summary
plan descriptions with respect thereto, were furnished to Republic).
(b) Compliance with Law. With respect to each Employee
Benefit Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no actions, suits, claims or disputes are pending, or threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) to the knowledge of
the Company and Brown, there are no facts which could give rise to any material
liability in the event of any such investigation, claim, action, suit, audit,
review, or other proceeding; (v) all material reports, returns, and similar
documents required to be filed with any governmental agency or distributed to
any plan participant have
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<PAGE> 23
been duly or timely filed or distributed; and (vi) no "prohibited transaction"
has occurred within the meaning of the applicable provisions of ERISA or the
Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a) (i) the
Internal Revenue Service has issued a favorable determination letter, true and
correct copies of which have been furnished to Republic, that such plans are
qualified and exempt from federal income taxes; (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs; (iii) no such plan has been amended in a manner that would
require security to be provided in accordance with Section 401(a)(29) of the
Code; (v) no reportable event (within the meaning of Section 4043 of ERISA) has
occurred, other than one for which the 30-day notice requirement has been
waived; and (v) as of the Effective Date, the present value of all liabilities
that would be "benefit liabilities" under Section 4001(a)(16) of ERISA if
benefits described in Code Section 411(d)(6)(B) were included will not exceed
the then current fair market value of the assets of such plan (determined using
the actuarial assumptions used for the most recent actuarial valuation for such
plan); (vi) except as disclosed on Schedule 3.18, all contributions to, and
payments from and with respect to such plans, which may have been required to
be made in accordance with such plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code, have been timely made; (vii) all such
contributions to the plans, and all payments under the plans (except those to
be made from a trust qualified under Section 401(a) of the Code) and all
payments with respect to the plans (including, without limitation, PBGC and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
Current Balance Sheet or are disclosed on Schedule 3.18.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of the
Company and its subsidiaries have been timely paid; (ii) the Company and its
subsidiaries have not incurred and are not expected to incur, directly or
indirectly, any withdrawal liability under ERISA with respect to any such plan
(whether by reason of the transactions contemplated by the Agreement or
otherwise); (iii) Schedule 3.18 sets forth (A) the withdrawal liability under
ERISA to each MPPA Plan, (B) the date as of which such amount was calculated,
and (C) the method for determining the withdrawal liability; and (iv) no such
plan is (or is expected to be) insolvent or in reorganization and no
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<PAGE> 24
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, exists or is expected to exist with
respect to any such plan.
(e) Welfare Plans. Other than as disclosed in Schedule
3.18, (i) the Company and its subsidiaries are not obligated under any employee
welfare benefit plan as described in Section 3(1) of ERISA ("Welfare Plan"),
whether or not disclosed in Schedule 3.18, to provide medical or death benefits
with respect to any employee or former employee of any of the Company, its
subsidiaries or their predecessors after termination of employment; (ii) the
Company and each of its subsidiaries has complied in all material respects with
the notice and continuation coverage requirements of Section 4980B of the Code
and the regulations thereunder with respect to each Welfare Plan that is, or
was during any taxable year of the Company for which the statute of limitations
on the assessment of federal income taxes remains, open, by consent or
otherwise, a group health plan within the meaning of Section 5000(b)(1) of the
Code, and (iii) there are no reserves, assets, surplus or prepaid premiums
under any Welfare Plan which is an Employee Benefit Plan. The consummation of
the transactions contemplated by this Agreement will not entitle any individual
to severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
(f) Controlled Group Liability. The Company, or any
entity that would be aggregated with the Company under Code Section 414(b),
(c), (m) or (o): (i) has not ever terminated or withdrawn from an employee
benefit plan under circumstances resulting (or expected to result) in liability
to the Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the
employee benefit plan is funded, or any employee or beneficiary for whose
benefit the plan is or was maintained (other than routine claims for benefits);
(ii) has no assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has not failed to pay
premiums to the PBGC when due; (iv) is not subject to (or expected to be
subject to) an excise tax under Code Section 4971; (v) has not engaged in any
transaction which would give rise to liability under Section 4069 or Section
4212(c) of ERISA; or (vi) has not violated Code Section 4980B or Section 601
through 608 of ERISA.
(g) Other Liabilities. Except as set forth on Schedule
3.18, (i) none of the Employee Benefit Plans obligates the Company or any of
its subsidiaries to pay separation, severance, termination or similar benefits
solely as a result of any transaction contemplated by this Agreement or solely
as a result of a "change of control" (as such term is defined in Section 280G
of the Code), (ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals for
all periods ending prior to or as
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<PAGE> 25
of the Effective Date shall have been made or properly accrued on the Current
Balance Sheet or will be properly accrued on the books and records of the
Company as of the Effective Date, and (iii) none of the Employee Benefit Plans
has any unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of the Company.
3.19 TAX MATTERS. Except as set forth in Schedule 3.19 hereto,
all Tax Returns required to be filed prior to the date hereof with respect to
the Company and each of its subsidiaries or any of their income, properties,
franchises or operations have been filed, each such Tax Return has been
prepared in substantial compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects. All Taxes due
and payable by or with respect to the Company and each of its subsidiaries
shown on the Tax Returns has been paid or are accrued on the Current Balance
Sheet or will be accrued on the books and records of the Company as of the
Closing. Except as set forth in Schedule 3.19 hereto: (i) with respect to each
taxable period of the Company and its subsidiaries, either such taxable period
has been audited by the relevant taxing authority or the time for assessing or
collecting Taxes with respect to each such taxable period has closed and such
taxable period is not subject to review by any relevant taxing authority; (ii)
no deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by any taxing
authority against the Company or its subsidiaries; (iii) the Company and each
of its subsidiaries have not consented to extend the time in which any Taxes
may be assessed or collected by any taxing authority; (iv) the Company and each
of its subsidiaries have not requested or been granted an extension of the time
for filing any Tax Return to a date later than the Effective Time; (v) there is
no action, suit, taxing authority proceeding, or audit or claim for refund now
in progress, pending or, to the knowledge of the Company and Brown, threatened
against or with respect to the Company or its subsidiaries regarding Taxes;
(vi) the Company and each of its subsidiaries has not made an election or filed
a consent under Section 341(f) of the Code (or any corresponding provision of
state, local or foreign law) on or prior to the Effective Time; (vii) there are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the Company or its subsidiaries; (viii) the Company and each of
its subsidiaries will not be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Effective Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Effective Time or (B) as a
result of any "closing agreement," as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from
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any taxable period (or portion thereof) beginning after the Effective Time;
(ix) the Company and its subsidiaries have not been a member of an affiliated
group (as defined in Section 1504 of the Code) or filed or been included in a
combined, consolidated or unitary income Tax Return; (x) neither the Company
nor any of its subsidiaries is a party to or bound by any tax allocation or tax
sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (xiii) the Company and each
of its subsidiaries has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provision of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xiv) no claim has ever been
asserted against the Company in writing by a taxing authority in a jurisdiction
where the Company or its subsidiaries do not file Tax Returns that the Company
or such subsidiaries is or may be subject to Taxes assessed by such
jurisdiction; and (xv) the Company and each of its subsidiaries has no
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xvi)
true, correct and complete copies of all income and sales Tax Returns filed by
or with respect to the Company and each of its subsidiaries for the past three
years have been furnished or made available to Republic; (xvii) the Company and
each of its subsidiaries will not be subject to any Taxes for the period ending
at the Effective Time for any period for which a Tax Return has not been filed
imposed pursuant to Section 1374 or Section 1375 of the Code (or any
corresponding provision of state, local or foreign law).
3.20 INSURANCE. The Company and each of its subsidiaries is
covered by valid, outstanding and enforceable policies of insurance issued to
it or them by reputable insurers covering its or their properties, assets and
business against risks of the nature normally insured against by corporations
in the same or similar lines of business and in coverage amounts typically and
reasonably carried by such corporations (the "Insurance Policies"). Such
Insurance Policies are in full force and effect, and all premiums due thereon
have been paid. As of the Effective Time, each of the Insurance Policies will
be in full force and effect. None of the Insurance Policies will lapse or
terminate as a result of the transactions contemplated by this Agreement. The
Company and each of its subsidiaries have complied with the provisions of such
Insurance Policies in all material respects. Schedule 3.20 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Republic) and (ii) a
detailed description of each pending claim under any of the Insurance Policies
for an amount in excess of $10,000 that relates to loss or damage to the
properties, assets or businesses of the Company or its subsidiaries. To the
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knowledge of the Company and Brown, the Company and its subsidiaries have not
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
3.21 RECEIVABLES. Except as set forth in Schedule 3.21:(i) all
of the Receivables (as hereinafter defined) are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business
of the Company and its consolidated subsidiaries; and (ii) all of the
Receivables are good and collectible receivables, without setoff or
counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the Current Balance Sheet as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business consistent with past
practice. For purposes of this Agreement, the term "Receivables" means all
receivables of the Company and its consolidated subsidiaries, including all
trade account receivables arising from the provision of services, sale of
inventory, notes receivable, and insurance proceeds receivable.
3.22 LICENSES AND PERMITS. The Company and its subsidiaries
possess all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "Permits") for their business and
operations, including with respect to the operation of each of the Owned
Properties and Leased Premises except where the failure to obtain any such
Permits would not have a Material Adverse Effect on the Company. To the
knowledge of the Company and Brown, all such Permits are valid and in full
force and effect, the Company and each of its subsidiaries is in compliance
with their requirements in all material respects, and no proceeding is pending
or, to the knowledge of the Company and Brown, threatened to revoke or amend
any of them. None of such Permits is or will be materially impaired or
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
3.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company and its subsidiaries
in the manner in which and to the extent to which such business is currently
being conducted. No current supplier to the Company or its subsidiaries of
items essential to the conduct of their business has, to the knowledge of the
Company and Brown, threatened to terminate its business relationship with the
Company or such subsidiary for any reason. Except as set forth on Schedule
3.23, to the knowledge of the Company and Brown, the Company and its
subsidiaries have no direct or indirect interest in any customer, supplier or
competitor of the Company or its subsidiaries, nor in any person from whom or
to whom the Company or its subsidiaries leases real or personal property.
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Except as set forth on Schedule 3.23, to the knowledge of Company and Brown, no
officer, director or shareholder of the Company or its subsidiaries, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with the Company or its subsidiaries or has any interest in any
property used by the Company or its subsidiaries.
3.24 INTELLECTUAL PROPERTY. To the knowledge of the Company and
Brown, the Company and each of its subsidiaries has full legal right, title and
interest in and to all trademarks, servicemarks, tradenames, copyrights,
know-how, patents, trade secrets, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the
conduct of its business (the "Intellectual Property"). To the knowledge of the
Company and Brown, the conduct of the Company's business as presently conducted
and the unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or, to the knowledge of the
Company and Brown, threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Contract
to which the Company and each of its subsidiaries is a party or by which the
Company or its subsidiaries or their properties and assets are bound and which
is material to the business, assets or properties of the Company or its
subsidiaries (the "Designated Contracts"), true and correct copies of which
have been made available to Republic. The copy of each Designated Contract
supplied by the Company to Republic is a true and complete copy of the document
it purports to represent and reflects all amendments thereto made through the
date of this Agreement. Except as set forth on Schedule 3.25, neither the
Company nor any of its subsidiaries has violated any of the material terms or
conditions of any Designated Contract or any term or condition which would
permit termination or material modification of any Designated Contract, and all
of the covenants to be performed by any other party thereto have been fully
performed and there are no claims for breach or indemnification or notice of
default or termination under any Designated Contract. Except as set forth on
Schedule 3.25, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a material default by the Company
or its subsidiaries under any Designated Contract, and no such event has
occurred which constitutes or would, to the knowledge of the Company and Brown,
constitute a material default
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<PAGE> 29
by any other party. Neither the Company nor any of its subsidiaries is subject
to any liability or payment resulting from renegotiation of amounts paid it
under any Designated Contract. As used in this Section, Designated Contracts,
subject to the materiality standard set forth in the first sentence of this
Section 3.25, shall include, without limitation, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional
sale or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligations to any other Person, or letters of intent or
commitment letters with respect to same; (b) contracts obligating the Company
or any of its subsidiaries to provide products or services for a period of one
year or more, excluding standard waste collection and disposal contracts
entered into in the ordinary course of business without material modification
from the preprinted forms used by the Company or its subsidiaries in the
ordinary course of their business; (c) leases of real property, and leases of
personal property not cancelable without penalty on notice of sixty (60) days
or less or calling for payment of an annual gross rental exceeding Twenty-Five
Thousand Dollars ($25,000.00); (d) distribution, sales agency or franchise or
similar agreements, or agreements providing for an independent contractor's
services, or letters of intent with respect to same; (e) employment agreements,
management service agreements, consulting agreements, confidentiality
agreements, non-competition agreements and any other agreements between the
Company and any employee, officer or director of the Company or its
subsidiaries; (f) licenses, assignments or transfers of trademarks, trade
names, service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (g) any
Contract relating to pending capital expenditures by the Company or its
subsidiaries; and (h) other material Contracts or understandings, irrespective
of subject matter and whether or not in writing, not entered into in the
ordinary course of business by the Company or any of its subsidiaries and not
otherwise disclosed on the Schedules.
3.26 CUSTOMER LISTS AND RECURRING REVENUE. Schedule 3.26 is a
true, correct and complete list of all material existing municipal, county or
city or other large customers (collectively, the "Material Customers") of the
Company and its subsidiaries who have entered into valid and enforceable
long-term (i.e., more than one year) waste collection and disposal, recycling
or other franchises or agreements with the Company or one or more of its
subsidiaries. True, correct and complete copies of such franchises and
agreements and any ordinances relating thereto have been furnished by the
Company to Republic. Other than the Material Customers listed on Schedule
3.26, no customer of the Company or its subsidiaries as of the date of this
Agreement accounts for more than 1% of the Company's consolidated annual
revenue. Schedule
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3.26 sets forth each Material Customer's name, address, account number, term of
franchise or agreement, billing cycle, type of service and rates charged.
3.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring the Republic Shares hereunder
for his own account for investment and not with a view to, or for the sale in
connection with, any distribution of any of the Republic Shares, except in
compliance with applicable state and federal securities laws. Each of the
Shareholders has had the opportunity to discuss the transactions contemplated
hereby with Republic and has had the opportunity to obtain such information
pertaining to the Republic Companies as has been requested, including but not
limited to filings made by Republic with the SEC under the Exchange Act. Each
of the Shareholders is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act, and has such knowledge and
experience in business or financial matters that he is capable of evaluating
the merits and risks of an investment in the Republic Shares.
3.28 BUSINESS LOCATIONS. As of the date hereof, the Company and
its subsidiaries have no office or place of business other than as identified
on Schedules 3.14(a) and 3.14(b) and the Company's principal place of business
and chief executive office (as such terms are used in subsection 9-401 of the
Uniform Commercial Code as enacted in the State of North Carolina as of the
date hereof) are indicated on Schedule 3.14(a) or 3.14(b), and, except for
equipment leased to customers in the ordinary course of business, all locations
where the equipment, inventory, chattel paper and books and records of the
Company and its subsidiaries are located as of the date hereof are fully
identified on Schedules 3.14(a) and 3.14(b).
3.29 NAMES; PRIOR ACQUISITIONS. All names under which the
Company and each of its subsidiaries does business as of the date hereof are
specified on Schedule 3.30. Except as set forth on Schedule 3.30, neither the
Company nor any of its subsidiaries has changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive office,
within the past three years.
3.30 NO COMMISSIONS. Neither the Company nor any Shareholder has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Except as set forth on Schedule 4.1, the Company covenants and agrees that,
between the date of this Agreement and the Effective Time, the business of the
Company and its consolidated subsidiaries shall be conducted only in, and the
Company and its consolidated subsidiaries shall not take any action except in,
the ordinary course of business, consistent with past practice. The Company
and its subsidiaries shall use their reasonable best efforts, subject to the
covenants of this Article IV, to preserve intact their business organization,
to keep available the services of their current officers, employees and
consultants and to preserve their present relationships with customers,
suppliers and other persons with which they have significant business
relations. By way of amplification and not limitation, except as contemplated
by this Agreement, the Company and each of its consolidated subsidiaries shall
not, between the date of this Agreement and the Effective Time, directly or
indirectly, do or propose or agree to do any of the following without the prior
written consent of Republic:
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with
past practice;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, for cash
or shares of stock), by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions
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of capital or property transfer, or, except in the ordinary course of
business, consistent with past practice, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances other than in the
ordinary course of business, or (iii) enter into any Contract other
than in the ordinary course of business, consistent with past
practice;
(f) increase the compensation payable or to become
payable to its officers or employees other than the ordinary course of
business consistent with past practice, or, except as presently bound
to do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its directors, officers
or other employees, or establish, adopt, enter into or amend or take
any action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date hereof in the ordinary course of business and
consistent with past practice;
(i) materially increase or decrease prices charged to
its customers, except for previously announced price changes, or take
any other action which might reasonably result in any material
increase in the loss of customers through non-renewal or termination
of service contracts or other causes; or
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(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III materially untrue or
incorrect except in the ordinary course of business.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby.
5.2 COVENANTS OF THE COMPANY. The Shareholders shall cause the
Company to comply with all of the covenants of the Company under this
Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with
the other in the preparation and filing of all forms, notifications, reports
and information, if any, required or reasonably deemed advisable pursuant to
any law, rule or regulation or the rules of any exchange on which the Republic
Common Stock is listed or the NASDAQ National Market in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly (and in no event later than ten (10) business days following
the date hereof) its respective filings, if any, and thereafter make any other
required submissions, under the HSR Act, with respect to the transactions
contemplated hereby, and (ii) use its reasonable best efforts to take, or cause
to be taken, all appropriate actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, using its best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of any
Governmental Authority and parties to Contracts with the Company or its
subsidiaries as are necessary for the consummation of the transactions
contemplated hereby. Each of parties shall make on a prompt and timely basis
all governmental or regulatory notifications and filings required to be made by
it for the consummation of the transactions contemplated hereby. The parties
also agree to use all reasonable best efforts to defend all
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lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby and to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. The fees
and expenses incurred in responding to any injunction brought by a governmental
authority under the HSR Act shall be paid by Republic.
5.5 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, the Company and each of its subsidiaries shall (and shall cause
its and their directors, officers, employees, auditors, counsel and agents) to
afford Republic and Republic's officers, employees, auditors, counsel and
agents reasonable access at all reasonable times to its and their properties,
offices, and other facilities, to its and their officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Republic of the occurrence or non-occurrence of any event of
which the Company becomes aware or has knowledge which would likely cause any
representation or warranty contained herein to be materially untrue or
inaccurate, or any covenant, condition, or agreement contained herein not to be
complied with or satisfied in all material respects.
5.7 TAX TREATMENT. Republic, the Company and the Shareholders
will use their respective best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and will not
take any action after the Merger is effected to cause the Merger to lose its
tax-free status. All parties hereto agree to file the Plan of Merger with
their respective federal income tax returns for the year in which the Merger is
effective, and to comply with the reporting requirements of Treasury Regulation
1.368-3.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party hereto
or their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Republic may make such public
disclosure which it believes in good faith to be required by law or by the
terms of any listing agreement with a securities exchange (in which case
Republic will consult with the other parties prior to making such disclosure).
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5.9 NO OTHER DISCUSSIONS. The Company, the Shareholders, and
their respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company or any or all of its subsidiaries
(whether by merger, consolidation, sale of stock or otherwise) or (ii) enter
into any agreement or commitment (whether or not binding) with respect to any
of the foregoing transactions. The Company will immediately notify Republic if
any third party attempts to initiate any solicitation, discussion or
negotiation with respect to any of the foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that the Republic
Companies will realize the benefits of the Merger and in consideration of being
employed by the Company and/or Republic after completion of the Merger, Brown
agrees with the Republic Companies that he will not for a period of three years
from the Effective Time:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any
business activity in the State of North Carolina which is directly or
indirectly in competition with the business conducted by the Company
and its subsidiaries at the Effective Time; provided, however, that,
the beneficial ownership of less than five percent (5%) of the shares
of stock of any corporation having a class of equity securities
actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person which
is a customer of the Company or its subsidiaries at the Effective Time
to patronize any business directly or indirectly in competition with
the business conducted by the Company or its subsidiaries; (ii)
canvass or solicit from any Person which is a customer of the Company
or its subsidiaries, any such competitive business, or (iii) request
or advise any Person which is a customer of the Company or its
subsidiaries at the Effective Time to withdraw, curtail or cancel any
such customer's business with the Company, its subsidiaries or their
successors;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to
employ, any person who was employed by either the Company or its
subsidiaries at or within
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six months prior to the Effective Time, or in any manner seek to
induce any such person to leave his or her employment except any such
person who was discharged by the Company or voluntarily terminated
employment with the Company;
(d) directly or indirectly, at any time following the
Effective Time, in any way utilize, disclose, copy, reproduce or
retain in his possession any of the Company's proprietary rights or
records, including, but not limited to, the Company's and its
subsidiaries' customer lists.
Brown agrees and acknowledges that the restrictions contained in this Section
5.10 are reasonable in scope and duration and are necessary to protect Republic
after the Effective Time. If any provision of this Section as applied to any
party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section will cause
irreparable damage to Republic and upon breach of any provision of this
Section, Republic shall be entitled to injunctive relief, specific performance
or other equitable relief; provided, however, that, this shall in no way limit
any other remedies which Republic may have (including, without limitation, the
right to seek monetary damages).
5.11 ENVIRONMENTAL ASSESSMENT. Republic, at its sole expense,
shall be entitled to have conducted prior to Closing an environmental
assessment of the Owned Properties and Leased Premises (hereinafter referred to
as "Environmental Assessment"). The Environmental Assessment may include, but
not be limited to, a physical examination of the Owned Property or Leased
Premises, and any structures, facilities, or equipment located thereon, soil
samples, ground and surface water samples, storage tank testing, review of
pertinent records, documents, and Licenses of the Company and its subsidiaries.
The Company shall provide Republic or its designated agents or consultants with
the access to such property which Republic, its agents or consultants require
to conduct the Environmental Assessment. If the results of the Environmental
Assessment are not satisfactory to Republic in its sole discretion, then
Republic may elect not to close. Republic shall provide promptly the Company
and the Shareholders with copies of the Environmental Assessment. The contents
of the Environmental
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Assessment and all related documents or findings shall automatically become
part of the Company's and Brown's exception list to Section 3.13. If the
Environmental Assessment identifies environmental contamination which requires
remediation or further evaluation under the Environmental, Health, and Safety
Laws, then Republic may elect to not close the transactions contemplated by
this Agreement, or Republic may elect to close in which case the Company shall
undertake and complete the required remediation and further evaluation that may
be required by a Governmental Authority, and a reasonable estimate, based on a
report of a mutually agreeable engineering or environmental remediation firm,
of such costs of remediation and evaluation shall be deducted from the
consideration granted in determining the Conversion Amount under Section 1.4.
Republic's failure or decision not to conduct any such Environmental Assessment
shall not affect any representation or warranty of the Shareholders under this
Agreement. The amount of the deduction set forth above shall not exceed the
maximum amount of Indemnifiable Damages set forth in Section 9.1(a) hereof.
5.12 TRADING IN REPUBLIC COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time, neither the Company nor the Shareholders (nor any Affiliates
thereof) will directly or indirectly purchase or sell (including short sales)
any shares of Republic Common Stock in any transactions effected on the Nasdaq
Stock Market, the Toronto Stock Exchange or otherwise.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions, any or all of which may be waived in whole or in part by
the Republic Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the Company and Brown
contained in this Agreement shall be true and correct in all material respects
at and as of the Effective Time with the same force and effect as though made
at and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Each of the Company and Brown shall have
performed and complied in all material respects with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Effective Time. Each of the Company and Brown shall have delivered to the
Republic
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Companies a certificate, dated as of the Effective Time, duly signed (in the
case of the Company, by its Chief Executive Officer and Chief Financial
Officer), certifying that such representations and warranties are true and
correct and that all such obligations have been performed and complied with in
all material respects.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change of the Company, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of the Company, and (iii)
none of the properties and assets of the Company shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Change on the Company, and there shall have been delivered to
the Republic Companies a certificate to that effect, dated the Effective Time
and signed by or on behalf of the Company and Brown.
6.3 CORPORATE CERTIFICATE. The Company and Brown shall have
delivered to the Republic Companies and each of its consolidated subsidiaries
(i) copies of the articles of incorporation and bylaws of the Company and each
of its consolidated subsidiaries as in effect immediately prior to the
Effective Time, (ii) copies of resolutions adopted by the Board of Directors
and shareholders of the Company authorizing the transactions contemplated by
this Agreement, and (iii) a certificate of good standing of the Company and
each of its consolidated subsidiaries issued by the Department of the Secretary
of State of the State of North Carolina and each other state in which the
Company is qualified to do business as of a date not more than ten days prior
to the Effective Time, certified in each case as of the Effective Time by the
Secretary of the Company as being true, correct and complete.
6.4 OPINION OF COUNSEL. The Republic Companies shall have
received an opinion dated as of the Effective Time from counsel for the Company
and the Shareholders, in form and substance acceptable to the Republic
Companies, to the effect that:
(i) the Company and each of its subsidiaries is
a corporation duly organized and existing and in good standing under
the laws of the State of North Carolina and has the corporate power
and authority to carry on the business now conducted by it and to own
or lease the properties now owned or leased by it;
(ii) The Company has obtained all necessary
authorizations and consents of its Board of Directors and the
Shareholders to effect the Merger;
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(iii) All issued and outstanding shares of capital
stock of the Company and its subsidiaries are owned of record as set
forth on Schedule 3.5 hereto;
(iv) Except as set forth in Schedule 3.12, to the
knowledge of such counsel, there is no litigation, proceeding or
investigation pending or threatened which would result in any Material
Adverse Change in the properties, business or prospects or in the
condition of the Company, or which questions the validity of this
Agreement;
(v) This Agreement is a valid and binding
obligation of the Company and the Shareholders, and enforceable
against the Company and the Shareholders in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally (except that such counsel does not opine
as to Section 5.10 of this Agreement).
6.5 CONSENTS. The Company shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company or its subsidiaries from any
person from whom such consent or waiver is required under any Designated
Contract as of a date not more than ten days prior to the Effective Time, or
who, as a result of the transactions contemplated hereby, would have such
rights to terminate or modify such Designated Contracts, either by the terms
thereof or as a matter of law.
6.6 SECURITIES LAWS. Republic shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of the Republic Shares, in connection with the
transactions contemplated hereby.
6.7 POOLING LETTERS. Republic shall have received from Farris,
Cooke & Associates, P.A., independent certified public accountants for the
Company, a letter dated the Effective Time, in form and substance acceptable to
Republic, confirming that, to their knowledge after due and diligent inquiry of
management, there have been no transactions or events with respect to the
Company which would, and the structure of the Company and the Shareholders,
would not, proscribe the transactions contemplated hereby, if consummated, from
being considered as a pooling of interests combination. Republic shall have
received from Arthur Andersen LLP, a letter dated the Effective Time,
confirming that the transactions contemplated hereby, if consummated, can
properly be accounted for as a pooling of interests combination in accordance
with GAAP and the criteria of Accounting Principles Board Opinion No. 16 and
the regulations of the SEC.
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6.8 UNDERTAKINGS. At or prior to the Closing, the Shareholders
shall have delivered to Republic a letter agreement relating to Rule 145 under
the Securities Act and "pooling of interests" criteria, in form and substance
satisfactory to the Republic Companies.
6.9 COMPANY STOCK. At the Closing, each of the Shareholders
shall have delivered to the Republic Companies all certificates evidencing the
Company Stock held by him or her or duly executed stock powers with indemnity.
6.10 STOCK POWERS. At the Closing, Brown shall have delivered to
Republic, for use in connection with the Pledged Shares, as hereinafter
defined, ten stock powers executed in blank.
6.11 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
and which, in the reasonable judgment of Republic, makes it inadvisable to
proceed with the Merger and other transactions contemplated hereby.
6.12 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting
period shall have expired or been terminated.
6.13 BOARD APPROVAL. The Board of Directors of Republic shall
have authorized and approved this Agreement, the Merger and transactions
contemplated hereby and thereby.
6.14 EMPLOYMENT. Brown and G. Mark Huffman shall have agreed to
become employees of Republic, or remain employees of the Company, on terms and
conditions acceptable to Republic.
6.15 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG THE COMPANY,
MACE J. BROWN AND MINA BROWN MCLEAN. Prior to the Closing, the Company shall
have closed the purchase of a certain parcel of real property located in
Hickory, North Carolina from Mace J. Brown and Mina Brown McLean, pursuant to
the terms of that certain real estate purchase contract to be entered into
among the Company, Mace J. Brown, and Mina Brown McLean.
6.16 REAL ESTATE PURCHASE AND SALE AGREEMENTS AMONG REPUBLIC,
BROWN AND SHARON J. BROWN. At the Closing, Republic shall close the purchase
of certain parcels of real property located in Morganton, North Carolina,
Boone, North Carolina and Atlanta, Georgia, respectively, from Brown and Sharon
J. Brown, pursuant to the terms of those certain real estate purchase contracts
to be entered into among Republic, Brown and Sharon J. Brown.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions, any or all of which may be waived in whole or in part
by the Company and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of each of the Republic
Companies contained in this Agreement shall be true and correct at and as of
the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. Each of the Republic Companies shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Effective Time. Each of the
Republic Companies shall have delivered to the Company a certificate, dated as
of the Effective Time, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the Shareholders
certificates representing the Republic Shares required to be issued to them
hereunder.
7.3 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
and which in the judgment of Brown makes it inadvisable to proceed with the
Merger and other transactions.
7.4 HSR ACT WAITING PERIOD. Any applicable HSR Act Waiting
Period shall have expired or been terminated.
7.5 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG THE COMPANY,
MACE J. BROWN AND MINA BROWN MCLEAN. Prior to the Closing, the Company shall
have closed the purchase of a certain parcel of real property located in
Hickory, North Carolina from Mace J. Brown and Mina Brown McLean, pursuant to
the terms of that certain real estate purchase contract to be entered into
among the Company, Mace J. Brown and Mina Brown McLean.
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7.6 REAL ESTATE PURCHASE AND SALE AGREEMENT AMONG REPUBLIC,
BROWN AND SHARON J. BROWN. At the Closing, Republic shall close the purchase
of certain parcels of real property located in Morganton, North Carolina,
Boone, North Carolina and Atlanta, Georgia, respectively, from Brown and Sharon
J. Brown, pursuant to the terms of those certain real estate purchase contracts
to be entered into among Republic, Brown and Sharon J. Brown.
7.7 KEY PERSONNEL. H. Wayne Huizenga shall be a member of
Republic's Board of Directors as of the Effective Time.
7.8 NO CASH DIVIDENDS. Republic shall not have declared or paid
any cash dividends with respect to its Common Stock between the date hereof and
the Effective Time.
7.9 NO STOCK ADJUSTMENTS. Republic shall not have declared or
caused to occur a stock split or stock dividend with respect to the Common
Stock of Republic without proportionately adjusting the number of Republic
shares to be issued pursuant to the Merger.
7.10 CAPITALIZATION. Republic shall not have amended its First
Amended and Restated Certificate of Incorporation to change its capitalization
from that described in Section 2.6 herein.
7.11 OPINION OF COUNSEL. The Company and the Shareholders shall
have received an opinion dated as of the Effective Time from counsel for
Republic, in the form and substance acceptable to the Company and the
Shareholders to the effect that:
(i) Republic is a corporation duly organized and
existing and in good standing under the laws of the State of Delaware
and has the necessary corporate power and authority to carry on the
business now conducted by it and to own or lease the properties now
owned by it;
(ii) Republic has obtained all necessary
authorizations and consents of its Board of Directors to effect the
Merger;
(iii) To the knowledge of such counsel, there is no
litigation, proceeding or investigation pending or threatened which
would result in any Material Adverse Change in the properties,
business or condition of Republic or which questions the validity of
this Agreement; and
(iv) This Agreement is a valid and binding obligation
of the Republic Companies in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or
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other laws affecting the enforcement of creditors' rights generally.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Republic Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR REPUBLIC SHARES; FILING OF
REGISTRATION STATEMENT. Republic will utilize its reasonable best efforts to
cause, as soon as practicable following the Effective Time, a registration
statement to be filed under the Securities Act or an existing registration
statement to be amended for the purpose of registering the Republic Shares for
resale by a Holder thereof (the "Registration Statement"). For purposes of
this Article, a person is deemed to be a "Holder" of Republic Shares whenever
such person is the record owner of Republic Shares. Republic will use its
reasonable best efforts to have the Registration Statement become effective and
cause the Republic Shares to be registered under the Securities Act, and
registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable.
8.2 EXPENSES OF REGISTRATION. Republic shall pay all expenses
incurred by Republic in connection with the registration, qualification and/or
exemption of the Republic Shares, including any SEC and state securities law
registration and filing fees, printing expenses, fees and disbursements of
Republic's counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration Statement or prospectuses contained
therein. Republic shall not, however, be liable for any sales, broker's or
underwriting commissions upon sale by any Holder of any of the Republic Shares.
8.3 FURNISHING OF DOCUMENTS. Republic shall furnish to the
Holders such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as the Holders may reasonably request in order to facilitate the
offering of the Republic Shares.
8.4 AMENDMENTS AND SUPPLEMENTS. Republic shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of
such amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Republic Shares is required
to be
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delivered under the Securities Act, any event shall have occurred as a result
of which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Republic shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
8.5 DURATION. Republic shall maintain the continual
effectiveness of the Registration Statement for a period of three (3) years
following the Effective Date or until such earlier time as Republic reasonably
determines, based on an opinion of counsel, (a copy of which shall be provided
to the Holders), that the Holders will be eligible to sell all of the Shares
then owned by the Holders without the need for continued registration of the
shares, in the three month period immediately following the termination of the
effectiveness of the Registration Statement.
8.6 FURTHER INFORMATION. If Republic Shares owned by a Holder
are included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.7 INDEMNIFICATION.
(a) Republic will indemnify and hold harmless the
Holders and each person, if any, who controls a Holder within the meaning of
the Securities Act, from and against any and all losses, damages, liabilities,
costs and expenses to which the Holders or any such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that, Republic will
not be liable in any such case to the extent that any such loss, claim, damage,
liability, cost or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished
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by or on behalf of any Holder or such controlling person in writing
specifically for use in the preparation thereof.
(b) Each of the Holders, individually and not jointly,
will indemnify and hold harmless Republic and each person, if any, who controls
Republic within the meaning of the Securities Act, from and against any and all
losses, damages, liabilities, costs and expenses to which Republic or any such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by or on behalf of any Holder specifically for use in the
preparation thereof; provided, however, that the indemnification obligations of
each Holder hereunder shall be limited to the amount of gross proceeds received
by such Holder from the sale of Republic Shares pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 8.7 notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have hereunder unless the
indemnifying party has been materially prejudiced thereby nor will such failure
to so notify the indemnifying party relieve it from any liability which it may
have to any indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After
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notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party.
(d) In the event any of the Republic Shares are sold by
any Holder or Holders in an underwritten public offering consented to by
Republic, Republic shall provide indemnification to the underwriters of such
offering and any person controlling any such underwriter on behalf of the
Holder or Holders making the offering; provided, however, that Republic shall
not be required to consent to any such underwriting or to provide such
indemnification in respect of the matters described in the proviso to the first
sentence of Section 8.7(a).
8.8 ADDITIONAL UNDERTAKINGS.
(a) In order to facilitate the resale by Holders of Republic
Shares during any period in which the Registration Statement shall not be
effective, Republic shall use its best efforts to take all action and file with
the SEC such information as the SEC may require as a condition to the
availability of Rule 144 or Rule 145 under the Securities Act (or any successor
exemptive rule hereafter in effect).
(b) During the three (3) years following the Effective Date,
Republic shall use its best efforts to maintain its listing on The Nasdaq Stock
Market or other nationally recognized securities exchange.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY BROWN TO INDEMNIFY. Brown agrees to indemnify
and hold Republic harmless from and against the aggregate of all Indemnifiable
Damages (as defined below).
(a) For purposes of this Agreement, "Indemnifiable
Damages" means, without duplication, the aggregate of all
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expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and
expenses) incurred or suffered by Republic in excess of $500,000.00,
to the extent (i) resulting from any breach of a representation or
warranty made by the Company or Brown in or pursuant to this
Agreement, except for matters disclosed to Republic prior to Closing
pursuant to Section 5.6 herein, (ii) resulting from any breach of the
covenants or agreements made by the Company or Brown in this
Agreement, or (iii) resulting from any inaccuracy in any certificate
delivered by the Company or any Shareholder pursuant to this
Agreement. The total Indemnifiable Damages shall not exceed Seven
Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) in
the aggregate.
(b) Without limiting the generality of the foregoing,
with respect to the measurement of Indemnifiable Damages, Republic
shall have the right to be put in the same financial position as it
would have been in had each of the representations and warranties of
the Company and the Shareholders been true and correct.
(c) Each of the representations and warranties made by
the Company and Brown in this Agreement or pursuant hereto shall
survive for a period of one year after the Effective Time,
notwithstanding any investigation at any time made by or on behalf of
Republic and upon expiration of such one year period, such
representations and warranties shall expire except the representations
and warranties of the Shareholders contained in Sections 3.1, 3.2,
3.3, 3.4, and 3.5 shall not expire but shall continue indefinitely.
No claim for the recovery of Indemnifiable Damages may be asserted by
Republic against Brown after such representations and warranties shall
thus expire, provided, however, that claims for Indemnifiable Damages
first asserted within the applicable period shall not thereafter be
barred.
9.2 SECURITY FOR BROWN'S INDEMNIFICATION OBLIGATION. As
security for the agreement by Brown to indemnify and hold Republic harmless as
described in Section 9.1, at the Closing, Brown shall deliver to and Republic
shall set aside and hold certificates representing five percent (5%) of the
shares of Republic Common Stock to be issued pursuant to Section 1.4 hereunder
(the "Pledged Shares") for a period not to exceed one year from the Effective
Date. There shall also be deposited with Republic, subject to the terms of
this Section 9.2, all shares of Republic Common Stock issued to Brown with
respect to the Pledged Shares as a result of any stock dividend or stock split.
The Pledged Shares and all stock issued or paid upon the Pledged Shares and
proceeds thereof
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are hereinafter referred to as the "Collateral." Except with respect to shares
transferred pursuant to the right of setoff referred to below (and in the case
of such shares, until the same are transferred), all Pledged Shares shall be
deemed to be owned by Brown and Brown shall be entitled to vote the same and to
receive all cash dividends paid upon same.
(a) Republic may make a claim for payment of
Indemnifiable Damages and may set off against the Pledged Shares any
Indemnifiable Damages for which Brown may be responsible pursuant to
this Agreement, subject, however, to the following terms and
conditions:
(1) Republic shall give written notice to Brown
of any claim for Indemnifiable Damages, which notice shall
set forth (i) the amount of Indemnifiable Damages which
Republic claims to have sustained, and (ii) the basis of the
claim therefore, and (iii) copies of all documentation and
other evidence in support of such claim;
(2) Unless the Indemnifiable Damages arise from
a claim of a third party, with respect to which Brown has
elected to assume the defense of and pay any resulting
liability, judgment or settlement thereunder, such set off
shall be affected on the later to occur of the expiration of
thirty (30) days from the delivery of such notice (the
"Notice of Contest Period") or, if such claim is contested,
the date the dispute is resolved, in accordance with
paragraph (3) below;
(3) If, prior to the expiration of the Notice
of Contest Period, the Shareholders shall notify Republic in
writing of an intention to dispute the claim and if such
dispute is not resolved within 30 days after expiration of
such period (the "Resolution Period"), then Republic shall
submit such dispute to arbitration. The arbitration shall
be conducted in Ft. Lauderdale, Florida by a committee of
three arbitrators (one appointed by Brown, one appointed by
Republic and one appointed by the two arbitrators so
appointed), which shall be appointed within 60 days after
the expiration of the Resolution Period. The arbitrators
shall permit discovery in accordance with the Federal Rules
of Civil Procedure and shall abide by the rules of the
American Arbitration Association. Their decision shall be
made within 45 days of being appointed and shall be final
and binding on all parties;
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(4) If the judgment of the arbitrators is
adverse to Brown, the amount thereof shall be paid by Brown
within ten (10) days of the written decision of the
arbitrators. In the event Brown does not pay within such
ten day period, then Republic shall within five (5) days
thereafter, set off against such portion of the Collateral
as shall have an aggregate value (based upon the sale price
per share as determined pursuant to Section 1.4 hereof)
equal to the amount of the final judgment of the
arbitrators.
(b) Subject to applicable accounting, securities, tax
and other legal requirements, Brown may at any time instruct Republic
to sell some or all of the Pledged Shares and the proceeds thereof
shall be held as substitute collateral for the Pledged Shares. Brown
may direct that such proceeds be reinvested in investment grade
securities in his name subject to the security interest contemplated
hereby.
(c) The Republic Companies agree to release the
Collateral from the security interest created in this Section 9.2 no
later than the first anniversary of the Effective Time and the
Republic Companies agree to promptly deliver to Brown all certificates
evidencing any Pledged Shares then held by them unless there then
remains unresolved any claim for Indemnifiable Damages or other
damages hereunder as to which notice has been given, in which event
any Collateral remaining on deposit after such claim shall not be
returned to Brown until after the time of satisfaction.
(d) The remedies provided for in this Section 9.2 shall
be in addition to and not in lieu of any other remedies available to
the Republic Companies under this Agreement; provided however,
following consummation of the Merger, a claim for Indemnifiable
Damages pursuant to this Article IX shall be Republic's sole and
exclusive remedy for a breach of the representations and warranties
contained herein, and in consideration of such limitation, Brown
agrees to waive any and all rights of contribution or other claims he
may have against the Company with respect to the breach of any of the
Company's representations and warranties.
9.3 ADJUSTMENT TO MERGER CONSIDERATION. All setoffs of Pledged
Shares for Indemnifiable Damages made pursuant to this Article IX shall be
treated as adjustments to the consideration granted in determining the
Conversion Amount under Section 1.4.
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ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after Effective Time of the Republic Shares:
10.1 DISPOSITION OF SHARES. Brown represents and warrants on
behalf of himself and McLean, that the shares of Republic Common Stock being
acquired by them hereunder are being acquired and will be acquired for their
own respective accounts and will not be sold or otherwise disposed of, except
pursuant to (a) an exemption from the registration requirements under the
Securities Act, which does not require the filing by Republic with the SEC of
any registration statement, offering circular or other document, in which case,
the Shareholders shall first supply to Republic an opinion of counsel (which
counsel and opinions shall be satisfactory to Republic) that such exception is
available, or (ii) an effective registration statement filed by Republic with
the SEC under the Securities Act.
10.2 LEGEND. The certificate representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 (D) PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE, AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE SECURITIES AND EXCHANGE
COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.
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ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business which
change (or effect) individually or in the aggregate, is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, business.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate,
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trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"Republic Shares" means the shares of Republic Common Stock
which the Shareholders receive in connection with the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
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11.3 KNOWLEDGE. Whenever any representation or warranty of an
individual is expressly qualified by reference to knowledge, the "knowledge" so
referred to shall be deemed to be such individual's actual knowledge after
reasonable inquiry under the circumstances. Whenever any representation and
warranty of a corporation is expressly qualified by reference to knowledge, the
"knowledge" so referred to shall be deemed to be the actual knowledge, after
reasonable inquiry under the circumstances, of its officers, directors and
employees, including those officers, directors and employees having authority
over or responsibility for the subject matter of such representation or
warranty, at the time such representation or warranty is made.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by any party at any time prior to the Closing Date
if there shall be a pending or threatened action or proceeding before
any court or other governmental body which shall seek to restrain,
prohibit or invalidate the transactions contemplated hereby, and
which, in the reasonable judgment of such party, makes it inadvisable
to proceed with the transactions contemplated by this Agreement.
(c) by Republic in the event of a material breach by the
Company or by Brown of any provision of this Agreement, or by Brown in
the event of a material breach by the Republic Companies of any
provision of this Agreement; or
(d) if the Closing shall not have occurred by April 30,
1996.
12.2 EFFECT OF TERMINATION. Except as provided in Article IX, in
the event of termination of this Agreement pursuant to Section 12.1, this
Agreement and the Plans of Merger shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
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ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO ANY OF THE REPUBLIC COMPANIES TO:
Republic Waste Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Ft. Lauderdale, FL 33301
Attn: Harris W. Hudson, President
Telecopy: (305) 779-3884
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
801 Brickell Avenue, 24th Floor
Miami, Florida 33131
Attention: Jonathan L. Awner, Esq.
Telecopy: (305) 374-5095
(b) IF TO THE COMPANY OR THE SHAREHOLDERS TO:
Garbage Disposal Service, Inc.
P.O. Box 2943
Hickory, North Carolina 28603
Attn: Lee G. Brown
Telecopy: (704) 256-3587
WITH A COPY TO:
Gaither, Gorham & Crone
Suite 203, Fidelity Professional Building
27 First Avenue, N.E.
Hickory, North Carolina 28603
Attn: James Gaither, Esq.
Telecopy: (704) 326-1882
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire
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understanding of the parties in respect of its subject matter and supersedes
all prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The Exhibits and Schedules
constitute a part hereof as though set forth in full above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any party without the prior written consent of
the other parties.
13.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by
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the words "without limitation." Time shall be of the essence in this
Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC WASTE INDUSTRIES, INC.
By: /s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
RWI/GDS MERGERSUB, INC.
By: /s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
GARBAGE DISPOSAL SERVICE, INC.
By: /s/ Lee G. Brown
-----------------------------------------
Lee G. Brown, President
/s/ Lee G. Brown
--------------------------------------------
Lee G. Brown, individually
/s/ Lee G. Brown
--------------------------------------------
Lee G. Brown, Attorney-In-Fact for
Mina Brown McLean, individually
The undersigned hereby join in this Agreement for the limited purpose
of agreeing that they will comply with those sections which are applicable to
such parties including, without limitation, Sections 6.15, 6.16, 7.5 and 7.6 of
this Agreement.
/s/ Lee G. Brown
--------------------------------------------
Lee G. Brown, Attorney-In-Fact for
Mace J. Brown, individually
/s/ Lee G. Brown
--------------------------------------------
Lee G. Brown, Attorney-In-Fact for
Sharon J. Brown, individually
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EXHIBIT 2.2
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of
November 11, 1995 by and among Republic Waste Industries, Inc., a Delaware
corporation ("Republic"); RWI/JCD Inc., RWI/Grand Inc., RWI/Trashaway Inc.,
RWI/Tos-It Inc., RWI/WesTex Inc., RWI/Pantego I Inc., RWI/Pantego II Inc.,
RWI/Trucking I Inc., and RWI/Trucking II Inc., all Texas corporations and
wholly-owned subsidiaries of Republic (together, the "Republic Merger Subs",
and together with Republic, the "Republic Companies"); J.C. Duncan Company,
Inc., a Texas corporation ("JCD"), and JCD's wholly-owned subsidiary, Arlington
Disposal Company, Inc., a Texas corporation ("ADC"); Grand Prairie Disposal
Company, Inc. ("GPD"), Trashaway Services, Inc. ("Trashaway"), Tos-It Service
Company, Inc. ("Tos-It"), Wes Tex Waste Services, Inc. ("Wes Tex"), Pantego
Service Company, a Texas general partnership ("Pantego"), Pantego I, Inc.
("PI"), Pantego II, Inc. ("PII"), E & E Truck Leasing I, Ltd., a Texas limited
partnership ("E&E"), EETL I, Inc. ("EETL I"), and EETL II, Inc. ("EETL II"),
all Texas corporations (except Pantego and E&E) and affiliates of JCD through
common ownership and/or management (together, the "JCD Affiliates", and
together with JCD, the "Duncan Companies"); and Robert C. Duncan, Jannette T.
Duncan, Dan R. Duncan, Debra A. Duncan, DeeDee Duncan Elliott, George Martin
Duncan, Melinda Duncan Vince, Robert C. Duncan as Trustee of the Robert C.
Duncan Annuity Trust No.'s One, Two, Three and Four, and Jannette T. Duncan as
Trustee of the Jannette T. Duncan Annuity Trust No.'s One, Two, Three and Four,
each a resident of the State of Texas (except George Martin Duncan and Melinda
Duncan Vince, who are residents of the State of Louisiana) or trust formed
under the laws of the State of Texas and who constitute all of the shareholders
of one or more of JCD and/or the JCD Affiliates (together, the "Shareholders").
Certain other capitalized terms used herein are defined in Article XI or
elsewhere throughout this Agreement.
RECITALS
The Boards of Directors of Republic and the Duncan Companies have
determined that it is in the best interests of their respective shareholders
for Republic to acquire the Duncan Companies upon the terms and subject to the
conditions set forth in this Agreement. In order to effectuate the
transaction, Republic has organized the Republic Merger Subs as wholly-owned
subsidiaries, and the parties have agreed, subject to the terms and conditions
set forth in this Agreement, to merge the Republic Merger Subs with and into
the Duncan Companies so that each of the Duncan Companies continue as surviving
corporations. As a result, each of the Duncan Companies will become a
wholly-owned subsidiary of Republic, and each of the Shareholders will be
issued certain shares of common stock of Republic.
<PAGE> 2
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
1.1 THE MERGERS. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below), and pursuant to the terms
and conditions set forth in the Plans of Merger and Reorganization annexed
hereto as Exhibits A through I (the "Plans of Merger"), the Republic Merger
Subs will be merged into and with the Duncan Companies (the "Mergers") as
follows:
(a) RWI/JCD Inc. will be merged into and with JCD;
(b) RWI/Grand Inc. will be merged into and with GPD;
(c) RWI/Trashaway Inc. will be merged into and with Trashaway;
(d) RWI/Tos-It Inc. will be merged into and with Tos-It;
(e) RWI/Wes Tex Inc. will be merged into and with Wes Tex;
(f) RWI/Pantego I Inc. will be merged into and with PI;
(g) RWI/Pantego II Inc. will be merged into and with PII;
(h) RWI/Trucking I Inc. will be merged into and with EETL I; and
(i) RWI/Trucking II Inc. will be merged into and with EETL II.
The terms and conditions of the Plans of Merger are incorporated herein by
reference as if fully set forth herein. As a result of the Mergers, the
separate corporate existence of each of the Republic Merger Subs shall cease
and each of the Duncan Companies shall continue as surviving corporations and
wholly-owned subsidiaries of Republic.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Mergers (the "Closing") shall take place as
promptly as practicable (and in
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any event within five (5) business days) after satisfaction or waiver of the
conditions set forth in Articles VI and VII, at the offices of Akerman,
Senterfitt & Eidson, P.A. in Miami, Florida, or such other place as the parties
may otherwise agree.
1.3 PLANS OF MERGER. Pursuant to the Plans of Merger, an
aggregate of 5,256,055 shares of common stock, $0.01 par value per share, of
Republic ("Republic Common Stock") will be issued in the Mergers in exchange
for all issued and outstanding shares of capital stock of each of the Duncan
Companies. The 5,256,055 shares of Republic Common Stock shall be allocated
among the Duncan Companies as follows: First, the fair market value of JCD,
GPD, Tos-It, Trashaway, Wes Tex, Pantego and E&E, shall be determined by and
set forth in written appraisals of Bernstein and Associates, Dallas, Texas.
Next, the "Adjusted Values" of such companies shall be determined by deducting
the following amounts from the fair market value of each such company:
JCD $3,378,166.84
GPD -0-
Tos-It -0-
Trashaway 29,325.00
Wes Tex 1,500.00
Pantego -0-
E&E 75,250.00
-------------
Total
$3,484,241.84
=============
Then, 5,095,238 shares of the Republic Common Stock shall be allocated among
such companies in proportion to the Adjusted Values as determined above. In
the case of Pantego and E&E, the shares allocated to those entities shall be
reallocated pro rata to their respective corporate partners. Then, the shares
so allocated to each of the Duncan Companies shall be allocated to their
respective shareholders in accordance with their respective share ownership in
the Duncan Companies. Finally, an additional 160,817 shares shall be allocated
among the shareholders of JCD in accordance with their respective share
ownership in JCD. After such allocations are computed and at least five (5)
days before Closing, the Shareholders shall deliver to Republic a certificate
signed by each of them setting forth such allocations of the 5,256,055 shares
of Republic Common Stock to each of the Duncan Companies and their respective
Shareholders.
1.4 FILING OF ARTICLES OF MERGER. Upon Republic's receipt of
the certificate executed by all of the Shareholders pursuant to Section 1.3,
Republic shall complete the Plans of Merger in accordance with such
certificate. At the time of the Closing, the parties shall cause the Mergers
to be consummated by filing duly executed Articles of Merger (with the
completed Plans of
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<PAGE> 4
Merger respectively annexed thereto) with the Secretary of State of the State
of Texas, in such form as Republic determines is required by and is in
accordance with the relevant provisions of the Texas Business Corporation Act
(the "TBCA") (the date and time of such filing is referred to herein as the
"Effective Date" or "Effective Time").
1.5 ISSUANCE OF REPUBLIC SHARES. At the Effective Time, by
virtue of the Merger and without any further action on the part of the parties
hereto, Republic shall issue to the Shareholders duly executed certificates, in
valid form registered in each such Shareholder's name, evidencing that number
of shares of Republic Common Stock determined, to the nearest whole share, in
accordance with each of the respective Plans of Merger and as set forth in
certificate executed by all of the Shareholders pursuant to Section 1.3. Any
Shareholders who wish to have their allocable shares of Republic Common Stock
issued in multiple certificates shall deliver a certificate to Republic within
5 business days prior to Closing pursuant to this Section 1.5 setting forth the
manner in which they wish to have their share certificates issued.
1.6 DELIVERY OF CERTIFICATES. At the Closing, the Shareholders
shall deliver the certificates representing all of the issued and outstanding
shares of capital stock of each of the Duncan Companies to Republic for
cancellation, and Republic shall deliver the certificates representing the
shares of Republic Common Stock issued pursuant to Section 1.5 in the following
manner: (i) Republic shall deliver to each such holder one or more certificates
evidencing ninety-five percent (95%) of such shares of Republic Common Stock
(rounded to the nearest whole share), and (ii) Republic shall set aside and
hold in accordance with Article IX the certificates evidencing the balance of
such shares of Republic Common Stock (the "Held Back Shares"). The shares of
Republic Common Stock, including the Held Back Shares, issuable by Republic in
the Mergers are sometimes referred to herein as the "Republic Shares".
1.7 ACCOUNTING TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as pooling of
interests business combinations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF REPUBLIC
As a material inducement to each of the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, Republic
makes the following representations and warranties to the Shareholders:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of the Republic Merger Subs is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. Each of
the Republic Merger Subs is a wholly-owned subsidiary of Republic.
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<PAGE> 5
2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic
Companies has the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. Each of the Republic Companies has taken
all action necessary to authorize its execution and delivery of this Agreement,
the performance of its respective obligations hereunder and the consummation of
the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the Mergers and
the issuance and delivery of certificates representing the Republic Shares to
the Shareholders, the Republic Shares will be validly issued, fully paid and
non-assessable shares of Republic Common Stock, and the Shareholders will
acquire good, valid and marketable title to, and record ownership of, the
Republic Shares respectively issued to them pursuant to Section 1.5.
2.5 NO COMMISSIONS. None of the Republic Companies has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
2.6 NO VIOLATION. The execution and delivery by the Republic
Companies of this Agreement, the consummation of the transactions contemplated
hereby, and the compliance by the Republic Companies with the terms and
provisions hereof, will not result in a default under (or give any other party
the right, with the giving of notice or the passage of time (or both), to
declare a default or accelerate any obligation under) or violate the Articles
of Incorporation or Bylaws of any of or any Contract to which any of the
Republic Companies is a party or by which any of the Republic Companies or
their respective properties or assets are bound (except to the extent that such
a default would not, in the case of a Contract, have a Material Adverse Effect
on Republic), or any Requirement of Law applicable to the Republic Companies,
or result in the creation or imposition of any Lien upon any of the capital
stock, properties or assets of any of (except where such Lien would not have a
Material Adverse Effect on Republic).
2.7 CONSENTS/APPROVALS. Except for filing and approval under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (a) no consents, filings, authorizations or other actions of any
Governmental Authority are required for execution, delivery and performance of
this Agreement by any of the Republic Companies, and (b) no consent, approval,
waiver or other action by any Person under any Contract to which any of the
Republic Companies is a party or by which any of their respective properties or
assets are bound is required
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<PAGE> 6
or necessary for the execution, delivery or performance by any of the Republic
Companies of this Agreement and the consummation of the transactions
contemplated hereby, except where the failure to obtain such consents would not
have a Material Adverse Effect on the Republic Companies.
2.8 CAPITALIZATION. The authorized capital stock of Republic
consists of 355,000,000 shares, of which 350,000,000 are shares of Republic
Common Stock and 5,000,000 are shares of preferred stock. As of the date
hereof, 62,583,074 shares of Republic Common Stock are validly issued and
outstanding, fully paid, and non-assessable, and no shares of preferred stock
are issued or outstanding. Not more than 40,000,000 shares of Republic Common
Stock have been reserved for issuance as of the date hereof pursuant to various
stock option plans, warrants, and pending contracts for business acquisitions,
and no other shares of Common Stock and no shares of preferred stock, or any
rights, options, warrants, convertible securities, subscription rights or other
agreements or commitments of any kind obligating Republic to issue or sell any
other shares of Republic Common Stock or preferred stock, are outstanding or
have been authorized, as of the date hereof. All issued and outstanding shares
of capital stock of the Republic Merger Subs are owned beneficially and of
record by Parent. No other shares of capital stock of the Republic Merger Subs
or any rights, options, warrants, convertible securities, subscription rights
or other agreements or commitments of any kind obligating any of the Republic
Merger Subs to issue or sell other such shares are outstanding or have been
authorized.
2.9 SEC REPORTS AND NASDAQ COMPLIANCE. Since January 1, 1995,
Republic has made all filings (the "SEC Reports") required to be made by it
under the Securities Act, the Exchange Act and the securities laws of any
state, and any rules and regulations promulgated thereunder and pursuant to any
Requirements of Law. The SEC Reports, when filed, complied in all material
respects with all applicable requirements of the Securities Act, the Exchange
Act and other Requirements of Law. None of the SEC Reports, at the time of
filing, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances in which they
were made. Republic has delivered or made accessible to the Shareholders true,
accurate and complete copies of the SEC Reports, as amended, which were filed
with the SEC since January 1, 1995, and as in effect as of the date hereof.
Republic has taken all necessary actions to ensure its continued inclusion in,
and the continued eligibility of the Republic Common Stock for trading on the
NASDAQ Stock Market under all currently effective and currently proposed
inclusion requirements.
2.10 GOVERNING DOCUMENTS. Republic has delivered or made
available to the Shareholders true, accurate and complete copies of the
Certificate of Incorporation and Bylaws of Republic in effect as of the date
hereof.
2.11 FINANCIAL STATEMENTS. Each of the balance sheets included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated financial position of Republic as of
its date, and each of the other financial statements included
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<PAGE> 7
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated results of operations or other
information therein of Republic for the periods or as of the dates therein set
forth in accordance with GAAP consistently applied during the periods involved.
2.12 CHANGES SINCE JUNE 30, 1995. Since June 30, 1995, (i) there
has been no Material Adverse Change in Republic, and (ii) there has not been
any direct or indirect redemption, purchase or other acquisition by Republic of
any Republic Common Stock, or any declaration, setting aside or payment of any
dividend or other distribution by Republic in respect of the Republic Common
Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
As a material inducement to Republic to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Shareholders
jointly and severally makes the following representations and warranties to
Republic:
3.1 CORPORATE STATUS. Each of the Duncan Companies and ADC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has the requisite power and authority to own or
lease its properties and to carry on its business as now being conducted. None
of the Duncan Companies and ADC is legally qualified to transact business as a
foreign corporation in any other jurisdictions as the nature of its properties
and the conduct of its business does not require such qualification and failure
to so qualify would not have a Material Adverse Effect on any of the Duncan
Companies or ADC. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of any of the Duncan
Companies or ADC.
3.2 POWER AND AUTHORITY. Each of the Duncan Companies and ADC
has the power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Duncan Companies and ADC has taken all action
necessary to authorize the execution and delivery of this Agreement, the
performance of its respective obligations hereunder and the consummation of the
transactions contemplated hereby. Each of the Shareholders are individuals
residing in, or is a trust formed under the laws of, the State of Texas, except
for George Martin Duncan and Melinda Duncan Vince who are individuals residing
in the State of Louisiana. Each of the Shareholders has the requisite
competence and authority to execute and deliver this Agreement, to perform his,
her or its respective obligations hereunder and to consummate the transactions
contemplated hereby.
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<PAGE> 8
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Duncan Companies, ADC and the Shareholders, and
constitutes the legal, valid and binding obligation of each of them,
enforceable against them in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
3.4 CAPITALIZATION. Schedule 3.4 sets forth, with respect to
each of the Duncan Companies and ADC, (a) the number of authorized shares of
each class of its capital stock, (b) the number of issued and outstanding
shares of each class of its capital stock, and (c) the number of shares of each
class of its capital stock which are held in treasury. All of the issued and
outstanding shares of capital stock of each of the Duncan Companies and ADC (a)
have been duly authorized and validly issued and are fully paid and
non-assessable, (b) were issued in compliance with all applicable state and
federal securities laws, and (c) were not issued in violation of any preemptive
rights or rights of first refusal. Except as set forth in Schedule 3.4, no
preemptive rights or rights of first refusal exist with respect to the shares
of capital stock of each of the Duncan Companies and ADC, and no such rights
arise by virtue of or in connection with the transactions contemplated hereby;
and, to the extent permitted by law, each of the Shareholders has waived (or
hereby waives) any and all such preemptive rights and rights of first refusal.
There are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require any of the Duncan
Companies or ADC to issue or sell any shares of its capital stock (or
securities convertible into or exchangeable for shares of its capital stock).
There are no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to any of the Duncan
Companies or ADC. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the capital stock of
any of the Duncan Companies or ADC. None of the Duncan Companies or ADC is
obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
3.5 SHAREHOLDERS. Schedule 3.5 sets forth, with respect to each
of the Duncan Companies and ADC, (a) the name, address and federal taxpayer
identification number of, and the number of outstanding shares of each class of
its capital stock owned by, each shareholder of record as of the close of
business on the date of this Agreement; and (b) the name, address and federal
taxpayer identification number of, and number of shares of each class of its
capital stock beneficially owned by, each beneficial owner of outstanding
shares of capital stock (to the extent that record and beneficial ownership of
any such shares are different). The Shareholders constitute all of the holders
of all issued and outstanding shares of capital stock of all of the Duncan
Companies, and each of the Shareholders owns such shares as is set forth on
Schedule 3.5, and JCD owns the issued and outstanding shares of capital stock
of ADC, free and clear of all Liens, restrictions and claims of any kind,
except as set forth on Schedule 3.5, and all Liens noted on Schedule 3.5 shall
be released at or prior to the Closing.
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<PAGE> 9
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by each of the Duncan Companies, ADC
and the Shareholders, the performance by them of their respective obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (i) contravene any provision of the articles of
incorporation or bylaws of any of the Duncan Companies or ADC; (ii) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against any of the Duncan Companies or ADC or any of the Shareholders; (iii)
conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding
upon or enforceable against any of the Duncan Companies or ADC or any of the
Shareholders, except to the extent such a default would not result in Material
Adverse Effect; (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of the property or assets of any of the Duncan
Companies or ADC; or (v) require the consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any applicable filings required under the
HSR Act and any SEC and other filings required to be made by the Republic
Companies, or except to the extent failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not
result in Material Adverse Effect, or would not preclude the Mergers from being
consummated in accordance with this Agreement.
3.7 RECORDS OF THE COMPANY. The copies of the respective
articles of incorporation and bylaws of the Duncan Companies and ADC which were
provided to Republic are true, accurate and complete and reflect all amendments
made through the date of this Agreement. True and correct copies of the minute
books for the Duncan Companies and ADC were made available to Republic for
review. Since July 1, 1993, all material corporate actions taken by any of the
Duncan Companies and ADC have been duly authorized or ratified. The stock
ledgers of the Duncan Companies and ADC, as previously made available to
Republic, contain accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of the Duncan Companies and ADC,
respectively.
3.8 SUBSIDIARIES. Except for ADC, which is a wholly-owned
subsidiary of JCD, and as otherwise set forth on Schedule 3.8, none of the
Duncan Companies owns, directly or indirectly, any outstanding voting
securities of or other interests in, or controls, any other corporation,
partnership, joint venture or other business entity.
3.9 FINANCIAL STATEMENTS. The Shareholders have delivered to
Republic the combined financial statements as of June 30, 1995 and 1994 of the
Duncan Companies and ADC (excluding only PI, PII, EETL I, and EETL II),
including the notes thereto, audited by Hendrix Sutton & Associates, L.L.P.
(collectively, the "Financial Statements"), a copy of which is attached to
Schedule 3.9 hereto. The combined balance sheet dated as of June 30, 1995
included in the Financial Statements is referred to herein as the "Current
Balance Sheet". The Financial
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<PAGE> 10
Statements fairly present the combined financial position of the Duncan
Companies and ADC (except for PI, PII, EETL I, and EETL II) at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated. The books and records of the Duncan
Companies and ADC fully and fairly reflect all of their respective
transactions, properties, assets and liabilities. The balance sheets included
in the Financial Statements do not reflect any writeup or revaluation
increasing the book value of any assets, except as specifically disclosed in
the notes thereto. The Financial Statements reflect all adjustments necessary
for a fair presentation of the financial information contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 3.10 and/or 4.1, since the date of the Current Balance
Sheet, none of the Duncan Companies or ADC has (i) issued any capital stock or
other securities; (ii) made any distribution of or with respect to its capital
stock or other securities or purchased or redeemed any of its securities; (iii)
paid any bonus to or increased the rate of compensation of any of its officers
or salaried employees or amended any other terms of employment of such persons;
(iv) sold, leased or transferred any of its properties or assets other than in
the ordinary course of business consistent with past practice; (v) made or
obligated itself to make capital expenditures out of the ordinary course of
business consistent with past practice; (vi) made any payment in respect of its
liabilities other than in the ordinary course of business consistent with past
practice; (vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of $50,000 in the aggregate out of the ordinary course of
business, except for this Agreement and the transactions contemplated hereby;
(viii) suffered any theft, damage, destruction or casualty loss, not covered by
insurance and for which a timely claim was filed, in excess of $50,000 in the
aggregate; (ix) suffered any extraordinary losses (whether or not covered by
insurance); (x) waived, cancelled, compromised or released any rights having a
value in excess of $50,000 in the aggregate; (xi) made or adopted any change in
its accounting practice or policies; (xii) made any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course consistent with past practice; (xiii) entered into any
transaction with any Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice; (xiv) entered into
any employment agreement, except in the ordinary course of business consistent
with past practices; (xv) terminated, amended or modified any agreement
involving an amount in excess of $50,000; (xvi) imposed any security interest
or other Lien on any of its assets other than in the ordinary course of
business consistent with past practice; (xvii) delayed paying any accounts
payable which is due and payable except to the extent being contested in good
faith; (xviii) made or pledged any charitable contribution other than in the
ordinary course of business consistent with past practice; (xix) entered into
any other transaction or been subject to any event which has or may have a
Material Adverse Effect on the Company; or (xx) agreed to do or authorized any
of the foregoing.
3.11
LIABILITIES OF THE COMPANY. Except as set forth on Schedule
3.11, the Duncan Companies and ADC do not have any liabilities or obligations,
whether accrued, absolute, contingent or otherwise, except (a) to the extent
reflected or taken into account in the Current
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<PAGE> 11
Balance Sheet and not heretofore paid or discharged, (b) to the extent
specifically set forth in or incorporated by express reference in any of the
Schedules attached hereto, (c) liabilities incurred in the ordinary course of
business consistent with past practice since the date of the Current Balance
Sheet (none of which relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit,
claim, governmental investigation or arbitration proceeding), (d) normal
accruals, reclassifications, and audit adjustments which would be reflected on
an audited financial statement and which would not be material in the
aggregate, (e) liabilities incurred in the ordinary course of business prior to
the date of the Current Balance Sheet which, in accordance with GAAP
consistently applied, were not recorded thereon and (f) other liabilities or
obligations which, individually or in the aggregate, will not result in a
Material Adverse Effect.
3.12 LITIGATION. Except as set forth on Schedule 3.12, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending, or to the knowledge of the Shareholders threatened,
anticipated or contemplated against, by or affecting any of the Duncan
Companies or ADC, or any of their respective properties or assets, or the
Shareholders, or which question the validity or enforceability of this
Agreement or the transactions contemplated hereby, and, to the knowledge of the
Shareholders, there is no basis for any of the foregoing. There are no
outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which the Duncan Companies or ADC is or was a
party which have not been complied with in full or which continue to impose any
material obligations on the Duncan Companies or ADC.
3.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.13:
(a) The Company is and has at all times been in
compliance in all material respects with all Environmental, Health and Safety
Laws (as defined herein) governing its business, operations, properties and
assets, including, without limitation, Environmental, Health and Safety Laws
with respect to discharges into the ground water, surface water and soil,
emissions into the ambient air, and generation, accumulation, storage,
treatment, transportation, transfer, labeling, handling, manufacturing, use,
spilling, leaking, dumping, discharging, release or disposal of Hazardous
Substances (as defined herein), or other Waste (as described herein). The
Company is not currently liable for any penalties, fines or forfeitures for
failure to comply with any Environmental, Health and Safety Laws. The Company
is in compliance in all material respects with all notice, record keeping and
reporting requirements of all Environmental, Health and Safety Laws, and has
complied with all informational requests or demands arising under the
Environmental, Health and Safety Laws.
(b) The Company has obtained, or caused to be obtained,
and is in material compliance with, all material licenses, certificates,
permits, approvals and registrations (collectively "Licenses") required by the
Environmental, Health and Safety Laws for the ownership of its properties and
assets and the operation of its business as presently conducted, including,
without limitation, all air emission, water discharge, water use and solid
waste,
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<PAGE> 12
hazardous waste and other Waste generation, transportation, transfer,
storage, treatment or disposal Licenses. There are no administrative or
judicial investigations, notices, claims or other proceedings pending or
threatened by any Governmental Authority or third parties against the Company,
its businesses, operations, properties, or assets, which question the validity
or entitlement of the Company to any License required by the Environmental,
Health and Safety Laws for the ownership of each of the properties and assets
of the Company and the operation of its business or wherein an unfavorable
decision, ruling or finding could have a Material Adverse Effect on the Company.
(c) The Company has not received and is not aware of any
non-compliance order, warning letter, notice of violation, claim, suit, action,
judgment, or administrative or judicial proceeding pending against or involving
the Company, its business, operations, properties, or assets, issued by any
Governmental Authority or third party with respect to any Environmental, Health
and Safety Laws in connection with the ownership by the Company of its
properties or assets or the operation of its business, which has not been
resolved to the satisfaction of the issuing Governmental Authority or third
party, or which could have a Material Adverse Effect on the Company.
(d) The Company is in full compliance with, and is not
in breach of or default under any applicable writ, order, judgment, injunction,
governmental communication or decree issued pursuant to the Environmental,
Health and Safety Laws and no event has occurred or is continuing which, with
the passage of time or the giving of notice or both, would constitute such
non-compliance, breach or default thereunder, or affect the Owned Properties or
Leased Premises, except where the failure to so comply would not have a
Material Adverse Effect on the Company.
(e) The Company has not generated, manufactured, used,
transported, transferred, stored, handled, treated, spilled, leaked, dumped,
discharged, released or disposed, nor has it allowed or arranged for any third
parties to generate, manufacture, use, transport, transfer, store, handle,
treat, spill, leak, dump, discharge, release or dispose of, Hazardous
Substances or other waste to or at any location other than a site lawfully
permitted to receive such Hazardous Substances or other waste for such
purposes, nor has it performed, arranged for or allowed by any method or
procedure such generation, manufacture, use, transportation, transfer, storage,
treatment, spillage, leakage, dumping, discharge, release or disposal in
contravention of any Environmental, Health and Safety Laws. The Company has
not generated, manufactured, used, stored, handled, treated, spilled, leaked,
dumped, discharged, released or disposed of, or allowed or arranged for any
third parties to generate, manufacture, use, store, handle, treat, spill, leak,
dump, discharge, release or dispose of, Hazardous Substances or other waste
upon property owned or leased by it, except as permitted by law. For purposes
of this Section 3.13, the term "Hazardous Substances" shall be construed
broadly to include any toxic or hazardous substance, material, or waste, and
any other contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation, chemicals,
compounds, by-products, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of which
requires investigation or remediation under any
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<PAGE> 13
Environmental, Health and Safety Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Health and Safety
Laws, including, without limitation, the United States Department of
Transportation Table (49 CFR 172, 101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 302) and any amendments thereto;
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendment and Reauthorization Act of 1986,
42 U.S.C. Section 9601, et seq. (hereinafter collectively "CERCLA"); the Solid
Waste Disposal Act, as amended by the Resource Conversation and Recovery Act of
1976 and subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Section 6901 et seq. (hereinafter, collectively "RCRA"); the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.;
the Clean Water Act, as amended, 33 U.S.C. Section 1311, et seq.; the Clean
Air Act, as amended (42 U.S.C. Section 7401-7642); Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq; the Federal Insecticide,
Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA");
the Emergency Planning and Community Right-to-Know Act of 1986 as amended, 42
U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et seq.
("OSHA"); any similar state statute, or any future amendments to, or
regulations implementing such statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, or which has been or shall be
determined or interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree. For purposes of this Section
3.13, the term "Waste" shall be construed broadly to include agricultural
wastes, biomedical wastes, biological wastes, bulky wastes, construction and
demolition debris, garbage, household wastes, industrial solid wastes, liquid
wastes, recyclable materials, sludge, solid wastes, special wastes, used oils,
white goods, and yard trash.
(f) The Company has not caused, or allowed to be caused
or permitted, either by action or inaction, a Release or Discharge, or
threatened Release or Discharge, of any Hazardous Substance on, into or beneath
the surface of any parcel of the Owned Properties or the Leased Premises.
There has not occurred, nor is there presently occurring, a Release or
Discharge, or threatened Release or Discharge, of any Hazardous Substance on,
into or beneath the surface of any parcel of the Owned Properties or the Leased
Premises. For purposes of this Section, the terms "Release" and "Discharge"
shall have the meanings given them in the Environmental, Health and Safety
Laws.
(g) The Company has not generated, handled,
manufactured, treated, stored, used, shipped, transported, transferred, or
disposed of, nor has it allowed or arranged, by contract, agreement or
otherwise, for any third parties to generate, handle, manufacture, treat,
store, use, ship, transport, transfer or dispose of, any Hazardous Substance or
other Waste to or at a site which, pursuant to CERCLA or any similar state law
(i) has been placed on the National Priorities List or its state equivalent; or
(ii) the Environmental Protection Agency or the relevant state agency has
notified the Company that it has proposed or is proposing to place on the
National Priorities List or its state equivalent. Neither the Company nor the
Shareholders has received notice, and neither the Company nor the Shareholders
has knowledge of any facts which
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could give rise to any notice, that the Company is a potentially responsible
party for a federal or state environmental cleanup site or for corrective
action under CERCLA, RCRA or any other applicable Environmental Health and
Safety Laws. The Company has not submitted nor was required to submit any
notice pursuant to Section 103(c) of CERCLA with respect to the Leased
Premises or the Owned Properties. The Company has not received any written or
oral request for information in connection with any federal or state
environmental cleanup site or in connection with any of the real property or
premises where the Company has transported, transferred or disposed of other
Wastes. The Company has not been required to and has not undertaken any
response or remedial actions or clean-up actions of any kind at the request of
any Governmental Authorities or at the request of any other third party. The
Company has no liability under any Environmental, Health and Safety Laws for
personal injury, property damage, natural resource damage, or clean up
obligations.
(h) The Company does not use, nor has it used, any
Aboveground Storage Tanks or Underground Storage Tanks, and there are not now
nor have there ever been any Underground Storage Tanks on the Leasehold
Premises or the Owned Properties. For purposes of this Section 3.13, the terms
"Aboveground Storage Tanks" and "Underground Storage Tanks" shall have the
meanings given them in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule, regulation,
order ruling, or decree governing Aboveground Storage Tanks or Underground
Storage Tanks.
(i) As used in this Agreement, "Environmental, Health
and Safety Laws" means all federal, state, regional or local statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings, and
changes or ordinances or judicial or administrative interpretations thereof,
any of which govern (or purport to govern) or relate to pollution, protection
of the environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the
Clean Water Act, FIFRA, EPCRA and OSHA.
(j) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by the Company on any of the Owned Properties or the Leased Premises
which have involved the generation, accumulation, storage, treatment,
transportation, labelling, handling, manufacturing, use, spilling, leaking,
dumping, discharging, release or disposal of Hazardous Substances.
(k) Notwithstanding the potential claims concerning
possible soil or groundwater contamination associated with the City of San
Angelo's municipal landfill operated by Trashaway ("San Angelo Municipal
Landfill"), the Company has and shall have no liability to any Governmental
Authority or third party based on any claim of any nature whatsoever
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<PAGE> 15
relating to or arising out of any such soil or groundwater contamination, and
the Company has and shall have no obligation, under operation of law or by
contract or in tort or otherwise, to pay or incur any costs or expenses of any
nature whatsoever relating to or arising out of the evaluation and/or
remediation of such soil or groundwater contamination, which may exist or has
occurred, or be associated with, or has been or is being caused by the
operations of, or is the result of releases, discharges and/or leaks at, the
San Angelo Municipal Landfill, and payment of any and all such costs and
expenses shall be the sole and exclusive responsibility, liability and
obligation of the City of San Angelo, Texas, without any claim of contribution
against or other right to seek redress from the Company with respect to such
groundwater contamination.
(l) As used in this Section 3.13, the term "the Company"
is deemed to refer to any and all of the Duncan Companies and ADC and their
Affiliates.
3.14 REAL ESTATE
(a) None of the Duncan Companies or ADC own any real
property or any interest therein except as set forth on Schedule 3.14(a) (the
"Owned Properties"), which Schedule sets forth the location of each of the
Owned Properties. Except as set forth on Schedule 3.14(a), with respect to
each such parcel of Owned Property:
(i) One of the Duncan Companies or ADC has good title to
the parcel of Owned Property, free and clear of any Lien other than
(x) liens for real estate taxes not yet due and payable; (y) recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy or value of the property subject thereto, and
(z) encumbrances and restrictions described in the title insurance
policies listed on Schedule 3.14(a), all of which policies have been
delivered or made available to Republic by the Duncan Companies;
(ii) there are no pending or, threatened condemnation
proceedings, suits or administrative actions relating to the Owned
Properties or other matters affecting adversely the current use,
occupancy or value thereof;
(iii) the legal descriptions for the parcels of Owned
Property contained in the deeds thereof describe such parcels fully
and adequately; the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation
of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-
conforming use" or "permitted non-conforming structure"
classifications), building code requirements, permits, licenses or
other forms of approval by any Governmental Authority, and do not
encroach on any easement which may burden the land; the land does not
serve any adjoining property for any purpose inconsistent with the use
of the land; and the Owned Properties are not located within any flood
plain
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(such that a mortgagee would require a mortgagor to obtain
flood insurance) or subject to any similar type restriction for which
any permits or licenses necessary to the use thereof have not been
obtained;
(iv) all facilities have received all approvals of
Governmental Authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been
operated and maintained in accordance with applicable laws,
ordinances, rules and regulations;
(v) there are no Contracts granting to any party or
parties the right of use or occupancy of any portion of the parcels of
Owned Property, except as set forth on Schedule 3.14(a), the Financial
Statements, or one of the other Schedules to this Agreement;
(vi) there are no outstanding options or rights of first
refusal to purchase the parcels of Owned Property, or any portion
thereof or interest therein;
(vii) there are no parties (other than the Duncan Companies
and ADC and its Affiliates) in possession of the parcels of Owned
Property, other than tenants under any leases disclosed in Schedule
3.14(a) who are in possession of space to which they are entitled;
(viii) all facilities located on the parcels of Owned
Property are supplied with utilities and other services necessary for
the operation of such facilities; and
(ix) all improvements and buildings on the Owned
Property are in good repair and are safe for occupancy and use.
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements ("Leases") to which any of the Duncan Companies
or ADC is a party (copies of which have previously been furnished to Republic),
in each case, setting forth (A) the lessor and lessee thereof and the date and
term of each of the Leases, (B) the legal description, including street
address, of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"). The Leases are in full force and effect and
have not been amended except as set forth on Schedule 3.14(b), and no party
thereto is in default or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both, would cause a
material breach of or default under any of such Leases. There is no breach or
anticipated breach by any other party to such Leases.
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3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) The Duncan Companies and ADC have good title to all
of their respective Assets (as hereinafter defined), free and clear of any
Liens or restrictions on use. For purposes of this Agreement, the term
"Assets" means all of the properties and assets of the Duncan Companies and
ADC, other than the Owned Properties and the Leased Premises, whether personal
or mixed, tangible or intangible, wherever located.
(b) The Fixed Assets (as hereinafter defined) currently
in use or necessary for the business and operations of the Duncan Companies or
ADC are in good operating condition, normal wear and tear excepted, and have
been maintained in all material respects in accordance with all applicable
manufacturer's specifications and warranties. For purposes of this Agreement,
the term "Fixed Assets" means all vehicles, machinery, equipment, tools,
supplies, leasehold improvements, furniture and fixtures used by or located on
the premises of any of the Duncan Companies or ADC or set forth on the Current
Balance Sheet or acquired by any of the Duncan Companies or ADC since the date
of the Current Balance Sheet. Schedule 3.15 lists the vehicles owned, leased
or used by the Duncan Companies and ADC.
3.16 COMPLIANCE WITH LAWS.
(a) Each of the Duncan Companies and ADC is and has been
in compliance in all material respects with all laws, regulations and orders
applicable to it, its business and operations (as conducted by it now and in
the past), the Assets, the Owned Properties and the Leased Premises and any
other properties and assets (in each case owned or used by it now or in the
past). Except as set forth on Schedule 3.16, none of the Duncan Companies or
ADC has been cited, fined or otherwise notified of any asserted past or present
failure to comply with any laws, regulations or orders and no proceeding with
respect to any such violation is pending or threatened except to the extent
such a failure to comply would, or does, not result in a Material Adverse
Effect.
(b) None of the Duncan Companies, ADC or any of their
employees or agents, has made any payment of funds in connection with their
business which is prohibited by law, and no funds have been set aside to be
used in connection with their business for any payment prohibited by law.
(c) None of the Duncan Companies or ADC is subject to
any decree or injunction or material Contract in which any such company is a
party which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, social security number and current rate of compensation of each of the
employees of the Duncan Companies and ADC. None of the Duncan Companies or ADC
is a party to or bound by any
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collective bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union during the 24 months prior to the
date hereof to organize any employees of the Duncan Company or ADC into one or
more collective bargaining units. There is no pending or threatened labor
dispute, strike or work stoppage which affects or which may affect the business
of the Duncan Companies or ADC or which may interfere with their continued
operations. None of the Duncan Companies or ADC nor any agent, representative
or employee thereof has within the last 24 months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or threatened charge or complaint against any of the Duncan
Companies or ADC by or with the National Labor Relations Board or any
representative thereof. There has been no strike, walkout or work stoppage
involving any of the employees of the Duncan Companies or ADC during the 24
months prior to the date hereof. None of the Shareholders is aware that any
executive or key employee or group of employees has any plans to terminate his,
her or their employment with any of the Duncan Companies or ADC as a result of
the Mergers or otherwise. Schedule 3.17 contains information about each
contract, agreement or plan of the following nature, whether formal or
informal, and whether or not in writing, to which any of the Duncan Companies
or ADC is a party or under which any of them has an obligation: (i) employment
agreements, (ii) employee handbooks, policy statements and similar plans, (iii)
noncompetition agreements and (iv) consulting agreements. Each of the Duncan
Companies and ADC has complied in all material respects with applicable laws,
rules and regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act, and the Americans with Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a
description of each employee benefit plan or arrangement of the Duncan
Companies and ADC, including but not limited to employee pension benefit plans,
as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of
ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock purchase
plans, hospitalization, disability and other insurance plans, severance or
termination pay plans and policies, whether or not described in Section 3(3) of
ERISA, in which employees, their spouses or dependents, of any of the Duncan
Companies or ADC participate ("Employee Benefit Plans") (true and accurate
copies of which, together with the most recent annual reports on Form 5500 and
summary plan descriptions with respect thereto, were furnished to Republic).
(b) Compliance with Law. With respect to each Employee
Benefit Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no actions, suits, claims or disputes are pending, or threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any material liability in the
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<PAGE> 19
event of any such investigation, claim, action, suit, audit, review, or other
proceeding; (v) all material reports, returns, and similar documents required
to be filed with any governmental agency or distributed to any plan participant
have been duly or timely filed or distributed; and (vi) no "prohibited
transaction" or "reportable event" has occurred within the meaning of the
applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a): (i) the
Internal Revenue Service has issued a favorable determination letter, true and
correct copies of which have been furnished to Republic, that such plans are
qualified and exempt from federal income taxes; and (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of any of
the Duncan Companies or ADC have been timely paid; (ii) none of the Duncan
Companies or ADC have incurred or are expected to incur, directly or
indirectly, any withdrawal liability under ERISA with respect to any such plan
(whether by reason of the transactions contemplated by the Agreement or
otherwise); and (iii) no such plan is (or is expected to be) insolvent or in
reorganization and no accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, exists or is
expected to exist with respect to any such plan.
(e) Welfare Plans. Other than as disclosed in Schedule
3.18, (i) none of the Duncan Companies or ADC are obligated under any employee
welfare benefit plan as described in Section 3(1) of ERISA ("Welfare Plan"),
whether or not disclosed in Schedule 3.18, to provide medical or death benefits
with respect to any employee or former employee of any of the Duncan Companies,
ADC, or their predecessors after termination of employment; and (ii) each of
the Duncan Companies and ADC has complied with the notice and continuation
coverage requirements of Section 4980B of the Code and the regulations
thereunder with respect to each Welfare Plan that is, or was during any taxable
year for which the statute of limitations on the assessment of federal income
taxes remains, open, by consent or otherwise, a group health plan within the
meaning of Section 5000(b)(1) of the Code. The consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
3.19 TAX MATTERS. Except as set forth in Schedule 3.19 hereto,
all Tax Returns required to be filed prior to the date hereof with respect to
each of the Duncan Companies or ADC or any of their income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and
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all such Tax Returns are true and accurate in all respects. All Taxes
due and payable by or with respect to each of the Duncan Companies and ADC
have been paid or are accrued on the Current Balance Sheet or will be accrued
on their books and records as of the Closing. Except as set forth in Schedule
3.19 hereto: (i) with respect to each taxable period of the Duncan Companies
and ADC, either such taxable period has been audited by the relevant taxing
authority or the time for assessing or collecting Taxes with respect to each
such taxable period has closed and such taxable period is not subject to review
by any relevant taxing authority; (ii) no deficiency or proposed adjustment
which has not been settled or otherwise resolved for any amount of Taxes has
been asserted or assessed by any taxing authority against any of the Duncan
Companies or ADC; (iii) none of the Duncan Companies or ADC have consented to
extend the time in which any Taxes may be assessed or collected by any taxing
authority; (iv) none of the Duncan Companies or ADC have requested or been
granted an extension of the time for filing any Tax Return to a date later than
the Effective Time; (v) there is no action, suit, taxing authority proceeding,
or audit or claim for refund now in progress, pending or threatened against or
with respect to any of the Duncan Companies or ADC regarding Taxes; (vi) none
of the Duncan Companies or ADC has made an election or filed a consent under
Section 341(f) of the Code (or any corresponding provision of state, local or
foreign law) on or prior to the Effective Time; (vii) there are no Liens for
Taxes (other than for current Taxes not yet due and payable) upon the assets of
any of the Duncan Companies or ADC; (viii) none of the Duncan Companies or ADC
has made any payments, and none is or will become obligated (under any contract
entered into on or before the Effective Date) to make any payments, that will
be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign law); and (ix) true, correct and complete
copies of all income and sales Tax Returns filed by or with respect to each of
the Duncan Companies and ADC for the past three years have been furnished or
made available to Republic.
3.20 INSURANCE. Each of the Duncan Companies and ADC is covered
by valid, outstanding and enforceable policies of insurance (including all
amendments, endorsements and riders thereto) issued to them by reputable
insurers covering their respective properties, assets and businesses against
risks of the nature normally insured against by corporations in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such corporations (the "Insurance Policies"). Such Insurance
Policies are in full force and effect, and all premiums due thereon have been
paid. As of the Effective Time, each of the Insurance Policies will be in full
force and effect. None of the Insurance Policies will lapse or terminate as a
result of the transactions contemplated by this Agreement. Each of the Duncan
Companies and ADC have complied with the provisions of such Insurance Policies.
Schedule 3.20 contains (i) a summary description of all Insurance Policies
(copies of which have been provided to Republic) and (ii) a detailed
description of each pending claim under any of the Insurance Policies for an
amount in excess of $50,000 that relates to loss or damage to the properties,
assets or businesses of any of the Duncan Companies or ADC. None of the Duncan
Companies or ADC have failed to give, in a timely manner, any notice required
under any of the Insurance Policies to preserve their rights thereunder.
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3.21 RECEIVABLES. All of the Receivables (as hereinafter
defined) are valid and legally binding, represent bona fide transactions and
arose in the ordinary course of business of the Duncan Companies and ADC.
Substantially all of the Receivables are good and collectible receivables, and
will be collected in full in accordance with the terms of such receivables in
all material respects (and in any event within six months following the
Closing), without setoff or counterclaims, subject to the allowance for
doubtful accounts, if any, set forth on the Current Balance Sheet as reasonably
adjusted since the date of the Current Balance Sheet in the ordinary course of
business consistent with past practice. For purposes of this Agreement, the
term "Receivables" means all receivables of the Duncan Companies and ADC,
including all trade account receivables arising from the provision of services,
sale of inventory, notes receivable, and insurance proceeds receivable.
3.22 LICENSES AND PERMITS. Each of the Duncan Companies and ADC
possess all material licenses and required governmental or official approvals,
permits or authorizations (collectively, the "Permits") for their respective
businesses and operations, including with respect to the operation of each of
the Owned Properties and Leased Premises. All such Permits are valid and in
full force and effect in all material respects, each of the Duncan Companies
and ADC is in material compliance with the respective requirements thereof, and
no proceeding is pending or threatened to revoke or amend any of them. None of
such Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
3.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Duncan Companies and ADC in
the manner in which and to the extent to which such business is currently being
conducted. No current supplier to the Duncan Companies or ADC of items
essential to the conduct of their business will or has threatened to terminate
its business relationship with them for any reason. Except as set forth on
Schedule 3.23, none of the Duncan Companies or ADC have any direct or indirect
interest in any customer, supplier or competitor of any of the Duncan Companies
or ADC, or in any person from whom or to whom any of the Duncan Companies or
ADC leases real or personal property. Except as set forth on Schedule 3.23, no
officer, director or shareholder of any of the Duncan Companies or ADC, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with any of the Duncan Companies or ADC or has any interest in any
property used by any of the Duncan Companies or ADC.
3.24 INTELLECTUAL PROPERTY. Each of the Duncan Company and ADC
has full legal right, title and interest in and to all trademarks,
servicemarks, tradenames, copyrights, know-how, patents, trade secrets,
licenses (including licenses for the use of computer software programs), and
other intellectual property used in the conduct of its business (the
"Intellectual Property"). The conduct of the business of the Duncan Companies
and ADC as presently conducted, and the unrestricted conduct and the
unrestricted use and exploitation of the Intellectual Property, does
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not infringe or misappropriate any rights held or asserted by any Person, and no
Person is infringing on the Intellectual Property. No payments are required
for the continued use of the Intellectual Property. None of the Intellectual
Property has ever been declared invalid or unenforceable, or is the subject of
any pending or threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a description of each
Contract to which any of the Duncan Companies or ADC is a party or by which any
of them or their properties and assets are bound and which is material to their
business, assets, properties or prospects (the "Designated Contracts"), true
and correct copies of which have been provided to Republic. The copy of each
Designated Contract furnished to Republic is a true and complete copy of the
document it purports to represent and reflects all amendments thereto made
through the date of this Agreement. Except as set forth on Schedule 3.25, none
of the Duncan Companies or ADC has violated any of the material terms or
conditions of any Designated Contract or any term or condition which would
permit termination or material modification of any Designated Contract, and all
of the covenants to be performed by any other party thereto have been fully
performed and there are no claims for breach or indemnification or notice of
default or termination under any Designated Contract. Except as set forth on
Schedule 3.25, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a material default by any of the
Duncan Companies or ADC under any Designated Contract, and no such event has
occurred which constitutes or would constitute a material default by any other
party. None of the Duncan Companies or ADC is subject to any liability or
payment resulting from renegotiation of amounts paid it under any Designated
Contract. As used in this Section, Designated Contracts shall include, without
limitation, (a) loan agreements, indentures, mortgages, pledges,
hypothecations, deeds of trust, conditional sale or title retention agreements,
security agreements, equipment financing obligations or guaranties, or other
sources of contingent liability in respect of any indebtedness or obligations
to any other Person, or letters of intent or commitment letters with respect to
same; (b) contracts obligating any of the Duncan Companies or ADC to provide
products or services for a period of one year or more, excluding standard waste
collection and disposal contracts entered into in the ordinary course of
business without material modification from the preprinted forms used by the
Duncan Companies and ADC in the ordinary course of their business; (c) leases
of real property, and leases of personal property not cancelable without
penalty on notice of sixty (60) days or less or calling for payment of an
annual gross rental exceeding Fifty Thousand Dollars ($50,000.00); (d)
distribution, sales agency or franchise or similar agreements, or agreements
providing for an independent contractor's services, or letters of intent with
respect to same; (e) employment agreements, management service agreements,
consulting agreements, confidentiality agreements, non-competition agreements
and any other agreements relating to any employee, officer or director of any
of the Duncan Companies or ADC; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (g) any Contract relating to pending capital expenditures by any of
the Duncan Companies or ADC; and (h) other material Contracts or
understandings, irrespective of
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subject matter and whether or not in writing, not entered into in the ordinary
course of business by any of the Duncan Companies or ADC and not otherwise
disclosed on the Schedules.
3.26 CUSTOMER LISTS AND RECURRING REVENUE. Schedule 3.26 is a
true, correct and complete list of each municipality, county or city
(collectively, the "Customers") which has entered into existing valid and
enforceable long-term (i.e., more than one year) waste collection and
disposal, recycling or other franchises or agreements with any one or more of
the Duncan Companies or ADC. True, correct and complete copies of such
franchises and agreements, and any ordinances relating thereto, have been
furnished by the Shareholders to Republic. Other than the Customers listed on
Schedule 3.26, no customer of any of the Duncan Companies or ADC as of the date
of this Agreement accounts for more than 1% of their combined annual revenue.
Schedule 3.26 sets forth each Customer's name, term of franchise or agreement,
and type of service.
3.27 ACCURACY OF REPRESENTATION FURNISHED BY THE SHAREHOLDERS.
To the knowledge of the Shareholders, no representation made by the
Shareholders to Republic in this Agreement, contains or shall contain any
untrue statement of a material fact or omits or shall omit any material fact
necessary to make the representation not misleading. The Shareholders have
provided Republic with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto.
3.28 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring the Republic Shares hereunder
for his, her or its own account for investment and not with a view to, or for
the sale in connection with, any distribution of any of the Republic Shares,
except in compliance with applicable state and federal securities laws. Each
of the Shareholders has had the opportunity to discuss the transactions
contemplated hereby with Republic and has had the opportunity to obtain such
information pertaining to the Republic Companies as has been requested,
including but not limited to filings made by Republic with the SEC under the
Exchange Act. Each of the Shareholders is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, and has such
knowledge and experience in business or financial matters that he is capable of
evaluating the merits and risks of an investment in the Republic Shares.
3.29 BUSINESS LOCATIONS. As of the date hereof, the Duncan
Companies and ADC have no office or place of business other than as identified
on Schedules 3.14(a) and 3.14(b) and each of the Duncan Companies' and ADC's
principal places of business and chief executive offices (as such terms are
used in subsection 9-401 of the Uniform Commercial Code as enacted in the State
of Texas as of the date hereof) are indicated on Schedule 3.14(a) or 3.14(b),
and, except for equipment leased to customers in the ordinary course of
business, all locations where the equipment, inventory, chattel paper and books
and records of the Duncan Companies and ADC are located as of the date hereof
are fully identified on Schedules 3.14(a) and 3.14(b).
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3.30 NAMES; PRIOR ACQUISITIONS. All names under which any of the
Duncan Companies and ADC does business as of the date hereof are specified on
Schedule 3.30. Except as set forth on Schedule 3.30, none of the Duncan
Companies or ADC has changed its name or used any assumed or fictitious name,
or been the surviving entity in a merger, acquired any business or changed its
principal place of business or chief executive office, within the past three
years.
3.31 NO COMMISSIONS. Except for Bear Stearns & Co. being
retained as financial advisors to the Duncan Companies and ADC, none of the
Duncan Companies or ADC or Shareholders has incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE DUNCAN COMPANIES PENDING THE
MERGERS. Except as set forth on Schedule 4.1, each of the Duncan Companies
covenants and agrees that, between the date of this Agreement and the Effective
Time, the business of the Duncan Companies and ADC shall be conducted only in,
and the Duncan Companies and ADC shall not take any material action except in,
the ordinary course of business, consistent with past practice. Each of the
Duncan Companies and ADC shall use their reasonable best efforts to preserve
intact their respective business organizations, to keep available the services
of their current officers, employees and consultants, and to preserve their
present relationships with customers, suppliers and other persons with which
they have significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, each of the Duncan
Companies and ADC shall not, between the date of this Agreement and the
Effective Time, directly or indirectly, do or propose or agree to do any of the
following without the prior written consent of Republic (such consent not to be
unreasonably withheld):
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents, except
to remove restrictions on transferability of shares;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with
past practice;
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(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, for cash
or shares of stock), by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions of
capital or property transfer, or, except in the ordinary course of
business, consistent with past practice, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, or (iii) enter into any
Contract other than in the ordinary course of business, consistent
with past practice;
(f) increase the compensation payable or to become
payable to its officers or employees, or, except as presently bound to
do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its directors, officers
or other employees, or establish, adopt, enter into or amend or take
any action to accelerate any rights or benefits which any collective
bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) except for payment of fees of financial advisors,
attorneys and accountants and of filing fees under the HSR Act in
connection with the transactions contemplated by this Agreement, pay,
discharge or satisfy any existing claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and
payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date
hereof in the ordinary course of business and consistent with past
practice;
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(i) increase or decrease prices charged to its customers,
except for previously announced price changes, or take any other
action which might reasonably result in any material loss of customers
through non-renewal or termination of service contracts or other
causes; or
(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
5.2 COMPLIANCE WITH COVENANTS. The Shareholders shall use their
reasonable best efforts to cause the Duncan Companies and ADC to comply with
all of the respective covenants of the Duncan Companies and ADC under this
Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with
the other in the preparation and filing of all forms, notifications, reports
and information, if any, required or reasonably deemed advisable pursuant to
any law, rule or regulation or the rules of any exchange on which the Republic
Common Stock is listed or the Nasdaq Stock Market in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly (and in no event later than five (5) business days following
the date hereof) its respective filings, if any, and thereafter make any other
required submissions, under the HSR Act, with respect to the transactions
contemplated hereby, and (ii) use its reasonable best efforts to take, or cause
to be taken, all appropriate actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, using its best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of any
Governmental Authority and parties to Contracts with any of the Duncan
Companies or ADC as are necessary for the consummation of the transactions
contemplated hereby. Each of parties shall make on a prompt and timely basis
all governmental or regulatory notifications and filings required to be made by
it for the consummation of the transactions contemplated hereby. The parties
also agree
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to use best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
5.5 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, each of the Duncan Companies and ADC shall (and shall cause its
and their directors, officers, employees, auditors, counsel and agents) to
afford Republic and Republic's officers, employees, auditors, counsel and
agents reasonable access at all reasonable times to its and their properties,
offices, and other facilities, to its and their officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested. No information
provided to or obtained by Republic shall affect any representation or warranty
in this Agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Shareholders shall
give prompt notice to Republic of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate in any material respect, or any covenant, condition, or
agreement contained herein not to be complied with or satisfied in all material
respects.
5.7 TAX TREATMENT. Republic, the Duncan Companies and the
Shareholders will use their respective best efforts to cause the Mergers to
qualify as reorganizations under the provisions of Section 368(a) of the Code
and will not take any action after the Mergers are effected to cause the
Mergers to lose their tax-free status. All parties hereto agree to file the
Plans of Merger with their respective federal income tax returns for the year
in which the Mergers are effective, and to comply with the reporting
requirements of Treasury Regulation 1.368-3.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party hereto
or their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Republic may make such public
disclosure which it believes in good faith to be required by law or by the
terms of any listing agreement with or requirements of a securities exchange
(in which case Republic will consult with Robert Duncan or another officer of
JCD prior to making such disclosure).
5.9 NO OTHER DISCUSSIONS. The Duncan Companies, the
Shareholders, and their respective Affiliates, employees, agents and
representatives will not (i) initiate, encourage the initiation by others of
discussions or negotiations with third parties or respond to solicitations by
third persons relating to any merger, sale or other disposition of any
substantial part of the assets, business or properties of any of the Duncan
Companies or ADC (whether by merger,
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consolidation, sale of stock or otherwise) or (ii) enter into any agreement or
commitment (whether or not binding) with respect to any of the foregoing
transactions. The Shareholders will immediately notify Republic if any third
party attempts to initiate any solicitation, discussion or negotiation with
respect to any of the foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that Republic
will realize the benefits of the Mergers and in consideration of being employed
by the Duncan Companies and/or Republic after completion of the Merger, each of
Robert C. Duncan and Dan R. Duncan jointly and severally agrees with Republic
that he will not for a period of three years from the later of the Effective
Time or the date he ceases to be an employee of the Duncan Companies and/or
Republic:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any
business activity in the State of Texas which is directly or
indirectly in competition with the business conducted by the Duncan
Companies or ADC at the Effective Time; provided, however, that, the
beneficial ownership of less than five percent (5%) of the shares of
stock of any corporation having a class of equity securities actively
traded on a national securities exchange or over-the-counter market
shall not be deemed, in and of itself, to violate the prohibitions of
this Section Rider 5.10(a) and provided, further, that Robert C.
Duncan and Dan R. Duncan may continue to engage in the ownership and
operation of businesses engaged in liquid waste hauling, portable
toilets, and trash bags, through Alco Environmental, Inc., Duncan
Distributing, Inc. or other entities controlled by them;
(b) directly or indirectly (i) induce any Person which is
a customer of any of the Duncan Companies or ADC at the Effective Time
to patronize any business directly or indirectly in competition with
the business conducted by any of the Duncan Companies or ADC; (ii)
canvass, solicit or accept from any Person which is a customer of any
of the Duncan Companies or ADC, any such competitive business, or
(iii) request or advise any Person which is a customer of any of the
Duncan Companies or ADC at the Effective Time to withdraw, curtail or
cancel any such customer's business with the Duncan Companies, ADC or
their successors;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to
employ, any person who was employed by any of the Duncan Companies or
ADC at or within six months prior to the Effective Time, or in any
manner seek to induce any such person to leave his or her employment;
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(d) directly or indirectly, at any time following the
Effective Time, in any way utilize, disclose, copy, reproduce or
retain in his possession any of the Duncan Companies' or ADC's
proprietary rights or records, including, but not limited to, any of
their customer lists.
Robert C. Duncan and Dan R. Duncan agree and acknowledge that the restrictions
contained in this Section 5.10 are reasonable in scope and duration and are
necessary to protect Republic after the Effective Time. If any provision of
this Section as applied to any party or to any circumstance is adjudged by a
court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section
will cause irreparable damage to Republic and upon breach of any provision of
this Section, Republic shall be entitled to injunctive relief, specific
performance or other equitable relief; provided, however, that, this shall in
no way limit any other remedies which Republic may have (including, without
limitation, the right to seek monetary damages).
5.11 ENVIRONMENTAL ASSESSMENT. Republic shall be entitled to
have conducted prior to Closing an environmental assessment of the Owned
Properties and Leased Premises (hereinafter referred to as "Environmental
Assessment"). The Environmental Assessment may include, but not be limited to,
a physical examination of the Owned Property or Leased Premises, and any
structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records,
documents, and Licenses of the Duncan Companies and ADC. The Shareholders
shall provide Republic or its designated agents or consultants with the access
to such property which Republic, its agents or consultants require to conduct
the Environmental Assessment. If the Environmental Assessment identifies
environmental contamination which requires remediation or further evaluation
under the Environmental, Health, and Safety Laws or if the results of the
Environmental Assessment are otherwise not satisfactory to Republic in its sole
discretion, then (i) Republic may elect not to close the transactions
contemplated by this Agreement, or (ii) Republic may require the costs of such
remediation and evaluation shall be considered to be Indemnifiable Damages
under Article IX hereunder in which case the Shareholders may elect not to
close the transactions contemplated by this Agreement. Republic's failure or
decision not to conduct any such Environmental Assessment shall not affect any
representation or warranty of the Shareholders under this Agreement.
5.12 RELEASE OF GUARANTEES. After the Closing, Republic
covenants and agrees to take promptly all action necessary to cause any and all
personal guarantees by any of the Shareholders of any indebtedness for borrowed
money of any of the Duncan Companies and ADC to be released by the holder(s) of
such guarantees.
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5.13 TRADING IN REPUBLIC COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time, none of the Duncan Companies, ADC or the Shareholders (nor any
Affiliates thereof) will directly or indirectly purchase or sell (including
short sales) any shares of Republic Common Stock in any transactions effected
on the Nasdaq Stock Market, the Toronto Stock Exchange or otherwise.
5.14 EARNINGS RELEASE. Republic agrees to issue a press release
reporting the earnings of the combined operations of Republic and the Duncan
Companies as promptly as possible after the first calendar quarter end
subsequent to the Effective Date which quarter contains at least thirty days of
combined operations.
5.15 EXTRANEOUS ASSETS. On or prior to the Closing Date, the
Shareholders of Trashaway, Wes Tex, and EETL II shall have certain of their
shares redeemed and in exchange such corporations shall transfer those certain
assets listed on Exhibit "A" to Schedule 4.1 (the "Extraneous Redemption
Assets") to such Shareholders, on an "as is, where is" basis with no warranties
(other than in connection with title transfers). On or prior to the Closing
Date, JCD shall sell and certain of the Shareholders shall purchase from JCD
those certain assets listed on Exhibit "B" to Schedule 4.1 (the "Extraneous
Purchased Assets"), on an "as is, where is" basis with no warranties (other
than in connection with title transfers), which includes the 6 D Ranch and
related ranch equipment, a personal residence in San Angelo, Texas, and all
amounts recorded on the books of JCD as "Advances to affiliates", for an
aggregate purchase price of Three Million Three Hundred Seventy-Eight Thousand
One Hundred Sixty-Six and 84/100 Dollars ($3,378,166.84) (the "Extraneous
Assets Purchase Price"). On the Closing Date or earlier date of the sale by
JCD to such Shareholders of the Extraneous Purchased Assets, the Shareholders
purchasing the Extraneous Purchased Assets shall execute and deliver to JCD one
or more promissory notes payable to JCD in the aggregate principal amount equal
to the Extraneous Assets Purchase Price (the "Notes"). The Notes shall bear
interest at the rate of eight percent (8%) per annum on the principal amounts
outstanding thereunder from the date of such sale until such date as is thirty
(30) days subsequent to the date on which Republic issues the earnings release
referred to in Section 5.14 (the "Due Date"), and if the full amount of all
principal and accrued interest is not paid in full on the Due Date to JCD by
the makers of the Notes, then the Notes shall be in default and the unpaid
amounts shall thereafter bear interest at the maximum lawful rate until such
amounts and all such default interest is paid in full. The Notes may be prepaid
prior to the Due Date, in whole or in part, without penalty or premium.
Payment of any of the Notes which is not executed and delivered by Robert C.
Duncan or Dan R. Duncan shall be personally guaranteed by Robert C. Duncan to
JCD.
5.16 EMPLOYMENT OF OFFICERS. Republic agrees to cause the Duncan
Companies to continue to employ, at the same base salary levels as were in
effect on June 30, 1995, all officers and key management personnel of the
Duncan Companies who are not Shareholders, for a period of at least twelve
months following the Closing Date, provided that except for the obligations to
be undertaken pursuant to the Rabbi Trust described in Schedule 4.1, various
benefits and "perqs" payable or granted to such officers may be changed or
eliminated to conform to Republic's
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policies, on a basis and in a manner comparable to that of similarly situated
officers of other comparable waste collection subsidiaries of Republic,
including the elimination or reduction of cash compensation otherwise payable
as an annual or special bonus, and the inclusion of such officers as
participants in Republic's stock option plans. The personnel covered by this
convenant are those listed on Schedule 4.1, Debra A. Duncan, Donald Foard, Dan
Springfield and Jackie Reid.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Mergers shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions, any or all of which may be waived in whole or in part by
the Republic Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the Shareholders
contained in this Agreement shall be true and correct at and as of the
Effective Time with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
of such date. Each of the Duncan Companies and the Shareholders shall have
performed and complied with all of their respective obligations required by
this Agreement to be performed or complied with at or prior to the Effective
Time. Each of the Duncan Companies and the Shareholders shall have delivered
to the Republic Companies a certificate, dated as of the Effective Time, duly
signed (in the case of each of the Duncan Companies, by its Chief Executive
Officer and Chief Financial Officer), certifying that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change to any of the Duncan Companies or ADC, (ii) there shall
have been no adverse federal, state or local legislative or regulatory change
affecting in any material respect the services, products or business of any of
the Duncan Companies or ADC, and (iii) none of the properties and assets of any
of the Duncan Companies or ADC shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of
insurance coverage for such damage) which damages may have a Material Adverse
Effect thereon, and there shall have been delivered to the Republic Companies a
certificate to that effect, dated the Effective Time and signed by or on behalf
of the Duncan Companies.
6.3 CORPORATE CERTIFICATE. The Shareholders shall have
delivered to the Republic Companies (i) copies of the articles of incorporation
and bylaws of each of the Duncan Companies
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and ADC as in effect immediately prior to the Effective Time, (ii) copies of
resolutions adopted by the Board of Directors and shareholders of each of the
Duncan Companies and ADC authorizing the transactions contemplated by this
Agreement, and (iii) a certificate of good standing of each of the Duncan
Companies and ADC issued by the Secretary of State of the State of Texas and
each other state in which such companies are qualified to do business as of
a date not more than thirty days prior to the Effective Time, certified in each
case as of the Effective Time by the Secretary of each such company as being
true, correct and complete.
6.4 OPINION OF COUNSEL. The Republic Companies shall have
received an opinion dated as of the Effective Time from counsel for the Duncan
Companies and the Shareholders, in form and substance acceptable to the
Republic Companies, to the effect that:
(i) each of the Duncan Companies and ADC is a
corporation duly organized and existing and in good standing under the
laws of the State of Texas and is authorized to carry on the business
now conducted by it and to own or lease the properties now owned or
leased by it;
(ii) each of the Duncan Companies and ADC has
obtained all necessary authorizations and consents of its Board of
Directors and the Shareholders to effect the Mergers;
(iii) All issued and outstanding shares of
capital stock of each of the Duncan Companies and ADC are owned as set
forth on Schedule 3.5 hereto;
(iv) Except as set forth in Schedule 3.12, such
counsel does not know of any litigation, proceeding or investigation
pending or threatened which might result in any material adverse
change in the properties, business or prospects or in the condition of
the Duncan Companies or ADC, or which questions the validity of this
Agreement;
(v) Such counsel does not know of any event has
occurred or state of facts which exists which would constitute a
breach of any of the representations and warranties made by the
Shareholders pursuant to Article III of this Agreement;
(vi) This Agreement is a valid and binding
obligation of each of the Duncan Companies, ADC and the Shareholders,
and enforceable against each of the Duncan Companies and the
Shareholders in accordance with its terms, except as enforcement may
be limited by general equitable principles or by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally.
6.5 CONSENTS. The Duncan Companies and ADC shall have received
consents to the transactions contemplated hereby and waivers of rights
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or obligations of the Duncan Companies or ADC from any person, including any of
the Customers (specifically including without limitation the City of Grand
Prairie), from whom such consent or waiver is required under any Designated
Contract or instrument as of a date prior to the Effective Time, or who, as a
result of the transactions contemplated hereby, would have such rights to
terminate or modify any material rights or obligations of the Duncan Companies
or ADC from any person, including any of the Customers (specifically including
without limitation the City of Grand Prairie), from whom such consent or waiver
is required under any Designated Contract or instrument as of a date prior to
the Effective Time, or who, as a result of the transactions contemplated
hereby, would have such rights to terminate or modify such Contracts or
instruments, either by the terms thereof or as a matter of law. In addition,
ADC shall have received a written waiver, consent or modification of or
relating to its franchise agreement with the City of Arlington eliminating or
modifying to Republic's satisfaction the requirement thereof that particular
individuals at all times remain as an officer of ADC, without imposing any
similar requirement relating to personal services to be provided under such
franchise by Robert C. Duncan or Dan R. Duncan or any other individual.
6.6 SECURITIES LAWS. Republic shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of the Republic Shares, in connection with the
transactions contemplated hereby.
6.7 POOLING LETTERS. Republic shall have received a copy of a
letter from Hendrix Sutton & Associates, LLP, independent certified public
accountants for the Duncan Companies, dated the Effective Time, and addressed
to the Duncan Companies, in form and substance acceptable to Republic,
confirming that, to their knowledge after due and diligent inquiry of
management, there have been no transactions or events with respect to the
Duncan Companies and ADC which would, and the ownership structure and
attributes of the Duncan Companies and ADC would not, proscribe the
transactions contemplated hereby, if consummated, from being considered as a
pooling of interests business combination. Republic shall have received from
Arthur Andersen LLP, a letter dated the Effective Time, confirming that the
transactions contemplated hereby, if consummated, can properly be accounted for
as a pooling of interests combination in accordance with GAAP and the criteria
of Accounting Principles Board Opinion No. 16 and the regulations of the SEC.
6.8 RULE 145 UNDERTAKINGS. At or prior to the Closing, the
Shareholders shall have delivered to Republic a letter agreement relating to
Rule 145 under the Securities Act and "pooling of interests" criteria, in form
and substance satisfactory to the Republic Companies.
6.9 DUNCAN COMPANIES STOCK. At the Closing, each of the
Shareholders shall have delivered to Republic all certificates evidencing the
shares of capital stock of any of the Duncan Companies held by him, her or it.
6.10 STOCK POWERS. At the Closing, each of the Shareholders
shall have delivered to Republic, for use in connection with the Held Back
Shares, ten stock powers executed in blank, with signatures guaranteed.
6.11 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Mergers or any other transaction
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contemplated hereby, and which, in the judgment of Republic, makes it
inadvisable to proceed with the Mergers and other transactions contemplated
hereby.
6.12 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting
period shall have expired or been terminated.
6.13 BOARD APPROVAL. The Board of Directors of Republic shall
have authorized and approved this Agreement, the Mergers and transactions
contemplated hereby.
6.14 EXTRANEOUS ASSETS. At or prior to the Closing, the
Extraneous Redeemed Assets shall have been transferred in accordance with
Section 5.15, and the Extraneous Purchased Assets shall have been sold in
accordance with Section 5.15, and the Shareholders who purchased the Extraneous
Purchased Assets shall have executed and delivered to JCD the Notes, and, if
applicable, Robert C. Duncan shall have executed and delivered to JCD his
personal guaranty of payment of the Notes in accordance with Section 5.15.
6.15 EMPLOYMENT AGREEMENTS. Robert C. Duncan and Dan R. Duncan
shall have entered into employment agreements with Republic on terms and
conditions reasonably satisfactory to Republic, including provisions which
allow for Republic to terminate either's employment for good cause or upon a
change of control of Republic or of its waste collection companies as a group,
as well as reasonable covenants not to compete with Republic and not to solicit
customers or employees of the Duncan Companies during their respective terms of
employment and for three years thereafter.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE DUNCAN COMPANIES AND THE SHAREHOLDERS
The obligations of the Duncan Companies and the Shareholders to effect
the Mergers shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions, any or all of which may be waived in whole or
in part by the Duncan Companies and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of each of the Republic
Companies contained in this Agreement shall be true and correct at and as of
the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. Each of the Republic Companies shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Effective Time. Each of the
Republic Companies shall have delivered to the Company a certificate, dated as
of the
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Effective Time, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 RULE 145 UNDERTAKINGS. At or prior to the Closing, Republic
shall have delivered to the Shareholders a letter agreement relating to Rule
145 under the Securities Act and "pooling of interests" criteria, in form and
substance satisfactory to the Shareholders.
7.3 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the Shareholders (i)
certificates representing the Republic Shares issued to them hereunder, other
than the Held Back Shares, and (ii) copies of stock certificates representing
the Held Back Shares issued to them.
7.4 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Mergers or any other transaction contemplated
hereby, and which in the judgment of the Shareholders makes it inadvisable to
proceed with the Mergers and other transactions.
7.5 HSR ACT WAITING PERIOD. Any applicable HSR Act Waiting
Period shall have expired or been terminated.
7.6 OPINION OF COUNSEL. The Shareholders shall have received an
opinion of counsel dated as of the Effective time from counsel for Republic, in
form and substance acceptable to the Shareholders, to the effect that:
(i) Republic and the Republic Merger Subs each is a
corporation duly organized and existing and in good standing under the
laws of the State of Delaware with respect to Republic and the State
of Texas with respect to the Republic Merger Subs;
(ii) Republic and each of the Republic Merger Subs has
obtained all necessary authorizations and consents of their respective
Boards of Directors to effect the Mergers;
(iii) This Agreement is a valid and binding obligation of
Republic, and enforceable against Republic in accordance with its
terms, except as enforcement may be limited by general equitable
principles or by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally;
and
(iv) The Republic Shares are validly issued, fully paid
and non-assessable shares of Republic Common Stock.
7.7 EMPLOYMENT AGREEMENTS. Republic shall have entered into
employment agreements with Robert C. Duncan and Dan R. Duncan on terms and
conditions reasonably
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satisfactory to Robert C. Duncan and Dan R. Duncan, including provisions that
set Robert C. Duncan's salary at $15,000 per month and Dan R. Duncan's salary
at $14,000 per month, and that obligate them to perform services and undertake
responsibilities and duties similar to those which they presently perform and
undertake, provided that various benefits and "perqs" payable or granted to
them may be changed or eliminated to conform to Republic's policies, on a basis
and in a manner comparable to that of similarly situated officers of other
comparable waste collection subsidiaries of Republic, including the elimination
or reduction of cash compensation otherwise payable as an annual or special
bonus, and the inclusion of such officers as participants in Republic's stock
option plans. Such employment agreements will be for an initial term of five
years, renewable for an additional term of five years on terms mutually
satisfactory to Republic and them.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Republic Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR REPUBLIC SHARES; FILING OF
REGISTRATION STATEMENT. Republic will utilize its reasonable best efforts to
cause, as soon as practicable following the Effective Time, a registration
statement to be filed under the Securities Act or an existing registration
statement to be amended for the purpose of registering the Republic Shares for
resale by a Holder thereof (the "Registration Statement"). For purposes of
this Article, a person is deemed to be a "Holder" of Republic Shares whenever
such person is the record owner of Republic Shares. Republic will use its
reasonable best efforts to (i) have the Registration Statement become effective
and cause the Republic Shares to be registered under the Securities Act, and
registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable; (ii) cause the Republic Shares to be listed on the Nasdaq Stock
Market or such other national securities exchange on which Republic Common
Stock is then listed and obtain all approvals from the Nasdaq Stock Market or
such exchange for trading thereon; (iii) provide a transfer agent and registrar
for the Republic Shares; and (iv) upon the sale of any Republic Shares pursuant
to such registration statement, remove all restrictive legends from all
certificates or other instruments evidencing the Republic Shares.
8.2 EXPENSES OF REGISTRATION. Republic shall pay all expenses
incurred by Republic in connection with the registration, qualification and/or
exemption of the Republic Shares, including any SEC and state securities law
registration and filing fees, printing expenses, fees and disbursements of
Republic's counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration
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Statement or prospectuses contained therein. Republic shall not, however, be
liable for any sales, broker's or underwriting commissions upon sale by any
Holder of any of the Republic Shares.
8.3 FURNISHING OF DOCUMENTS. Republic shall furnish to the
Holders such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as the Holders may reasonably request in order to facilitate the
offering of the Republic Shares.
8.4 AMENDMENTS AND SUPPLEMENTS. Republic shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of
such amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Republic Shares is required
to be delivered under the Securities Act, any event shall have occurred as a
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Republic shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
8.5 DURATION. Republic's obligations contained in Sections 8.1,
8.3 and 8.4 shall continue and Republic shall maintain the effectiveness of the
Registration Statement until the earlier of (i) such time as Republic
reasonably determines, based on an opinion of counsel, that the Holders will be
eligible to sell all of the Shares then owned by the Holders without the need
for continued registration of the shares, in the three month period immediately
following the termination of the effectiveness of the Registration Statement,
or (ii) the third anniversary of the Effective Date.
8.6 FURTHER INFORMATION. If Republic Shares owned by a Holder
are included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.7 INDEMNIFICATION
(a) Republic will indemnify and hold harmless the
Holders and each person, if any, who controls a Holder within the meaning of
the Securities Act, from and against any and all losses, damages, liabilities,
costs and expenses to which the Holders or any such controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any prospectus contained
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therein or any amendment or supplement thereto, or arise out of or
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that, Republic will not be liable in any such case to the
extent that any such loss, claim, damage, liability, cost or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by or on
behalf of any Holder or such controlling person in writing specifically for use
in the preparation thereof.
(b) Each of the Holders, jointly and severally, will
indemnify and hold harmless Republic and each person, if any, who controls
Republic within the meaning of the Securities Act, from and against any and all
losses, damages, liabilities, costs and expenses to which Republic or any such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in strict conformity with written information
furnished by or on behalf of any Holder specifically for use in the preparation
thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 8.7 notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have hereunder unless the
indemnifying party has been materially prejudiced thereby nor will such failure
to so notify the indemnifying party relieve it from any liability which it may
have to any indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified
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party in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party.
(d) In the event any of the Republic Shares are sold by
any Holder or Holders in an underwritten public offering consented to by
Republic, Republic shall provide indemnification to the underwriters of such
offering and any person controlling any such underwriter on behalf of the
Holder or Holders making the offering; provided, however, that Republic shall
not be required to consent to any such underwriting or to provide such
indemnification in respect of the matters described in the proviso to the first
sentence of Section 8.7(a).
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The
Shareholders jointly and severally agree to indemnify and hold Republic
harmless from and against the aggregate of all Indemnifiable Damages (as
defined below).
(a) For purposes of this Agreement, "Indemnifiable
Damages" means, without duplication, the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Republic, on a pre-tax consolidated basis, to
the extent not covered by insurance and (i) resulting from any breach
of a representation or warranty made by the Shareholders in this
Agreement, or (ii) resulting from any breach of the covenants or
agreements made by any of the Duncan Companies, ADC or any Shareholder
in this Agreement.
(b) Each of the representations and warranties made by
the Shareholders in this Agreement or pursuant hereto shall survive
for a period of one year after the Effective Time, notwithstanding any
investigation at any time made by or on behalf of Republic and upon
expiration of such one year period, such representations and
warranties shall expire except as follows: (i) the representations and
warranties of the Shareholders contained in Section 3.19 to the extent
relating to tax attributes or liabilities with respect to Taxes of JCD
relating to the operations of the Hamilton County, Texas property
owned by JCD, shall expire at the time the period of limitations
(including any extensions thereof pursuant to the delivery of waivers
of the applicable period of limitations) expires for the
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assessment by the taxing authority of additional Taxes with
respect to which the representations and warranties relate; (ii) the
representations and warranties of the Shareholders contained in
Sections 3.13 and 3.16 shall expire at the time the latest period of
limitations expires for the enforcement by an applicable Governmental
Authority or third party of any remedy with respect to any costs of
evaluation and/or remediation of any soil and/or groundwater
contamination at the San Angelo Municipal Landfill or surrounding
property; and (iii) the representations and warranties of the
Shareholders contained in Sections 3.1, 3.2, 3.3, 3.4, and 3.5 shall
not expire but shall continue indefinitely. No claim for the recovery
of Indemnifiable Damages may be asserted by Republic against the
Shareholders after such representations and warranties shall thus
expire, provided, however, that claims for Indemnifiable Damages first
asserted in writing within the applicable period shall not thereafter
be barred. Notwithstanding any knowledge of facts determined or
determinable by any party by investigation, each party shall have the
right to fully rely on the representations, warranties, covenants and
agreements of the other parties contained in this Agreement or in any
other documents or papers delivered in connection herewith. Each
representation, warranty, covenant and agreement of the parties
contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
(c) In the event that Republic believes that it is
entitled to a claim for any Indemnifiable Damages hereunder, Republic
shall promptly give written notice to the Shareholders of such claim
and the amount or the estimated amount of such claim, and the basis
for such claim. If the Shareholders do not transfer shares to pay the
amount of the claim for Indemnifiable Damages to Republic within ten
(10) days, then Republic may set off the amount of such claim by
selling some or all of the Held Back Shares and retaining the net
proceeds thereof as a set off against the claim in accordance with the
procedures, and subject to the Shareholders' right to contest such
claim, as set forth in Section 9.2 below. If the Held Back Shares are
insufficient to set off the claim (or have been delivered to the
Shareholders prior to the making or resolution of such claim), then
Republic may take any action or exercise any remedy available to it by
appropriate legal proceedings to collect the Indemnifiable Damages.
(d) Notwithstanding anything to the contrary in this
Section 9.2, the Shareholders shall not be liable to Republic with
respect to any claim for Indemnifiable Damages unless all
Indemnifiable Damages incurred by Republic exceed an aggregate of One
Million Five Hundred Thousand Dollars ($1,500,000.00), in which case
the Shareholders shall be liable only for the amount of such
Indemnifiable Damages in excess of One Million Five Hundred Thousand
Dollars ($1,500,000.00), provided, however, that the maximum liability
of the Shareholders for Indemnifiable Damages shall not exceed Fifteen
Million Dollars ($15,000,000.00) in the aggregate.
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(e) With respect to any Indemnifiable Damages which arise
from any costs of evaluation and remediation of any soil and/or
groundwater contamination at the San Angelo Municipal Landfill or
surrounding property which Trashaway becomes obligated to pay,
Republic agrees that before enforcing a claim for Indemnifiable
Damages against the Shareholders, the Shareholders shall be given
notice and have the opportunity to promptly attempt to seek a contract
modification from the City of San Angelo to raise rates for the
purpose of mitigating Trashaway's costs of evaluation and remediation;
the Shareholders shall have the burden of proving that any contract
modification or rate increase was entered into in order to mitigate
such costs as opposed to other reasons and any modification or rate
increase made more than twelve months later than the date of
Republic's notice to the Shareholders shall be presumed not to be
entered into for purposes of such mitigation.
9.2 SECURITY FOR THE SHAREHOLDERS' INDEMNIFICATION OBLIGATION.
As security for the agreement by the Shareholders to indemnify and hold
Republic harmless as described in Sections 9.1, at the Closing, Republic shall
set aside and hold certificates representing the Held Back Shares issued
pursuant to this Agreement.
(a) Republic may set off against the Held Back Shares any
loss, damage, cost or expense for which the Shareholders may be
responsible pursuant to this Agreement (including without limitation,
any Indemnifiable Damages for which the Shareholders may be
responsible pursuant to this Agreement) whether or not indemnified
pursuant to Section 9.1 of this Agreement, subject, however, to the
following terms and conditions:
(1) Republic shall give written notice to the Shareholders
of any claim for Indemnifiable Damages or any other damages
hereunder, which notice shall set forth (i) the amount of
Indemnifiable Damages or other loss, damage, cost or expense
which Republic claims to have sustained by reason thereof, and
(ii) the basis of such claim;
(2) Such set off shall be effected on the later to occur on
the expiration of 10 days from the date of such notice (the
"Notice of Contest Period") or, if such claim is contested, the
date the dispute is resolved, and such set off shall be charged
proportionally against the shares set aside;
(3) If, prior to the expiration of the Notice of Contest
Period, the Shareholders shall notify Republic in writing of an
intention to dispute the claim and if such dispute is not
resolved within 30 days after expiration of such period (the
"Resolution Period"), then Republic may elect that such dispute
shall be resolved by a committee of three arbitrators (one
appointed by the Shareholders, one appointed by Republic
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and one appointed by the two arbitrators so appointed), which
shall be appointed within 60 days after the expiration of the
Resolution Period. The arbitrators shall abide by the rules of
the American Arbitration Association and their decision shall be
made within 45 days of being appointed and shall be final and
binding on all parties;
(4) As soon as the Held Back Shares are registered and any
restrictions on sale imposed under Rule 145 of the Securities Act
are terminated, the Shareholders may instruct Republic to sell
some or all of the Held Back Shares and the net proceeds thereof
shall be substituted for such Held Back Shares in any set off to
be made by Republic pursuant to any claim hereunder subject to
continued compliance with any applicable securities and other
regulations; and
(5) For purposes of this Section 9.2, the shares of
Republic Common Stock not sold as provided in clause (4) of this
Section 9.2 shall be valued at the Average Closing Sale Price.
(b) Except with respect to shares transferred pursuant to
the foregoing right of setoff (and in the case of such shares, until
the same are transferred), all Held Back Shares shall be deemed to be
owned by the Shareholders and the Shareholders shall be entitled to
vote the same; provided, however, that, there shall also be deposited
with Republic subject to the terms of this Section 9.2, all shares of
Republic Common Stock issued to the Shareholders as a result of any
stock dividend or stock split and all cash issuable to the
Shareholders as a result of any cash dividend, with respect to the
Held Back Shares. All stock and cash issued or paid upon Held Back
Shares shall be distributed to the person or entity entitled to
receive such Held Back Shares together with such Held Back Shares.
(c) Republic agrees to deliver to the Shareholders no
later than the first anniversary of the Effective Time any Held Back
Shares then held by it (or proceeds from the Held Back Shares) unless
there then remains unresolved any claim for Indemnifiable Damages or
other damages hereunder as to which notice has been given, in which
event any Held Back Shares remaining on deposit (or proceeds from the
sale of Held Back Shares) after such claim shall have been satisfied
shall be returned to the Shareholders promptly after the time of
satisfaction.
9.3 ADJUSTMENT TO MERGER CONSIDERATION. All payments for
Indemnifiable Damages made pursuant to this Article IX shall be treated as
adjustments to the consideration granted in the Mergers under Section 1.3.
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9.4 AGREEMENT BY REPUBLIC TO INDEMNIFY. Republic agrees to
indemnify and hold the Shareholders harmless from and against the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses) incurred
or suffered by the Shareholders to the extent not covered by insurance and (i)
resulting from any breach of a representation or warranty made by Republic in
this Agreement, or (ii) resulting from any breach of the covenants or
agreements made by Republic in the Agreement. Each of the representations and
warranties made by Republic in the Agreement shall survive for a period of one
year after the Effective Time, and no claim for indemnification hereunder may
be asserted by the Shareholders against Republic after such representations and
warranties shall thus expire, provided, however, that claims for
indemnification first asserted in writing within the one year period shall not
thereafter be barred. Notwithstanding the foregoing, Republic shall not be
liable to the Shareholders with respect to any claim for indemnification
hereunder unless all such claims incurred by the Shareholders exceed an
aggregate of One Million Five Hundred Thousand Dollars ($1,500,000.00), in
which case Republic shall be liable only for the amount in excess of One
Million Five Hundred Thousand Dollars ($1,500,000.00), provided, however, that
the maximum liability of Republic for such indemnification claims shall not
exceed Fifteen Million Dollars ($15,000,000.00) in the aggregate. Republic
will satisfy any obligation of indemnification under this Section 9.4 by
delivery of shares of Republic Common Stock only. In determining the number of
shares of Republic Common Stock to be delivered to satisfy any indemnification
obligation by Republic, the value of such Republic Common Stock shall be
determined by the Average Closing Sale Price.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after Effective Time of the Republic Shares:
10.1 DISPOSITION OF SHARES. The Shareholders represent and
warrant that the shares of Republic Common Stock being acquired by them
hereunder are being acquired and will be acquired for their own respective
accounts and will not be sold or otherwise disposed of, except pursuant to (a)
an exemption from the registration requirements under the Securities Act, which
does not require the filing by Republic with the SEC of any registration
statement, offering circular or other document, in which case, the Shareholders
shall first supply to Republic an opinion of counsel (which counsel and
opinions shall be satisfactory to Republic) that such exception is available,
or (ii) an effective registration statement filed by Republic with the SEC
under the Securities Act.
10.2 LEGEND. The certificates representing the Republic Shares
shall bear the following legend:
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE, AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE SECURITIES AND EXCHANGE
COMMISSION'S ACCOUNTING SERIES RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
"Average Closing Sale Price" shall mean $21.00 per share of Republic
Common Stock.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or oral.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
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"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional sale
or other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in connection with such
mortgage, pledge, security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business or
prospects of or in the entity to which the change (of effect) relates.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration statement.
"Republic Shares" means the shares of Republic Common Stock which the
Shareholders receive in connection with the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
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11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by Republic in the event of a material breach by any
of the Duncan Companies or any of the Shareholders of any provision of
this Agreement;
(c) by all of the Shareholders jointly in the event of a
material breach by the Republic Companies of any provision of this
Agreement; or
(d) if the Closing shall not have occurred by March 1,
1996.
12.2 EFFECT OF TERMINATION. Except as provided in Article IX, in
the event of termination of this Agreement pursuant to Section 12.1, this
Agreement and the Plans of Merger shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
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ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO ANY OF THE REPUBLIC COMPANIES TO:
Republic Waste Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Ft. Lauderdale, FL 33301
Attn: Richard L. Handley, General Counsel
Telecopy: (305) 779-3884
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
801 Brickell Avenue, 24th Floor
Miami, Florida 33131
Attention: Jonathan L. Awner, Esq.
Telecopy: (305) 374-5095
(b) IF TO ANY OF THE DUNCAN COMPANIES OR THE
SHAREHOLDERS TO:
J.C. Duncan Co., Inc.
1212 Harrison Avenue
Arlington, Texas 76011
Attn: Robert Duncan, President
Telecopy: (817) 860-0330
WITH A COPY TO EACH OF:
Meadows, Owens, Collier, Reed,
Cousins & Blau, LLP
901 Main Street, Suite 3700
Dallas, Texas 75202
Attention: David N. Reed, Esq.
-47-
<PAGE> 48
Telecopy: (214) 747-3732
Cantey & Hanger, LLP
801 Cherry Street, Suite 2100
Fort Worth, Texas 76102
Attention: Harry E. Bartel, Esq.
Telecopy: (817) 877-2807
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire understanding of the parties in respect of
its subject matter and supersedes all prior agreements and understandings (oral
or written) between or among the parties with respect to such subject matter.
The Exhibits and Schedules constitute a part hereof as though set forth in full
above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any of the Duncan Companies, ADC or any
Shareholders without the prior written consent of Republic and may not be
assigned by Republic without the prior written consent of the Shareholders.
13.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
-48-
<PAGE> 49
13.7 INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
-49-
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC WASTE INDUSTRIES, INC.
By: /s/ H. WAYNE HUIZENGA
------------------------------
H. Wayne Huizenga,
Chairman and Chief Executive Officer
RWI/JCD INC.
By: /s/ Gregory K. Fairbanks
---------------------------------
Gregory K. Fairbanks,
Vice President
RWI/GRAND INC.
By: /s/ Gregory K. Fairbanks
--------------------------------
Gregory K. Fairbanks,
Vice President
RWI/TRASHAWAY INC.
By: /s/ Gregory K. Fairbanks
-------------------------
Gregory K. Fairbanks,
Vice President
RWI/TOS-IT INC.
By: /s/ Gregory K. Fairbanks
--------------------------------
Gregory K. Fairbanks,
Vice President
-50-
<PAGE> 51
RWI/WESTEX INC.
By: /s/ Gregory K. Fairbanks
--------------------------------
Gregory K. Fairbanks,
Vice President
RWI/PANTEGO I INC.
By: /s/ Gregory K. Fairbanks
-------------------------
Gregory K. Fairbanks,
Vice President
RWI/PANTEGO II INC.
By: /s/ Gregory K. Fairbanks
--------------------------------
Gregory K. Fairbanks,
Vice President
RWI/TRUCKING I INC.
By: /s/ Gregory K. Fairbanks
--------------------------------
Gregory K. Fairbanks,
Vice President
RWI/TRUCKING II INC.
By: /s/ Gregory K. Fairbanks
-------------------------------
Gregory K. Fairbanks,
Vice President
-51-
<PAGE> 52
J.C. DUNCAN COMPANY, INC.
By: /s/ Robert C. Duncan
-------------------------------
ROBERT C. DUNCAN,
Chief Executive Officer
ARLINGTON DISPOSAL COMPANY, INC.
By: /s/ Robert C. Duncan
-------------------------------
ROBERT C. DUNCAN,
Chief Executive Officer
GRAND PRAIRIE DISPOSAL COMPANY, INC.
By: /s/ Robert C. Duncan
-------------------------------
ROBERT C. DUNCAN,
Chief Executive Officer
TRASHAWAY SERVICES, INC.
By: /s/ Dan R. Duncan
-------------------------------
DAN R. DUNCAN, President
TOS-IT SERVICE COMPANY, INC.
By: /s/ Dan R. Duncan
------------------------------
DAN R. DUNCAN, President
-52-
<PAGE> 53
WES TEX WASTE SERVICE, INC.
By:/s/ Dan R. Duncan
-----------------------------
DAN R. DUNCAN, President
PANTEGO SERVICE COMPANY
By: Pantego I, Inc., partner
By: /s/ Robert C. Duncan
-----------------------------
ROBERT C. DUNCAN, President
PANTEGO I, INC.
By: /s/ Robert C. Duncan
--------------------------------
ROBERT C. DUNCAN, President
PANTEGO II, INC.
By: /s/ Dan R. Duncan
------------------------------
DAN R. DUNCAN, President
E & E TRUCK LEASING, LTD.
By its General Partner,
EETL I, INC.
By: /s/ Dan R. Duncan
------------------------------
DAN R. DUNCAN, President
-53-
<PAGE> 54
EETL I, INC.
By: /s/ Dan R. Duncan
------------------------------
DAN R. DUNCAN, President
EETL II, INC.
By: /s/ Debra A. Duncan
------------------------------
DEBRA A. DUNCAN, President
/s/ Robert C. Duncan
---------------------------------
Robert C. Duncan
/s/ Jannette T. Duncan
--------------------------------
Jannette T. Duncan
/s/ Dan R. Duncan
-------------------------------
Dan R. Duncan
/s/ Debra A. Duncan
----------------------------------
Debra A. Duncan
/s/ DeeDee Duncan Elliott
--------------------------------
DeeDee Duncan Elliott
/s/ George Martin Duncan
----------------------------------
George Martin Duncan
/s/ Melinda Duncan Vince
----------------------------------
Melinda Duncan Vince
-54-
<PAGE> 55
ROBERT C. DUNCAN ANNUITY TRUST NO.
ONE
By: /s/ Robert C. Duncan
---------------------------------
Robert C. Duncan, Trustee
ROBERT C. DUNCAN ANNUITY TRUST NO.
TWO
By: /s/ Robert C. Duncan
---------------------------------
Robert C. Duncan, Trustee
ROBERT C. DUNCAN ANNUITY TRUST NO.
THREE
By: /s/ Robert C. Duncan
--------------------------------
Robert C. Duncan, Trustee
ROBERT C. DUNCAN ANNUITY TRUST NO.
FOUR
By: /s/ Robert C. Duncan
---------------------------------
Robert C. Duncan, Trustee
JANNETTE T. DUNCAN ANNUITY TRUST NO.
ONE
By: /s/ Jannette T. Duncan
---------------------------------
Jannette T. Duncan, Trustee
-55-
<PAGE> 56
JANNETTE T. DUNCAN ANNUITY TRUST NO.
TWO
By: /s/ Jannette T. Duncan
---------------------------------
Jannette T. Duncan, Trustee
JANNETTE T. DUNCAN ANNUITY TRUST NO.
THREE
By: /s/ Jannette T. Duncan
---------------------------------
Jannette T. Duncan, Trustee
JANNETTE T. DUNCAN ANNUITY TRUST NO.
FOUR
By: /s/ Jannette T. Duncan
---------------------------------
Jannette T. Duncan, Trustee
-56-
<PAGE> 57
EXHIBIT A
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/JCD Inc., a Texas corporation ("Republic
Sub"), and J. C. Duncan Co., Inc., a Texas corporation ("Duncan").
RECITALS
The boards of directors and shareholders of Republic Sub and Duncan
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Duncan on the terms and subject to the conditions set
forth herein, such that Duncan will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Duncan in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Duncan shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
Duncan, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
B. At the Effective Time, the Bylaws of Duncan, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of Duncan
shall be the officers and directors of the Surviving
<PAGE> 58
Corporation until their successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Duncan,
$100.00 par value per share (the "Duncan Common Stock"), which shall be issued
and outstanding (other than shares of Duncan Common Stock held in treasury)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________)shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Duncan Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Duncan
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Duncan Common Stock, which shall
be the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of Duncan and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of
2
<PAGE> 59
Duncan and Republic Sub shall become liabilities and obligations of the
Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 60
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/JCD INC.
By:
------------------------------------
Name:
Title:
J. C. DUNCAN CO, INC.
By:
------------------------------------
Name: Robert C. Duncan
Title: Chief Executive Officer
4
<PAGE> 61
EXHIBIT B
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Grand Inc., a Texas corporation ("Republic
Sub"), and Grand Prarie Disposal Company, Inc., a Texas corporation ("Grand").
RECITALS
The boards of directors and shareholders of Republic Sub and Grand
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Grand on the terms and subject to the conditions set
forth herein, such that Grand will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Grand in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Grand shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of Grand,
as in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter altered, amended
or repeated in accordance with the TCBA.
B. At the Effective Time, the Bylaws of Grand, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
1
<PAGE> 62
C. At the Effective Time, the officers and directors of Grand
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Grand,
$10.00 par value per share (the "Grand Common Stock"), which shall be issued
and outstanding (other than shares of Grand Common Stock held in treasury)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________)shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Grand Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Grand
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Grand Common Stock, which shall be
the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
2
<PAGE> 63
At the Effective Time, all property, rights, privileges, powers and
franchises of Grand and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of Grand and Republic Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 64
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/GRAND INC.
By:
------------------------------------
Name:
Title:
GRAND PRARIE DISPOSAL COMPANY, INC.
By:
------------------------------------
Name: Robert C. Duncan
Title: Chief Executive Officer
4
<PAGE> 65
EXHIBIT C
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Trashaway Inc., a Texas corporation ("Republic
Sub"), and Trashaway Services, Inc., a Texas corporation ("Trashaway").
RECITALS
The boards of directors and shareholders of Republic Sub and Trashaway
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Trashaway on the terms and subject to the conditions
set forth herein, such that Trashaway will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Trashaway in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Trashaway shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
Trashaway, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
B. At the Effective Time, the Bylaws of Trashaway, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
<PAGE> 66
C. At the Effective Time, the officers and directors of Trashaway
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of
Trashaway, $1.00 par value per share (the "Trashaway Common Stock"), which
shall be issued and outstanding (other than shares of Trashaway Common Stock
held in treasury) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive
______________________ (________) shares of common stock, $0.01 par value per
share, of Republic Waste Industries, Inc., a Delaware corporation and the
parent of Republic Sub ("Republic Common Stock"). Fractional shares of
Republic Common Stock will not be issued, instead shares of Republic Common
Stock will be issued determined to the nearest whole share of Republic Common
Stock.
B. At the Effective Time, each share of Trashaway Common Stock
held in treasury shall be canceled and extinguished without any conversion
thereof.
C. At the Effective Time, each right to acquire shares of
Trashaway Common Stock, to the extent that any such rights exist, which shall
be issued and outstanding shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Trashaway Common Stock, which
shall be the only outstanding common stock of the Surviving Corporation
immediately following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
2
<PAGE> 67
At the Effective Time, all property, rights, privileges, powers and
franchises of Trashaway and Republic Sub shall vest in the Surviving
Corporation, and all liabilities and obligations of Trashaway and Republic Sub
shall become liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 68
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/TRASHAWAY INC.
By:
------------------------------------
Name:
Title:
TRASHAWAY SERVICES, INC.
By:
------------------------------------
Name: Robert C. Duncan
Title: Chief Executive Officer
4
<PAGE> 69
EXHIBIT D
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Tos-It Inc., a Texas corporation ("Republic
Sub"), and Tos-It Service Company, Inc., a Texas corporation ("Tos-It").
RECITALS
The boards of directors and shareholders of Republic Sub and Tos-It
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Tos-It on the terms and subject to the conditions set
forth herein, such that Tos-It will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Tos-It in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Tos-It shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
Tos-It, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
B. At the Effective Time, the Bylaws of Tos-It, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of Tos-It
shall be the officers and directors of the Surviving
<PAGE> 70
Corporation until their successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Tos-It,
no par value per share (the "Tos-It Common Stock"), which shall be issued and
outstanding (other than shares of Tos-It Common Stock held in treasury) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________) shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Tos-It Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Tos-It
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Tos-It Common Stock, which shall
be the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of Tos-It and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of
2
<PAGE> 71
Tos-It and Republic Sub shall become liabilities and obligations of the
Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 72
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/TOS-IT INC.
By:
------------------------------------
Name:
Title:
TOS-IT SERVICE COMPANY, INC.
By:
------------------------------------
Name: Robert C. Duncan
Title: Chief Executive Officer
4
<PAGE> 73
EXHIBIT E
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Wes Tex Inc., a Texas corporation ("Republic
Sub"), and Wes Tex Waste Service, Inc., a Texas corporation ("Wes Tex").
RECITALS
The boards of directors and shareholders of Republic Sub and Wes Tex
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Wes Tex on the terms and subject to the conditions set
forth herein, such that Wes Tex will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Wes Tex in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Wes Tex shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of Wes
Tex, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
<PAGE> 74
B. At the Effective Time, the Bylaws of Wes Tex, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of Wes Tex
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Wes Tex,
$1.00 par value per share (the "Wes Tex Common Stock"), which shall be issued
and outstanding (other than shares of Wes Tex Common Stock held in treasury)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________) shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Wes Tex Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Wes Tex
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Wes Tex Common Stock, which shall
be the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
2
<PAGE> 75
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of Wes Tex and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of Wes Tex and Republic Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 76
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/WES TEX INC.
By:
------------------------------------
Name:
Title:
WES TEX WASTE SERVICE, INC.
By:
------------------------------------
Name: Dan R. Duncan
Title: President
4
<PAGE> 77
EXHIBIT F
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Pantego I Inc., a Texas corporation ("Republic
Sub"), and Pantego I, Inc., a Texas corporation ("Pantego").
RECITALS
The boards of directors and shareholders of Republic Sub and Pantego
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Pantego on the terms and subject to the conditions set
forth herein, such that Pantego will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Pantego in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Pantego shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
Pantego, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
<PAGE> 78
B. At the Effective Time, the Bylaws of Pantego, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of Pantego
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Pantego,
$0.10 par value per share (the "Pantego Common Stock"), which shall be issued
and outstanding (other than shares of Pantego Common Stock held in treasury)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________) shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Pantego Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Pantego
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Pantego Common Stock, which shall
be the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
2
<PAGE> 79
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of Pantego and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of Pantego and Republic Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 80
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/PANTEGO I INC.
By:
------------------------------------
Name:
Title:
PANTEGO I, INC.
By:
------------------------------------
Name: Robert C. Duncan
Title: President
4
<PAGE> 81
EXHIBIT G
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/Pantego II Inc., a Texas corporation
("Republic Sub"), and Pantego II, Inc., a Texas corporation ("Pantego").
RECITALS
The boards of directors and shareholders of Republic Sub and Pantego
have determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into Pantego on the terms and subject to the conditions set
forth herein, such that Pantego will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into Pantego in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and Pantego shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of
Pantego, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, until thereafter
altered, amended or repeated in accordance with the TCBA.
<PAGE> 82
B. At the Effective Time, the Bylaws of Pantego, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of Pantego
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of Pantego,
$0.10 par value per share (the "Pantego Common Stock"), which shall be issued
and outstanding (other than shares of Pantego Common Stock held in treasury)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive ______________________
(________) shares of common stock, $0.01 par value per share, of Republic Waste
Industries, Inc., a Delaware corporation and the parent of Republic Sub
("Republic Common Stock"). Fractional shares of Republic Common Stock will not
be issued, instead shares of Republic Common Stock will be issued determined to
the nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of Pantego Common Stock held
in treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of Pantego
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of Pantego Common Stock, which shall
be the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
2
<PAGE> 83
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of Pantego and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of Pantego and Republic Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 84
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/PANTEGO II INC.
By:
------------------------------------
Name:
Title:
PANTEGO II, INC.
By:
------------------------------------
Name: Dan R. Duncan
Title: President
4
<PAGE> 85
EXHIBIT H
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/TRUCKING I Inc., a Texas corporation
("Republic Sub"), and EETL I, Inc., a Texas corporation ("EETL").
RECITALS
The boards of directors and shareholders of Republic Sub and EETL have
determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into EETL on the terms and subject to the conditions set
forth herein, such that EETL will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into EETL in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and EETL shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of EETL,
as in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter altered, amended
or repeated in accordance with the TCBA.
<PAGE> 86
B. At the Effective Time, the Bylaws of EETL, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of EETL
shall be the officers and directors of the Surviving Corporation until their
successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of EETL,
$0.10 par value per share (the "EETL Common Stock"), which shall be issued and
outstanding (other than shares of EETL Common Stock held in treasury) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive ______________________ (________) shares
of common stock, $0.01 par value per share, of Republic Waste Industries, Inc.,
a Delaware corporation and the parent of Republic Sub ("Republic Common
Stock"). Fractional shares of Republic Common Stock will not be issued,
instead shares of Republic Common Stock will be issued determined to the
nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of EETL Common Stock held in
treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of EETL
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of EETL Common Stock, which shall be
the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
2
<PAGE> 87
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of EETL and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of EETL and Republic Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 88
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/TRUCKING I INC.
By:
------------------------------------
Name:
Title:
EETL I, INC.
By:
------------------------------------
Name: Dan R. Duncan
Title: President
4
<PAGE> 89
EXHIBIT I
PLAN OF MERGER AND REORGANIZATION
This Plan of Merger and Reorganization (this "Plan") is entered into
as of __________, 1995 among RWI/TRUCKING II Inc., a Texas corporation
("Republic Sub"), and EETL II, Inc., a Texas corporation ("EETL").
RECITALS
The boards of directors and shareholders of Republic Sub and EETL have
determined that it is advisable and in the best interests of each such
corporation and its respective shareholders that Republic Sub be merged (the
"Merger") with and into EETL on the terms and subject to the conditions set
forth herein, such that EETL will be the surviving corporation and a
wholly-owned subsidiary of Republic Waste Industries, Inc., a Delaware
corporation.
ARTICLE I
THE MERGER
At the Effective Time (as defined in Article V hereof), Republic Sub
shall be merged with and into EETL in accordance with the Texas Business
Corporation Act (the "TBCA"), and the separate existence of Republic Sub shall
cease and EETL shall thereafter continue as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Texas.
ARTICLE II
THE SURVIVING CORPORATION
A. At the Effective Time, the Articles of Incorporation of EETL,
as in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter altered, amended
or repeated in accordance with the TCBA.
B. At the Effective Time, the Bylaws of EETL, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter altered, amended or repealed in accordance with
the TCBA.
C. At the Effective Time, the officers and directors of EETL
shall be the officers and directors of the Surviving
<PAGE> 90
Corporation until their successors are elected and have qualified.
ARTICLE III
MANNER AND BASIS OF CONVERTING SHARES
A. At the Effective Time, each share of common stock of EETL,
$0.10 par value per share (the "EETL Common Stock"), which shall be issued and
outstanding (other than shares of EETL Common Stock held in treasury) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive ______________________ (________) shares
of common stock, $0.01 par value per share, of Republic Waste Industries, Inc.,
a Delaware corporation and the parent of Republic Sub ("Republic Common
Stock"). Fractional shares of Republic Common Stock will not be issued,
instead shares of Republic Common Stock will be issued determined to the
nearest whole share of Republic Common Stock.
B. At the Effective Time, each share of EETL Common Stock held in
treasury shall be canceled and extinguished without any conversion thereof.
C. At the Effective Time, each right to acquire shares of EETL
Common Stock, to the extent that any such rights exist, which shall be issued
and outstanding shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to acquire
__________________ (_____) shares of Republic Common Stock.
D. Each share of common stock of Republic Sub, $1.00 par value
per share, issued and outstanding immediately prior to the Effective Time shall
be automatically converted into one share of EETL Common Stock, which shall be
the only outstanding common stock of the Surviving Corporation immediately
following the Effective Time.
ARTICLE IV
EFFECT OF MERGER
At the Effective Time, all property, rights, privileges, powers and
franchises of EETL and Republic Sub shall vest in the Surviving Corporation,
and all liabilities and obligations of
2
<PAGE> 91
EETL and Republic Sub shall become liabilities and obligations of the Surviving
Corporation.
ARTICLE V
EFFECTIVE TIME
As used in this Plan, the term, "Effective Time" shall mean the date
and time of filing of Articles of Merger with the Secretary of State of the
State of Texas with respect to the Merger.
[SIGNATURES ON NEXT PAGE]
3
<PAGE> 92
IN WITNESS WHEREOF, each of the parties has caused this Plan to be
executed on its behalf as of the date first written above.
RWI/TRUCKING II INC.
By:
------------------------------------
Name:
Title:
EETL II, INC.
By:
------------------------------------
Name: Debra A. Duncan
Title: President
4
<PAGE> 1
EXHIBIT 2.3
MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of
November 13, 1995 by and among Republic Waste Industries, Inc., a Delaware
corporation ("Republic"); RI/FCC Mergersub, Inc. ("RI/FCC"), RI/FWS Mergersub,
Inc. ("RI/FWS"), RI/PD Mergersub, Inc. ("RI/PD"), RI/FV Mergersub, Inc.
("RI/FV"), and RI/Investment Co., Inc. ("RI/Investment"), each a South
Carolina corporation and wholly-owned subsidiary of Republic (sometimes
hereinafter collectively referred to as the "Republic Merger Subs", and
together with Republic, the "Republic Companies"); Fennell Waste Systems, Inc.
("Fennell Waste"), Fennell Container Co., Inc. ("Fennell Container"), Fenn-Vac,
Inc. ("Fenn-Vac"), Pepperhill Development Co., Inc. ("Pepperhill"), and GF/WWF,
Inc. ("GF/WWF"), each a South Carolina corporation (sometimes hereinafter
collectively referred to as the "Fennell Companies"); and the shareholders of
the Fennell Companies, George W. Fennell ("Fennell"), Robert N. Shepard
("Shepard"), G. Scott Fennell, S. Allison Fennell, Debra A. Haschker, James R.
Bland, John H. Chapman, Jeffrey A. Forslund and Leo J. Zolnierowicz (sometimes
hereinafter collectively referred to as the "Shareholders", and Fennell and
Shepard are sometimes hereinafter collectively referred to as the "Control
Shareholders"). Certain other capitalized terms used herein are defined in
Article XI.
RECITALS
The Boards of Directors of Republic and the Fennell Companies have
determined that it is in the best interests of their respective shareholders
for Republic to acquire the Fennell Companies upon the terms and subject to the
conditions set forth in this Agreement. In order to effectuate the
transaction, Republic has organized the Republic Merger Subs as wholly-owned
subsidiaries, and the parties have agreed, subject to the terms and conditions
set forth in this Agreement, to merge the Republic Merger Subs with and into
the Fennell Companies so that the Fennell Companies continue as the surviving
corporations (the "Surviving
<PAGE> 2
Corporations"). As a result, the Fennell Companies will become wholly-owned
subsidiaries of Republic.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
1.1 THE MERGERS. Subject to the terms and conditions of this
Agreement, at the Effective time (as defined below), and pursuant to the terms
and conditions set forth in the Plans of Merger annexed hereto as Exhibits A
through E (the "Plans of Merger"), the Republic Merger Subs will be merged with
and into the Fennell Companies (the "Mergers") as follows:
(a) RI/FCC will be merged with and into Fennell
Container;
(b) RI/FWS will be merged with and into Fennell Waste;
(c) RI/PD will be merged with and into Pepperhill;
(d) RI/FV will be merged with and into Fenn-Vac; and
(e) RI/Investment will be merged with and into GF/WWF.
The terms and conditions of the Plans of Merger are incorporated herein by
reference as if fully set forth herein. As a result of the Mergers, the
separate corporate existence of each of the
-2-
<PAGE> 3
Republic Merger Subs shall cease and each of the Fennell Companies shall
continue as the Surviving Corporations and wholly-owned subsidiaries of
Republic.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Mergers (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of Akerman, Senterfitt & Eidson, P.A., 801 Brickell Avenue, 24th
Floor, Miami, Florida 33131, or such other place as the parties may otherwise
agree. The parties agree to use their best efforts to consummate the Closing
on or before November 30, 1995.
1.3 FILING OF ARTICLES OF MERGER. At the time of the Closing,
the parties shall cause the Mergers to be consummated by filing duly executed
Articles of Merger with respect to each of the Mergers (with the completed
Plans of Merger annexed thereto) with the Secretary of State of the State of
South Carolina, in such form as Republic and the Fennell Companies determine is
required by and is in accordance with the relevant provisions of the South
Carolina Business Corporation Act (the "SCBCA") (the date and time of such
filing is referred to herein as the "Effective Date" or "Effective Time").
1.4 PLANS OF MERGER. Pursuant to the Plans of Merger, an
aggregate of 3,105,244 shares of common stock, $0.01 par value per share, of
Republic ("Republic Common Stock") will be issued in the mergers in exchange
for all the issued and outstanding shares of capital stock of each of the
Fennell Companies as follows:
(a) 217,732 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Fennell Waste;
(b) 1,780,436 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Fennell Container;
(c) 846,276 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Fenn-Vac;
-3-
<PAGE> 4
(d) 200,000 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of Pepperhill; and
(e) 60,800 shares of Republic Common Stock will be
issued in exchange for all of the issued and outstanding shares of
common stock of GF/WWF.
1.5 DELIVERY OF CERTIFICATES. At the Closing, each holder of
shares of capital stock of the Fennell Companies (the "Fennell Common Stock")
shall deliver the certificates representing such shares to Republic for
cancellation, and Republic shall deliver one or more certificates representing
the shares of Republic Common Stock issued pursuant to Section 1.4 to each such
holder (rounded to the nearest whole share). The shares of Republic Common
Stock issuable by Republic in exchange for the Fennell Common Stock in the
Mergers are sometimes referred to herein as the "Republic Shares," and will be
validly issued, fully paid and non-assessable, free and clear of all liens and
encumbrances, except as set forth in Schedule 3.5.
1.6 ACCOUNTING TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as a pooling
of interests combination.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE REPUBLIC COMPANIES
As a material inducement to the Fennell Companies and to each of the
Shareholders to enter into this Agreement and to consummate the transactions
contemplated hereby, each of the Republic Companies jointly and severally make
the following representations and warranties to the Fennell Companies and the
Shareholders:
2.1 CORPORATE STATUS. Republic is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each Republic Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of South Carolina. Each Republic
Merger Sub is
-4-
<PAGE> 5
a wholly-owned subsidiary of Republic, within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code and Rev. Rul. 74-564, 1974-2 C.B.
124.
2.2 CORPORATE POWER AND AUTHORITY. Each of the Republic
Companies has the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to consummate
the transactions contemplated hereby. Each of the Republic Companies has taken
all action necessary to authorize its execution and delivery of this Agreement,
the performance of its respective obligations hereunder and the consummation of
the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Republic Companies and constitutes a legal, valid and
binding obligation of each of the Republic Companies, enforceable against each
of the Republic Companies in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 REPUBLIC COMMON STOCK. Upon consummation of the Mergers and
the issuance and delivery of certificates representing the Republic Shares to
the Shareholders, the Republic Shares will be validly issued, fully paid and
non-assessable shares of Republic Common Stock, free and clear of all liens and
encumbrances, except as set forth in Schedule 3.5.
2.5 NO COMMISSIONS. None of the Republic Companies has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
2.6 CAPITALIZATION. The authorized capital stock of Republic
consists of 350,000,000 shares of Republic Common Stock and 5,000,000 shares of
preferred stock. As of November 7, 1995, (i) 62,583,074 shares of Republic
Common Stock were validly issued and outstanding, fully paid and nonassessable
and not issued in violation of any preemptive right of any stockholder of
Republic,
-5-
<PAGE> 6
and (ii) no shares of preferred stock were issued and outstanding. The
Republic Shares to be issued in the Merger will be "voting stock" within the
meaning of the Internal Revenue Code.
2.7 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Republic, nor the consummation by Republic of
the transactions contemplated hereby, nor compliance by Republic with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of its First Amended and Restated Certificate of Incorporation, (b)
violate, conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of any lien, upon
any of the properties or assets of Republic or any of its subsidiaries (the
"Republic Subsidiaries") under any of the terms, conditions or provisions of
any contract or lien, to which Republic or any Republic Subsidiary is a party
or to which they or any of their respective properties or assets may be
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which,
individually or in the aggregate, will not have a Material Adverse Effect on
Republic, (c) violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Republic or any Republic subsidiary
or any of their respective properties or assets, except for such violations
which, individually or in the aggregate, will not have a Material Adverse
Effect on Republic, or (d) require any consent, approval, authorization or
permit of or from, or filing with or notification to, any Governmental
Authority except (i) pursuant to the Exchange Act and the Securities Act, (ii)
filings required under the securities or blue sky laws of the various states,
(iii) filings required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), (iv) consents, approvals, authorizations,
permits, filings or notifications which have either been obtained or made prior
to the Closing or which, if not obtained or made, will neither, individually or
in the aggregate, have a Material Adverse Effect on Republic nor restrict
Republic's legal authority to execute and deliver this Agreement and consummate
the transactions contemplated hereby, or (v) any filings required to be made by
the Fennell Companies or the Shareholders.
-6-
<PAGE> 7
2.8 REPORTS AND FINANCIAL STATEMENTS. Within the last three
years, except where failure to have done so did and would not have a Material
Adverse Effect on Republic, Republic has filed all reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with the SEC, including, but not limited to Forms 10-K, Forms 10-Q,
Forms 8-K and proxy statements (collectively, the "Republic Reports").
Republic has previously furnished to the Fennell Companies and made available
to the Shareholders copies of all Republic Reports filed with the SEC since
January 1, 1995, and with respect to Republic Reports filed after the date of
this Agreement until the Effective Date, will promptly furnish to the Fennell
Companies and make available to the Shareholders, copies of each of the
Republic Reports filed with the SEC during such period. As of their respective
dates (but taking into account any amendments filed prior to the date of this
Agreement), the Republic Reports complied, or, with respect to Republic Reports
filed after the date of this Agreement, will comply, in all material respects
with all the rules and regulations promulgated by the SEC and did not contain,
or, with respect to Republic Reports filed after the date of this Agreement,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Republic Reports filed by Republic with the SEC prior to the date of this
Agreement, since December 31, 1994 to the date of this Agreement, there has not
been any change in the financial condition, results of operations or business
of Republic and the Republic Subsidiaries that either individually or in the
aggregate would have a Material Adverse Effect on the financial condition of
Republic.
2.10 ACCOUNTING AND TAX MATTERS. Neither Republic nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to take any
action that would prevent Republic from accounting for the business
combinations to be effected by the Mergers as a "pooling of interests."
Republic warrants that it has no intention of disposing of any of the Fennell
Common Stock to be received by Republic in the Mergers. Republic agrees that
from and
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after the Effective Time, it will not take any action to cause the Merger to
lose its tax free status.
2.11 SURVIVAL. Each of the representations and warranties made
by Republic in this Agreement or pursuant hereto shall survive for a period of
one year after the Effective Time, notwithstanding any investigation at any
time made by or on behalf of the Shareholders, and upon expiration of such one
year period, such representations and warranties of Republic shall expire,
except that the representations and warranties of Republic contained in
Sections 2.1, 2.2, 2.3 and 2.4 shall not expire but shall continue
indefinitely.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE FENNELL COMPANIES
As a material inducement to each of the Republic Companies to enter
into this Agreement and to consummate the transactions contemplated hereby,
each of the Fennell Companies makes the following representations and
warranties to the Republic Companies:
3.1 CORPORATE STATUS. Each of the Fennell Companies is a
corporation duly organized, validly existing and in good standing under the
laws of the State of South Carolina and has the requisite power and authority
to own or lease its properties and to carry on its business as now being
conducted. Each of the Fennell Companies is legally qualified to transact
business as a foreign corporation in all jurisdictions where the nature of its
properties and the conduct of its business requires such qualification (all of
which jurisdictions are listed on Schedule 3.1) and is in good standing in each
of the jurisdictions in which it is so qualified. There is no pending or
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of the Fennell Companies.
3.2 POWER AND AUTHORITY. Each of the Fennell Companies has the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Each of the Fennell Companies has taken all action necessary to
authorize the execution
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and delivery of this Agreement, the performance of its obligations hereunder
and the consummation of the transactions contemplated hereby. Each of the
Shareholders is an individual residing in the State of South Carolina, and each
of the Shareholders has the requisite competence and authority to execute and
deliver this Agreement, to perform his or her respective obligations hereunder
and to consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Fennell Companies and each of the Shareholders and
constitutes the legal, valid and binding obligation of each of the Fennell
Companies and each of the Shareholders, enforceable against each of the Fennell
Companies and each of the Shareholders in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4 CAPITALIZATION. Schedule 3.4 sets forth, with respect to
each of the Fennell Companies, (a) the number of authorized shares of each
class of its capital stock, and (b) the number of issued and outstanding shares
of each class of its capital stock. All of the issued and outstanding shares
of capital stock of each of the Fennell Companies (a) have been duly authorized
and validly issued and are fully paid and non-assessable, (b) were issued in
compliance with all applicable state and federal securities laws, and (c) were
not issued in violation of any preemptive rights or rights of first refusal,
and no preemptive rights or rights of first refusal exist, and no such rights
arise by virtue of or in connection with the transactions contemplated hereby.
There are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require any of the Fennell
Companies to issue or sell any shares of its respective capital stock (or
securities convertible into or exchangeable for shares of its respective
capital stock). There are no outstanding stock appreciation, phantom stock,
profit participation or other similar rights with respect to any of the Fennell
Companies. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer
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of the capital stock of any of the Fennell Companies. None of the Fennell
Companies is obligated to redeem or otherwise acquire any of its outstanding
shares of capital stock. With regard to the 1991 Stockholders Agreement for
Fennell Waste, the Shareholders, by their execution of this Agreement, hereby
terminate such Stockholders Agreement as of the Effective Date.
3.5 SHAREHOLDERS OF THE FENNELL COMPANIES. Schedule 3.5 sets
forth, with respect to each of the Fennell Companies, (a) the name, address and
social security number of, and the number of outstanding shares of each class
of its capital stock owned by, each shareholder of record as of the close of
business on the date of this Agreement; and (b) the name, address and social
security number of, and number of shares of each class of its capital stock
beneficially owned by each beneficial owner of outstanding shares of capital
stock (to the extent that record and beneficial ownership of any such shares
are different). Each of the holders of shares of capital stock of the Fennell
Companies owns such shares free and clear of all Liens, restrictions and claims
of any kind, except as set forth on Schedule 3.5.
3.6 NO VIOLATION. Except as set forth on Schedule 3.6, the
execution and delivery of this Agreement by each of the Fennell Companies and
each of the Shareholders, the performance by each of the Fennell Companies and
each of the Shareholders of its respective obligations hereunder and the
consummation by each of the Fennell Companies and each of the Shareholders of
the transactions contemplated by this Agreement will not (i) contravene any
provision of the articles of incorporation or bylaws of any of the Fennell
Companies, (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against any of the Fennell Companies or any of the
Shareholders except for such violations which, individually, or in the
aggregate, will not have a Material Adverse Effect on the Fennell Companies;
(iii) conflict with, result in any breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding
upon or enforceable against any of the Fennell Companies or any of the
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Shareholders except for such conflicts, breaches and defaults which,
individually or in the aggregate, will not have a Material Adverse Effect on
the Fennell Companies, (iv) result in or require the creation or imposition of
any Lien upon or with respect to any of the property or assets of any the
Fennell Companies, or (v) require the consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, any
court or tribunal or any other Person, except any applicable filings required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR") and any filings required to be made by the Republic Companies.
3.7 RECORDS OF THE FENNELL COMPANIES. The copies of the
articles of incorporation and bylaws of the Fennell Companies which were
provided to Republic are true, accurate and complete and reflect all amendments
made through the date of this Agreement. The minute books for the Fennell
Companies made available to Republic for review were correct and complete as of
the date of such review, no further entries have been made through the date of
this Agreement, such minute books contain the true signatures of the persons
purporting to have signed it, and such minute books contain a substantially
complete and accurate record of all corporate actions of the shareholders and
directors (and any committees thereof) of the Fennell Companies taken by
written consent or at a meeting since incorporation. All material corporate
actions taken by the Fennell Companies have been duly authorized or ratified.
All accounts, books, ledgers and official and other records of the Fennell
Companies have been fully, properly and accurately kept and completed in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained therein. The stock ledger of the Fennell Companies, as
previously made available to Republic, contains an accurate and complete record
of all issuances, transfers and cancellations of shares of the capital stock of
the Fennell Companies.
3.8 SUBSIDIARIES. Except as set forth on Schedule 3.8, the
Fennell Companies do not own, directly or indirectly, any outstanding voting
securities of or other interests in, or control, any corporation, partnership,
joint venture or other business entity.
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3.9 FINANCIAL STATEMENTS. The Fennell Companies have delivered to
Republic the financial statements of each of the Fennell Companies, including
the notes thereto, audited by Gamble, Givens & Moody, P.A. (other than Fennell
Waste, which has been duly compiled by Gamble, Givens & Moody, P.A. and
Pepperhill for which no financial statements exist) (the "Financial
Statements"), a copy of each of which is attached to Schedule 3.9 hereto. Each
balance sheet dated as of December 31, 1994 of each of the Fennell Companies is
referred to herein as the "Current Balance Sheet". The Financial Statements
fairly present the financial position of the Fennell Companies at the balance
sheet date and the results of operations for the periods covered thereby, and
have been prepared in accordance with GAAP consistently applied throughout the
periods indicated. The books and records of the Fennell Companies fully and
fairly reflect all transactions, properties, assets and liabilities of the
Fennell Companies. There are no material special or non-recurring items of
income or expense during the periods covered by the Financial Statements and
the balance sheets included in the Financial Statements do not reflect any
writeup or revaluation increasing the book value of any assets, except as
specifically disclosed in the notes thereto. The Financial Statements reflect
all adjustments necessary for a fair presentation of the financial information
contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as
disclosed in Schedule 3.10, since the date of the Current Balance Sheet, the
Fennell Companies have not (i) issued any capital stock or other securities;
(ii) made any distribution of or with respect to their capital stock or other
securities or purchased or redeemed any of their securities; (iii) paid any
bonus to or increased the rate of compensation of any of their officers or
salaried employees or amended any other terms of employment of such persons
except in the ordinary course of business consistent with past practice; (iv)
sold, leased or transferred any of their properties or assets other than in the
ordinary course of business consistent with past practice; (v) made or
obligated themselves to make capital expenditures out of the ordinary course of
business consistent with past practice; (vi) made any payment in respect of
their liabilities other than in the ordinary course of business consistent with
past practice; (vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of
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$25,000 in the aggregate out of the ordinary course of business, except for
this Agreement and the transactions contemplated hereby; (viii) suffered any
theft, damage, destruction or casualty loss, not covered by insurance and for
which a timely claim was filed, in excess of $25,000 in the aggregate; (ix)
suffered any extraordinary losses (whether or not covered by insurance); (x)
waived, cancelled, compromised or released any rights having a value in excess
of $25,000 in the aggregate; (xi) made or adopted any change in their
accounting practice or policies not consistent with GAAP; (xii) made any
adjustment to their books and records other than in respect of the conduct of
their business activities in the ordinary course consistent with past practice;
(xiii) entered into any transaction with any Affiliate other than intercompany
transactions in the ordinary course of business consistent with past practice;
(xiv) entered into any employment agreement; (xv) terminated, amended or
modified any agreement involving an amount in excess of $25,000; (xvi) imposed
any security interest or other Lien on any of their assets other than in the
ordinary course of business consistent with past practice; (xvii) delayed
paying any accounts payable which is due and payable except to the extent being
contested in good faith; (xviii) made or pledged any charitable contribution
other than in the ordinary course of business consistent with past practice;
(xix) entered into any other transaction or been subject to any event which has
or may have a Material Adverse Effect on the Fennell Companies; or (xx) agreed
to do or authorized any of the foregoing.
3.11 LIABILITIES OF THE FENNELL COMPANIES. Except as set forth
on Schedule 3.11, the Fennell Companies do not have any material liabilities or
obligations, whether accrued, absolute, contingent or otherwise, except (a) to
the extent reflected or taken into account in each Current Balance Sheet and
not heretofore paid or discharged, (b) to the extent specifically set forth in
or incorporated by express reference in any of the Schedules attached hereto,
(c) liabilities incurred in the ordinary course of business consistent with
past practice since the date of each Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), (d) normal accruals,
reclassifications, and audit adjustments which would be reflected on an audited
financial statement and which would not be material in the
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aggregate, and (e) liabilities incurred in the ordinary course of business
prior to the date of each Current Balance Sheet which, in accordance with GAAP
consistently applied, were not recorded thereon. The aggregate amount of
indebtedness for borrowed money, including principal and accrued but unpaid
interest, and including the net present value of remaining payments on
capitalized equipment leases, of the Fennell Companies, will not exceed
$9,500,000, and their combined net worth will be no less than $6,900,000, as of
the Effective Time.
3.12 LITIGATION. Except as set forth on Schedule 3.12, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending, or to the knowledge of the Fennell Companies,
threatened, anticipated or contemplated against, by or affecting the Fennell
Companies, or any of their properties or assets, or the Shareholders, which
could have a Material Adverse Effect on any of the Fennell Companies, or which
question the validity or enforceability of this Agreement or the transactions
contemplated hereby, and, to the knowledge of the Fennell Companies, there is
no basis for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which
any of the Fennell Companies is or was a party which have not been complied
with in full or which continue to impose any material obligations on any of the
Fennell Companies.
3.13 ENVIRONMENTAL MATTERS. To the knowledge of the Fennell
Companies, and except as set forth on Schedule 3.13:
(a) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Fennell Companies (i) the Fennell Companies are and have
at all times been in substantial compliance with all material Environmental,
Health and Safety Laws (as defined herein) governing their businesses,
operations, properties and assets, including, without limitation,
Environmental, Health and Safety Laws with respect to discharges into the
ground water, surface water and soil, emissions into the ambient air, and
generation, accumulation, storage, treatment, transportation, transfer,
labeling, handling, manufacturing, use, spilling, leaking, dumping,
discharging, release or disposal of Hazardous Substances (as defined herein),
or other Waste (as
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described herein); and (ii) the Fennell Companies have not been notified in
writing by any Governmental Authority that it is or may be liable for any
penalties, fines or forfeitures for failure to comply with any Environmental,
Health and Safety Laws; and (iii) the Fennell Companies are in substantial
compliance with all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied substantially with all
informational requests or demands made of it in writing by any Governmental
Authority under the Environmental, Health and Safety Laws.
(b) The Fennell Companies have obtained, or caused to be
obtained, and are in substantial compliance with, all material licenses,
certificates, permits, approvals and registrations (collectively "Licenses")
required by the Environmental, Health and Safety Laws applicable to its
ownership of its properties and assets and the operation of its business as
presently conducted, including, without limitation, all air emission, water
discharge, water use and solid waste, Hazardous Substances and other Waste
generation, transportation, transfer, storage, treatment or disposal Licenses,
and the Fennell Companies are in substantial compliance with all the terms,
conditions and requirements of such Licenses, and copies of such Licenses have
been provided to Republic. There are no material administrative or judicial
investigations, notices, claims or other proceedings pending or threatened in
writing by any Governmental Authority or third parties against the Fennell
Companies, their businesses, operations, properties, or assets, which question
the validity or entitlement of the Fennell Companies to any License required by
the Environmental, Health and Safety Laws for the ownership of each of the
properties and assets of the Fennell Companies and the operation of its
business or wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect on the Fennell Companies.
(c) The Fennell Companies have not received any written
notice of any non-compliance order, Potentially Responsible Party letter,
notice of violation, claim, suit, action, judgment, or administrative or
judicial proceeding pending against or involving the Fennell Companies, their
business, operations, properties, or assets, issued by any Governmental
Authority or third party with respect to any Environmental, Health and Safety
Laws in connection
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with the ownership by the Fennell Companies of its properties or assets or the
operation of its business, which if has not been resolved to the satisfaction
of the issuing Governmental Authority or third party could reasonably be
expected to have a Material Adverse Effect on the Fennell Companies.
(d) The Fennell Companies are in substantial compliance
with, and are not in breach of or default under any applicable writ, order,
judgment, injunction, governmental decree issued to the Fennell Companies
pursuant to the Environmental, Health and Safety Laws and no event has occurred
or is continuing which, with the passage of time or the giving of notice or
both, would constitute such non-compliance, breach or default thereunder.
(e) Except for violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Fennell Companies:
(1) (i) the Fennell Companies have not generated,
manufactured, used, transported, transferred, stored, handled,
treated, spilled, leaked, dumped, discharged, released or disposed,
nor has it allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or
other waste to or at any location other than a site lawfully allowed
to receive such Hazardous Substances or other waste for such purposes;
and (ii) the Fennell Companies have not generated, manufactured, used,
stored, handled, treated, spilled, leaked, dumped, discharged,
released or disposed of, or allowed or arranged for any third parties
to generate, manufacture, use, store, handle, treat, spill, leak,
dump, discharge, release or dispose of, Hazardous Substances or other
waste upon property owned or leased by them, except as allowed by law.
For purposes of this Section 3.13, the term "Hazardous Substances"
shall be construed broadly to include any toxic or hazardous
substance, material, or waste, and any other contaminant, pollutant or
constituent thereof, whether liquid, solid, semi-solid, sludge and/or
gaseous, including without limitation, chemicals, compounds,
by-products, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of
which requires
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remediation under any Environmental, Health and Safety Laws or which
are regulated, listed or controlled by, under or pursuant to any
Environmental Health and Safety Laws, including, without limitation,
by the Environmental Protection Agency as hazardous substances (40 CFR
Part 302) and any amendments thereto; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq. (hereinafter collectively "CERCLA"); the Solid Waste
Disposal Act, as amended by the Resource Conversation and Recovery Act
of 1976 and subsequent Hazardous and Solid Waste Amendments of 1984,
42 U.S.C. Section 6901 et seq. (hereinafter, collectively "RCRA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section
1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section
1311, et seq.; the Clean Air Act, as amended (42 U.S.C. Section 7401-
7642); Toxic Substances Control Act, as amended, 15 U.S.C. Section
2601 et seq; the Federal Insecticide, Fungicide, and Rodenticide Act
as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the Emergency
Planning and Community Right-to-Know Act of 1986 as amended, 42 U.S.C.
Section 11001, et seq. (Title III of SARA) ("EPCRA"); the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et
seq. ("OSHA"); any similar state statute, including without
limitation, and by way of example, the South Carolina Solid Waste
Policy and Management Act of 1991 (Section 44-96-10 et. seq.) as
amended, the South Carolina Hazardous Waste Management Act (Section
44-56-10 et. seq.) as amended, and the Code of Laws of South Carolina,
Chapter 61, Department of Health and Environmental Control, or
regulations implementing such statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, or which has been
determined or interpreted by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree. For purposes of this
Section 3.13, the term "Waste" shall have the same meaning, and be
defined the same as, the term "Solid Waste" is defined in RCRA.
(2) The Fennell Companies have not caused, or
allowed to be caused a Release or Discharge, or threatened Release or
Discharge, of any Hazardous Substance on, into or beneath the surface
of any parcel of the Owned Properties or
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the Leased Premises that would reasonably be expected to have a
Material Adverse Effect on the Fennell Companies. There has not
occurred, nor is there presently occurring, a Release or Discharge, or
threatened Release or Discharge, of any Hazardous Substance on, into
or beneath the surface of any parcel of the Owned Properties or the
Leased Premises that would reasonably be expected to have a Material
Adverse Effect on the Fennell Companies. For purposes of this
Section, the terms "Release" and "Discharge" shall have the meanings
given them in the Environmental, Health and Safety Laws.
(3) Other than is stated in Schedule 3.13, the
Fennell Companies have not generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred, or disposed of, nor
has it allowed or arranged, by contract, agreement or otherwise, for
any third parties to generate, handle, manufacture, treat, store, use,
ship, transport, transfer or dispose of, any Hazardous Substance or
other Waste to or at a site which, pursuant to CERCLA or any similar
state law (i) has been placed on the National Priorities List or its
state equivalent; or (ii) the Environmental Protection Agency or the
relevant state agency has notified the Fennell Companies that they has
proposed or are proposing to place on the National Priorities List or
its state equivalent. The Fennell Companies have not received written
notice, and the Fennell Companies have no knowledge of any facts which
could give rise to any notice, that the Fennell Companies are a
potentially responsible party for a federal or state environmental
cleanup site or for corrective action under CERCLA, RCRA or any other
applicable Environmental Health and Safety Laws. The Fennell
Companies have not submitted nor were required to submit any notice
pursuant to Section 103(c) of CERCLA with respect to the Leased
Premises or the Owned Properties. Other than is stated in Schedule
3.13, the Fennell Companies have not received any written request for
information in connection with any federal or state environmental
cleanup site, or in connection with any of the real property or
premises where the Fennell Companies have transported, transferred or
disposed of other Wastes. The Fennell Companies have not been
required to and has not undertaken any response or remedial actions or
clean-up
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actions of any kind at the written request of any Governmental
Authorities or at the request of any other third party.
(f) Other than is stated in Schedule 3.13, the Fennell
Companies do not use, nor have they used, any Aboveground Storage Tanks or
Underground Storage Tanks, and there are not now nor have there ever been any
Underground Storage Tanks on the Leasehold Premises or the Owned Properties.
For purposes of this Section 3.13, the terms "Aboveground Storage Tanks" and
"Underground Storage Tanks" shall have the meanings given them in Section 6901
et seq., as amended, of RCRA, or any applicable state or local statute, law,
ordinance, code, rule, regulation, order ruling, or decree governing
Aboveground Storage Tanks or Underground Storage Tanks.
(g) Schedule 3.13 identifies (i) all environmental
audits, assessments or occupational health studies undertaken by the Fennell
Companies or their agents or, to the knowledge of the Fennell Companies,
undertaken by any Governmental Authority, or any third party, concerning the
Fennell Companies or any of the Leased Premises or the Owned Properties within
the last three years; (ii) the results of any ground, water, soil, air or
asbestos monitoring undertaken by the Fennell Companies or their agents or, to
the knowledge of the Fennell Companies, undertaken by any Governmental
Authority or any third party, concerning the Fennell Companies or any of the
Leased Premises or the Owned Properties within the last three (3) years; (iii)
all written communications between the Fennell Companies and any Governmental
Authority within the last three (3) years arising under or related to
Environmental, Health and Safety Laws; and (iv) all citations issued under
OSHA, or similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, concerning either of the Fennell
Companies or any of the Leased Premises or the Owned Properties.
(h) Schedule 3.13 contains a list of the assets of the
Fennell Companies which contain "asbestos" or "asbestos-containing material"
(as such terms are identified under the Environmental, Health and Safety Laws).
Schedule 3.13 also identifies all documents or actions taken by the Fennell
Companies, directly or indirectly, or by any of their agents, employees,
representatives or contractors with respect to asbestos or asbestos-containing
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materials, including but not limited to all methods and manner of abatement,
removal, containment, encapsulation, repair, maintenance, renovation,
demolition, salvage, installation, storage, transportation, disposal,
monitoring, spill/emergency clean-up, protective health and safety measures and
training of personnel (whether employees or independent contractors or
otherwise). Except as set forth in Schedule 3.13, the Fennell Companies have
operated and continues to operate in substantial compliance with all
Environmental, Health & Safety Laws governing the handling, use and exposure to
and disposal of asbestos or asbestos-containing materials. Except as set forth
in Schedule 3.13, there are no claims, actions, suits, governmental
investigations or proceedings before any Governmental Authority or third party
pending, or threatened against or directly affecting the Fennell Companies, or
any of their assets or operations relating to the use, handling or exposure to
and disposal of asbestos or asbestos-containing materials in connection with
their assets and operations.
(i) As used in this Agreement, "Environmental, Health
and Safety Laws" means all federal, state, regional or local statutes, laws,
rules, regulations, codes, orders, injunctions, decrees, rulings, and
ordinances or judicial or administrative interpretations thereof, and that
govern (or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the
Clean Water Act, FIFRA, EPCRA, OSHA and including without limitation, and by
way of example, the South Carolina Solid Waste Policy and Management Act of
1991 (Section 44-96-10 et. seq.) as amended, the South Carolina Hazardous Waste
Management Act (Section 44-56-10 et. seq.) as amended, and the Code of Laws of
South Carolina, Chapter 61, Department of Health and Environmental Control.
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(j) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted and are being
conducted by the Fennell Companies on any of the Owned Properties or the Leased
Premises which have materially involved the generation, accumulation, storage,
treatment, transportation, labelling, handling, manufacturing, use, spilling,
leaking, dumping, discharging, release or disposal of Hazardous Substances.
(k) Schedule 3.13 identifies the respective locations to
which the Fennell Companies have transferred, transported, hauled, moved, or
disposed of Hazardous Substances and Waste over the past five (5) years and the
respective types and volumes of Hazardous Substances and Waste transferred,
transported, hauled, moved, or disposed of to each such location.
(l) As used in this Section 3.13, the term "the Fennell
Companies" is deemed to refer to the Fennell Companies or any of their
Affiliates.
3.14 REAL ESTATE
(a) The Fennell Companies do not own any real property
or any interest therein except as set forth on Schedule 3.14(a) (the "Owned
Properties"), which Schedule sets forth the location and size of, and principal
improvements and buildings on, the Owned Properties. Except as set forth on
Schedule 3.14(a), with respect to each such parcel of Owned Property:
(i) The Fennell Companies have good and marketable
title to the parcel of Owned Property, free and clear of any Lien
other than (x) liens for real estate taxes currently due and payable
but not yet delinquent; (y) recorded easements, covenants, and other
restrictions which do not materially impair the current use of the
property subject thereto, and (z) encumbrances and restrictions
described in the title insurance policies listed on Schedule 3.14(a),
all of which policies have been previously delivered or made available
to Republic by the Fennell Companies;
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(ii) there are no pending or, to the knowledge of the
Fennell Companies, threatened condemnation proceedings, suits or
administrative actions relating to the Owned Properties affecting
adversely and materially the current use thereof;
(iii) the legal descriptions for the parcels of Owned
Property contained in the deeds thereof describe such parcels fully
and adequately; the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation
of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances and do not encroach on any
easement which may burden the land; the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land; and the Owned Properties are not located within any flood plain
(such that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been
obtained;
(iv) to the knowledge of the Fennell Companies, all
facilities have received all approvals of Governmental Authorities
(including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained
substantially in accordance with applicable laws, ordinances, rules
and regulations in all material respects;
(v) there are no Contracts granting to any party or
parties the right of use or occupancy of any portion of the parcels of
Owned Property, except as set forth on Schedule 3.14(a);
(vi) there are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
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(vii) there are no parties (other than the Fennell
Companies) in possession of the parcels of Owned Property, other than
tenants under any leases disclosed in Schedule 3.14(a) who are in
possession of space to which they are entitled;
(viii) to the knowledge of the Fennell Companies, all
facilities located on the parcels of Owned Property are supplied with
utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate in
accordance with all applicable laws, ordinances, rules and
regulations, and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcels of Owned
Property;
(ix) each parcel of Owned Property abuts on and has
direct vehicular access to a public road, or has access to a public
road via a permanent, irrevocable, appurtenant easement benefitting
the parcel of Owned Property; access to the property is provided by
paved public right-of-way with adequate curb cuts available; and
there is no pending or threatened termination of the foregoing access
rights;
(x) except for matters or conditions which would not
reasonably, individually or in the aggregate, have a Material Adverse
Effect on the Fennell Companies, all improvements and buildings on the
Owned Property are in good repair (reasonable wear and tear excepted)
and are safe for occupancy and use, free from termites or other
wood-destroying organisms; the roofs thereof are watertight; and the
structural components and systems (including plumbing, electrical, air
conditioning/heating, and sprinklers) are in good working order and
adequate for the use of such Owned Property in the manner in which
presently used; and
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(xi) there are no service contracts, management
agreements or similar agreements which affect the parcels of Owned
Property, except as set forth on Schedule 3.14(a).
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements ("Leases") to which any of the Fennell Companies
is a party (copies of which have previously been furnished to Republic), in
each case, setting forth (A) the lessor and lessee thereof and the date and
term of each of the Leases, (B) the legal description, including street
address, of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), to the knowledge of the Fennell Companies, all
of which are within the property set-back and building lines of the respective
property. The Leases are in full force and effect and have not been amended
except as set forth on Schedule 3.14(b), and to the knowledge of the Fennell
Companies, no party thereto is in default or breach under any such Lease. To
the knowledge of the Fennell Companies, no event has occurred which, with the
passage of time or the giving of notice or both, would cause a material breach
of or default under any of such Leases. To the knowledge of the Fennell
Companies, there is no breach or anticipated breach by any other party to such
Leases. Except as set forth on Schedule 3.14(b), with respect to each such
Leased Premises:
(i) The Fennell Companies have valid leasehold
interests in the Leased Premises, free and clear of any Liens,
covenants and easements or title defects of any nature whatsoever;
(ii) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Fennell Companies, the portions of the
buildings located on the Leased Premises that are used in each of the
Fennell Companies' businesses are each in good repair and condition,
normal wear and tear excepted, and are in the aggregate sufficient to
satisfy each of the Fennell Companies' current and reasonably
anticipated normal business activities as conducted thereat;
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(iii) Each of the Leased Premises (a) has direct
access to public roads or access to public roads by means of a
perpetual access easement; and (b) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal
business activities as conducted at such parcel; and
(iv) None of the Fennell Companies has received notice of
(a) any condemnation proceeding with respect to any portion of the
Leased Premises or any access thereto; or (b) any special assessment
which may affect any of the Leased Premises.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except as set forth in Schedule 3.15, the Fennell
Companies have good and marketable title to all of their Assets (as hereinafter
defined), free and clear of any Liens or restrictions on use. For purposes of
this Agreement, the term "Assets" means all of the properties and assets of the
Fennell Companies, other than the Owned Properties and the Leased Premises,
whether personal or mixed, tangible or intangible, wherever located.
(b) Except for matters or conditions which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Fennell Companies, the Fixed Assets (as hereinafter
defined) currently in use or necessary for the business and operations of the
Fennell Companies are in good operating condition, normal wear and tear
excepted. For purposes of this Agreement, the term "Fixed Assets" means all
vehicles, machinery, equipment, tools, supplies, leasehold improvements,
furniture and fixtures used by or located on the premises of the Fennell
Companies or set forth on the Current Balance Sheet or acquired by the Fennell
Companies since the date of each Current Balance Sheet. Schedule 3.15 lists
the vehicles owned, leased or used by the Fennell Companies, setting forth the
make, model, description of body and chassis, vehicle identification number,
and year of manufacture, and for each vehicle, whether it is owned or leased,
and if owned, the name of any lienholder and the amount of
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the lien, and if leased, the name of the lessor and the general terms of the
lease.
3.16 COMPLIANCE WITH LAWS.
(a) The Fennell Companies are and have been in material
compliance with all laws, regulations and orders applicable to them, their
businesses and operations (as conducted by them now and in the past), the
Assets, the Owned Properties and the Leased Premises and any other properties
and assets (in each case owned or used by it now or in the past) the
noncompliance of with which could have a Material Adverse Effect on the Fennell
Companies. Except as set forth on Schedule 3.16 or other Schedules to this
Agreement, none of the Fennell Companies has been cited, fined or otherwise
notified of any asserted past or present failure to comply with any laws,
regulations or orders and no proceeding with respect to any such violation is
pending or, to the knowledge of the Fennell Companies, threatened.
(b) None of the Fennell Companies nor any of the Control
Shareholders, has made any payment of funds in connection with the business of
the Fennell Companies which is prohibited by law, and no funds have been set
aside to be used in connection with the business of the Fennell Companies for
any payment prohibited by law.
(c) The Fennell Companies are and at all times have been
in substantial compliance with the terms and provisions of the Immigration
Reform and Control Act of 1986, as amended (the "Immigration Act"). With
respect to each Employee (as defined in 8 C.F.R. 274a.1(f)) of the Fennell
Companies for whom compliance with the Immigration Act by each of the Fennell
Companies as employer is required, the Fennell Companies have made available to
Republic a true, accurate and complete copy of (i) each Employee's Form I-9
(Employment Eligibility Verification Form) and (ii) all other records,
documents or other papers prepared, procured and/or retained by the Fennell
Companies pursuant to the Immigration Act. None of the Fennell Companies has
been cited, fined, served with a Notice of Intent to Fine or with a Cease and
Desist Order, nor has any action or administrative proceeding been initiated
or, to any of the Fennell Companies' knowledge, threatened against the Fennell
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Companies by reason of any actual or alleged failure to comply with the
Immigration Act.
(d) Except as set forth in Schedule 3.16, none of the
Fennell Companies is subject to any Contract, decree or injunction in which any
of the Fennell Companies is a party which restricts the continued operation of
any business or the expansion thereof to other geographical areas, customers
and suppliers or lines of business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of each
of the employees of each of the Fennell Companies. To protect the privacy of
the Fennell Companies' employees, this information shall be provided to only
those with a legitimate business need to know the information. None of the
Fennell Companies is a party to or bound by any collective bargaining agreement
or any other agreement with a labor union, and there has been no effort by any
labor union during the 24 months prior to the date hereof to organize any
employees of any of the Fennell Companies into one or more collective
bargaining units. There is no pending or, to the knowledge of the Fennell
Companies, threatened labor dispute, strike or work stoppage which affects or
which may affect the businesses of the Fennell Companies or which may interfere
with their continued operation. None of the Fennell Companies nor any agent,
representative or employee of the Fennell Companies have within the last 24
months committed any unfair labor practice as defined in the National Labor
Relations Act, as amended, and there is no pending or, to the knowledge of the
Fennell Companies, threatened charge or complaint against any of the Fennell
Companies by or with the National Labor Relations Board or any representative
thereof. There has been no strike, walkout or work stoppage involving any of
the employees of the Fennell Companies during the 24 months prior to the date
hereof. None of the Fennell Companies has received notice that any executive
or key employee or group of employees has any plans to terminate his, her or
their employment with any of the Fennell Companies as a result of the Mergers
or otherwise. Schedule 3.17 contains detailed information about each contract,
agreement or plan of the following nature, whether formal or informal, and
whether or not in writing, to which any of the Fennell Companies is a party or
under which any of the Fennell Companies has an obligation: (i) employment
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agreements, (ii) employee handbooks, policy statements and similar plans, (iii)
noncompetition agreements and (iv) consulting agreements. Except as provided
in Schedule 3.17, the Fennell Companies have complied in all material respects
with applicable laws, rules and regulations relating to employment, civil
rights and equal employment opportunities, including but not limited to, the
Civil Rights Act of 1964, the Fair Labor Standards Act, and the Americans with
Disabilities Act, as amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a
list setting forth each employee benefit plan or arrangement of each of the
Fennell Companies, including but not limited to employee profit sharing plans,
as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of
ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock purchase
plans, hospitalization, disability and other insurance plans, severance or
termination pay plans and policies, whether or not described in Section 3(3) of
ERISA, in which employees, their spouses or dependents, of the Fennell
Companies participate ("Employee Benefit Plans") (true and accurate copies of
which, together with the most recent annual reports on Form 5500 and summary
plan descriptions with respect thereto, were furnished to Republic).
(b) Compliance with Law. Except as set forth in
Schedule 3.18, with respect to each Employee Benefit Plan (i) each has been
administered in all material respects in compliance with its terms and with all
applicable laws, including, but not limited to, ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"); (ii) no actions, suits, claims or
disputes are pending, or threatened; (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any governmental or regulatory
agency; (iv) to the knowledge of the Fennell Companies, there are no facts
which could give rise to any material liability in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding; (v) all
material reports, returns, and similar documents required to be filed with any
governmental agency or distributed to any plan participant have been duly or
timely
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filed or distributed; and (vi) no "prohibited transaction" has occurred within
the meaning of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a) (i) the
Internal Revenue Service has issued a favorable determination letter, true and
correct copies of which have been furnished to Republic, that such plans are
qualified and exempt from federal income taxes; (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs; (iii) no such plan has been amended in a manner that would
require security to be provided in accordance with Section 401(a)(29) of the
Code; (v) no reportable event (within the meaning of Section 4043 of ERISA) has
occurred, other than one for which the 30-day notice requirement has been
waived; and (v) as of the Effective Date, the present value of all liabilities
that would be "benefit liabilities" under Section 4001(a)(16) of ERISA if
benefits described in Code Section 411(d)(6)(B) were included will not exceed
the then current fair market value of the assets of such plan (determined using
the actuarial assumptions used for the most recent actuarial valuation for such
plan); (vi) except as disclosed on Schedule 3.18, all contributions to, and
payments from and with respect to such plans, which may have been required to
be made in accordance with such plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code, have been timely made; (vii) all such
contributions to the plans, and all payments under the plans (except those to
be made from a trust qualified under Section 401(a) of the Code) and all
payments with respect to the plans (including, without limitation, PBGC and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
Current Balance Sheet or are disclosed on Schedule 3.18.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of each of
the Fennell Companies have been
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timely paid; (ii) the Fennell Companies have not incurred and are not expected
to incur, directly or indirectly, any withdrawal liability under ERISA with
respect to any such plan (whether by reason of the transactions contemplated by
the Agreement or otherwise); (iii) Schedule 3.18 sets forth (A) the withdrawal
liability under ERISA to each MPPA Plan, (B) the date as of which such amount
was calculated, and (C) the method for determining the withdrawal liability;
and (iv) no such plan is (or is expected to be) insolvent or in reorganization
and no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists or is expected to exist
with respect to any such plan.
(e) Welfare Plans. Other than as disclosed in Schedule
3.18, (i) the Fennell Companies are not obligated under any employee welfare
benefit plan as described in Section 3(1) of ERISA ("Welfare Plan"), whether or
not disclosed in Schedule 3.18, to provide medical or death benefits with
respect to any employee or former employee of any of the Fennell Companies or
their predecessors after termination of employment; (ii) the Fennell Companies
have complied in all material respects with the notice and continuation
coverage requirements of Section 4980B of the Code and the regulations
thereunder with respect to each Welfare Plan that is, or was during any taxable
year of any of the Fennell Companies for which the statute of limitations on
the assessment of federal income taxes remains, open, by consent or otherwise,
a group health plan within the meaning of Section 5000(b)(1) of the Code, and
(iii) there are no reserves, assets, surplus or prepaid premiums under any
Welfare Plan which is an Employee Benefit Plan. The consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay, and, will not accelerate the time of payment or vesting, or
increase the amount of compensation, due to any individual.
(f) Controlled Group Liability. The Fennell Companies,
or any entity that would be aggregated with the Fennell Companies under Code
Section 414(b), (c), (m) or (o): (i) have never terminated or withdrawn from
an employee benefit plan under circumstances resulting (or expected to result)
in liability to the Pension Benefit Guaranty Corporation ("PBGC"), the fund by
which the employee benefit plan is funded, or any employee or beneficiary for
whose benefit the plan is or was maintained (other than routine
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claims for benefits); (ii) have no assets subject to (or expected to be subject
to) a lien for unpaid contributions to any employee benefit plan; (iii) have
not failed to pay premiums to the PBGC when due; (iv) are not subject to (or
expected to be subject to) an excise tax under Code Section 4971; (v) have not
engaged in any transaction which would give rise to liability under Section
4069 or Section 4212(c) of ERISA; or (vi) have not violated Code Section 4980B
or Section 601 through 608 of ERISA.
(g) Other Liabilities. Except as set forth on Schedule
3.18, (i) none of the Employee Benefit Plans obligates any of the Fennell
Companies to pay separation, severance, termination or similar benefits solely
as a result of any transaction contemplated by this Agreement or solely as a
result of a "change of control" (as such term is defined in Section 280G of the
Code), (ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals for
all periods ending prior to or as of the Effective Date shall have been made or
properly accrued on each Current Balance Sheet or will be properly accrued on
the books and records of each of the Fennell Companies as of the Effective
Date, and (iii) none of the Employee Benefit Plans has any unfunded liabilities
which are not reflected on each Current Balance Sheet or the books and records
of each of the Fennell Companies.
3.19 TAX MATTERS. Except as set forth in Schedule 3.19 hereto,
all Tax Returns required to be filed prior to the date hereof with respect to
the Fennell Companies or any of their income, properties, franchises or
operations have been filed, each such Tax Return has been prepared in
substantial compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all material respects. All Taxes due and
payable by or with respect to each of the Fennell Companies shown on the Tax
Returns have been paid or are accrued on each Current Balance Sheet or will be
accrued on the books and records of each of the Fennell Companies as of the
Closing. Each of the Fennell Companies has duly and validly filed elections
for "S" corporation status under the Code, and none of such "S" elections have
been revoked or terminated and none of the Fennell Companies or the
Shareholders have taken any action which would cause a termination of such "S"
elections. Except as set forth in Schedule 3.19 hereto: (i) no deficiency or
proposed adjustment which has not been
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settled or otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority against the Fennell Companies; (ii) the
Fennell Companies have not consented to extend the time in which any Taxes may
be assessed or collected by any taxing authority; (iii) none of the Fennell
Companies has requested or been granted an extension of the time for filing any
Tax Return to a date later than the Effective Time; (iv) there is no action,
suit, taxing authority proceeding, or audit or claim for refund now in
progress, pending or, to the knowledge of the Fennell Companies and the Control
Shareholders, threatened against or with respect to the Fennell Companies
regarding Taxes; (v) none of the Fennell Companies has made an election or
filed a consent under Section 341(f) of the Code (or any corresponding
provision of state, local or foreign law) on or prior to the Effective Time;
(vi) there are no Liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of any of the Fennell Companies; (vii) the Fennell
Companies will not be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Effective Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Effective Time or (B) as a
result of any "closing agreement," as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from any taxable period (or
portion thereof) beginning after the Effective Time; (viii) none of the Fennell
Companies has been a member of an affiliated group (as defined in Section 1504
of the Code) or filed or been included in a combined, consolidated or unitary
income Tax Return; (ix) none of the Fennell Companies is a party to or bound by
any tax allocation or tax sharing agreement or has any current or potential
contractual obligation to indemnify any other Person with respect to Taxes; (x)
none of the Fennell Companies has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provision of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xi) no claim has ever been asserted
against any of the Fennell Companies in writing by a taxing authority in a
jurisdiction where the Fennell Companies do not file Tax Returns that any of
the Fennell Companies are or may be subject to Taxes
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assessed by such jurisdiction; (xii) none of the Fennell Companies has a
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xiii)
true, correct and complete copies of all income and sales Tax Returns filed by
or with respect to the Fennell Companies for the past three years have been
furnished or made available to Republic; and (xiv) none of the Fennell
Companies will be subject to any Taxes for the period ending at the Effective
Time for any period for which a Tax Return has not been filed imposed pursuant
to Section 1374 or Section 1375 of the Code (or any corresponding provision of
state, local or foreign law).
3.20 INSURANCE. Except as set forth in Schedule 3.20, the
Fennell Companies are covered by valid, outstanding and enforceable policies of
insurance issued to it or them by reputable insurers covering their properties,
assets and businesses against risks of the nature normally insured against by
corporations in the same or similar lines of business and in coverage amounts
typically and reasonably carried by such corporations (the "Insurance
Policies"). Such Insurance Policies are in full force and effect, and all
premiums due thereon have been paid. As of the Effective Time, each of the
Insurance Policies will be in full force and effect. None of the Insurance
Policies will lapse or terminate as a result of the transactions contemplated
by this Agreement. The Fennell Companies have complied with the provisions of
such Insurance Policies in all material respects. Schedule 3.20 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Republic) and (ii) a
detailed description of each pending claim under any of the Insurance Policies
for an amount in excess of $10,000 that relates to loss or damage to the
properties, assets or businesses of the Fennell Companies. To the knowledge of
the Fennell Companies, the Fennell Companies have not failed to give, in a
timely manner, any notice required under any of the Insurance Policies to
preserve their rights thereunder.
3.21 RECEIVABLES. Except as set forth in Schedule 3.21:(i) all
of the Receivables (as hereinafter defined) are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business
of the Fennell Companies; and (ii) all of the Receivables are good and
collectible receivables, without setoff or counterclaims, subject to the
allowance for doubtful
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accounts, if any, set forth on each Current Balance Sheet as reasonably
adjusted since the date of each Current Balance Sheet in the ordinary course of
business consistent with past practice. For purposes of this Agreement, the
term "Receivables" means all receivables of the Fennell Companies, including
all trade account receivables arising from the provision of services, sale of
inventory, notes receivable, and insurance proceeds receivable.
3.22 LICENSES AND PERMITS. The Fennell Companies possess all
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for their businesses and
operations, including with respect to the operation of each of the Owned
Properties and Leased Premises except where the failure to obtain any such
Permits would not have a Material Adverse Effect on any of the Fennell
Companies. To the knowledge of the Fennell Companies, all such Permits are
valid and in full force and effect, the Fennell Companies are in compliance
with their requirements in all material respects, and no proceeding is pending
or, to the knowledge of the Fennell Companies, threatened to revoke or amend
any of them. None of such Permits is or will be materially impaired or
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
3.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the businesses of the Fennell Companies in the
manner in which and to the extent to which such business is currently being
conducted. No current supplier to the Fennell Companies of items essential to
the conduct of their businesses has, to the knowledge of the Fennell Companies,
threatened to terminate its business relationship with any of the Fennell
Companies for any reason. Except as set forth on Schedule 3.23, to the
knowledge of the Fennell Companies, the Fennell Companies have no direct or
indirect interest in any customer, supplier or competitor of the Fennell
Companies, nor in any person from whom or to whom the Fennell Companies leases
real or personal property. Except as set forth on Schedule 3.23, to the
knowledge of the Fennell Companies, no officer, director or shareholder of the
Fennell Companies, nor any person related by blood or marriage to any such
person, nor any entity in which any such person owns
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any beneficial interest, is a party to any Contract or transaction with any of
the Fennell Companies or has any interest in any property used by the Fennell
Companies.
3.24 INTELLECTUAL PROPERTY. To the knowledge of the Fennell
Companies, the Fennell Companies have full legal right, title and interest in
and to all trademarks, servicemarks, tradenames, copyrights, know-how, patents,
trade secrets, licenses (including licenses for the use of computer software
programs), and other intellectual property used in the conduct of their
businesses (the "Intellectual Property"). To the knowledge of the Fennell
Companies, the conduct of the Fennell Companies' businesses as presently
conducted and the unrestricted conduct and the unrestricted use and
exploitation of the Intellectual Property do not infringe or misappropriate any
rights held or asserted by any Person, and no Person is infringing on the
Intellectual Property. No payments are required for the continued use of the
Intellectual Property. None of the Intellectual Property has ever been
declared invalid or unenforceable, or is the subject of any pending or, to the
knowledge of the Fennell Companies, threatened action for opposition,
cancellation, declaration, infringement, or invalidity, unenforceability or
misappropriation or like claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Contract
to which the Fennell Companies are parties or by which the Fennell Companies or
their properties and assets are bound and which are material to the business,
assets or properties of the Fennell Companies (the "Designated Contracts"),
true and correct copies of which have been made available to Republic. The
copy of each Designated Contract supplied by the Fennell Companies to Republic
is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement.
Except as set forth on Schedule 3.25, none of the Fennell Companies has
violated any of the material terms or conditions of any Designated Contract or
any term or condition which would permit termination or material modification
of any Designated Contract, and all of the covenants to be performed by any
other party thereto have been fully performed and there are no claims for
breach or indemnification or notice of default or termination under any
Designated Contract. Except as set forth on Schedule 3.25, no event has
occurred which constitutes, or after
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notice or the passage of time, or both, would constitute, a material default by
any of the Fennell Companies under any Designated Contract, and no such event
has occurred which constitutes or would, to the knowledge of the Fennell
Companies, constitute a material default by any other party. None of the
Fennell Companies is subject to any liability or payment resulting from
renegotiation of amounts paid to them under any Designated Contract. As used
in this Section, Designated Contracts, subject to the materiality standard set
forth in the first sentence of this Section 3.25, shall include, without
limitation, (a) loan agreements, indentures, mortgages, pledges,
hypothecations, deeds of trust, conditional sale or title retention agreements,
security agreements, equipment financing obligations or guaranties, or other
sources of contingent liability in respect of any indebtedness or obligations
to any other Person, or letters of intent or commitment letters with respect to
same; (b) contracts obligating the Fennell Companies to provide products or
services for a period of one year or more, excluding standard waste collection
and disposal contracts entered into in the ordinary course of business without
material modification from the preprinted forms used by the Fennell Companies
in the ordinary course of their business; (c) leases of real property, and
leases of personal property not cancelable without penalty on notice of sixty
(60) days or less or calling for payment of an annual gross rental exceeding
Twenty- Five Thousand Dollars ($25,000.00); (d) distribution, sales agency or
franchise or similar agreements, or agreements providing for an independent
contractor's services, or letters of intent with respect to same; (e)
employment agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements and any other agreements
between the Fennell Companies and any employee, officer or director of the
Fennell Companies; (f) licenses, assignments or transfers of trademarks, trade
names, service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (g) any
Contract relating to pending capital expenditures by the Fennell Companies; and
(h) other material Contracts or understandings, irrespective of subject matter
and whether or not in writing, not entered into in the ordinary course of
business by the Fennell Companies and not otherwise disclosed on the Schedules.
3.26 CUSTOMER LISTS AND RECURRING REVENUE. Schedule 3.26 is a
true, correct and complete list of all material existing
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municipal, county or city or other large customers (collectively, the "Material
Customers") of the Fennell Companies who have entered into valid and
enforceable long-term (i.e., more than one year) waste collection and disposal,
recycling or other franchises or agreements with the Fennell Companies. True,
correct and complete copies of such franchises and agreements and any
ordinances relating thereto have been furnished by the Fennell Companies to
Republic. Other than the Material Customers listed on Schedule 3.26, no
customer of the Fennell Companies as of the date of this Agreement accounts for
more than 1% of the Fennell Companies' consolidated annual revenue. Schedule
3.26 sets forth each Material Customer's name, address, account number, term of
franchise or agreement, billing cycle, type of service and rates charged.
3.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring the Republic Shares hereunder
for his own account for investment and not with a view to, or for the sale in
connection with, any distribution of any of the Republic Shares, except in
compliance with applicable state and federal securities laws. Each of the
Shareholders has had the opportunity to discuss the transactions contemplated
hereby with Republic and has had the opportunity to obtain such information
pertaining to the Republic Companies as has been requested, including but not
limited to filings made by Republic with the SEC under the Exchange Act.
Fennellis an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act, and each of the Shareholders has such
knowledge and experience in business or financial matters that he is capable of
evaluating the merits and risks of an investment in the Republic Shares.
3.28 BUSINESS LOCATIONS. As of the date hereof, the Fennell
Companies have no office or place of business other than as identified on
Schedules 3.14(a) and 3.14(b) and each of the Fennell Companies' principal
place of business and chief executive office (as such terms are used in
subsection 9-401 of the Uniform Commercial Code as enacted in the State of
South Carolina as of the date hereof) are indicated on Schedule 3.14(a) or
3.14(b), and, except for equipment leased to customers in the ordinary course
of business, all locations where the equipment, inventory, chattel paper and
books and records of the Fennell Companies are located as
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of the date hereof are fully identified on Schedules 3.14(a) and 3.14(b).
3.29 NAMES; PRIOR ACQUISITIONS. All names under which each of
the Fennell Companies do business as of the date hereof are specified on
Schedule 3.29. Except as set forth on Schedule 3.30, none of the Fennell
Companies has changed its name or used any assumed or fictitious name, or been
the surviving entity in a merger, acquired any business or changed its
principal place of business or chief executive office, within the past three
years.
3.30 NO COMMISSIONS. None of the Fennell Companies nor any
Shareholder has incurred any obligation for any finder's or broker's or agent's
fees or commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGERS
4.1 CONDUCT OF BUSINESS BY THE FENNELL COMPANIES PENDING THE
MERGERS. Except as set forth on Schedule 4.1, the Fennell Companies covenant
and agree that, between the date of this Agreement and the Effective Time, the
businesses of the Fennell Companies shall be conducted only in, and the Fennell
Companies shall not take any action except in, the ordinary course of business,
consistent with past practice. The Fennell Companies shall use their
reasonable best efforts, subject to the covenants of this Article IV, to
preserve intact their business organizations, to keep available the services of
their current officers, employees and consultants and to preserve their present
relationships with customers, suppliers and other persons with which they have
significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, each of the Fennell Companies shall
not, between the date of this Agreement and the Effective Time, directly or
indirectly, do or propose or agree to do any of the following without the prior
written consent of Republic:
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(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with
past practice;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that dividends may be
paid equal to the estimated tax that the Shareholders will have to pay
on the taxable income of the Fennell Companies for the current year;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, for cash
or shares of stock), by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions of
capital or property transfer, or, except in the ordinary course of
business, consistent with past practice, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any
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loans or advances other than in the ordinary course of business, or
(iii) enter into any Contract other than in the ordinary course of
business, consistent with past practice;
(f) increase the compensation payable or to become
payable to its officers or employees other than in the ordinary course
of business consistent with past practice, or, except as presently
bound to do, grant any severance or termination pay to, or enter into
any employment or severance agreement with, any of its directors,
officers or other employees, or establish, adopt, enter into or amend
or take any action to accelerate any rights or benefits under any
collective bargaining, bonus, profit sharing, trust, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date hereof in the ordinary course of business and
consistent with past practice;
(i) materially increase or decrease prices charged to
its customers, except for previously announced price changes, or take
any other action
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which might reasonably result in any material increase in the loss of
customers through non-renewal or termination of service contracts or
other causes; or
(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III materially untrue or
incorrect except in the ordinary course of business.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby.
5.2 COVENANTS OF THE FENNELL COMPANIES. The Shareholders shall
cause the Fennell Companies to comply with all of the covenants of the Fennell
Companies under this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with
the other in the preparation and filing of all forms, notifications, reports
and information, if any, required or reasonably deemed advisable pursuant to
any law, rule or regulation or the rules of any exchange on which the Republic
Common Stock is listed or the NASDAQ Stock Market in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly its respective filings, if any, and thereafter make any other
required submissions, under the HSR Act, with respect to the transactions
contemplated hereby, and (ii) use
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its reasonable best efforts to take, or cause to be taken, all appropriate
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated herein, including, without limitation,
using its best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Authority and
parties to Contracts with the Fennell Companies as are necessary for the
consummation of the transactions contemplated hereby. Each of parties shall
make on a prompt and timely basis all governmental or regulatory notifications
and filings required to be made by it for the consummation of the transactions
contemplated hereby. The Republic Companies and the Fennell Companies also
agree to use all reasonable best efforts to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby. The fees and expenses incurred in responding
to any injunction brought by a governmental authority under the HSR Act shall
be paid by Republic.
5.5 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, each of the Fennell Companies shall (and shall cause its and
their directors, officers, employees, auditors, counsel and agents) to afford
Republic and Republic's officers, employees, auditors, counsel and agents
reasonable access at all reasonable times to its and their properties, offices,
and other facilities, to its and their officers and employees and to all books
and records, and shall furnish such persons with all financial, operating and
other data and information as may be requested. Republic agrees to keep all
such information disclosed pursuant to this Section 5.5 confidential.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Fennell Companies
shall give prompt notice to Republic of the occurrence or non-occurrence of any
event of which any of the Fennell Companies becomes aware or has knowledge
which would likely cause any representation or warranty contained herein to be
materially untrue or inaccurate, or any covenant, condition, or agreement
contained herein not to be complied with or satisfied in all material respects.
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5.7 TAX TREATMENT. Republic, the Fennell Companies and the
Shareholders will use their respective best efforts to cause the Mergers to
qualify as a reorganization under the provisions of Section 368(a) of the Code
and will not take any action after the Mergers are effected to cause the
Mergers to lose their tax-free status. All parties hereto agree to file the
Plans of Merger with their respective federal income tax returns for the year
in which the Mergers are effective, and to comply with the reporting
requirements of Treasury Regulation 1.368-3.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by
law or as otherwise permitted or expressly contemplated herein, no party hereto
or their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that Republic may make such public
disclosure which it believes in good faith to be required by law or by the
terms of any listing agreement with a securities exchange (in which case
Republic will consult with the other parties prior to making such disclosure).
5.9 NO OTHER DISCUSSIONS. From the date hereof until the
Effective Time or the earlier termination of this Agreement, the Fennell
Companies, the Shareholders, and their respective Affiliates, employees, agents
and representatives will not (i) initiate, encourage the initiation by others
of discussions or negotiations with third parties or respond to solicitations
by third persons relating to any merger, sale or other disposition of any
substantial part of the assets, business or properties of the Fennell Companies
(whether by merger, consolidation, sale of stock or otherwise) or (ii) enter
into any agreement or commitment (whether or not binding) with respect to any
of the foregoing transactions. The Fennell Companies will immediately notify
Republic if any third party attempts to initiate any solicitation, discussion
or negotiation with respect to any of the foregoing transactions.
5.10 ENVIRONMENTAL ASSESSMENT. Republic, at its sole expense,
shall be entitled to have conducted prior to Closing an
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environmental assessment of the Owned Properties and Leased Premises
(hereinafter referred to as "Environmental Assessment"). The Environmental
Assessment may include, but not be limited to, a physical examination of the
Owned Property or Leased Premises, and any structures, facilities, or equipment
located thereon, soil samples, ground and surface water samples, storage tank
testing, review of pertinent records, documents, and Licenses of each of the
Fennell Companies. The Fennell Companies shall provide Republic or its
designated agents or consultants with the access to such property which
Republic, its agents or consultants require to conduct the Environmental
Assessment. If the results of the Environmental Assessment are not
satisfactory to Republic in its sole discretion, then Republic may elect not to
close. Republic shall provide promptly the Fennell Companies and the
Shareholders with copies of the Environmental Assessment. The contents of the
Environmental Assessment and all related documents or findings shall
automatically become part of the Fennell Companies' and the Control
Shareholders' exception list to Section 3.13. If the Environmental Assessment
identifies environmental contamination which requires remediation or further
evaluation under the Environmental, Health, and Safety Laws, then Republic may
elect to not close the transactions contemplated by this Agreement. Republic's
failure or decision not to conduct any such Environmental Assessment shall not
affect any representation or warranty of the Fennell Companiesunder this
Agreement.
5.11 TRADING IN REPUBLIC COMMON STOCK. Except as otherwise
expressly consented to by Republic, from the date of this Agreement until the
Effective Time or the earlier termination of this Agreement, neither the
Fennell Companies nor the Shareholders (nor any Affiliates thereof) will
directly or indirectly purchase or sell (including short sales) any shares of
Republic Common Stock in any transactions effected on the Nasdaq Stock Market,
the Toronto Stock Exchange or otherwise.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE REPUBLIC COMPANIES
The obligations of the Republic Companies to effect the Mergers shall
be subject to the fulfillment at or prior to the
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Effective Time of the following conditions, any or all of which may be waived
in whole or in part by the Republic Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the Fennell Companies
contained in this Agreement shall be true and correct in all material respects
at and as of the Effective Time with the same force and effect as though made
at and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Each of the Fennell Companies and the
Shareholders shall have performed and complied in all material respects with
all of its obligations required by this Agreement to be performed or complied
with at or prior to the Effective Time. Each of the Fennell Companies shall
have delivered to the Republic Companies a certificate, dated as of the
Effective Time, duly signed (in the case of each of the Fennell Companies, by
its Chief Executive Officer and Chief Financial Officer), certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with in all material respects.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change of the Fennell Companies, (ii) there shall have been no
adverse federal, state or local legislative or regulatory change affecting in
any material respect the services, products or business of the Fennell
Companies, and (iii) none of the properties and assets of the Fennell Companies
shall have been damaged by fire, flood, casualty, act of God or the public
enemy or other cause (regardless of insurance coverage for such damage) which
damages may have a Material Adverse Change on the Fennell Companies, and there
shall have been delivered to the Republic Companies a certificate to that
effect, dated the Effective Time and signed by or on behalf of the Fennell
Companies.
6.3 CORPORATE CERTIFICATE. The Fennell Companies and the
Control Shareholders shall have delivered to the Republic Companies (i) copies
of the articles of incorporation and bylaws of the Fennell Companies as in
effect immediately prior to the Effective Time, (ii) copies of resolutions
adopted by the Board of Directors
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and shareholders of each of the Fennell Companies authorizing the transactions
contemplated by this Agreement, and (iii) a certificate of existenceof each of
the Fennell Companies issued by the Secretary of State of the State of South
Carolina and each other state in which each of the Fennell Companies is
qualified to do business as of a date not more than ten days prior to the
Effective Time, certified in each case as of the Effective Time by the
Secretary of each of the Fennell Companies as being true, correct and complete.
6.4 OPINION OF COUNSEL. The Republic Companies shall have
received an opinion dated as of the Effective Time from counsel for each of the
Fennell Companies, in form and substance acceptable to the Republic Companies,
to the effect that:
(i) Each of the Fennell Companies is a
corporation duly organized and existing and in good standing under the
laws of the State of South Carolina and has the corporate power and
authority to carry on the business now conducted by it and to own or
lease the properties now owned or leased by it;
(ii) Each of the Fennell Companies has obtained
all necessary authorizations and consents of its Board of Directors
and the Shareholders to effect the Mergers;
(iii) All issued and outstanding shares of capital
stock of each of the Fennell Companies is owned of record as set forth
on Schedule 3.5 hereto;
(iv) Except as set forth in Schedule 3.12, insofar
as is known to such counsel, there is no litigation, proceeding or
investigation pending or threatened which would result in any Material
Adverse Change in the properties, businesses or prospects or in the
condition of the Fennell Companies, or which questions the validity of
this Agreement;
(v) This Agreement is a valid and binding
obligation of each of the Fennell Companies, and enforceable against
each of the Fennell Companies in
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accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and general
principles of equity.
6.5 CONSENTS. Each of the Fennell Companies shall have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any material rights or obligations of each of the Fennell
Companies from any person from whom such consent or waiver is required under
any Designated Contract as of a date not more than ten days prior to the
Effective Time, or who, as a result of the transactions contemplated hereby,
would have such rights to terminate or modify such Designated Contracts, either
by the terms thereof or as a matter of law.
6.6 SECURITIES LAWS. Republic shall have received all necessary
consents and otherwise complied with any state Blue Sky or securities laws
applicable to the issuance of the Republic Shares, in connection with the
transactions contemplated hereby.
6.7 POOLING LETTERS. Republic shall have received from Gamble,
Givens & Moody, P.A., independent certified public accountants for the Fennell
Companies, a letter dated the Effective Time, in form and substance acceptable
to Republic, confirming that, to their knowledge after due and diligent inquiry
of management, there have been no transactions or events with respect to the
Fennell Companies which would, and the structure of each of the Fennell
Companies and the Shareholders, would not, proscribe the transactions
contemplated hereby, if consummated, from being considered as a pooling of
interests combination. Republic shall have received from Arthur Andersen LLP,
a letter dated the Effective Time, confirming that the transactions
contemplated hereby, if consummated, can properly be accounted for as a pooling
of interests combination in accordance with GAAP and the criteria of Accounting
Principles Board Opinion No. 16 and the regulations of the SEC.
6.8 UNDERTAKINGS. At or prior to the Closing, the Shareholders
shall have delivered to Republic a letter agreement relating to Rule 145 under
the Securities Act and "pooling of
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interests" criteria, in form and substance satisfactory to the Republic
Companies.
6.9 COMPANY STOCK. At the Closing, each of the Shareholders
shall have delivered to the Republic Companies all certificates evidencing the
Fennell Common Stock held by him or her or duly executed stock powers with
indemnity for lost certificates.
6.10 STOCK POWERS. At the Closing, the Control Shareholders
shall have each delivered to Republic, for use in connection with the Pledged
Shares, as hereinafter defined, ten stock powers executed in blank.
6.11 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Mergers or any other transaction contemplated
hereby, and which, in the reasonable judgment of Republic, makes it inadvisable
to proceed with the Mergers and other transactions contemplated hereby.
6.12 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting
period shall have expired or been terminated.
6.13 EMPLOYMENT. Fennell and Shepard shall have agreed to become
employees of Republic, or remain employees of the Fennell Companies, on terms
and conditions acceptable to Republic.
6.14 REAL ESTATE PURCHASE AND SALE AGREEMENT BETWEEN REPUBLIC AND
FENNELL. At or prior to the Closing, Republic shall close the purchase of a
certain parcel of real property located in Dorchester County, South Carolina,
comprising approximately 10 acres, from Fennel for an aggregate consideration
of 5,867 shares of Republic Common Stock, pursuant to the terms of a real
estate purchase contract to be entered into among Republic and Fennel which
shall include customary terms and conditions for commercial real estate
contracts in Charleston, South Carolina, including that Fennell will convey
good and insurable title to such property and Republic shall pay all closing
costs in connection therewith.
6.15 REAL ESTATE TRANSFER BY FENNELL TO GF/WWF. Prior to the
Closing, Fennell shall transfer a certain parcel of real property
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primarily located in Dorchester County, South Carolina, comprising
approximately 27 acres, to GF/WWF pursuant to which Republic shall pay all
transfer costs associated with such transfer and provided that after such
transfer the representations and warranties contained in Section 3.14 hereof
will be true and correct with respect to such parcel when held by GF/WWF,
except that the representations and warranties contained in Section 3.14 shall
not apply to a certain subparcel (the "Subparcel") located within the 27 acre
parcel. With respect to the Subparcel, Fennel represents and warrants the
following:
(a) The Subparcel is unimproved and has an area of
approximately 2 acres more or less;
(b) The Subparcel is not adjacent to any public or private
road and is located within the interior of the 27 acre parcel;
(c) No roads, driveways, walkways or alleys of any kind,
nature or description cross the Subparcel, and access to and from any
improvements located within the 27 acre parcel is not obtained by means of
crossing the Subparcel;
(d) No utilities necessary to service any part of the
improvements located within the 27 acre parcel are located within or cross
over, under or through the Subparcel;
(e) The Subparcel is not necessary for the utilization of
any of the improvements located within the 27 acre parcel and the ownership or
use of the Subparcel is not necessary for the validity or the continued
validity or the ability to obtain in the future any certificate of use and
occupancy (or its equivalent), license, permit or approval issued or to be
issued by any applicable governmental authority or agency having jurisdiction
over the 27 acres which is needed or to be needed with respect to the
improvements or the use of the 27 acre parcel;
(f) Fennel has not received any notice of any claim to the
Subparcel by any other party;
(g) Fennel has not received any notice or demand to cease
using the Subparcel or that its use is unlawful; and
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(h) The location and legal description of the Subparcel
shall be supplied to Republic before closing by means of a survey and shall be
transferred to GF/WWF by means of a quitclaim deed.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE FENNELL COMPANIES AND THE SHAREHOLDERS
The obligations of the Fennell Companies and the Shareholders to
effect the Mergers shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions, any or all of which may be waived
in whole or in part by the Fennell Companies and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of each of the Republic
Companies contained in this Agreement shall be true and correct at and as of
the Effective Time with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct as of such date. Each of the Republic Companies shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Effective Time. Each of the
Republic Companies shall have delivered to the Fennell Companies a certificate,
dated as of the Effective Time, and signed by an executive officer, certifying
that such representations and warranties are true and correct and that all such
obligations have been performed and complied with.
7.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change of the Republic Companies, (ii) there shall have been
no adverse federal, state or local legislative or regulatory change affecting
in any material respect the services, products or business of the Republic
Companies, and (iii) none of the properties and assets of the Republic
Companies shall have been damaged by fire, flood, casualty, act of God or the
public enemy or other cause (regardless of insurance coverage for
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such damage) which damages may have a Material Adverse Change on the Republic
Companies, and there shall have been delivered to the Shareholders a
certificate to that effect, dated the Effective Time and signed by or on behalf
of the Republic Companies.
7.3 REPUBLIC SHARES. At the Closing, Republic shall have issued
all of the Republic Shares and shall have delivered to the Shareholders
certificates representing the Republic Shares required to be issued to them
hereunder.
7.4 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Mergers or any other transaction contemplated
hereby, and which in the judgment of the Fennell Companies makes it inadvisable
to proceed with the Mergers and other transactions.
7.5 HSR ACT WAITING PERIOD. Any applicable HSR Act Waiting
Period shall have expired or been terminated.
7.6 REAL ESTATE PURCHASE AND SALE AGREEMENT BETWEEN REPUBLIC AND
FENNELL. At or prior to the Closing, Republic shall close the purchase of a
certain parcel of real property located in Dorchester County, South Carolina
from Fennell, pursuant to the terms of a real estate purchase contract to be
entered into among Republic and Fennell.
7.7 KEY PERSONNEL. H. Wayne Huizenga shall be a member of
Republic's Board of Directors as of the Effective Time.
7.8 NO CASH DIVIDENDS. Republic shall not have declared or paid
any cash dividends with respect to its Common Stock between the date hereof and
the Effective Time.
7.9 NO STOCK ADJUSTMENTS. Republic shall not have declared or
caused to occur a stock split or stock dividend with respect to the Common
Stock of Republic without proportionately adjusting the number of Republic
shares to be issued pursuant to the Mergers.
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7.10 CAPITALIZATION. Republic shall not have amended its First
Amended and Restated Certificate of Incorporation to change its capitalization
from that described in Section 2.6 herein.
7.11 OPINION OF COUNSEL. The Fennell Companies and the
Shareholders shall have received an opinion dated as of the Effective Time from
counsel for Republic, in the form and substance acceptable to the Fennell
Companies and the Shareholders to the effect that:
(i) Republic is a corporation duly organized and
existing and in good standing under the laws of the State of Delaware
and has the necessary corporate power and authority to carry on the
business now conducted by it and to own or lease the properties now
owned by it;
(ii) Republic has obtained all necessary
authorizations and consents of its Board of Directors to effect the
Mergers and no consent of its shareholders is required;
(iii) Insofar as is known to such counsel, there is no
litigation, proceeding or investigation pending or threatened which
would result in any Material Adverse Change in the properties,
business or condition of Republic or which questions the validity of
this Agreement; and
(iv) This Agreement is a valid and binding obligation
of the Republic Companies in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors'
rights generally and general principles of equity.
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ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Republic Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR REPUBLIC SHARES; FILING OF
REGISTRATION STATEMENT. Republic will utilize its reasonable best efforts to
cause, as soon as practicable following the Effective Time, a registration
statement to be filed under the Securities Act or an existing registration
statement to be amended for the purpose of registering the Republic Shares for
resale by a Holder thereof (the "Registration Statement"). For purposes of
this Article, a person is deemed to be a "Holder" of Republic Shares whenever
such person is the record owner of Republic Shares. Republic will use its
reasonable best efforts to have the Registration Statement become effective and
cause the Republic Shares to be registered under the Securities Act, and
registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable.
8.2 EXPENSES OF REGISTRATION. Republic shall pay all expenses
incurred by Republic in connection with the registration, qualification and/or
exemption of the Republic Shares, including any SEC, NASD and state securities
law registration and filing fees, printing expenses, fees and disbursements of
Republic's counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Republic in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration Statement or prospectuses contained
therein. Republic shall not, however, be liable for any sales, broker's or
underwriting commissions upon sale by any Holder of any of the Republic Shares.
8.3 FURNISHING OF DOCUMENTS. Republic shall furnish to the
Holders such reasonable number of copies of the Registration Statement and any
amendments thereto, such prospectuses as are contained in the Registration
Statement and such other documents as the Holders may reasonably request in
order to facilitate the offering of the Republic Shares.
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8.4 AMENDMENTS AND SUPPLEMENTS. Republic shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of
such amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Republic Shares is required
to be delivered under the Securities Act, any event shall have occurred as a
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Republic shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
8.5 DURATION. Republic shall maintain the continual
effectiveness of the Registration Statement for a period of three (3) years
following the Effective Date or until such earlier time as Republic reasonably
determines, based on an opinion of counsel, (a copy of which shall be provided
to the Holders), that the Holders will be eligible to sell all of the Shares
then owned by the Holders without the need for continued registration of the
shares, in the three month period immediately following the termination of the
effectiveness of the Registration Statement.
8.6 FURTHER INFORMATION. If Republic Shares owned by a Holder
are included in any registration, such Holder shall furnish Republic such
information regarding itself as Republic may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.7 INDEMNIFICATION.
(a) Republic will indemnify and hold harmless the
Holders and each person, if any, who controls a Holder within the meaning of
the Securities Act, from and against any and all losses, damages, liabilities,
costs and expenses to which the Holders or
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any such controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that, Republic will not be liable in any such case to the extent that any such
loss, claim, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by or on behalf of any Holder
or such controlling person in writing specifically for use in the preparation
thereof.
(b) Each of the Holders, individually and not jointly,
will indemnify and hold harmless Republic and each person, if any, who controls
Republic within the meaning of the Securities Act, from and against any and all
losses, damages, liabilities, costs and expenses to which Republic or any such
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by or on behalf of any Holder specifically for use in the
preparation thereof; provided, however, that the indemnification obligations of
each Holder hereunder shall be limited to the amount of gross proceeds received
by such Holder from the sale of Republic Shares pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section
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8.7 notice of the commencement of any action involving the subject matter of
the foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the provisions
of said paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have hereunder unless the
indemnifying party has been materially prejudiced thereby nor will such failure
to so notify the indemnifying party relieve it from any liability which it may
have to any indemnified party otherwise than hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
(d) In the event any of the Republic Shares are sold by
any Holder or Holders in an underwritten public offering consented to by
Republic, Republic shall provide indemnification to the underwriters of such
offering and any person controlling any such
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underwriter on behalf of the Holder or Holders making the offering; provided,
however, that Republic shall not be required to consent to any such
underwriting or to provide such indemnification in respect of the matters
described in the proviso to the first sentence of Section 8.7(a).
8.8 ADDITIONAL UNDERTAKINGS.
(a) In order to facilitate the resale by Holders of Republic
Shares during any period in which the Registration Statement shall not be
effective, Republic shall use its best efforts to take all action and file with
the SEC such information as the SEC may require as a condition to the
availability of Rule 144 or Rule 145 under the Securities Act (or any successor
exemptive rule hereafter in effect).
(b) During the three (3) years following the Effective Date,
Republic shall use its best efforts to maintain its listing on The Nasdaq Stock
Market or other nationally recognized securities exchange.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE CONTROL SHAREHOLDERS TO INDEMNIFY. The
Control Shareholders agree to indemnify and hold Republic harmless from and
against the aggregate of all Indemnifiable Damages (as defined below).
(a) For purposes of this Agreement, "Indemnifiable
Damages" means, without duplication, the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Republic in excess of $500,000.00, to the
extent (i) resulting from any breach of a representation or warranty
made by the Fennell Companies in or pursuant to this Agreement, except
for matters disclosed to Republic prior to Closing pursuant to Section
5.6 herein, (ii) resulting from any breach of the covenants or
agreements made by
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the Fennell Companies or the Control Shareholders in this Agreement,
or (iii) resulting from any inaccuracy in any certificate delivered by
the Fennell Companies or any Control Shareholder pursuant to this
Agreement. The total Indemnifiable Damages shall not exceed Seven
Million Five Hundred Thousand and No/100 Dollars ($7,500,000.00) in
the aggregate.
(b) Without limiting the generality of the foregoing,
with respect to the measurement of Indemnifiable Damages, Republic
shall have the right to be put in the same financial position as it
would have been in at the Effective Date had each of the
representations and warranties of the Fennell Companies been true and
correct.
(c) Each of the representations and warranties made by
the Fennell Companies in this Agreement or pursuant hereto shall
survive for a period of one year after the Effective Time,
notwithstanding any investigation at any time made by or on behalf of
Republic and upon expiration of such one year period, such
representations and warranties shall expire except (i) with respect to
claims resulting from a breach of any representation, warranty or
covenant relating to Republic incurring any Taxes because of the
disqualification of any of the Fennell Companies' "S" corporation
elections prior to the date preceding the Effective Time (a "Tax
Claim"); written notice of any such Tax Claim must be received prior
to the expiration of the statutory period during which any taxing
authority may bring a claim against the Fennell Companies, the Control
Shareholders or Republic for Taxes which are the subject of any such
Tax Claim, and (ii) the representations and warranties of the Fennell
Companies contained in Sections 3.1, 3.2, 3.3, 3.4, and 3.5 shall not
expire but shall continue indefinitely. No claim for the recovery of
Indemnifiable Damages may be asserted by Republic against the Control
Shareholders after such representations and warranties shall thus
expire, provided, however, that claims for Indemnifiable Damages first
asserted within the applicable period shall not thereafter be barred.
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9.2 SECURITY FOR THE CONTROL SHAREHOLDERS' INDEMNIFICATION
OBLIGATION. As security for the agreement by the Control Shareholders to
indemnify and hold Republic harmless as described in Section 9.1, at the
Closing, the Control Shareholders shall deliver to and Republic shall set aside
and hold certificates representing 154,252 shares of Republic Common Stock to
be issued pursuant to Section 1.4 hereunder (the "Pledged Shares") for a period
not to exceed one year from the Effective Date. There shall also be deposited
with Republic, subject to the terms of this Section 9.2, all shares of Republic
Common Stock issued to the Control Shareholders with respect to the Pledged
Shares as a result of any stock dividend or stock split. The Pledged Shares
and all stock issued or paid upon the Pledged Shares and proceeds thereof are
hereinafter referred to as the "Collateral." Except with respect to shares
transferred pursuant to the right of setoff referred to below (and in the case
of such shares, until the same are transferred), all Pledged Shares shall be
deemed to be owned by the Control Shareholders and the Control Shareholders
shall be entitled to vote the same and to receive all cash dividends paid upon
same.
(a) Republic may make a claim for payment of
Indemnifiable Damages and may set off against the Pledged Shares any
Indemnifiable Damages for which the Control Shareholders may be
responsible pursuant to this Agreement, subject, however, to the
following terms and conditions:
(1) Republic shall give written notice to the
Control Shareholders of any claim for Indemnifiable Damages,
which notice shall set forth (i) the amount of Indemnifiable
Damages which Republic claims to have sustained, and (ii)
the basis of the claim therefore, and (iii) copies of all
documentation and other evidence in support of such claim;
(2) Unless the Indemnifiable Damages arise from
a claim of a third party, with respect to which the Control
Shareholders have elected to assume the defense of and pay
any resulting
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liability, judgment or settlement thereunder, such set off
shall be effected on the later to occur of the expiration of
thirty (30) days from the delivery of such notice (the
"Notice of Contest Period") or, if such claim is contested,
the date the dispute is resolved, in accordance with
paragraph (3) below;
(3) If, prior to the expiration of the Notice
of Contest Period, the Control Shareholders shall notify
Republic in writing of an intention to dispute the claim and
if such dispute is not resolved within 30 days after
expiration of such period (the "Resolution Period"), then
Republic shall submit such dispute to arbitration. The
arbitration shall be conducted in Charleston, South Carolina
by a committee of three arbitrators (one appointed by the
Control Shareholders, one appointed by Republic and one
appointed by the two arbitrators so appointed), which shall
be appointed within 60 days after the expiration of the
Resolution Period. The arbitrators shall permit discovery
in accordance with the Federal Rules of Civil Procedure and
shall abide by the rules of the American Arbitration
Association. Their decision shall be made within 45 days of
being appointed and shall be final and binding on all
parties;
(4) If the judgment of the arbitrators is
adverse to the Control Shareholders, the amount thereof
shall be paid by the Control Shareholders within ten (10)
days of the written decision of the arbitrators, which when
aggregated with all Indemnifiable Damages shall not exceed
$7,500,000. In the event the Control Shareholders do not
pay within such ten day period, then Republic shall within
five (5) days thereafter, set off against such portion of
the Collateral as shall have an aggregate value equal to the
amount of the final judgment of the arbitrators.
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(b) Subject to applicable accounting, securities, tax
and other legal requirements, the Control Shareholders may at any time
instruct Republic to sell some or all of the Pledged Shares and the
proceeds thereof shall be held as substitute collateral for the
Pledged Shares. The Control Shareholders may direct that such
proceeds be reinvested in investment grade securities in their names
subject to the security interest contemplated hereby. If the Pledged
Shares have not otherwise been released within four (4) years from the
Effective Date, the Control Shareholders will substitute other
collateral in place of the Pledged Shares equal to the value of such
Pledged Shares on the Effective Date and the Pledged Shares shall be
released.
(c) The Republic Companies agree to release the
Collateral from the security interest created in this Section 9.2 no
later than the first anniversary of the Effective Time and the
Republic Companies agree to promptly deliver to the Control
Shareholders all certificates evidencing any Pledged Shares then held
by them unless there then remains unresolved any claim for
Indemnifiable Damages or other damages hereunder as to which notice
has been given, in which event any Collateral remaining on deposit
after such claim shall not be returned to the Control Shareholders
until after the time of satisfaction.
(d) The remedies provided for in this Section 9.2 shall
be in addition to and not in lieu of any other remedies available to
the Republic Companies under this Agreement; provided however,
following consummation of the Mergers, a claim for Indemnifiable
Damages pursuant to this Article IX shall be Republic's sole and
exclusive remedy for any breach of the representations, warranties,
covenants and agreements contained herein or in any other documents
delivered in connection with the Closing, and in consideration of such
limitation, the Control Shareholders agree to waive any and all rights
of contribution or other claims he or she may have against the Fennell
Companies with respect to the breach of any of the Fennell Companies'
representations and warranties.
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9.3 ADJUSTMENT TO MERGER CONSIDERATION. All setoffs of Pledged
Shares for Indemnifiable Damages made pursuant to this Article IX shall be
treated as adjustments to the consideration set forth in Section 1.4.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Effective Time of the Republic Shares:
10.1 DISPOSITION OF SHARES. The Control Shareholders represent
and warrant on behalf of themselves and the Shareholders that the shares of
Republic Common Stock being acquired by them hereunder are being acquired and
will be acquired for their own respective accounts and will not be sold or
otherwise disposed of, except pursuant to (a) an exemption from the
registration requirements under the Securities Act, which does not require the
filing by Republic with the SEC of any registration statement, offering
circular or other document, in which case, the Shareholders shall first supply
to Republic an opinion of counsel (which counsel and opinions shall be
satisfactory to Republic) that such exception is available, or (b) an effective
registration statement filed by Republic with the SEC under the Securities Act.
10.2 LEGEND. The certificate representing the Republic Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF RULE 145 (D) PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE
HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, AND ALSO MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER
WITHOUT COMPLIANCE WITH
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THE SECURITIES AND EXCHANGE COMMISSION'S ACCOUNTING SERIES
RELEASES 130 AND 135.
Republic may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to
such certificates in accordance with federal securities laws.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind
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(including, but not limited to, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or
charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business which
change (or effect) individually or in the aggregate, is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, business.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"Republic Shares" means the shares of Republic Common Stock
which the Shareholders receive in connection with the Mergers.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
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"Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
11.3 KNOWLEDGE. Whenever any representation or warranty of an
individual is expressly qualified by reference to knowledge, the "knowledge" so
referred to shall be deemed to be such individual's actual knowledge after
reasonable inquiry under the circumstances. Whenever any representation and
warranty of a corporation is expressly qualified by reference to knowledge, the
"knowledge" so referred to shall be deemed to be the actual knowledge, after
reasonable inquiry under the circumstances, of its officers, directors and
managers, including those officers, directors and managers having authority
over or responsibility for the subject matter of such representation or
warranty, at the time such representation or warranty is made.
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ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by any party at any time prior to the Closing Date
if there shall be a pending or threatened action or proceeding before
any court or other governmental body which shall seek to restrain,
prohibit or invalidate the transactions contemplated hereby, and
which, in the reasonable judgment of such party, makes it inadvisable
to proceed with the transactions contemplated by this Agreement.
(c) by Republic in the event of a material breach by any
of the Fennell Companies or the Control Shareholders of any provision
of this Agreement, or by the Control Shareholders in the event of a
material breach by the Republic Companies of any provision of this
Agreement; or
(d) by the Fennell Companies or the Republic Companies
by notice to the other consistent with the notice provisions contained
herein, if the Closing shall not have occurred by December 31, 1995.
12.2 EFFECT OF TERMINATION. Except as provided in Article IX, in
the event of termination of this Agreement pursuant to Section 12.1, this
Agreement and the Plans of Merger shall forthwith become void, there shall be
no liability on the part of the parties hereto or thereto to each other and all
rights and obligations of the parties hereto or thereto shall cease; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
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ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO ANY OF THE REPUBLIC COMPANIES TO:
Republic Waste Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Ft. Lauderdale, FL 33301
Attn: Harris W. Hudson, President
Telecopy: (305) 779-3884
WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
801 Brickell Avenue, 24th Floor
Miami, Florida 33131
Attention: Jonathan L. Awner, Esq.
Telecopy: (305) 374-5095
(b) IF TO THE FENNELL COMPANIES OR THE SHAREHOLDERS TO:
Fennell Container Company, Inc.
P.O. Box 62679
N. Charleston, South Carolina 29419
Attn: George W. Fennell
Telecopy: (803) 760-5216
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WITH A COPY TO:
Nicholas C. Sottile, Esq.
Sottile & Hopkins, L.L.P.
753 Coleman Blvd.
Mt. Pleasant, South Carolina 29464
Telecopy: (803) 884-5868
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire understanding of the parties in respect of
its subject matter and supersedes all prior agreements and understandings (oral
or written) between or among the parties with respect to such subject matter.
The Exhibits and Schedules constitute a part hereof as though set forth in full
above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the
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parties and their respective successors and assigns. Nothing expressed or
implied herein shall be construed to give any other person any legal or
equitable rights hereunder. Except as expressly provided herein, the rights
and obligations of this Agreement may not be assigned by any party without the
prior written consent of the other parties.
13.6 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and obtain the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
REPUBLIC WASTE INDUSTRIES, INC.
By:/s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
RI/FCC MERGERSUB, INC.
By:/s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
RI/PD MERGERSUB, INC.
By: Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
RI/FV MERGERSUB, INC.
By:/s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
RI/FWS MERGERSUB, INC.
By:/s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
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RI/INVESTMENT CO., INC.
By:/s/ Gregory K. Fairbanks
-----------------------------------------
Gregory K. Fairbanks, Executive
Vice President
FENNELL WASTE SYSTEMS, INC.
By:/s/ George W. Fennell
-----------------------------------------
George W. Fennell, President
FENNELL CONTAINER CO., INC.
By:/s/ George W. Fennell
-----------------------------------------
George W. Fennell, President
FENN-VAC, INC.
By:/s/ George W. Fennell
-----------------------------------------
George W. Fennell, President
PEPPERHILL DEVELOPMENT CO., INC.
By:/s/ George W. Fennell
-----------------------------------------
George W. Fennell, President
GF/WWF, INC.
By:/s/ George W. Fennell
-----------------------------------------
George W. Fennell, President
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/s/ George W. Fennell
-----------------------------------------
George W. Fennell, individually
/s/ Robert N. Shepard
-----------------------------------------
Robert N. Shepard, individually
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The undersigned hereby join in this Agreement for the limited purpose
of agreeing that they will comply with those sections of this Agreement which
are applicable to such parties.
/s/ G. Scott Fennell
-----------------------------------------
G. Scott Fennell, individually
/s/ S. Allison Fennell
-----------------------------------------
S. Allison Fennell, individually
/s/ Debra A. Haschker
-----------------------------------------
Debra A. Haschker, individually
/s/ James R. Bland
-----------------------------------------
James R. Bland, individually
/s/ John H. Chapman
-----------------------------------------
John H. Chapman, individually
/s/ Leo J. Zolnierowicz
-----------------------------------------
Leo J. Zolnierowicz, individually
/s/ Jeffrey A. Forslund
-----------------------------------------
Jeffrey A. Forslund, individually
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