SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1997
MID-AMERICAN WASTE SYSTEMS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10727 31-1161917
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1006 Walnut Street, Canal Winchester, Ohio 43110
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614) 833-9155
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 3. Bankruptcy or Receivership.
On January 21, 1997, the Registrant and each of its
directly and indirectly wholly-owned subsidiaries (collectively, the
"Debtors") filed voluntary petitions for relief commencing cases (the
"Chapter 11 Cases") under Chapter 11 of title 11 of the United States
Code, 11 U.S.C. sections 101 et seq. (the "Bankruptcy Code") in the
United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"). On January 22, 1997, the Registrant issued a press
release announcing the filing of the petitions for relief under Chapter
11 of the Bankruptcy Code and the transaction discussed in Item 5 below.
The press release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
The Chapter 11 Cases were assigned to the Honorable Peter
J. Walsh and designated as case numbers 97-104 through 97-135. The
Chapter 11 Cases are jointly administered and consolidated for procedural
purposes only pursuant to an order entered on January 21, 1997. Each of
the Debtors continues to operate its business and manage its property as
a debtor-in-possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code.
Item 5. Other Events.
On January 21, 1997, the Registrant and certain of its
subsidiaries filed a motion (the "Motion") with the Bankruptcy Court
seeking approval to sell substantially all of their assets free and clean
of all liens, claims, encumbrances, rights of first refusal, and other
interests (except those expressly assumed) pursuant to the Asset Purchase
Agreement, dated as of January 21, 1997 (the "Asset Purchase Agreement"),
by and among certain of the Debtors, USA Waste Services, Inc. ("USA
Waste"), and certain wholly-owned acquisition subsidiaries of USA Waste.
The Bankruptcy Court has scheduled a hearing on the Motion for March 7,
1997. The Asset Purchase Agreement is annexed hereto as Exhibit 99.2 and
is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits
99.1 Press release dated January 22,
1997, announcing the filing of the
petitions for relief under Chapter
11 of the Bankruptcy Code and the
execution of a definitive agreement
to sell substantially all the
assets of certain of the Debtors.
99.2 Asset Purchase Agreement, dated as of January
21, 1997, by and among USA Waste Services,
Inc. ("USA Waste"), certain wholly-owned
acquisition subsidiaries of USA Waste,
Mid-American Waste Systems, Inc.
("Mid-American"), and certain of
Mid-American's directly and indirectly
wholly-owned subsidiaries.
Signatures
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.
Dated: January 28, 1997
MID-AMERICAN WASTE SYSTEMS, INC.
By:/s/ Gene A. Meredith
Gene A. Meredith
Chairman of the Board,
President, Secretary, and
Chief Executive Officer
EXHIBIT INDEX
Exhibits
99.1 Press release dated January 22, 1997, announcing the
filing of the petitions for relief under Chapter 11
of the Bankruptcy Code and the execution of a
definitive agreement to sell substantially all the
assets of certain of the Debtors.
99.2 Asset Purchase Agreement, dated as of
January 21, 1997, by and among USA Waste
Services, Inc. ("USA Waste"), certain
wholly-owned acquisition subsidiaries of
USA Waste, Mid-American Waste Systems,
Inc. ("Mid-American"), and certain of Mid-
American's directly and indirectly
wholly-owned subsidiaries.
Exhibit 99.1
Release: January 22, 1992
Contact: Gene A. Meredith
Mid-American Waste Systems, Inc. Agrees To
Sell Substantially All Of Its Assets To
USA Waste Services, Inc. And Files
Chapter 11 Petitions
CANAL WINCHESTER, OHIO, Wednesday, January 22, 1997:
Mid-American Waste Systems, Inc. (NYSE: "MAW") and its subsidiaries
announced today that they had executed a definitive agreement to sell
substantially all of their assets (excluding cash and net working
capital) to USA Waste Services, Inc. ("USA Waste") for consideration
consisting of $180 million in cash and USA Waste common stock (including
the assumption of approximately $49 million of outstanding senior
indebtedness) and the assumption by USA Waste of certain agreed
liabilities. Following execution of the agreement MAW and its
subsidiaries filed petitions for reorganization under Chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the District
of Delaware. The transaction, which has been approved by the Boards of
Directors of the companies, is subject to bankruptcy court approval, a
hearing for which has been scheduled for March 7, 1997. The sale is
subject to other customary conditions, including the receipt of required
regulatory approvals and the absence of a material adverse change in the
business of MAW.
MAW currently contemplates that the proceeds of the sale
together with retained assets at closing would in the aggregate
constitute approximately $227 million compared to approximately $323
million of outstanding long term indebtedness (including approximately
$175 million of subordinated indebtedness) as of December 31, 1996
together with an as yet undetermined amount of other liabilities. As
previously disclosed, the sale will likely result in minimal, if any,
value to the existing shareholders of the Company.
MAW emphasized that there will be no interruption of waste
collection and related services to its customers during its Chapter 11
case. Following consummation of the transaction, USA Waste will continue
to provide waste collection and related services to MAWS' customers
without interruption.
MAW operates an integrated solid waste management business
that provides non-hazardous solid waste collection, transfer, recycling
and disposal services to approximately 328,000 residential, commercial,
and industrial customers in selected metropolitan markets in eight
states.
Exhibit 99.2
ASSET PURCHASE AGREEMENT
BY AND AMONG
USA WASTE SERVICES, INC.
AS PURCHASER
AND
MID-AMERICAN WASTE SYSTEMS, INC.,
FAIRFIELD SANITARY LANDFILL, INC.,
JOHNSON DISPOSAL, INC.,
MID-AMERICAN WASTE SYSTEMS OF OHIO, INC.,
MID-AMERICAN WASTE SYSTEMS OF CUYAHOGA, INC.
MOUND LANDFILL, INC.,
TRIANGLE LANDFILL, INC.,
UNITED WASTE SYSTEMS, INC.,
B & L SANITATION, INC.,
H & D EXCAVATING, INC.,
MID-AMERICAN WASTE SYSTEMS OF INDIANA, INC.,
CENTERPOINT LANDFILL, INC.,
MID-AMERICAN WASTE SYSTEMS OF ILLINOIS, INC.,
DAUBS LAND FILL, INC.,
K/C RECLAMATION, INC.,
MID-AMERICAN WASTE SYSTEMS OF PENNSYLVANIA, INC.,
RESOURCE CONSERVATION CORP.,
LOCAL SANITATION SERVICE, INC.,
PLAINS MANAGEMENT, INC.,
NATIONAL WASTE AND ENERGY CORPORATION,
MID-AMERICAN WASTE SYSTEMS OF HARRISON, INC.,
MID-AMERICAN WASTE SYSTEMS OF WEST VIRGINIA, INC.,
BUTTON GWINNETT ACQUISITION CORP.,
SPEEDWAY GRADING CORP., INC.,
MID-AMERICAN WASTE SYSTEMS OF SOUTH CAROLINA, INC., AND
NORTHWESTERN DISPOSAL CO.
AS SELLERS
DATED AS OF JANUARY 21, 1997
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS......................... 1
Section 1.1. Purchase and Sale of Assets......................... 1
Section 1.2. Excluded Assets..................................... 3
Section 1.3. Assumed Liabilities................................. 4
Section 1.4. Excluded Liabilities................................ 5
Section 1.5. Purchase Price...................................... 6
Section 1.6. Purchase Price Adjustment........................... 6
ARTICLE II THE CLOSING......................................... 7
Section 2.1. Closing............................................. 7
Section 2.2. Deliveries at Closing............................... 7
Section 2.3. Acquisition Subsidiaries............................ 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS....... 8
Section 3.1. Organization........................................ 8
Section 3.2. Authority Relative to this Agreement................ 8
Section 3.3. Consents and Approvals.............................. 9
Section 3.4. No Violations....................................... 9
Section 3.5. Company Financial Statements........................ 9
Section 3.6. Absence of Certain Changes.......................... 10
Section 3.7. Litigation.......................................... 10
Section 3.8. Absence of Undisclosed Liabilities.................. 10
Section 3.9. No Default.......................................... 10
Section 3.10. No Violation of Law................................. 10
Section 3.11. Taxes............................................... 11
Section 3.12. Environmental Matters............................... 12
Section 3.13. Employee Benefit Plans; Labor Matters............... 12
Section 3.14. Title to Property................................... 13
Section 3.15. Non-Competition Agreements.......................... 14
Section 3.16. Brokers............................................. 14
Section 3.17. Contracts........................................... 14
Section 3.18. Disclosure.......................................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS.......................................... 15
Section 4.1. Organization........................................ 15
Section 4.2. Capitalization...................................... 15
Section 4.3. Authority Relative to this Agreement................ 15
Section 4.4. Consents and Approvals.............................. 15
Section 4.5. No Violations....................................... 16
Section 4.6. Purchaser SEC Reports............................... 16
Section 4.7. No Default.......................................... 17
Section 4.8. Brokers............................................. 17
Section 4.9. Disclosure.......................................... 17
Section 4.10. Financing........................................... 17
ARTICLE V COVENANTS........................................... 17
Section 5.1. Conduct of Business by the Sellers
Pending the Closing............................... 17
Section 5.2. Access and Information.............................. 18
Section 5.3. Acquisition Proposal Procedures..................... 19
Section 5.4. Filings; Other Action............................... 20
Section 5.5. Public Announcements................................ 21
Section 5.6. Bankruptcy Actions.................................. 21
Section 5.7. Tax Returns and Filings; Payment of Taxes........... 21
Section 5.8. Surety or Performance Bonds......................... 22
Section 5.9. Purchase Price Allocation........................... 22
Section 5.10. Securities Laws Compliance.......................... 22
Section 5.11. Additional Matters.................................. 22
ARTICLE VI ADDITIONAL POST-CLOSING COVENANTS................... 22
Section 6.1. Further Assurances.................................. 22
Section 6.2. Books and Records; Personnel........................ 23
Section 6.3. Third Party Rights.................................. 23
Section 6.4. Employee Withholding................................ 23
Section 6.5. Indemnification..................................... 24
Section 6.6. Use of Name......................................... 24
ARTICLE VII EMPLOYEES AND EMPLOYEE BENEFIT PLANS................ 24
Section 7.1. Employment of the Sellers' Employees................ 24
Section 7.2. Welfare and Fringe Benefit Plans.................... 25
Section 7.3. Workers' Compensation............................... 26
Section 7.4. Sellers' 401(k) Plan................................ 26
Section 7.5. Collective Bargaining Agreement..................... 26
Section 7.6. No Employee Rights.................................. 26
Section 7.7. Right to Terminate or Modify Plans.................. 26
ARTICLE VIII CONDITIONS PRECEDENT................................ 26
Section 8.1. Conditions Precedent to Obligation of the
Sellers and the Purchasers........................ 26
Section 8.2. Conditions Precedent to Obligation of the
Sellers........................................... 27
Section 8.3. Conditions Precedent to Obligation of
the Purchasers.................................... 28
ARTICLE IX TERMINATION, AMENDMENT, AND WAIVER.................. 29
Section 9.1. Termination by Mutual Consent....................... 29
Section 9.2. Termination by Either Purchaser or the Company...... 29
Section 9.3. Termination by the Company.......................... 29
Section 9.4. Termination by USA Waste............................ 29
Section 9.5. Effect of Termination and Abandonment............... 29
Section 9.6. Expense Reimbursement; Termination Fee.............. 30
ARTICLE X GENERAL PROVISIONS.................................. 31
Section 10.1. Survival of Representations, Warranties,
and Agreements.................................... 31
Section 10.2. Notices............................................. 31
Section 10.3. Descriptive Headings................................ 32
Section 10.4. Entire Agreement; Assignment........................ 32
Section 10.5. Governing Law....................................... 32
Section 10.6. Expenses............................................ 32
Section 10.7. Amendment........................................... 32
Section 10.8. Waiver.............................................. 32
Section 10.9. Counterparts; Effectiveness......................... 33
Section 10.10. Severability; Validity; Parties in Interest......... 33
Section 10.11. Enforcement of Agreement............................ 33
ARTICLE XI DEFINITIONS......................................... 33
Section 11.1. Defined Terms....................................... 33
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 21, 1997
(the "Agreement"), by and among USA WASTE SERVICES, INC., a Delaware
corporation ("USA Waste" which together with certain wholly-owned
acquisition subsidiaries of USA Waste ("Acquisition Subsidiaries") to be
designated by USA Waste pursuant to Section 2.3 are collectively referred
to herein as "Purchasers"), MID-AMERICAN WASTE SYSTEMS, INC., a Delaware
corporation (the "Company"), and each of the Company's wholly-owned
subsidiaries (each a "Seller Subsidiary" and collectively the "Seller
Subsidiaries") set forth on the signature pages hereof. The Company and
the Seller Subsidiaries are hereinafter referred to as the "Sellers."
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in Article XI.
WHEREAS, the Sellers are engaged in the business of
collecting, disposing, storing, transferring, recovering, processing and
recycling of rubbish, garbage, paper, textiles, chemicals and other
non-hazardous waste (the "Business");
WHEREAS, the Sellers intend to file voluntary petitions
(the "Petitions") for relief commencing cases (the "Chapter 11 Cases")
under Chapter 11 of title 11 of the United States Code, 11 U.S.C.
sections 101 et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court");
and
WHEREAS, the Purchasers desire to purchase and assume from
the Sellers, and the Sellers desire to sell, convey, assign, and transfer
to the Purchasers, substantially all the assets and properties of each
Seller Subsidiary relating to the Business, together with certain
obligations and liabilities relating thereto, all in the manner and
subject to the terms and conditions set forth herein and in accordance
with sections 105, 363, and 365 of the Bankruptcy Code;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. Purchase and Sale of Assets. On the terms and
subject to the conditions set forth in this Agreement, at the Closing the
Sellers shall sell, assign, transfer, convey, and deliver to the
Purchasers, and the Purchasers shall purchase and accept from the
Sellers, the Sellers' rights, title, and interests in and to the
Business, including, without limitation, in and to all the assets,
properties, rights, contractual rights of Sellers, and claims of Sellers
related to the Business (except as otherwise set forth in Section 1.2
hereof), wherever located, whether tangible or intangible, as the same
shall exist at the Closing (such rights, title, and interests in and to
all such assets, properties, rights, contracts, and claims being
collectively referred to herein as the "Assets"). The Assets shall
include, without limitation, all the Sellers' rights, title, and
interests in and to the assets, properties, rights, contracts, and claims
described in clauses (a) through (p) below:
(a) all furnishings, furniture, fixtures, office
supplies, vehicles (including all certificated motor vehicles
listed in Section 1.1(a) of the Company Disclosure Letter), spare
parts, tools, dies, machinery, equipment, computers, and other
tangible personal property;
(b) all accounts receivable and related deposits,
security, or collateral therefor, including recoverable customer
deposits (collectively, the "Trade Receivables");
(c) indefeasible fee simple title to, or leasehold
interest in, as applicable, the real property identified in
Section 1.1(c) of the Company Disclosure Letter, including all
buildings, landfills (whether closed or operating), and transfer
stations located thereon, any fixtures attached thereto, and any
and all rights appurtenant thereto;
(d) the Intellectual Property related to the
Assets, the rights to sue for, and remedies against, past,
present, and future infringements thereof, and the rights of
priority and protection of interests therein under applicable
laws;
(e) all copies of marketing brochures and
materials and other non-proprietary printed or written materials
in any form or medium relating to the Sellers' ownership or
operation of the Business that Sellers are not required by law to
retain and duplicates of any such materials that the Sellers are
required by law to retain;
(f) all rights under all warranties,
representations, and guarantees made by suppliers, manufacturers,
and contractors in connection with the operation of the Business;
(g) all Company Permits held by the Sellers (or,
to the extent any such Company Permits are not freely
transferable by the permittee, all right, title and interest of
Sellers in such Company Permits to the full extent such right,
title and interest may be transferred);
(h) all Contracts, including those Contracts
listed in Section 1.1(h) of the Company Disclosure Letter;
(i) all books and records of the Business,
including, without limitation, plans, surveys, maps, drawings,
designs, data processing records, employment and personnel
records, laboratory and testing files and records, customer
lists, files, and records, advertising and marketing data and
records, credit records, records relating to suppliers and other
data;
(j) all credits, prepaid expenses, deferred
charges, advance payments, security deposits (other than security
deposits described in Section 1.2(d)) and prepaid items (and, in
each case, security interests from third parties relating
thereto);
(k) any claims or causes of action relating to the
Assets or the Business and any counterclaims, set-offs, or
defenses the Sellers may have with respect to the Assumed
Liabilities;
(l) all goodwill relating to the Assets and the
Business;
(m) the right to use all computer software
programs and databases used by the Sellers whether owned,
licensed (subject to applicable restrictions), leased, or
internally developed (it being understood that all proprietary
software of Sellers is being sold to a third party buyer, subject
to the right of Purchasers to use such software on a royalty-free
basis);
(n) all insurance claims or insurance refunds in
respect of the Assets or the operations to be transferred to
Purchasers hereunder on account of losses arising prior to the
Closing Date (other than claims and refunds in respect of the
policies described in Section 1.2(e) below);
(o) all right, title, and interest of Sellers in
and to the telephone numbers used by Sellers in the conduct of
the Business; and
(p) those items described in Section 1.1(p) of the
Company Disclosure Letter.
Section 1.2. Excluded Assets. The following assets,
properties, and rights (the "Excluded Assets") are not included in the
Assets:
(a) all cash and cash equivalents of the Sellers;
provided, however, that the cash and cash equivalents listed in
Section 1.1(p) of the Company Disclosure Letter shall be included
in the Assets to be transferred to Purchasers hereunder;
(b) the capital stock of any direct or indirect
subsidiary of the Company;
(c) the notes and receivables listed under the
column marked "MAWS Cash" in the tables set forth in Section
1.2(c) of the Company Disclosure Letter;
(d) any surety or performance bonds existing with
respect to the Contracts being acquired and assumed by the
Purchasers (it being understood that the Purchasers shall at
their own expense provide or cause to be provided satisfactory
substitute surety or performance bonds with respect to the
Contracts), any cash, cash equivalents, letters of credit, or
similar collateral provided by the Sellers to facilitate the
issuance of any surety or performance bonds, and any cash
deposits used for financial assurance purposes by the Sellers
that exist on the Closing Date, including, without limitation,
the cash deposits listed in Section 1.2(d) of the Company
Disclosure Letter; provided, subject to Section 5.8, however,
that Sellers shall maintain such surety or performance bonds, and
the collateral in respect thereof, in place until such time as
Purchasers have replaced them with substitute surety or
performance bonds.
(e) any tax refunds relating to periods prior to
the Closing Date or to the Excluded Assets and insurance claims
and refunds in respect of claims attributable to the Excluded
Assets or the Excluded Liabilities (or operations in respect of
Excluded Assets), whether the claims relate to director or
officer insurance policies or similar coverage and losses arising
prior to or after the Closing Date;
(f) the causes of action, judgments, and claims
identified in Section 1.2(f) of the Company Disclosure Letter;
(g) the assets identified in Section 1.2(g) of the
Company Disclosure Letter; and
(h) any Contracts with respect to which Purchasers
do not assume all liabilities that arise after the Closing Date
in accordance with the 365 Order.
Section 1.3. Assumed Liabilities. On the terms and subject
to the conditions set forth in this Agreement, at the Closing, the
Purchasers shall assume from the Sellers and thereafter pay, perform, or
discharge in accordance with their terms, the following liabilities and
obligations of the Sellers (the "Assumed Liabilities"):
(a) all trade payables of the Sellers incurred in
the ordinary course of the Business for goods and services and
recorded on the books of the Sellers in a manner consistent with
past practice (the "Trade Payables") outstanding on the Closing
Date;
(b) all liabilities and obligations, including,
without limitation, the obligation to provide satisfactory surety
bonds, performance bonds, letters of credit, or any other form of
financial assurance, under the express terms of the Contracts;
provided, that in each case the Purchasers shall assume such
Contracts only to the extent such obligations (other than
obligations to provide surety bonds, performance bonds, letters
of credit, or any other form of financial assurance) first mature
and are required to be performed subsequent to the close of
business on the Closing Date;
(c) all liabilities and obligations owing to, or
required to be performed by order or directive of, any
governmental agency (other than liabilities in the nature of
fines, penalties or other similar payments to governmental
agencies in respect of conduct taking place or conditions
existing prior to the Closing) that arise under and are required
by Environmental Laws, including without limitation liabilities
and obligations with respect to the closure of the landfills and
all post closure and financial assurance obligations in
connection therewith; provided, however, that in connection with
satisfying all such liabilities and performing all such
obligations, Purchasers shall in no respect be required to (i)
admit or agree that any actions of Sellers giving rise to such
liabilities or obligations shall in any respect be attributed to
Purchasers or (ii) assume any liability for fines, penalties, or
other similar payments to governmental agencies in respect of
conduct taking place or conditions existing prior to the Closing;
(d) all liabilities and obligations imposed as a
result of the pending claims in litigation identified in Section
1.3(d) of the Company Disclosure Letter;
(e) all liabilities and obligations under the
revenue bonds listed in Section 1.3(e) of the Company Disclosure
Letter;
(f) all liabilities and obligations under the
Contracts to purchase property identified in Section 1.3(f) of
the Company Disclosure Letter;
(g) all liabilities in connection with employee
benefits that Purchasers shall have agreed to assume pursuant to
Article VII; and
(h) all liabilities and obligations for Taxes
attributable to periods subsequent to the Closing Date.
Section 1.4. Excluded Liabilities. Notwithstanding
anything in Section 1.3 hereof to the contrary, the Sellers and the
Purchasers expressly understand and agree that the Purchasers shall not
become liable for any of the following liabilities of the Sellers
(collectively, the "Excluded Liabilities"):
(a) any liabilities or obligations of Sellers that
the Purchasers have not herein expressly agreed to assume;
(b) any liability or obligation in respect of the
Excluded Assets;
(c) any liability or obligation related to the
litigation matters identified in Section 1.4(c) of the Company
Disclosure Letter;
(d) any liability or obligation for Taxes
attributable to any period through the Closing Date;
(e) any liability or obligation to indemnify any
director, officer, employee, agent, advisor, accountant, or
auditor of the Sellers;
(f) any liability or obligation identified in
Section 1.4(f) of the Company Disclosure Letter;
(g) any liability or obligation in respect of
employment, consulting, severance, change in control or similar
agreements, including those listed in Section 1.4(g) of the
Company Disclosure Letter (unless and to the extent Purchasers in
their discretion agree in writing to assume any such obligations
after modifying or amending any such agreements as they may in
their sole judgment elect);
(h) any liability or obligation in respect of
Environmental Laws that is not expressly assumed by Purchasers
pursuant to Section 1.3(c) hereof. Without limiting the
generality of the foregoing, Purchasers do not assume any
liability or obligation in respect of Environmental Laws (i) to
any third party other than any governmental agency or (ii) to pay
any fine, penalty or monetary amount to any governmental agency
with respect to conduct taking place or conditions existing prior
to the Closing, whether in connection with the matters set forth
under the heading "Permits and Licenses" of Section 3.9 of the
Company Disclosure Letter or otherwise; and
(i) any liability or obligation in respect of the
agreement listed in Section 1.4(i) of the Company Disclosure
Letter, and any amendments thereto, (unless and to the extent
Purchasers in their discretion agree in writing to assume any
such obligations after modifying or amending any such agreements
as they may in their sole judgment elect); provided, however,
that in the event Purchasers do not assume Sellers' liabilities
pursuant to such agreement, Purchasers will increase the Cash
Consideration to be paid by them by an amount equal to the amount
required to be paid by Sellers' to satisfy their obligations
under such agreement pursuant to the plan of reorganization
approved in connection with the Petitions.
The listing of any specific item or matter as an Excluded Liability shall
in no respect (x) limit the generality of the terms of Section 1.4(a)
hereof or (y) create any implication that any item or matter not so
listed is an Assumed Liability.
Section 1.5. Purchase Price. In consideration for the
Assets, the Purchasers shall pay to the Sellers at the Closing
$180,000,000, as adjusted pursuant to Section 1.6 hereof (the
"Consideration"). One half of the Consideration equalling $90,000,000
shall be paid in Purchaser Common Stock (the "Stock Consideration"). For
purposes of computing the number of shares of Purchaser Common Stock to
be delivered to Sellers in satisfaction of the Stock Consideration, the
value of each share of Purchaser Common Stock shall be equal to the
arithmetic average of the last reported sales prices per share on the New
York Stock Exchange for the five (5) consecutive market days ending on
(and including) the tenth trading day prior to the Closing Date, as
reported in the Wall Street Journal (the "Valuation Price"). The number
of shares of Purchaser Common Stock issued multiplied by the Valuation
Price will equal $90,000,000, or such lesser amount as Purchasers may
elect pursuant to the last sentence of this Section 1.5. The remaining
balance of the Consideration shall be paid in cash (the "Cash
Consideration"), which shall be adjusted as set forth in Section 1.6 and
shall be reduced by an amount equal to the amount of obligations in
respect of the revenue bonds listed in Section 1.3(e) of the Company
Disclosure Letter that are assumed by Purchasers. Notwithstanding the
foregoing, Purchasers may in their sole discretion elect to eliminate the
Stock Consideration or reduce it by any amount they may choose, in which
case the Cash Consideration will be increased by the amount of such
reduction in the Stock Consideration.
Section 1.6. Purchase Price Adjustment.
(a) The Sellers' Trade Receivables, Trade
Payables, and Transferrable Prepaid Expenses as of December 31,
1996 were approximately $9,984,325, $3,262,459 and $2,190,660,
respectively. On or prior to the Closing Date, the Company shall
provide to the Purchasers a schedule (the "Preliminary
Statement") along with a certificate signed by the chief
executive officer of the Company setting forth in reasonable
detail the Company's good faith estimate of the Trade
Receivables, the Trade Payables, and the prepaid expenses that
relate to the Assets that are to be transferred to the Purchasers
("Transferrable Prepaid Expenses"), which schedule shall be
prepared in a manner consistent with the Company Financial
Statements. Based on the Preliminary Statement, at the Closing,
the Purchasers shall increase the Cash Consideration to be paid
to the Sellers by the difference between the (i) sum of the Trade
Receivables and Transferrable Prepaid Expenses and (ii) the Trade
Payables if it is a positive number or shall reduce the Cash
Consideration by such amount if the difference is a negative
number. As promptly as possible following the Closing, the
Sellers shall prepare and provide to the Purchasers a schedule
(the "Final Statement") showing the Trade Receivables, the Trade
Payables, and the Transferrable Prepaid Expenses as of the close
of business on the Closing Date. Within thirty (30) days of
receipt of the Final Statement, the Purchasers shall notify the
Sellers if they dispute any aspect of the Final Statement or
accept it. If the Purchasers dispute the Final Statement, the
parties shall work together in good faith to resolve the dispute.
If they are unable to resolve the dispute, the dispute shall be
referred to such nationally recognized accounting firm as the
Bankruptcy Court may approve. The Purchasers shall in good faith
use all commercially reasonable efforts to collect the Trade
Receivables following the Closing Date.
(b) On the date sixty (60) days after the Closing
Date, the parties shall make any payment necessary to adjust the
Cash Consideration such that the Purchasers shall have paid the
amount of the Trade Receivables and Transferrable Prepaid
Expenses less the Trade Payables shown on the Final Statement,
such net amount being reduced by the amount, if any, of the Trade
Receivables shown on the Final Statement that have not actually
been collected by the Purchasers through such date. The
Purchasers shall on such date pay to the Sellers the increase, if
any, in the Cash Consideration and shall reassign to the Sellers
any Trade Receivables not collected as of such date. The Sellers
shall remit to the Purchasers any decrease in the Cash
Consideration. Sellers' obligation to make this payment shall
constitute an administrative expense of Sellers pursuant to
Sections 503(b) and 507(a)(1) of the Bankruptcy Code.
ARTICLE II
THE CLOSING
Section 2.1. Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Mayor, Day, Caldwell & Keeton, L.L.P., 700 Louisiana, Suite
1900, Houston, Texas 77002-2778 at 10:00 a.m. on the fifth business day
after the conditions set forth in Article VIII shall have been satisfied
or waived or at such other time, date, and place as shall be fixed by
agreement among the parties (the date of the Closing being herein
referred to as the "Closing Date").
Section 2.2. Deliveries at Closing. (a) At the Closing,
each of the Sellers shall deliver to the Purchasers (i) a duly executed
bill of sale and such other duly executed instruments of conveyance,
transfer, and assignment as may be required to transfer to the Purchasers
the Assets owned by such Seller, and (ii) such other duly executed
documents and certificates as may be required to be delivered by the
Sellers pursuant to the terms of this Agreement including but not limited
to (A) duly executed and acknowledged Special Warranty Deeds in a form
and substance reasonably acceptable to Purchasers (the "Deeds") conveying
title to the real property subject only to the Permitted Encumbrances,
together with any documents reasonably required by any title company
issuing title insurance with regard to this transaction for the effective
conveyance to Purchasers of the real property and (B) applicable
assignments of each lease as to real property leasehold interests owned
by Sellers, each in a form and substance reasonably acceptable to
Purchasers.
(b) At the Closing, the Purchasers shall deliver
to the Sellers (i) such duly executed instruments as may be
required to effectuate the assumption by the Purchasers of the
Assumed Liabilities, (ii) the Cash Consideration by wire transfer
of immediately available funds to an account or accounts
designated by the Sellers, (iii) stock certificates representing
the Stock Consideration accompanied by stock powers duly executed
in blank, and (iv) such other duly executed documents and
certificates as may be required to be delivered by the Purchasers
pursuant to the terms of this Agreement.
(c) At Closing all real estate taxes and
assessments with respect to the real property for the year in
which the Closing occurs will be prorated as of the Closing Date,
with Sellers being charged and credited for all of the same up to
such date and for prior years during Sellers' ownership and the
Purchasers being charged and credited for all of the same on and
after such date. If the actual amounts to be prorated are not
known as of the Closing Date, the prorations shall be made on the
basis of taxes assessed for the prior calendar year; provided,
however, for purposes of calculating such prorated amounts, taxes
for the prior calendar year shall be increased by five percent
(5%). Except as set forth below, no proration shall be made at
the Closing for utility charges including, without limitation,
water, wastewater, telephone, gas and electricity. Sellers shall
terminate Sellers' accounts (but not the service itself) with the
providers of all such services as of the Closing Date. Prior to
the Closing Date, Purchasers shall make application to the
service providers for the continuation of such services in the
name of Purchasers. It is anticipated that in connection with all
such utility services that the meters will be read on or about
the Closing Date and Sellers shall be responsible for paying the
bills for such services on or prior to the Closing Date and
Purchasers shall be responsible for the payment of all such bills
occurring after the Closing Date. If any such accounts are not
paid in full and terminated, they shall be prorated as of the
Closing Date with Sellers being charged and credited for all of
the same up to such date and for all prior months during Sellers'
ownership and the Purchasers being charged and credited for all
of the same on or after such date. If all amounts to be prorated
are not known as of the Closing Date, the prorations shall be
made on the basis of the prior month's bill. Except for those
instances in which Sellers have not paid an utility account in
full and terminated such account, in which case any deposit held
by the applicable utility service provider shall be first applied
to any outstanding amounts due and owing to any balance remaining
then returned to Sellers, Sellers shall keep and retain all
rights to any deposits held by any utility service providers in
connection with the real property. The provisions of this
subsection shall survive the Closing.
Section 2.3. Acquisition Subsidiaries. On or before the
Closing, USA Waste will designate the Acquisition Subsidiaries to receive
specified assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as otherwise disclosed to the Purchasers in a
schedule attached hereto and made a part hereof (which schedule contains
appropriate references to identify the representations and warranties
herein to which the information in such schedule relates) (the "Company
Disclosure Letter"), the Sellers jointly and severally represent and
warrant to the Purchasers as follows:
Section 3.1. Organization. Each of the Sellers is a
corporation validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority and all necessary governmental approvals to own, lease, and
operate its properties and to carry on its business as it is now being
conducted or presently proposed to be conducted. Each of the Sellers is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified
would not individually or in the aggregate have a Company Material
Adverse Effect.
Section 3.2. Authority Relative to this Agreement. Each of
the Sellers has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution,
delivery, and performance of this Agreement by each of the Sellers and
the consummation by each of the Sellers of the transactions contemplated
hereby have been duly authorized by all requisite corporate actions.
Subject to the foregoing, this Agreement has been duly and validly
executed and delivered by each of the Sellers and (assuming this
Agreement constitutes a valid and binding obligation of the Purchasers)
constitutes a valid and binding agreement of each of the Sellers,
enforceable against each of the Sellers in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency,
moratorium, and other laws affecting creditors' rights generally from
time to time in effect and to general equitable principles.
Section 3.3. Consents and Approvals. No consent, approval,
or authorization of, or declaration, filing, or registration with, any
United States federal or state governmental or regulatory authority is
required to be made or obtained by any Seller in connection with the
execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby, except (a) for
consents, approvals, or authorizations of, or declarations or filings
with, the Bankruptcy Court, (b) for the filing of a notification and
report form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the expiration or earlier
termination of the applicable waiting period thereunder, (c) for
consents, approvals, authorizations, declarations, or filings identified
in Section 3.3 of the Company Disclosure Letter, and (d) for consents,
approvals, authorizations, declarations, filings, or registrations,
which, if not obtained, would not, individually or in the aggregate, have
a Company Material Adverse Effect. The items described to in clauses (a)
through (c) of this Section 3.3 are hereinafter referred to as the
"Governmental Requirements."
Section 3.4. No Violations. Assuming that the consents,
approvals, authorizations, declarations, and filings referred to in
Section 3.3 have been made or obtained and shall remain in full force and
effect and the conditions set forth in Article VII shall have been
satisfied or waived, neither the execution, delivery, or performance of
this Agreement by any of the Sellers, nor the consummation by any of the
Sellers of the transactions contemplated hereby, nor compliance by any of
the Sellers with any of the provisions hereof will (a) conflict with or
result in any breach of any provisions of the certificate or articles of
incorporation, as the case may be, or bylaws of any of the Sellers, (b)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time) a default (or give rise to any right of
termination, cancellation, vesting, payment, exercise, acceleration,
suspension, or revocation) under any of the terms, conditions, or
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan, or other instrument or
obligation to which a Seller is a party or by which a Seller's properties
or assets may be bound or affected, (c) violate any order, writ,
injunction, decree, statute, rule, or regulation applicable to a Seller
or a Seller's properties or assets, (d) result in the creation or
imposition of any Encumbrance on any asset of a Seller, or (e) cause the
suspension or revocation of any permit, license, governmental
authorization, consent, or approval necessary for any Seller to conduct
its business as currently conducted, except in the case of clauses (b),
(c), (d), and (e) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions, or
revocations that (i) would not individually or in the aggregate have a
Company Material Adverse Effect, (ii) are excused by or unenforceable as
a result of the Sellers' filing of the Petitions, or, (iii) are set forth
in Section 3.4 of the Company Disclosure Letter.
Section 3.5. Company Financial Statements. Except as set
forth in the Company Disclosure Letter or otherwise indicated therein,
the unaudited consolidated interim financial statements for the Company
(the "Company Financial Statements") (including any related notes and
schedules) included (or incorporated by reference) in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, fairly
present, in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the Sellers as of
the dates thereof and the consolidated results of their operations and
changes in their financial position for the periods then ended (subject
to normal year-end adjustments).
Section 3.6. Absence of Certain Changes. Since September
30,1996, there has been no event or condition that has had (or is
reasonably likely to result in) a Company Material Adverse Effect other
than the filing of the Chapter 11 Cases, and, except as set forth in
Section 3.6 of the Company Disclosure Letter, the Sellers have in all
material respects conducted their businesses in the ordinary course
consistent with past practice and have not taken any action that, if
taken after the date hereof, would violate Section 5.1 hereof.
Section 3.7. Litigation. Except as disclosed in the notes
to the Company Financial Statements or as set forth in Section 3.7 of the
Company Disclosure Letter, there is no suit, action, proceeding, or
investigation (whether at law or equity, before or by any federal, state,
or foreign commission, court, tribunal, board, agency, or
instrumentality, or before any arbitrator) pending or, to the best
knowledge of the Company, threatened against or affecting the Sellers,
the outcome of which, in the reasonable judgment of the Company, is
likely individually or in the aggregate to have a Company Material
Adverse Effect, nor is there any judgment, decree, injunction, rule, or
order of any court, governmental department, commission, agency,
instrumentality, or arbitrator outstanding against the Sellers having, or
that, insofar as can reasonably be foreseen, in the future may have, a
Company Material Adverse Effect.
Section 3.8. Absence of Undisclosed Liabilities. Except
for (i) liabilities or obligations accrued or reserved against in the
Company Financial Statements (or reflected in the notes thereto), (ii)
liabilities or obligations disclosed in the Company Disclosure Letter,
and (iii) liabilities or obligations under the Contracts entered into in
the ordinary course of business that are not required to be disclosed in
Section 3.17 of the Company Disclosure Letter, the Sellers do not have
any liabilities or obligations (whether absolute, accrued, contingent, or
otherwise) which constitute or are reasonably likely to result in a
Company Material Adverse Effect.
Section 3.9. No Default. Except as set forth in Section
3.9 of the Company Disclosure Letter, no Seller is in violation or breach
of, or default under (and no event has occurred that with notice or the
lapse of time would constitute a violation or breach of, or a default
under) any term, condition, or provision of (a) its articles or
certificate of incorporation, as the case may be, or bylaws, (b) any
note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, contract, lease, commitment, or other
instrument or obligation to which a Seller is a party or by which a
Seller's properties or assets may be bound or affected, (c) any order,
writ, injunction, decree, statute, rule, or regulation applicable to a
Seller or a Seller's properties or assets, or (d) any permit, license,
governmental authorization, consent, or approval necessary for a Seller
to conduct its business as currently conducted, except in the case of
clauses (b), (c), and (d) above for breaches, defaults, or violations
that (i) would not individually or in the aggregate have a Company
Material Adverse Effect or (ii) are excused by or unenforceable as a
result of the Sellers' filing of the Petitions.
Section 3.10. No Violation of Law. Except as disclosed in
Section 3.10 of the Company Disclosure Letter or the Company Financial
Statements, no Seller is in violation of, or has been given notice or
been charged with any violation of, any law, statue, order, rule,
regulation, ordinance, or judgment (including, without limitation, any
applicable environmental law, ordinance, or regulation) of any
governmental or regulatory body or authority, except for violations,
which, in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. Except as disclosed in Section 3.10 of
the Company Disclosure Letter or the Company Financial Statements, as of
the date of this Agreement, no investigation or review by any
governmental or regulatory body or authority is pending or, to the best
knowledge of the Company, threatened, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same,
other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Company Material Adverse
Effect and the Sellers have all permits, licenses, franchises, variances,
exemptions, orders, and other governmental authorizations, consents, and
approvals necessary to conduct their businesses as presently conducted,
including all approvals in connection with bonding and surety
arrangements in respect of closed landfills (collectively, the "Company
Permits"), except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents, and approvals the absence
of which, alone or in the aggregate, would not have a Company Material
Adverse Effect. The Sellers are not in violation of the terms of any
Company Permit, except for delays in filing reports or violations which,
alone or in the aggregate, would not have a Company Material Adverse
Effect.
Section 3.11. Taxes. Except as set forth in Section 3.11
of the Company Disclosure Letter:
(a) the Sellers have (i) duly filed (or there has
been filed on their behalf) with the appropriate governmental
authorities all Tax Returns required to be filed by them on or
prior to the date hereof and (ii) duly paid (or made provision
for payment) in full in accordance with GAAP (or there has been
paid or provision has been made on their behalf) for the payment
of all Taxes for all periods ending through the date hereof,
except in each of subsection (i) and (ii) where failure to file
Tax Returns or pay Taxes would not have a Company Material
Adverse Effect;
(b) no federal, state, local, or foreign audits or
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of the
Sellers wherein an adverse determination or ruling in any one
such proceeding or in all such proceedings in the aggregate could
have a Company Material Adverse Effect;
(c) the federal income Tax Returns of the Company
have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal
income Taxes for such periods have expired) for all periods
through and including December 31, 1990, and no deficiencies were
asserted as a result of such examinations that have not been
resolved and fully paid;
(d) no Seller has granted any requests,
agreements, consents, or waivers to extend the statutory period
of limitations applicable to the assessment of any Taxes with
respect to any Tax Returns of such Seller;
(e) no Seller is a party to any tax sharing, tax
indemnity, or other agreement or arrangement relating to Taxes;
(f) there are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the Assets;
(g) none of the Assets is property which is
required to be treated as being owned by any other person
pursuant to the so-called "safe harbor lease" provisions of
former section 168(f)(8) of the Code;
(h) none of the Assets directly or indirectly
secures any debt the interest on which is tax exempt under
section 103(a) of the Code; and
(i) none of the Assets is "tax-exempt use
property" within the meaning of section 168(h) of the Code.
Section 3.12. Environmental Matters. Except as set forth
in Section 3.12 of the Company Disclosure Letter or in the Company
Financial Statements, to the best knowledge of the Company, (a) the
Sellers are in compliance with all federal, state, and local laws
governing pollution or the protection of human health or the environment
("Environmental Laws"), except in each case where noncompliance with
Environmental Laws would not reasonably be expected to have a Company
Material Adverse Effect, (b) no Seller has received any written notice
not subsequently resolved with respect to the business of, or any
property owned or leased by, a Seller from any governmental entity or
third party alleging that a Seller is not in compliance with any
Environmental Law, and (c) there has been no release of a Hazardous
Substance, as that term is defined in the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., in
excess of a reportable quantity on any real property owned or leased by a
Seller that is used in the Business.
Section 3.13. Employee Benefit Plans; Labor Matters. (a)
With respect to the employee benefit plans, programs, and arrangements
maintained or contributed to by any Seller (the "Company Plans"), except
as set forth in Section 3.13(a) of the Company Disclosure Letter or in
the Company Financial Statements and except as would not have a Company
Material Adverse Effect, (i) each Company Plan intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service that it is so qualified and
nothing has occurred since the date of such letter that could reasonably
be expected to affect the qualified status of such Company Plan; (ii)
each Company Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law
including, without limitation, timely compliance with all reporting,
disclosure and notice requirements of the Code and ERISA as well as the
prohibited transactions restrictions of the Code and ERISA; (iii) no
Seller has incurred any direct or indirect liability under, arising out
of, or by operation of Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), in connection with the
termination of, or withdrawal from, any Company Plan or other retirement
plan or arrangement, and no fact or event exists that could reasonably be
expected to give rise to any such liability; (iv) all contributions
required by law or by a collective bargaining or other agreement to be
made under each Company Plan with respect to all periods through the
Closing Date will have been made by such date; (v) no changes in
contributions or benefit levels have been implemented, or negotiated (but
not yet implemented), with respect to any Company Plan since the date for
which the information in Section 3.13(a) of the Company Disclosure Letter
has been provided; (vi) all premiums due the PBGC have been paid; and
(vii) there are no pending or known threatened claims, lawsuits or
arbitrations on behalf of any Company Plan, or any beneficiary covered
under any Company Plan or otherwise which allege a violation of ERISA or
any other law or a breach of any fiduciary duties which might result in
any liability on the part of the Seller and/or any Seller Subsidiary, nor
is there any basis for such claim. Except as set forth in Section 3.13(a)
of the Company Disclosure Letter or in the Company Financial Statements,
the aggregate accumulated benefit obligations of each Company Plan
subject to Title IV of ERISA (as of the date hereof and as of the Closing
Date) do not exceed the fair market value of the assets of such Company
Plan (as of the date of such valuation).
(b) Except as disclosed in Section 3.13(b) of the
Company Disclosure Letter, the Sellers are not subject to any
collective bargaining or other labor union contracts applicable
to persons employed by the Sellers as of the date of this
Agreement. As of the date of this Agreement, there is no pending
or threatened in writing labor dispute, strike, or work stoppage
against the Sellers that may interfere with the business
activities of the Sellers, except where such dispute, strike, or
work stoppage would not have a Company Material Adverse Effect.
Section 3.14. Title to Property.
(a) Except as set forth in Section 3.14(a) of the
Company Disclosure Letter and except for matters that would not,
individually or in the aggregate, reasonably be expected to give
rise to a Company Material Adverse Effect:
(i) the Sellers have good and valid title to
the Assets free and clear of all Encumbrances;
(ii) the Sellers own and have good and
marketable title in fee simple to the real property
constituting part of the Assets being sold free and clear
of all mortgages, pledges, liens, charges, encumbrances,
defects, security interests, claims, options, and
restrictions of all kinds (collectively, "Encumbrances"),
except for (A) liens for current taxes not yet due and
payable and (B) Encumbrances that, pursuant to the 363
Order, are voided or otherwise not enforceable against the
Assets once the Assets are transferred to the Purchasers,
which voided or unenforceable Encumbrances include without
limitation those listed as items 3, 4, 5 and 6 of Section
3.14(a) of the Company Disclosure Letter (the Encumbrances
described in clauses (A) and (B) are referred to herein as
the "Permitted Encumbrances");
(iii) all real estate constituting any part
of the Assets that is used or held by the Sellers pursuant
to any lease or other contractual arrangement other than
by ownership of fee simple title is designated in Section
3.14(a) of the Company Disclosure Letter;
(iv) Sellers have valid leasehold interests
in, or have other valid contractual rights to use, all of
the Assets of the type described in Section 3.14(a)(iii)
above;
(v) Sellers are in peaceful and undisturbed
possession of the space or estate under the leases or
other agreements under which they are tenants or entitled
to use the properties of a type described in Section
3.14(a)(iii) above being sold;
(vi) As to all properties of the type
described in Section 3.14(a)(iii) above, either (A)
Sellers are in no respect in default or delinquent in
performing their obligations under such leases or other
agreements, or (B) any such default or delinquency will be
fully cured, or otherwise may not be asserted against
Purchasers or the Assets, as a result of the entry by the
Bankruptcy Court of the 363 Order and the 365 Order, such
that Sellers' rights in and under all such leases or other
agreements shall vest in Purchasers upon the Closing
without reversion or diminution; and
(vii) Sellers have good and valid rights of
ingress and egress to and from all the real property owned
or leased by them and constituting part of the Assets
being sold from and to the public street systems for all
usual street, road, and utility purposes.
(b) The Assets include, without limitation, all
real property and related rights and interests and all personal
property, both tangible and intangible, necessary to conduct the
Business as it is currently conducted by Sellers, to operate all
facilities that are the subject of Governmental Permits
(including without limitation landfill and transfer station
permits) to the full extent authorized by such Governmental
Permits, and to permit, construct and operate the expansions as
to those certain landfills in all areas shown in Section 3.14(b)
of the Company Disclosure Letter, except for any Assets which, if
not owned by the Company, would not result in a Company Material
Adverse Effect.
Section 3.15. Non-Competition Agreements. Except as set
forth in Section 3.15 of the Company Disclosure Letter, no Seller is a
party to any agreement that purports to restrict or prohibit it, directly
or indirectly, from engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling, marketing, or
disposal of rubbish, garbage, paper, textiles, chemicals, or
non-hazardous waste or any other material business currently engaged in
by the Sellers, or, to the best knowledge of the Sellers, by the
Purchasers or any corporations affiliated with the Purchasers. No
officers, directors, or key employees of any Seller is a party to any
agreement, which by virtue of such person's relationship with such
Seller, restricts such Seller from, directly or indirectly, engaging in
any of the businesses described above.
Section 3.16. Brokers. Except as set forth in Section 3.16
of the Company Disclosure Letter, no person is entitled to any brokerage,
financial advisory, finder's or similar fee or commission payable by any
of the Sellers in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Sellers.
Section 3.17. Contracts. Section 3.17 of the Company
Disclosure Letter contains a complete and accurate list of all Contracts
involving payments in any calendar year equal to or greater than
$250,000. True and complete copies of each such written Contract (or
written summaries of the terms of any such oral contract) have been
heretofore made available to the Purchasers; and, in the case of each
Contract listed in Section 1.1(h) of the Company Disclosure Letter, true
and complete copies of each such Contract have been delivered to
Purchasers prior to the execution of this Agreement. Except as set forth
in Section 3.17 of the Company Disclosure Letter, the Sellers have not
received notice, nor do they otherwise have knowledge, that any party to
any such Contract intends to cancel, terminate, or refuse to renew such
Contract or to exercise or decline to exercise any option or right
thereunder.
Section 3.18. Disclosure. There is no fact known to the
Sellers that could have a Company Material Adverse Effect that has not
been set forth in the Company Financial Statements or in this Agreement,
including the Company Disclosure Letter. If the Sellers become aware of
any fact or circumstance that would change a representation or warranty
of the Sellers in this Agreement, the party with such knowledge shall
immediately give notice of such fact or circumstance to the Purchaser.
However, such notification shall not relieve the Sellers of their
obligations under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Except as otherwise disclosed to the Sellers in a schedule
annexed hereto (which schedule contains appropriate references to
identify the representations and warranties herein to which the
information in such schedule relates) (the "Purchaser Disclosure
Letter"), the Purchasers jointly and severally represent and warrant to
the Sellers as follows:
Section 4.1. Organization. Each of the Purchasers is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority
and all necessary governmental approvals to own, lease, and operate its
properties and to carry on its business as it is now being conducted or
presently proposed to be conducted. Each of the Purchasers are duly
qualified as foreign corporations to do business, and is in good
standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities make such
qualification necessary, except where the failure to be so qualified
would not individually or in the aggregate materially impair the ability
of the Purchasers to perform their obligations hereunder or to consummate
the transactions set forth herein (a "Purchaser Material Adverse
Effect").
Section 4.2. Capitalization. The authorized capital stock
of USA Waste consists of 300,000,000 common shares, par value $.01 per
share ("Purchaser Common Stock"), of which 139,548,045 shares were issued
and outstanding as of December 31, 1996. All the issued and outstanding
shares of capital stock of USA Waste are validly issued, fully paid,
nonassessable, and free of preemptive rights. All the shares of Purchaser
Common Stock reserved for issuance in connection with the transactions
contemplated by this Agreement will be, when so issued, duly authorized,
validly issued, fully paid, nonassessable, and free of preemptive rights.
Except as set forth above or as specified in Section 4.2 of the Purchaser
Disclosure Letter, as of December 31, 1996 there were no shares of
capital stock of USA Waste issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible securities, or other
agreements or commitments obligating USA Waste to issue, transfer, sell,
redeem, repurchase, or otherwise acquire any shares of its capital stock.
Section 4.3. Authority Relative to this Agreement. Each of
the Purchasers has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution,
delivery, and performance of this Agreement by each of the Purchasers and
the consummation by each of the Purchasers of the transactions
contemplated hereby have been duly authorized by all requisite corporate
actions. This Agreement has been duly and validly executed and delivered
by each of the Purchasers and (assuming this Agreement constitutes a
valid and binding obligation of the Sellers) constitutes a valid and
binding agreement of each of the Purchasers, enforceable against each of
the Purchasers in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting creditors' rights generally from time to time in effect and to
general equitable principles. Each of the Purchasers has delivered to the
Sellers true, accurate, and complete copies of its articles or
certificate of incorporation, as the case may be, and bylaws, as in
effect on the date hereof, including all amendments thereto.
Section 4.4. Consents and Approvals. No consent, approval,
or authorization of, or declaration, filing or registration with, any
United States federal or state governmental or regulatory authority is
required to be made or obtained by the Purchasers in connection with the
execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby, except (a) for the
Governmental Requirements, (b) for consents, approvals, authorizations,
declarations, or filings identified in Section 4.4 of the Purchaser
Disclosure Letter, and (c) for consents, approvals, authorizations,
declarations, filings, or registrations, which, if not obtained, would
not, individually or in the aggregate, have a Purchaser Material Adverse
Effect. To the Purchaser's best knowledge, there are no other consents,
approvals, authorizations, declarations, and filings required to be made
or obtained in connection with the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated
hereby other than the requirements referred to in clauses (a) through (c)
of this Section 4.4.
Section 4.5. No Violations. Assuming that the consents,
approvals, authorizations, declarations, and filings referred to in
Section 4.4 have been made or obtained and shall remain in full force and
effect and the conditions set forth in Article VII shall have been
satisfied or waived, neither the execution, delivery, or performance of
this Agreement by any Purchaser, nor the consummation by any Purchaser of
the transactions contemplated hereby, nor compliance by any Purchaser
with any of the provisions hereof, will (a) conflict with or result in
any breach of any provisions of the articles or certificate of
incorporation, as the case may be, or bylaws of a Purchaser, (b) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time) a default (or give rise to any right of termination,
cancellation, acceleration, vesting, payment, exercise, suspension, or
revocation) under any of the terms, conditions, or provisions of any
note, bond, mortgage, deed of trust, security interest, indenture,
license, contract, agreement, plan, or other instrument or obligation to
which a Purchaser is a party or by which a Purchaser or a Purchaser's
properties or assets may be bound or affected, (c) violate any order,
writ, injunction, decree, statute, rule, or regulation applicable to any
Purchaser or a Purchaser's properties or assets, (d) result in the
creation or imposition of any Encumbrance on any asset of any Purchaser,
or (e) cause the suspension or revocation of any permit, license,
governmental authorization, consent, or approval necessary for any
Purchaser to conduct its business as currently conducted, except in the
case of clauses (b), (c), (d), and (e) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions, or revocations that would not individually or
in the aggregate have a Purchaser Material Adverse Effect or except as
set forth in Section 4.5 of the Purchaser Disclosure Letter.
Section 4.6. Purchaser SEC Reports. USA Waste has
delivered to the Sellers true and complete copies of each registration
statement, report and proxy or information statement (including exhibits
and any amendments thereto) filed by it with the SEC since January 1,
1992 (collectively, the "Purchaser SEC Reports"). As of the respective
dates such Purchaser SEC Reports were filed or, if any such Purchaser SEC
Reports were amended, as of the date such amendment was filed, each of
the Purchaser SEC Reports (a) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and
the rules and regulations promulgated thereunder and (b) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Each of (a) the audited consolidated financial
statements of USA Waste (including any related notes and schedules)
included (or incorporated by reference) in its Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 and (ii) the unaudited
consolidated interim financial statements of USA Waste (including any
related notes and schedules) included (or incorporated by reference) in
its Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, fairly presents, in conformity with GAAP applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Purchasers as of the dates thereof and the
consolidated results of its operations and changes in its financial
position for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
Section 4.7. No Default. Except as set forth in Section
4.7 of the Purchaser Disclosure Letter, no Purchaser is in violation or
breach of, or default under (and no event has occurred that with notice
or the lapse of time would constitute a violation or breach of, or
default under), any term, condition, or provision of (a) its articles or
certificate of incorporation, as the case may be, or bylaws, (b) any
note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, contract, lease, commitment, or other
instrument or obligation to which a Purchaser is a party or by which a
Purchaser or a Purchaser's properties or assets may be bound or affected,
(c) any order, writ, injunction, decree, statute, rule, or regulation
applicable to a Purchaser or a Purchaser's properties or assets, or (d)
any permit, license, governmental authorization, consent, or approval
necessary for a Purchaser to conduct its business as currently conducted,
except in the case of clauses (b), (c), and (d) above for violations,
breaches, or defaults that would not individually or in the aggregate
have a Purchaser Material Adverse Effect.
Section 4.8. Brokers. Except as set forth in Section 4.8
of the Purchaser Disclosure Letter, no person is entitled to any
brokerage, financial advisory, finder's or similar fee or commission
payable by a Purchaser in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of a
Purchaser.
Section 4.9. Disclosure. There is no fact known to the
Purchasers that could reasonably be expected to have a Purchaser Material
Adverse Effect, which has not been set forth in this Agreement, including
the Purchaser Disclosure Letter. If the Purchasers become aware of any
fact or circumstance that would change a representation or warranty of
the Purchasers in this Agreement, the Purchasers shall immediately give
notice of such fact or circumstance to the Sellers. However, such
notification shall not relieve the Purchasers of their obligations under
this Agreement.
Section 4.10. Financing. USA Waste represents that on the
Closing Date it will have sufficient funds and a sufficient number of
authorized shares of Purchaser Common Stock to deliver the Consideration
to the Sellers.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business by the Sellers Pending
the Closing. Subject, after the date on which the Sellers file the
Petitions, to any obligations as a debtor or debtor-in possession under
the Bankruptcy Code, or order of the Bankruptcy Court, the Sellers shall
conduct their businesses in the ordinary course consistent with past
practice, including, without limitation, meeting their obligations as
they become due and fulfilling their commitments to customers. The
Sellers shall also use all commercially reasonable efforts to preserve
intact their business organizations and relationships with third parties
and to keep available the services of their present officers and key
employees, subject to the terms of this Agreement. Except as provided in
the Company Disclosure Letter or except as otherwise contemplated under
this Agreement, from the date hereof until the Closing Date, without the
prior written consent of the Purchasers:
(a) No Seller shall adopt or propose any change in
its articles or certificate of incorporation, as the case may be,
or bylaws, except a change that would not have any adverse affect
on the transactions contemplated by this Agreement;
(b) No Seller shall declare, set aside, or pay any
dividend or other distribution with respect to any shares of its
capital stock, or split, combine, or reclassify any of its
capital stock, or repurchase, redeem, or otherwise acquire any
shares of its capital stock;
(c) No Seller shall merge or consolidate with any
other person or (except in the ordinary course of business)
acquire a material amount of assets of any other person;
(d) No Seller shall lease, license, or otherwise
surrender, relinquish, encumber, or dispose of (i) any real
estate or motor vehicles or other equipment owned or leased by it
or (ii) any other assets or property that are material to it,
except for Excluded Assets and except for assets listed in
Section 5.1(d) of the Company Disclosure Letter;
(e) No Seller shall grant any increase in the
compensation of its directors, officers, employees, consultants,
or agents;
(f) No Seller shall enter into or amend any
employment agreement or other employment arrangement with any of
its employees;
(g) No Seller shall change any method of
accounting or accounting practice used by it, except for any
change required by GAAP;
(h) No Seller shall agree or commit to do any of
the foregoing; and
(i) except to the extent necessary to comply with
the requirements of applicable laws and regulations, no Seller
shall (i) take, or agree or commit to take, any action that would
make any representation or warranty of the Sellers hereunder
inaccurate in any respect at, or as of any time prior to, the
Closing Date, (ii) omit, or agree or commit to omit, to take any
action necessary to prevent any such representation or warranty
from being inaccurate in any respect on the Closing Date,
provided however that the Sellers shall be permitted to take or
omit to take such action that (without any significant
uncertainty) can be cured, and in fact is cured, at or prior to
the Closing Date, or (iii) take, or agree or commit to take, any
action that would result in, or is reasonably likely to result
in, any of the conditions set forth in Article VII not being
satisfied.
Section 5.2. Access and Information. The Sellers shall
afford to each Purchaser and to each Purchaser's financial advisors,
legal counsel, accountants, consultants, financing sources, and other
authorized representatives access during normal business hours throughout
the period prior to the Closing Date to all their books, records,
properties, plants, and personnel and, during such period, shall furnish
as promptly as practicable to each Purchaser (a) a copy of each report,
schedule, and other document filed or received by them pursuant to the
requirements of federal or state securities laws and (b) all other
information as each Purchaser reasonably may request, provided that no
Purchaser shall disclose any competitively sensitive information (unless
such Purchaser is legally compelled to do so in which case such Purchaser
shall provide the Company with prompt written notice of the legal
requirement to disclose so that the Company may seek a protective order
or other appropriate remedy) and no investigation pursuant to this
Section 5.2 shall affect any representations or warranties made herein or
the conditions to the obligations of the respective parties to consummate
the transactions contemplated by this Agreement. USA Waste shall continue
to abide by the terms of the Letter Agreement, dated as of March 18, 1996
(the "1996 Letter Agreement"), between USA Waste and Donaldson, Lufkin &
Jenrette Securities Corporation, as agent for the Company, and by the
terms of the Letter Agreement, dated as of October 20, 1994 (the "1994
Letter Agreement" and, together with the 1996 Letter Agreement, the
Letter Agreements"), between the Company and USA Waste.
Section 5.3. Acquisition Proposal Procedures. The
Purchasers and the Sellers acknowledge that this Agreement is the
culmination of an extensive process undertaken by the Sellers to identify
and negotiate a transaction with a bidder who was prepared to pay the
highest and best purchase price for the assets of the Sellers while
assuming or otherwise satisfying relevant liabilities in order to
maximize value for the Sellers' constituents. The parties also
acknowledge that under the Bankruptcy Code the Sellers must take
reasonable steps to demonstrate that they have sought to obtain the
highest and best price possible for the Assets, including, but not
limited to, giving notice of the transactions contemplated by this
Agreement to creditors and other interested parties as ordered by the
Bankruptcy Court, providing information about the Business to responsible
bidders subject to appropriate confidentiality agreements, entertaining
higher and better offers from responsible bidders, and, if necessary,
conducting an auction. To facilitate the foregoing, the Sellers shall,
promptly following the Petition Date, seek the entry of an order (the
"Overbid Procedures Order") providing for procedures substantially
similar to the following procedures:
(a) The Sellers shall give notice of the
transactions contemplated by this Agreement to such persons and
in such manner as the Bankruptcy Court shall direct.
(b) Unless this Agreement has been terminated in
accordance with its terms, Sellers will not authorize or permit
any of their officers, directors, or employees, or any investment
banker, financial adviser, attorney, accountant, or any other
representative (i) to solicit, initiate or encourage, or take any
other action to facilitate, any inquiry or the making of any
proposal that constitutes, or may reasonably be expected to lead
to, an Overbid (as hereinafter defined); provided, however, that
if the Board of Directors of Sellers determines in good faith
that it is necessary to do so to comply with their fiduciary
duties under corporate law or the Bankruptcy Code, Sellers may,
in response to an unsolicited Overbid (x) provide public and
non-public information concerning the Business to those parties
who first have delivered an Overbid meeting the requirements of
subsection (c) of this Section, provided that such party executes
a confidentiality agreement materially the same as the Letter
Agreements; and (y) participate in negotiations or discussions
concerning such Overbid. The Sellers shall immediately notify the
Purchasers orally and in writing of all inquiries, or proposals
or requests for information received from any party, and the
material terms and conditions of such inquiry, proposal or
request and the identity of the person making such inquiry,
proposal or request. Sellers shall keep Purchasers fully informed
of the status and details (including amendments or proposed
amendments) of any such inquiry, proposal or request. Upon
request by Purchasers, Sellers will identify and furnish to
Purchasers all information provided in response to any such
inquiry, proposal or request.
(c) The Sellers will consider as higher and better
offers ("Overbids") only those proposals that meet the following
requirements:
(i) Overbids that propose consideration
having a readily ascertainable fair market value of not
less than $1,000,000 in excess of the sum of the Purchase
Price and any amounts payable pursuant to Section 9.6
hereof, subject to adjustments no less favorable to the
Sellers than those contained in this Agreement, plus the
assumption of the liabilities assumed by the Purchasers
under this Agreement.
(ii) Overbids that are in the form of this
Agreement marked to show all changes thereto and that are
on terms and conditions no less favorable to the Sellers
than terms and conditions contained in this Agreement,
including, but not limited to, the time of closing.
(iii) Overbids that are delivered to the
Sellers with copies to the Purchasers not later than 4:00
p.m. Eastern Standard Time on the tenth business day
prior to the date set for the hearing to approve the
transactions contemplated by this Agreement (the "363
Hearing") and that are accompanied by appropriate
evidence of the bidder's financial ability to consummate
a transaction on or prior to the Closing Date.
(iv) With respect to subsequent Overbids
(including any by the Purchasers), Overbids that include
additional consideration of at least $1 million over the
previous bid.
(d) If any qualified Overbids are timely received,
an auction will be conducted on the second business day following
the due date for Overbids at the offices of counsel for the
Sellers at which only the Purchasers and any prospective
purchaser who has timely submitted a qualifying Overbid in
conformity with clauses (c)(i) through (c)(iv) above shall be
entitled to participate. At the auction, bidding shall begin with
the highest qualifying Overbid and shall not conclude until each
participating bidder has had the opportunity to submit any
additional overbid with full knowledge of the existing highest
bid.
(e) The Board of Directors of the Company, in
consultation with the Official Committee of Creditors, shall
determine in good faith whether a submitted Overbid meets the
requirements described herein and whether this Agreement or such
Overbid constitutes the most favorable transaction. The most
favorable bid so determined by the Company's Board of Directors
shall be submitted to the Bankruptcy Court for approval at the
363 Hearing. Purchasers shall be deemed parties in interest with
standing to appear and be heard in connection with any motion,
hearing, or other proceeding relating to this Agreement or any
Overbid.
Section 5.4. Filings; Other Action. Subject to the terms
and conditions herein provided, as promptly as practicable, the Sellers
and the Purchasers shall (a) promptly make all filings and submissions
under the HSR Act, (b) use all commercially reasonable efforts to
cooperate with each other in (i) determining which filings are required
to be made prior to the Closing Date with, and which material consents,
approvals, permits, or authorizations are required to be obtained prior
to the Closing Date from, governmental or regulatory authorities of the
United States, the several states or the District of Columbia, the
Commonwealth of Puerto Rico, and foreign jurisdictions in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (ii) timely making all such filings
and timely seeking all such consents, approvals, permits, or
authorizations, and (c) use all commercially reasonable efforts to take,
or cause to be taken, all other action and do, or cause to be done, all
other things necessary or appropriate to consummate the transactions
contemplated by this Agreement, as soon as practicable; provided,
however, that USA Waste shall not be required to divest any of its
significant assets or businesses, or discontinue or refrain from
conducting any of its significant operations, in order to obtain any
approvals to consummate the transactions contemplated by this Agreement.
In connection with the foregoing, the Sellers will provide the
Purchasers, and the Purchasers will provide the Sellers, with copies of
all correspondence, filings, or communications (or memoranda setting
forth the substance thereof) between such party or any of its
representatives, on the one hand, and any governmental agency or
authority or members of their respective staffs, on the other hand, with
respect to this Agreement and the transactions contemplated hereby. The
parties acknowledge that certain actions may be necessary with respect to
the foregoing in making notifications and obtaining clearances, consents,
approvals, waivers, or similar third party actions that are material to
the consummation of the transactions contemplated hereby, and each party
agrees to take all commercially reasonable actions as are necessary,
subject to the proviso above with respect to USA Waste not divesting any
significant assets or businesses or discontinuing or refraining from
conducting any significant operations, to complete such notifications and
obtain such clearances, approvals, waivers, or third party actions,
except where such consequence, event, or occurrence would have a
Purchaser Material Adverse Effect or a Company Material Adverse Effect,
as the case may be.
Section 5.5. Public Announcements. The Purchasers, on the
one hand, and the Sellers, on the other hand, agree that they will not
issue any press release or respond to any press inquiry with respect to
this Agreement or the transactions contemplated hereby without the prior
approval of the other party (which approval will not be unreasonably
withheld), except as may be required by applicable law or any requirement
of any stock exchange on which the stock of the Company or USA Waste is
listed.
Section 5.6. Bankruptcy Actions. (a) As promptly as
practicable after the Petition Date, the Sellers will file with the
Bankruptcy Court a motion, supporting papers, notices and a proposed
Overbid Procedures Order, all in form and substance reasonably
satisfactory to Purchasers, seeking the Bankruptcy Court's approval of
the terms of Sections 5.3 and 9.6 of this Agreement and observance and
performance of such terms by the Sellers and the Purchasers during the
pendency of the Chapter 11 Cases.
(b) After the Petition Date, the Sellers will file
with the Bankruptcy Court a motion, supporting papers, notices
and a form of 363 Order and 365 Order, all in form and substance
reasonably satisfactory to Purchasers, seeking the Bankruptcy
Court's approval of this Agreement (including without limitation
approval of provisions adequate to assure Sellers' compliance
with Section 1.6(b)), the Sellers' performance under this
Agreement, and the assumption and assignment of the Contracts.
(c) The Sellers will provide the Purchasers with
copies of all motions, applications, and supporting papers
prepared by the Sellers (including forms of orders and notices to
interested parties) relating in any way to Purchasers or the
transactions contemplated by this Agreement prior to the filing
thereof in the Chapter 11 Cases.
(d) Sellers shall give appropriate notice, and
provide appropriate opportunity for hearing, to all parties
entitled thereto, of all motions, orders, hearings, or other
proceedings relating to this Agreement or the transactions
contemplated hereby.
Section 5.7. Tax Returns and Filings; Payment of Taxes.
Sellers shall prepare all tax returns of Sellers for periods ending on or
prior to the Closing Date. Sellers shall be responsible for paying all
taxes of Sellers for periods ending on or prior to the Closing Date.
Section 5.8. Surety or Performance Bonds. For a period of
at least sixty (60) days following the Closing Date, Sellers shall use
commercially reasonable efforts to maintain all surety or performance
bonds and the collateral in respect thereof as described in Section
1.2(d) in place unless such bonds and collateral have earlier been
released by the regulatory authority in possession thereof. Purchasers
shall use their commercially reasonable efforts to replace and provide
for substitution of such surety or performance bonds as soon as
reasonably practicable after the execution of this Agreement. In the
event that any such bonds and collateral are not released and returned to
Sellers on or before the date that is one month after the Closing, then
Purchasers shall pay Sellers an amount equal to (a) Purchasers' per diem
interest cost incurred in respect of borrowed funds times (b) the
outstanding amount of such bonds and collateral for the period commencing
with the first day of the second month following the Closing and ending
when the last of such bonds and collateral has been replaced. On the
sixtieth day following the Closing Date, the Purchasers shall pay to the
Sellers an amount of cash equal to the amount of cash collateral, if any,
that is still subject to the performance bonds; provided Sellers have
executed any documents or instruments required by Purchasers to release
such bonds and assign to the Purchasers all of their right, title and
interest in and to such cash collateral.
Section 5.9. Purchase Price Allocation. The Purchasers and
the Sellers hereby agree that the Consideration for the Assets and the
Assumed Liabilities will be allocated in a mutually acceptable manner not
later than the Closing Date. Subject to the requirements of any
applicable Tax law, all Tax Returns filed by Purchasers and Sellers shall
be prepared consistently with such allocation.
Section 5.10. Securities Laws Compliance. The parties will
in good faith attempt to obtain confirming orders or otherwise structure
the Petitions and the plan of reorganization to be approved pursuant
thereto in such manner as to permit the issuance of the Stock
Consideration without registration thereof under the Securities Act of
1933, as amended, and applicable state securities laws (collectively, the
"Securities Laws"). In the event Purchasers do not receive assurances,
that in the judgment of Purchasers upon advice of counsel are reasonably
sufficient to assure them that such issuance may be made without
registration under the Securities Laws, then in such event Purchasers
shall use their commercially reasonable best efforts to register the
issuance of the Stock Consideration under the Securities Laws or the
transfer by Sellers of the Stock Consideration pursuant to such plan of
reorganization.
Section 5.11. Additional Matters. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action
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 by this Agreement, including
using all commercially reasonable efforts to obtain all necessary
waivers, consents, and approvals in connection with the Governmental
Requirements and to effect all necessary registrations and filings.
ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
Section 6.1. Further Assurances. In addition to the
provisions of this Agreement, from time to time after the Closing Date,
the Sellers and the Purchasers will use all commercially reasonable
efforts to execute and deliver such other instruments of conveyance,
transfer or assumption, as the case may be, and take such other action as
may be reasonably requested to implement more effectively the conveyance
and transfer of the Assets to the Purchasers and the assumption of the
Assumed Liabilities by the Purchasers.
Section 6.2. Books and Records; Personnel. For a period of
seven (7) years after the Closing Date (or such longer period as may be
required by any governmental or regulatory body or authority or ongoing
Legal Proceeding):
(a) the Purchasers shall not dispose of or destroy
any of the business records and files of the Business. If the
Purchasers wish to dispose of or destroy such records and files
after that time, they shall first give sixty (60) days' prior
written notice to the Sellers, and the Sellers shall have the
right, at their option and expense, upon prior written notice to
the Purchasers within such sixty-day period, to take possession
of the records and files within ninety (90) days after the date
of the notice from the Sellers.
(b) each of the Purchasers shall allow the Sellers
and any of their directors, officers, employees, counsel,
representatives, accountants, and auditors (collectively, the
"Seller Representatives") access to all business records and
files of the Sellers or the Business that are transferred to it
in connection herewith, which are reasonably required by such
party in anticipation of, or preparation for, any existing or
future Legal Proceeding involving a Seller or Tax Return
preparation, during regular business hours and upon reasonable
notice at such Purchaser's principal place of business or at any
location where such records are stored, and the Sellers and the
Seller Representatives shall have the right to make copies of any
such records and files; provided, however, that any such access
or copying shall be had or done in such a manner so as not to
interfere with the normal conduct of such Purchaser's business or
operations.
(c) each of the Purchasers shall make available to
the Sellers and the Seller Representatives upon written request
(i) personnel to assist the Sellers and the Seller Representa-
tives in locating and obtaining records and files maintained by
such Purchaser and (ii) any of the personnel previously in employ
of the Sellers whose assistance or participation is reasonably
required by the Sellers and the Seller Representatives in
anticipation of, or preparation for, existing or future Legal
Proceeding involving any Seller, Tax Return preparation, or other
matter in which a Seller is involved or which is related to the
Business; provided, however, that any such access to personnel
shall be had in such a manner so as not to interfere with the
normal conduct of such Purchaser's business or operations.
Section 6.3. Third Party Rights. No provision of this
Agreement shall create any third party beneficiary rights in any employee
or former employee of the Sellers or any other persons or entities
(including any beneficiary or dependent thereof), in respect of continued
employment (or resumed employment) for any specified period of any nature
or kind whatsoever, and no provision of this Agreement shall create such
third party beneficiary rights in any such persons or entities in respect
of any benefits that may be provided, directly or indirectly, under any
Company Plan except to the extent such obligations are specifically
assumed.
Section 6.4. Employee Withholding. The Sellers agree that,
pursuant to the "Alternative Procedure" provided in Section 5 of Revenue
Procedure 84-77, 1984-2 C.B. 753, with respect to filing and furnishing
IRS Forms W-2, W-3, and 941, (a) each of the Sellers shall report on a
"predecessor-successor" basis, as set forth therein, (b) each of the
Sellers shall be relieved from furnishing Forms W-2 to any of the
employees of the Sellers who become employees of the Purchasers, and (c)
the Purchasers shall assume the obligations of the Sellers to furnish
such Forms W-2 to such employees for the year in which the Closing
occurs.
Section 6.5. Indemnification. The Purchasers shall
indemnify the Sellers for any losses the Sellers may incur (including
reasonable attorneys' fees) with respect to any claims of employees of
the Sellers and their beneficiaries (a) arising out of their employment
with the Purchasers, (b) under any law relating to the termination of
such employee's employment arising after the Closing Date, and (c) in
connection with the liabilities assumed by the Purchasers under Sections
6.3, 6.4, 7.5 or 7.6.
Section 6.6. Use of Name. Sellers hereby consent to the
use by Purchasers of the name "Mid-American Waste Systems, Inc." and any
variation or derivation thereof and any trademarks, service marks, trade
names, trade dress, logos, business and product names and slogans for a
period of six (6) months after the Closing Date. From time to time after
the Closing Date until 6 months after the Closing Date, Sellers will,
without further consideration, execute and deliver such other instruments
and take such other action to evidence the consent of Sellers to
Purchasers use of Sellers' name.
ARTICLE VII
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
Section 7.1. Employment of the Sellers' Employees.
(a) Effective as of the Closing Date, Purchasers
may offer employment in Purchasers' sole discretion to certain of
the Employees of Sellers. Such Employees, if any, who accept such
offers of employment effective as of the Closing Date shall be
referred to herein as the "Transferred Employees".
(b) Except for matters disclosed in Section 7.1(b)
of the Company Disclosure Letter from and after the Closing
Sellers shall remain solely responsible for any and all Benefit
Liabilities in respect of the Employees, including the
Transferred Employees and their beneficiaries and dependents,
relating to or arising in connection with or as a result of (i)
the employment of any such Employee by any Seller, (ii) the
termination of employment with any Seller of any Employee on or
prior to the Closing Date, including Benefit Liabilities under
any of the Company Plans that provides severance pay, (iii) the
participation in or accrual of benefits or compensation under, or
the failure to participate in or to accrue compensation or
benefits under, any Company Plans or other employee or retiree
benefit or compensation plan, program, practice, policy,
agreement or arrangement of any Seller or (iv) accrued but unpaid
salaries, wages, bonuses, incentive compensation, sick pay or
other compensation or payroll items in connection with the
employment of any such Employee by any Seller (including, without
limitation, deferred compensation), except, in any such case, to
the extent any such Benefit Liability becomes the obligation of
the Purchasers pursuant to this Article VII.
(c) As of the Closing Date, the Purchasers shall
assume all of the Sellers' obligations with respect to accrued
but unpaid vacation for Transferred Employees.
Section 7.2. Welfare and Fringe Benefit Plans.
(a) Effective as of the Closing Date, the
Purchasers shall make available or establish a medical plan for
the Transferred Employees and their dependents and beneficiaries
containing provisions not in the aggregate less favorable than
the Sellers' medical plan maintained under the Mid-American Waste
Systems, Inc. Employee Health and Welfare Plan. Transferred
Employees and their dependents and beneficiaries shall not be
subject to any pre-existing conditions limitations under the
medical plan established by the Purchasers that were covered
under Sellers' medical benefit plan. In addition, commencing on
the Closing Date the Purchasers shall provide the Transferred
Employees and their dependents and beneficiaries coverage under
any other pension, retirement, welfare and fringe benefit plans,
programs, policies or arrangements established by the Purchasers
for such Persons, who for all purposes of this sentence will be
credited, to the extent permissible under applicable law, with
all service with Sellers or their affiliates; provided that, from
and after the Closing Date, the Sellers shall remain solely
responsible for any and all Benefit Liabilities to or in respect
of the Employees or their beneficiaries or dependents relating to
or arising in connection with any claims whether such claims are
submitted for payment before, on or after the Closing Date, for
life, disability, accidental death or dismemberment, supplemental
unemployment compensation, medical, dental, hospitalization,
other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an
occurrence before the Closing Date (including claims for
continuing treatment in respect of any illness, accident,
disability, condition or confinement which occurs or commences
before the Closing Date), but only to the extent such Benefit
Liabilities are attributable to the period from the date the
condition arose to the Closing Date. Notwithstanding the
foregoing, pursuant to Section 7.1(b), the Purchasers shall have
no liability with respect to any such claims, unless such claims
are covered under a welfare or fringe benefit plan or policy
maintained by the Purchasers.
(b) From and after the Closing, the Sellers shall
remain solely responsible for any and all Benefit Liabilities in
respect of any former employee of Sellers and his covered
dependents and beneficiaries under any Company Plans that is an
"employee welfare benefit plan" (within the meaning of Section
3(1) of ERISA) that as of the Closing Date provides post-
employment life, medical or dental benefits to such former
employee.
(c) From and after the Closing Date, the Sellers
shall remain solely responsible for any and all Benefit
Liabilities relating to or arising in connection with the
requirements of Section 4980B of the Code to provide continuation
of health care coverage under any Company Plans in respect of (i)
Employees, other than the Transferred Employees, their
beneficiaries and their covered dependents, and (ii) to the
extent related to a qualifying event occurring on or before the
Closing Date, Transferred Employees, their beneficiaries and
their covered dependents.
(d) The Sellers shall provide the appropriate
notices required under Section 4980B of the Code with respect to
continuation of health care coverage under any Company Plans in
respect of Transferred Employees, their beneficiaries and covered
dependents.
(e) Pursuant to Section 7.1(b), the Sellers shall
not have any liability or responsibility for any benefits or
other amounts that may become payable to Transferred Employees
and their dependents or beneficiaries on or after the Closing
Date under any pension, retirement, welfare and fringe benefit
plans, programs, policies or arrangements established or
maintained by the Purchasers.
Section 7.3. Workers' Compensation. From and after the
Closing Date, the Sellers shall remain solely responsible for any and all
Benefit Liabilities to or in respect of any Employee relating to or
arising in connection with any and all claims for workers' compensation
benefits arising with respect to any period or event on or prior to the
Closing Date; provided, that with respect to Benefit Liabilities to or in
respect of any Employee for which a claim for workers' compensation
benefits is made after the Closing Date that relates to periods or events
that occur both before and after the Closing Date, the Purchasers shall
be responsible for the Benefit Liabilities attributable to that period
and those events that occur after the Closing Date.
Section 7.4. Sellers' 401(k) Plan. Subject to Section 7.7,
effective as of the Closing Date, Purchasers shall assume the sponsorship
and be liable for any obligations or liabilities of Sellers with respect
to the Mid-American Waste Systems, Inc. Retirement Savings Plan, but only
to the extent that such liabilities or obligations first mature and are
required to be performed subsequent to the close of business on the
Closing Date.
Section 7.5. Collective Bargaining Agreement. Effective as
of the Closing, the Purchasers shall (a) assume and honor all the rights
and obligations of the Sellers under the collective bargaining agreement
listed in Section 7.5(a) of the Company Disclosure Letter and (b) to the
extent provided in this Article VII assume sponsorship of each single
employer employee benefit plan and benefit arrangement provided for under
such collective bargaining agreement listed in Section 7.5(a) of the
Company Disclosure Letter, in each case, only to the extent such rights
and obligations first mature and are required to be performed subsequent
to the close of business on the Closing Date; and provided further, that
Purchasers shall not be required to assure any obligations under this
Section 7.5 unless they shall have received reasonable assurances from
the International Union of Operating Engineers to the effect that such
collective bargaining agreement imposes no obligation on any Purchaser or
any affiliate of a Purchaser with regard to the employment of persons at
any site, or in connection with any operations, other than the current
site and operations of Mid-American Waste Systems of Cuyahoga, Inc.
Section 7.6. No Employee Rights. Nothing in this Article
VII express or implied shall confer upon any Transferred Employee or
other employee or legal representative thereof any rights or remedies,
including but not limited to any right to employment, or continued
employment for any specified period, of any nature or kind whatsoever
under or by reason of this Agreement.
Section 7.7. Right to Terminate or Modify Plans. Nothing
in this Article VII express or implied shall be construed to prevent the
Purchasers from terminating or modifying to any extent or in any respect
any benefit plan that the Purchasers may establish or maintain.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1. Conditions Precedent to Obligation of the
Sellers and the Purchasers. The respective obligations of each party to
effect the transactions contemplated by this Agreement shall be subject
to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) any waiting period applicable to the
consummation of the transactions contemplated by this Agreement
under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or
the Federal Trade Commission challenging or seeking to enjoin the
consummation of the transactions contemplated by this Agreement,
which action shall not have been withdrawn or terminated without
requiring Purchasers to dispose of or divest any of their
significant assets or businesses, or discontinue or refrain from
conducting any of their significant operations;
(b) no statute, rule, regulation, executive order,
decree, ruling, or preliminary or permanent injunction shall have
been enacted, entered, promulgated, or enforced by any federal or
state court or governmental authority that prohibits, restrains,
enjoins, or restricts the consummation of the transactions
contemplated by this Agreement;
(c) each of the parties shall have made such
filings and obtained such permits, authorizations, consents, or
approvals required by the Governmental Requirements to consummate
the transactions contemplated hereby; and
(d) no claim, action, suit, arbitration, inquiry
proceeding, or investigation (each, an "Action") shall have been
commenced by or before any United States federal, state, or local
or any foreign government, governmental, regulatory, or
administrative authority, agency, or commission or any court,
tribunal or judicial or arbitral body against the Purchasers or
the Sellers, seeking to restrain or materially and adversely
alter the transactions contemplated by this Agreement that, in
the reasonable good faith determination of any party, is likely
to render it impossible or unlawful to consummate such
transactions; provided, however, that the provisions of this
Section 8.1(d) shall not apply to any party that has directly or
indirectly solicited or encouraged any such Action; and
(e) the 363 Order and the 365 Order shall each
have been entered by the Bankruptcy Court and shall not have been
reversed, stayed, modified or amended, and shall not be subject
to any pending or potential appeal that, in the reasonable
judgment of Purchasers, after obtaining advice of counsel, could
if decided adversely to Sellers or Purchasers reasonably result
in judicial relief that would materially and adversely affect the
use by or value to Purchasers of the Business or the Assets.
Section 8.2. Conditions Precedent to Obligation of the
Sellers. The obligation of the Sellers to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or
prior to the Closing Date of the following additional conditions: the
Purchasers shall have performed in all material respects their
obligations under this Agreement required to be performed by them at or
prior to the Closing Date; the representations and warranties of the
Purchasers contained in this Agreement that are qualified with respect to
materiality shall be true and correct in all respects, and such
representations and warranties that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as if made at and as of such date
except as contemplated by the Purchaser Disclosure Letter or this
Agreement; and the Sellers shall have received a certificate of the
chairman of the board, the president, an executive vice president, a
senior vice president, or the chief financial officer of each of the
Purchasers as to the satisfaction of this condition.
Section 8.3. Conditions Precedent to Obligation of the
Purchasers. The obligation of the Purchasers to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at
or prior to the Closing Date of the following additional conditions:
(a) the Sellers shall have performed in all
material respects their obligations under this Agreement required
to be performed by them at or prior to the Closing Date; the
representations and warranties of the Sellers contained in this
Agreement that are qualified with respect to materiality (i.e.,
with respect to the occurrence or likely occurrence of a Company
Material Adverse Effect) shall be true and correct in all
respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects
(i.e., all breaches of such non-qualified representations and
warranties, when combined with all matters that, but for the
qualification by reference to a Company Material Adverse Effect,
would have constituted breaches of the representations and
warranties that are qualified by such reference, would not
collectively constitute or give rise to a Company Material
Adverse Effect), in each case as of the date of this Agreement
and at and as of the Closing Date as if made at and as of such
date, except as contemplated by the Company Disclosure Letter or
this Agreement; and the Purchasers shall have received a
certificate of the chairman of the board, the president, or a
vice president of each of the Sellers as to the satisfaction of
this condition;
(b) The Overbid Procedures Order shall have been
entered by the Bankruptcy Court in substantially the form
contemplated by this Agreement within ten (10) days of the
Petition Date;
(c) The 363 Order and the 365 Order shall each
have been entered by the Bankruptcy Court by March 17, 1997;
(d) Purchasers shall have received all government
approvals, clearances, consents or authorizations necessary or
advisable to transfer the Company Permits to Purchasers (or
Purchasers shall have received adequate assurances that all such
approvals, clearances, consents and authorizations will be
given), and no Company Permits shall be revoked, or shall fail to
be transferred to Purchasers without additional expense and
subject to no additional restrictions or burdens on the
permittee, except in each case for such matters as would not
individually or in the aggregate have a Company Material Adverse
Effect;
(e) Purchasers shall have received title
commitments, title reports or other reasonably satisfactory
evidence demonstrating the accuracy and correctness of Sellers'
representation set forth at Section 3.14;
(f) Purchasers shall have received all approvals
or waivers from the holders of Purchasers' senior debt that
Purchasers deem necessary or advisable in connection with the
Closing and consummation of the transactions contemplated by this
Agreement; and
(g) Purchasers shall have received such consents
and approvals as are necessary in their reasonable judgment to
permit the assignment to Purchasers, without default or
termination, of Sellers rights and obligations in connection with
the industrial revenue bonds and related financial arrangements
described at Section 1.3(e) of the Company Disclosure Letter;
provided, with regard to item number one (1) at Section 1.3(e) of
the Company Disclosure Letter, in the event Purchasers' are not
able to receive such consents such bonds listed in such item may
be paid in full and Purchasers shall have no obligations in
respect thereof under Section 1.3(e), and the Assets will not be
subject to any Encumbrances with regard thereto.
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER
Section 9.1. Termination by Mutual Consent. This Agreement
may be terminated at any time prior to the Closing Date by mutual written
agreement of USA Waste and the Company.
Section 9.2. Termination by Either Purchaser or the
Company. This Agreement may be terminated at any time prior to the
Closing Date by action of the Board of Directors of either USA Waste or
the Company if (a) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory,
or administrative agency or commission shall have issued an order,
decree, or ruling or taken any other action permanently restraining,
enjoining, or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement and either (i) thirty (30) days shall have
elapsed from the issuance of such order, decree, or ruling or other
action and such order, decree, or ruling or other action has not been
removed or (ii) such order, decree, ruling, or other action shall have
become final and non-appealable, provided that the party seeking to
terminate this Agreement pursuant to this clause shall have used all
reasonable efforts to remove such injunction, order, or decree, or (b)
the Closing Date shall not have occurred on or before May 31, 1997.
Section 9.3. Termination by the Company. This Agreement
may be terminated at any time prior to the Closing Date by action of the
Board of Directors of the Company if (a) there has been a breach by the
Purchasers of any representation or warranty contained in this Agreement
that would have or would be likely to have a Purchaser Material Adverse
Effect; (b) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the Purchasers,
which breach is not curable or, if curable, is not cured within thirty
(30) days after written notice of such breach is given by the Company to
the Purchasers; (c) the conditions to the obligations of Purchasers set
forth in Sections 8.3(d), (e) or (f) shall not have been waived or
satisfied on or before April 15, 1997; or (d) the Board of Directors of
the Company has withdrawn, modified, or changed in a manner adverse to
the Purchasers its approval or recommendation of this Agreement in order
to approve and permit the Company to execute a definitive agreement
relating to an Overbid.
Section 9.4. Termination by USA Waste. This Agreement may
be terminated at any time prior to the Closing Date by action of the
Board of Directors of USA Waste if (a) there has been a breach by the
Sellers of any representation or warranty contained in this Agreement
that would have or would be reasonably likely to have a Company Material
Adverse Effect or (b) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the
Sellers, which breach is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach is given by the
Purchasers to the Sellers.
Section 9.5. Effect of Termination and Abandonment. In the
event of termination of the Agreement pursuant to this Article IX,
written notice thereof shall as promptly as practicable be given to the
other parties to this Agreement and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as
provided herein (a) there shall be no liability or obligation on the part
of the Sellers, the Purchasers, or their respective officers and
directors, and all obligations of the parties shall terminate, except for
(i) the obligations of the parties pursuant to Sections 5.5, 9.5, 9.6,
10.5, 10.6, and 10.10, (ii) the obligations of the parties set forth in
the Letter Agreements referred to in Section 5.2 hereof and except that a
party that is in material breach of its representations, warranties,
covenants, or agreements set forth in this Agreement shall be liable for
damages occasioned by such breach, including without limitation any
expenses incurred by the other parry in connection with this Agreement
and the transactions contemplated hereby, and (b) all filings,
applications and other submissions made pursuant to the transactions
contemplated by this Agreement shall, to the extent practicable, be
withdrawn from the agency or person to which made.
Section 9.6. Expense Reimbursement; Termination Fee.
(a) Expense Reimbursement. In the event this
Agreement is terminated for any reason other than pursuant solely
to Section 9.1, 9.2 or subsections (a), (b) or (c) of Section 9.3
hereof, Sellers shall reimburse Purchasers for their actual
reasonable expenses, not to exceed $1,000,000, incurred in
furtherance of this Agreement and the transactions contemplated
herein, including without limitation attorneys' fees and expenses
incurred by Purchasers for services of outside counsel in
negotiating this Agreement, performance of due diligence, or
otherwise. This obligation shall survive any termination of this
Agreement, and shall constitute an administrative expense of
Sellers under sections 503(b) and 507(a)(1) of the Bankruptcy
Code. This reimbursement will be made by Sellers within ten (10)
days of submission by Purchasers of an itemized statement
reflecting such actual reasonable expenses.
(b) Termination Fee.
(i) Sellers agree and acknowledge that Purchasers'
negotiation and execution of the Agreement have resulted from
substantial investment of management time and have required
significant commitment of financial and other resources by
Purchasers, and that the negotiation and execution have provided
value to Sellers. Therefore, if a Termination Fee Event (as
defined in subsection (ii) below) occurs, Sellers shall pay
$6,000,000 to Purchasers as a Termination Fee; provided, that
Sellers shall not be obligated to pay the Termination Fee if,
prior to the occurrence of the Termination Fee Event, the
Agreement has validly been terminated pursuant solely to Section
9.1 or subsections (a) or (b) of Section 9.3 hereof.
(ii) A "Termination Fee Event" is the occurrence
of any of the following:
(A) The termination of this Agreement pursuant to
Section 9.3(d) hereof;
(B) The execution by any of the Sellers, or any
trustee in bankruptcy for any of the Sellers, of an agreement
providing for the sale of all or any material portion of the
Business or of an equity interest in any of the Sellers, or any
business combination of any of the Sellers, involving any party
other than Purchasers (an "Alternative Transaction"); or
(C) The confirmation of any plan of reorganization
in the Bankruptcy Court, or the approval of any agreement or
transaction by the Bankruptcy Court, that provides for any
Alternative Transaction within twelve months of termination of
this transaction.
(iii) Sellers shall pay the Termination Fee
simultaneously with the closing of any such Alternative
Transaction. Sellers' obligation to pay the Termination Fee shall
constitute an administrative expense of Sellers under sections
503(b) and 507(a)(1) of the Bankruptcy Code.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. Survival of Representations, Warranties, and
Agreements. No representations or warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive beyond the
Closing Date.
Section 10.2. Notices. All notices, claims, demands, and
other communications hereunder shall be in writing and shall be deemed
given upon (a) confirmation of receipt of a facsimile transmission, tb)
confirmed delivery by a standard overnight carrier or when delivered by
hand, or (c) the expiration of five (5) business days after the day when
mailed by registered or certified mail (postage prepaid, return receipt
requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by
like notice):
(a) If to the Purchasers, to
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Telecopy: (713) 209-9711
Attention: President
with copies to
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Telecopy: (713) 209-9711
Attention: Gregory T. Sangalis, Esq.
and
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Telecopy: (713) 225-7047
Attention: Roy E. Bertolatus, Esq.
(b) If to the Sellers, to
Mid-American Waste Systems, Inc.
1006 Walnut Street
Canal Winchester, Ohio 43110
Telecopy: (614) 833-9173
Attention: Gene A. Meredith
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: J. Gregory Milmoe, Esq.
Section 10.3. Descriptive Headings. The headings contained
in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 10.4. Entire Agreement; Assignment. This Agreement
(including the Exhibits, the Purchaser Disclosure Letter, the Company
Disclosure Letter, and the other documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all other
prior agreements and understandings (other than those contained in the
Letter Agreements, which are hereby incorporated by reference herein),
both written and oral, among the parties or any of them, with respect to
the subject matter hereof, including, without limitation, any transaction
between or among the parties hereto and (b) shall not be assigned by
operation of law or otherwise.
Section 10.5. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware without regard to the rules of conflict of laws of the State of
Delaware or any other jurisdiction. Each of the parties hereto
irrevocably and unconditionally consents to submit to the jurisdiction
of the courts of the State of Delaware and the United States of America
located in the State of Delaware (the "Delaware Courts") for any
litigation arising out of or relating to this Agreement and the
transactions contemplated thereby (and agrees not to commence any
litigation relating thereto except in such courts), waives any objection
to the laying of venue of any such litigation in the Delaware Courts, and
agrees not to plead or claim that such litigation brought in any Delaware
Court has been brought in an inconvenient forum.
Section 10.6. Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expenses.
Section 10.7. Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties
hereto.
Section 10.8. Waiver. At any time prior to the Closing
Date, the parties hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
Section 10.9. Counterparts; Effectiveness. This Agreement
may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which shall constitute one and the
same agreement. This Agreement shall become effective when each party
hereto shall have received counterparts thereof signed by all the other
parties hereto.
Section 10.10. Severability; Validity; Parties in
Interest. If any provision of this Agreement or the application thereof
to any person or circumstance is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to
other persons or circumstances, shall not be affected thereby, and to
such end, the provisions of this Agreement are agreed to be severable.
Nothing in this Agreement, express or implied, is intended to confer upon
any person not a party to this Agreement any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 10.11. Enforcement of Agreement. The parties
hereto agree that irreparable damage would occur in the event that any
provision of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any state or federal court in the State of Delaware,
this being in addition to any other remedy to which they are entitled
at law or in equity.
ARTICLE XI
DEFINITIONS
Section 11.1. Defined Terms. As used herein, the terms
below shall have the following meanings.
Sellers as of the Closing Date
"Acquisition Subsidiaries" has the meaning set forth in
the Preamble.
"Action" has the meaning set forth in Section 8.1(d).
"Agreement" has the meaning set forth in the Preamble.
"Assets" has the meaning set forth in Section 1.1.
"Assumed Liabilities" has the meaning set forth in Section
1.3.
"Bankruptcy Code" has the meaning set forth in the
Recitals.
"Bankruptcy Court" has the meaning set forth in the
Recitals.
"Benefit Liabilities" means liabilities, obligations,
commitments, damages, costs, taxes and expenses, including reasonable
fees and disbursements of attorneys and other advisors, including any
such expenses incurred in connection with the enforcement of any
applicable provision of this Agreement payable with respect to any
Employee or with respect to or under any Company Plans.
"Business" has the meaning set forth in the Recitals.
"Cash Consideration" has the meaning set forth in Section
1.5.
"Chapter 11 Cases" has the meaning set forth in the
Recitals.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning set forth in the Preamble.
"Company Disclosure Letter" has the meaning set forth in
Article III.
"Company Financial Statements" has the meaning set forth
in Section 3.5
"Company Material Adverse Effect" means any events,
conditions, or matters in respect of the Sellers, the Assets, and the
Assumed Liabilities (collectively, the "Acquired Businesses"), other than
the filing of the Chapter 11 Cases, that in the aggregate taking into
account all events, conditions or matters in respect of the Acquired
Businesses (whether or not in connection with the same or any similar
representation, warranty or matter) result in or are reasonably expected
to result in a loss, cost, or charge to, or a reduction in the revenue
of, the Acquired Businesses in the aggregate amount of $5,000,000 or
more; provided, however, that any of the events, conditions or matters
that exist on the date hereof and have been reflected in this Agreement
or disclosed in the Company Disclosure Letter (in each case without
taking into account the $5,000,000 threshold) shall not be deemed to
constitute a Company Material Adverse Effect, except for and expressly
excluding, however, those events, conditions or matters which were to be
voided or otherwise made unenforceable against the Assets once the Assets
were transferred to Purchasers pursuant to the 363 Order or the 365
Order, but which events, conditions or matters have in fact not been
voided or made unenforceable, in which case such events, conditions or
matters shall be deemed to constitute a Company Material Adverse Effect.
"Company Permits" has the meaning set forth in Section
3.10.
"Company Plans" has the meaning set forth in Section
3.13(a).
"Consideration" has the meaning set forth in Section 1.5.
"Contract" means (a) those contracts, bids, proposals,
purchase orders, agreements, indentures, notes, bonds, loans,
instruments, leases, mortgages, or other arrangements or agreements
listed in Section 1.1(h) of the Company Disclosure Letter and (b) any
other contract, agreement, understanding, or arrangement (whether written
or oral) entered into by the Sellers in the ordinary course of business
pursuant to which a Seller (i) provides solid waste collection,
transportation, or disposal services to a residential, commercial or
industrial customer on such terms as are common in the industry;
provided, however, that no Contract of a type referred to in Clause
(b)(i) shall obligate Purchasers to perform any services or obligations
other than the collection, transportation or disposal of solid, non-
hazardous waste, and other ordinary and related obligations that are in
the industry customarily incidental to the provision of such services; or
(ii) leases or acquires goods or services for use in its offices under
terms customary for such agreements (provided that no Contract of a type
described in this Clause (b)(ii) shall obligate Purchasers to make
payments under any such Contract or group of similar Contracts in an
amount in excess of $20,000 annually unless such Contract may be
terminated by Purchasers without penalty upon reasonable notice).
"Deeds" has the meaning set forth in Section 2.2.
"Delaware Courts" has the meaning set forth in Section
10.5.
"Encumbrances" has the meaning set forth in Section
3.14(b)(i).
"Environmental Laws" has the meaning set forth in Section
3.12.
"Employees" means collectively, any employee or former
employee employed or formerly employed by the Sellers in the operation of
the Business or the beneficiaries or dependents of any such employee or
former employee.
"ERISA" has the meaning set forth in Section 3.13.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Excluded Assets" has the meaning set forth in Section
1.2.
"Excluded Liabilities" has the meaning set forth in
Section 1.4.
"Final Statement" has the meaning set forth in Section
1.6.
"GAAP" has the meaning set forth in Section 3.5.
"Governmental Requirements" has the meaning set forth in
Section 3.3.
"HSR Act" has the meaning set forth in Section 3.3.
"Intellectual Property" means all United States (a)
patents and patent applications (including reissues, divisions,
continuations-in-part and extensions thereof), invention disclosures,
inventions, and improvements thereto, (b) trademarks, trade names,
service marks, trade dress and logos and registrations and applications
for registration thereof, (c) copyrights and registrations thereof and
(d) licenses of any of the foregoing.
"Legal Proceeding "means any judicial, administrative,
regulatory or arbitral proceeding, investigation or inquiry or
administrative charge or complaint pending at law or in equity before any
governmental or regulatory body or authority.
"Letter Agreements" has the meaning set forth in Section
5.2.
"Overbid Procedures Order" has the meaning set forth in
Section 5.3.
"Overbids" has the meaning set forth in Section 5.3(c).
"PBGC" has the meaning set forth in Section 7.6(b).
"Permitted Encumbrances" has the meaning set forth in
Section 3.14(b)(i).
"Person" means any natural person, firm, partnership,
association, corporation, company, trust, business trust or other entity.
"Petitions" has the meaning set forth in the Recitals.
"Petition Date" means the date on which the Petitions are
filed with the Bankruptcy Court.
"Preliminary Statement" has the meaning set forth in
Section 1.6.
"Purchasers" has the meaning set forth in the Preamble.
"Purchaser Common Stock" has the meaning set forth in
Section 4.2
"Purchaser Disclosure Letter" has the meaning set forth in
Article IV.
"Purchaser Material Adverse Effect" has the meaning set
forth in Section 4.1.
"Purchaser SEC Reports" has the meaning set forth in
Section 4.6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Laws" has the meaning set forth in Section
5.10.
"Sellers" has the meaning set forth in the Preamble.
"Seller Representatives" has the meaning set forth in
Section 6.2(b).
"Seller Subsidiaries" has the meaning set forth in the
Preamble.
"Seller Subsidiary" has the meaning set forth in the
Preamble.
"Service Contract" means any Contract pursuant to which
any Seller provides collection, recycling disposal, storage, transfer,
recovery or processing services to a customer, including, but not limited
to, municipal, commercial, industrial, or residential customers.
"Stock Consideration" has the meaning set forth in Section
1.5.
"Tax" means all federal, state, local, and foreign taxes,
and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or
penalties applicable thereto.
"Tax Returns" means all federal, state, local, and foreign
tax returns, declarations, statements, reports, schedules, forms, and
information return and any amended Tax Returns relating to Taxes.
"Termination Payment" has the meaning set forth in Section
9.6.
"Trade Payables" has the meaning set forth in Section
1.3(a).
"Trade Receivables" has the meaning set forth in Section
1.1(b).
"Transferrable Prepaid Expenses" has the meaning set forth
in Section 1.6.
"Transferred Employees" has the meaning set forth in
Section 7.1(a).
"USA Waste" has the meaning set forth in the Preamble.
"Valuation Price" has the meaning set forth in Section
1.5.
"1994 Letter Agreement" has the meaning set forth in
Section 5.2.
"1996 Letter Agreement" has the meaning set forth in
Section 5.2.
"363 Hearing" has the meaning set forth in Section
5.3(c)(iii).
"363 Order" means an order of the Bankruptcy Court, in
form and substance reasonably satisfactory to the Purchasers and the
Sellers, approving the sale of the Business by the Sellers to the
Purchasers under this Agreement pursuant to sections 105 and 363 of the
Bankruptcy Code. The 363 Order shall provide that the transfer of the
Assets by the Sellers to the Purchasers (a) is or will be a legal, valid,
and effective transfer of the Assets; (b) vests or will vest the
Purchasers with good title to the Assets free and clear of all claims and
Encumbrances (including without limitation claims and Encumbrances (i)
that purport to give to any party a right or option to effect any
forfeiture, modification, right of first refusal, repurchase or
termination of Sellers' or Purchasers' interest in the Assets or any
similar rights or (ii) in respect of Taxes) except those expressly
assumed by the Purchasers hereunder; (c) constitutes reasonably
equivalent value and fair consideration under the Bankruptcy Code and
under the laws of the United States, any state, territory, possession, or
the District of Columbia; (d) does not and will not subject the
Purchasers to any liability by reason of such transfer under the laws of
the United States, any state, territory or possession thereof or the
District of Columbia based, in whole or in part, directly or indirectly,
on any theory of law, including, without limitation, any theory of
successor or transferee liability; (e) the Bankruptcy Court retains
jurisdiction to enforce the provisions of this Agreement in all respects,
including retaining jurisdiction to protect Purchasers against any of the
Excluded Liabilities; (f) the provisions of the 363 Order are
nonseverable and mutually dependent; and (g) the transactions
contemplated by this Agreement are undertaken by the Purchasers in good
faith, as that term is used in section 363(m) of the Bankruptcy Code.
"365 Order" means an order or orders of the Bankruptcy
Court, in form and substance reasonably satisfactory to the Purchasers
and the Sellers, approving the assumption and assignment of all Assumed
Liabilities by the Sellers pursuant to section 365 of the Bankruptcy
Code. The 365 Order shall provide that all defaults of Sellers under the
Contracts arising or accruing prior to the date of the 365 Order (without
giving effect to any acceleration clauses or any default provisions in
such contracts of a kind specified in section 365(b)(2) of the Bankruptcy
Code) have been cured or will be promptly cured by Sellers such that
Purchasers shall have no liability or obligation with respect to any
default or obligation arising or accruing prior to the date of the 365
Order, except as may otherwise be specifically agreed as set forth in
this Agreement; provided, however, that to the extent such Contracts are
in default as a result of any failure to post, procure, or maintain in an
adequate amount performance or surety bonds or any other forms of
financial assurance, including, without limitation, letters of credit and
cash deposits, the Purchasers shall post, procure, and maintain such
performance or surety bonds; and that the Contracts (other than Excluded
Liabilities) will be transferred to, and remain in full force and effect
for the benefit of the Purchasers, notwithstanding any provision in such
Contracts or in applicable law (including those described in sections
365(b)(2) and (f) of the Bankruptcy Code) that prohibits, restricts, or
limits in any way such assignment or transfer.
IN WITNESS WHEREOF, the Sellers and the Purchasers have
caused this Agreement to be executed on their behalf by their officers
thereunto duly authorized, as of the date first above written.
MID-AMERICAN WASTE SYSTEMS, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
FAIRFIELD SANITARY LANDFILL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
JOHNSON DISPOSAL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF OHIO, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF CUYAHOGA, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MOUND LANDFILL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
TRIANGLE LANDFILL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
UNITED WASTE SYSTEMS, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
B & L SANITATION, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
H & D EXCAVATING, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF INDIANA, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
CENTERPOINT LANDFILL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF ILLINOIS, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
DAUBS LAND FILL, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
K/C RECLAMATION, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF PENNSYLVANIA,
INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
RESOURCE CONSERVATION CORP.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
LOCAL SANITATION SERVICE, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
PLAINS MANAGEMENT, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
NATIONAL WASTE AND ENERGY CORPORATION
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF HARRISON, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF WEST VIRGINIA, INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
BUTTON GWINNETT ACQUISITION CORP.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
SPEEDWAY GRADING CORP., INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
MID-AMERICAN WASTE SYSTEMS OF SOUTH CAROLINA,
INC.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
NORTHWESTERN DISPOSAL CO.
By: /s/ Gene A. Meredith
Name: Gene A. Meredith
Title: President
USA WASTE SERVICES, INC.
By: /s/ Gregory T. Sangalis
Name: Gregory T. Sangalis
Title: Vice President
