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
June 28, 1996
Date of Report
(Date of Earliest Event Reported)
CONTINENTAL WASTE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22602 11-2909512
(State of Incorporation) (Commission File No.) (IRS Employer
Identification Number)
67 Walnut Avenue, Suite 103
Clark, New Jersey 07066
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (908) 396-0018
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Item 2. Acquisition or Disposition of Assets.
On July 1, 1996, Continental Waste Industries, Inc. (the "Company") entered into
a definitive agreement to purchase all of the stock of Recycling Industries,
Inc. and Statewide Environmental Contractors, Inc. and all of the assets of
Lomac Realty (the "Acquisition"). These three companies are all affiliated with
each other, have combined revenues of approximately $13 million and all are
engaged in the waste management business in central New Jersey, which business
the Company intends to continue to operate.
The Company paid $3.2 million in cash, issued 555,512 shares of the Company's
common stock, issued $3.0 million in Notes payable to the Sellers and assumed
$3.5 million of debt for the Acquisition. The Company will record this
transaction as a purchase. The cash portion of the purchase price for the
Acquisition was paid using proceeds of an advance under the Company's revolving
credit facility led by LaSalle National Bank.
Item 5. Other Events.
On June 27, 1996, the Company entered into a definitive agreement to merge with
and into a newly-formed, wholly-owned subsidiary of Republic Industries, Inc.
Under the terms of the proposed merger, each share of the Company's common
stock, $0.0006 par value per share, outstanding on the effective date of the
merger will be converted into 4/5ths of a share of common stock, $0.01 par value
per share, of Republic Industries (the "Merger").
The Merger, which Republic Industries expects to account for on a pooling of
interests basis, is subject to approval by the Company's shareholders and
various other customary closing conditions, including regulatory approvals.
The Company's three largest shareholders, Carlos E. Aguero, Thomas A. Volini and
First Analysis Corporation, as general partner of each of Environmental Venture
Fund Limited Partnership, Apex Investment Fund and the Productivity Fund Limited
Partnership (the "Management Shareholders"), who, in the aggregate, own
(directly or indirectly) approximately 5% of the Company's outstanding common
stock, have agreed that at the time a definitive merger agreement is executed,
they will each deliver to Republic irrevocable proxies with respect to all of
the shares owned by them which will enable Republic to vote all of these shares
in favor of the Merger.
Item 7. Financial Statements and Exhibits.
Below is a list of the financial statements, pro forma financial information and
exhibits to be filed in connection with this report:
(a) The combined financial statements of Recycling Industries, Inc. and
Statewide Environmental Contractors, Inc. are not available for
submission. Those financial statements will be filed within 75 days of
July 1, 1996.
(b) The pro forma financial information for the Company and the combined
Recycling Industries, Inc. and Statewide Environmental Contractors,
Inc. are not available for submission. Those financial statements will
be filed within 75 days of July 1, 1996.
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Exhibits
No. Description
2.1 Agreement and Plan of Merger by and among Republic Industries, Inc., RI/CW
Merger Corp. Continental Waste Industries, Inc. and Thomas A. Volini and
Carlos E. Aguero, dated June 27, 1996.
2.2 Acquisition Agreement by and among Continental Waste Industries, Inc.,
Statewide Environmental Contractors, Inc. and the Stockholders of Statewide
Environmental Contractors, Inc., dated April 11, 1996
2.3 Acquisition Agreement by and among Continental Waste Industries, Inc.,
Recycling Industries, Inc. and the Stockholders of Recycling Industries,
Inc., dated April 11, 1996
2.4 Agreement of Sale between Lomac Realty and Karat Corp., dated April 11,
1996.
2.5 Override Agreement Respecting Closing Consideration among Continental Waste
Industries, Inc., CWI of NJ, Inc., Statewide Environmental Contractors,
Inc., Recycling Industries, Inc., Lomac Realty, Mary Lemmo, Nicholas Lemmo,
Maurice Kirchofer, Don J. Lotano, Frank J. Lotano, Arline M. Lotano and
Joseph Lemmo, dated June 28, 1996.
2.6 Non-Compete Agreement (Schedule 2.2(k)) among Recycling Industries, Inc.,
Continental Waste Industries, Inc., Don J. Lotano, Frank J. Lotano, Arline
Lotano (the "Stockholders") and among CWI, Stockholders, Maurice Kirchofer
and Joseph Lemmo, dated April 11, 1996.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONTINENTAL WASTE INDUSTRIES, INC.
By: /S/ Carlos E. Aguero
Carlos E. Aguero
President and
Chief Executive Officer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 27, 1996 (this
"Agreement"), by and among REPUBLIC INDUSTRIES, INC., a Delaware corporation
("Republic"), RI/CW MERGER CORP., a Delaware corporation and wholly-owned
subsidiary of Republic ("Mergersub"), CONTINENTAL WASTE INDUSTRIES, INC., a
Delaware corporation (the "Company"), and THOMAS A. VOLINI and CARLOS E. AGUERO
(the "Management Stockholders").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware
("Delaware Law"), the parties desire to enter into a business combination
transaction pursuant to which Mergersub will be merged with and into the Company
(the "Merger');
WHEREAS, the Board of Directors of the Company has determined that the
Merger is fair to, and in the best interests of, the Company and its
stockholders, has approved and adopted this Agreement and the Merger, and has
recommended approval and adoption of this Agreement and the Merger by the
stockholders of the Company;
WHEREAS, the Board of Directors of Republic has determined that the
Merger is fair to, and in the best interests of, Republic and its stockholders
and has approved and adopted this Agreement and the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling-of-interests business combination.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined in Section 1.3), Mergersub shall be merged with and
into the Company, with the Company being the surviving corporation in the Merger
(the "Surviving Corporation") and thereby becoming a wholly-owned subsidiary of
Republic, and the separate corporate existence of Mergersub shall cease.
SECTION 1.2. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VIII, the closing of the Merger (the "Closing") will take place
at a date and time determined by the parties as promptly as practicable (and in
any event within two business days) after satisfaction or waiver of the
conditions precedent set forth in Article VIII at the offices of Akerman,
Senterfitt & Eidson, P.A., One S.E. Third Avenue, Miami, Florida, unless another
date, time or place is agreed to in writing by the parties hereto.
SECTION 1.3. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware in such form as required by, and executed in accordance
with the relevant provisions of, Delaware Law (the date and time of such filing,
or such later date or time as set forth therein, being the "Effective Time").
SECTION 1.4. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in Section 259 of the Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all property, rights, privileges,
powers and franchises of the Company and Mergersub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Mergersub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. CERTIFICATE OF INCORPORATION: BY-LAWS. At the Effective
Time, the Certificate of Incorporation and the By-Laws of the Company, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation thereafter, unless
and until amended in accordance with their terms and as provided by law.
SECTION 1.6. DIRECTORS AND OFFICERS. At the Effective Time, the
directors of Mergersub at such time shall be the directors of the Surviving
Corporation, and the officers of the Company at such time shall be the officers
of the Surviving Corporation, each to hold a directorship or office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation, until their respective successors are duly elected and qualified.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company,
Mergersub or the stockholders of the Company or Mergersub:
(a) Each share of common stock, par value $0.0006 per share, of the Company
("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be canceled
pursuant to Section 2.1(b)) shall be converted, subject to Section 2.2(d), into
the right to receive 4/5 of one share (the "Exchange Ratio") of common stock,
par value $0.01 per share, of Republic ("Republic Common Stock"); provided,
however, that if between the date of this Agreement and the Effective Time the
outstanding shares of Company Common Stock or Republic Common Stock shall have
been changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. Nothing stated in
the immediately preceding sentence shall be construed as providing the holders
of Company Common Stock any preemptive or antidilutive rights other than in the
case of a stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, and there shall be no adjustment to
the Exchange Ratio in the event that Republic issues or agrees to issue any
shares of Republic Common Stock between the date hereof and the Effective Time,
whether for cash, through option grants, option or warrant exercises, in
acquisitions, or in other transactions. At the Effective Time, all shares of
Company Common Stock issued and outstanding immediately prior thereto shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive, upon the surrender of such
certificate in accordance with the provisions of Section 2.2, certificates
evidencing such number of whole shares of Republic Common Stock into which such
Company Common Stock was converted in accordance with the Exchange Ratio and any
cash in lieu of fractional shares of Republic Common Stock paid in consideration
therefor pursuant to Section 2.2(d). The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided herein or by law.
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(b) Each share of Company Common Stock held in the treasury of the Company
and each share of Company Common Stock owned by Republic or any direct or
indirect wholly owned subsidiary of Republic or of the Company immediately prior
to the Effective Time shall automatically be canceled and extinguished without
any conversion thereof and no payment shall be made with respect thereto.
(c) Each share of common stock of Mergersub issued and outstanding at the
Effective Time shall be converted into one share of the common stock , $0.0006
par value per share, of the Surviving Corporation.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Republic shall deposit, or shall cause to be deposited,
with Wells Fargo Bank (Texas), National Association, or such other bank or trust
company as may be designated by Republic (the "Exchange Agent"), for the benefit
of the holders of shares of Company Common Stock, for exchange in accordance
with this Article II, through the Exchange Agent, at the Effective Time, (i)
certificates evidencing the shares of Republic Common Stock issuable pursuant to
Section 2.1 in exchange for outstanding shares of Company Common Stock and (ii)
upon the request of the Exchange Agent, cash in an amount sufficient to make any
cash payment in lieu of fractional shares of Republic Common Stock pursuant to
Section 2.2(d) (such certificates for shares of Republic Common Stock, together
with any dividends or distributions with respect thereto, and cash in lieu of
fractional shares of Republic Common Stock being hereafter collectively referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Republic Common Stock contemplated to be issued
pursuant to Section 2.1 out of the Exchange Fund to holders of shares of Company
Common Stock. Except as contemplated by Section 2.2(e) hereof, the Exchange Fund
shall not be used for any other purpose. Any interest, dividends or other income
earned on the investment of cash or other property held in the Exchange Fund
shall be for the account of Republic.
(b) Exchange Procedures. Republic shall instruct the Exchange Agent to
mail, within five (5) business days after the Effective Time, to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time evidenced outstanding shares of Company Common Stock (the "Certificates")
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Republic may reasonably specify) and (ii)
instructions to effect the surrender of the Certificates in exchange for the
certificates evidencing shares of Republic Common Stock and cash (if any). Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) certificates evidencing
that number of whole shares of Republic Common Stock that such holder has the
right to receive in accordance with the Exchange Ratio in respect of the shares
of Company Common Stock formerly evidenced by such Certificate, (B) any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c), and (C) cash in lieu of fractional shares of Republic Common
Stock to which such holder is entitled pursuant to Section 2.2(d) (the shares of
Republic Common Stock, and the dividends, distributions and cash described in
clauses (A), (B) and (C) being, collectively, the "Merger Consideration"), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, Merger Consideration may be issued and
paid in accordance with this Article II to a transferee if the Certificate
evidencing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been paid
or by the transferee requesting such payment paying to the Exchange Agent any
such transfer tax. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to evidence
only the right to receive upon such surrender the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares of Republic Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to Republic Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Republic Common Stock represented thereby and no cash
payment in lieu of fractional shares of Republic Common Stock shall be paid to
any such holder pursuant to Section 2.2(d), until the holder of such Certificate
shall surrender such Certificate. Upon such surrender, there shall be paid to
the person or entity (hereinafter, any person or entity being referred to as a
"Person") in whose name the certificates representing the shares of Republic
Common Stock into which such Certificates were converted and registered, all
dividends and other distributions payable in respect of such Republic Common
Stock on a date after, and in respect of a record date after, the Effective
Time.
(d) Fractional Shares. No fraction of a share of Republic Common Stock
shall be issued in the Merger and any such fractional share interest shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Republic. In lieu of any such fractional shares, each holder of Company Common
Stock upon surrender of a Certificate for exchange pursuant to this Section 2.2
shall be paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the per share closing price on The Nasdaq Stock
Market-National Market ("Nasdaq") of Republic Common Stock on the date of the
Effective Time (or, if shares of Republic Common Stock are not quoted on the
Nasdaq on such date, the first date of trading of such Republic Common Stock on
the Nasdaq after the Effective Time) by (ii) the fractional interest to which
such holder would otherwise be entitled (after taking into account all shares of
Company Common Stock then held of record by such holder).
(e) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Republic, upon demand, and any
holders of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Republic for the Merger Consideration
to which they are entitled pursuant to this Article II.
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(f) No Liability. Neither Republic nor the Company shall be liable to any
holder of shares of Company Common Stock for any such shares of Republic Common
Stock (or dividends or distributions with respect thereto) from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) Withholding Rights. Republic or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such amounts as
Republic or the Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the Code or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Republic or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Republic or
the Exchange Agent.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the shares
of Republic Common Stock, any cash in lieu of fractional shares and any unpaid
dividends and distributions on shares of Republic Common Stock deliverable in
respect thereof, pursuant to this Agreement.
SECTION 2.3. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
recordation of transfers of shares of the Company Common Stock thereafter on the
stock transfer books of the Company. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Republic in accordance with
Section 2.2(b) shall be converted into the Merger Consideration.
SECTION 2.4. STOCK OPTIONS AND WARRANTS. At the Effective Time, the
Company's obligations with respect to each outstanding Company Stock Option (as
defined in Section 3.3) and each outstanding Company Warrant (as defined in
Section 3.3), in each case to purchase shares of Company Common Stock, as
amended in the manner described in the following sentence, shall be assumed by
Republic. The Company Stock Options and Company Warrants so assumed by Republic
shall continue to have, and be subject to, the same terms and conditions as set
forth in the stock option plans and agreements pursuant to which such Company
Stock Options were issued and any other agreements evidencing such options and
warrants, as in effect immediately prior to the Effective Time, except that from
and after the Effective Time each such Company Stock Option and Company Warrant
shall be exercisable for that number of whole shares of Republic Common Stock
equal to the product of the number of shares of Company Common Stock covered by
such option or warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio and rounded up to the nearest whole number of shares of Republic
Common Stock, with an exercise price per share equal to the exercise price per
share of such option or warrant immediately prior to the Effective Time divided
by the Exchange Ratio; provided, however, that in the case of any option to
which Section 421 of the Code applies by reason of its qualification under
any of the requirements of Section 421 of the Code, the option price, the number
of shares purchasable pursuant thereto and the terms and conditions of exercise
thereof shall be determined in order to comply with Section 424(a) of the Code.
Republic shall (i) reserve for issuance the number of shares of Republic Common
Stock that will become issuable upon the exercise of such Company Stock Options
and Company Warrants pursuant to this Section 2.4 and (ii) promptly after
the Effective Time issue to each holder of an outstanding Company Stock
Option or Company Warrant a document evidencing the assumption by Republic of
the Company's obligations with respect thereto under this Section 2.4.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND MANAGEMENT STOCKHOLDERS
The Company and the Management Stockholders, jointly and severally,
represent and warrant to Republic that:
SECTION 3.1. ORGANIZATION AND GOOD STANDING. Each of the Company and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of the Company and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a material adverse effect on
the Company. The Company has delivered to Republic complete and correct copies
of its Certificate of Incorporation and By-Laws and the certificates of
incorporation and by-laws (or similar organizational documents) of its
subsidiaries, in each case as amended to the date hereof.
SECTION 3.2. SUBSIDIARIES. Schedule 3.2 lists each subsidiary of the
Company, together with its jurisdiction of incorporation or organization. Except
as set forth on Schedule 3.2, all the outstanding shares of capital stock of
each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company or by another subsidiary of the
Company, free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens").
Except for the capital stock of its subsidiaries set forth on Schedule 3.2, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
SECTION 3.3. CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of: (a) 40,000,000 shares of Company Common Stock, and (b) an aggregate
total of 644,200 shares of preferred stock (the "Company Preferred Stock"),
consisting of (1) 425,200 shares of preferred stock, $5.64 par value, (2)
119,000 shares of preferred stock, $20.00 par value, and (3) 100,000 shares of
preferred stock, $0.001 par value. At the close of business on June 17, 1996:
(i) 14,243,748 shares of Company Common Stock were issued and outstanding; (ii)
79,375 shares of Company Common Stock were held by the Company in its treasury;
(iii) an aggregate total of 619,941 shares of Company Common Stock were reserved
for issuance upon the exercise of outstanding stock options ("Company Stock
Options") granted pursuant to the Company 1995 Employee Stock Option Plan, the
Company 1995 Stock Option Plan for Outside Directors, the Company's prior stock
option plans, and certain employment agreements and other contracts with
officers and key employees of the Company; (iv) 287,023 shares of Company Common
Stock were reserved for issuance upon exercise of outstanding warrants, all of
which warrants are presently exercisable ("Company Warrants"); and (v) no shares
of Company Preferred Stock are issued and outstanding. Except as set forth
above, as of the date of this Agreement, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. A list of the names of the holders of all outstanding Company Stock
Options and Company Warrants, with the respective amounts of shares, exercise
prices, vesting dates and expiration dates thereof, is set forth on Schedule
3.3, as are descriptions of other obligations to issue shares of Company Common
Stock, and copies of the Company Warrants, Company 1995 Employee Stock Option
Plan and Company 1995 Stock Option Plan for Outside Directors are attached to
Schedule 3.3. All outstanding shares of capital stock of the Company are, and
all shares which may be issued pursuant to the Company Stock Options and Company
Warrants will be, when issued against payment therefor in accordance with the
terms thereof, duly authorized, validly issued, fully-paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into
securities having the right to vote) on any matters on which stockholders of the
Company may vote. Except as set forth above and except for the matters listed on
Schedule 5.9, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is a
party or by which any of them is bound, obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company or of any of its subsidiaries, or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. As of
the date hereof, there are no outstanding contractual obligations which require
or will require or obligate the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries.
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SECTION 3.4. AUTHORITY; NONCONTRAVENTION. Each of the Company and the
Management Stockholders has the requisite corporate or other power and authority
to execute and deliver this Agreement and, subject, in the case of the Company,
to approval of this Agreement by the holders of a majority of the outstanding
shares of the Company Common Stock, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the Company
and the Management Stockholders and the consummation by the Company and the
Management Stockholders of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate or other action on their
respective parts, subject, in the case of the Company, to approval of this
Agreement by the holders of a majority of the outstanding shares of the Company
Common Stock. This Agreement has been duly executed and delivered by the Company
and the Management Stockholders and constitutes a valid and binding obligation
of the Company and the Management Stockholders, enforceable against them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
generally and general equitable principles. Except as set forth on Schedule 3.4,
the execution and delivery of this Agreement does not, and performance of the
respective obligations hereunder by the Company and the Management Stockholders
will not, conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its subsidiaries under, any
provision of (a) the Certificate of Incorporation or By-laws of the Company or
any provision of the comparable charter or organizational documents of any of
its subsidiaries, (b) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
or license to which the Company or any of its subsidiaries is a party or by
which their respective properties or assets are bound, or (c) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clause (b) and clause (c), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) have a material adverse effect on the Company
or its subsidiaries, (y) impair in any material respect the ability of the
Company to perform its obligations under this Agreement, or (z) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local government
or any court, tribunal, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Authority"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution, delivery and performance of this
Agreement by the Company, except for: (i) the filing of a premerger notification
and report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (ii) the filing with the
Securities and Exchange Commission ("SEC") of (y) a proxy statement relating to
the approval by the Company's stockholders of this Agreement and the Merger (as
amended or supplemented from time to time, the "Proxy Statement"), and (z) such
reports under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business; (iv) the consents set forth on Schedule 3.4; and (v) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a material adverse effect on the Company or prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
8
SECTION 3.5. SEC DOCUMENTS AND FINANCIAL STATEMENTS. The Company has
filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1995 (the "SEC Documents"). As of their respective
dates, the SEC Documents complied as to form in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed SEC Document, filed and
publicly available prior to the date of this Agreement, as of the date of this
Agreement, none of the SEC Documents contains any untrue statement of a material
fact or omits to state any 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. The financial statements of the
Company included in the SEC Documents complied as of their respective dates of
filing with the SEC as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q) applied on a consistent basis during the period involved (except
as may be indicated in the notes thereto) and fairly present the consolidated
financial position, results of the Company's operations and cash flows as at the
dates and for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
SEC Documents and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto which
individually or in the aggregate, could reasonably be expected to have material
adverse effect on the Company.
SECTION 3.6. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Republic in connection with the issuance of Republic Common Stock in the
Merger (the "Registration Statement") will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders and
at the time of the meeting of the Company's stockholders held to vote on
approval of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply in all material
respects with the requirements of the Exchange Act, and the rules and
regulations thereunder. No representation is made by the Company in this Section
3.6 with respect to statements made or incorporated by reference in the Proxy
Statement based on information supplied by Republic or Mergersub specifically
for inclusion or incorporation by reference in the Proxy Statement.
9
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement, and except as expressly contemplated by this Agreement, since the
date of the most recent audited financial statements included in such SEC
Documents, the Company has conducted its business only in the ordinary course,
and there has not been: (i) any material adverse change in the business, assets,
results of operations, customer and employee relations, or business prospects of
the Company and its subsidiaries, taken as a whole; (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock; (iii) any
split, combination or reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock; (iv) any
granting by the Company or any of its subsidiaries to any officer of the Company
or any of its subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in such SEC Documents; (v) any granting by the
Company or any of its subsidiaries to any officer of any increase in severance
or termination pay, except as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in such SEC Documents; (vi) an entry by the
Company or any of its subsidiaries into any employment, severance or termination
agreement with any officer; (vii) any damage, destruction or loss, whether or
not covered by insurance, that has had or is likely to have a material adverse
effect on the Company; (viii) any change in accounting methods, principles or
practices by the Company materially affecting its assets, liabilities or
business, except insofar as may have been required by a change in generally
accepted accounting principles; or (ix) any adoption or amendment in any
material respect by the Company or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding in
each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or its subsidiaries for the benefit of any
current or former employee, officer or director of the Company or any of its
subsidiaries (each, a "Benefit Plan" and, collectively, "Benefit Plans").
SECTION 3.8. LITIGATION. Except as disclosed on Schedule 3.8 or in the SEC
Documents filed and publicly available prior to the date of this Agreement,
there is no suit, action or proceeding pending or threatened in writing against
the Company or any of its subsidiaries challenging the acquisition by Republic
or Mergersub of any shares of the Company Common Stock or any provision of this
Agreement or seeking to restrain or prohibit the consummation of the Merger, or
that, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company, nor is there any judgment, decree,
injunction, rule or order of any Governmental Authority or arbitrator
outstanding against the Company or any of its subsidiaries having, or which
could reasonably be expected to have, any such effect.
10
SECTION 3.9. COMPLIANCE WITH LAWS; PERMITS. Except as disclosed on
Schedule 3.9 or in the SEC Documents filed and publicly available prior to the
date of this Agreement, the Company and its subsidiaries are in compliance with
all applicable statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any Governmental Authority applicable to its business or
operations, except for instances of possible noncompliance that, individually or
in the aggregate, would not have a material adverse effect on the Company or its
subsidiaries. Except as set forth on Schedule 3.9, each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits"), necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit, except for the absence of Permits
and for defaults under Permits which, individually or in the aggregate, would
not have a material adverse effect on the Company or its subsidiaries. None of
such Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement, or consummation of the transactions contemplated
hereby provided that the consents or filings referred to in Schedule 3.4 are
obtained or made prior to the Closing.
SECTION 3.10. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.10 or where the failure
to comply could not reasonably be expected to have a material adverse effect on
the Company, the Company and each of its subsidiaries is and has at all times
been in full compliance with all Environmental Laws (as defined in clause (h)
below) governing its business, operations, properties and assets, including,
without limitation: (i) all requirements relating to the Discharge (as defined
in clause (h) below) and Handling (as defined in clause (h) below) of Hazardous
Substances (as defined in clause (h) below) or other Wastes (as defined in
clause (h) below); (ii) all requirements relating to notice, record keeping and
reporting; (iii) all requirements relating to obtaining and maintaining Licenses
(as defined in clause (h) below) for the ownership of its properties and assets
and the operation of its business as presently conducted, including Licenses
relating to the Handling and Discharge of Hazardous Substances and other Wastes;
or (iv) all applicable writs, orders, judgements, injunctions, governmental
communications, decrees, informational requests or demands issued pursuant to,
or arising under, any Environmental Laws.
(b) Except as set forth on Schedule 3.10, there are no (and to the
knowledge of the Company there is no basis for any) non-compliance orders,
warning letters, notices of violation (collectively "Notices"), claims, suits,
actions, judgments, penalties, fines, or administrative or judicial
investigations or proceedings (collectively "Proceedings") pending or threatened
against or involving the Company or any of its subsidiaries, or any of their
respective businesses, operations, properties, or assets, issued by any
Governmental Authority or third party with respect to any Environmental Laws or
Licenses issued to the Company or any of its subsidiaries thereunder in
connection with, related to or arising out of the ownership by the Company of
its properties or assets or the operation of its business, which have not been
resolved to the satisfaction of the issuing Governmental Authority or third
party in a manner that would not impose any obligation, burden or continuing
liability on Republic or the Surviving Corporation in the event that the
transactions contemplated by this Agreement are consummated, or which could have
a material adverse effect on the Company, including, without limitation: (i)
Notices or Proceedings related to the Company or any of its subsidiaries being a
potentially responsible party for a federal or state environmental cleanup site
or for corrective action under any applicable Environmental Laws; (ii) Notices
or Proceedings in connection with any federal or state environmental cleanup
site, or in connection with any of the real property or premises where the
Company or any of its subsidiaries has transported, transferred or disposed of
other Wastes; (iii) Notices or Proceedings relating to the Company or any of its
subsidiaries being responsible to undertake any response or remedial actions or
clean-up actions of any kind; or (iv) Notices or Proceedings related to the
Company or any of its subsidiaries being liable under any Environmental Laws for
personal injury, property damage, natural resource damage, or clean up
obligations.
11
(c) Except as set forth on Schedule 3.10, neither the Company
nor any of its subsidiaries has not Handled or Discharged, nor have any of them
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances or other Waste to, at or upon: (i) any location other than a site
lawfully permitted to receive such Hazardous Substances or other Waste; (ii) any
of the Owned Properties (as defined in Section 3.16(a)) or Leased Premises (as
defined in Section 3.16(b)); or (iii) any site which, pursuant to CERCLA (as
defined in clause (h) below) or any similar state law (x) has been placed on the
National Priorities List or its state equivalent; or (y) the Environmental
Protection Agency or the relevant state agency or other Governmental Authority
has notified the Company or any of its subsidiaries that such Governmental
Authority has proposed or is proposing to place on the National Priorities List
or its state equivalent. There has not occurred, nor is there presently
occurring, a Discharge, or threatened Discharge, of any Hazardous Substance on,
into or beneath the surface of, or adjacent to, any of the Owned Properties or
Leased Premises in an amount or otherwise requiring a notice or report to be
made to a Governmental Authority or in violation of any applicable Environmental
Laws.
(d) Schedule 3.10 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by the
Company on any of the Owned Properties or Leased Premises which have involved
the Handling or Discharge of Hazardous Substances.
(e) Schedule 3.10 identifies the locations to which the Company
has transferred, transported, hauled, moved, or disposed of Waste over the past
five (5) years and the types and volumes of Waste transferred, transported,
hauled, moved, or disposed of to each such location.
(f) Except as set forth on Schedule 3.10, neither the Company nor any of
its subsidiaries uses, nor has any of them used, any Aboveground Storage Tanks
(as defined in clause (h) below) or Underground Storage Tanks (as defined in
clause (h) below), and there are not now nor have they ever been any Underground
Storage Tanks beneath any of the Owned Properties or Leased Premises.
(g) Schedule 3.10 identifies (i) all environmental audits,
assessments or occupational health studies undertaken since January 1, 1994 by
the Company or its agents or, to the knowledge of the Company, undertaken by any
Governmental Authority, or any third party, relating to or affecting the Company
or any of the Owned Properties or Leased Premises; (ii) the results of any
ground, water, soil, air or asbestos monitoring undertaken by the Company or its
agents or, to the knowledge of the Company, undertaken by any Governmental
Authority or any third party, relating to or affecting the Company or any of the
Owned Properties or Leased Premises which indicate the presence of Hazardous
Substances at levels requiring a notice or report to be made to a Governmental
Authority or in violation of any applicable Environmental Laws; (iii) all
material written communications between the Company and any Governmental
Authority arising under or related to Environmental Laws; and (iv) all
outstanding citations issued under OSHA, or similar state or local statutes,
laws, ordinances, codes, rules, regulations, orders, rulings, or decrees,
relating to or affecting either the Company or any of the Owned Properties or
Leased Premises.
12
(h) For purposes of this Section 3.10, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further
be defined in any Environmental Law, into any medium including,
without limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings, and changes or ordinances or judicial or
administrative interpretations thereof, or similar laws of foreign
jurisdictions where the Company or any of its subsidiaries conducts
business, whether currently in existence or hereafter enacted or
promulgated, any of which govern (or purport to govern) or relate to
pollution, protection of the environment, public health and safety,
air emissions, water discharges, hazardous or toxic substances, solid
or hazardous waste or occupational health and safety, as any of these
terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendment and Reauthorization Act of 1986, 42
U.S.C. Section 9601, et seq. (hereinafter collectively "CERCLA"); the
Solid Waste Disposal Act, as amended by the Resource Conversation and
Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section 6901 et seq. (hereinafter,
collectively "RCRA") the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as
amended (42 U.S.C. Section 7401-7642); the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C.
Section 136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986 as amended, 42 U.S.C. Section 11001, et seq.
(Title III of SARA) ("EPCRA"); and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. Section 651, et seq. ("OSHA").
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, of any Hazardous Substances or
Waste.
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Laws,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar state
statute, or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, or which has been or shall be determined or
interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits, approvals
and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
"Waste" shall be construed broadly to include agricultural
wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes,
industrial solid wastes, liquid wastes, recyclable materials, sludge,
solid wastes, special wastes, used oils, white goods, and yard trash
as those terms are defined under any applicable Environmental Laws.
13
SECTION 3.11. BENEFIT PLAN COMPLIANCE.
(a) Schedule 3.11 contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Benefit Plans maintained, or
contributed to, or required to be contributed to, by the Company or any of its
subsidiaries or any other Person that, together with the Company, is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code (the Company
and each such other Person, a "Commonly Controlled Entity") for the benefit of
any current or former employees, officers or directors of the Company or any of
its subsidiaries. The Company has delivered or made available to Republic true,
complete and correct copies of (i) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (ii) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect to each
Benefit Plan (if any such report was required), (iii) the most recent summary
plan description for each Benefit Plan for which such summary plan description
is required, and (iv) each trust agreement and group annuity contract relating
to any Benefit Plan. Each Benefit Plan has been administered in all material
respects in accordance with its terms and is in compliance with the applicable
provisions of ERISA, the Code, all other applicable laws and all applicable
collective bargaining agreements except where the failure to comply would not be
reasonably expected to result in a material adverse effect on the Company.
(b) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service, or have filed a timely application
therefor, to the effect that such Pension Plans are qualified and exempt from
federal income taxes under Section 401(a) and 501(a), respectively, of the Code,
and no such determination letter has been revoked nor has any such Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(c) No Commonly Controlled Entity has incurred any liability
which has not been fully paid to a Pension Plan under Title IV of ERISA (other
than for contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due) that, when
aggregated with other such liabilities, would result in a material adverse
effect on the Company.
(d) As of the most recent valuation date for each Pension Plan
that is a "defined benefit pension plan" (as defined in Section 3(35) of ERISA
subject to Title IV of ERISA (other than a multiemployer plan) (hereinafter a
"Defined Benefit Plan")), there was not any material amount of "unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined
Benefit Plan, and the Company is not aware of any facts or circumstances that
would materially adversely change the funded status of any such Defined Benefit
Plan. The Company has furnished or made available to Republic the most recent
actuarial report or valuation with respect to each Defined Benefit Plan and has
no reason to believe that the conclusions expressed in those reports or
valuations are incorrect.
(e) No Commonly Controlled Entity has been required at any time
within the five calendar years preceding the date hereof or is required
currently to contribute to any "multiemployer plan (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) that has not been fully paid.
(f) With respect to any Benefit Plan that is an employee
welfare benefit plan, (i) no such Benefit Plan is funded through a "welfare
benefits fund", as such term is defined in Section 419(e) of the Code, and (ii)
each such Benefit Plan that is a "group health plan", as such term is defined in
Section 5000(b)(1) of the Code, complies substantially with the applicable
requirements of Section 4980(B)(f) of the Code.
(g) Except with respect to certain of the Company Stock Options
as indicated on Schedule 3.3, no employee of the Company or any of its
subsidiaries will be entitled to any additional compensation or benefits or any
acceleration of the time of payment or vesting of any compensation or benefits
under any Benefit Plan as a result of the transactions contemplated by this
Agreement.
14
(h) Neither the Company or any of its subsidiaries nor any
Person acting on behalf of the Company or any of its subsidiaries has, in
contemplation of any corporate transaction involving Republic, issued any
written communication to, or otherwise made or entered into any legally binding
commitment with, any employees of the Company or of any of its subsidiaries to
the effect that, following the date hereof, (i) any benefits or compensation
provided to such employees under existing Benefit Plans or under any other plan
or arrangement will be enhanced, (ii) any new plans or arrangements providing
benefits or compensation will be adopted, (iii) any Benefit Plans will be
continued for any period of time, or (iv) any plans or arrangements provided by
Republic or Mergersub will be made available to such employees.
SECTION 3.12. TAXES. As used in this Section 3.12, "Taxes" shall include
all federal, state, local and foreign income, property, sales, payroll, employee
withholding, excise and other taxes, tariffs or governmental charges of any
nature whatsoever, including any interest, penalties or additions with respect
thereto. Except as set forth on Schedule 3.12, the Company and each of its
subsidiaries, and each affiliated, consolidated, combined or unitary group of
which the Company or any of its subsidiaries is a member (an "Affiliated
Group"), has filed timely all material income tax returns and reports required
to be filed by the Company and its subsidiaries, each such tax return is true
and correct to the knowledge of the Company and has been prepared in material
compliance with all applicable laws and regulations, and the Company and each of
its subsidiaries has paid (or the Company has paid on their behalf) all Taxes
required to be paid by it and them. The most recent financial statements
contained in the SEC Documents filed and publicly available prior to the date of
this Agreement reflect an adequate reserve for all Taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through the
date of such financial statements. Except as set forth on Schedule 3.12, no
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any Taxes has been asserted or assessed by any taxing authority
against the Company or any of its subsidiaries or any Affiliated Group. Except
as set forth on Schedule 3.12, the Company and each of its subsidiaries has not
consented to extend the time in which any Taxes may be assessed or collected by
any taxing authority, and the Company and each of its subsidiaries has not
requested or been granted an extension of the time for filing any tax return to
a date later than the Effective Time. The Company and each of its subsidiaries
has not made an election under Section 341(f) of the Code, or any corresponding
provision of state, local or foreign law. None of the assets or properties of
the Company or any of its subsidiaries is subject to any material tax lien
except for taxes not yet due and payable. Except as set forth on Schedule 3.12,
the Company and each of its subsidiaries will not be required to (A) as a result
of a change in method of accounting for a taxable period ending at or prior to
the Effective Time, to include any adjustment under Section 481(c) of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income for any taxable period (or portion thereof) beginning after the Effective
Time, or (B) as a result of any "closing agreement" as defined in Section 7121
of the Code (or any corresponding provision of state, local or foreign law) to
include any item of income or exclude any item of deduction from any taxable
period (or portion thereof) beginning after the Effective Time. Neither the
Company nor any of its subsidiaries is a party to or bound by any tax allocation
or tax sharing agreement and, except as set forth on Schedule 3.12, has no
current or potential contractual obligation to indemnify any other Person with
respect to Taxes. The Company and each of its subsidiaries has not been a United
States real property holding corporation within the meaning of Section
897(c)(1)(a)(ii) of the Code (or any corresponding provision of state, local or
foreign law) during the applicable period specified in Section 897(c)(1)(a)(ii)
of the Code (or any corresponding provision of state, local, or foreign law). No
material claim has ever been received by the Company from a taxing authority in
a jurisdiction where the Company or any of its subsidiaries do not file tax
returns that the Company or any such subsidiary is or may be subject to Taxes
assessed by such jurisdiction. The Company and each of its subsidiaries has no
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country, except
Costa Rica. The federal income tax returns of the Company and each of its
subsidiaries consolidated in such returns have not been examined or audited by
the Internal Revenue Service, except as set forth on Schedule 3.12, and the
Company has not received notice of any proposed tax audit. True, correct and
complete copies of all federal and state income tax returns filed by or with
respect to the Company and each of its subsidiaries for the past three years
have been made available to Republic.
SECTION 3.13. NO EXCESS PARACHUTE PAYMENTS. Neither the Company nor any
affiliates has made any payments, is obligated to make any payments, or is a
party to any agreement that could obligate it to make any payments, that will
not be deductible under Section 280G of the Code (or any corresponding provision
of state, local or foreign law).
15
SECTION 3.14. CONTRACTS.
(a) Neither the Company nor any of its subsidiaries is a party to or bound
by, and neither they nor their properties are subject to, any contracts,
agreements or arrangements required to be disclosed in a Form 10-K or 10-Q under
the Exchange Act which is not filed as an exhibit to one or more of the SEC
Documents filed and publicly available prior to the date of this Agreement.
(b) Schedule 3.14 sets forth (x) a list of all written and oral contracts,
agreements or arrangements to which the Company or any of its subsidiaries is a
party or by which the Company or such subsidiary or any of their respective
assets is bound which would be required to be filed as exhibits to the Company's
Annual Report on Form 10-K for the year ending December 31, 1996 and (y) the
following written and oral arrangements (all such written or oral agreements,
arrangements or commitments as are required to be set forth on Schedule 3.14 or
filed as an exhibit to any SEC Document, collectively the "Designated
Contracts"), which schedule further identifies each of the Designated Contracts
which contain change of control provisions:
(i) each partnership, joint venture or similar
agreement of the Company or any of its subsidiaries with
another Person;
(ii) each contract or agreement under which the
Company or any of its subsidiaries have created, incurred,
assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness of more than $1,000,000 in principal
amount or under which the Company or any of its subsidiaries
have imposed (or may impose) a security interest or lien on any
of their respective assets, whether tangible or intangible
securing indebtedness in excess of $1,000,000;
(iii) each contract or agreement to which the Company
or any of its subsidiaries is a party which involves an
obligation or commitment to pay or be paid an amount in excess
of $1,000,000 per year;
(iv) each contract or agreement which involves or
contributes to the Company or any of its subsidiaries aggregate
annual remuneration which exceeds 5% of the Company's and its
subsidiaries' consolidated annual net revenues for the twelve
months ended December 31, 1994 or December 31, 1995;
(v) each contract or agreement relating to employment
or consulting which provides for annual compensation in excess
of $100,000 and each severance, termination, confidentiality,
non- competition or indemnification agreement or arrangement
with any of the directors, officers, consultants or employees
of the Company or any of its subsidiaries;
(vi) each contract or agreement to which the Company or any
of its subsidiaries or affiliates is a party limiting, in any
material respect, the right of the Company or any of its
subsidiaries prior to the Effective Time, or the Surviving
Corporation or any of its subsidiaries or affiliates at or after
the Effective Time (i) to engage in, or to compete with any
Person in, any business, including each contract or agreement
containing exclusivity provisions restricting the geographical
area in which, or the method by which, any business may be
conducted by the Company or any of its subsidiaries or affiliates
prior to the Effective Time, or the Surviving Corporation or any
of its subsidiaries or affiliates after the Effective Time or
(ii) to solicit any customer or client;
16
(vii) all contracts or agreements between the Company
or any of its subsidiaries, and any Person controlling,
controlled by or under common control with the Company;
(viii) each contract, agreement and franchise with any
municipality, county or city for waste collection, disposal,
recycling or other services which is for a term of one year or
longer;
(ix) all other contracts or agreements which are
material to the Company and its subsidiaries, taken as a whole,
or the conduct of their respective business, other than those
made in the ordinary course of business or those which are
terminable by the Company or any of its subsidiaries upon no
greater than 60 days prior notice and without penalty or other
adverse consequence.
(c) All the Designated Contracts are valid, subsisting, in full
force and effect, binding upon the Company or one of its subsidiaries in
accordance with their terms, and binding upon the other parties thereto in
accordance with their terms. The Company and its subsidiaries have paid in full
or accrued all amounts now due from them under the Designated Contracts and have
satisfied in full or provided for all of their liabilities and obligations under
the Designated Contracts which are presently required to be satisfied or
provided for, and are not (with or without notice or lapse of time or both) in
default in any material respect under any of the Designated Contracts nor is any
other party to any such Designated Contract (with or without notice or lapse of
time or both) in default in any material respect thereunder, except for any
defaults that could not be reasonably expected to have a material adverse effect
on the Company and its subsidiaries taken as a whole.
SECTION 3.15. VOTING REQUIREMENTS. The affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the Merger.
SECTION 3.16. REAL ESTATE.
(a) The Company and its subsidiaries does not own any real property or any
interest therein except as set forth on Schedule 3.16(a) (the "Owned
Properties"), which Schedule sets forth the location and size of, and principal
improvements and buildings on, the Owned Properties, together with a list of all
title insurance policies relating to such properties, all of which policies have
previously been delivered or made available to Republic by the Company. With
respect to each such parcel of Owned Property, except as set forth on Schedule
3.16(a): (i) the Company has good and marketable title to the parcel of Owned
Property, free and clear of any Lien other than (x) Liens for real estate taxes
not yet due and payable, (y) recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy or value of the
property subject thereto, and (z) encumbrances and restrictions described in the
title insurance policies listed on Schedule 3.16(a); (ii) there are no pending
or threatened condemnation proceedings, suits or administrative actions relating
to the Owned Properties or other matters affecting adversely the current use,
occupancy or value thereof; (iii) the legal descriptions for the parcels of
Owned Property contained in the deeds thereof describe such parcels fully and
adequately; the buildings and improvements are located within the boundary lines
of the described parcels of land, are not in violation of applicable setback
requirements, local comprehensive plan provisions, zoning laws and ordinances
(and none of the properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming structure"
classifications), building code requirements, permits, licenses or other forms
of approval by any Governmental Authority, and do not encroach on any easement
which may burden the land; the land does not serve any adjoining property for
any purpose inconsistent with the use of the land; and the Owned Properties are
not located within any flood plain (such that a mortgagee would require a
mortgagor to obtain flood insurance) or subject to any similar type restriction
for which any permits or licenses necessary to the use thereof have not been
obtained; (iv) all facilities have received all material approvals of
Governmental Authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, ordinances, rules and regulations; (v) there
are no outstanding options or rights of first refusal to purchase the parcels of
Owned Property, or any portion thereof or interest therein; and (vii) there are
no parties (other than the Company and its subsidiaries) in possession of the
parcels of Owned Property.
(b) Schedule 3.16(b) sets forth a list of all leases, licenses
or similar agreements to which the Company or its subsidiaries is a party, which
are for the use or occupancy of real estate owned by a third party and which are
material to the operations or the business of the Company or its subsidiaries
("Leases")(copies of which have previously been furnished to Republic), in each
case, setting forth (A) the lessor and lessee thereof and the date and term of
each of the Leases, (B) the street address of each property covered thereby, and
(C) a brief description (including size and function) of the principal
improvements and buildings thereon (the "Leased Premises"). The Leases are in
full force and effect and have not been amended, and neither the Company or its
subsidiaries nor, to the knowledge of the Company, any other party thereto is in
material default or breach under any such Lease. No event has occurred which,
with the passage of time or the giving of notice or both, would cause a breach
of or default under any of such Leases, except for breaches or defaults which in
the aggregate could not be expected to have a material adverse effect on the
Company.
17
SECTION 3.17. GOOD TITLE TO, CONDITION AND ADEQUACY OF ASSETS. Except as
set forth on Schedule 3.17, the Company and its subsidiaries have good title to
all of their respective Assets (as hereinafter defined), free and clear of any
Liens or restrictions on use. The Assets constitute, in the aggregate, all of
the assets and properties necessary for the conduct of the business of the
Company and its subsidiaries in the manner in which and to the extent to which
such business is currently being conducted. All vehicles, machinery, equipment,
tools, supplies, leasehold improvements, furniture and fixtures constituting
part of the Assets and which are used by or located on the premises of the
Company or its subsidiaries and which are currently in use or necessary for the
business and operations of the Company or its subsidiaries are in operating
condition, normal wear and tear excepted. For purposes of this Agreement, the
term "Assets" means all of the properties and assets owned by the Company and
its subsidiaries, whether personal or mixed, tangible or intangible, wherever
located.
SECTION 3.18. LABOR AND EMPLOYMENT MATTERS. Schedule 3.18 sets forth
the name, address, social security number and current rate of compensation of
each of the officers and key employees of the Company and its subsidiaries.
Except as set forth on Schedule 3.18, neither the Company nor any of its
subsidiaries is a party to or bound by any collective bargaining agreement or
any other agreement with a labor union, and there has been no effort by any
labor union during the 24 months prior to the date hereof to organize any
employees of the Company or any of its subsidiaries into one or more collective
bargaining units. There is no pending or threatened labor dispute, strike or
work stoppage which affects or which may affect the business of the Company or
any of its subsidiaries. As of the date hereof, the Company is not aware that
any officer, key employee or group of employees has any plans to terminate his
or their employment with the Company or any of its subsidiaries as a result of
the Merger or otherwise.
SECTION 3.19. INSURANCE. Section 3.19 sets forth a list of all
insurance policies maintained as of the date hereof by the Company and its
subsidiaries. There are valid and enforceable policies of insurance covering the
respective properties, assets and business of the Company and its subsidiaries
against risks of the nature normally insured against by entities in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such entities. Such policies are in full force and effect, and all
premiums due thereon have been paid. None of such policies will lapse or
terminate as a result of the transactions contemplated by this Agreement. The
Company has not failed to give, in a timely manner, any notice required under
any of such policies to preserve its material rights thereunder.
SECTION 3.20. RELATED PARTY TRANSACTIONS. Except as set forth in the
SEC Documents, since January 1, 1995, none of the officers or directors of the
Company or any of its subsidiaries, and no Person owning of record or
beneficially more than 5% of the Company Common Stock, or any members of their
immediate families, has been a party to any transaction, or series of similar
transactions, with the Company or any of its subsidiaries, in which the amount
involved exceeds $60,000 per annum, and in which any such Persons had or will
have a direct or indirect material interest.
SECTION 3.21. NAMES; PRIOR ACQUISITIONS. All names under which the
Company and its subsidiaries do business as of the date hereof are specified on
Schedule 3.21. Except as set forth on Schedule 3.21, neither the Company nor any
of its subsidiaries has changed its name or used any assumed or fictitious name,
or been the surviving entity in a merger, acquired any business or changed its
principal place of business or chief executive office, within the past three
years.
SECTION 3.22. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Merger and this Agreement, and such approval is
sufficient to render inapplicable to this Agreement, the Merger and the other
transactions contemplated by this Agreement, the provisions of Section 203 of
the Delaware Law, to the extent, if any, such provisions of Section 203 are
applicable to this Agreement, the Merger and the other transactions contemplated
by this Agreement.
18
SECTION 3.23. BROKERS. No broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or SEC in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company,
except that the Company has retained Raymond James & Associates, Inc. and First
Analysis Corporation as financial advisors. A true and correct copy of the
Company's agreements with Raymond James & Associates, Inc. and with First
Analysis Corporation have been delivered to Republic.
SECTION 3.24. ACCOUNTING MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to take any action that (without regard to any
action taken or agreed to be taken by Republic or any of its affiliates) would
prevent Republic from accounting for the business combination to be effected by
the Merger as a pooling of interests.
SECTION 3.25. TAX MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken by
Republic or any of its affiliates) would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a)(2)(E) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Republic hereby represents and warrants to the Company that:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Each of Republic and
Mergersub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Republic and Mergersub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing (individually or in the
aggregate) would not have a material adverse effect on Republic. Republic has
delivered to the Company complete and correct copies of the Certificate of
Incorporation and By-Laws of Republic and of Mergersub, in each case as amended
to the date hereof. Mergersub is controlled by Republic within the meaning of
Section 368(a)(2)(E) of the Code.
SECTION 4.2. CAPITAL STRUCTURE. The authorized capital stock of
Republic consists 500,000,000 shares of Republic Common Stock and 5,000,000
shares of preferred stock, par value $0.01 per share ("Republic Preferred
Stock"). At the close of business on June 19, 1996, (i) 184,023,886 shares of
Republic Common Stock were issued and outstanding, (ii) no shares of Republic
Common Stock were held by Republic in its treasury, (iii) 15,735,194 shares of
Republic Common Stock were reserved for issuance upon the exercise of
outstanding stock options granted pursuant to Republic's various stock option
plans, (iv) 34,853,900 shares of Common Stock were reserved for issuance upon
the exercise of outstanding and vested warrants, and (v) no shares of Republic
Preferred Stock were issued or outstanding. All outstanding shares of capital
stock of Republic are, and all shares which may be issued pursuant to
outstanding options and warrants will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of Republic having the right to vote (or convertible into
securities having the right to vote) on any matters on which stockholders of
Republic may vote. Except as set forth above and except in connection with other
acquisitions of businesses and business combinations by Republic and its
subsidiaries, as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Republic or any of its subsidiaries is a party
or by which any of them is bound, obligating Republic or any of its subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Republic or of any of its
subsidiaries, or obligating Republic or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations which require
or will require or obligate Republic or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Republic or any of
its subsidiaries.
19
SECTION 4.3. AUTHORITY; NONCONTRAVENTION. Republic and Mergersub have the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by Republic and Mergersub has been duly
authorized by all necessary corporate action on the part of Republic and
Mergersub, respectively. This Agreement has been duly executed and delivered by
Republic and Mergersub and constitutes a valid and binding obligation of
Republic and Mergersub, enforceable against Republic and Mergersub in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and general equitable principles. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of Republic or any of its subsidiaries under, any provision
of (a) the Certificate of Incorporation or By-laws of Republic or any provision
of the comparable charter or organizational documents of any of its
subsidiaries, (b) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, or license
applicable to Republic or any of its subsidiaries or their respective properties
or assets, or (c) subject to the governmental filings and other matters referred
to in the following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree applicable to Republic or any of its
subsidiaries or their respective properties or assets, other than, in the case
of clause (b) and clause (c), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not (x) have a
material adverse effect on Republic, (y) impair in any material respect the
ability of Republic or Mergersub to perform its obligations under this
Agreement, or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority, is required by or with respect to Republic or any of its subsidiaries
in connection with the execution, delivery and performance of this Agreement by
Republic or Mergersub, except for: (i) the filing of a premerger notification
and report form by Republic under the HSR Act; (ii) the filing with the SEC of
the Registration Statement and such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement; (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware; and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate, have a
material adverse effect on Republic or Mergersub or prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement.
SECTION 4.4. SEC DOCUMENTS AND FINANCIAL STATEMENTS. Republic has filed all
required reports, schedules, forms, statements and other documents with the SEC
since January 1, 1995 (the " Republic SEC Documents"). As of their respective
dates, the Republic SEC Documents complied as to form in all material respects
with the requirements of Securities Act, or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Republic SEC Documents, and none of the Republic SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Republic SEC
Document has been revised or superseded by a later-filed Republic SEC Document,
filed and publicly available prior to the date of this Agreement, as of the date
of this Agreement, none of the Republic SEC Documents contains any untrue
statement of a material fact or omits to state any 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. The financial
statements of Republic included in the Republic SEC Documents complied as of
their respective dates of filing with the SEC in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q or 8-K) applied on a consistent basis during the period
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position, results of operations and cash flows as at
the dates and for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
Republic SEC Documents and except for liabilities and obligations incurred in
the ordinary course of business consistent with past practice, neither Republic
nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated balance sheet
of Republic and its consolidated subsidiaries or in the notes thereto which
individually or in the aggregate, could reasonably be expected to have material
adverse effect on Republic.
20
SECTION 4.5. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Republic specifically for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders and
at the time of the meeting of the Company's stockholders held to vote on
approval of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement will comply as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations thereunder. No representation is made by Republic in this
Section 4.5 with respect to statements made or incorporated by reference in the
Registration Statement based on information supplied by the Company or the
Management Stockholders specifically for inclusion or incorporation by reference
in the Registration Statement.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Republic SEC Documents filed and publicly available prior to the date of
this Agreement, and except as expressly contemplated by this Agreement, since
the date of the most recent audited financial statements included in such
Republic SEC Documents, Republic has conducted its business only in the ordinary
course, and there has not been: (i) any material adverse change in Republic's
business, results of operation, or business prospects; (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of Republic's capital stock; (iii) any
split, combination or reclassification of any of its capital stock or any
issuance or the authorization of any insurance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock; (iv)
any damage, destruction or loss, whether or not covered by insurance, that has
had or is likely to have a material adverse effect on Republic; or (v) any
change in accounting methods, principles or practices by Republic materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles.
SECTION 4.7. LITIGATION. Except as disclosed in the Republic SEC Documents
filed and publicly available prior to the date of this Agreement, there is no
suit, action or proceeding pending or threatened against Republic or any of its
subsidiaries challenging the acquisition by Republic or Mergersub of any shares
of Company Common Stock or any provision of this Agreement or seeking to
restrain or prohibit the consummation of the Merger, or that, individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
Republic, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority or arbitrator outstanding against Republic or any of its
subsidiaries having, or which could reasonably by expected to have, any such
effect.
SECTION 4.8. COMPLIANCE WITH LAWS. Except as disclosed in the Republic
SEC Documents filed and publicly available prior to the date of this Agreement,
Republic and its subsidiaries are in compliance with all applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees and orders of any
Governmental Authority applicable to its business or operations, except for
instances of possible noncompliance that, individually or in the aggregate,
would not have a material adverse effect on Republic. Each of Republic and its
subsidiaries has in effect all Permits, necessary for it to own, lease or
operate its properties and assets and to carry on its business as now conducted,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which, individually or in the aggregate,
would not have a material adverse effect on Republic. None of such Permits is or
will be impaired or in any way affected by the execution and delivery of this
Agreement, or consummation of the transactions contemplated hereby.
SECTION 4.9. CONTRACTS. Neither Republic nor any of its subsidiaries is
a party to or bound by, and neither they nor their properties are subject to,
any contracts, agreements or arrangements required to be disclosed in its most
recently filed Form 10-K, 10-Q or 8-K under the Exchange Act which has not been
filed as an exhibit to one or more of the Republic SEC Documents filed and
publicly available prior to the date of this Agreement.
SECTION 4.10. BROKERS. No broker, investment banker, financial advisor
or other Person, is entitled to any broker's, finder's, financial advisor's or
other similar fee or SEC in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Republic.
SECTION 4.11. ACCOUNTING MATTERS. Neither Republic nor any of its
affiliates has taken or agreed to take any action that (without regard to any
action taken or agreed to be taken by Republic or any of its affiliates) would
prevent Republic from accounting for the business combination to be effected by
the Merger as a pooling of interests.
SECTION 4.12. TAX MATTERS. Neither Republic nor any of its affiliates
has taken or agreed to take any action, or knows of any circumstances, that
(without regard to any action taken or agreed to be taken by the Company or any
of its affiliates) would prevent the Merger from qualifying as a reorganization
within the meaning of Sections 368(a)(2)(E) of the Code.
21
SECTION 4.13. OWNERSHIP OF COMPANY COMMON STOCK. As of the date hereof,
except for the voting proxies granted to Republic as described in Section 5.10,
neither Republic nor any of its affiliates or associates (as such terms are
defined under the Exchange Act), (i) beneficially owns, directly or indirectly,
or (ii) is party to any agreement, arrangement or understanding providing for
the acquisition, holding, voting or disposition of, in each case, shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for capital stock of the Company, which in the aggregate
represent 10% or more of the outstanding shares of the Company Common Stock
after giving effect to the conversion, exercise or exchange of all such
securities beneficially owned by Republic and its affiliates and associates
which are convertible into or exercisable or exchangeable for capital stock of
the Company.
SECTION 4.14. INTERIM OPERATIONS OF MERGERSUB. Mergersub was formed
solely for the purpose of engaging in a business combination transaction with
the Company and has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
ARTICLE V
COVENANTS OF THE COMPANY AND THE MANAGEMENT STOCKHOLDERS
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except for those items
described in Section 5.9 and as may be agreed to in writing by Republic, from
the date hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries to, (i) use its and their best efforts to conduct its and their
operations according to its and their ordinary and usual course of business,
consistent with past practice, (ii) preserve intact its and their business
organization, (iii) keep or cause to be kept in full force and effect all of its
and their material rights, contracts and agreements, (iv) maintain all of its
and their property in good operating condition and repair, (v) use its and their
best efforts to maintain satisfactory relationships with licensors, licensees,
supplies, contractors, distributors, customers and others having business
relationships with any of them, consistent with the Company's past practices,
and (vi) maintain continuously insurance coverage substantially equivalent to
the insurance coverage in existence on the date of this Agreement. Subject to
the exercise of the applicable fiduciary duties of the Board of Directors of the
Company as set forth in Section 5.2(a), the Company and its subsidiaries shall
not take any action that would, or that could reasonably be expected to, result
in any of the conditions to the obligations of the Company or Republic to
consummate the Merger set forth in Article VIII not being satisfied. Without
limiting the generality of the foregoing and except as provided above, the
Company shall not, and shall not permit any of its subsidiaries to:
(a) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of additional
employee or other options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any options or rights to
acquire, or any securities convertible into, shares of stock of any class;
provided that the Company shall be entitled to issue shares of the Company
Common Stock (1) upon exercise of Company Stock Options and Company Warrants
against payment therefor in accordance with their terms, and (2) in connection
with the closing of any of the Company's pending acquisitions described on and
in accordance with Schedule 5.9;
(b) split, combine or reclassify any shares of its or any of
its subsidiaries' capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) to
its stockholders whether or not in respect of its capital stock; or redeem,
purchase or otherwise acquire any shares of, or rights to acquire shares of, its
or any of its subsidiaries' capital stock;
(c) amend its charter or by-laws;
(d) voluntarily sell, transfer, surrender, abandon or dispose
of any of its material assets or property rights (tangible or intangible), other
than in the ordinary course of business consistent with past practices;
(e) acquire (including, without limitation, for cash or shares
of stock, by merger, consolidation, or acquisitions of stock or assets) any
interest in any corporation, partnership or other business organization or
division thereof, or make any investment in any such entity either by purchase
of securities, contributions of capital or transfer of property, or make any
loans or advances to any Person;
(f) grant or make any mortgage or pledge or subject itself or
any of its material properties or assets to any lien, charge or encumbrance of
any kind, except liens for taxes not currently due;
22
(g) create, incur or assume any liability or indebtedness for
borrowed money (contingent or otherwise), in an amount exceeding $1,000,000
individually or $2,500,000 in the aggregate, except borrowings under the
Company's credit facilities with LaSalle National Bank and certain other lenders
to the extent such borrowings are in the ordinary course of business consistent
with past practices;
(h) make or commit to make any capital expenditures in excess
of $1,000,000 individually or $2,500,000 in the aggregate, other than as set
forth on the capital expenditure budget provided by the Company to Republic, a
copy of which is attached as Schedule 5.1;
(i) grant any increase in the compensation payable or to become
payable to directors, officers or employees (including, without limitation, any
such increase pursuant to any Benefit Plan or otherwise), other than merit
increases to employees of the Company or its subsidiaries who are not directors
or officers of the Company, in the ordinary course of business and consistent
with past practices;
(j) alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices therein reflected;
(k) enter into any material commitment, transaction or
agreement, other than in the ordinary course of business consistent with past
practices and other than commitments, transactions or agreements that are
terminable by the Company without cost or penalty on no more than 60 days prior
notice;
(l) apply any of its assets to the direct or indirect payment,
discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of any affiliate of the Company or any of its
subsidiaries, except in the ordinary course of business consistent with past
practices;
(m) modify any provision of any Benefit Plan, any stock
option plans of the Company or the terms of any stock options granted
thereunder;
(n) modify any of the Designated Contracts other than in
the ordinary course of business consistent with past practices;
(o) enter into any agreement or transaction with any
Person controlling, controlled by or under common control with the Company; or
(p) agree, whether in writing or otherwise, to do any of
the foregoing.
SECTION 5.2. NO SOLICITATION; COMPETING TRANSACTIONS.
(a) From the date hereof until the earlier of (A) the Effective
Time, or (B) the date this Agreement shall terminate in accordance with its
terms (the "Non-Solicitation Period"), neither the Company nor the Management
Stockholders shall, directly or indirectly, solicit or initiate discussion with,
enter into negotiations or agreements with, or furnish any information about the
Company that is not publicly available to, or otherwise assist, facilitate or
encourage, any Person or group (other than Republic, an affiliate of Republic or
their authorized representatives) concerning any proposal for a merger, sale of
substantial assets, sale of shares of capital stock or other securities,
recapitalization or other business combination transactions involving the
Company or any of the subsidiaries of the Company, other than the transactions
set forth on Schedule 5.9 (a "Competing Transaction"). The Company and the
Management Stockholders will instruct the respective officers, directors,
employees, advisors, affiliates, counsel and agents of the Company and its
subsidiaries (collectively, the "Representatives") not to take any action
contrary to the provisions of the previous sentence; provided, however, that the
Company and the Representatives shall not be prohibited from entering into any
negotiations (or entering into an agreement resulting from such negotiations)
which were not so solicited or initiated to the extent such action is taken by,
or upon the authority of, the Board of Directors of the Company due to the
applicable fiduciary duties of such Board of Directors to the stockholders of
the Company, as determined by such directors in the exercise of good faith
judgment based upon the written advice of independent, outside legal counsel
that a failure of the Board of Directors of the Company to take such action
would be likely to constitute a breach of its fiduciary duties to the
stockholders of the Company; and provided, further, that for a period of thirty
23
(30) days following the date hereof, if the Company receives an offer or
proposal involving a Competing Transaction it may furnish all information
pertaining to the Company and its subsidiaries as the Board of Directors of the
Company believes in good faith to be appropriate, if the Board of Directors of
the Company (after consultation with its independent, outside legal counsel)
determines in good faith that such action is required due to the applicable
fiduciary duties of the directors. The Company will notify Republic immediately
in writing if the Company becomes aware that any inquiries or proposals are
received by, any information is requested from, or any negotiations or
discussions are sought to be initiated with, the Company or its subsidiaries
with respect to a Competing Transaction. Each time, if any, that the Board of
Directors of the Company determines, upon written advice of such legal counsel
and in the exercise of its good faith judgment as to its fiduciary duties to the
Company's stockholders, that it must enter into negotiations with, or furnish
any information that is not publicly available to, any Person or group (other
than Republic, an affiliate of Republic or their authorized representatives)
concerning any Competing Transaction, the Company will give Republic prompt
notice of such determination (which shall include a copy of the written advice
of such legal counsel), the Company will promptly provide Republic copies of the
information provided to such other Person or group, and the Company will fully
inform Republic of the status and substance of such negotiations in a prompt
manner.
(b) To induce Republic to commit to expend its resources and money to
perform the due diligence investigation of the Company and to enter into this
Agreement, the Company agrees that should it or any of the Management
Stockholders or the Representatives during the Non-Solicitation Period either
(i) receive an unsolicited proposal for a Competing Transaction (an "Acquisition
Proposal"), other than from Republic or an affiliate of Republic or their
authorized representatives, and, during the Non-Solicitation Period or, provided
that this Agreement has not been terminated by the Company pursuant to Section
9.1(j), within one (1) year after the date hereof, consummate a transaction of a
kind that would constitute a Competing Transaction with (x) the offeror or any
affiliate of the offeror who made the Acquisition Proposal (the "Original
Offeror") or (y) another party who makes an Acquisition Proposal prior to the
termination of negotiations with the Original Offeror, or (ii) solicit or
initiate any discussions for a Competing Transaction (regardless of whether it
is consummated); then, in either instance, (A) the Company shall pay to
Republic, as liquidated damages (and not as a penalty) to compensate Republic
for the effort and expense which Republic will be expending in entering into and
performing this Agreement and for its lost opportunity, the sum of $1,000,000
(which shall be paid contemporaneously with consummation of the Competing
Transaction if the Acquisition Proposal was not solicited, or contemporaneously
with the solicitation or initiation of any discussion if the Acquisition
Proposal was solicited) and (B) each Management Stockholder shall pay to
Republic an amount in cash equal to the consideration paid by the acquiror (the
"Third Party Acquisition Consideration") on a per share of Company Common Stock
basis in excess of (1) $16.00 (in the case of proposals noted in (i) above, and
then this provision shall apply only to the individual Management Stockholders)
or (2) $13.375 (in the case of solicitations under (ii) above) (in either case,
the "Base Amount") multiplied by the number of shares beneficially owned by each
such Management Stockholder (which additional amounts shall be paid
contemporaneously with consummation of the acquisition, whether or not such
Acquisition Proposal was solicited); provided, that number of shares and the
Base Amount shall be appropriately adjusted for stock splits, stock dividends,
stock combinations, recapitalizations, reclassifications and other similar
transactions. The Third Party Acquisition Consideration shall be deemed to
include both cash and any securities or other property received in the
transaction, as well as debts assumed in the transaction. In the event that any
Third Party Acquisition Consideration shall be payable in securities; debt
securities shall be valued at the greater of par or market value on the day of
delivery; preferred stock shall be valued at the greater of par, liquidation
preference or market value on the day of delivery; and common stock shall be
valued by its market value on the day of delivery based on the ten day average
closing price of such common stock on the principal stock exchange or Nasdaq
market on which it is traded or quoted for the period prior to the consummation
of such acquisition. In the event that any Third Party Acquisition Consideration
shall be payable in other property, such other property shall be valued at an
amount to be reasonably determined by Republic.
24
SECTION 5.3. APPROVAL BY THE COMPANY'S STOCKHOLDERS. The Company shall,
as soon as practicable following the date hereof, establish a record date for,
duly call, give notice of, convene and hold a meeting of its stockholders, to be
held as promptly as practicable after the date of this Agreement, for the
purpose of voting upon the Merger and this Agreement (the "Company Special
Meeting"). The Company, through its Board of Directors, shall recommend that the
Company's stockholders approve of this Agreement and the Merger and include such
recommendation in the Proxy Statement, provided that the Board of Directors
shall not be obligated to make such recommendation if the Company shall have
received an offer for a Competing Transaction that the Board of Directors
determines in good faith is more favorable to the stockholders of the Company
from a financial point of view than the transactions contemplated by this
Agreement. Subject to the exercise of its applicable fiduciary duties under
Delaware Law to the stockholders of the Company, the Board of Directors of the
Company shall use its reasonable best efforts to solicit from stockholders of
the Company votes in favor of the Merger and the transactions contemplated
hereby. The parties will use their respective best efforts to cause the Company
Special Meeting to be held and to close the transactions contemplated hereby on
or before August 12, 1996.
SECTION 5.4. ACCESS TO INFORMATION. From the date of this Agreement to the
Effective Time, the Company shall, and shall cause its subsidiaries and its and
their representatives, officers, directors, employees, auditors and agents to,
afford the representatives, officers, employees and agents of Republic
reasonable access at all reasonable times to its representatives, officers,
employees, agents, properties, offices, and other facilities and to all books
and records, and shall furnish Republic with all financial, operating and other
data and information Republic, through its representatives, officers, employees
or agents, may reasonably request. Republic shall be entitled to conduct prior
to Closing an environmental assessment of the Owned Properties, and to the
extent permitted under the terms of the Leases, the Leased Premises (hereinafter
referred to as the "Environmental Assessment"), and to otherwise conduct a due
diligence investigation of the Company and its assets and financial condition.
The Environmental Assessment may include, but not be limited to, a physical
examination of such real property, and any structures, facilities, or equipment
located thereon, soil samples, ground and surface water samples, storage tank
testing, review of pertinent records, documents, and licenses of the Company.
The Company shall provide Republic or its designated agents or consultants with
the access to such property which Republic, its agents or consultants require to
conduct the Environmental Assessment and due diligence review. If the results of
the Environmental Assessment or due diligence review are not satisfactory to
Republic in its sole discretion, then Republic may elect not to close, in which
event the provisions of Section 5.2(b) shall not thereafter apply provided that
the Company and the Management Stockholders had complied with Section 5.2(a) in
all respects prior to the date of their receipt of notice of Republic's election
not to close in accordance with this Section 5.4.
25
SECTION 5.5. AFFILIATE LETTERS.
(a) Schedule 5.5 sets forth a list of names and addresses of
those persons who may be deemed "affiliates" of the Company within the meaning
of Rule 145 under the Securities Act ("Rule 145"), including the Management
Stockholders and all other officers and directors of the Company (each an
"Affiliate"). The Company shall provide Republic such information and documents
as Republic shall reasonably request for purposes of reviewing the accuracy and
completeness of such list. There shall be added to such list the names and
addresses of any other Person who becomes an Affiliate of the Company at any
time after the date hereof up to and including the time of the Company Special
Meeting or who Republic reasonably identifies (by written notice to the Company)
as being a Person who may be deemed to be an Affiliate of the Company. The
Company shall deliver or cause to be delivered to Republic, concurrent herewith,
from each of the Affiliates identified on Schedule 5.5 (as the same may be
supplemented as aforesaid), a letter in the form of Exhibit A hereto (the
"Affiliate Letter"), which shall contain (i) a representation that on the date
hereof, such Affiliate had no plan or intention to sell, exchange or otherwise
dispose of the Republic Common Stock received by it pursuant to the Merger, (ii)
a covenant that such Affiliate shall not sell or otherwise dispose of any shares
of Republic Common Stock issued to it in the Merger until such time as final
results of operations of Republic covering at least thirty (30) days of combined
operations of Republic and the Company have been published and (iii) a covenant
that such Affiliate will not sell or otherwise dispose of any shares of Republic
Common Stock issued to it in the Merger, except pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of paragraph (d) of Rule 145 or another exemption from registration
under the Securities Act.
(b) Republic shall be entitled to place appropriate legends on the
certificates evidencing the Republic Common Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stock transfer instructions to the transfer agent for the Republic Common Stock,
to the effect that the shares of the Republic Common Stock received or to be
received by such Affiliates pursuant to the terms of this Agreement may only be
sold, transferred or otherwise conveyed, and the holder thereof may only reduce
his interest in or risks relating to such shares of Republic Common Stock,
pursuant to an effective registration statement under the Securities Act or in
accordance with the provisions of paragraph (d) of Rule 145 or another exemption
from registration under the Securities Act and, in any event, only after
financial results covering at least 30 days of combined operations of Republic
and the Company after the Effective Time shall have been published. The
foregoing restrictions on the transferability of the Republic Common Stock shall
apply to all purported sales, transfers and other conveyances of the shares of
Republic Common Stock received or to be received by such Affiliates pursuant to
this Agreement and to all purported reductions in the interest in or risks
relating to such shares of the Republic Common Stock whether or not such
Affiliate has exchanged the certificates previously evidencing such Affiliate's
shares of the Company Common Stock for certificates evidencing the shares of
Republic Common Stock into which such shares of the Company Common Stock were
converted. The Proxy Statement and the Registration Statement shall disclose the
foregoing in a reasonably prominent manner.
SECTION 5.6. LETTER OF COMPANY'S ACCOUNTANTS. The Company shall cause
to be delivered to Republic a letter of Arthur Andersen LLP, the Company's
independent public accountants, dated a date within two business days before (a)
the date on which the Registration Statement shall become effective, (b) the
date of the Company Special Meeting, and (c) the Effective Time, and addressed
to Republic in form and substance reasonably satisfactory to Republic and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement. In connection with the Company's efforts to obtain such
letter, if requested by Arthur Andersen LLP, Republic shall provide a
representation letter to Arthur Andersen LLP complying with SAS 72 (as amended),
if then required.
SECTION 5.7. COVENANT NOT TO COMPETE. On the date hereof, the
Management Stockholders shall execute and deliver to Republic a covenant not to
compete and non-disclosure agreement in the form of Exhibit B hereto (the
"Covenant Letters").
26
SECTION 5.8. INDEMNIFICATION BY MANAGEMENT STOCKHOLDERS. The Management
Stockholders covenant and agree that, from and after the Closing, they shall
jointly indemnify and hold Republic harmless from any losses, claims,
liabilities, damages, and expenses (including attorneys' fees) arising out of
any breach or inaccuracy in any representation, warranty or covenant made by
them in this Agreement or in any certificate delivered pursuant hereto, provided
that each Management Stockholder will be liable only to the extent of the lesser
of (i) the amount of such losses, claims, damages, liabilities, and expenses
resulting to Republic or the Surviving Corporation from such breach or
inaccuracy in excess of $500,000 or (ii) 15% of the aggregate Merger
Consideration (valued as of the Effective Time) multiplied by the percentage
ownership of such Management Stockholder (and members of such Management
Stockholder's immediate family and the affiliates and associates of such
Management Stockholder as owned by such persons on May 20, 1996) of the
outstanding Company Common Stock on May 20, 1996, and further provided, that
Republic has furnished written notice to the Management Stockholders of any such
losses, claims, liabilities, damages, and expenses, prior to the date on which
Republic files its annual report on Form 10-K for the year ending December 31,
1996.
SECTION 5.9. CERTAIN PENDING TRANSACTIONS. Notwithstanding anything to the
contrary contained herein, from the date hereof until the Effective Time, the
Company may (a) continue to pursue certain acquisition opportunities which are
set forth on Schedule 5.9 to the extent approved in writing by Republic, such
approval to be withheld or granted by Republic in its sole and absolute
discretion, provided, that the Company shall promptly provide Republic copies of
all material agreements and due diligence with respect to such transactions and
will keep Republic fully informed of the status and substance of all
negotiations related thereto, and, further provided that the Company shall not
bind itself to closing any such acquisition without the prior written approval
of Republic, such approval to be withheld or granted by Republic in its sole and
absolute discretion, and (b) expand its existing credit facility from
$45,000,000 to $70,000,000 and borrow thereunder in the ordinary course of
business, consistent with past practices, for usual corporate purposes,
including funding the purchase price incurred in closing (if and to the extent
approved by Republic) any of the acquisitions set forth on Schedule 5.9 and/or
paying off all indebtedness for borrowed money of any business acquired in
accordance with Schedule 5.9.
SECTION 5.10. IRREVOCABLE PROXIES. On the date hereof, each of Thomas
A. Volini, Carlos E. Aguero, Environmental Venture Fund, Limited Partnership,
Apex Investment Funds L.P., and The Productivity Fund Limited Partnership shall
execute and deliver to Republic an irrevocable voting proxy in the form of
Exhibit C hereto (the "Irrevocable Proxies").
SECTION 5.11. LANDFILL OPERATIONS. Without the prior written approval
of Republic, which approval may be withheld or granted in Republic's sole and
absolute discretion, the Company agrees not to directly or indirectly acquire
any ownership interest or joint venture interest in any additional landfill
facility, and, unless Republic otherwise approves in writing, the Company
further agrees that it shall, prior to the Effective Time, terminate or dispose
of any and all of its or its subsidiaries' landfill management or remediation
contracts or operations with respect to any and all landfill facilities which
the Company or a subsidiary thereof does not own as of the date hereof.
ARTICLE VI
COVENANTS OF REPUBLIC AND MERGERSUB
SECTION 6.1. CERTAIN ACTIONS. Republic and its subsidiaries shall not
take any action that would, or that could reasonably be expected to, result in
any of the conditions to the obligations of Republic to consummate the Merger
set forth in Article VIII not being satisfied.
SECTION 6.2. ACCESS TO INFORMATION. From the date of this Agreement to
the Effective Time, Republic shall furnish the Company with all publicly
available information relating to Republic and allow Representatives of the
Company to engage in discussions with such senior management of Republic as the
parties mutually agree upon.
27
SECTION 6.3. LETTER OF REPUBLIC'S ACCOUNTANTS. Republic shall cause to be
delivered to the Company a letter of Arthur Andersen LLP, Republic's independent
public accountants, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to the
Company, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement. In connection with Republic's efforts to obtain such
letter, if requested by Arthur Andersen LLP, the Company shall provide a
representation letter to Arthur Andersen LLP complying with SAS 72 (as amended),
if then required.
SECTION 6.4. COMPLIANCE WITH NASDAQ AND SEC REQUIREMENTS. From the date
hereof to the Effective Time, Republic shall comply in all material respects
with all applicable requirements of Nasdaq and the SEC with respect to the
filing of information and reports.
SECTION 6.5. BENEFIT PLANS. As soon as practicable after the Effective
Time but in no event later than January 1, 1997, Republic shall provide benefits
to employees of the Company and its subsidiaries which are substantially similar
to the benefits provided to similarly situated employees of Republic and its
subsidiaries (the date(s) on which employees of the Company and its subsidiaries
are provided such benefits is hereinafter referred to as the "Benefit Plan
Transition Dates"). Subject to requirements of applicable law, after the
Effective Time, Republic shall cause the Surviving Corporation to maintain the
Benefit Plans in substantially the same form as in effect on the date of this
Agreement until the applicable Benefit Plan Transition Date. With respect to
employee benefit plans and other benefit arrangements covering employees of
Republic and its subsidiaries ("Republic Benefit Plans"), Republic shall grant
all employees of the Company and its subsidiaries who become participants in
such plans after the applicable Benefit Plan Transition Date credit for all
service with the Company and its subsidiaries and their respective predecessors
prior to the applicable Benefit Plan Transition Date for all purposes for which
such service was recognized by the Company. To the extent the Republic Benefit
Plans provide medical or dental welfare benefits after the applicable Benefit
Plan Transition Date, for all employees who have already met the pre-existing
conditions and actively at work requirements under the Benefit Plans that
provide medical or dental welfare benefits, Republic shall cause all
pre-existing conditions exclusions and actively at work requirements to be
waived. For all other employees of the Company and its subsidiaries, Republic
shall credit all service with the Company and its subsidiaries that counted
toward the pre-existing conditions and actively at work requirements of such
Benefit Plans toward satisfying the pre- existing conditions and actively at
work requirements of the Republic Benefit Plans. Republic shall provide that any
expenses incurred on or before the applicable Benefit Plan Transition Date shall
be taken into account under the Republic Benefit Plans for purposes of
satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions for such employees and their covered dependents. On and after the
Effective Time, Republic shall cause the Benefit Plans that provide medical or
dental welfare benefits to provide continuation coverage (within the meaning of
Section 4980B of the Code) to employees of the Company and its subsidiaries who
terminated employment prior to the Effective Time and their dependents.
28
ARTICLE VII
COVENANTS OF THE COMPANY, REPUBLIC AND MERGERSUB
SECTION 7.1. LEGAL CONDITIONS TO MERGER. Each of the Company, Republic
and Mergersub, shall use its best efforts to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger, this
Agreement and the transactions contemplated hereby. Such actions shall include,
without limitation, filing or causing to be filed under the HSR Act a premerger
notification and report form, with respect to the transactions contemplated
hereby, furnishing all additional information required under the HSR Act and in
connection with approvals of or filings with any Governmental Authority. Each of
the Company, Republic and Mergersub promptly shall cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their subsidiaries in connection with such transactions.
Each of the Company, Republic and Mergersub shall, and shall cause each of its
subsidiaries to, use its best efforts to obtain (and shall cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority or other public or private third party,
required to be obtained or made by the Company, Republic or any of their
subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement. In connection with the filings under the HSR
Act, each party shall request early termination of the HSR waiting period.
SECTION 7.2. PREPARATION OF PROXY STATEMENT AND REGISTRATION
STATEMENT.
(a) Republic promptly shall prepare, with the Company's
cooperation and assistance, and file with the SEC the Proxy Statement and
Republic promptly shall prepare and file with the SEC the Registration Statement
relating to the issuance of the Merger Consideration, in which the Proxy
Statement will be included as a prospectus. Each of Republic and the Company
shall use its best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing.
(b) Republic shall use its best efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities law
or "Blue Sky" permits or approvals in connection with the issuance of Republic
Common Stock in the Merger and under the Stock Plans, except that Republic shall
not be required to execute or file any general consent to service of process in
any jurisdiction in which it is not qualified to transact business or to
register as a dealer in any jurisdiction. Republic shall advise the Company
(promptly after it receives notice thereof) of the time when the Registration
Statement has become effective, of any supplement or amendment that has been
filed, of the issuance of any stop order, of the suspension of the qualification
of the shares of Republic Common Stock for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Registration Statement or for
additional information.
(c) If at any time prior to the Effective Time any event
relating to Republic or any of its subsidiaries or Mergersub should be
discovered which should be set forth in an amendment of, or a supplement to, the
Proxy Statement, Republic promptly shall so inform the Company and shall furnish
all necessary information to the Company relating to such event. If at any time
prior to the Effective Time any event relating to the Company or any of its
subsidiaries should be discovered which should be set forth in an amendment of,
or a supplement to, the Registration Statement, the Company promptly shall so
inform Republic and shall furnish all necessary information to Republic relating
to such event.
29
SECTION 7.3. BEST EFFORTS. Upon the terms and subject to the conditions
of this Agreement (including, without limitation, the provisions of Section
5.2(a) relating to the exercise of the applicable fiduciary duties of the Board
of Directors of the Company), each of the parties to this Agreement shall use
its best efforts to take or cause to be taken all actions and to do or cause to
be done all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement, and
shall use its best efforts to obtain all necessary waivers, consents and
approvals, including the actions described in Sections 7.1 and 7.2 above.
SECTION 7.4. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Republic and Republic shall give prompt notice to the Company,
of (a) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would, in the reasonable judgment of their respective
management, be likely to cause either (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Effective Time or (ii) any
condition set forth herein to be unsatisfied in any material respect at any time
from the date of this Agreement to the Effective Time, and (b) any material
failure of the Company, Republic or Mergersub, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, provided that the delivery of any notice pursuant to this Section 7.4
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 7.5. BROKERS OR FINDERS. Each of the Company and Republic
represents that no agent, broker, investment banker, financial advisor or other
firm or Person is or shall be entitled to any brokers' or finder's fee or any
other SEC or similar fee in connection with any of the transactions contemplated
by this Agreement (except as set forth in Section 3.24), and each of the Company
and Republic shall indemnify and hold the other harmless from and against any
and all claims, liabilities or obligations with respect to any other fees, SECs
or expenses asserted by any Person on the basis of any act or statement alleged
to have been made by such party.
SECTION 7.6. PUBLIC ANNOUNCEMENTS. Neither the Company nor Republic shall
issue any press release or public announcement, including announcements by any
party for general reception by or dissemination to employees, agents or
customers, with respect to this Agreement, the Merger and the other transactions
contemplated by this Agreement without the prior written consent of the other
party (which consent shall not be withheld unreasonably), provided that the
Company or Republic may make any disclosure or announce with such party, in the
opinion of its counsel, is obligated to make pursuant to applicable law or
regulation of the Nasdaq or any national securities exchange, as applicable, in
which case the party desiring to make the disclosure shall reasonably consult
with the other party prior to making such disclosure or announcement.
SECTION 7.7. TAX TREATMENT. Until the Effective Time, the Company and
Republic shall, and from and after the Effective Time Republic shall, use its
best efforts to qualify the Merger, and shall use best efforts not to take any
action to cause the Merger not to qualify, as a reorganization within Section
368(a) of the Code. From and after the Effective Time, (a) Republic shall cause
the Surviving Corporation to continue the Company's historic business or use a
significant portion of the Company's historic business assets in a business
within the meaning of the Treasury regulation Section 1.368-1(d), and (b)
Republic and Mergersub shall, and Republic shall cause the Surviving Corporation
to, treat the Merger as a "reorganization" within the meaning of Section 368(a)
of the Code and shall file such information with their income tax returns as may
be required by Treasury regulation Section 1.368-3 or other applicable law.
30
SECTION 7.8. INDEMNIFICATION AND INSURANCE OF COMPANY OFFICERS AND
DIRECTORS.
(a) The Company shall, and from and after the Effective Time
Republic and the Surviving Corporation shall, indemnify, defend and hold
harmless each Person who is now, or who becomes prior to the Effective Time, an
officer or director of the Company or any of its subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, liabilities
or judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be withheld unreasonably) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
Person is or was a director, officer or employee of the Company or any of its
subsidiaries, whether pertaining to any matter existing or occurring at or prior
to the Effective Time and whether asserted or claimed prior to, or at or after,
the Effective Time ("Indemnified Liabilities"), and (ii) all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to this Agreement or the transactions contemplated by this
Agreement, in each case to the full extent provided under the Certificate of
Incorporation and By-laws of the Company as in effect as of the date hereof or
permitted under Delaware Law, as applicable, to indemnify directors and
officers. Prior to the Effective Time, the Company shall cause each Person
eligible for indemnification pursuant to this Section 7.8(a) to execute and
deliver to Republic, and/or to the insurance company providing the insurance
referred to in clause (b) below, a writing confirming, among other matters, that
he or she has no knowledge of any pending or threatened claims, actions or other
matters which reasonably could give rise to Indemnified Liabilities, in such
form as shall be reasonably satisfactory to Republic and/or such insurance
company.
(b) The Company shall, and from and after the Effective Time Republic
shall, use its reasonable best efforts to cause the Surviving Corporation to
obtain and maintain in effect an extended reporting period under the Company's
existing directors' and officers' liability insurance policy or comparable
coverage through a "tail" or other policy for a period of at least five years
from the Effective Time. The Certificate of Incorporation and the Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's Certificate of Incorporation and
Bylaws on the date of this Agreement, and such provisions shall not be amended,
repealed or otherwise modified for a period of five years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors or officers of
the Company, unless such modification is required by law.
(c) The provisions of this Section 7.8 are intended for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and executors to the extent that each Indemnified Party has executed and
delivered the writing with respect to himself or herself in accordance with
Section 7.8(a) prior to the Effective Time.
SECTION 7.9. FURTHER ASSURANCES. In the event that at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of the Company,
Republic and Mergersub shall take such necessary action.
31
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF THE COMPANY, REPUBLIC AND
MERGERSUB. The obligations of the Company, Republic and Mergersub to consummate
the Merger and the other transactions contemplated by this Agreement are subject
to the fulfillment, on or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote, in person or by proxy,
of the holders of a majority of the outstanding shares of Company Common Stock
entitled to vote at the Company Special Meeting.
(b) Approvals of Governmental Authorities and Other Persons. All
authorizations, consents, orders or approvals of, or declarations or filings
with, or expiration or termination of any notice and waiting period imposed by,
any Governmental Authority or any other Person upon the consummation of the
transactions contemplated by this Agreement, the failure of which to obtain
could reasonably be expected to have a material adverse effect on Republic and
its subsidiaries or the Company and its subsidiaries, in each case taken as a
whole, shall have been filed or obtained or shall have occurred. All of such
authorizations, consents, orders or approvals shall have been obtained without
the imposition of any conditions which would require the divestiture of any of
the Company's or Republic's assets or would otherwise materially adversely
effect Republic's ability to operate the businesses of the Company and its
subsidiaries following the Effective Time.
(c) Registration Statement. The Registration Statement
shall have been declared effective, and no stop order terminating the
effectiveness of the Registration Statement shall have been issued or
threatened.
(d) No Order or Injunction. The consummation of the Merger
shall not be precluded, enjoined, prohibited or materially restricted by any
order or injunction of a court of competent jurisdiction (each party agreeing to
use its best efforts to have any such order reversed or injunction lifted), and
no litigation, arbitration, or other proceeding initiated by any Governmental
Authority shall be pending which seeks to enjoin prohibit or materially restrict
the consummation of the Merger.
(e) Pooling Letter. The Company and Republic shall have
received a letter from Arthur Andersen LLP, addressed to each of them, dated the
date the Proxy Statement is first mailed to the stockholders of the Company and
confirmed in writing as of the Effective Time, stating that the Merger shall
qualify as a pooling of interests business combination under applicable
accounting and SEC rules.
(f) Accountants Letters. The Company and Republic shall
have received the letters of Arthur Andersen LLP described in Sections 5.6 and
6.3 above.
(g) Nasdaq Listing. The shares of Republic Common Stock
included in the Merger Consideration shall have been duly listed for trading on
the Nasdaq National Market, subject to official notice of issuance.
SECTION 8.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. Except as
otherwise provided below, the obligations of the Company to consummate the
Merger and the other transactions contemplated by this Agreement shall be
subject to the fulfillment on or prior to the Effective Time of the following
additional conditions, any one or more of which may be waived by the Company:
(a) Performance of Obligations of Republic and Mergersub.
Republic and Mergersub shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by them at or prior to the Effective Time, and the Company shall
have received a certificate signed on behalf of each of Republic and Mergersub
by an executive officer of each such company to such effect.
(b) Representations and Warranties; Change in Condition. The
representations and warranties of Republic and Mergersub set forth in this
Agreement shall be true and correct on and as of the date hereof and at and as
of the Effective Time, with the same force and effect as through such
representations and warranties had been made at and as of the Effective Time,
and the Company shall have received a certificate signed on behalf of each of
Republic and Mergersub by an executive officer of each such company to such
effect. Since the date hereof, no event or condition shall have occurred (or
shall be discovered) that could reasonably be expected to have a material
adverse effect on Republic and its subsidiaries taken as a whole.
Notwithstanding the foregoing, the Company acknowledges and agrees that: (i) the
enactment or proposal of any legislation relating to solid waste flow control,
(ii) the occurrence of any event (or series of events) which materially effects
solid waste companies and/or electronic security services companies generally,
or (iii) the commencement of any litigation by Republic stockholders in the name
of or against Republic or any of its subsidiaries or affiliates arising as a
result of the transactions contemplated by this Agreement, shall in no event be
deemed to have had or reasonably be expected to have a material adverse effect
on Republic and its subsidiaries taken as a whole.
(c) Corporate Action. The Company shall have received from
Republic (i) copies of the certificates of incorporation and bylaws of Republic
and Mergersub, (ii) copies of resolutions of Republic's and Mergersub's Boards
of Directors approving and adopting this Agreement and the transactions
contemplated hereby, certified on behalf of each of Republic and Mergersub by
the corporate secretary of each such company, and (iii) a certificate of good
standing from the Secretary of State of the State of Delaware for each of
Republic and Mergersub (dated as of a date not more than 10 days prior to the
Closing).
32
(d) Opinion of Counsel. The Company shall have received an
opinion of counsel to Republic and Mergersub, dated the Effective Time, in the
form of Exhibit D.
(e) Opinion of Financial Advisor. The Company shall have
received the opinion of Raymond James & Associates, Inc. dated as of the date of
this Agreement and confirmed or updated in writing as of the date that the Proxy
Statement is first mailed to stockholders of the Company to the effect that, as
of such respective dates, the consideration to be received in the Merger by the
Company's stockholders is fair to such stockholders from a financial point of
view and such opinion shall not have been withdrawn prior to the Effective Time.
(f) Tax Opinion. The Company shall have received the opinion,
based on appropriate representations of the Company and Republic, of Shefsky
Froelich & Devine Ltd., counsel to the Company, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that the Company, Republic and
Mergersub each will be a party to that reorganization within the meaning of
Section 368(b) of the Code, which opinion shall have been dated on or about the
date the Proxy Statement is first mailed to stockholders of the Company.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF REPUBLIC AND MERGERSUB. The
obligations of Republic and Mergersub to consummate the Merger and the other
transactions contemplated by this Agreement shall be subject to the fulfillment
on or prior to the Effective Time of the following additional conditions, any
one or more of which may be waived by Republic and Mergersub:
(a) Performance of Obligations of the Company and the
Management Stockholders. The Company and the Management Stockholders shall have
performed and complied in all material respects with all agreements required by
this Agreement to be performed or complied with by them at or prior to the
Effective Time, and each of Republic and Mergersub shall have received a
certificate of the Company and the Management Stockholders (in the case of the
Company, signed by the chief executive officer, the chief operating officer, and
the chief financial officer of the Company) to such effect.
(b) Representations and Warranties; Change in Condition. The
representations and warranties of the Company and the Management Stockholders
set forth in this Agreement shall be true and correct on and as of the date
hereof and at and as of the Effective Time, with the same force and effect as
though such representations and warranties had been made at and as of the
Effective Time, and each of Republic and Mergersub shall have received a
certificate of the Company and the Management Stockholders (in the case of the
Company, signed by the chief executive officer and the chief financial officer
of the Company) to such effect. Since the date hereof, no event or condition
shall have occurred (or shall be discovered of any previously existing event or
condition) that could reasonably be expected to have a material adverse effect
on the Company and its subsidiaries taken as a whole. Notwithstanding the
foregoing, each of Republic and Mergersub acknowledges and agrees that: (i) the
enactment or proposal of any legislation relating to solid waste flow control,
(ii) the occurrence of any event (or series of events) which materially effects
solid waste companies generally, or (iii) the commencement of any litigation by
the Company stockholders in the name of or against the Company or any of its
subsidiaries or affiliates arising as a result of the transactions contemplated
by this Agreement, shall in no event be deemed to have had or reasonably be
expected to have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(c) Corporate Action. Each of Republic and Mergersub shall have
received from the Company (i) copies of the certificates of incorporation and
bylaws of the Company and each of its subsidiaries, (ii) copies of resolutions
of the Company's Board of Directors approving and adopting this Agreement and
the transactions contemplated hereby, certified on behalf of the Company and
each of its subsidiaries by the corporate secretary of each such company, and
(iii) a certificate of good standing from the Secretary of State of the State of
Delaware for the Company (dated as of a date not more than 10 days prior to the
Closing).
33
(d) Opinion of Counsel. Each of Republic and Mergersub
shall have received an opinion of counsel to the Company, dated the Effective
Time, in the form of Exhibit E.
(e) Environmental Assessment and Due Diligence. Republic
shall be satisfied with the results of its Environmental Assessment and due
diligence review of the Company pursuant to Section 5.4.
(f) Tax Opinion. Republic shall have received the opinion,
based on appropriate representations of the Company and Republic, of Akerman,
Senterfitt & Eidson, P.A., counsel to Republic, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and that the Company, Republic and
Mergersub each will be a party to that reorganization within the meaning of
Section 368(b) of the Code, which opinion shall have been dated on or about the
date the Proxy Statement is first mailed to stockholders of the Company.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated and
the Merger contemplated by this Agreement may be abandoned at any time after
the occurrence of any of the following events, but prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company);
(a) by mutual written consent of Republic and the
Company;
(b) by either Republic or the Company, if any Governmental
Authority shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger, and such
order, decree, ruling or other action shall have become final and nonappealing;
(c) by either Republic or the Company, if the Merger has not
been consummated by November 18, 1996 (such date, or such later date mutually
agreed to in writing by the parties hereto, referred to as the "End Date")
(other than due to the failure of the party seeking to terminate this Agreement
to perform its obligations under this Agreement required to be performed at or
prior to the Effective Time);
34
(d) by either Republic or the Company, if the Company's Special
Meeting shall have been held, and the stockholders of the Company shall have
failed to approve and adopt this Agreement and the Merger at the Company Special
Meeting (or any adjournment thereof);
(e) by Republic, if a tender offer or exchange offer for more
than 30% of the outstanding shares of the Company Common Stock is commenced, and
the Board of Directors of the Company, within ten business days after such
tender offer or exchange offer is so commenced, fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders or takes
no position with respect to such offer;
(f) by Republic, if any Person or group (as that term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder), other than the Management Stockholders, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of more than
50% of the then combined voting power of all classes of the capital stock of the
Company;
(g) by Republic, if the Board of Directors of the Company does
not recommend to its stockholders the approval of the Merger, this Agreement and
the transactions contemplated hereby, or withdraws, modifies or changes its
recommendation to approve the Merger, this Agreement and the transactions
contemplated hereby, or shall have resolved to do any of the foregoing, except
as permitted in accordance with the terms of Section 9.1(h) below;
(h) by either Republic or the Company, if the Company or its
stockholders receives an offer for a Competing Transaction that the Board of
Directors of the Company determines in good faith is more favorable to the
stockholders of the Company from a financial point of view than the transactions
contemplated by this Agreement, and the Board of Directors of the Company
accepts, recommends or resolves to accept or recommend to the Company's
stockholders such a Competing Transaction;
(i) by Republic, if any of the representations and warranties
of the Company in this Agreement are not true and correct and could not
reasonably be expected to become true and correct prior to the End Date, or if
the Company breaches in any material respects any covenant of the Company
contained in this Agreement and such breach could not reasonably be expected to
be cured prior to the End Date; or
(j) by the Company, if any of the representations and
warranties of Republic in this Agreement are not true and correct and could not
reasonably be expected to become true and correct prior to the End Date, or if
Republic breaches in any material respect any covenant of Republic contained in
this Agreement and such breach could not reasonably be expected to be cured
prior to the End Date.
35
SECTION 9.2. EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 9.1, this Agreement shall terminate and become
void and of no force and effect, the Merger shall be abandoned without further
action by any of the parties to this Agreement, and no party to this Agreement
shall have any liability or further obligation under this Agreement, except for
the agreements contained in Sections 5.2 (No Solicitations), 7.5 (Brokers or
Finders), 9.3 (Covenant Not to Purchase), 10.3 (Fees and Expenses) and 10.8
(Governing Law); provided that any termination of this Agreement pursuant to
Sections 9.1(i) or 9.1(j) of this Agreement shall not relieve any party from any
liability for the breach of any material representation, warranty or covenant
contained in this Agreement or be deemed to constitute a waiver of any remedy
available for such breach; provided, further, and notwithstanding the foregoing
to the contrary, no party to this Agreement shall have any continuing liability
or further obligation under Section 5.2 of this Agreement if this Agreement is
terminated pursuant to Sections 9.1(b) or (j). Upon termination of this
Agreement, each party shall return all documents and other materials of any
other party which constitute confidential or proprietary information or trade
secrets, whether so obtained before or after the execution of this Agreement, to
the party furnishing the same.
SECTION 9.3. COVENANT NOT TO PURCHASE. In the event that this Agreement
is terminated pursuant to Sections 9.1(a), (b), (c) or (j), Republic agrees, for
a period of one year following such date of termination, not to purchase or
acquire, by means of a stock purchase, asset purchase, merger or other business
combination, any of the entities proposed to be acquired by the Company which
are set forth on Schedule 5.9.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented only by written
agreement of the Company, on the one hand, and Republic and Mergersub, on the
other hand, at any time prior to the Effective Time with respect to any of the
terms contained herein; provided, however, that, after the adoption of this
Agreement by the Company's stockholders, no such amendment or modification shall
reduce the amount or change the form of the consideration to be delivered to the
stockholders of the Company as contemplated by Article II of this Agreement.
SECTION 10.2. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the
Company, or of Republic or Mergersub, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by Republic or Mergersub,
or by the Company, respectively, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
10.2.
SECTION 10.3. FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement or by law,
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, except that the expenses payable in connection
with printing and mailing the Proxy Statement and the Registration Statement,
all SEC filing fees relating to the transactions contemplated herein, and the
fees for filing under the HSR Act, shall be borne by Republic.
(b) If this Agreement is terminated pursuant to Sections 9.1(d), (e), (f),
(g), or (i), then the Company shall pay Republic an amount equal to $1,000,000,
plus out-of-pocket expenses (including reasonable attorneys and advisors fees)
incurred by Republic and Mergersub in connection with this Agreement and the
transactions contemplated by this Agreement, except that if this Agreement is
terminated pursuant to Section 9.1(d), then the Company only shall be obligated
to pay such amounts to Republic in the event that the Company's Board of
Directors did not recommend that the Company's stockholders approve and adopt
this Agreement and the Merger, or the Management Stockholders did not use their
respective reasonable best efforts to solicit votes in favor of approval of this
Agreement and the Merger prior to and at the Company Special Meeting, in
accordance with Section 5.3.
36
(c) If this Agreement shall be terminated pursuant to Section
9.1(h), or if within the period described in Section 5.2(b), the Company
consummates a Competing Transaction, then the Company and the Management
Stockholders shall pay Republic the amounts described in Section 5.2(b), which
amounts shall be independent of any amounts payable pursuant to Section 10.3(b).
(d) Each party agrees that the actual damages accruing to
Republic from termination of this Agreement pursuant to those termination
provisions referenced in Sections 10.3(b) and (c) are incapable of precise
estimation and would be difficult to prove, and that the damages stipulated
herein bear a reasonable relationship to the potential injury likely to be
sustained in the event of termination pursuant to such occurrence. The payments
stipulated in Sections 10.3(b) and (c) are intended by the parties to provide
just compensation in the event of termination pursuant to such provisions and
are not intended to compel performance or to constitute a penalty for
nonperformance.
(e) Any payment required to be made by the Company pursuant to
Section 10.3(b) shall be made to Republic not later than five business days
after the occurrence of the event for which Republic is entitled to payment as
provided for herein. All payments required to be made pursuant to this Section
10.3 shall be made by wire transfer of immediately available funds to an account
designated by Republic.
SECTION 10.4. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Section 7.8, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed or is intended to give to any Person, other than the parties hereto
and such assigns, any legal or equitable rights hereunder.
SECTION 10.5. SURVIVAL OF AND RELIANCE ON REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company and the Management
Stockholders in this Agreement or in any schedule or certificate or other
documents delivered pursuant to this Agreement shall survive the Effective Time,
until the date on which Republic files its Annual Report on Form 10-K for the
fiscal year in which the Merger is consummated. The representations and
warranties of Republic and Mergersub in this Agreement or in any schedule or
certificate or other document delivered pursuant to this Agreement shall expire
at the Effective Time. Notwithstanding any knowledge of facts determined or
determinable by any party by investigation, each party shall have the right to
fully rely on the representations and warranties of the other parties contained
in this Agreement or in any other documents or certificates delivered in
connection herewith. Each representation and warranty contained in this
Agreement is independent of each other representation and warranty. None of the
covenants in this Agreement or in any Schedule, certificate, or other document
delivered pursuant to this Agreement shall survive beyond the Effective Time,
except for the agreements in Article I (The Merger), Article II (Conversion of
Securities; Exchange of Certificates), Section 6.5 (Benefit Plans), Section 7.7
(Tax Treatment), Section 7.8 (Indemnification and Insurance of Company Officers
and Directors), Section 7.9 (Further Assurances), and Section 10.8 (Governing
Law), and for those set forth in the Affiliate Letters, the Covenant Letters,
and the Irrevocable Proxies.
SECTION 10.6. NOTICES. All notice and other communications required or
permitted hereunder shall be in writing and shall be deemed duly given if
delivered by hand, faxed (provided a confirmation is sent by guaranteed
overnight delivery), guaranteed overnight delivery or mailed, first class
certified mail with postage prepaid, to the parties at the following addresses,
or such other addresses as such party shall furnish to the other in writing:
(a) If to Republic or Mergersub to:
Republic Industries, Inc.
200 East Las Olas Blvd., Suite 1400
Fort Lauderdale, FL 33301
Attn: Richard L. Handley, General Counsel
Fax: (954) 522-8219
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
One S.E. Third Avenue, 28th Floor
Miami, FL 33131
Attn: Jonathan L. Awner, Esq.
Fax: (305) 374-5095
(b) If to the Company or any Management Stockholder to:
Continental Waste Industries, Inc.
67 Walnut Avenue, Suite 103
Clark, New Jersey 07066
Attn: Jeffrey E. Levine, General Counsel
Fax: (908) 396-4381
37
SECTION 10.7. ASSIGNMENT. This Agreement and all of its provisions
shall be binding upon and inure to the benefit of the parties to this Agreement,
but neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by operation of law or otherwise.
SECTION 10.8. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
applicable to contracts executed and to be wholly performed within such State.
SECTION 10.9. HEADINGS. The table of contents and the article and
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
When reference is made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement (which term as used
throughout includes the Exhibits and Schedules hereto) and the other documents
and certificates contemplated herein embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements and understandings (oral or written)
between or among the parties with respect to such subject matter. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein.
SECTION 10.11. SEVERABILITY. Wherever possible, each provision or
portion of any provisions of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of this Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have made and entered into this Agreement
on the date set forth above.
REPUBLIC INDUSTRIES, INC., a Delaware
corporation
By: /s/ H. Wayne Huizenga
------------------------------
H. Wayne Huizenga,
Chairman and Chief Executive
Officer
RI/CW MERGER CORP., a Delaware
corporation
By: /s/ Richard L. Handley
------------------------------
Richard L. Handley,
Vice President
CONTINENTAL WASTE INDUSTRIES, INC., a
Delaware corporation
By: /s/ Thomas A. Volini
------------------------------
Thomas A. Volini
Chairman of the Board and
Chief Operating Officer
/s/ Thomas A. Volini
------------------------------------
Thomas A. Volini, individually
/s/ Carlos E. Aguero
------------------------------------
Carlos E. Aguero, individually
38
EXHIBIT A
June __, 1996
Republic Industries, Inc.
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of June
__, 1996 (the "Merger Agreement"), among REPUBLIC INDUSTRIES, INC., a Delaware
corporation ("Republic"); RI/CW MERGER CORP., a Delaware corporation and
wholly-owned subsidiary of Republic ("Mergersub"); CONTINENTAL WASTE INDUSTRIES,
INC., a Delaware corporation (the "Company"); and THOMAS A. VOLINI and CARLOS E.
AGCERO, pursuant to which Mergersub is to be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation and a
wholly-owned subsidiary of Republic. Upon consummation of the Merger, the
undersigned, as a stockholder of the Company, will receive shares (the "Shares")
of common stock, $0.01 par value per share, of Republic ("Republic Common
Stock") in exchange for the undersigned's shares of common stock of the Company
("Company Common Stock"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Merger Agreement.
The undersigned may be deemed to be an "affiliate" of the Company
within the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act
of 1993, as amended (the "Securities Act"), and for purposes of qualifying the
Merger as a pooling of interests business combination under applicable
accounting and Securities and Exchange Commission ("SEC") rules and regulations.
The undersigned hereby represents that on the date hereof, the
undersigned has no plan or intention to sell, exchange or otherwise dispose of
the Shares.
As an affiliate of the Company the undersigned understands that any
resale of the Shares must be made in accordance with the then applicable
provisions of Rule 145, pursuant to an effective registration statement filed
with the SEC under the Securities Act or in a transaction exempt from
registration under the Securities Act. Accordingly, the undersigned agrees that
the undersigned will not sell, transfer or otherwise dispose of any of the
Shares unless such sale, transfer or disposition is (i) pursuant to an effective
registration statement under the Securities Act, (ii) in compliance with the
provisions of Rule 145, or (iii) in accordance with an opinion of counsel, in
form and substance
Republic Industries, Inc.
June __, 1996
Page 2
- -------------------------
satisfactory to Republic, that an exemption from the registration requirements
under the Securities Act is available.
The undersigned understands that it is Republic's intention that the
transactions contemplated by the Merger Agreement be accounted for as a pooling
of interests business combination. The undersigned further understands that in
order to accommodate this accounting treatment, affiliates of the Company must
comply with certain rules of the SEC restricting their resale of Republic Common
Stock received pursuant to the Merger Agreement or otherwise acquired.
Accordingly, the undersigned represents that the undersigned has not, within the
preceding 30 days, sold, transferred or otherwise disposed of any shares of
Company Common Stock held by the undersigned and agrees that the undersigned
will not sell, transfer or pledge, dispose of or otherwise part with any
interest in or with respect to, or in any other manner reduce the undersigned's
investment risk with respect to, any of the Shares until such time as Republic
publishes financial results covering at least 30 days of combined operations of
Republic and the Company.
The undersigned understands that the certificates evidencing the Shares
will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO, (B) IN
ACCORDANCE WITH RULE 145(D) UNDER THE ACT, OR (C) IN ACCORDANCE WITH AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
COMPLIANCE WITH THE SECURITIES AND EXCHANGE COMMISSION'S ACCOUNTING
SERIES RELEASES 130 AND 135.
The undersigned further understands that Republic will instruct its
stock transfer agent not to effect any transfer of the Shares unless such
transfer is made in compliance with said restrictions. In connection with any
sale, transfer or other disposition of the Shares in accordance with Rule 145,
the undersigned will be required to deliver to Republic's transfer agent, Wells
Fargo Bank (Texas), N.A., the undersigned's restricted stock certificate(s),
instructions for transfer and a representation letter which confirms that the
Shares are being sold in a manner that complies with the requirements of Rule
145(d) promulgated under the Securities Act of 1933, as amended, specifically,
Rules 144(f)
2
Republic Industries, Inc.
June __, 1996
Page 3
- -------------------------
and (g) thereunder relating to the manner of sale of such shares. A form of the
representation letter is attached hereto as Annex I.
The undersigned hereby acknowledges and agrees that any breach of this
letter may result in special damage and injury to Republic not readily
recoverable as money damages and therefore the undersigned consents to, and
covenants that he or it will not oppose, any application by Republic, for
equitable relief from any such breach by way of injunction or decree of specific
performance on the basis that Republic has an adequate remedy at law.
This Letter shall terminate if the Agreement is terminated.
----------------------------------------
NAME:
ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
REPUBLIC INDUSTRIES, INC.
By:__________________________________
Name: ____________________________
Title:____________________________
3
ANNEX I
[FORM OF REPRESENTATION LETTER TO BE
COMPLETED BY BROKER OR OTHER APPROPRIATE PARTY]
Wells Fargo Bank (Texas), N.A.
Corporate Trust Department
1000 Louisiana, Suite 700
Houston, TX 77002
Telephone: (713) 250-4020
Facsimile: (713) 250-7929
Attn: Ms. Deri Ward
RE: SALE OF SHARES OF COMMON STOCK OF REPUBLIC
INDUSTRIES, INC. ("REPUBLIC")
Dear Ms. Ward:
The undersigned hereby certifies that, in connection with the sale of
shares of Common Stock of Republic described below issued to the Record Holder
pursuant to the Company's Prospectus, dated _________, 1996, as filed on a
Registration Statement on Form S-4 with the Securities and Exchange Commission,
the undersigned is selling such shares in a manner that complies with the
requirements of Rule 145(d) under the Securities Act of 1933, as amended,
specifically Rules 144(f) and (g) thereunder relating to the manner of sale of
such shares.
Record Holder: _______________________________________
Stock Certificate No(s). _________________________________
Number of Shares Sold: _________________________________
Date of Sale: __________________________________________
In the event that you receive stock certificates representing more
shares of Common Stock than has been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer order on your records with regard to such
certificate.
Very truly yours,
cc: Republic Industries, Inc.
Facsimile: (954) 522-8219
Attn: Corporate Secretary
4
EXHIBIT B
_________, 1996
Republic Industries, Inc.
200 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, FL 33301
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of
June_____, 1996 (the "Merger Agreement"), among REPUBLIC INDUSTRIES, INC., a
Delaware corporation ("Republic"); RI/CW MERGER CORP.,a Delaware corporation and
wholly-owned subsidiary of Republic ("Mergersub"); CONTINENTAL WASTE INDUSTRIES,
INC., a Delaware corporation (the "Company"); and THOMAS A. VOLINI and CARLOS E.
AGCERO, pursuant to which Mergersub is to be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation and a
wholly-owned subsidiary of Republic. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the Merger
Agreement.
The undersigned agrees that during the undersigned's employment with
Republic, the Company or any of their subsidiaries (the "Republic Companies")
immediately following the consummation of the Merger and for a period of three
(3) years after termination of the undersigned's employment with the Republic
Companies for any reason, the undersigned shall not, directly or indirectly:
(1) alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor, or security
holder, of any Person, engage in any business activity in any State in
which the Republic Companies are doing business, which is directly or
indirectly in competition with the business engaged in by the Republic
Companies in such States (a "Competing Business"); provided, however,
that the beneficial ownership of less than five percent (5%) of any
class of securities of any entity having a class of equity securities
actively traded on a national securities exchange or The Nasdaq Stock
Market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(2) (i) induce any customer of the Republic Companies to
patronize any business which is a Competing Business; (ii) solicit or
accept for or on behalf of any such Competing Business any customer of
the Republic Companies; or (iii) request or advise any customer of the
Republic Companies to withdraw, curtail or cancel any such customer's
business with the Republic Companies;
Republic Industries, Inc.
June ______, 1996
Page 2
- -------------------------
(3) employ any person who was employed by the Republic
Companies within six months prior to the date being employed by the
undersigned, or in any manner seek to induce any employee of the
Republic Companies to leave his or her employment;
(4) in any way utilize, disclose, copy, reproduce or retain in
his possession any of the proprietary rights, records or trade secrets
of the Republic Companies, including, but not limited to, any customer
lists and non-public financial data; provided that the foregoing shall
not restrict the retention by the undersigned of non-public financial
data received by the undersigned in his capacity as a director of the
Company.
The undersigned agrees and acknowledges that the restrictions contained
in this letter are reasonable in scope and duration, and are necessary to
protect Republic. If any provision of this letter is adjudged by a court of
competent jurisdiction to be invalid or unenforceable, the same will in no way
affect the validity or enforceability of the remainder of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or otherwise, then the
parties agree that the court making such determination shall have the power to
reduce the duration, area or scope of such provision, and/or to delete specific
words or phrases, and in its reduced or modified form, such provision shall then
be enforceable and shall be enforced. The undersigned further agrees and
acknowledges that any breach of this letter will cause irreparable injury to
Republic and upon any breach or threatened breach of any provision of this
letter, Republic shall be entitled to injunctive relief, specific performance or
other equitable relief, without the necessity of posting bond; provided,
however, that this shall in no way limit any other remedies which Republic may
have as a result of such breach, including the right to seek monetary damages.
This Letter shall terminate if the Agreement is terminated.
----------------------------------------
[NAME]
ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
REPUBLIC INDUSTRIES, INC.
By: ___________________________________
Name:______________________________
Title:_______________________________
2
EXHIBIT C
IRREVOCABLE PROXY
This Irrevocable Proxy (this "Proxy") is entered into and delivered as
of June __, 1996 by the undersigned stockholder of Continental Waste Industries,
Inc., a Delaware corporation ("Stockholder"), in favor of REPUBLIC INDUSTRIES,
INC., a Delaware corporation ("Republic").
RECITALS
As of the date of this Proxy, Stockholder owns beneficially and of
record such number of shares of common stock, par value $0.0006 per share
("Company Common Stock") of Continental Waste Industries, Inc., a Delaware
corporation (the "Company") as is set forth next to its name on the signature
page hereof. All such shares, together with any shares acquired by Stockholder
prior to the termination of this Proxy, are sometimes referred to herein as the
"Shares".
On the date hereof, Republic, RI/CW Merger Corp., a Delaware
corporation and wholly-owned subsidiary of Republic ("Mergersub"), the Company
and certain stockholders of the Company, have entered into an Agreement and Plan
of Merger, dated as of the date hereof (as the same may be amended from time to
time, the "Merger Agreement"), which provides for the merger of Mergersub with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation and a wholly-owned subsidiary of Republic.
Republic has required, in connection with its execution and delivery of
the Merger Agreement that Stockholder grant Republic a proxy to vote its shares
on the terms set forth below.
TERMS OF PROXY
In consideration of the mutual representations, warranties, covenants
and agreements set forth in the Merger Agreement and in order to induce Republic
to execute and deliver the Merger Agreement, and, in each case, to consummate
the transactions contemplated thereby, the parties hereto hereby agree as
follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
Stockholder hereby represents and warrants to Republic as
follows:
1.1 DUE ORGANIZATION, ETC. Stockholder is either a limited
partnership duly organized, validly existing and in good standing under the laws
of its state of formation or an individual residing in the United States.
Stockholder has the power and authority to execute and deliver this Proxy and to
consummate the transactions contemplated hereby. Stockholder has taken all
necessary actions to authorize the execution, delivery and performance of this
Proxy and the grant of the rights covered hereby. This Proxy has been duly
executed and delivered by or on behalf of Stockholder and constitutes a legal,
valid and binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.
1.2 TITLE TO SHARES. Stockholder is the record and beneficial
owner of the Shares and owns the Shares free and clear of liens, claims, charges
or encumbrances of any kind or any proxy or voting restriction other than that
granted pursuant to this Proxy.
ARTICLE II
TRANSFER AND VOTING OF SHARES
2.1 RESTRICTION ON TRANSFER OF SHARES. During the Term (as
defined below), Stockholder shall not (a) sell, transfer, pledge, grant a
security interest in or lien on or otherwise dispose of or encumber any of the
Shares, (b) deposit any of the Shares into a voting trust, enter into a voting
agreement or arrangement or grant any proxy with respect to any of the Shares,
or (c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer,
pledge, grant of a security interest in or lien on or other disposition of or
encumbrance on the Shares.
2.2 VOTING OF SHARES. Stockholder does hereby irrevocably constitute and
appoint Republic, or any nominee of Republic, with full power of substitution,
during and for the Term, as its true and lawful attorney and proxy, for and in
its name, place and stead, to vote each of the Shares as its proxy, at every
annual, special or adjourned meeting of the shareholders of the Company
(including the right to sign its name (as shareholder) to any consent,
certificate or other document relating to the Company that the law of the State
of Delaware may permit or require) (i) in favor of the approval of the Merger
Agreement and the consummation of all other transactions contemplated by the
Merger Agreement, (ii) against any Competing Transaction (as defined in the
Merger Agreement) involving the Company, or any action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which could
result in any of the conditions to the Company's obligations under the Merger
Agreement not being fulfilled, and (iii) in favor of any other matter relating
to consummation of the transactions contemplated by the Merger Agreement.
Stockholder further agrees to cause the Shares owned by it beneficially to be
voted in accordance with the foregoing.
2.3 FURTHER ASSURANCES. Stockholder shall take such further
actions and execute such further documents and instruments as may reasonably be
requested by Republic to vest in Republic (or its designee) the power to vote
the Shares and carry out the provisions of this Proxy.
2.4 TERM. The term of this Proxy (the "Term") shall commence on
the date hereof and shall remain valid until the earlier of (a) consummation of
the Merger, (b) consummation of a Competing Transaction, or (c) termination of
the Merger Agreement for any reason (other than as a result of a Competing
Transaction). THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH AN INTEREST.
ARTICLE III
GENERAL PROVISIONS
3.1 SEVERABILITY. If any term or other provision of this Proxy
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Proxy shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, Stockholder agrees
to negotiate with Republic in good faith to modify this Proxy so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
3.2 ENTIRE AGREEMENT. This Proxy constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between Stockholder and Republic, with respect to the
subject matter hereof.
3.3 ASSIGNMENT. Except as provided herein, this
Proxy shall not be assigned by operation of law or otherwise. This Proxy shall
be binding upon Stockholder and its successors and assigns.
3.4 PARTIES IN INTEREST. This Proxy shall be binding upon and
inure solely to the benefit of Republic, and nothing in this Proxy, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Proxy.
3.5 SPECIFIC PERFORMANCE. Stockholder agrees that irreparable
damage would occur in the event any provision of this Proxy was not performed in
accordance with the terms hereof and that Republic shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or in
equity.
3
EXHIBIT D
OPINION OF COUNSEL FOR REPUBLIC INDUSTRIES, INC.
The following shall be addressed to Continental Waste Industries, Inc.
Capitalized terms used herein without definition shall have the meanings as set
forth in the Agreement and the Plan of Merger (the "Merger Agreement").
(1) Each of Republic and Mergersub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on the business as now being conducted.
(2) Each of Republic and Mergersub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing (individually or in the
aggregate) would not have a material adverse effect on Republic.
(3) The shares of Republic Common Stock to be issued in the Merger by
Republic will be, when issued in accordance with the terms of the Merger
Agreement, duly authorized, validly issued, fully paid and nonassessable.
(4) Republic and Mergersub have the requisite corporate power and
authority to execute and deliver the Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Merger
Agreement by Republic and Mergersub has been duly authorized by all necessary
corporate action on the part of Republic and Mergersub, respectively. The Merger
Agreement has been duly executed and delivered by Republic and Mergersub and
constitutes a valid and binding obligation of Republic, enforceable against
Republic in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and general equitable principles.
(5) The execution and delivery of the Merger Agreement does not, and the
consummation of the transactions contemplated by the Merger Agreement and
compliance with the provisions of the Merger Agreement will not, conflict with,
or result in any violation of, or constitute a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Republic or any of its subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of Republic or any provision of the
comparable charter or organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, or license applicable to
Republic or any of its subsidiaries or their respective properties or assets, or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree applicable to Republic or any of its subsidiaries or
their respective properties or assets, other than, in the case of clause (ii)
and clause (iii), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not (1) have a material
adverse effect on Republic, (2) impair in any material respect the ability of
Republic or Mergersub to perform its obligations under the Merger Agreement, or
(3) prevent or materially delay the consummation of any of the transactions
contemplated by the Merger Agreement.
(6) Except as disclosed in the SEC Documents filed and publicly
available immediately prior to the Merger, there is no suit, action or
proceeding pending or threatened against Republic or any of its subsidiaries
challenging the acquisition by Republic or Mergersub of any shares of Company
Common Stock or any provision of the Merger Agreement or seeking to restrain or
prohibit the consummation of the Merger, or that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Republic, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Republic or any of its
subsidiaries having, or which could reasonably by expected to have, any such
effect.
EXHIBIT E
OPINION OF COUNSEL FOR CONTINENTAL WASTE INDUSTRIES, INC.
The following opinion shall be addressed to Republic Industries, Inc.
and RI/CW Merger Corp. Capitalized terms used herein without definition shall
have the meanings set forth in the Agreement and Plan of Merger (the "Merger
Agreement").
(1) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted.
(2) Each of the Company and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed or to be in good standing
(individually or in the aggregate) would not have a material adverse effect on
the Company and its subsidiaries taken as a whole.
(3) The Company has the requisite corporate power and authority to
execute and deliver the Merger Agreement and to consummate the transactions
contemplated by the Merger Agreement. The execution and delivery of the Merger
Agreement by the Company and the consummation by the Company of the transactions
contemplated thereby have been duly authorized by all necessary corporate
action. The Merger Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and general equitable principles.
(4) All the outstanding shares of capital stock of each subsidiary of
the Company listed on Schedule 3.2 to the Merger Agreement are owned by the
Company or by another subsidiary of the Company, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever.
(5) Except as set forth on Schedule 3.4 of the Merger Agreement, the
execution and delivery of the Merger Agreement by the Company does not, and
performance of the Company's obligations thereunder will not, conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of the Company or any provision of the
comparable charter or organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, or license to which the
Company or any of its subsidiaries is a party or by which their respective
properties or assets are bound, or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree applicable to the
Company or any of its subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) and clause (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (1) have a material adverse effect on the Company and its
subsidiaries taken as a whole, (2) impair in any material respect the ability of
the Company to perform its obligations under this Agreement, or (3) prevent or
materially delay the consummation of any of the transactions contemplated by the
Merger Agreement.
(6) Except as disclosed on Schedule 3.8 to the Merger Agreement or in
the SEC Documents filed and publicly available prior to the Merger, there is no
suit, action or proceeding pending or threatened in writing against the Company
or any of its subsidiaries challenging the acquisition by Republic or Mergersub
of any shares of the Company Common Stock or any provision of the Merger
Agreement or seeking to restrain or prohibit the consummation of the Merger, or
that, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a whole,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority or arbitrator outstanding against the Company or any of its
subsidiaries having, or which could reasonably be expected to have, a material
adverse effect on the Company and its subsidiaries taken as a whole.
2
ACQUISITION AGREEMENT
BY AND AMONG
CONTINENTAL WASTE INDUSTRIES, INC.
STATEWIDE ENVIRONMENTAL CONTRACTORS, INC.
AND
THE STOCKHOLDERS OF
STATEWIDE ENVIRONMENTAL CONTRACTORS, INC.
-------------------------------
DATED: APRIL 11, 1996
--------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. THE EXCHANGE..............................................................1
1.1 The Exchange of Shares............................................1
1.2 Short-Term Assets and Closing Adjustments.........................2
2. CLOSING AND DELIVERIES AT THE CLOSING.....................................2
2.1 Closing Time and Place............................................2
2.2 Deliveries at Closing.............................................2
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.............................5
3.1 Organization, Standing and Qualification..........................5
3.2 Capitalization....................................................5
3.3 Authority for Agreement...........................................5
3.4 No Breach or Default..............................................5
3.5 Subsidiaries......................................................6
3.6 Financial Statements..............................................6
3.7 Liabilities.......................................................6
3.8 Conduct of Business ..............................................7
3.9 Permits and Licenses..............................................7
3.10 Receivables......................................................8
3.11 Fixed Assets ....................................................8
3.12 Disposal of Assets...............................................8
3.13 Contracts and Agreements; Adverse Restrictions ..................8
3.14 Insurance........................................................9
3.15 Personnel........................................................9
3.16 Benefit Plans ...................................................9
3.17 Taxes...........................................................10
3.18 Articles of Incorporation and Bylaws............................10
3.19 Customers, Billings and Current Receipts........................10
3.20 No Change ......................................................10
3.21 Bank Accounts ..................................................11
3.22 Compliance with Laws ...........................................12
3.23 Environmental Compliance....................................... 12
3.25 Real Property ..................................................14
3.27 Accurate and Complete Records...................................16
3.28 No Misleading Statements .......................................16
3.29 Knowledge ......................................................16
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................16
4.1 Existence and Good Standing.....................................16
4.2 Authorization of Agreement......................................16
4.3 Litigation......................................................16
4.4 No Misleading Statements........................................16
5. COVENANTS OF STOCKHOLDERS................................................17
5.1 Access; Confidential Information................................17
5.2 Operations......................................................17
5.3 No Change.......................................................18
5.4 Notice..........................................................18
5.5 Exclusivity of Negotiations.....................................18
6. COVENANTS OF CWI.........................................................19
6.1 Consents........................................................19
6.2 Tax and Other Records...........................................19
6.3 Nondisclosure of Confidential Information.......................19
7. INDEMNIFICATION..........................................................19
7.1 Stockholder Indemnities.........................................19
7.2 Purchaser's Indemnities.........................................20
7.3 Notice of Indemnity Claim.......................................21
7.4 Right of Set-Off................................................21
-i-
<PAGE>
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF CWI...............................22
8.1 ISRA and Related Environmental Compliance.......................22
8.2 Accuracy of Representations; Performance of Covenants...........23
8.3 Closing Deliveries..............................................23
8.4 Governmental Consents; No Litigation............................23
8.5 No Material Adverse Change......................................23
8.6 Liabilities.....................................................23
8.7 Material Contracts..............................................24
8.8 Resignations....................................................24
8.9 Releases........................................................24
8.10 Certificate of Good Standing....................................24
8.11 Necessary Filings...............................................24
8.12 Liens...........................................................24
8.13 Due Diligence...................................................24
8.14 Simultaneous Closings...........................................24
8.15 Assignment of Recycling and Lomac Purchase Options..............24
8.16 Transitional Management.........................................24
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS......................25
9.1 Accuracy of Representations.....................................25
9.2 Closing Deliveries..............................................25
10. JOINT COVENANTS OF CWI AND STOCKHOLDERS..................................25
10.1 Delivery of U.C.C. Search Documents.............................25
10.2 Diligence Towards Closing.......................................25
10.3 Notice of Untrue or Inaccurate Representations..................25
10.4 Post-Closing Covenants..........................................26
11. TERMINATION OF AGREEMEN..................................................26
11.1 Mutual Consent..................................................26
11.2 Failure to Fulfill Respective Conditions........................26
11.3 Misrepresentation...............................................26
11.4 Notice and Effect of Termination................................26
12. COMPLIANCE WITH REQUIREMENTS OF SECURITIES LAWS..........................27
12.1 Unregistered Stock..............................................27
12.2 Restrictive Legend..............................................27
12.3 Stockholders' Representations and Warranties....................27
13. POST-CLOSING COVENANTS OF STOCKHOLDERS AND CWI...........................28
13.1 Restrictive Covenants...........................................29
13.2 Rights and Remedies Upon Breach ................................30
14. POST-CLOSING COVENANTS OF PURCHASER......................................30
14.1 Tax and Other Records...........................................30
14.2 Continuing Liability for Obligations to Stockholders............30
14.3 Compliance with all Consent Orders and Closure Agreements.......30
14.4 Mutual Cooperation..............................................30
15. GENERAL..................................................................30
15.1 Additional Conveyances..........................................30
15.2 Assignment......................................................30
15.3 Public Announcements............................................30
15.4 Counterparts....................................................31
15.5 Notices.........................................................31
15.6 Applicable Law..................................................31
15.7 Payment of Fees and Expenses....................................31
15.8 Incorporation by Reference......................................31
15.9 Captions........................................................32
15.10 Number and Gender of Words.....................................32
15.11 Entire Agreement...............................................32
15.12 Survival of Representations....................................32
15.13 Effective Date.................................................32
15.14 Predecessors...................................................32
LIST OF SCHEDULES.............................................................32
-ii-
<PAGE>
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made April 11,
1996, by and among CONTINENTAL WASTE INDUSTRIES, INC., a Delaware corporation
("CWI" or "Purchaser"), STATEWIDE ENVIRONMENTAL CONTRACTORS, INC., a New Jersey
corporation ("Statewide") and MARY LEMMO, NICHOLAS LEMMO, MAURICE KIRCHOFER, DON
J. LOTANO, FRANK J. LOTANO AND ARLINE LOTANO, individuals, (individually
"Stockholder" and collectively, "Stockholders"), who are the owners of all of
the issued and outstanding shares of the capital stock of Statewide, being the
corporation to be acquired hereby.
WHEREAS, Stockholders own and will own on the Closing Date (as
defined in Section 2 below), all of the issued and outstanding stock of
Statewide, which they desire to exchange pursuant to the terms, conditions and
covenants of this Agreement, solely for shares of voting Common Stock of CWI, as
hereinafter provided; and
WHEREAS, CWI desires to acquire all of the issued and
outstanding capital stock of Statewide from Stockholders, solely in exchange for
shares of voting common stock of CWI (the "CWI Stock"), as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE EXCHANGE
1.1 The Exchange of Shares. At the "Closing" (as defined in Section 2,
below), provided that all conditions precedent to closing the transactions
contemplated by this Agreement have been satisfied by CWI, Stockholders agree to
deliver or cause to be delivered to CWI all of the issued and outstanding
capital stock of Statewide (the "Company Stock"), being the number of shares of
Company Stock set forth opposite their respective names on Schedule 1.1 Schedule
1.1 annexed hereto. At the Closing, in exchange for Company Stock, provided that
all conditions precedent to closing the transactions contemplated by this
Agreement have been satisfied by Statewide and Stockholders, CWI shall issue to
Stockholders shares of CWI Stock having a dollar value of Three Million Five
Hundred Thousand ($3,500,000) Dollars, exclusive of the "Permissible Debt" as
defined below, and subject to adjustment as provided herein. If the average
closing price of the CWI Stock for the five trading days immediately prior to
the Closing Date ("Average Trading Price") is Eleven and 50/100 Dollars ($11.50)
per share, or higher, CWI shall issue to Stockholders 304,348 shares of CWI
Stock; however, if the Average Trading Price is less than $11.50, then the
number of shares of CWI Stock to be issued to Stockholders under this Agreement
shall be determined by dividing the Average Trading Price into $3,500,000. The
number of shares of CWI Stock to be issued to each Stockholder shall be the
number shown on Schedule 1.1. Stockholders have represented and warranted
hereinbelow that the aggregate debt of Statewide on the Closing Date will not
exceed Two Million ($2,000,000) Dollars (the "Permissible Debt"). Permissible
Debt is to be retired by CWI on the Closing Date. In the event that the actual
debt of Sdollar amount of such excess against the cash and/or note portion of
any consideration payable by CWI or its subsidiaries or affiliates to
Stockholders of Recycling Industries, Inc., a New Jersey corporation
("Recycling") and/or the partners of Lomac Realty, a New Jersey partnership
("Lomac"), pursuant to the simultaneous acquisition of Recycling by CWI and the
assets of Lomac by Karat Corp. or its nominee on the Closing Date.tatewide on
the Closing Date exceeds the Permissible Debt and Stockholders shall fail to
otherwise retire such excess debt out of their own funds on the Closing Date,
CWI shall offset the
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1.2 Short-Term Assets and Closing Adjustments. Stockholders shall retain
all cash on hand and accounts receivable (other than pre-paid hauling fees) as
of the Closing Date. The parties hereto will adjust the pre-paid hauling fees
and the trade accounts payable, and, as applicable, other current assets and
current payables, within forty five (45) days of the Closing Date (as
hereinafter defined). CWI will assume the lease obligations for that certain
1996 Mack truck, which obligations shall be excluded from the calculation of the
Permissible Debt as described in Section 1.1, above.
2. CLOSING AND DELIVERIES AT THE CLOSING
2.1 Closing Time and Place. The consummation of the transactions
contemplated hereby and under the Transaction Documents (as hereinafter defined)
(the "Closing") shall be held at the offices of Lowenstein, Sandler, Kohl,
Fisher & Boylan, 65 Livingston Avenue, Roseland, New Jersey 07068, on April 30,
1996 at a time mutually convenient to the parties (the "Closing Date"), or at
such later date as may be mutually agreed among the parties.
2.2 Deliveries at Closing.
(a) Exchange of Consideration.
(i) Stockholders shall deliver to CWI, all outstanding
certificates representing shares of Company Stock, free and clear of
any and all liens, security interests, claims and encumbrances of
every kind, and shall, upon delivery of such certificates, be entitled
to receive certificates evidencing in the aggregate 304,348 shares of
CWI Stock; and
(ii) CWI shall deliver to Stockholders the certificates
representing 304,348 shares of CWI Stock in the proportions
set forth on Schedule 1.1.
(b) Stock Certificates. Stockholders shall deliver the
certificates representing Company Stock, duly endorsed in blank by
Stockholders listed on Schedule 1.1, or accompanied by stock powers
duly executed and affixed thereto. Stockholders agree to cure any
deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to Company Stock or with
respect to the stock powers accompanying any Company Stock;
(c) Creditors' Pay-Off Letters and Termination Statements. Prior
to the Closing Date, Stockholders shall deliver letters from all
creditors indicating pay-off amounts as of the Closing Date, as well
as wire transfer information. Stockholders shall also prepare and
deliver UCC-3 termination statements with respect to all debt to be
retired, together with certificates from creditors that any debts to
be assumed by Purchaser are current as of the Closing Date;
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(d) Certificate of Incorporation and Good Standing. Stockholders
shall have delivered to Purchaser certified Articles of Incorporation
and a certificate, dated as of a recent date, duly issued by the State
of New Jersey, showing that Statewide is authorized to do business in
the State of New Jersey, together with the minute books and stock
ledger of Statewide;
(e) Permits. Stockholders shall deliver to Purchaser originals,
if available, or certified copies of each and every applicable
operating license and/or permit, and each and every authorization
required by any Governmental Authority to own and operate its waste
collection and transportation business, including, but not limited to
certificates of public convenience and necessity, transporter licenses
and registrations, and approvals under N.J.S.A. 13:1E-126, et seq.
("A901");
(f) Legal Opinions. Each party shall deliver to the other party
an opinion from counsel for such party, dated as of the Closing Date,
in a form substantially similar to that annexed hereto as Schedule
2.2(f)Schedules 2.2(f);
(g) Resignations. Stockholders shall deliver to Purchaser the
resignations effective as of the Closing Date of all Officers and
Directors of Statewide;
(h) Insurance Certificates. Statewide shall deliver to Purchaser
insurance certificates showing that all insurance relative to
Statewide's operation and ownership, including pollution liability
insurance, if available, is and remains in force and continuous
through the Closing Date, along with proof of payment of all premiums
from the inception of the coverage year;
(i) Evidence of Environmental Compliance. Stockholders shall
deliver to CWI a certificate which shall be satisfactory in form and
substance to CWI, evidencing environmental compliance pursuant to
Section 3.23 and Section 8.1 below;
(j) Certificates of Authorization. Each party shall deliver to
the other party the appropriate corporate authorizations for the
transactions contemplated hereby;
(k) Investment Letters. Each Stockholder shall deliver to CWI an
Investment Letter Agreement with respect to the CWI Stock exchanged
hereby, in a form substantially similar to that annexed hereto as
Schedule 2.2(k);
(l) Registration Rights Agreements. CWI shall deliver to each
Stockholder a Registration Rights Agreement in a form substantially
similar to that annexed hereto as Schedule 2.2(l), setting forth,
among other things, the obligation of CWI to register such
Stockholders' CWI Stock, at the sole cost and expense of CWI, no later
than ninety (90) days following the Closing Date;
(m) Consulting Agreements. Intentionally omitted.
(n) Transition Management Agreements. The Transition Management
Agreements defined in Section 8.16 herein shall have been executed and
delivered by the parties thereto; and
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(o) Stockholders' Certificates. Stockholders shall deliver to CWI
a certificate, dated the Closing Date, in compliance with Section 8.2
and 8.5 below. Additionally, Stockholders shall deliver to CWI a
certificate, dated the Closing Date, representing and warranting the
validity of the following matters:
(i.) Average Statewide sales during each of the last twelve
months have been at least $1,000,000;
(ii.) Other than the Notices of Violation, copies of which
are annexed hereto as Schedule 2.2(o)(ii) Schedule 2.2(o)(ii),
Statewide is in environmental compliance as that term is defined
in Section 3.23, is not in violation of waste flow control rules
or other NJDEP rules pertaining to disposal of waste in or out of
state, and is on notice with NJDEP that it is not delivering
mixed loads to the Middlesex County landfill;
(iii.) Together, Statewide and Recycling, process and sell
approximately 1,000 tons per month of cardboard, waste paper and
metals; and
(iv.) Statewide has approximately 1,300 bona fide commercial
and industrial customers of which approximately 70% or more are
under contracts of a minimum of one year. No one customer
represents more than 10% of the revenue of Statewide;
(p) Consents. Purchaser shall have received such consents as
counsel for Purchaser shall determine to be required to enable
Purchaser to enjoy the benefit of Statewide's leases, agreements,
material contracts and the like;
(q) Releases. Purchaser shall have received general releases in
favor of Statewide executed by Stockholders and such other employees
of Statewide as Purchaser shall designate. These releases shall not
relate to rights or obligations under this Agreement, that certain
acquisition agreement dated contemporaneously herewith involving CWI,
Recycling, and Stockholders of Recycling (the "Statewide Acquisition
Agreement"), that certain agreement of sale dated contemporaneously
herewith between Lomac and Karat Corp. (the "Lomac Agreement of
Sale"), and all other documents, instruments and agreements executed
in connection herewith or therewith (collectively, "Transaction
Documents");.
(r) Records. Purchaser shall have received possession of all
corporate, accounting, business, financial, environmental and tax
records of Statewide, which records are in the possession and control
of Statewide or its officers, directors, shareholders, agents and
attorneys;
(s) Prepayment of Indebtedness. Unless otherwise provided in
Schedule 2.2(s) annexed hereto, on or before the Closing Date, any and
all indebtedness owing to Statewide by any Stockholders or from
Statewide to any Stockholders have been paid in full. To the extent
any such obligation is not extinguished on or before the Closing Date,
Purchaser and Statewide shall have received a release and hold
harmless agreement from the parties to such obligations;
(t) Satisfactory Searches. Purchaser shall have received
evidence, satisfactory to it as shown by customary uniform commercial
code searches, tax lien searches, franchise tax searches and upper and
lower court searches that Statewide (a) has good title to its assets,
free and clear of all encumbrances, other than those listed in
Schedule 2.2(t) annexed hereto, and (b) has filed all federal, state
and local tax returns which are due and has paid all taxes reflected
on these returns;
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(u) Pension Plan. Statewide shall have taken any required steps
to remain in compliance with ERISA and the PBGC Rules and Regulations;
(v) Equipment Leases. Purchaser shall have received evidence
satisfactory to it that any equipment leases disclosed on Schedule
2.2(v) annexed hereto have been either terminated or assigned to
Purchaser, if such lease is acceptable to Purchaser in its discretion;
and
(w) Pre-Emptive Rights. Purchaser shall have received evidence,
satisfactory to Purchaser, that Stockholders do not have pre-emptive
rights, or that, if they have pre-emptive rights, all such rights have
been honored or waived.
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholders represent and warrant as follows:
3.1 Organization, Standing and Qualification. Statewide is a corporation
duly organized, validly existing and in good standing under the laws of New
Jersey. Statewide has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted.
3.2 Capitalization. Annexed hereto as Schedule 3.2 is a true and accurate
description of the capitalization of Statewide. All of the issued and
outstanding shares of Company Stock are owned beneficially and of record by
Stockholders. There are no dividends, due to be paid or in arrears with respect
to Company Stock, nor has Statewide ever paid any dividend in any form. At the
time of Closing, the Company Stock shall be owned by Stockholders free and clear
of all liens, security interests, encumbrances and claims of every kind.
Stockholders have full legal right, power and authority to enter into this
Agreement. Each share of Company Stock is duly and validly authorized and
issued, fully paid and nonassessable, and was not issued in violation of the
pre-emptive rights of any past or present stock holder of Statewide. Other than
as described in Schedule 3.2, no option, warrant, call, conversion right or
commitment of any kind exists which obligates Statewide to issue any of its
authorized but unissued capital stock or other equity interest.
3.3 Authority for Agreement. Stockholders have full right, power and
authority to enter into this Agreement and to perform their obligations
hereunder. This Agreement has been duly and validly executed and delivered by
Stockholders and, subject to the due authorization, execution and delivery by
Purchaser, constitutes the valid and binding obligation of Stockholders,
enforceable against Stockholders in accordance with its terms.
3.4 No Breach or Default. The execution and delivery by Stockholders of
this Agreement, and the consummation by Stockholders of the transactions
contemplated hereby, will not:
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(a) to Stockholders' knowledge, result in the material breach of any
of the terms or conditions of, or constitute a default under, or in any
manner release any party from any obligation under, any mortgage, lease,
note, bond, indenture, or material contract, agreement, settlement
agreement including without limitation the Settlement Agreement (as
hereinafter defined), license or other instrument or obligation of any kind
or nature to which Statewide is a party, or by which Statewide or any of
its assets or business is or may be bound or affected;
(b) to Stockholders' knowledge, materially violate any law or any
order, writ, injunction, or decree of any court, administrative agency or
governmental authority; or
(c) violate the Articles of Incorporation or Bylaws of Statewide.
3.5 Subsidiaries. Statewide has no subsidiaries, owns no securities of any
other corporation or other business entity, and is not a subsidiary or division
of another company.
3.6 Financial Statements. Stockholders have annexed hereto as Schedule
3.6Schedule 3.6, copies of the audited Statements of Earnings, Cash Flows and
Retained Earnings for the year ended December 31, 1995 (collectively, with the
Balance Sheet, the "Financial Statements"), and the Reviewed Financial
Statements, as prepared by , for the period ended February 29, 1996 (the
"Current Balance Sheet"). Except to the extent disclosed therein, the Financial
Statements and Current Balance Sheet have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, and the Financial Statements together with the
Current Balance Sheet present fairly the financial condition of Statewide as of
December 31, 1995 and February 29, 1996 (the "Balance Sheet Date").
3.7 Liabilities. Schedule 3.7 annexed hereto sets forth, as of the Balance
Sheet Date, all material fixed and uncontested liabilities of any kind,
character and description, accrued or absolute, and sets forth as to each such
liability, the amount of such liability.
(a) Except as noted on Schedule 3.7, Statewide did not have as of the
Balance Sheet Date, nor has it incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any
nature, including but not limited to environmental liabilities, except (i)
liabilities, obligations or contingencies which are accrued or reserved
against in the Financial Statements, (ii) liabilities and obligations which
were incurred after the Balance Sheet Date, and were incurred in the
ordinary course of business and consistent with past practices, (iii)
obligations arising in the ordinary course of business but which are not of
a type required to be reflected in the Financial Statements and (iv)
liabilities and obligations that are specifically disclosed herein or in
the Schedules annexed hereto or that are contemplated herein but not
required to be specifically disclosed because they are not material;
(b) Except as set forth in Schedule 3.7, there are no lawsuits, or, to
the knowledge of Stockholders, legal, administrative or arbitration
proceedings or investigations pending or, to the knowledge of Stockholders,
threatened by or against Statewide or any of its properties, assets,
operations or business that involve more than $5,000 in claims or damages.
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3.8 Conduct of Business. Except as set forth on Schedule 3.8 annexed hereto
and referred to in Section 3.20 below, and as set forth in Schedule 3.20 annexed
heretoSchedule 3.20 annexed hereto, since February 9, 1996, the date of the
Letter of Intent by and among the parties hereto:
(a) The business of Statewide has been conducted only in the ordinary
course; and
(b) There has been no change in the condition, financial or otherwise,
of the assets, liabilities, business or operations of the business of
Statewide other than changes in the ordinary course of business, none of
which either singly or in the aggregate has been materially adverse.
3.9 Permits and Licenses.
(a) Stockholders have delivered to Purchaser a list, annexed hereto as
Schedule 3.9(a)Schedule 3.9(a), together with copies, of all permits,
licenses, fuel permits, zoning and land use authorizations and any other
similar documents constituting an entitlement or otherwise material to or
necessary for the operation of the business by Statewide (collectively the
"Governmental Permits"). Except as set forth on Schedule 3.9(a), to
Stockholders' knowledge, all of the Governmental Permits set forth on
Schedule 3.9(a) are adequate for the operation of the business of Statewide
as presently constituted and are valid and in full force and effect;
(b) Except to the extent set forth in Schedule 3.9(a), as of the date
of this Agreement, Statewide has provided to Purchaser all material
records, notifications, reports, licenses, permit and license applications,
engineering studies and environmental impact reports or assessments filed
or submitted or, to Stockholders' knowledge, required to be filed or
submitted to appropriate Governmental Authorities (as defined below), and
all material notifications from such Governmental Authorities relating to
any such records, notifications, reports, permits, licenses or
applications, all pursuant to federal, state, county or local laws, rules
or regulations relating to or necessary for the operation of Statewide's
business, the Release or threatened Release of Regulated Substances (as
each such capitalized term is defined below) into the environment by
Statewide and/or the collection, handling or transportation by Statewide of
solid or other waste materials.
(c) Except as otherwise set forth in Schedule 3.9(c) annexed
hereto:
(i) As of the date hereof, Statewide is fully licensed, permitted
and authorized to carry on its current business under all applicable
federal, state, county, and local statutes, orders, approvals, zoning
or land use requirements, rules and regulations, including but not
limited to the Solid Waste Management Act as amended (N.J.S.A.13:1E-1,
et seq.), the Public Utilities law as amended (N.J.S.A. 48:1-1, et
seq.), and the Solid Waste Utility Control Act as amended (N.J.S.A.
48:13A-1, et seq.).
(ii) All activities and operations of Statewide are being and
have been conducted in compliance in all material respects with the
requirements, standards and conditions set forth in all applicable
federal, state, county and local statutes, orders, approvals, permits,
registrations, zoning or land use requirements and restrictions,
variances, licenses, rules and regulations, including but not limited
to the Solid Waste Management Act as amended (N.J.S.A. 13:1E-1, et
seq.) the Public Utilities law as amended (N.J.S.A. 48:1-1, et seq.)
and the Solid Waste Utilities Control Act as amended (N.J.S.A.
48:13A-1, et seq.), and there are, on the date of this Agreement, no
material violations known to Stockholders, nor is there known to
Stockholders any material deviation from any provision or requirement
of any Governmental Permit;
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(iii) Stockholders know of no circumstances, condition or reason
which is likely to be the basis for revocation or suspension of
Statewide's Governmental Permits, or of any modification or proposed
modification to any Governmental Permit which would limit Statewide's
operations, result in a change to the volume limitations or the types
of acceptable waste as described in any Governmental Permit other than
that contemplated by the pending application for the upgraded transfer
permit submitted to the NJDEP by Recycling, or create any geographic
limitations on areas from where waste transferred to facilities used
by Statewide may originate.
3.10 Receivables. [See Section 1.2 herein]
3.11 Fixed Assets. Stockholders have delivered to Purchaser a list annexed
hereto as Schedule 3.11, as of the Balance Sheet Date, of substantially all the
fixed assets (real or personal) of Statewide, including, without limitation,
identification of each vehicle by description and serial number, identification
of containers, including compactors and roll off boxes, machinery and equipment
used by Statewide in its business, identified by type and amount, and a general
description of parts, supplies and inventory. Except as described on Schedule
3.11,
(a) All of Statewide's containers, vehicles, machinery and equipment
necessary for the operation of its business are in substantially the same
condition, normal wear and tear excepted, as at the time of Purchaser's
inspection on _____________ 1996; and
(b) All of the motor vehicles and other rolling stock of Statewide are
in material compliance with all applicable laws, rules and regulations. To
Stockholders' knowledge, all leases of fixed assets are in full force and
effect and binding upon the parties thereto. Neither Statewide nor, to the
knowledge of Stockholders, any other parties to such leases are in breach
of any of the material provisions thereof. All fixed assets are listed on
Schedule 3.11 and are either owned by Statewide or leased under an
agreement reflected on Schedule 3.11.
3.12 Disposal of Assets. Except as indicated on Schedule 3.8, since the
Balance Sheet Date, Statewide has not acquired or sold or otherwise disposed of
any properties or assets which, singly or in the aggregate, are material to the
operation of Statewide's business as presently constituted.
3.13 Contracts and Agreements; Adverse Restrictions.
(a) Stockholders have delivered to Purchaser a list, annexed hereto as
Schedule 3.13, together with copies, as of the date of this Agreement, of
all material contracts and agreements to which Statewide is a party or by
which it or any of its property is bound, including, but not limited to,
joint venture or partnership agreements, contracts with any labor
organizations, promissory notes, loan agreements, settlement agreements,
bonds, mortgages, deeds of trust, liens, pledges, conditional sales
contracts, option agreements, or other security agreements. To
Stockholders' knowledge, all such contracts and agreements set forth in
Schedule 3.13 are in full force and effect and binding upon the parties
thereto. Neither Statewide nor, to the knowledge of Stockholders, any other
party to any such contract or agreement, including without limitation that
certain settlement agreement dated an unspecified date in July of 1991 (the
"Settlement Agreement") among Statewide, Recycling, the New Jersey Board of
Public Utilities and certain individual parties, are in breach of and to
Stock holders' knowledge, none of the parties has threatened to breach any
of the material provisions thereof. Schedule 3.13 discloses as to all loan
agreements, promissory notes, deeds of trust or security agreements, the
full amount of all underlying indebtedness evidenced and/or secured thereby
as of the Current Balance Sheet; and
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(b) Except as set forth on Schedule 3.13, to Stockholders' knowledge,
there is no outstanding judgment, order, writ, injunction or decree against
Statewide, the result of which could materially adversely affect Statewide
or the business of Statewide, nor, to the knowledge of Stockholders, has
Statewide been notified that any such judgment, order, writ, injunction or
decree has been requested.
3.14 Insurance. Stockholders have delivered to Purchaser a list,
annexed hereto as Schedule 3.14, together with copies, as of the date of this
Agreement, of all available insurance policies carried by Statewide now or in
the past, including those currently in effect and copies of any claims and the
resolution of any claims made thereunder. For each insurer providing coverage
for any of the contingent or other liabilities listed in Schedule 3.7, each such
insurer, if required, has been properly and timely notified of such liability,
no reservation of rights letters have been received by Statewide and the insurer
has assumed defense of each suit or legal proceeding.
3.15 Personnel. Stockholders have delivered to Purchaser a list, annexed
hereto as Schedule 3.15, as of the date of this Agreement, of all Officers,
Directors and employees, by type or classification, of Statewide and, (i) the
respective rates of compensation of such employees; (ii) the portions thereof
attributable to bonuses, and (iii) any other salary, or, with respect to
Officers, Directors and/or employees, any bonus or other payment arrangement
made with or promised to any of them which will not have been satisfied as of
the Closing Date.
3.16 Benefit Plans. Stockholders have delivered to Purchaser a list,
annexed hereto as Schedule 3.16, as of the date of this Agreement, together with
copies, of all employee benefit plans and agreements currently maintained or
contributed to by Statewide, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement plans, welfare
benefit plans and deferred compensation agreements, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 3.16, Statewide has no other
pension, profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plans or arrangements. Except as disclosed on
Schedule 3.16, all employee benefit plans listed on Schedule 3.16 are currently
funded and in substantial compliance with all applicable federal statutes,
ordinances and regulations. All such plans that are intended to qualify under
Section 401(a) of the Internal Revenue Code have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination letters are
included as part of the documents provided in this Section. Except as disclosed
on Schedule 3.16, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of the
documents provided in this Section. Statewide has incurred no liability for
excise tax or penalty due to the Internal Revenue Service or U.S. Department of
Labor nor any liability to the Pension Benefit Guaranty Corporation ("PBGC") for
any employee benefit plan. Statewide has not participated in or made
contributions to any "multi-employer plan" as defined in the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor would Statewide or any affiliate be
subject to any withdrawal liability with respect to such a plan if any such
employer withdrew from such a plan immediately prior to the date of this
Agreement. No employee pension benefit plan is underfunded on a termination
basis as of the date of this Agreement.
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3.17 Taxes. Statewide has filed, on a timely basis, all requisite federal
and state tax and information returns due for all fiscal periods ended on or
before the date of this Agreement; and, except as set forth on Schedule 3.17,
annexed hereto, there are no open years, examinations in progress or claims
against Statewide for federal or state taxes, including penalties and interest,
for any period prior to and including the date of this Agreement and no notice
of any claim, whether pending or threatened, for taxes has been received, or, if
so, such claims have been settled or resolved prior to the date of this
Agreement. Copies of (a) any tax examinations, (b) extensions of statutory
limitations and (c) Statewide's federal and state income and sales tax returns
for its last three (3) fiscal years have been delivered to Purchaser by
Stockholders and are contained in Schedule 3.17. Copies of all other federal,
state, and other tax and information returns for the prior three (3) years have
been made available to Purchaser and are among the records of Statewide,
possession of which will accrue to Purchaser at Closing. Except as set forth on
Schedule 3.17, (x) Statewide has not agreed to any extensions of any statutes of
limitations in connection with a federal, state or local income, franchise or
sales tax examination, (y) state or local income, franchise or sales tax
examinations currently in progress, and (z) Statewide has not been contacted by
any federal, state or local taxing authority regarding a prospective
examination.
3.18 Articles of Incorporation and Bylaws. Except as disclosed on Schedule
3.18, annexed hereto, the certified copies of the Articles of Incorporation and
By-Laws of Statewide contained therein are true and correct copies of such
documents as of the date hereof.
3.19 Customers, Billings and Current Receipts. Stockholders have delivered
to Purchaser a current list, Schedule 3.19 annexed hereto, setting forth:
(a) The customers Statewide serves on an ongoing basis, including
name, location and current billing rate, all as of the Balance Sheet Date;
and
(b) Statewide's accounting of monthly sales for the 12 month period
preceding the Closing Date, listed by weight and volume.
3.20 No Change. Except as set forth on Schedule 3.20 annexed hereto and in
connection with the redemption of the shares of the capital stock of Statewide
owned by the Estate of Joseph Scalamoni (the "Scalamoni Shares"), with respect
to Statewide, since the Balance Sheet Date, there has not been:
(a) Any material adverse change in its financial condition, assets,
liabilities, contingent or otherwise, income, operations or business;
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(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting any material portion of its properties or
business;
(c) Any change or agreement to change (i) its stockholders or (ii)
ownership of its authorized capital or outstanding securities;
(d) Any declaration or payment of, or any agreement to declare or pay,
any dividend or distribution in respect of Company Stock or any direct or
indirect redemption, purchase or other acquisition of any of Company Stock;
(e) Any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its Directors, Officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or other
special compensation to any employee or any severance or termination pay
paid to any of its present or former Officers or other key employees other
than in the ordinary course of business and other than a one-time bonus
payable to employees as fully described on Schedule 3.20(e), annexed
hereto;
(f) Any labor dispute or any other event or condition of any
character, materially adversely affecting its business or future prospects;
(g) Any sale or transfer, or any agreement to sell or transfer or
option, any of its material assets, property or rights to any other person,
including, without limitation, Stockholders, other than in the ordinary
course of business;
(h) Any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including, without
limitation, any indebtedness or obligation of Stockholders;
(i) Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any party to the transfer and assignment
of any such assets, property or rights;
(j) Any purchase, acquisition, agreement, plan or arrangement to
purchase or acquire, any of its property, rights or assets outside the
ordinary course of its businesses;
(k) Any waiver of any of its material rights or claims;
(l) Any amendment or termination of any material contract, agreement,
license, permit or other right to which it is a party; or
(m) Except as expressly permitted by this Agreement, any other
transaction outside the ordinary course of its business.
3.21 Bank Accounts. Stockholders have delivered to Purchaser a list,
Schedule 3.21 annexed hereto, as of the date of this Agreement, of the name of
each bank in which Statewide has accounts or safe deposit boxes; the names in
which the accounts or boxes are held; the type of account; and the name of each
person authorized to draw thereon or have access thereto.
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3.22 Compliance with Laws. Without limitation of any representations or
warranties made by Stockholders or Statewide in Section 3.23 or elsewhere in
this Agreement, to Stockholders' knowledge, except as disclosed on Schedule 3.22
annexed hereto and in Section 3.9(c) above, as of the date of this Agreement,
Statewide has and, as of the Closing Date, Statewide will have, materially com
plied with, and is presently in material compliance with, federal, state and
local laws, ordinances, rules, regulations, Governmental Permits, orders,
judgments, awards, decrees, consent judgments, settlement agreements (including
the Settlement Agreement), consent orders and requirements applicable to
Statewide (collectively, "Laws"), except for such minor noncompliances which, to
Stockholders' knowledge, do not materially adversely affect Statewide. To
Stockholders' knowledge, except as disclosed on Schedule 3.22 and in Paragraph
3.9(c), there has been no assertion by any party that Statewide has violated any
Laws.
3.23 Environmental Compliance. For purposes of this Agreement:
(a) "Environmental Law" shall mean any Legal Requirement pertaining to
(i) the protection of health, safety, and the indoor or outdoor
environment, (ii) the conservation, management, or use of natural resources
or wildlife, (iii) the protection or use of surface water and groundwater,
(iv) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, Release, threatened Release,
abatement, removal, remediation, handling of, or exposure to, any Regulated
Substance or (v) pollution (including any Release to air, land, surface
water, and groundwater), including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. 9601 et seq.), the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act and the Hazardous and Solid Waste Amendments (42 U.S.C. 6901
et seq.), the Federal Water Pollution Control Act and the Clean Water Act
(33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App. 1801 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.), the Oil
Pollution Control Act (33 U.S.C. 2701 et seq.), the Emergency Planning and
Community Right-to- Know Act (42 U.S.C. 11001 et seq.), the National
Environmental Policy Act (42 U.S.C. 4321 et seq.), the Safe Drinking Water
Act (42 U.S.C. 300(f) et seq.), the Industrial Site Recovery Act (N.J.S.A.
13:1K- 6 et seq.), the Spill Compensation and Control Act (N.J.S.A.
58:10-23.11 et seq.), the Underground Storage of Hazardous Substances Act
(N.J.S.A. 58:10A-21 et seq.), the Toxic Catastrophe Prevention Act
(N.J.S.A. 13:1K-19 et seq.), the Worker and Community Right to Know Act
(N.J.S.A. 34:5A-1 et seq.), the Pollution Prevention Act (N.J.S.A. 13:D-35
et seq.), the Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.), the
Solid Waste Utility Control Act (N.J.S.A. 48:13A-1 et seq.), the Air
Pollution Control Act (N.J.S.A. 26:2C-1 et seq.), the Water Pollution
Control Act (N.J.S.A. 58:10A-1 et seq.), the Flood Hazard Control Act
(N.J.S.A. 58:16A-50 et seq.), the Freshwater Wetlands Protection Act
(N.J.S.A. 12:3-1 et seq.), the Noise Control Act (N.J.S.A. 13:1G-1 et
seq.), the Pesticide Control Act (N.J.S.A. 13:1F-1 et seq.), all as
amended, and any other federal, state, county or local law or regulation
designed to protect public health or the environment, regulate solid or
hazardous waste, or protect workers and reduce occupational safety and
health hazards;
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(b) "Environmental Claim" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding or claim (whether
administrative, judicial, or private in nature) arising (i) pursuant to or
connection with an actual or alleged violation of any Environmental law,
(ii) in connection with any Regulated Substance or actual or alleged
Regulated Substance activity, (iii) from any abatement, removal, remedial,
corrective or other response action in connection with any Regulated
Substance, Environmental Law, or other order of a Governmental Authority or
(iv) from any actual or alleged injury, threat, or harm to health, safety,
natural resources or the environment;
(c) "Environmental Record" shall mean any document, correspondence,
pleading, report, assessment, analytical result, Governmental Approval, or
other record concerning any Environmental Claim, any Regulated Substance,
compliance or non-compliance with any Environmental Law;
(d) "Governmental Approval" shall mean any permit, registration,
license, variance, certificate, consent, letter, clearance, closure,
exemption, decision, action or approval of any Governmental Authority;
(e) "Governmental Authority" shall mean any federal, state, regional,
county, or local person or body having governmental or quasi-governmental
authority;
(f) "Legal Requirement" shall mean any statute, law, regulation,
ordinance, Governmental Approval, injunction, judgment, order, consent
decree, settlement, or other requirement of any Governmental Authority;
(g) "Regulated Substance" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, by-product, pollutant,
contaminant or material which is classified or regulated as a hazardous
substance or waste or as a toxic substance under any Environmental Law;
(h) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the indoor or outdoor environment of any Regulated
Substance;
(i) Except as set forth in Schedule 3.23(a) annexed hereto, Statewide
and its Stockholders represent and warrant as follows:
(i) Statewide is in compliance with all applicable federal,
state, county, and local Environmental Laws;
(ii) Statewide has never engaged in the "generation",
"treatment", "storage", or "disposal" of any "hazardous waste" as
those terms are defined in any Environmental Law;
(iii) Statewide and its Stockholders have not received and have
no knowledge of any present or threatened Environmental Claim against
Statewide by any Governmental Authority or private party;
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(iv) To the knowledge of Statewide and Stockholders, there are no
facts or circumstances that could form the basis for any Environmental
Claim against Statewide by any Governmental Authority or private
party;
(v) Statewide has all Governmental Approvals necessary to
lawfully operate its collection, transportation, and other business
operations;
(vi) Other than any tanks identified in Schedule 3.23(a),
Statewide does not own or use any underground storage tanks at any
property or premises at which it conducts its business;
(vii) To the knowledge of Statewide and Stockholders, Statewide
has not caused or permitted any Release or threatened Release of any
Regulated Substance at, on, from or beneath any location at which it
conducts its business;
(viii) No lien has attached to any property interest of Statewide
or its Stockholders pursuant to any Environmental Law;
(ix) No informational request has been issued to Statewide or its
Stockholders pursuant to any Environmental Law;
(x) To the knowledge of Statewide and Stockholders, there are no
conditions or circumstances which pose a risk to the environment or
the health and safety of persons at any property at which Statewide
conducts its business and Statewide has received no OSHA notices or
any other notices contrary;
(xi) Statewide has provided to CWI all Environmental Records
concerning Statewide in Statewide's possession, custody or control, or
which Statewide could reasonably have obtained;
(xii) Neither the Business Concern Disclosure Statement 1996
Annual Update (A-901) filed by Statewide in the offices of the NJDEP
nor any other disclosures, certificates, statements, reports or
applications delivered to any Governmental Authority by or on behalf
of Statewide contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained
therein not misleading.
3.24 Real Property. To the knowledge of Statewide and Stockholders:
(a) Lomac owns the real property located at premises commonly known as
11 Harmich Road, South Plainfield, New Jersey, shown on the municipal tax
map as Lot 27 in Block 255 ("Real Property") and has good and marketable
fee simple title thereto, and shall be transferred at Closing free and
clear of all claims, liens, charges, encumbrances, leases, easements,
rights, reservations, covenants and conditions;
(b) The Real Property is adequately serviced by all public utilities
including, but not limited to, electricity and telephone, as is necessary
to the conduct of the business of Statewide as it is being conducted on the
date of this Agreement;
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(c) The Real Property is zoned for the purpose for which it is
presently used or is not required to be so zoned. There is no plan, study
or effort by any governmental authority which in any way affects or could
affect the present use or zoning of the land;
(d) Neither the whole nor any portion of the Real Property, nor the
means of ingress thereto or egress therefrom, is subject to any pending
condemnation, taking or other similar proceeding by any public authority,
and Statewide and Stockholders do not know or have grounds to believe that
any such condemnation or taking is threatened or contemplated;
(e) All easements and rights, including, without limitation, easements
for power lines, roadways and other means of ingress and egress, necessary
for the use of the Real Property have been obtained;
(f) All of the buildings, structures, pipelines and pumping systems
(the "Improvements") located on the Real Property were constructed in a
reasonably good, workmanlike and substantial manner, in substantial
conformity with all applicable rules, regulations, laws, restrictive
covenants and ordinances applicable at the time of construction. The
Improvements are in reasonably good repair, condition and working order,
normal wear and tear excepted and, except as disclosed in this Agreement or
in schedules to this Agreement: (i) the Real Property is not subject to,
and neither Statewide nor Stockholders have received from any Governmental
Authority, any notice of zoning, building, fire, safety, environmental
protection or health code violations with respect to the Real Property; and
(ii) no written notice has been given by any insurance company which has
issued a policy with respect to any portion of the Real Property or by any
board of fire underwriters (or any other body exercising similar functions)
requesting the performance of any repairs, replacements, alterations, or
other work on or at the Real Property; and
(g) Since the latest real property assessment, Statewide nor
Stockholders have received any notice or information of an increase in the
assessed value of the Real Property and the Real Property is not subject to
any special assessments and to the best of their knowledge, there are no
special assessments contemplated with respect to the Real Property.
3.25 Accurate and Complete Records. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of Statewide:
(a) Have been made available to CWI at the Statewide offices;
(b) To Stockholders' knowledge, have been, in all material respects,
maintained in accordance with all applicable laws, rules and regulations;
and
(c) To Stockholders' knowledge, are reasonably accurate and complete
in all material aspects and do not contain or reflect any material
discrepancies.
3.26 No Misleading Statements. To Stockholders' knowledge, the
representations and warranties of Stockholders contained in this Agreement and
Schedules annexed hereto and all other documents and information furnished to
Purchaser and its representatives pursuant hereto are, taken as a whole,
accurate in all material respects and do not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading as of the Closing Date.
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3.27 Knowledge. Wherever reference is made in this Agreement to the
"knowledge" of Stockholders or Statewide, such term means: (a) the actual
knowledge of Stockholders, (b) the constructive knowledge of Stockholders or
Statewide based upon their due inquiry with respect to conversations had with
and/or writings received from any person having supervisory or managerial
responsibility for the operations, environmental and/or financial aspects of the
business of Statewide, the subject matter of which materially affects the
environmental liabilities, contingent liabilities, compliance with laws or
financial affairs or business of Statewide.
3.28 Survival. These representations and warranties of Stockholders shall
survive the Closing.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
CWI represents and warrants as follows:
4.1 Existence and Good Standing. CWI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by Purchaser and CWI and, subject to the due
authorization, execution and delivery by Statewide, constitutes a legal, valid
and binding obligation of CWI. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and the fulfillment and
compliance with the terms and conditions hereof do not (a) violate any
provisions of any judicial or administrative order, award, judgment or decree
applicable to CWI; or (b) conflict with any of the provisions of the Articles of
Incorporation or By-Laws of CWI; or (c) conflict with, result in a breach of or
constitute a default under any agreement or instrument to which CWI is a party
or by which it is bound.
4.3 Litigation. Except as set forth in Schedule 4.3, annexed hereto, there
are no actions, suits, proceedings or investigations pending or, to the
knowledge of CWI, threatened in any court or before any governmental agency or
instrumentality against, by or affecting CWI or its financial conditions or
which would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby or declare the same unlawful or cause the
rescission thereof.
4.4 No Misleading Statements. The representations and warranties of CWI
contained in this Agreement and Schedules annexed hereto and all other documents
and information furnished to Stockholders and their representatives pursuant
hereto, including, but not limited to, copies of reports required to be filed by
CWI with the Securities and Exchange Commission, are materially complete and
accurate, and do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made and to be made not
misleading as of the Closing Date.
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5. COVENANTS OF STOCKHOLDERS
5.1 Access; Confidential Information. Between the date hereof and the
Closing Date, Stockholders will afford to the Officers and authorized
representatives of CWI access to the assets, properties, books and records of
Statewide, and will furnish CWI with such additional financial and operating
data and other information as to the business and properties of Statewide as CWI
may from time to time reasonably request. Stockholders will cooperate with CWI
and its representatives in the preparation of any documents or other material
which may be required by any governmental agency subsequent to the Closing.
Stockholders covenant and agree not to disclose to any third persons other than
their accountants, bankers or legal counsel any of the terms or provisions of
this Agreement prior to or after the Closing Date without the prior written
consent of CWI, except as may be required by law or to maintain the rights of
Statewide pursuant to its existing liability insurance company contracts.
5.2 Operations. Between the date hereof and the Closing Date, Stockholders
will cause Statewide to:
(a) Carry on its business in substantially the same manner as it has
heretofore;
(b) Maintain its properties and facilities, including those held under
leases in as good working order and condition as at present, ordinary wear
and tear excepted;
(c) Perform all of its material obligations under agreements relating
to or affecting its assets, properties, business operations and rights;
(d) Keep in full force and effect present insurance policies;
(e) Use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business relations
with it;
(f) Advise CWI promptly in writing of any material change in any
document, Schedule, or other information delivered pursuant to this
Agreement;
(g) File on a timely basis all of its notices, reports or other
filings required to be filed with or reported to any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or any instrumentality of any of the foregoing wherever located with
respect to its continuing business operations;
(h) Maintain compliance with all Governmental Permits, laws, rules,
regulations and consent orders; and
(i) File on a timely basis all complete and correct applications or
other documents necessary to maintain, renew or extend any Governmental
Permit, variance or any other approval required by any governmental
authority necessary and/or required for the continuing operation of its
business operations, whether or not such approval would expire before or
after the Closing Date.
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5.3 No Change. Between the date of this Agreement and the Closing Date,
except as otherwise permitted by the prior written consent of CWI, Stockholders
will not, with respect to Statewide:
(a) Make any change in its charter documents or Bylaws;
(b) Except as provided in Section 3.20 above, declare or pay any
dividend or make any distribution in respect of its capital stock whether
now or hereafter outstanding, or purchase, redeem or otherwise acquire or
retire for value any of its shares of capital stock;
(c) Enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditure, except in the ordinary
course of business;
(d) Except as set forth in Schedule 3.20(e), above, pay, contract or
otherwise agree to pay any salary, bonus or other payment of any kind to
any Director, Officer, employee or agent, or make or promise to make any
bonus payment to any such person;
(e) Create, assume or otherwise permit the imposition of any mortgage,
pledge or other lien or encumbrances upon or grant any options or rights of
first refusal with respect to any assets or properties whether now owned or
hereafter acquired;
(f) Sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(g) Merge or consolidate or agree to merge or consolidate with or into
any firm, corporation or other entity;
(h) Waive any material rights or claims;
(i) Amend or terminate any material agreement or assign any permit,
license or other right; or
(j) Enter into any other transaction outside the ordinary course of
Statewide's business or prohibited hereunder.
5.4 Notice. Promptly upon the occurrence of, or promptly upon Stockholders
becoming aware of the impending or threatened occurrence of, any event which
would cause any of the representations or warranties of Stockholders contained
herein or in any Schedule annexed hereto to become materially inaccurate,
Stockholders shall give detailed written notice thereof to CWI and shall discuss
with CWI what efforts will be taken by Stockholders to prevent or promptly
remedy the same.
5.5 Exclusivity of Negotiations. Stockholders agree that they will not
enter into any arrangements, agreements, negotiations or otherwise communicate
with any parties, except for CWI, with respect to (i) any sale or disposition of
the assets or stock which are the subject of this Agreement and the other
Transaction Documents, or (ii) any merger, reorganization or change in ownership
of Statewide.
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6. COVENANTS OF CWI
6.1 Consents. CWI shall use its best efforts to obtain prior to the Closing
all consents, authorizations and approvals required to be obtained by CWI in
connection with the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated hereby and thereby.
6.2 Tax and Other Records. CWI shall cooperate with Stockholders with
respect to any personnel or administrative matters involving such Stockholders
and with respect to their tax returns and any tax audits, appeals, claims or
litigation with respect to such tax returns or the preparation of such tax
returns, by making available to Stockholders during normal business hours, such
Statewide files, documents, books and records for inspection and copying as may
be reasonably requested by such Stockholders and shall cooperate with such
Stockholders with respect to retaining information and documents which relate to
such tax and personnel or administrative matters.
6.3 Nondisclosure of Confidential Information. CWI acknowledges that it
will have access to valuable confidential information of Statewide, such as
customer lists, prices and costs. CWI agrees that, in the event that the
transactions contemplated herein are not consummated, it will never use or
disclose such confidential information to any person, corporation or other
entity for any purpose or reason whatsoever, except as required by law. In the
event of a breach or threatened breach by CWI of the provisions of this Section
6.3, Stockholders shall be entitled to an injunction restraining CWI, its
Directors, Officers and representatives from disclosing or using, in whole or in
part, such confidential information.
7. INDEMNIFICATION
7.1 Stockholder Indemnities. Stockholders covenant and agree that, for the
period described in Section 15.12 they shall jointly and severally indemnify and
hold harmless Purchaser and its Directors, Officers and agents from and after
the effective date of this Agreement and Statewide and its Directors, Officers
and agents from and after the Closing Date (singularly "Purchaser Indemnitee"
and plural, "Purchaser's Indemnitees"), against any and all actions,
proceedings, losses, damages, assessments, adjustments, liabilities, claims,
deficiencies, fines, penalties, costs, expenses, including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation,
(herein collectively referred to as "Purchaser Losses") arising out of or with
respect to each of the following:
(a) All Environmental Claims that arise from (i) conditions or
occurrences listed in Schedule 3.23(b); (ii) any matter, activity,
omission, event, circumstance, occurrence, Release, threatened Release, or
condition that occurred or that was in existence on or before the Closing
Date in addition to those conditions or occurrences in Schedule 3.23(b);
and (iii) any operations of Statewide on or before the Closing Date;
(b) Any breach of any representation, warranty or covenant by
Statewide or Stockholders;
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(c) Any loss, cost, claim or expense arising from any damage to
persons or property caused by any activities undertaken by any
environmental consultant designated by Stockholders pursuant to Section
8.1, or any contractors, subcontractors, employees, or agents;
(d) Any loss, cost, claim or expense arising from the failure of
Stockholders to fully comply with ISRA;
(e) Any federal, state or municipal tax liability of Statewide arising
out of any period ended on or before the Closing Date;
(f) Any material accrued or absolute liability of or claim against
Statewide, existing at the Closing Date but which is not disclosed as
provided in Section 3.7, above;
(g) Any claim for payment of fees and/or expenses by a broker or
finder in connection with the origin, negotiation, execution or
consummation of this Agreement based upon any alleged agreement between the
claimant and Stockholders;
(h) Any misrepresentation, breach of warranty, or non-fulfillment of
any agreement or covenant on the part of Stockholders or Statewide pursuant
to the terms of this Agreement or any misrepresentation in or omission from
any Schedule, certificate or other instrument or information furnished or
to be furnished to Purchaser pursuant to the terms of this Agreement;
(i) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses incident to any of the foregoing matters;
and
(j) The provisions of this Section 7.1 shall survive the Closing.
7.2 Purchaser's Indemnities. CWI covenants and agrees to indemnify and hold
harmless Stockholders and their respective agents, heirs, representatives and
assigns (the "Stockholders' Indemni tee") from and against any and all losses,
damages, assessments, adjustments, liabilities, claims, deficiencies, fines,
penalties, costs, expenses, including reasonable attorneys' fees and expenses of
investigation, (collectively, the "Stockholder Losses") arising out of or with
respect to each of the following:
(a) Any claim for payment of fees and/or expenses of any broker or
finder in connection with the origin, negotiation, execution, or
consummation of this Agreement based upon any alleged agreement between the
claimant and CWI;
(b) The operation of the business of Statewide subsequent to the
Closing Date;
(c) Any other misrepresentation, breach of warranty, or
non-fulfillment of any agreement or covenant on the part of CWI pursuant to
the terms of this Agreement or any misrepresentation in or omission from
any Schedule, certificate or other instrument furnished or to be furnished
to Stockholders pursuant to the terms of this Agreement;
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(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses incident to any matter against which CWI
has indemnified Stockholders hereunder; and
(e) The provisions of this Section 7.2 shall survive the Closing.
7.3 Notice of Indemnity Claim.
(a) In the event that any claim ("Claim") is hereafter asserted
against any party hereto as to which such party may be entitled to
indemnification hereunder, such party (the "Indemnitee") shall notify the
party required by the terms of this Agreement to indemnify the Indemnitee
(the "Indemnifying Party") in writing thereof (the "Claims Notice") within
thirty (30) days after (a) receipt of written notice of commencement of any
third party litigation against such Indemnitee, (b) receipt by such
Indemnitee of written notice of any third party claim pursuant to an
invoice, notice of claim or assessment, against such Indemnitee, or (c)
such Indemnitee becomes aware of the existence of any other event, in
respect of which indemnification may be sought from the Indemnifying Party.
The Claims Notice shall describe the Claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount if known,
or estimate, if possible, of the Indemnitee's Losses;
(b) The Indemnifying Party may elect to defend and/or compromise any
Claim, at its or his own expense and by its or his own counsel, who shall
be reasonably acceptable to the Indemnitee. Without the written approval of
the Indemnitee, which approval shall not be unreasonably withheld, the
Indemnifying Party shall not agree to any settlement or compromise of a
Claim defended by the Indemnifying Party which would require the Indemnitee
to perform or take any action or to refrain from performing or taking any
action, including the payment of money.
(c) If, within thirty (30) days of the Indemnifying Party's receipt of
a Claim Notice, the Indemnifying Party shall not have notified the
Indemnitee of its election to assume the defense, Indemnitee shall have the
right to assume control of the defense of such Claim, and in any event, the
non-defending party shall have the right to participate, at its or his own
expense, in the defense of the Claim;
(d) The party assuming the defense of any Claim shall keep the other
party reasonably informed at all times of the progress and development of
its or their defense of and compromise efforts with respect to such Claim
and shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other, and make available to each other and their
representatives all available relevant records or other materials required
by them for their use in defending, compromising or contesting any Claim;
(e) The failure to timely notify the Indemnifying Party of the
commencement of such actions in accordance with this Section shall relieve
the Indemnifying Party from the obligation to indemnify under this Section
7.
7.4 Right of Set-Off. In the event that CWI or its nominee is entitled to
indemnification as provided herein or under any other Transaction Documents, CWI
or its nominee shall have the right to set off the amount thereof against the
amount, if any, which CWI or its nominee shall owe at such time or from time to
time thereafter to Stockholders, to Lomac or the shareholders of Recycling,
whether arising under this Agreement or any other Transaction Documents.
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF CWI
The obligations of CWI hereunder are, at its option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
precedent. In the event that any of the conditions set forth in this Section 8
have not been fulfilled as of the Closing Date, CWI may, at its option, unless
such date is extended by CWI, at its sole discretion, elect by written notice to
Stockholders to:
(a) Terminate the Agreement, except that the foregoing shall not be
deemed to affect in any way any right of action which CWI may have against
Stockholders for breach or non-performance of any representation, warranty,
covenant or condition hereunder; or
(b) Waive any failure on Stockholders' part to satisfy the following
conditions precedent.
8.1 ISRA and Regulatory Compliance
(a) Prior to Closing, Statewide shall obtain all Governmental
Approvals necessary to validly consummate this transaction, including but
not limited to any permit, certificate or other document required by USEPA,
NJDEP, or any other governmental agency having authority over the subject
matter thereof.
(b) Prior to the Closing, Stockholders, at their sole cost and
expense, shall either (i) obtain a letter of non-applicability ("LNA") for
this transaction from NJDEP as such term is defined in N.J.A.C. 7:26B-1.3
and any amendments thereto, (ii) obtain a "Negative Declaration" or a "No
Further Action Letter" from NJDEP as such terms are defined in N.J.S.A.
13:1K-8 and any amendments thereto, or (iii) apply for, obtain, and enter
into a "Remediation Agreement" pursuant to N.J.S.A. 13:1K-9E, as such term
is defined in N.J.A.C. 7:26B-1.3 and any amendments thereto to allow this
transaction to go forward prior to Stockholder's final and complete
compliance with the provisions of ISRA.
(c) In the event Stockholders enter into a Remediation Agreement with
NJDEP pursuant to (iii) above, they shall obtain and maintain a remediation
funding source in form and amount acceptable to NJDEP pursuant to N.J.S.A.
58:10B-3. The estimated cost of such work shall be withheld from the
proceeds payable to Stockholders at the Closing and shall be deposited with
Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C. to be held in escrow until
all such work has been completed and final approval has been obtained from
NJDEP. Within 30 days after the Closing, Statewide's Stockholders shall
designate and hire an environmental consultant acceptable to CWI to perform
all acts necessary in connection with the Remediation Agreement and obtain
full compliance with ISRA and other requirements of Environmental Laws
required by the NJDEP arising from the ISRA case resulting from this
transaction, including but not limited to implementation of any
investigation, monitoring or remedial efforts required by NJDEP. All
workers and contractors employed by Stockholders shall be covered by
adequate worker's compensation and liability insurance naming CWI as an
additional insured. At the request of CWI, all such contractors shall
furnish certificates of insurance confirming that the required coverage is
then in effect. Statewide's Stockholders shall ensure that their designated
consultant diligently and expeditiously pursues and obtains full ISRA
compliance. All ISRA compliance activities shall be undertaken with advance
notice in a manner that does not materially disrupt or unreasonably
interfere with the ongoing operations of Statewide or Recycling, or with
any current or planned construction activity at the Property;
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(d) Prior to the Closing, if a lien shall be filed against the
Property pursuant to any Environmental Law, Statewide shall, at Purchaser's
sole option, immediately either (i) pay the claim and remove the lien from
the Real Property, or (ii) furnish security reasonably satisfactory to the
Purchaser in an amount sufficient to discharge the claim out of which the
lien arises; and
(e) The provisions of this Section 8.1 shall survive the Closing.
8.2 Accuracy of Representations; Performance of Covenants. The
representations and warranties of Statewide and Stockholders contained herein
shall be accurate in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date; each and all of the agreements of Stockholders and
Statewide to be performed on or before the Closing Date pursuant to the terms
hereof shall have been performed; and each Stockholder shall have delivered to
CWI a certificate dated the Closing Date and signed by him to all such effects.
8.3 Closing Deliveries. CWI shall have received from Statewide and
Stockholders all consideration, agreements and documents set forth in Section
2.2 hereof, in form and substance acceptable to CWI and its counsel.
8.4 Governmental Consents; No Litigation. Prior to the Closing,
Stockholders shall use their best efforts and give their fullest cooperation to
CWI in order to obtain all necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated in this Agreement including, without limitation, all
state, local and municipal permits. All required approvals from NJDEP and other
governmental regulatory agencies with respect to the transactions contemplated
by this Agreement shall have been received by CWI.
8.5 No Material Adverse Change. No material adverse change in the results
of operations, financial condition or business of Statewide as of the Closing
Date, shall have occurred, and Statewide shall not have suffered any material
loss or damage to any of its material properties or assets, whether or not
covered by insurance, since the date hereof, which change, loss or damage
materially affects or impairs the ability of Statewide to conduct its business
and CWI shall have received a certificate signed by Stockholders dated the
Closing Date to such effect.
8.6 Liabilities. Stockholders shall have delivered to CWI an accurate list,
Schedule 8.6, annexed hereto, as of the Closing Date, showing all fixed and
uncontested liabilities and, to Stockholder's knowledge, contingent liabilities
of Statewide, arising since the Current Balance Sheet. All liabilities listed on
Schedule 8.6 shall be described in the same fashion as required in Schedule 3.6
pursuant to the provisions of Section 3.6, above.
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8.7 Material Contracts. Stockholders shall have delivered to CWI an
accurate list, together with copies thereof, Schedule 8.7 annexed heretoSchedule
8.7 annexed hereto, as of the Closing Date, showing all material contracts and
agreements entered into by Statewide since the date of Schedule 3.13.
8.8 Resignations. Stockholders shall have delivered to CWI the resignations
effective as of the Closing Date of all Officers and Directors of Statewide.
8.9 Releases. Stockholders shall have delivered to CWI an instrument dated
the Closing Date releasing Statewide and CWI from any and all claims of
Stockholders against Statewide, except those obligations arising under this
Agreement or any other Transaction Documents.
8.10 Certificate of Good Standing. Stockholders shall have delivered to CWI
a certificate, dated as of a recent date, duly issued by the State of New Jersey
that Statewide is in good standing and authorized to do business in the State of
New Jersey.
8.11 Necessary Filings. Except as disclosed on Schedule 3.16, all reports,
notices and forms with respect to Statewide's benefit plans listed in 3.16
required to be filed with the Internal Revenue Service, PBGC, the Department of
Labor, and any other person (including, but not limited to, the trustee, the
participants and the beneficiaries) shall have been filed or delivered with
copies delivered to CWI.
8.12 Liens. Stockholders shall have delivered to CWI Uniform Commercial
Code UCC-3 termination statements and such other instrument as are necessary and
in form satisfactory to counsel for CWI, showing that there are no security
interests, judgments, taxes, other liens or encumbrances outstanding against
Statewide or any of its assets other than those disclosed in Schedules 3.25 and
3.26.
8.13 Due Diligence. CWI shall have completed its due diligence
investigations of Statewide, Recycling and Lomac and their respective business
operations, including, but not limited to, an environmental audit, and, shall
have been satisfied with the results thereof in its sole judgment, including,
without limitation, being satisfied that Statewide's environmental practices and
procedures are in compliance with all applicable Federal, state and local laws,
regulations and regulatory interpretations governing the operation of
Statewide's business, and that there are no material, actual or probable
violations, compliance deficiencies, required capital expenditures or other
substantive environmental concerns.
8.14 Simultaneous Closings. Stockholders, Lomac and the stockholders of
Recycling shall have satisfied all conditions to closing under the Transaction
Documents in connection with the acquisition transactions involving Statewide,
Recycling and Lomac.
8.15 Assignment of Recycling and Lomac Purchase Options. Stockholders
Kirchofer and Lemmo shall have assigned their options to purchase a majority
interest in Recycling and in Lomac, each at fair market value, as established by
mutual agreement of the parties hereto.
8.16 Transitional Management. The principals and employees of Statewide,
being those individuals listed on Schedule 8.16(a) annexed hereto, shall each
have entered into a letter agreement in substantially the form annexed hereto as
Schedule 8.16(b) (the "Transition Management Agreement") by which they agree to
dedicate at no expense to Statewide a minimum of twenty (20) hours per week for
sixty (60) days following the Closing Date, in order to effect a smooth
transition in the management of Statewide.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
The obligations of Stockholders hereunder are, at their option, subject to
the following conditions precedent. Upon closing of this Agreement, all
conditions not satisfied are deemed to be waived by Stockholders. In the event
that any of the conditions set forth in this Section 9 have not been fulfilled
as of the Closing Date, Stockholders may, at their option, unless such date is
extended by Stockholders at their sole discretion, elect by written notice to
CWI to:
(a) Terminate this Agreement, except that the foregoing shall not be
deemed to affect in any way any right of action which Stockholders may have
against CWI for breach of any representation, warranty, covenant or
condition hereunder; or (b) waive any failure on CWI's part to satisfy the
foregoing conditions precedent.
9.1 Accuracy of Representations. The representations and warranties of CWI
contained herein shall be accurate in all material respects as of the Closing
Date as though such represen tations and warranties had been made at and as of
that time; all of the terms, covenants and conditions of this Agreement to be
complied with and performed by CWI on or before the Closing Date shall have been
duly complied with and performed; and a certificate to the foregoing effect
dated the Closing Date and signed by the President, the Chairman of the Board or
any Senior Vice President or by a duly authorized representative of CWI shall
have been delivered to Stockholders.
9.2 Closing Deliveries. Stockholders shall have received from CWI all
consideration, agreements and documents set forth in Section 2.2 hereof, in form
and substance acceptable to Stockholders and their counsel.
10. JOINT COVENANTS OF CWI AND STOCKHOLDERS
10.1 Delivery of U.C.C. Search Documents. Prior to the Closing Date,
Stockholders shall deliver to CWI, all of the documents referred to in Section
8.12.
10.2 Diligence Towards Closing. Stockholders and CWI covenant and agree
from and after the date hereof not to hinder in any way or unreasonably delay
the Closing of the transactions contemplated by this Agreement. Neither
Stockholders nor CWI shall take any action that would cause the respective
conditions precedent and the other party's obligation to close the transaction
contemplated by this Agreement, not to be fulfilled, including, without
limitation taking or causing to be taken any action that would cause their or
its representations to be untrue or incorrect at the Closing Date. Furthermore,
from the date hereof until the Closing Date, each party hereto shall cause its
representations and warranties contained herein to be and remain true and
correct.
10.3 Notice of Untrue or Inaccurate Representations. Prior to the Closing
Date, Stockholders and CWI will promptly give written notice to the other upon
becoming aware of the occurrence or failure to occur, or the impending or
threatened occurrence or failure to occur, of any event that would cause or
constitute, or would be likely to cause or constitute, any of such party's
representations or warranties being or becoming untrue or inaccurate.
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10.4 Post-Closing Covenants. Subsequent to the Closing, Stockholders shall
use their best efforts and give their fullest cooperation to CWI and Statewide
in order to obtain all necessary consents of and filings with any governmental
authority or agency relating to the consummation of the transactions
contemplated in this Agreement including, without limitation, all state, local
and municipal permits.
11. TERMINATION OF AGREEMENT
Notwithstanding the good faith obligations of the parties to satisfy all of
the conditions to Closing set forth in Sections 8 and 9 herein, this Agreement
may be terminated in accordance with the following provisions:
11.1 Mutual Consent. The parties hereto may terminate this Agreement at or
at any time prior to the Closing by their mutual consent.
11.2 Failure to Fulfill Respective Conditions. CWI may terminate this
Agreement at the Closing if any of the CWI's Conditions to Closing set forth in
Section 8 hereof shall not have been satisfied. Stockholders may terminate this
Agreement at the Closing if any of Stockholders' Conditions to Closing set forth
in Section 9 hereof shall not have been satisfied.
11.3 Misrepresentation. CWI may terminate this Agreement at or at any time
prior to the Closing Date if any of Stockholders' representations or warranties,
made herein, are, or become, untrue. Stockholders may terminate this Agreement
at or at any time prior to the Closing Date if any of CWI's representations or
warranties, made herein, are, or become, untrue.
11.4 Notice and Effect of Termination. Any termination of this Agreement in
accordance with the foregoing provisions shall become effective upon the giving
of written notice of such termination by the terminating party to the other
parties hereto. Upon such termination, the transactions contemplated herein
shall forthwith be abandoned and all continuing obligations and liabilities of
the parties under or in connection with this Agreement, except those set forth
in Section 6.3 hereof, shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant con tained
in this Agreement prior to such termination, except that it is understood and
agreed that the damages of Stockholders and Statewide are limited to the receipt
by Lomac of any deposit monies and any interest earned thereon to which Lomac
may be entitled under the agreement of sale between Lomac and CWI or its nominee
Karat Corp. and as more fully set forth in that certain escrow agreement dated
April 11, 1996 (the "Escrow Agreement") involving Recycling, Statewide, Lomac,
Stockholders, CWI, Karat Corp., Harvey R. Poe, Esq., and other parties.
Forthwith upon termination of this Agreement, Statewide and CWI shall each
destroy or return all documents of any description received by it or them,
regardless of whether such documents have been marked as confidential and the
appropriate party shall be entitled to the return of the deposit pursuant to the
terms of the Escrow Agreement.
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12. COMPLIANCE WITH REQUIREMENTS OF SECURITIES LAWS
12.1 Unregistered Stock. Stockholders recognize that the CWI Stock issued
to them is, at the time of delivery, not being registered of under the
Securities Act of 1933, as amended (the "Act") in reliance upon an exemption
from registration under the Act, which is predicated, in part, on the
representations and agreements of Stockholders hereinafter set forth.
Stockholders represent and warrant to CWI that each (a) is an "accredited
investor" as defined in rule 501(a) under the 1933 Act, and (b) the CWI Stock to
be issued and delivered to each of them pursuant to this Agreement is being
acquired solely for their own account for investment and not with a view to, or
for offer or resale in connection with a distribution thereof within the meaning
of the Act. Each Stockholder understands that the effect of such representation
and warranty is that the CWI Stock must be held indefinitely until subsequently
registered under the Act or an exemption from such registration is available at
the time for any proposed sale or other transfer thereof. Each Stockholder is
familiar with the provisions of Rule 144 issued by the SEC under the Act and has
been advised further of the applicable limitations upon the resale of the CWI
Stock. Each Stockholder represents that he has consulted with his counsel in
regard to the Act and Rule 144 and is fully familiar with the circumstances
under which he is required to hold the CWI Stock and the limitations upon the
transfer or other disposition thereof. Each Stockholder acknowledges that CWI is
relying upon the truth and accuracy of the foregoing representations and
warranties in issuing the CWI Stock. Each Stockholder herewith agrees to
indemnify and hold CWI harmless and to pay any and all reasonable attorneys'
fees incurred by CWI as a result of any sale, transfer or other disposition by
such Stockholder of all or any part of the CWI Stock in violation of the Act.
12.2 Restrictive Legend. Each Stockholder represents and warrants that none
of the shares of the CWI Stock issued to him will be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of except after full
compliance with all of the applicable provisions of the Act and applicable SEC
rules and regulations. The CWI Stock issued hereunder shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT UPON
SUCH REGISTRATION OR UPON DELIVERY TO THE CORPORATION OF AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER."
12.3 Stockholders' Representations and Warranties. As of the date of this
Agreement, each Stockholder hereby makes the following representations and
warranties to and for the benefit of CWI with respect to his receipt of the CWI
Stock:
(a) That Stockholder has been provided with a copy of CWI's Prospectus
dated October 3, 1995, CWI's latest 10-K and last 3 10-Q disclosure
statements and 1995 Proxy Statement, as well as CWI's Annual Report for the
period ended December 31, 1994, and has been provided as much time and
opportunity as he or she deemed appropriate to review and study such
documents and to consult with CWI regarding the merits and risks of the
transactions contemplated by this Agreement;
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(b) That Stockholders have had adequate opportunity to ask questions
and receive answers from the Officers of CWI concerning any and all matters
pertaining to the transactions referred to in the documents referred to in
(a) above which he deemed appropriate, including, without limitation, the
background and experience of such officers and Board of Directors of CWI
and the current conduct and status of and prospects for CWI's business;
(c) That Stockholders have in fact asked CWI's Officers any and all
questions of the nature described in (b) above which he or she has desired
to ask, and all such questions have been answered to the satisfaction of
such Stockholder;
(d) That each Stockholder is the true party in interest, and each
Stockholder is not acquiring any of the CWI Stock for the benefit of any
other person or entity;
(e) That each Stockholder has such knowledge and experience in
financial and business matters and investments in general that he is
capable of evaluating the merits and risks of the ownership of the CWI
Stock, or, in the alternative, has sought and obtained the advice and
counsel of a qualified investment advisor, in which event Stockholder shall
have annexed hereto at Closing the certificate of such investment advisor
in form and substance reasonably satisfactory to CWI and its counsel; and
(f) That Stockholders understand that the CWI Stock each will receive
cannot be readily sold without compliance with applicable state and federal
securities laws or the terms of this Agreement. However, CWI shall deliver
to Stockholders on the Closing Date the Registration Rights Agreement,
annexed hereto on the Closing Date as Schedule 12.3(f)Schedule 12.3(f),
which agreement shall obligate CWI to register the CWI Stock within ninety
(90) days of the Closing Date.
13. POST-CLOSING COVENANTS OF STOCKHOLDERS AND CWI
13.1 Restrictive Covenants. Stockholders acknowledge that the agreements
and covenants contained in this Section 13 are essential to protect the business
interests and goodwill of CWI. In order to induce CWI to enter into the
transactions contemplated hereby and provided CWI is not in default hereunder,
Stockholders covenant and agree that for a period commencing on the Closing Date
and terminating five (5) years thereafter (the "Restricted Period"), no
Stockholder shall, anywhere within the a 150 mile radius of South Plainfield,
New Jersey, directly or indirectly:
(a) Engage in the operation of a solid waste hauling business, a
disposal, landfilling or waste transfer business or facility, a recycling
business or facility or composting business or facility;
(b) Enter the employ of, or render any personal services to, or
receive remuneration in the form of salary, commissions or otherwise, from
any business or facility engaged in such activities; or
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(c) Receive or purchase a financial interest in any such business or
facility in any capacity, including, without limitation, as a sole
proprietor, partner, shareholder, member, officer, director, principal,
agent or trustee; provided, however, that Stockholders may own, directly or
indirectly, solely as an investment, securities of any business traded on
any national securities exchange or NASDAQ provided such Stockholder is not
a controlling person of, or a member of a group which controls, such
business and further provided that Stockholders do not, directly or
indirectly, own five per cent (5%) or more of any class of securities of
such business.
13.2 Rights and Remedies Upon Breach. If any Stockholder breaches, or
threatens to commit a breach of, any of the provisions of this Section 13.1
above (the "Restrictive Covenants"), CWI shall have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to non-breaching party at law or in
equity:
(a) Specific Performance. The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction, it
being agreed that any breach or threatened breach of the Restrictive
Covenants would cause irreparable injury to non-breaching party and that
money damages would not provide an adequate remedy to non-breaching party.
Accordingly, in addition to any other rights or remedies, non-breaching
party shall be entitled to injunctive relief to enforce the terms of the
Restrictive Covenants and to restrain each Stockholder from any violation
thereof;
(b) Accounting. The right and remedy to require each Stockholder to
account for and pay over to the non-breaching party, as the case may be,
all profits or other benefits derived or received by such Stockholder as
the result of any transactions constituting a breach of the Restrictive
Covenants;
(c) Severability of Covenants. Each Stockholder acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect, without regard to
the invalid portions;
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall reduce the
duration or scope of such provision, as the case may be, to the extent
necessary to render it enforceable and, in its reduced form, such provision
shall then be enforced;
(e) Enforceability in Jurisdiction. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographic scope of the Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties that such determination not
bar or in any way affect the non-breaching party's right to the relief
provided above in the courts of any other jurisdiction within the
geographic scope of the Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.
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14. POST-CLOSING COVENANTS OF PURCHASER
14.1 Tax and Other Records. After the Closing Purchaser shall cooperate
with Stockholders with respect to any matters involving Stockholders arising out
of his or her ownership of Statewide prior to the Closing, including matters
relating to tax returns and any tax audits, appeals, claims or litigation with
respect to such tax returns or the preparation of such tax returns. In
connection therewith, Purchaser shall make available to Stockholders such
Statewide files, documents, books and records for inspection and copying as may
be reasonably requested by Stockholders and shall cooperate with Stockholders
with respect to retaining information and documents which relate to such
matters.
14.2 Continuing Liability for Obligations to Stockholders. In the event
that Purchaser sells, transfers, conveys, assigns or otherwise disposes of
Statewide, the operations of the business or substantially all of its assets
prior to the expiration of all periods during which Stockholders are entitled to
receive consideration hereunder, the terms of any such transfer shall require
the purchaser or transferee to assume and perform all obligations to
Stockholders contained in this Agreement, but Purchaser and CWI will remain
fully liable for the performance of all such obligations.
14.3 Compliance with all Consent Orders and Closure Agreements. After the
Closing, Purchaser shall be bound by, and shall cause Statewide to comply with
all applicable Consent Orders and Closure Agreements.
14.4 Mutual Cooperation. Subsequent to the Closing, the parties shall each
use their best efforts and give their fullest cooperation in order to obtain all
necessary consents of and filings with any Governmental Authority or agency
relating to the consummation of the transactions contemplated in this Agreement
including, without limitation, all state, local and municipal permits.
15. GENERAL
15.1 Additional Conveyances. Following the Closing, Stockholders and
Purchaser shall each deliver or cause to be delivered at such times and places
as shall be reasonably agreed upon such additional instruments as Purchaser may
reasonably request for the purpose of carrying out this Agree ment and the other
Transaction Documents. Stockholders will cooperate with Purchaser and/or
Statewide on and after the Closing in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings or
disputes of any nature with respect to matters pertaining to all periods prior
to the date of this Agreement.
15.2 Assignment. This Agreement may not be assigned by either Purchaser or
Stockholders (except by operation of law) and this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, and their respective
heirs, executors, administrators, successors and assigns.
15.3 Public Announcements. Except as required by law, no party shall make
any public announcement or filing with respect to the transactions provided for
herein without the prior consent of the other parties hereto. Purchaser agrees
to consult with Stockholders in advance regarding any required public
announcement.
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15.4 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or three days following
deposit in the U.S. mail or one business day following deposit with an air
courier service:
If to Stockholders: In Care of
Harvey R. Poe
Poe & Freireich, PA
256 Columbia Turnpike
Florham Park, New Jersey 07932
With a copy to: Harvey R. Poe
Poe & Freireich, PA
256 Columbia Turnpike
Florham Park, New Jersey 07932
If to Purchaser: c/o General Counsel
Continental Waste Industries, Inc.
67 Walnut Avenue - Suite 103
Clark, NJ 07066
15.6 Applicable Law. This Agreement shall be construed in accordance with
the laws of New Jersey without regard to its conflicts of laws provisions.
15.7 Payment of Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, each party hereto will pay its own fees,
expenses and disbursements incurred in connection herewith and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed hereunder.
15.8 Incorporation by Reference. All Schedules attached hereto are
incorporated herein by reference as though fully set forth at each point
referred to in this Agreement.
15.9 Captions. The captions in this Agreement are for convenience only and
shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
15.10 Number and Gender of Words. Whenever the singular number is used
herein, the same shall include the plural where appropriate, and shall apply to
all of such number, and to each of them, jointly and severally, and words of any
gender shall include each other gender where appropriate.
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15.11 Entire Agreement. This Agreement (including the schedules, annexes
and Schedules hereto) and the other documents delivered pursuant hereto
constitute the entire Agreement and understanding between Stockholders and
Purchaser and supersedes any prior agreement and understanding relating to the
subject matter of this Agreement, including, without limitation, that certain
letter of intent dated February 9, 1996, by and among Stockholders and CWI. This
Agreement may be modified or amended only by a written instrument executed by
Stockholders and Purchaser acting through their duly authorized representatives.
The indemnification and hold harmless provisions contained in this Agreement are
in addition to, and not in limitation of, any indemnification or hold harmless
provisions in any other Transaction Documents.
15.12 Survival of Representations. The representations and warranties of
the parties contained in this Agreement and in any Certificate or Schedule
delivered pursuant hereto (the "Representations and Warranties") and the
liability of the party making such representation and warranty for breaches
thereof shall survive the consummation of the transactions contemplated hereby
for the duration of applicable statutes of limitations, provided that such time
periods shall be extended with respect to any litigation commenced by CWI or any
subsidiary of affiliate of CWI or by Stockholders, within such time limits until
the resolution of such litigation, to recover indemnity therefor.
15.13 Effective Date. This Agreement shall be effective on the earliest
date on which this Agreement has been duly executed by the parties hereto and
each of the Lomac Agreement of Sale and the Recycling Acquisition Agreement has
been duly executed by the parties thereto.
15.14 Predecessors. For purposes of this Agreement, Statewide shall be
deemed to include predecessors including Mountainside Disposal Company, Inc., a
New Jersey corporation; Bar- Ela, Inc., a New Jersey corporation, sometimes
trading as Monarch Disposal; American Recycling, a New Jersey general
partnership; and Edison Disposal Co., Inc., a New Jersey corporation, Maurice
Kirchofer sometimes trading as Reese Disposal Service; and P. Scalamoni, Inc.
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COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
ATTEST: CONTINENTAL WASTE INDUSTRIES, INC.
/s/ Jeffrey E. Levine BY: /s/ Carlos E. Aguero
Carlos E. Aguero
ATTEST: STATEWIDE ENVIRONMENTAL CONTRACTORS, INC.
BY: /s/ Maurice Kirchofer
Harvey R. Poe Maurice Kirchofer
WITNESS:
/s/Harvey R. Poe /s/ Mary Lemmo
Mary Lemmo, Stockholder
/s/Harvey R. Poe /s/ Nicholas Lemmo
Nicholas Lemmo, Stockholder
/s/ Maurice Kirchofer
/s/Harvey R. Poe Maurice Kirchofer, Stockholder
/s/Harvey R. Poe /s/ Don J. Lotano
Don J. Lotano, Stockholder
/s/Harvey R. Poe /s/ Frank J. Lotano
Frank J. Lotano, Stockholder
/s/Harvey R. Poe /s/ Arline Lotano
Arline Lotano, Stockholder
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LIST OF SCHEDULES
Schedule 1.1............................................1
Schedules 2.2(f)........................................4
Schedule 2.2(o)(ii).....................................5
Schedule 3.2............................................7
Schedule 3.6............................................8
Schedule 3.8............................................9
Schedule 3.20 annexed hereto............................9
Schedule 3.9(a).........................................9
Schedule 3.9(c) annexed hereto.........................10
Schedule 3.11..........................................11
Schedule 3.13..........................................12
Schedule 3.14..........................................12
Schedule 3.15..........................................13
Schedule 3.16..........................................13
Schedule 3.17..........................................14
Schedule 3.18..........................................14
Schedule 3.19 annexed hereto,..........................14
Schedule 3.20(e), annex................................15
Schedule 3.21 annexed hereto...........................16
Schedule 3.22..........................................16
Schedule 4.3...........................................23
Schedule 8.5...........................................33
Schedule 8.7 annexed hereto............................33
Schedule 8.16(a).......................................34
Schedule 8.16(b).......................................34
Schedule 12.3(f).......................................39
ACQUISITION AGREEMENT
BY AND AMONG
CONTINENTAL WASTE INDUSTRIES, INC.,
RECYCLING INDUSTRIES, INC.
AND
THE STOCKHOLDERS OF
RECYCLING INDUSTRIES, INC.
-------------------------------
DATED: APRIL 11, 1996
--------------------------------
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TABLE OF CONTENTS
Page
1. THE PURCHASE................................................1
------------
1.1 Purchase and Sale..................................1
1.2 Offsets Against Purchase Price.....................1
1.3 Short-Term Assets and Closing Adjustments..........2
2. CLOSING AND DELIVERIES AT THE CLOSING.......................2
2.1 Closing Time and Place.............................2
2.2 Deliveries at Closing..............................2
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER...............5
---------------------------------------------
3.1 Organization, Standing and Qualification...........5
3.2 Capitalization.....................................5
3.3 Authority for Agreement............................6
3.4 No Breach or Default...............................6
3.5 Subsidiaries.......................................6
3.6 Financial Statements...............................6
3.7 Liabilities........................................7
3.8 Conduct of Business................................7
3.9 Permits and Licenses...............................7
3.10 Receivables........................................8
3.11 Fixed Assets.......................................8
3.12 Disposal of Assets.................................9
3.13 Contracts and Agreements; Adverse Restrictions.....9
3.14 Insurance..........................................9
3.15 Personnel.........................................10
3.16 Benefit Plans.....................................10
3.17 Taxes .........................................10
3.18 Articles of Incorporation and Bylaws..............11
3.19 Customers, Billings and Current Receipts..........11
3.20 No Change.........................................11
3.21 Bank Accounts.....................................12
3.22 Compliance with Laws..............................12
3.23 Environmental Compliance..........................13
3.24 Real Property.....................................15
3.25 Accurate and Complete Records.....................16
3.26 No Misleading Statements..........................17
3.27 Knowledge.........................................17
3.28 Survival......................................... 17
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER................17
-------------------------------------------
4.1 Existence and Good Standing.......................17
4.2 Authorization of Agreement........................17
4.3 Litigation........................................17
4.4 No Misleading Statements..........................18
5. COVENANTS OF STOCKHOLDERS..................................18
-------------------------
5.1 Access; Confidential Information..................18
5.2 Operations........................................18
5.3 No Change.........................................18
5.4 Notice .........................................19
5.5 Exclusivity of Negotiations.......................20
6. COVENANTS OF CWI...........................................20
----------------
6.1 Consents..........................................20
6.2 Tax and Other Records.............................20
6.3 Nondisclosure of Confidential Information.........20
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7. INDEMNIFICATION............................................21
---------------
7.1 Stockholder Indemnities...........................21
7.2 Purchaser's Indemnities...........................22
7.3 Notice of Indemnity Claim.........................23
7.4 Rights of Setoff..................................23
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF CWI.................24
------------------------------------------
8.1 ISRA and Regulatory Compliance....................24
8.2 Accuracy of Representations;Performance of
Covenant........................................25
8.3 Closing Deliveries................................25
8.4 Governmental Consents; No Litigation..............25
8.5 No Material Adverse Change........................25
8.6 Liabilities.......................................26
8.7 Material Contracts................................26
8.8 Resignations......................................26
8.9 Releases..........................................26
8.10 Certificate of Good Standing......................26
8.11 Necessary Filings.................................26
8.12 Liens .........................................26
8.13 Due Diligence.....................................26
8.14 Simultaneous Closings.............................27
8.15 Assignment of Option to Purchase Stock............27
8.16 Termination of Option to Purchase Stock...........27
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS....28
9.1 Accuracy of Representations.......................28
9.2 Closing Deliveries................................28
10. JOINT COVENANTS OF CWI AND STOCKHOLDERS....................28
---------------------------------------
10.1 Delivery of Documents.............................28
10.2 Diligence Towards Closing.........................28
10.3 Notice of Untrue or Inaccurate Representations....28
10.4 Post-Closing Covenants............................28
11. TERMINATION OF AGREEMENT...................................29
------------------------
11.1 Mutual Consent....................................29
11.2 Failure to Fulfill Respective Conditions..........29
11.3 Misrepresentation.................................29
11.4 Notice and Effect of Termination..................29
12. SECTION INTENTIONALLY OMITTED
13. POST-CLOSING COVENANTS OF STOCKHOLDERS AND CWI.............29
13.1 Restrictive Covenants.............................29
13.2 Rights and Remedies Upon Breach...................30
14. POST-CLOSING COVENANTS OF PURCHASER........................31
-----------------------------------
14.1 Tax and Other Records.............................31
14.2 Continuing Liability for Obligations to
Stockholders....................................31
14.3 Mutual Cooperation................................31
15. GENERAL....................................................31
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15.1 Additional Conveyances............................31
15.2 Assignment........................................31
15.3 Public Announcements..............................31
15.4 Counterparts......................................32
15.5 Notices...........................................32
15.6 Applicable Law....................................32
15.7 Payment of Fees and Expenses......................32
15.8 Incorporation by Reference........................33
15.9 Captions..........................................33
15.10 Number and Gender of Words........................33
15.11 Entire Agreement..................................33
15.12 Survival of Representations.......................33
15.13 Effective Date....................................34
LIST OF SCHEDULES...................................................36
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made April 11,
1996, by and among CONTINENTAL WASTE INDUSTRIES, INC., a Delaware corporation
("CWI" or "Purchaser"), RECYCLING INDUSTRIES, INC., a New Jersey corporation
("Recycling") and DON J. LOTANO, FRANK J. LOTANO, AND ARLINE LOTANO,
individuals, (individually "Stockholder" and collectively, "Stockholders"), who
are the owners of all of the issued and outstanding shares of the capital stock
of Recycling, being the corporation to be acquired hereby.
WHEREAS, Stockholders own and will own on the Closing Date (as
defined in Section 2 below), all of the issued and outstanding stock of
Recycling, which they desire to sell to CWI pursuant to the terms, conditions
and covenants set forth in this Agreement; and
WHEREAS, CWI desires to acquire all of the issued and
outstanding capital stock of Recycling from Stockholders, for the purchase price
pursuant to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE PURCHASE
1.1 The Purchase and Sale. At the "Closing" (as hereinafter defined in
Section 2), provided that all conditions precedent to closing the transactions
contemplated by this Agreement have been satisfied by CWI, Stockholders agree to
sell and deliver or cause to be delivered to CWI all of the issued and
outstanding capital stock of Recycling (the "Company Stock"), being the number
of shares of Company Stock set forth opposite their respective names on Schedule
1.1(a) annexed hereto. At the Closing, in payment for the Company Stock,
provided that all conditions precedent to closing the transactions contemplated
by this Agreement have been satisfied by Recycling and Stockholders, CWI agrees
to pay to Stockholders the purchase price of Six Million Four Hundred Thousand
and 00/100 Dollars ($6,400,000.00) (the "Purchase Price"). The Purchase Price is
payable on the Closing Date as follows: (a) $4,900,000 by certified, attorney's
trust account or bank or cashier's check, wire transfer or other immediately
available funds ("Cash Portion") and (b) by CWI's non-interest bearing
promissory note ("Recycling Note") in the form and content of Schedule 1.1(b)
annexed hereto, in the original maximum principal amount of $1,500,000 for a one
(1) year term, with a one (1) year renewal term, payable in accordance with the
terms of the Recycling Note. The Recycling Note shall be secured by an
irrevocable letter of credit issued by a financial institution selected by CWI
and reasonably acceptable to Stockholders.
1.2 Offsets Against Purchase Price. The Purchase Price is subject to offset
and reduction by the following:
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(a) All amounts representing any Recycling debt not retired by
Recycling at or prior to Closing;
(b) All amounts permitted under the Recycling Note with respect to
both the pending application by Recycling for an upgraded transfer station
permit and the indemnification of CWI pursuant to this Agreement or any
other Transaction Documents (as hereinafter defined);
(c) All amounts necessary to comply with the requirements of that
certain developer's agreement soon to be executed (the "Developer's
Agreement") between Recycling and the Borough of South Plainfield,
including without limitation, the aggregate amount of the developer's
contribution and all costs associated with the reconstruction, maintenance
and repair of Harmich Road; and
(d) All other amounts resulting in an adjustment in the Purchase Price
as are permitted or required pursuant to this Agreement.
1.3 Short-Term Assets and Closing Adjustments. Stockholders shall retain
all cash on hand and accounts receivable (other than pre-paid hauling fees) as
of the Closing Date. The parties hereto will adjust the pre-paid hauling fees
and the trade accounts payable, and, as applicable, other current assets and
current payables, within forty five (45) days of the Closing Date (as
hereinafter defined).
2. CLOSING AND DELIVERIES AT THE CLOSING
2.1 Closing Time and Place. The consummation of the transactions
contemplated hereby and under the Transaction Documents (the "Closing") shall be
held at the offices of Lowenstein, Sandler, Kohl, Fisher & Boylan, 65 Livingston
Avenue, Roseland, New Jersey 07068, on April 30, 1996 at a time mutually
convenient to the parties (the "Closing Date"), or at such later date as may be
mutually agreed among the parties.
2.2 Deliveries at Closing.
(a) Simultaneous Exchange of Consideration.
(i) Stockholders shall deliver to CWI, all outstanding
certificates representing shares of Company Stock, free and clear of
any and all liens, security interests, claims and encumbrances of
every kind; and
(ii) CWI shall deliver to Stockholders the Cash Portion of the
Purchase Price and issue and deliver to Stockholders the Recycling
Note.
(b) Stock Certificates. Stockholders shall deliver the certificates
representing Company Stock, duly endorsed in blank by Stockholders or
accompanied by stock powers duly executed and affixed thereto. Stockholders
agree to cure any deficiencies with respect to the endorsement of the
certificates or other documents of conveyance with respect to Company Stock
or with respect to the stock powers accompanying any Company Stock;
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(c) Creditors' Pay-Off Letters and Termination Statements. Prior to
the Closing Date, Stockholders shall deliver letters from all creditors
indicating pay-off amounts as of the Closing Date, as well as wire transfer
information. Stockholders shall also prepare and deliver UCC-3 termination
statements with respect to all debt to be retired;
(d) Certificate of Incorporation and Good Standing. Stockholders shall
have delivered to Purchaser certified Articles of Incorporation and a
certificate, dated as of a recent date, duly issued by the State of New
Jersey, showing that Recycling is authorized to do business in the State of
New Jersey, together with the minute books and stock ledger of Recycling;
(e) Permits. Stockholders shall deliver to Purchaser originals, if
available, or certified copies of each and every applicable operating
license and/or permit, and each and every authorization required by any
Governmental Authority to own and operate its business as a transfer and
material recovery facility including but not limited to all permits and
certificates and approvals under N.J.S.A. 13:1E-126, et seq. ("A901");
(f) Legal Opinions. Each party shall deliver to the other party an
opinion from counsel for such party, dated as of the Closing Date, in a
form substantially similar to that annexed hereto as Schedule 2.2(f);
(g) Resignations. Stockholders shall deliver to Purchaser the
resignations effective as of the Closing Date of all Officers and Directors
of Recycling;
(h) Insurance Certificates. Recycling shall deliver to Purchaser
insurance certificates showing that all insurance relative to Recycling's
operation and ownership, including pollution liability insurance, if
available, is and remains in force and continuous through the Closing Date,
along with proof of payment of all premiums from the inception of the
coverage year;
(i) Evidence of Environmental Compliance. Stockholders shall deliver
to CWI a certificate which shall be satisfactory in form and substance to
CWI, evidencing environmental compliance pursuant to Section 3.23 and
Section 8.1 below;
(j) Certificates of Authorization. Each party shall deliver to the
other party the appropriate corporate authorizations for the transactions
contemplated hereby;
(k) Non-Compete Agreements. Joseph Lemmo, Maurice Kirchofer and
Stockholders shall execute and deliver in favor of CWI agreements in the
form annexed hereto as Schedule 2.2(k) pursuant to which each has agreed
not to compete with Recycling and Statewide for a period of five (5) years
from the Closing Date within a one hundred fifty (150) mile radius of South
Plainfield, New Jersey;
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(l) South Plainfield Agreement. South Plainfield Transfer and
Recycling Corp. ("South Plainfield Corp."), its stockholders, CWI and
certain other parties shall have entered into an agreement (the "South
Plainfield Agreement") in substantially the form annexed hereto as Schedule
2.2(l) pursuant to which South Plainfield Corp. and the other parties to
the South Plainfield Agreement (to the extent of their respective
interests) have agreed, among other things, to: (i) without the consent of
CWI, apply for more than 1,750 tons per week unless the Edgeboro landfill
closes; (ii) grant CWI or its nominees a three (3) year purchase option;
(iii) grant CWI or its nominees a five (5) year right of first refusal;
(iv) be subject to certain sale and transfer restrictions involving the
assets and stock of South Plainfield Corp., for a period of five (5) years
from the Closing Date; and (v) be subject to certain restrictive covenants
prohibiting them from engaging directly or indirectly in the business of
source collection of solid waste or recyclable materials, for a period of
five (5) years from the Closing Date and within a 100-mile radius of South
Plainfield, New Jersey;
(m) Stockholders' Certificates. Stockholders shall deliver to CWI a
certificate, dated the Closing Date, in compliance with Section 8.2 and 8.5
below. Additionally, Stockholders shall deliver to CWI a certificate, dated
the Closing Date, representing and warranting the validity of the following
matters:
(i) Other than any Notices of Violation, copies of which are annexed
hereto as Schedule 2.2(m)(i), Recycling is in environmental compliance as
that term is defined in Section 3.23; and
(ii) Together, Statewide and Recycling, process and sell approximately
1,000 tons per month of cardboard, waste paper and metals.
(n) Consents. Purchaser shall have received such consents as counsel
for Purchaser shall determine to be required to enable Purchaser to enjoy
the benefit of Recycling's leases, agreements, material contracts and the
like;
(o) Releases. Purchaser shall have received general releases in favor
of Recycling executed by Stockholders and such other employees of Recycling
as Purchaser shall designate. These releases shall not relate to rights or
obligations under this Agreement, that certain acquisition agreement dated
contemporaneously herewith involving CWI, Statewide, and Stockholders of
Statewide (the "Statewide Acquisition Agreement"), that certain agreement
of sale dated contemporaneously herewith between Lomac and Karat Corp. (the
"Lomac Agreement of Sale"), and all other documents, instruments and
agreements executed in connection herewith or therewith (collectively, the
"Transaction Documents");
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(p) Records. Purchaser shall have received possession of all
corporate, accounting, business, financial, environmental and tax records
of Recycling, which records are in the possession and control of Recycling
or its officers, directors, shareholders, agents and attorneys;
(q) Prepayment of Indebtedness. Unless otherwise provided in Schedule
2.2(q) annexed hereto, on or before the Closing Date, any and all
indebtedness owing to Recycling by any Stockholders or from Recycling to
any Stockholders have been paid in full. To the extent any such obligation
is not extinguished on or before the Closing Date, Purchaser and Recycling
shall have received a release and hold harmless agreement from the parties
to such obligations;
(r) Satisfactory Searches. Purchaser shall have received evidence,
satisfactory to it as shown by customary uniform commercial code searches,
tax lien searches, franchise tax searches and upper and lower court
searches that Recycling (a) has good title to its assets, free and clear of
all encumbrances, other than those listed in Schedule 2.2(r) annexed
hereto, and (b) has filed all federal, state and local tax returns which
are due and has paid all taxes reflected on these returns;
(s) Pension Plan. Recycling shall have taken any required steps to
remain in compliance with ERISA and the PBGC Rules and Regulations;
(t) Equipment Leases. Purchaser shall have received evidence
satisfactory to it that any equipment leases disclosed on Schedule 2.2(t)
annexed hereto have been either terminated or assigned to Purchaser, if
such lease is acceptable to Purchaser in its discretion; and
(u) Pre-Emptive Rights. Purchaser shall have received evidence,
satisfactory to Purchaser, that Stockholders do not have pre-emptive
rights, or that, if they have pre-emptive rights, all such rights have been
honored or waived.
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholders represent and warrant as follows:
3.1 Organization, Standing and Qualification. Recycling is a corporation
duly organized, validly existing and in good standing under the laws of New
Jersey. Recycling has full corporate power and authority to own and lease its
properties and to carry on its business as now conducted.
3.2 Capitalization. Annexed hereto as Schedule 3.2 is a true and accurate
description of the capitalization of Recycling. All of the issued and
outstanding shares of Company Stock are owned beneficially and of record by
Stockholders. There are no dividends, due to be paid or in arrears with respect
to Company Stock, nor has Recycling ever paid any dividend in any form. At the
time of Closing, the Company Stock shall be owned by Stockholders free and clear
of all liens, security interests, encumbrances and claims of every kind.
Stockholders have full legal right, power and authority to enter into this
Agreement. Each share of Company Stock is duly and validly authorized and
issued, fully paid and nonassessable, and was not issued in violation of the
pre-emptive rights of any past or present stockholder of Recycling. Other than
as described in Schedule 3.2, no option, warrant, call, conversion right or
commitment of any kind exists which obligates Recycling to issue any of its
authorized but unissued capital stock or other equity interest.
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3.3 Authority for Agreement. Stockholders have full right, power and
authority to enter into this Agreement and to perform their obligations
hereunder. This Agreement has been duly and validly executed and delivered by
Stockholders and, subject to the due authorization, execution and delivery by
Purchaser, constitutes the valid and binding obligation of Stockholders,
enforceable against Stockholders in accordance with its terms.
3.4 No Breach or Default. The execution and delivery by Stockholders of
this Agreement, and the consummation by Stockholders of the transactions
contemplated hereby, will not:
(a) To Stockholders' knowledge, result in the material breach of any
of the terms or conditions of, or constitute a default under, or in any
manner release any party from any obligation under, any mortgage, lease,
note, bond, indenture, or material contract, agreement, settlement
agreement, including without limitation the Settlement Agreement (as
hereinafter defined) license or other instrument or obligation of any kind
or nature to which Recycling is a party, or by which Recycling or any of
its assets or business is or may be bound or affected;
(b) To Stockholders' knowledge, materially violate any law or any
order, writ, injunction, or decree of any court, administrative agency or
governmental authority; or
(c) Violate the Articles of Incorporation or Bylaws of Recycling.
3.5 Subsidiaries. Recycling has no subsidiaries, owns no securities of any
other corporation or other business entity, and is not a subsidiary or division
of another company.
3.6 Financial Statements. Stockholders have annexed hereto as Schedule 3.6,
copies of the audited Statements of Earnings, Cash Flows and Retained Earnings
for the year ended December 31, 1995 (collectively, with the Balance Sheet, the
"Financial Statements"), and the Reviewed Financial Statements, as prepared by
________________, for the period ended February 29, 1996 (the "Current Balance
Sheet"). Except to the extent disclosed therein, the Financial Statements and
Current Balance Sheet have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, and the Financial Statements together with the Current Balance Sheet
present fairly the financial condition of Recycling as of December 31, 1995 and
February 29, 1996 (the "Balance Sheet Date").
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3.7 Liabilities. Schedule 3.7 annexed hereto sets forth, as of the Balance
Sheet Date, all material fixed and uncontested liabilities of any kind,
character and description, accrued or absolute, and sets forth as to each such
liability, the amount of such liability.
(a) Except as noted on Schedule 3.7, Recycling did not have as of the
Balance Sheet Date, nor has it incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any
nature, including but not limited to environmental liabilities, except (i)
liabilities, obligations or contingencies which are accrued or reserved
against in the Financial Statements, (ii) liabilities and obligations which
were incurred after the Balance Sheet Date, and were incurred in the
ordinary course of business and consistent with past practices, (iii)
obligations arising in the ordinary course of business but which are not of
a type required to be reflected in the Financial Statements and (iv)
liabilities and obligations that are specifically disclosed herein or in
the Schedules annexed hereto or that are contemplated herein but not
required to be specifically disclosed because they are not material;
(b) Except as set forth in Schedule 3.7, there are no lawsuits, or, to
the knowledge of Stockholders, legal, administrative or arbitration
proceedings or investigations pending or, to the knowledge of Stockholders,
threatened by or against Recycling or any of its properties, assets,
operations or business that involve more than $5,000 in claims or damages.
3.8 Conduct of Business. Except as set forth on Schedule 3.8 annexed hereto
and referred to in Section 3.20 below, and as set forth in Schedule 3.20 annexed
hereto, since February 9, 1996, the date of the Letter of Intent involving the
parties hereto and Lomac:
(a) The business of Recycling has been conducted only in the ordinary
course; and
(b) There has been no change in the condition, financial or otherwise,
of the assets, liabilities, business or operations of the business of
Recycling other than changes in the ordinary course of business, none of
which either singly or in the aggregate has been materially adverse.
3.9 Permits and Licenses.
(a) Stockholders have delivered to Purchaser a list, annexed hereto as
Schedule 3.9(a), together with copies, of all permits, licenses, fuel
permits, zoning and land use authorizations and any other similar documents
constituting an entitlement or otherwise material to or necessary for the
operation of the business by Recycling (collectively the "Governmental
Permits"). Except as set forth on Schedule 3.9(a), to Stockholders'
knowledge, all of the Governmental Permits set forth on Schedule 3.9(a) are
adequate for the operation of the business of Recycling as presently
constituted and are valid and in full force and effect;
(b) Except to the extent set forth in Schedule 3.9(a), as of the date
of this Agreement, Recycling has provided to Purchaser all material
records, notifications, reports, licenses, permit and license applications,
engineering studies and environmental impact reports or assessments filed
or submitted or, to Stockholders' knowledge, required to be filed or
submitted to appropriate Governmental Authorities (as defined below), and
all material notifications from such Governmental Authorities relating to
any such records, notifications, reports, permits, licenses or
applications, all pursuant to federal, state, county or local laws, rules
or regulations relating to or necessary for the operation of Recycling's
business, the Release or threatened Release of Regulated Substances (as
each such capitalized term is defined below) into the environment by
Recycling and/or the collection, handling or transportation by Recycling of
solid or other waste materials;
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(c) Except as otherwise set forth in Schedule 3.9(c) annexed hereto:
(i) As of the date hereof, Recycling is fully licensed, permitted
and authorized to carry on its current business under all applicable
federal, state, county, and local statutes, orders, approvals, zoning
or land use requirements, rules and regulations, including but not
limited to the Solid Waste Management Act as amended (N.J.S.A.13:1E-1,
et seq.).
(ii) All activities and operations of Recycling are being and
have been conducted in compliance in all material respects with the
requirements, standards and conditions set forth in all applicable
federal, state, county and local statutes, orders, approvals, permits,
registrations, zoning or land use requirements and restrictions,
variances, licenses, rules and regulations, including but not limited
to the Solid Waste Management Act as amended (N.J.S.A. 13:1E-1, et
seq.) and there are, on the date of this Agreement, no material
violations known to Stockholders, nor is there known to Stockholders
any material deviation from any provision or requirement of any
Governmental Permit; and
(iii) Stockholders know of no circumstances, condition or reason
which is likely to be the basis for revocation or suspension of
Recycling's Governmental Permits, or of any modification or proposed
modification to any Governmental Permit which would limit Recycling's
operations, result in a change to the volume limitations or the types
of acceptable waste as described in any Governmental Permit other than
that contemplated by the pending application for the upgraded transfer
and materials recovery permit submitted by Recycling to the NJDEP.
3.10 Receivables. [See Section 1.2 herein]
3.11 Fixed Assets. Stockholders have delivered to Purchaser a list annexed
hereto as Schedule 3.11, as of the Balance Sheet Date, of substantially all the
fixed assets (real or personal) of Recycling, including, without limitation,
identification of each vehicle by description and serial number, identification
of containers, including compactors and roll off boxes, machinery and equipment
used by Recycling in its business, identified by type and amount, and a general
description of parts, supplies and inventory. Except as described on Schedule
3.11:
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(a) All of Recycling's containers, vehicles, machinery and equipment
necessary for the operation of its business are in substantially the same
condition, normal wear and tear excepted, as at the time of Purchaser's
inspection on ______________, 1996; and
(b) All of the motor vehicles and other rolling stock of Recycling are
in material compliance with all applicable laws, rules and regulations. To
Stockholders' knowledge, all leases of fixed assets are in full force and
effect and binding upon the parties thereto. Neither Recycling nor, to the
knowledge of Stockholders, any other parties to such leases are in breach
of any of the material provisions thereof. All fixed assets are listed on
Schedule 3.11 and are either owned by Recycling or leased under an
agreement reflected on Schedule 3.11.
3.12 Disposal of Assets. Except as indicated on Schedule 3.8, since the
Balance Sheet Date, Recycling has not acquired or sold or otherwise disposed of
any properties or assets which, singly or in the aggregate, are material to the
operation of Recycling's business as presently constituted.
3.13 Contracts and Agreements; Adverse Restrictions.
(a) Stockholders have delivered to Purchaser a list, annexed hereto as
Schedule 3.13, together with copies, as of the date of this Agreement, of
all material contracts and agreements to which Recycling is a party or by
which it or any of its property is bound, including, but not limited to,
joint venture or partnership agreements, contracts with any labor
organizations, promissory notes, loan agreements, settlement agreements,
bonds, mortgages, deeds of trust, liens, pledges, conditional sales
contracts, option agreements, or other security agreements. To
Stockholder's knowledge, all such contracts and agreements set forth in
Schedule 3.13 are in full force and effect and binding upon the parties
thereto. Neither Recycling nor, to the knowledge of Stockholders, any other
party to any such contract or agreement, including without limitation that
certain settlement agreement dated an unspecified date in July of 1991 (the
"Settlement Agreement") among Statewide, Recycling, the New Jersey Board of
Public Utilities and certain individual parties, are in breach of and to
Stockholders' knowledge, none of the parties has threatened to breach any
of the material provisions thereof. Schedule 3.13 discloses as to all loan
agreements, promissory notes, deeds of trust or security agreements, the
full amount of all underlying indebtedness evidenced and/or secured thereby
as of the Current Balance Sheet; and
(b) Except as set forth on Schedule 3.13, to Stockholders' knowledge,
there is no outstanding judgment, order, writ, injunction or decree against
Recycling, the result of which could materially adversely affect Recycling
or the business of Recycling, nor, to the knowledge of Stockholders, has
Recycling been notified that any such judgment, order, writ, injunction or
decree has been requested.
3.14 Insurance. Stockholders have delivered to Purchaser a list, annexed
hereto as Schedule 3.14, together with copies, as of the date of this Agreement,
of all available insurance policies carried by Recycling now or in the past,
including those currently in effect and copies of any claims and the resolution
of any claims made thereunder. For each insurer providing coverage for any of
the contingent or other liabilities listed in Schedule 3.7, each such insurer,
if required, has been properly and timely notified of such liability, no
reservation of rights letters have been received by Recycling and the insurer
has assumed defense of each suit or legal proceeding.
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3.15 Personnel. Stockholders have delivered to Purchaser a list, annexed
hereto as Schedule 3.15, as of the date of this Agreement, of all Officers,
Directors and employees, by type or classification, of Recycling and, (i) the
respective rates of compensation of such employees; (ii) the portions thereof
attributable to bonuses, and (iii) any other salary, or, with respect to
Officers, Directors and/or employees, any bonus or other payment arrangement
made with or promised to any of them which will not have been satisfied as of
the Closing Date.
3.16 Benefit Plans. Stockholders have delivered to Purchaser a list,
annexed hereto as Schedule 3.16, as of the date of this Agreement, together with
copies, of all employee benefit plans and agreements currently maintained or
contributed to by Recycling, including employment agreements and any other
agreements containing "golden parachute" provisions, retirement plans, welfare
benefit plans and deferred compensation agreements, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 3.16, Recycling has no other
pension, profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plans or arrangements. Except as disclosed on
Schedule 3.16, all employee benefit plans listed on Schedule 3.16 are currently
funded and in substantial compliance with all applicable federal statutes,
ordinances and regulations. All such plans that are intended to qualify under
Section 401(a) of the Internal Revenue Code have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination letters are
included as part of the documents provided in this Section. Except as disclosed
on Schedule 3.16, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of the
documents provided in this Section. Recycling has incurred no liability for
excise tax or penalty due to the Internal Revenue Service or U.S. Department of
Labor nor any liability to the Pension Benefit Guaranty Corporation ("PBGC") for
any employee benefit plan. Recycling has not participated in or made
contributions to any "multi-employer plan" as defined in the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor would Recycling or any affiliate be
subject to any withdrawal liability with respect to such a plan if any such
employer withdrew from such a plan immediately prior to the date of this
Agreement. No employee pension benefit plan is underfunded on a termination
basis as of the date of this Agreement.
3.17 Taxes. Recycling has filed, on a timely basis, all requisite federal
and state tax and information returns due for all fiscal periods ended on or
before the date of this Agreement; and, except as set forth on Schedule 3.17,
annexed hereto, there are no open years, examinations in progress or claims
against Recycling for federal or state taxes, including penalties and interest,
for any period prior to and including the date of this Agreement and no notice
of any claim, whether pending or threatened, for taxes has been received, or, if
so, such claims have been settled or resolved prior to the date of this
Agreement. Copies of (a) any tax examinations, (b) extensions of statutory
limitations and (c) Recycling's federal and state income and sales tax returns
for its last three (3) fiscal years have been delivered to Purchaser by
Stockholders and are contained in Schedule 3.17. Copies of all other federal,
state, and other tax and information returns for the prior three (3) years have
been made available to Purchaser and are among the records of Recycling,
possession of which will accrue to Purchaser at Closing. Except as set forth on
Schedule 3.17, (x) Recycling has not agreed to any extensions of any statutes of
limitations in connection with a federal, state or local income, franchise or
sales tax examination, (y) state or local income, franchise or sales tax
examinations currently in progress, and (z) Recycling has not been contacted by
any federal, state or local taxing authority regarding a prospective
examination.
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3.18 Articles of Incorporation and Bylaws. Except as disclosed on Schedule
3.18, annexed hereto, the certified copies of the Articles of Incorporation and
By-Laws of Recycling contained therein are true and correct copies of such
documents as of the date hereof.
3.19 Customers, Billings and Current Receipts. Stockholders have delivered
to Purchaser a current list, Schedule 3.19 annexed hereto, setting forth:
(a) The customer Recycling sells recovered material to an ongoing
basis, including name, location and current billing rate, all as of the
Balance Sheet Date; and
(b) Recycling's accounting of monthly sales for the 12 month period
preceding the Closing Date, listed by weight and volume.
3.20 No Change. Except as set forth on Schedule 3.20 annexed hereto, with
respect to Recycling, since the Balance Sheet Date, there has not been:
(a) Any material adverse change in its financial condition, assets,
liabilities, contingent or otherwise, income, operations or business;
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting any material portion of its properties or
business;
(c) Any change or agreement to change (i) its stockholders or (ii)
ownership of its authorized capital or outstanding securities;
(d) Any declaration or payment of, or any agreement to declare or pay,
any dividend or distribution in respect of Company Stock or any direct or
indirect redemption, purchase or other acquisition of any of Company Stock;
(e) Any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its Directors, Officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or other
special compensation to any employee or any severance or termination pay
paid to any of its present or former Officers or other key employees other
than in the ordinary course of business and other than a one-time bonus
payable to employees as fully described on Schedule 3.20(e), annexed
hereto;
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(f) Any labor dispute or any other event or condition of any
character, materially adversely affecting its business or future prospects;
(g) Any sale or transfer, or any agreement to sell or transfer or
option, any of its material assets, property or rights to any other person,
including, without limitation, Stockholders, other than in the ordinary
course of business;
(h) Any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including, without
limitation, any indebtedness or obligation of Stockholders;
(i) Any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any party to the transfer and assignment
of any such assets, property or rights;
(j) Any purchase, acquisition, agreement, plan or arrangement to
purchase or acquire, any of its property, rights or assets outside the
ordinary course of its businesses;
(k) Any waiver of any of its material rights or claims;
(l) Any amendment or termination of any material contract, agreement,
license, permit or other right to which it is a party; or
(m) Except as expressly permitted by this Agreement or in connection
with Recycling's guaranty of the obligations of Statewide in connection
with the redemption of the Statewide stock by the Estate of Joseph
Scalamoni, any other transaction outside the ordinary course of its
business.
3.21 Bank Accounts. Stockholders have delivered to Purchaser a list,
Schedule 3.21 annexed hereto, as of the date of this Agreement, of the name of
each bank in which Recycling has accounts or safe deposit boxes; the names in
which the accounts or boxes are held; the type of account; and the name of each
person authorized to draw thereon or have access thereto.
3.22 Compliance with Laws. Without limitation of any representations or
warranties made by Stockholders or Recycling in Section 3.23 or elsewhere in
this Agreement, to Stockholders' knowledge, except as disclosed on Schedule 3.22
annexed hereto and in Section 3.9(c) above, as of the date of this Agreement,
Recycling has and, as of the Closing Date, Recycling will have, materially
complied with, and is presently in material compliance with, federal, state and
local laws, ordinances, rules, regulations, Governmental Permits, orders,
judgments, awards, decrees, consent judgments, settlement agreements, (including
the Settlement Agreement), consent orders and requirements applicable to
Recycling (collectively, "Laws"), except for such minor noncompliances which, to
Stockholders' knowledge, do not materially adversely affect Recycling. To
Stockholders' knowledge, except as disclosed on Schedule 3.22 and in Paragraph
3.9(c), there has been no assertion by any party that Recycling has violated any
Laws.
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3.23 Environmental Compliance. For purposes of this Agreement:
(a) "Environmental Law" shall mean any Legal Requirement pertaining to
(i) the protection of health, safety, and the indoor or outdoor
environment, (ii) the conservation, management, or use of natural resources
or wildlife, (iii) the protection or use of surface water and groundwater,
(iv) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, Release, threatened Release,
abatement, removal, remediation, handling of, or exposure to, any Regulated
Substance or (v) pollution (including any Release to air, land, surface
water, and groundwater), including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. 9601 et seq.), the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act and the Hazardous and Solid Waste Amendments (42 U.S.C. 6901
et seq.), the Federal Water Pollution Control Act and the Clean Water Act
(33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App. 1801 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.), the Oil
Pollution Control Act (33 U.S.C. 2701 et seq.), the Emergency Planning and
Community Right-to- Know Act (42 U.S.C. 11001 et seq.), the National
Environmental Policy Act (42 U.S.C. 4321 et seq.), the Safe Drinking Water
Act (42 U.S.C. 300(f) et seq.), the Industrial Site Recovery Act (N.J.S.A.
13:1K-6 et seq.), the Spill Compensation and Control Act (N.J.S.A.
58:10-23.11 et seq.), the Underground Storage of Hazardous Substances Act
(N.J.S.A. 58:10A-21 et seq.), the Toxic Catastrophe Prevention Act
(N.J.S.A. 13:1K-19 et seq.), the Worker and Community Right to Know Act
(N.J.S.A. 34:5A-1 et seq.), the Pollution Prevention Act (N.J.S.A. 13:D-35
et seq.), the Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.), the
Solid Waste Utility Control Act (N.J.S.A. 48:13A-1 et seq.), the Air
Pollution Control Act (N.J.S.A. 26:2C-1 et seq.), the Water Pollution
Control Act (N.J.S.A. 58:10A-1 et seq.), the Flood Hazard Control Act
(N.J.S.A. 58:16A-50 et seq.), the Freshwater Wetlands Protection Act
(N.J.S.A. 12:3-1 et seq.), the Noise Control Act (N.J.S.A. 13:1G-1 et
seq.), the Pesticide Control Act (N.J.S.A. 13:1F-1 et seq.), all as
amended, and any other federal, state, county or local law or regulation
designed to protect public health or the environment, regulate solid or
hazardous waste, or protect workers and reduce occupational safety and
health hazards;
(b) "Environmental Claim" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding or claim (whether
administrative, judicial, or private in nature) arising (i) pursuant to or
connection with an actual or alleged violation of any Environmental law,
(ii) in connection with any Regulated Substance or actual or alleged
Regulated Substance activity, (iii) from any abatement, removal, remedial,
corrective or other response action in connection with any Regulated
Substance, Environmental Law, or other order of a Governmental Authority or
(iv) from any actual or alleged injury, threat, or harm to health, safety,
natural resources or the environment;
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(c) "Environmental Record" shall mean any document, correspondence,
pleading, report, assessment, analytical result, Governmental Approval, or
other record concerning any Environmental Claim, any Regulated Substance,
compliance or non-compliance with any Environmental Law;
(d) "Governmental Approval" shall mean any permit, registration,
license, variance, certificate, consent, letter, clearance, closure,
exemption, decision, action or approval of any Governmental Authority;
(e) "Governmental Authority" shall mean any federal, state, regional,
county, or local person or body having governmental or quasi-governmental
authority;
(f) "Legal Requirement" shall mean any statute, law, regulation,
ordinance, Governmental Approval, injunction, judgment, order, consent
decree, settlement, or other requirement of any Governmental Authority;
(g) "Regulated Substance" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, by-product, pollutant,
contaminant or material which is classified or regulated as a hazardous
substance or waste or as a toxic substance under any Environmental Law;
(h) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the indoor or outdoor environment of any Regulated
Substance;
(i) Except as set forth in Schedule 3.23(a) annexed hereto, Recycling
and its Stockholders represent and warrant as follows:
(i) Recycling is in compliance with all applicable federal, state,
county, and local Environmental Laws;
(ii) Recycling has never engaged in the "generation", "treatment",
"storage", or "disposal" of any "hazardous waste" as those terms are
defined in any Environmental Law;
(iii) Recycling and its Stockholders have not received and have no
knowledge of any present or threatened Environmental Claim against
Recycling by any Governmental Authority or private party;
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(iv) To the knowledge of Recycling and Stockholders, there are no
facts or circumstances that could form the basis for any Environmental
Claim against Recycling by any Governmental Authority or private party;
(v) Recycling has all Governmental Approvals necessary to lawfully
operate its business;
(vi) Other than any tanks identified in Schedule 3.23(a), Recycling
does not own or use any underground storage tanks at any property or
premises at which it conducts its business;
(vii) To the knowledge of Recycling and Stockholders, Recycling has
not caused or permitted any Release or threatened Release of any Regulated
Substance at, on, from or beneath any location at which it conducts its
business;
(viii) No lien has attached to any property interest of Recycling or
its Stockholders pursuant to any Environmental Law;
(ix) No informational request has been issued to Recycling or its
Stockholders pursuant to any Environmental Law;
(x) To the knowledge of Recycling and Stockholders, there are no
conditions or circumstances which pose a risk to the environment or the
health and safety of persons at any property at which Recycling conducts
its business and Recycling has received no OSHA notices or any other
notices to the contrary;
(xi) Recycling has provided to CWI all Environmental Records
concerning Recycling in Recycling's possession, custody or control, or
which Recycling could reasonably have obtained;
(xii) Neither the Business Concern Disclosure Statement 1996 Annual
Update (A-901) filed by Recycling in the offices of the NJDEP, any
application for transfer station upgrade, nor any other disclosures,
certificates, statements, reports or applications delivered to any
Governmental Authority by or on behalf of Recycling contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements contained therein not misleading.
3.24 Real Property. To the knowledge of Recycling and Stockholders:
(a) Lomac owns the real property located at premises commonly known as
11 Harmich Road, South Plainfield, New Jersey, shown on the municipal tax
map as Lot 27 in Block 255 ("Real Property") and has good and marketable
fee simple title thereto, and shall be transferred at Closing free and
clear of all claims, liens, charges, encumbrances, leases, easements,
rights, reservations, covenants and conditions;
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(b) The Real Property is adequately serviced by all public utilities
including, but not limited to, electricity and telephone, as is necessary
to the conduct of the business of Recycling as it is being conducted on the
date of this Agreement;
(c) The Real Property is zoned for the purpose for which it is
presently used or is not required to be so zoned. There is no plan, study
or effort by any governmental authority which in any way affects or could
affect the present use or zoning of the land;
(d) Neither the whole nor any portion of the Real Property, nor the
means of ingress thereto or egress therefrom, is subject to any pending
condemnation, taking or other similar proceeding by any public authority,
and Recycling and Stockholders do not know or have grounds to believe that
any such condemnation or taking is threatened or contemplated;
(e) All easements and rights, including, without limitation, easements
for power lines, roadways and other means of ingress and egress, necessary
for the use of the Real Property have been obtained;
(f) All of the buildings, structures, pipelines and pumping systems
(the "Improvements") located on the Real Property were constructed in a
reasonably good, workmanlike and substantial manner, in substantial
conformity with all applicable rules, regulations, laws, restrictive
covenants and ordinances applicable at the time of construction. The
Improvements are in reasonably good repair, condition and working order,
normal wear and tear excepted and, except as disclosed in this Agreement or
in schedules to this Agreement: (i) the Real Property is not subject to,
and neither Recycling nor Stockholders have received from any Governmental
Authority, any notice of zoning, building, fire, safety, environmental
protection or health code violations with respect to the Real Property; and
(ii) no written notice has been given by any insurance company which has
issued a policy with respect to any portion of the Real Property or by any
board of fire underwriters (or any other body exercising similar functions)
requesting the performance of any repairs, replacements, alterations, or
other work on or at the Real Property; and
(g) Since the latest real property assessment, Recycling nor
Stockholders have received any notice or information of an increase in the
assessed value of the Real Property and the Real Property is not subject to
any special assessments and to the best of their knowledge, there are no
special assessments contemplated with respect to the Real Property.
3.25 Accurate and Complete Records. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of Recycling:
(a) Have been made available to CWI at the Recycling offices;
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(b) To Stockholders' knowledge, have been, in all material respects,
maintained in accordance with all applicable laws, rules and regulations;
and
(c) To Stockholders' knowledge, are reasonably accurate and complete
in all material aspects and do not contain or reflect any material
discrepancies.
3.26 No Misleading Statements. To Stockholders' knowledge, the
representations and warranties of Stockholders contained in this Agreement and
Schedules annexed hereto and all other documents and information furnished to
Purchaser and its representatives pursuant hereto are by or on behalf of
Stockholders or Recycling, taken as a whole, accurate in all material respects
and do not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made and to be made not
misleading as of the Closing Date.
3.27 Knowledge. Wherever reference is made in this Agreement to the
"knowledge" of Stockholders or Recycling, such term means: (a) the actual
knowledge of Stockholders, (b) the constructive knowledge of Stockholders or
Recycling based upon their due inquiry with respect to conversations had with
and/or writings received from any person having supervisory or managerial
responsibility for the operations, environmental and/or financial aspects of the
business of Recycling, the subject matter of which materially affects the
environmental liabilities, contingent liabilities, compliance with laws or
financial affairs or business of Recycling.
3.28 Survival. These representations and warranties of Stockholders shall
survive the Closing.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
CWI represents and warrants as follows:
4.1 Existence and Good Standing. CWI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by Purchaser and CWI and, subject to the due
authorization, execution and delivery by Recycling, constitutes a legal, valid
and binding obligation of CWI. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and the fulfillment and
compliance with the terms and conditions hereof do not (a) violate any
provisions of any judicial or administrative order, award, judgment or decree
applicable to CWI; or (b) conflict with any of the provisions of the Articles of
Incorporation or By-Laws of CWI; or (c) conflict with, result in a breach of or
constitute a default under any agreement or instrument to which CWI is a party
or by which it is bound.
4.3 Litigation. Except as set forth in Schedule 4.3, annexed hereto, there
are no actions, suits, proceedings or investigations pending or, to the
knowledge of CWI, threatened in any court or before any governmental agency or
instrumentality against, by or affecting CWI or its financial conditions or
which would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby or declare the same unlawful or cause the
rescission thereof.
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4.4 No Misleading Statements. The representations and warranties of CWI
contained in this Agreement and Schedules annexed hereto and all other documents
and information furnished to Stockholders and their representatives pursuant
hereto, including, but not limited to, copies of reports required to be filed by
CWI with the Securities and Exchange Commission, are materially complete and
accurate, and do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made and to be made not
misleading as of the Closing Date.
5. COVENANTS OF STOCKHOLDERS
5.1 Access; Confidential Information. Between the date hereof and the
Closing Date, Stockholders will afford to the Officers and authorized
representatives of CWI access to the assets, properties, books and records of
Recycling, and will furnish CWI with such additional financial and operating
data and other information as to the business and properties of Recycling as CWI
may from time to time reasonably request. Stockholders will cooperate with CWI
and its representatives in the preparation of any documents or other material
which may be required by any governmental agency subsequent to the Closing.
Stockholders covenant and agree not to disclose to any third persons other than
their accountants, bankers or legal counsel any of the terms or provisions of
this Agreement prior to or after the Closing Date without the prior written
consent of CWI, except as may be required by law or to maintain the rights of
Recycling pursuant to its existing liability insurance company contracts.
5.2 Operations. Between the date hereof and the Closing Date, Stockholders
will cause Recycling to:
(a) Carry on its business in substantially the same manner as it has
heretofore;
(b) Maintain its properties and facilities, including those held under
leases in as good working order and condition as at present, ordinary wear
and tear excepted;
(c) Perform all of its material obligations under agreements relating
to or affecting its assets, properties, business operations and rights;
(d) Keep in full force and effect present insurance policies;
(e) Use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business relations
with it;
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(f) Advise CWI promptly in writing of any material change in any
document, Schedule, or other information delivered pursuant to this
Agreement;
(g) File on a timely basis all of its notices, reports or other
filings required to be filed with or reported to any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or any instrumentality of any of the foregoing wherever located with
respect to its continuing business operations;
(h) Maintain compliance with all Governmental Permits, laws, rules,
regulations and consent orders; and
(i) File on a timely basis all complete and correct applications or
other documents necessary to maintain, renew or extend any Governmental
Permit, variance or any other approval required by any Governmental
Authority necessary and/or required for the continuing operation of its
business operations, whether or not such approval would expire before or
after the Closing Date.
5.3 No Change. Between the date of this Agreement and the Closing Date,
except as otherwise permitted by the prior written consent of CWI, Stockholders
will not, with respect to Recycling:
(a) Make any change in its charter documents or Bylaws;
(b) Except as provided in Section 3.20 above, declare or pay any
dividend or make any distribution in respect of its capital stock whether
now or hereafter outstanding, or purchase, redeem or otherwise acquire or
retire for value any of its shares of capital stock;
(c) Enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditure, except in the ordinary
course of business;
(d) Except as set forth in Schedule 3.20(e), above, pay, contract or
otherwise agree to pay any salary, bonus or other payment of any kind to
any Director, Officer, employee or agent, or make or promise to make any
bonus payment to any such person;
(e) Create, assume or otherwise permit the imposition of any mortgage,
pledge or other lien or encumbrances upon or grant any options or rights of
first refusal with respect to any assets or properties whether now owned or
hereafter acquired;
(f) Sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(g) Merge or consolidate or agree to merge or consolidate with or into
any firm, corporation or other entity;
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(h) Waive any material rights or claims;
(i) Amend or terminate any material agreement or assign any permit,
license or other right; or
(j) Enter into any other transaction outside the ordinary course of
Recycling's business or prohibited hereunder.
5.4 Notice. Promptly upon the occurrence of, or promptly upon Stockholders
becoming aware of the impending or threatened occurrence of, any event which
would cause any of the representations or warranties of Stockholders contained
herein or in any Schedule annexed hereto to become materially inaccurate,
Stockholders shall give detailed written notice thereof to CWI and shall discuss
with CWI what efforts will be taken by Stockholders to prevent or promptly
remedy the same.
5.5 Exclusivity of Negotiations. Stockholders agree that they will not
enter into any arrangements, agreements, negotiations or otherwise communicate
with any parties, except for CWI, with respect to (i) any sale or disposition of
the assets or stock which are the subject of this Agreement and the other
Transaction Documents, or (ii) any merger, reorganization or change in ownership
of Recycling.
6. COVENANTS OF CWI
6.1 Consents. CWI shall use its best efforts to obtain prior to the Closing
all consents, authorizations and approvals required to be obtained by CWI in
connection with the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated hereby and thereby.
6.2 Tax and Other Records. CWI shall cooperate with Stockholders with
respect to any personnel or administrative matters involving such Stockholders
and with respect to their tax returns and any tax audits, appeals, claims or
litigation with respect to such tax returns or the preparation of such tax
returns, by making available to Stockholders during normal business hours, such
Recycling files, documents, books and records for inspection and copying as may
be reasonably requested by such Stockholders and shall cooperate with such
Stockholders with respect to retaining information and documents which relate to
such tax and personnel or administrative matters.
6.3 Nondisclosure of Confidential Information. CWI acknowledges that it
will have access to valuable confidential information of Recycling, such as
customer lists, prices and costs. CWI agrees that, in the event that the
transactions contemplated herein are not consummated, it will never use or
disclose such confidential information to any person, corporation or other
entity for any purpose or reason whatsoever, except as required by law. In the
event of a breach or threatened breach by CWI of the provisions of this Section
6.3, Stockholders shall be entitled to an injunction restraining CWI, its
Directors, Officers and representatives from disclosing or using, in whole or in
part, such confidential information.
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7. INDEMNIFICATION
7.1 Stockholder Indemnities. Stockholders covenant and agree that, for the
period described in Section 15.12 they shall jointly and severally indemnify and
hold harmless Purchaser and its Directors, Officers and agents from and after
the effective date of this Agreement and Statewide and its Directors, Officers
and Agents from and after the Closing Date (singularly "Purchaser Indemnitee"
and plural, "Purchaser's Indemnitees") against any and all actions, proceedings,
losses, damages, assessments, adjustments, liabilities, claims, deficiencies,
fines, penalties, costs, expenses, including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation, (herein
collectively referred to as "Purchaser Losses") arising out of or with respect
to each of the following:
(a) All Environmental Claims that arise from (i) conditions or
occurrences listed in Schedule 3.23(b); (ii) any matter, activity,
omission, event, circumstance, occurrence, Release, threatened Release, or
condition that occurred or that was in existence on or before the Closing
Date in addition to those conditions or occurrences in Schedule 3.23(b);
and (iii) any operations of Recycling on or before the Closing Date;
(b) Any breach of any representation, warranty or covenant by
Recycling or Stockholders;
(c) Any loss, cost, claim or expense arising from any damage to
persons or property caused by any activities undertaken by any
environmental consultant designated by Stockholders pursuant to Section
8.1, or any contractors, subcontractors, employees, or agents;
(d) Any loss, cost, claim or expense arising from the failure of
Stockholders to fully comply with ISRA;
(e) Any federal, state or municipal tax liability of Recycling arising
out of any period ended on or before the Closing Date;
(f) Any material accrued or absolute liability of or claim against
Recycling, existing at the Closing Date but which is not disclosed as
provided in Section 3.7, above;
(g) Any claim for payment of fees and/or expenses by a broker or
finder in connection with the origin, negotiation, execution or
consummation of this Agreement based upon any alleged agreement between the
claimant and Stockholders;
(h) Any misrepresentation, breach of warranty, or non-fulfillment of
any agreement or covenant on the part of Stockholders or Recycling pursuant
to the terms of this Agreement or any misrepresentation in or omission from
any Schedule, certificate or other instrument or information furnished or
to be furnished to Purchaser pursuant to the terms of this Agreement;
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(i) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses incident to any of the foregoing matters;
and
(j) The provisions of this Section 7.1 shall survive the Closing.
7.2 Purchaser's Indemnities. CWI covenants and agrees to indemnify and hold
harmless Stockholders and their respective agents, heirs, representatives and
assigns (the "Stockholders' Indemnitee") from and against any and all losses,
damages, assessments, adjustments, liabilities, claims, deficiencies, fines,
penalties, costs, expenses, including reasonable attorneys' fees and expenses of
investigation, (collectively, the "Stockholder Losses") arising out of or with
respect to each of the following:
(a) Any claim for payment of fees and/or expenses of any broker or
finder in connection with the origin, negotiation, execution, or
consummation of this Agreement based upon any alleged agreement between the
claimant and CWI;
(b) The operation of the business of Recycling subsequent to the
Closing Date;
(c) Any other misrepresentation, breach of warranty, or
non-fulfillment of any agreement or covenant on the part of CWI pursuant to
the terms of this Agreement or any misrepresentation in or omission from
any Schedule, certificate or other instrument furnished or to be furnished
to Stockholders pursuant to the terms of this Agreement;
(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses incident to any matter against which CWI
has indemnified Stockholders hereunder; and
(e) The provisions of this Section 7.2 shall survive the Closing.
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7.3 Notice of Indemnity Claim.
(a) In the event that any claim ("Claim") is hereafter asserted
against any party hereto as to which such party may be entitled to
indemnification hereunder, such party (the "Indemnitee") shall notify the
party required by the terms of this Agreement to indemnify the Indemnitee
(the "Indemnifying Party") in writing thereof (the "Claims Notice") within
thirty (30) days after (a) receipt of written notice of commencement of any
third party litigation against such Indemnitee, (b) receipt by such
Indemnitee of written notice of any third party claim pursuant to an
invoice, notice of claim or assessment, against such Indemnitee, or (c)
such Indemnitee becomes aware of the existence of any other event, in
respect of which indemnification may be sought from the Indemnifying Party.
The Claims Notice shall describe the Claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount if known,
or estimate, if possible, of the Indemnitee's Losses;
(b) The Indemnifying Party may elect to defend and/or compromise any
Claim, at its or his own expense and by its or his own counsel, who shall
be reasonably acceptable to the Indemnitee. Without the written approval of
the Indemnitee, which approval shall not be unreasonably withheld, the
Indemnifying Party shall not agree to any settlement or compromise of a
Claim defended by the Indemnifying Party which would require the Indemnitee
to perform or take any action or to refrain from performing or taking any
action, including the payment of money.
(c) If, within thirty (30) days of the Indemnifying Party's receipt of
a Claim Notice, the Indemnifying Party shall not have notified the
Indemnitee of its election to assume the defense, Indemnitee shall have the
right to assume control of the defense of such Claim, and in any event, the
non-defending party shall have the right to participate, at its or his own
expense, in the defense of the Claim;
(d) The party assuming the defense of any Claim shall keep the other
party reasonably informed at all times of the progress and development of
its or their defense of and compromise efforts with respect to such Claim
and shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other, and make available to each other and their
representatives all available relevant records or other materials required
by them for their use in defending, compromising or contesting any Claim;
(e) The failure to timely notify the Indemnifying Party of the
commencement of such actions in accordance with this Section shall relieve
the Indemnifying Party from the obligation to indemnify under this Section
7.
7.4 Right of Set-Off. In the event that CWI or its nominee is entitled to
indemnification as provided herein or any other Transaction Documents, CWI or
its nominee shall have the right to set off the amount thereof against the
amount, if any, which CWI or its nominee shall owe at such time or from time to
time thereafter to Stockholders, to Lomac or the shareholders of Statewide,
whether arising under this Agreement or any other Transaction Documents.
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF CWI.
The obligations of CWI hereunder are, at its option, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
precedent. In the event that any of the conditions set forth in this Section 8
have not been fulfilled as of the Closing Date, CWI may, at its option, unless
such date is extended by CWI, at its sole discretion, elect by written notice to
Stockholders to:
(a) Terminate the Agreement, except that the foregoing shall not be
deemed to affect in any way any right of action which CWI may have against
Stockholders for breach or non-performance of any representation, warranty,
covenant or condition hereunder; or
(b) Waive any failure on Stockholders' part to satisfy the following
conditions precedent.
8.1 ISRA and Regulatory Compliance
(a) Prior to Closing, Recycling shall obtain all Governmental
Approvals necessary to validly consummate this transaction, including but
not limited to any permit, certificate or other document required by USEPA,
NJDEP, or any other governmental agency having authority over the subject
matter thereof.
(b) Prior to the Closing, Stockholders, at their sole cost and
expense, shall either (i) obtain a letter of non-applicability ("LNA") for
this transaction from NJDEP as such term is defined in N.J.A.C. 7:26B-1.3
and any amendments thereto, (ii) obtain a "Negative Declaration" or a "No
Further Action Letter" from NJDEP as such terms are defined in N.J.S.A.
13:1K-8 and any amendments thereto, or (iii) apply for, obtain, and enter
into a "Remediation Agreement" pursuant to N.J.S.A. 13:1K-9E, as such term
is defined in N.J.A.C. 7:26B-1.3 and any amendments thereto to allow this
transaction to go forward prior to Stockholder's final and complete
compliance with the provisions of ISRA.
(c) In the event Stockholders enter into a Remediation Agreement with
NJDEP pursuant to (iii) above, they shall obtain and maintain a remediation
funding source in form and amount acceptable to NJDEP pursuant to N.J.S.A.
58:10B-3. The estimated cost of such work shall be withheld from the
proceeds payable to Stockholders at the Closing and shall be deposited with
Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C. to be held in escrow until
all such work has been completed and final approval has been obtained from
NJDEP. Within 30 days after the Closing, Recycling's Stockholders shall
designate and hire an environmental consultant acceptable to CWI to perform
all acts necessary in connection with the Remediation Agreement and obtain
full compliance with ISRA and other requirements of Environmental Laws
required by the NJDEP arising from the ISRA case resulting from this
transaction, including but not limited to implementation of any
investigation, monitoring or remedial efforts required by NJDEP. All
workers and contractors employed by Stockholders shall be covered by
adequate worker's compensation and liability insurance naming CWI as an
additional insured. At the request of CWI, all such contractors shall
furnish certificates of insurance confirming that the required coverage is
then in effect. Stockholders shall ensure that their designated consultant
diligently and expeditiously pursues and obtains full ISRA compliance. All
ISRA compliance activities shall be undertaken with advance notice in a
manner that does not materially disrupt or unreasonably interfere with the
ongoing operations of Statewide or Recycling, or with any current or
planned construction activity at the Property;
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(d) Prior to the Closing, if a lien shall be filed against the
Property pursuant to any Environmental Law, Recycling shall, at Purchaser's
sole option, immediately either (i) pay the claim and remove the lien from
the Real Property, or (ii) furnish security reasonably satisfactory to the
Purchaser in an amount sufficient to discharge the claim out of which the
lien arises; and
(e) The provisions of this Section 8.1 shall survive the Closing.
8.2 Accuracy of Representations; Performance of Covenants. The
representations and warranties of Recycling and Stockholders contained herein
shall be accurate in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date; each and all of the agreements of Stockholders and
Recycling to be performed on or before the Closing Date pursuant to the terms
hereof shall have been performed; and each Stockholder shall have delivered to
CWI a certificate dated the Closing Date and signed by him or her to all such
effects.
8.3 Closing Deliveries. CWI shall have received from Recycling and
Stockholders all consideration, agreements and documents set forth in Section
2.2 hereof, in form and substance acceptable to CWI and its counsel.
8.4 Governmental Consents; No Litigation. Prior to the Closing,
Stockholders shall use their best efforts and give their fullest cooperation to
CWI in order to obtain all necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated in this Agreement including, without limitation, all
state, local and municipal permits. All required approvals from NJDEP and other
governmental regulatory agencies with respect to the transactions contemplated
by this Agreement shall have been received by CWI.
8.5 No Material Adverse Change. No material adverse change in the results
of operations, financial condition or business of Recycling as of the Closing
Date, shall have occurred, and Recycling shall not have suffered any material
loss or damage to any of its material properties or assets, whether or not
covered by insurance, since the date hereof, which change, loss or damage
materially affects or impairs the ability of Recycling to conduct its business
and CWI shall have received a certificate signed by Stockholders dated the
Closing Date to such effect.
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8.6 Liabilities. Stockholders shall have delivered to CWI an accurate list,
Schedule 8.6, annexed hereto, as of the Closing Date, showing all fixed and
uncontested liabilities and, to Stockholder's knowledge, contingent liabilities
of Recycling, arising since the Current Balance Sheet. All liabilities listed on
Schedule 8.6 shall be described in the same fashion as required in Schedule 3.6
pursuant to the provisions of Section 3.6, above.
8.7 Material Contracts. Stockholders shall have delivered to CWI an
accurate list, together with copies thereof, Schedule 8.7 annexed hereto, as of
the Closing Date, showing all material contracts and agreements entered into by
Recycling since the date of Schedule 3.13.
8.8 Resignations. Stockholders shall have delivered to CWI the resignations
effective as of the Closing Date of all Officers and Directors of Recycling.
8.9 Releases. Stockholders shall have delivered to CWI an instrument dated
the Closing Date releasing Recycling and CWI from any and all claims of
Stockholders against Recycling, except those obligations arising under this
Agreement or any other Transaction Documents.
8.10 Certificate of Good Standing. Stockholders shall have delivered to CWI
a certificate, dated as of a recent date, duly issued by the State of New Jersey
that Recycling is in good standing and authorized to do business in the State of
New Jersey.
8.11 Necessary Filings. Except as disclosed on Schedule 3.16, all reports,
notices and forms with respect to Recycling's benefit plans listed in 3.16
required to be filed with the Internal Revenue Service, PBGC, the Department of
Labor, and any other person (including, but not limited to, the trustee, the
participants and the beneficiaries) shall have been filed or delivered with
copies delivered to CWI.
8.12 Liens. Stockholders shall have delivered to CWI Uniform Commercial
Code UCC-3 termination statements and such other instrument as are necessary and
in form satisfactory to counsel for CWI, showing that there are no security
interests, judgments, taxes, other liens or encumbrances outstanding against
Recycling or any of its assets other than those disclosed in Schedules 3.25 and
3.26.
8.13 Due Diligence. CWI shall have completed its due diligence
investigations of Statewide, Recycling and Lomac and their respective business
operations, including, but not limited to, an environmental audit, and, shall
have been satisfied with the results thereof in its sole judgment, including,
without limitation, being satisfied that Recycling's environmental practices and
procedures are in compliance with all applicable Federal, state and local laws,
regulations and regulatory interpretations governing the operation of
Recycling's business, and that there are no material, actual or probable
violations, compliance deficiencies, required capital expenditures or other
substantive environmental concerns.
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8.14 Simultaneous Closings. Stockholders, Lomac and the stockholders of
Statewide shall have satisfied all conditions to closing under the Transaction
Documents in connection with the acquisition transactions involving Statewide,
Recycling and Lomac.
8.15 Assignment of Option to Purchase Stock. Maurice Kirchofer and Mary
Lemmo shall have assigned their options to purchase a majority interest in
Recycling pursuant to that certain option to purchase stock agreement dated May
10, 1994 (the "Option Agreement") among certain of Stockholders, Maurice
Kirchofer, Mary Lemmo and various other parties, each at fair market value, as
established by mutual agreement of the parties hereto.
8.16 Termination of Option to Purchase Stock. The Estate of Joseph
Scalamoni shall have terminated the option of Joseph Scalamoni to acquire an
interest in Recycling pursuant to the Option Agreement, at fair market value as
established by the parties hereto.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
The obligations of Stockholders hereunder are, at their option, subject to
the following conditions precedent. Upon closing of this Agreement, all
conditions not satisfied are deemed to be waived by Stockholders. In the event
that any of the conditions set forth in this Section 9 have not been fulfilled
as of the Closing Date, Stockholders may, at their option, unless such date is
extended by Stockholders at their sole discretion, elect by written notice to
CWI to:
(a) Terminate this Agreement, except that the foregoing shall not be
deemed to affect in any way any right of action which Stockholders may have
against CWI for breach of any representation, warranty, covenant or
condition hereunder; or
(b) waive any failure on CWI's part to satisfy the foregoing
conditions precedent.
9.1 Accuracy of Representations. The representations and warranties of CWI
contained herein shall be accurate in all material respects as of the Closing
Date as though such representations and warranties had been made at and as of
that time; all of the terms, covenants and conditions of this Agreement to be
complied with and performed by CWI on or before the Closing Date shall have been
duly complied with and performed; and a certificate to the foregoing effect
dated the Closing Date and signed by the President, the Chairman of the Board or
any Senior Vice President or by a duly authorized representative of CWI shall
have been delivered to Stockholders.
9.2 Closing Deliveries. Stockholders shall have received from CWI all
consideration, agreements and documents set forth in Section 2.2 hereof, in form
and substance acceptable to Stockholders and their counsel.
10. JOINT COVENANTS OF CWI AND STOCKHOLDERS
10.1 Delivery of Documents. Prior to the Closing Date, Stockholders shall
deliver to CWI, all of the documents referred to in Section 8.12.
10.2 Diligence Towards Closing. Stockholders and CWI covenant and agree
from and after the date hereof not to hinder in any way or unreasonably delay
the Closing of the transactions contemplated by this Agreement. Neither
Stockholders nor CWI shall take any action that would cause the respective
conditions precedent and the other party's obligation to close the transaction
contemplated by this Agreement, not to be fulfilled, including, without
limitation taking or causing to be taken any action that would cause their or
its representations to be untrue or incorrect at the Closing Date. Furthermore,
from the date hereof until the Closing Date, each party hereto shall cause its
representations and warranties contained herein to be and remain true and
correct.
10.3 Notice of Untrue or Inaccurate Representations. Prior to the Closing
Date, Stockholders and CWI will promptly give written notice to the other upon
becoming aware of the occurrence or failure to occur, or the impending or
threatened occurrence or failure to occur, of any event that would cause or
constitute, or would be likely to cause or constitute, any of such party's
representations or warranties being or becoming untrue or inaccurate.
10.4 Post-Closing Covenants. Subsequent to the Closing, Stockholders shall
use their best efforts and give their fullest cooperation and assistance to CWI
and Recycling in order to obtain all necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated in this Agreement including, without limitation, all
state, local and municipal permits and the transfer station upgrade.
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11. TERMINATION OF AGREEMENT
Notwithstanding the good faith obligations of the parties to satisfy all of
the conditions to Closing set forth in Sections 8 and 9 herein, this Agreement
may be terminated in accordance with the following provisions:
11.1 Mutual Consent. The parties hereto may terminate this Agreement at or
at any time prior to the Closing by their mutual consent.
11.2 Failure to Fulfill Respective Conditions. CWI may terminate this
Agreement at the Closing if any of the CWI's Conditions to Closing set forth in
Section 8 hereof shall not have been satisfied. Stockholders may terminate this
Agreement at the Closing if any of Stockholders' Conditions to Closing set forth
in Section 9 hereof shall not have been satisfied.
11.3 Misrepresentation. CWI may terminate this Agreement at or at any time
prior to the Closing Date if any of Stockholders' representations or warranties,
made herein, are, or become, untrue. Stockholders may terminate this Agreement
at or at any time prior to the Closing Date if any of CWI's representations or
warranties, made herein, are, or become, untrue.
11.4 Notice and Effect of Termination. Any termination of this Agreement in
accordance with the foregoing provisions shall become effective upon the giving
of written notice of such termination by the terminating party to the other
parties hereto. Upon such termination, the transactions contemplated herein
shall forthwith be abandoned and all continuing obligations and liabilities of
the parties under or in connection with this Agreement, except those set forth
in Section 6.3 hereof, shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained in
this Agreement prior to such termination, except that it is understood and
agreed that the damages of Stockholders and Recycling are limited to the receipt
by Lomac of any deposit monies and any interest earned thereon to which Lomac
may be entitled under the agreement of sale between Lomac and CWI or its nominee
Karat Corp. and as more fully set forth in that certain escrow agreement dated
April 11, 1996 (the "Escrow Agreement") involving Recycling, Statewide, Lomac,
Stockholders, CWI, Karat Corp., Harvey R. Poe, Esq. and other parties. Forthwith
upon termination of this Agreement, Recycling and CWI shall each destroy or
return all documents of any description received by it or them, regardless of
whether such documents have been marked as confidential and the appropriate
party shall be entitled to the return of the deposit pursuant to the terms of
the Escrow Agreement.
12. SECTION INTENTIONALLY OMITTED
13. POST-CLOSING COVENANTS OF STOCKHOLDERS AND CWI
13.1 Restrictive Covenants. Stockholders acknowledge that the agreements
and covenants contained in this Section 13 are essential to protect the business
interests and goodwill of CWI. In order to induce CWI to enter into the
transactions contemplated hereby and provided CWI is not in default hereunder,
Stockholders covenant and agree that for a period commencing on the Closing Date
and terminating five (5) years thereafter (the "Restricted Period"), no
Stockholder shall, anywhere within a one hundred fifty (150) mile radius of
South Plainfield, New Jersey, directly or indirectly: (a) Engage in the
operation of a solid waste hauling business, a disposal, landfilling or waste
transfer business or facility, a recycling business or facility or composting
business or facility;
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(b) Enter the employ of, or render any personal services to, or
receive remuneration in the form of salary, commissions or otherwise, from
any business or facility engaged in such activities; or
(c) Receive or purchase a financial interest in any such business or
facility in any capacity, including, without limitation, as a sole
proprietor, partner, shareholder, member, officer, director, principal,
agent or trustee; provided, however, that Stockholders may own, directly or
indirectly, solely as an investment, securities of any business traded on
any national securities exchange or NASDAQ provided such Stockholder is not
a controlling person of, or a member of a group which controls, such
business and further provided that Stockholders do not, directly or
indirectly, own five percent (5%) or more of any class of securities of
such business.
13.2 Rights and Remedies Upon Breach. If any Stockholder breaches, or
threatens to commit a breach of, any of the provisions of this Section 13.1
above (the "Restrictive Covenants"), CWI shall have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to non-breaching party at law or in
equity:
(a) Specific Performance. The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction, it
being agreed that any breach or threatened breach of the Restrictive
Covenants would cause irreparable injury to non- breaching party and that
money damages would not provide an adequate remedy to non-breaching party.
Accordingly, in addition to any other rights or remedies, non-breaching
party shall be entitled to injunctive relief to enforce the terms of the
Restrictive Covenants and to restrain each Stockholder from any violation
thereof;
(b) Accounting. The right and remedy to require each Stockholder to
account for and pay over to the non-breaching party, as the case may be,
all profits or other benefits derived or received by such Stockholder as
the result of any transactions constituting a breach of the Restrictive
Covenants;
(c) Severability of Covenants. Each Stockholder acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect, without regard to
the invalid portions;
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall reduce the
duration or scope of such provision, as the case may be, to the extent
necessary to render it enforceable and, in its reduced form, such provision
shall then be enforced;
(e) Enforceability in Jurisdiction. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographic scope of the Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties that such determination not
bar or in any way affect the non- breaching party's right to the relief
provided above in the courts of any other jurisdiction within the
geographic scope of the Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.
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14. POST-CLOSING COVENANTS OF PURCHASER
14.1 Tax and Other Records. After the Closing, Purchaser shall cooperate
with Stockholders with respect to any matters involving Stockholders arising out
of his or her ownership of Recycling prior to the Closing, including matters
relating to tax returns and any tax audits, appeals, claims or litigation with
respect to such tax returns or the preparation of such tax returns. In
connection therewith, Purchaser shall make available to Stockholders such
Recycling files, documents, books and records for inspection and copying as may
be reasonably requested by Stockholders and shall cooperate with Stockholders
with respect to retaining information and documents which relate to such
matters.
14.2 Continuing Liability for Obligations to Stockholders. In the event
that Purchaser sells, transfers, conveys, assigns or otherwise disposes of
Recycling, the operations of the business or substantially all of its assets
prior to the expiration of all periods during which Stockholders are entitled to
receive consideration hereunder, the terms of any such transfer shall require
the purchaser or transferee to assume and perform all obligations to
Stockholders contained in this Agreement, but Purchaser and CWI will remain
fully liable for the performance of all such obligations.
14.3 Mutual Cooperation. Subsequent to the Closing, the parties shall each
use their best efforts and give their fullest cooperation in order to obtain all
necessary consents of and filings with any Governmental Authority or agency
relating to the consummation of the transactions contemplated in this Agreement
including, without limitation, all state, local and municipal permits.
15. GENERAL
15.1 Additional Conveyances. Following the Closing, Stockholders and
Purchaser shall each deliver or cause to be delivered at such times and places
as shall be reasonably agreed upon such additional instruments as Purchaser may
reasonably request for the purpose of carrying out this Agreement and the other
Transaction Documents. Stockholders will cooperate with Purchaser and/or
Recycling on and after the Closing in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings or
disputes of any nature with respect to matters pertaining to all periods prior
to the date of this Agreement.
15.2 Assignment. This Agreement may not be assigned by either Purchaser or
Stockholders (except by operation of law) and this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, and their respective
heirs, executors, administrators, successors and assigns.
15.3 Public Announcements. Except as required by law, no party shall make
any public announcement or filing with respect to the transactions provided for
herein without the prior consent of the other parties hereto. Purchaser agrees
to consult with Stockholders in advance regarding any required public
announcement.
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15.4 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or three days following
deposit in the U.S. mail or one business day following deposit with an air
courier service:
If to Stockholders: In Care of
Harvey R. Poe
Poe & Freireich, PA
256 Columbia Turnpike
Florham Park, New Jersey 07932
With a copy to: Harvey R. Poe
Poe & Freireich, PA
256 Columbia Turnpike
Florham Park, New Jersey 07932
If to Purchaser: c/o General Counsel
Continental Waste Industries, Inc.
67 Walnut Avenue - Suite 103
Clark, NJ 07066
With Copy to: Martha L. Lester, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
50 Division Street - Suite 504
Somerville, New Jersey 08876
15.6 Applicable Law. This Agreement shall be construed in accordance with
the laws of New Jersey without regard to its conflicts of laws provisions.
15.7 Payment of Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, each party hereto will pay its own fees,
expenses and disbursements incurred in connection herewith and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed hereunder.
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15.8 Incorporation by Reference. All Schedules attached hereto are
incorporated herein by reference as though fully set forth at each point
referred to in this Agreement.
15.9 Captions. The captions in this Agreement are for convenience only and
shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
15.10 Number and Gender of Words. Whenever the singular number is used
herein, the same shall include the plural where appropriate, and shall apply to
all of such number, and to each of them, jointly and severally, and words of any
gender shall include each other gender where appropriate.
15.11 Entire Agreement. This Agreement (including the schedules, annexes
and Schedules hereto) and the other documents delivered pursuant hereto
constitute the entire Agreement and understanding between Stockholders and
Purchaser and supersedes any prior agreement and understanding relating to the
subject matter of this Agreement, including, without limitation, that certain
letter of intent dated February 9, 1996, by and among CWI, Recycling and Lomac.
This Agreement may be modified or amended only by a written instrument executed
by Stockholders and Purchaser acting through their duly authorized
representatives. The indemnifica tion and hold harmless provisions contained in
this Agreement are in addition to, and not in limitation of, any indemnification
or hold harmless provisions in any other Transaction Documents.
15.12 Survival of Representations. The representations and warranties of
the parties contained in this Agreement and in any Certificate or Schedule
delivered pursuant hereto (the "Representations and Warranties") and the
liability of the party making such representation and warranty for breaches
thereof shall survive the consummation of the transactions contemplated hereby
for the duration of applicable statutes of limitations, provided that such time
periods shall be extended with respect to any litigation commenced by CWI or any
subsidiary of affiliate of CWI or by Stockholders, within such time limits until
the resolution of such litigation, to recover indemnity therefor.
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<PAGE>
15.13 Effective Date. This Agreement shall be effective on the earliest
date on which this Agreement has been duly executed by the parties hereto and
each of the Lomac Agreement of Sale and the Statewide Acquisition Agreement has
been duly executed by the parties thereto.
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<PAGE>
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
ATTEST: CONTINENTAL WASTE INDUSTRIES, INC.
/s/ Jeffrey E. Levine BY: /s/ Carlos E. Aguero
Carlos E. Aguero
ATTEST: RECYCLING INDUSTRIES, INC.
/s/ Harvey R. Poe BY: /s/ Maurice Kirchofer
Maurice Kirchofer,
WITNESS:
/s/ Harvey R. Poe /s/ Don J. Lotano
- ---------------------------------- -----------------------------------
Don J. Lotano, Stockholder
/s/ Harvey R. Poe /s/ Frank J. Lotano
- ---------------------------------- -----------------------------------
Frank J. Lotano, Stockholder
/s/ Harvey R. Poe /s/ Arline Lotano
- ---------------------------------- -----------------------------------
Arline Lotano, Stockholder
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<PAGE>
LIST OF SCHEDULES
Schedule 1.1(a)
Schedule 1.1(b)
Schedule 2.2(f)
Schedule 2.2(k)
Schedule 2.2(l)
Schedule 2.2(m)(i)
Schedule 2.2(q)
Schedule 2.2(r)
Schedule 2.2(t)
Schedule 3.2
Schedule 3.6
Schedule 3.7
Schedule 3.8
Schedule 3.9(a)
Schedule 3.9(c)
Schedule 3.11
Schedule 3.13
Schedule 3.14
Schedule 3.15
Schedule 3.16
Schedule 3.17
Schedule 3.18
Schedule 3.19
Schedule 3.20
Schedule 3.20(e)
Schedule 3.21
Schedule 3.22
Schedule 3.23(a)
Schedule 3.23(b)
Schedule 3.25
Schedule 3.26
Schedule 4.3
Schedule 8.6
Schedule 8.7
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AGREEMENT OF SALE
This AGREEMENT OF SALE is dated April 11, 1996,
BETWEEN LOMAC REALTY, A Partnership, a New Jersey general
partnership, having a place of business of 11 Harmich Road,
South Plainfield, New Jersey ("Seller");
AND KARAT CORP., a New Jersey corporation, nominee of
Continental Waste Industries, Inc., a Delaware corporation,
having a place of business in care of Continental Waste
Industries, Inc., 67 Walnut Avenue, Suite 103, Clark, New
Jersey 07066 ("Purchaser");
W I T N E S S E T H, T H A T:
1. DEFINITIONS AND INTERPRETATIONS.
1.1 Definitions. Unless the context clearly indicates to the contrary,
terms defined in the heading, recitals or elsewhere in this agreement shall
have the meanings assigned to them whenever initially capitalized in this
agreement, including the terms set forth below:
"Agreement." This Agreement and any modifications or amendments
hereto.
"Applications." All documents necessary or advisable for obtaining the
Approvals.
"Approvals." All governmental authorizations necessary or advisable
for the use and occupancy of the Property as contemplated by this
Agreement and the Acquisition Agreements.
"Acquisition Agreements." Each of (a) that certain acquisition
agreement dated April 11, 1996 among CWI, Recycling Industries, Inc.
and involving the individual shareholders of Recycling Industries,
Inc., and (b) that certain acquisition agreement dated April 11, 1996
among CWI, Statewide Environmental Contractors, Inc. and involving the
individual shareholders of Statewide Environmental Contractors, Inc.
"Cleanup and Removal Costs." Funds expended by the chief executive of
the Spill Fund pursuant to N.J.S.A. 58:10-23.11b(d).
"Closing." The meeting of Seller and Purchaser and/or their legal
representatives at which the closing of title takes place.
"Closing Date." The date on which the Closing occurs.
"CWI." Continental Waste Industries, Inc., a Delaware corporation.
"Deposit." Funds deposited by Purchaser with Escrow Agent under the
Escrow Agreement, which funds shall be credited against the purchase
price for the Property at the Closing or paid to Seller or Purchaser
in accordance with the provisions of this Agreement and the Escrow
Agreement if this Agreement is terminated.
"Developer's Agreement." The developer's agreement soon to be entered
into between the Borough of South Plainfield and Recycling Industries,
Inc. respecting the reconstruction of Harmich Road in South
Plainfield, New Jersey.
"Enforcement Notice." A summons, citation, directive, order, claim,
litigation, investigation, judgment, letter or other communication,
written or oral, actual or threatened from the NJDEP, the USEPA or
other federal, state or local agency or authority or any other person,
concerning any intentional or unintentional action or omission
resulting or which might result in the Releasing of Regulated
Substances into the waters or onto the lands of the State of New
Jersey, or into waters outside the jurisdiction of the State of New
Jersey where damage may have resulted to the land, waters, fish,
shellfish, wildlife, biota, air or other resources owned, managed,
held in trust or otherwise controlled by, or within the jurisdiction
of the State of New Jersey, or into the "Environment" as such term is
defined in 42 U.S.C. ss.9601(a).
<PAGE>
"Environmental Condition." Any condition with respect to subsurface
soil, ambient air, surface waters, groundwaters, leachate, run-on or
run-off, stream or other sediments or similar environmental medium on
or off the Property, which condition could require investigation or
remedial or corrective action or compliance with permit requirements,
standards, rules, regulations, ordinances or other laws, or may result
in claims, demands or liabilities against Purchaser or the Property by
third parties, including governmental entities.
"Escrow Agent." Harvey R. Poe, Esq., the party designated to hold the
Deposit in trust under the provisions of this Agreement and the Escrow
Agreement.
"Escrow Agreement." The escrow agreement dated April 11, 1996 among
Escrow Agent, Seller, Purchaser, CWI and various other parties.
"Existing Mortgage(s)." Any mortgage which encumbers the Property as
of the date hereof or on the date of the Closing.
"Fixtures." Gas, electric, and other utility fixtures; heating,
ventilation and cooling systems; telephone, television and other
communications wiring, cables, antennae and other devices; Tanks;
linoleum, wall to wall carpeting and other floor coverings; screens,
shades, awnings and other interior and exterior window treatments;
storm windows and doors; and any and all other tangible property
affixed to and used in the operation of the Property.
"Improvements." Any building, Fixtures, fences, plantings and other
improvements and installations located on or beneath the Land.
"Initial Studies." Any investigation of the Property deemed necessary
or desirable by the Purchaser to determine the condition of the
Property and its feasibility for use for the purpose described in the
Lomac Letter of Intent, this Agreement and the Acquisition Agreements,
including but not limited to environmental due diligence.
"ISRA." The Industrial Site Recovery Act as set forth in N.J.S.A.
13:1K-6 et seq., as amended, along with the Environmental Cleanup
Responsibility Act and any other predecessor or successor act, and all
administrative regulations, decisions, policies and court decisions
implementing or interpreting the same.
"ISRA Activities." Any activities by Seller or Purchaser carried out
for the purpose of ISRA Compliance.
"ISRA Compliance." Compliance with the requirements of ISRA and
section 8 hereof.
"Land." That certain tract or parcel of land more specifically
described on Exhibit 2.1 annexed to this Agreement.
"Leases." All tenant leases with respect to the Property which are in
effect or executed as of the date of this Agreement or which become
effective or executed between the date of this Agreement and the
Closing, or thereafter.
"LNA." A letter of ISRA nonapplicability with respect to the Property
and this transaction issued by the NJDEP.
"LOI." A letter of interpretation or other action by the NJDEP or
other governmental agency indicating whether or not there are any
Wetlands on or affecting the Property.
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<PAGE>
"Lomac Letter of Intent." The letter of intent dated February 9, 1996
among CWI, Seller and Recycling Industries, Inc.
"Lomac Note." The note issued by Purchaser in favor of Seller in the
original maximum principal amount of $1,500,000.
"NJDEP." The New Jersey Department of Environmental Protection.
"Option Agreement." The option to purchase real property agreement
dated May 10, 1994 among Seller, Maurice Kirchofer, Joseph Scalamoni
and Mary Lemmo.
"Permits." Any air quality, water discharge and other permits relating
to the Property and its use.
"Personal Property." Personal property not affixed to the Land or the
Improvements, including trade fixtures, and used in connection with
the operation thereof.
"Property." All property, rights and interests to be sold by Seller to
Purchaser as enumerated in this Agreement.
"Purchaser." Karat Corp., a New Jersey corporation, nominee of CWI,
and its successors and assigns, if any.
"Regulated Substance." Any substance regulated by governmental
authority, including any pollutant, dangerous substance, toxic
substance, hazardous waste, hazardous material, hazardous substance or
contaminant as defined in or pursuant to ISRA, the Spill Compensation
and Control Act (N.J.S.A. 58:10-23.11 et seq.) ("Spill Act"), the
Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.) ("RCRA"),
the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. ss.9601 et seq.) ("CERCLA"), the Clean Water Act (33
U.S.C. ss.1251, et seq.), the Air Pollution Control Act (N.J.S.A.
26:2C-1 et seq.), or any other local, state or federal environmental
or occupational health or safety law, rule, or regulation as amended.
"Release" or "Releasing." Any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, regardless of whether the result of an
intentional or unintentional act or omission.
"Scalamoni Shares." The shares of the capital stock of Statewide
Environmental Contractors, Inc. owned by the Estate of Joseph
Scalamoni.
"Seller." Lomac Realty, A Partnership.
"SIC." A classification of the type of activity conducted on a
property based upon categories contained in the Standard Industrial
Classification Manual, published in 1987 by the Office of Management
and Budget, Executive Office of the President, as revised and
supplemented thereafter.
"Survey." A current survey of the Property to be obtained by the
Purchaser.
"Tanks." All underground storage tanks located within or relating to
the Land and any piping, lines or other apparatus, whether above or
below ground, related thereto, as defined pursuant to the Tank Laws.
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<PAGE>
"Tank Laws." The Federal Underground Storage Tank Law (Subtitle I of
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss.6901
et seq.) and the New Jersey Underground Storage Tank Act (N.J.S.A.
58:10A-21 et seq.), the regulations promulgated thereunder, and any
successor laws.
"Title Company." The title insurance company licensed to transact
business in New Jersey which is selected by Purchaser to examine title
to the Property.
"Title Question." Any encumbrance, outstanding interest or question of
title not actually consented to by Purchaser which renders Seller
unable to deliver title as required by this Agreement.
"Title Report." The report on title to be prepared for Purchaser by
the Title Company.
"USEPA." The United States Environmental Protection Agency.
"Wetlands." Freshwater, coastal and tidal wetlands and waters as
defined in any laws, including Section 404 of the Clean Water Act, 33
U.S.C.A. ss.1251, et seq., the New Jersey Freshwater Wetlands
Protection Act, N.J.S.A. 13:9B-1 et seq., the Wetlands Act of 1970,
N.J.S.A. 13:9A-1 et seq. and the Waterfront and Harbor Facilities Act,
N.J.S.A. 13:1D-29 et seq., and any successor or similar laws, and all
related transition areas or buffers regulated thereby.
1.2 Interpretations. Unless otherwise specified or required by the
context of this Agreement, the following rules of construction shall be
applicable for all purposes of this Agreement and all documents
supplemental hereto:
1.2.1 All references herein to numbered sections, subsections or to
schedules or exhibits are references to the sections and subsections hereof
and the schedules or exhibits attached hereto.
1.2.2 The terms "include", "including" and similar terms shall be
construed as if followed by the phrase "without being limited to."
1.2.3 The terms buildings, structures, improvements, "Land,"
"Property," "Fixtures," "Improvements" and similar terms shall be construed
as if followed by the phrase "or any part thereof."
1.2.4 Singular words include the plural and plural words include the
singular.
1.2.5 Words importing any gender include the other gender and the
neuter.
1.2.6 The term "person" shall include natural persons, firms,
partnerships, limited liability companies, incorporated or unincorporated
associations, trusts or any other public and private legal entities.
1.2.7 The term "provisions," "terms" or similar words, when used with
respect hereto or to any other related document, shall be construed as if
preceded by the phrase "terms, covenants, agreements, requirements,
conditions, restrictions and/or."
1.2.8 The terms "hereto," "herein," "hereof," "hereunder" and similar
terms shall refer to this Agreement in its entirety, unless the context
clearly indicates otherwise.
1.2.9 Section, subsection, schedule and exhibit captions and any table
of contents are used for convenience and reference only and in no way
define, limit or affect the construction of the provisions hereof.
1.2.10 No inference in favor of any party shall be drawn from the fact
that such party has drafted any portion hereof.
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<PAGE>
1.2.11 All recitals set forth in, and all exhibits, schedules or other
attachments to, this Agreement are incorporated by reference herein.
1.2.12 The term "Leases" or "leases" shall mean "lease, sublease,
tenancy, subtenancy, letting, subletting, license, sublicense or other
occupancy arrangement," and the term "Tenant" or "tenant" shall mean
"subtenant, lessee, sublessee, licensee, sublicensee or other occupant."
1.2.13 All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or item requires.
1.2.14 The term "date hereof" shall mean the date a completely
executed copy of this Agreement, including any riders or amendments hereto,
has been delivered to Purchaser and its attorney. All time periods
hereunder shall commence on the first calendar day following the date
hereof which is not a Saturday, Sunday or holiday on which national banks
are closed for business within the State of New Jersey.
1.2.15 If any provision of this Agreement shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the
application of such provision to persons or circumstances other than those
as to which it is held invalid or enforceable shall not be affected thereby
and each provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
1.2.16 The term "law" shall mean and include any statute, ordinance,
rule, regulation, code, order, opinion or similar governmental action or
directive, including any executive, court or administrative interpretation,
order or decision enforcing or interpreting any of the foregoing.
References to any statutes, ordinances, rules or regulations shall be
deemed to include any predecessor, successor or replacement statutes,
ordinances, rules or regulations.
1.2.17 This Agreement is intended by the parties as a final expression
of their agreement and as a complete and exclusive statement of the terms
hereof. All negotiations, considerations and representations between the
parties have been incorporated herein. As it relates to the subject matter
hereof, the Lomac Letter of Intent is hereby superseded by this Agreement.
No course of prior dealing between the parties or their principals, agents
or affiliates shall be relevant or admissible to supplement, explain or
vary any of the terms of this Agreement. No representations, understandings
or agreements have been made or relied upon in the making of this Agreement
other than those specifically set forth herein. This Agreement cannot be
modified orally, but only by a writing signed by all of the parties hereto
or their duly authorized agents.
2. PROPERTY.
2.1 Seller agrees to sell and convey to Purchaser and Purchaser agrees
to buy the Property from Seller, including the Land, the Improvements, the
Permits, the Approvals and, the Personal Property located in the Borough of
South Plainfield, County of Middlesex and State of New Jersey, commonly
known as 11 Harmich Road, South Plainfield, New Jersey, shown on the
municipal tax map as Lot 27 in Block 255, and as more specifically
described on Exhibit 2.1 annexed hereto. This sale includes all right,
title and interest of Seller, if any, in and to (a) the land constituting
any public street, road or avenue, opened or proposed, in front of or
adjoining the Land to the center line thereof, (b) any award made or to be
made in lieu thereof and any unpaid award for damages to the Land or the
Improvements by reason of change of grade of any street, road or avenue,
(c) any condemnation claim or award paid or payable with respect to the
property interests to be conveyed hereunder and (d) any rights, easements,
variances, conditional uses, nonconforming uses or structures,
environmental permits, land use permits and other rights, causes of action
and other legal status, whether or not vested, and all privileges
appurtenant or related to the Land or the Improvements.
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<PAGE>
2.2 The Personal Property included in this sale is set forth in
Exhibit 2.2 annexed hereto. The Personal Property includes any site plans,
building plans, architectural and engineering designs, plans and drawings,
building name, other tradenames and goodwill, telephone numbers and all
other tangible and intangible personal property associated with the
Property.
2.3 Except as listed on Exhibit 2.3, Purchaser is not assuming, and
Seller agrees to indemnify Purchaser from and against any claims arising
from any service, maintenance or other similar contracts or other
agreements, with respect to the Personal Property or other Property
included in this sale.
3. TITLE.
3.1 Seller represents that it is the fee owner of the Property and
that it has the authority and power and will convey marketable title of
record to the Property such as will be insurable at regular rates by the
Title Company, but expressly subject to the following:
3.1.1 All present zoning, building, environmental and other laws,
ordinances, codes, restrictions and regulations of all governmental
authorities having jurisdiction, provided that none of same would render
title unmarketable or substantially interfere with the Purchaser's use of
the Property as presently used and as contemplated by this Agreement and
the Acquisition Agreements.
3.1.2 Any state of facts which would be shown by an accurate survey
and inspection of the Property, provided that none of same would render
title unmarketable. This exception does not include any further state of
facts the Survey discloses, unless such further state of facts would not
render title unmarketable or substantially interfere with the Purchaser's
use of the Property as presently used and as contemplated by this Agreement
and the Acquisition Agreements.
3.1.3 All rights, easements and agreements for the erection and/or
maintenance of water, gas, electric, telephone, sewer or other utility
pipelines, poles, wires, conduits or other like facilities and
appurtenances thereto, over, across and under the Property, only if they
are located along the bed of a public street or if they service the
Property and will not substantially interfere with the Purchaser's use of
the Property as presently used and as contemplated by this Agreement and
the Acquisition Agreements.
3.1.4 Recorded agreements which limit the use of the Property, if they
are not presently violated, do not contain an enforceable clause under
which the Property would be forfeited if they were violated and would not
substantially interfere with the Purchaser's use of the Property as
presently used and as contemplated by this Agreement and the Acquisition
Agreements.
3.1.5 Current taxes or liens for taxes and assessments to the extent
installments are not yet payable.
3.1.6 The Developer's Agreement.
3.2 To the extent not already provided to Purchaser, Seller shall
promptly deliver to Purchaser copies of the following information relating
to the Property to the extent within Seller's possession or control: most
recent prior owner's and lender's title abstracts, searches and policies;
affidavits of title, and other information relating to prior transactions
and owners; all surveys, engineering or architectural work, construction
plans, building permits, certificates of occupancy, site plans, variances,
conditional uses, environmental reports, developers' agreements and
governmental resolutions relating to the Property; Leases(Exhibit 3.2),
cash flow analyses and results, and other financial information, statements
of operating revenues and expenses and federal and state tax returns, all
of which shall be provided for the three most recent calendar years; copies
of all correspondence, management agreements, service contracts; and
warranties, guaranties and any other documents and information relevant to
the Property and Purchaser's investigation thereof.
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<PAGE>
3.3. Purchaser shall at its sole cost and expense cause title to the
Property to be examined by the Title Company and obtain the Survey to be
certified to both Seller and Purchaser and insured by the Title Company.
Purchaser shall deliver a copy of the Title Report and the Survey to
Seller's attorneys promptly after receipt of same, together with written
notice of any Title Questions disclosed by the Title Report or the Survey
or otherwise known to Purchaser which Purchaser believes are not covered by
the exceptions to title set forth in section 3.1 and which Purchaser
believes it is not required to take title "subject to."
3.4 If the Property is affected by any Title Question which may,
according to reasonable expectations, be removed within thirty days, Seller
shall have the right to adjourn the Closing for up to thirty days to remove
or satisfy the Title Question. If Seller is unable in good faith to convey
title as herein required, Purchaser may terminate this Agreement, in which
event Seller shall return the Deposit plus interest earned thereon to
Purchaser. Nevertheless, Purchaser may accept such title as Seller may be
able to convey, with Purchaser to receive a reduction of or a credit
against the purchase price equal to the loss in value attributable to
uncorrected Title Questions, and without further liability on the part of
Seller.
3.5 The Deposit and any interest earned thereon are hereby made liens
against the Property.
3.6 Seller warrants and represents that the Property agreed to be
conveyed is not derived from any Martin Act proceedings, any act for the
sale of land for nonpayment of municipal taxes or assessments, adverse
possession or color of title possession.
3.7 Seller agrees that following the date hereof, unless required (a)
by another provision of this Agreement, (b) the Developer's Agreement, (c)
the documents respecting the redemption of the Scalamoni Shares (including
the mortgage in favor of the Estate of Joseph Scalamoni granted by Seller
to secure its guarantee of the redemption purchase price, which mortgage
shall be discharged at or prior to Closing), or (d) the pursuit of the
upgrade transfer permit by Recycling Industries, Inc., Seller will not
suffer or permit any of the following:
3.7.1 Any application for or consent to any change of zoning of the
Property.
3.7.2 Any construction of any improvement upon the Property.
3.7.3 The removal of any soil or fill from or the placement of any
soil or fill on the Property.
3.7.4 The commission of any act of waste on the Property.
3.7.5 The creation or placement against the Property of any
encumbrance or the increase or extension of any existing encumbrance.
3.7.6 The creation, extension, modification or renewal of any lease,
option, license or other agreement, including any brokerage or service
agreements, relating to the Property.
3.7.7 The grant, assignment, release, modification or transfer of any
interest in the Property except to remove Title Questions.
3.7.8 The taking of any action with respect to the Property which
decreases its market value, its legal rights or its potential for the
purposes set forth in this Agreement and the Acquisition Agreements.
3.7.9 The entering into of any arrangements, agreements, negotiations
or other communications with any parties (except CWI or its affiliates)
with respect to (i) any sale or disposition of the Property, (ii) the
subject of this Agreement, or (iii) any change in the ownership interests
in Seller.
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<PAGE>
4. CONSIDERATION.
4.1 The purchase price for the Property is $4,250,000, payable as
follows:
(a) The Deposit.......................................................$ 100,000
The Deposit shall be payable upon execution of this Agreement.
(b) At Closing by certified, attorney's trust account or bank cashiers' check,
wire transfer or in other immediately available funds
$2,650,000
(c) By Purchaser's non-interest bearing promissory note in the form and content
of Exhibit 4.1(c) annexed hereto, in the original maximum principal amount of
$1,500,000, for a one (1) year term, with a one (1) year renewal term, payable
in accordance with the terms of the Lomac Note. The Lomac Note shall be secured
by an irrevocable letter of credit issued by a bank selected by Purchaser
and reasonably acceptable to Seller...................................$1,500,000
TOTAL.......................................................$4,250,000
4.2 The aggregate purchase price for the Property is subject to offset
and reduction by Purchaser as is more fully provided the Lomac Note.
4.3 The Deposit shall be paid to the Escrow Agent pursuant to the
Escrow Agreement and shall be held or distributed as is required hereunder
and thereunder. The Deposit shall be held in a segregated FDIC insured
money market account and all interest or earnings thereon shall belong to
the party entitled to the principal amount of the Deposit.
4.4 Seller's federal taxpayer identification number is #22-2140179;
Purchaser's federal taxpayer identification number is #22-3017045.
5. CLOSING.
5.1 The Closing shall take place at 10 a.m. in the offices of
Lowenstein, Sandler, Kohl, Fisher & Boylan, 65 Livingston Avenue, Roseland,
New Jersey 07068, on April 30, 1996 or following satisfaction of all
contingencies as described in sections 7.1 through 7.5 and compliance with
section 8 of this Agreement and all contingencies and preconditions set
forth in the Acquisition Agreements.
5.2 At the Closing, Purchaser shall deliver the balance of the
purchase price and Seller shall deliver the following items duly executed
by Seller or its authorized representatives:
5.2.1 A Bargain and Sale Deed with Covenant against Grantor's Acts.
The deed shall be in recordable form, contain a legal description in
accordance with the deed into Seller, and as otherwise required by the
Title Company and sufficient to convey title to the Property subject only
to the matters affecting title as contemplated by section 3.1.
5.2.2 A certified copy of its partnership agreement, as amended,
partnership consent, and affidavit of title.
5.2.3 A W-9 form and closing statement.
5.2.4 A Bill of Sale with warranties of clear title by Seller with
respect to any Personal Property.
5.2.5 An assignment of the Leases and any guaranties, warranties and
service contracts.
5.2.6 A certificate of occupancy, without exceptions.
5.2.7 A Certification of Non-Foreign Status Entity by Transferor
(F.I.R.P.T.A. Affidavit).
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<PAGE>
5.2.8 An affidavit stating that any Tanks on or part of the Property
are exempt from the provisions of N.J.S.A. 58:10A-21 et seq. or evidence
that any Tanks on or part of the Property have been properly registered
with the NJDEP, as applicable
5.2.9 All original warranties, guarantees and other information and
documents contemplated under sections 2.2, 3.2 or otherwise in this
Agreement.
5.2.10 Evidence of ISRA Compliance, including the original NJDEP
approvals or LNA relating to ISRA.
5.2.11 The original of any LOI relating to the Property in possession
of Seller or Seller's representatives or attorneys.
5.2.12 An amended and corrected trade name certificate for Seller
shall have been filed in the Office of the New Jersey Secretary of State.
5.2.13 The Estate of Joseph Scalamoni shall have terminated its rights
under the Option Agreement and Maurice Kirchofer and Mary Lemmo shall have
assigned to Purchaser their respective rights under the Option Agreement.
5.2.14 Such other documents as are contemplated by this Agreement or
as may be reasonably required by Purchaser, by Purchaser's counsel or by
the Title Company to issue, at regular rates, a title insurance policy
insuring that Purchaser's title is in accordance with section 3.1.
6. CLOSING ADJUSTMENTS.
6.1 At the Closing, the following items shall be apportioned between
the parties as of the Closing Date (Seller shall be responsible for the
Closing Date):
6.1.1 Real estate taxes, water and sewer assessments, if any, on the
basis of the fiscal year for which assessed.
6.1.2 Any water and sewer charges, according to a final reading, or,
if unmetered, prorated on the basis of the applicable billing period.
6.1.3 Fuel on the Property, if any.
6.1.4 Payments under the service contracts, if any.
6.1.5 Charges or fees for transferable licenses or Permits which are
transferred to Purchaser at Closing.
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6.1.6 Other items normally adjusted between purchasers and sellers in
such transactions.
6.2 If there is a water meter on the Property, Seller shall furnish a
reading to a date not more than 7 days prior to the date of the Closing,
and the meter charge, if any, based thereon for the intervening time shall
be apportioned on the basis of the last reading.
6.3 If the Closing shall occur before the tax rate is fixed, the
apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding year applied to the latest assessed valuation, and
the parties agree to make a final, post-closing adjustment based upon
actual, final taxes for the year in which the Closing occurs when the final
tax bill is received.
6.4 Seller shall pay the realty transfer fee due upon the sale of the
Property.
6.5 Any errors, omissions or estimations in computing apportionments
at the Closing, including any corrections to any payoff amounts owing to
Existing Mortgagees, shall be corrected as soon as practicable thereafter.
6.6 All adjustments shall be made against the cash portion of the
purchase price.
6.7 Seller shall keep all taxes and assessments affecting the Property
paid currently until Closing.
6.8 If Purchaser pays off any encumbrances utilizing Seller's closing
proceeds based upon a payoff letter or other information provided by Seller
or its encumbrancer, Seller will remain liable for and save, defend,
indemnify and hold Purchaser harmless from and against any additional
claims by such encumbrancers.
6.9 The provisions of this section 6 shall survive the Closing.
7. CONTINGENCIES.
7.1 Governmental Approvals.
7.1.1 Purchaser's obligation to close is contingent upon its
obtaining, at its sole cost and expense, the Approvals necessary or
advisable for the use of the property contemplated by this Agreement
and the Acquisition Agreements. Purchaser's obligation to close is
also contingent on Seller's obtaining all approvals required by ISRA
pursuant to Section 8.1 below. The Approvals shall only be deemed to
have been obtained following the expiration of all appeal periods
relating to the Approvals with no appeals being taken or, in the event
of any appeal, following the final, nonappealable, favorable
adjudication of each such appeal. Any approval which is conditioned
upon or subject to requirements not satisfactory to Purchaser shall be
deemed a denial of the relevant application.
7.1.2 Approvals shall include the following:
(a) Any required variances or approvals, building permits or
other permits authorizing the use of the Property for the purposes
contemplated by the Lomac Letter of Intent and the Acquisition
Agreements.
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(b) Any sewer connection and waste water treatment permit and
approval required by any appropriate authority for the use of the
Property for the purposes contemplated by the Lomac Letter of Intent
and the Acquisition Agreements.
(c) Any water, stream encroachment, Wetlands delineation, waste
disposal, waste water pre-treatment, sewer connection, air quality and
any other permit, consent or approval required to be obtained from the
NJDEP, the USEPA or any other governmental agency for the use of the
Property for the purposes contemplated by the Lomac Letter of Intent
and the Acquisition Agreements, including approval of the stock
transfers contemplated by the Acquisition Agreements.
(d) Any soil erosion and sediment control permit required from
the soil control district having jurisdiction thereof for the use of
the Property for the purposes contemplated by the Lomac Letter of
Intent and the Acquisition Agreements.
(e) Any certificate of occupancy or equivalent certificate or
permit required by any governmental entity having jurisdiction over
the Property.
7.1.3 Other than the ISRA documents referenced in Section 8.1 below,
which are Seller's responsibility, Purchaser agrees to file all
Applications for the Approvals of which Purchaser has knowledge promptly,
together with any other Applications as soon as it becomes aware that they
are necessary, and to diligently pursue the Applications.
7.1.4 Without limiting any other obligation of Purchaser hereunder,
Seller agrees to cooperate with the Purchaser and any approving agencies in
connection with the Applications, to schedule and attend preapplication
conferences to the extent available with any approving agency and/or its
professional staff and to comply promptly with all requests from Purchaser
and/or the approving agencies for additional information. All filing fees,
professional fees and other expenses of prosecuting the Applications shall
be Purchaser's sole responsibility, except for ISRA fees pursuant to
Section 8.1.
7.1.5 If any Application in the name of the Seller or any consent or
approval by the Seller shall be legally required as a condition for the
Approvals or any such Application, Seller agrees to execute such documents
as Purchaser may request. Seller agrees that it will cooperate with
Purchaser in connection with any Applications.
7.1.6 If Purchaser, despite using its best efforts and diligently
pursuing the Applications has not obtained all of the Approvals within a
ninety (90) day period, and if Purchaser has not waived any Approval not
obtained, Purchaser may terminate this Agreement. However, if at that time
it reasonably appears that any such Approval has been voted on favorably by
the approving agency but not formally issued, the time for obtaining such
Approval may, at Purchaser's sole option, be extended for such additional
periods as are necessary to allow for such issuance, vote, any required
publication and the expiration of any appeal period, if applicable.
7.1.7 If this Agreement is terminated pursuant to this section 7.1 or
if Seller defaults hereunder, Escrow Agent shall return the Deposit and all
interest earned thereon to Purchaser.
7.2 Inspection Contingencies. Purchaser may promptly have one or more
physical inspections of the Property made by a licensed engineer,
architect, contractor, environmental consultant and/or other reasonably
qualified expert of Purchaser's selection. Purchaser has informed Seller
that a Phase I environmental study is being presently conducted at the
Property. If the inspection reveals any condition unsatisfactory to
Purchaser affecting the structural integrity of the Improvements, or any
unsatisfactory condition impairing the proper functioning of any building
component or mechanical system, or any Environmental Condition, Purchaser
shall have the right to terminate this Agreement by delivering to Seller a
notice of termination and a copy of any available inspection reports,
including those specifying any unsatisfactory condition or Environmental
Condition. In case of such termination by Purchaser, the Deposit and all
interest earned thereon shall be delivered to Purchaser. Purchaser, at its
sole option exercised in writing, may waive this contingency at any time
prior to termination of this Agreement.
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7.3 Environmental Approvals. In addition to the environmental
Approvals referred to in section 7.1.2 of this Agreement and required under
the Acquisition Agreements, this Agreement is contingent upon the Seller's
providing proof acceptable to Purchaser of ISRA Compliance prior to the
Closing in accordance with the provisions of section 8. Seller shall
promptly prepare and file and diligently pursue any applications, forms and
documents required thereunder.
8. ENVIRONMENTAL COMPLIANCE.
8.1 Prior to the Closing, Seller, at its sole cost and expense, shall
either (a) obtain an LNA or (b) achieve ISRA Compliance by submitting to
the NJDEP and obtaining approval of a "Negative Declaration," or "No
Further Action" letter as such terms are defined in N.J.S.A. 13:1K-8 and
any amendments thereto, or (c) in lieu of clause (b), apply for and obtain
a Remediation Agreement pursuant to N.J.S.A. 13:1K-9(e) and any amendments
thereto to allow this transaction to go forward prior to final and complete
compliance with the provisions of ISRA, and post any financial assurances
and perform all necessary acts in connection therewith, including the
implementation of any monitoring or remedial efforts required pursuant to
any other applicable environmental statutes, required by NJDEP. If ISRA
Compliance is not completed prior to the Closing and passing of title,
Seller shall diligently continue to pursue ISRA Compliance after the
Closing to completion. Purchaser grants to Seller the right to enter upon
the Property as required to perform the work necessary for completion of
ISRA Compliance. Seller shall furnish a schedule at the time of Closing
specifying the work remaining to be done and the estimated cost therefor.
The estimated cost of such work shall be withheld from the proceeds payable
to Seller at the Closing and shall be deposited with Lowenstein, Sandler,
Kohl, Fisher & Boylan, P.C., to be held in escrow until all such work has
been completed and final approval[s] from the NJDEP has been obtained. All
workers and contractors employed by Seller shall be covered by adequate
worker's compensation and liability insurance naming Purchaser as an
additional insured. At the request of Purchaser, all such contractors shall
furnish certificates of insurance confirming that the required coverage is
then in effect. All such work shall proceed upon advance notice to
Purchaser and at times and in such manner so as not to interfere
unreasonably with Purchaser's operations, including any construction work
then underway on the property. Seller agrees that it will save, defend with
counsel selected by Purchaser, indemnify and hold Purchaser harmless from
and against any loss, cost, claim or expense arising from any damage to
persons or property caused by Seller or any contractor or worker employed
or retained by Seller or its agents. In all events, Seller will post with
the NJDEP a surety bond or other financial security approved by the NJDEP
in an amount sufficient to implement and complete full ISRA Compliance.
8.2 Prior to the Closing, Seller shall not cause or permit the
Property to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce or process Regulated Substances
or other dangerous or toxic substances, or solid waste, except (a) in type,
amount and use specified in Exhibit 8.2 hereto, or (b) upon prior written
consent of the Purchaser, which permission may be arbitrarily withheld.
8.3 If a lien shall be filed against the Property pursuant to CERCLA
or as a result of the provisions of the Spill Act, or if any other Federal,
State or local agency or authority, or any other entity or any individual
shall file a lien against the Property in connection with any Environmental
Condition at or emanating from the Property, Seller shall, at Purchaser's
sole option, immediately either (a) pay the claim and remove the lien from
the Property, or (b) furnish (i) a bond satisfactory to Purchaser in the
amount of the claim out of which the lien arises, (ii) a cash deposit in
the amount of the claim out of which the lien arises or (iii) other
security reasonably satisfactory to Purchaser in an amount sufficient to
discharge the claim out of which the lien arises.
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8.4 Seller agrees to save, defend with counsel selected by Purchaser,
indemnify and hold Purchaser harmless from and against all costs, fees,
claims and expenses which (a) are related to or arise from the failure of
Seller to comply with any obligation imposed on Seller with respect to the
Property by ISRA, by the NJDEP, by the USEPA, by any other governmental
entity having jurisdiction or by any statute, administrative regulation or
other law, (b) arise as a result of Seller's failure to remove Regulated
Substances from the Property, whether pursuant to an approved Cleanup Plan
or otherwise, (c) arise in connection with the presence of Tanks at the
Property, including any remediation, cleanup, closure, removal, filling,
testing, monitoring and upgrading, or (d) arise out of any breach of any
representation, warranty or covenant by Seller whether under this section 8
or under any other provision of this Agreement. The provisions of this
section are in addition to, and not in limitation of, any other
indemnification or hold harmless provisions in the Acquisition Agreements
or under any other document or agreement executed in connection herewith or
therewith.
8.5 The provisions of this section 8 shall survive the Closing.
9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER.
9.1 Seller agrees, represents and warrants that the following
statements with respect to the Property are true as of the date hereof and
shall be true as of the date of Closing:
9.1.1 Environmental Matters:
(a) The SIC numbers for the activities now carried on within the
Property are 4212 and 5093 and no activities involving any other SIC
numbers shall be conducted on the Property prior to the Closing
without the Purchaser's prior written consent, which consent may be
arbitrarily withheld.
(b) The Property has not been used by Seller or any previous
owner, user and/or operator of the Property to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce or
process Regulated Substances, or other dangerous toxic substances, or
solid waste, except as disclosed by Seller in Exhibit 9.1.1(b) hereto.
(c) The Property has not been, is not now being and will not be
used as a "Major Facility", as such term is defined in N.J.S.A.
58:10-23.11b(1).
(d) Seller has not caused or permitted and has no knowledge of
the existence of any Release or the threat of any Release of any
Regulated Substance at, on, from or beneath the surface of the
Property or any other property owned by Seller within the State of New
Jersey, except as set forth on Schedule 8.2. This representation
specifically includes the time period during which the Property was
owned, leased, used and/or occupied by any party other than Seller.
(e) No lien has attached to any real property, revenues or other
personal property interest of Seller located in the State of New
Jersey, including any real property owned, leased, used and/or
occupied by Seller, pursuant to CERCLA or as a result of the provision
of the Spill Act, arising from any intentional or unintentional action
or omission of Seller or any predecessor in interest or any previous
owner, user and/or operator of the Property, resulting in the
Releasing of Regulated Substances into the waters or onto the lands of
the State of New Jersey, where damage may have resulted to the lands,
waters, fish, shellfish, wildlife, biota, air or other resources
owned, managed, held in trust or otherwise controlled by, or within
the jurisdiction of the State of New Jersey, nor does the Seller have
any knowledge of any facts which could give rise to such an
expenditure or lien.
(f) There exists neither any Enforcement Notice nor any facts
which might result in any Enforcement Notice with respect to Seller,
occupancy, interest or title to the Property.
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(g) No informational request has been issued to Seller pursuant
to section 104 of CERCLA or any other federal, state or local
environmental law, ordinance, regulation or rule.
(h) To the knowledge of Seller, no asbestos or
asbestos-containing materials are installed on, used on, or
incorporated into the Improvements.
(i) To Seller's knowledge, no polychlorinated byphenyls are used
in any electrical transformers, capacitors, fluorescent light fixtures
or in any other manner whatsoever in the Improvements.
(j) Seller has not received a written notice of intention to
commence suit pursuant to any federal, state, county or local
Environmental Law, and there is no basis for such written notice to be
issued to Seller.
(k) If Seller obtains knowledge prior to the Closing of the
assertion of any lien, as set forth in subsections 8.3 or 9.1.1(e), or
an Enforcement Notice, as set forth in subsection 9.1.1(f), or obtains
knowledge of facts which may give rise to such lien or Enforcement
Notice, whether written or oral, it shall immediately notify the
Purchaser in writing.
(l) Seller neither owns nor owned any property nor conducts or
conducted any business outside the jurisdiction of the State of New
Jersey.
9.1.2 General Matters.
(a) Except those disclosed to Seller on Exhibit 9.1.2(a), Seller
has received no notices of violation or otherwise (including
investigation, proceeding, judgment, letter or other communication),
from any governmental authority, insurance company or board of fire
underwriters or other person requiring or calling attention to the
need for any work, alterations, repairs, removal, cleanup or
construction on or at the Property by reason of any building, safety,
fire, antipollution, environmental or other law or regulation or
otherwise.
(b) Seller has no knowledge of the presence of any radon
contamination at the Property.
(c) Seller has secured all necessary licenses, permits and
certificates required to operate and use the Property as presently
operated and used, and there is no violation of any law with respect
to the Property or any such permit, license or certificate.
(d) The Property is connected to and served by a governmentally
approved sewage system and the Seller has not discharged any substance
into the sewage system in violation of applicable governmental
regulations.
(e) The Personal Property, plumbing, heating, air conditioning,
sewage disposal, electrical and other systems and Fixtures are in good
working order, the roof is free from leaks and there is no defect in
the integrity of the foundation, any load bearing member or any system
included in the Property. Such systems and building components,
together with the Personal Property to be conveyed to Purchaser, will
be in good working order and in substantially the same condition at
Closing as on the date hereof, ordinary wear and tear excepted.
(f) There are presently and as of the date of Closing there will
be no management or other service, maintenance or other contracts
affecting the Property in existence, except those set forth on Exhibit
9.1.2(f) hereto, all of which are in good standing, in full force and
effect and fully assumable or terminable at will, at the discretion of
the owner of the Property.
(g) The Property and the use(s) thereof are not in violation of
applicable land use, construction or other laws, or any private
agreements or restrictions, whether or not of record.
(h) All Improvements located on the Property are within the
boundary lines described in the deed into Seller and within applicable
set-back requirements, and there are no encroachments onto the
Property from adjacent properties.
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(i) The Property is zoned to permit Purchaser's proposed use of
the Property, without any variances, nonconforming use, conditional
use or other permits, approvals or other special legal approvals or
status.
(j) The Property is not within any flood plain or flood hazard
area and includes no Wetlands, whether or not designated by federal,
state or local agencies. No Wetlands within the property have ever
been disturbed or filled except in compliance with applicable laws. No
portion of the Premises has been filled with soil or any other
substances or materials, including Regulated Substances. The Property
is not and has never been subject to any claims or rights of the
United States of America as lands now or formerly flowed by tidal
waters.
(k) There are two (2) Tanks located within the Property. All such
Tanks have been registered with the NJDEP pursuant to the Tank Laws.
Seller shall supply Purchaser with copies of each registration and
recertification. In addition to registration, to Seller's knowledge,
Seller has in all respects complied with the Tank Laws and there have
been no Releases of Regulated Substances from any such Tanks.
(l) There has been no federally, state, locally or privately
funded or ordered removal or remedial action affecting the Property
and there is no basis for any such action.
(m) The Property is not assessed under the Farmland Assessment
Act.
(n) There are no proceedings or applications presently pending
for a change of the zoning or, except for the pending application for
the upgraded transfer permit, use of the Property or of properties
contiguous to or located within 200 feet of the Property.
(o) There are no claims, suits, actions or proceedings pending,
threatened against, relating to or adversely affecting any use, right,
title or interest of Seller in and to the Property or which constitute
or would constitute a lien, encumbrance or cloud on title to or
interference with the ownership or use of the Property.
(p) The sale, transfer and delivery of the Property by Seller to
Purchaser will not violate any federal, state or local law.
(q) Except with respect to the Option Agreement, Seller has not
made any other contract to sell or transfer any interest in the
Property to anyone else.
(r) To Seller's knowledge, there are no artifacts, relics or
ancient ruins of archaeological significance, mines of any nature
whatsoever or other hidden obstructions or latent conditions located
upon or beneath the Property, which would preclude, limit or adversely
affect Purchaser's intended use and occupancy of the Property.
(s) Seller has not failed to disclose to Purchaser any relevant
and material information concerning the Property.
9.2 If Seller becomes aware of any fact or circumstance which changes,
contradicts or renders incomplete a representation made by Seller in this
Agreement, Seller will immediately give written notice to Purchaser of such
fact or circumstance.
9.3 Seller agrees to generally maintain the Property until the Closing
and to deliver the offices located at the Property in "broom-clean"
condition, free and clear of all occupants and with all of Seller's
personal property removed, except for the Personal Property included in
this sale.
9.4 Wherever reference is made in this Agreement to the "knowledge" of
Seller, such term means: (a) the actual knowledge of Seller, (b) the
constructive knowledge of Seller based upon its inquiry with respect to
conversations had with and/or writings received from any person having
supervisory or managerial responsibility for the operations, environmental
and/or financial aspects of the business of Seller, the subject matter of
which materially affects the environmental liabilities, contingent
liabilities, compliance with laws or financial affairs or business of
Seller.
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10. RISK OF LOSS.
10.1 The risk of loss due to damage to the Property beyond ordinary
wear and tear prior to the Closing shall be upon Seller. Damage to the
Property shall include any event which gives rise to an Environmental
Condition. Seller shall maintain in force upon the Improvements, through
the date of the Closing, a policy of all-risk hazard insurance with
extended coverage provisions in an amount not less than the purchase price
hereunder and shall provide a copy of such policy to Purchaser if Purchaser
so requests.
10.2 Within 7 days prior to the Closing, Purchaser shall have the
right to inspect the Property. If the Property is damaged beyond normal
wear and tear, Seller will, at Purchaser's sole option, (a) before Closing
or as reasonably soon thereafter as is feasible, repair or remediate the
damage to the satisfaction of any governmental authority having
jurisdiction and to the reasonable satisfaction of Purchaser, or (b) at
Closing give Purchaser a credit against the purchase price in the amount of
the estimated cost of such repair or remediation, or (c) if the loss was
insured against, assign to Purchaser at Closing any insurance proceeds
received or receivable by Seller on account of any damage and give
Purchaser a credit against the purchase price in the amount of any
deductible.
10.3 If Purchaser elects to have Seller repair or remediate the
Property pursuant to section 10.2, all such repairs or remediation measures
shall be completed within thirty (30) days if the estimated cost of repair
or remediation is less than $150,000. Any repairs made or remediation
measures taken by Seller shall be done in a workmanlike manner, using only
first quality materials, by a contractor approved by Purchaser. The Closing
shall, at Purchaser's sole option, be adjourned for a reasonable period of
time to permit completion of the repairs or remediation measures. Seller
agrees to assign to Purchaser any guarantee or warranty received by Seller
in connection with Seller's repairs. Notwithstanding anything in this
section 10 to the contrary, Purchaser shall have no obligation to take
title to the Property if the cost of repair or remediation of the loss
exceeds $150,000 and until the completed repairs or remediation measures
has been inspected and approved by Purchaser. If the damage is caused by an
event which gives rise to an Environmental Condition, Purchaser shall have
no obligation to take title to the Property until the NJDEP has approved
the completed remediation.
11. BROKERAGE. Purchaser and Seller respectively represent to each
other that no broker has been involved in connection with any aspect of
this sale. Each party agrees to indemnify the other from and against any
loss, damage or expenses (including litigation costs and reasonable
attorney's fees) by reason of any claim for compensation or commission by
any broker based upon an allegation of relations or negotiations between
the claimant and the indemnitor inconsistent with the representations
herein made. This representation, warranty and Agreement shall survive the
Closing or termination of this Agreement.
12. NOTICES. Any notices or other communications provided for
hereunder may be given by the party or its attorney, shall be in writing
and shall be either (a) hand-delivered to the other party at the address
first set forth above or to its attorney (Harvey R. Poe, Esq., having an
address at 256 Columbia Turnpike, Columbia Commons - Suite 202, Florham
Park, New Jersey 07932), for Seller and Jeffrey Levine, General Counsel,
having an address at 67 Walnut Avenue Suite 103, Clark, New Jersey 07066,
for Purchaser, (b) deposited with a nationwide, overnight courier delivery
service for delivery to the other party or to that party's attorney at the
address set forth above or (c) mailed by certified mail, return receipt
requested, postage prepaid to the other party or to that party's attorney
at the address set forth above. All notices shall be deemed to have been
given either when hand-delivered, 1 day after having been deposited with a
nationwide, overnight courier delivery service or 2 days following the date
of mailing. In order to be effective, copies of any notice having to do
with the Deposit or other duties of the Escrow Agent must be sent in the
manner aforesaid to the Escrow Agent at its address set forth on the
signature page hereof.
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13. LIENS AND ENCUMBRANCES.
13.1 If, at the time of Closing, the Property shall be subject to any
liens such as for judgments or transfer, inheritance, estate, franchise,
license or other similar taxes, any mortgages or other encumbrances or
other Title Question whatsoever which would be grounds for Purchaser to
reject title hereunder, at Purchaser's sole option, none of the same shall
be deemed a Title Question if, at the time of Closing, either (a) Seller
uses all or a portion of the purchase price to satisfy same and delivers to
Purchaser at the Closing (i) if the lien is held by a noninstitutional
lender, instruments in recordable form sufficient to satisfy and discharge
of record such liens and encumbrances or (ii) if the lien is held or
asserted by a governmental agency or an institutional lender, a payoff
letter issued by the lienholder setting forth the amount necessary to pay
the lien in full, together with the cost of recording or filing such
instruments, or (b) the Title Company will issue or bind itself to issue a
policy which will insure Purchaser against collection thereof from or
enforcement thereof against the Property, such policy to be at regular
rates or with any excess premium therefor to be paid by Seller. If request
is made within a reasonable time prior to the date of Closing, Purchaser
agrees to provide at the Closing separate certified, attorney's trust
account or bank cashiers checks aggregating the balance of the purchase
price to be paid to Seller at Closing in order to facilitate the
satisfaction of any such liens or other Title Questions, which shall not be
deemed defects in or objections to title if Purchaser has so agreed and if
Seller shall comply with the foregoing requirements.
13.2 Purchaser shall have the right to satisfy any liens or
encumbrances affecting the Property out of the proceeds of sale. Seller
shall not encumber the Property following the date hereof.
14. ASSESSMENTS. All assessments for public improvements which have
been completed or initiated on or before the date of the Closing are to be
paid in full or allowed by Seller on the date of Closing. All other
assessments shall be Purchaser's responsibility. Unconfirmed assessments or
improvements, if any, shall be paid and allowed by Seller on account of the
purchase price if the improvement or work has been completed or initiated
on or before the Closing. Seller represents and warrants that no unpaid
assessments for public improvements are presently pending against the
Property and that it knows of no unconfirmed assessments or improvements
planned, completed or under construction as of the date hereof with respect
to the Property. If Seller is responsible for unconfirmed assessments or
improvements as above provided, Seller shall deposit such sums in escrow
with Purchaser's attorney or the Title Company as in the reasonable
estimation of the Title Company may be required to satisfy the unconfirmed
assessments or improvements in full. However, Seller shall continue to
remain liable in full for any deficiency which may arise if the escrowed
amount proves insufficient. The escrowee shall pay such sums in discharge
of the liability once the same becomes fixed and promptly refund any excess
to Seller. The provisions of this section 14 shall survive the Closing.
15. CONDEMNATION.
15.1 Seller represents that it has not received any notice of taking
or other notification of anticipated or pending condemnation proceedings
affecting the Property. If proceedings to condemn the Property or any part
thereof as would impair Purchaser's intended use of the Property in
Purchaser's sole judgment, commence before the Closing, then Purchaser
shall promptly after its receipt of notice of the proceeding provide Seller
notice of terminating this Agreement, in which event Seller shall return to
Purchaser the Deposit together with all interest earned thereon. If
Purchaser does not elect to terminate this Agreement or if the proceedings
to condemn relate to a part of the Property as would not, in Purchaser's
sole judgment impair Purchaser's intended use of the Property, then
Purchaser shall purchase the Property, in which event at the Closing Seller
shall assign to Purchaser all of Seller's right, title and interest in and
to any claim Seller may have or award or settlement Seller may be entitled
to receive in the condemnation proceedings and credit Purchaser with the
amount of any condemnation proceeds theretofore paid to or on behalf of
Seller.
15.2 If Purchaser purchases the Property as above provided and an
award is rendered to or settlement reached by and paid to Seller before
Closing, then the purchase price to be paid hereunder shall be reduced by
the full amount thereof. Seller agrees to advise Purchaser in writing of
any notice of taking or other notification of anticipated or pending
condemnation proceedings promptly upon Seller's receipt of same and further
agrees to permit Purchaser to participate in any such condemnation
proceeding as a "contract purchaser" if this Agreement is not terminated.
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16. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and shall be binding upon the Purchaser and Seller, and their respective heirs,
executors, administrators, successors and assigns. Purchaser may assign this
Agreement to its nominees without obtaining the prior written consent of Seller.
17. RECORDING. This Agreement or any memorandum or notice hereof may be
recorded or filed by Purchaser at any time. Purchaser may file a Notice of
Settlement prior to Closing and Seller agrees to cooperate fully with Purchaser
in connection therewith.
18. LIMITATION ON LIABILITY. If Purchaser defaults under this Agreement,
Seller's sole remedy shall be to retain the Deposit plus all interest earned
thereon, which amounts the parties hereby fix and settle as liquidated damages,
and thereafter this Agreement shall be null and void and neither party shall
have any further rights against the other.
19. SURVIVAL OF REPRESENTATIONS. All agreements, warranties and
representations made by Seller herein shall survive the Closing.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute the original hereof.
When counterparts have been executed by and delivered to all parties hereto, or
their counsel, they shall have the same effect as if the signatures were all on
the same copy hereof.
21. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New Jersey.
22. EFFECTIVE DATE. This Agreement shall be effective on the earliest date
on which this Agreement has been duly executed by the parties hereto and each of
the Acquisition Agreements has been duly executed by the parties thereto.
IN WITNESS WHEREOF, the parties have executed or caused their authorized
representatives to execute this Agreement as of the date first set forth above.
ATTEST: KARAT CORP., Purchaser
/s/ Jeffrey E. Levine By:/s/ Carlos E. Aguero
Carlos E. Aguero, President
WITNESS: LOMAC REALTY, A Partnership,
Seller
/s/ Harvey R. Poe By: /s/ Don J. Lotano
Don J. Lotano, General Partner
/s/ Harvey R. Poe By: /s/ Frank J. Lotano
Frank J. Lotano,General Partner
/s/ Harvey R. Poe By: /s/ Arline M. Lotano
Arline M. Lotano, General Partner
The undersigned agrees to act as Escrow Agent under the terms and conditions of
the within Agreement:
/s/ Harvey R. Poe
Name: Harvey R. Poe
Address: 256 Columbia Turnpike
Columbia Commons
Suite 202
Florham Park, NJ 07932
-18-
<PAGE>
List of Exhibits :
Exhibit 2.1 Land Description
Exhibit 2.2 Personal Property
Exhibit 2.3 Service and other Contracts; Assumptions
Exhibit 3.2 Leases
Exhibit 4.1(c) Lomac Note
Exhibit 8.2 Permitted Uses and Disclosure of Regulated Substances
Exhibit 9.1.1(b) Prior Uses
Exhibit 9.1.2(a) Violations
Exhibit 9.1.2(f) Contracts
<PAGE>
Exhibit 2.1
Land Description
Exhibit 2.2
Personal Property
Exhibit 2.3
Service and other Contracts; Assumptions
None
Exhibit 3.2
Leases
1. Lease Agreement between Lomac Realty Partnership, as
Landlord, and Statewide Environmental Contractors, Inc.,
as Tenant, dated June 1, 1994.
2. Lease Agreement between Lomac Realty Partnership, as
Landlord, and Recycling Industries, Inc., as Tenant,
dated June 1, 1994.
Exhibit 4.1(c)
Lomac Note
Exhibit 7.2
Property Conditions
Exhibit 8.2
Permitted Uses and Disclosure of Regulation Substances
Exhibit 9.1.1(b)
Prior Uses
Exhibit 9.1.2(a)
Violations
Exhibit 9.1.2(f)
Contracts
OVERRIDE AGREEMENT
RESPECTING CLOSING CONSIDERATION
This Override Agreement Respecting Closing Consideration ("Agreement") is
made this 28th day of June, 1996 among CONTINENTAL WASTE INDUSTRIES, INC., a
Delaware corporation ("CWI"); CWI OF NJ, INC., a New Jersey corporation
("CWINJ"); STATEWIDE ENVIRONMENTAL CONTRACTORS, INC., a New Jersey corporation
("Statewide"), RECYCLING INDUSTRIES, INC., a New Jersey corporation
("Recycling"); LOMAC REALTY, a New Jersey partnership ("Lomac"); MARY LEMMO,
NICHOLAS LEMMO, MAURICE KIRCHOFER, DON J. LOTANO, FRANK J. LOTANO, ARLINE M.
LOTANO, each individuals, (collectively, "Stockholders" and together with JOSEPH
LEMMO collectively, "Individuals").
R E C I T A L S
A. On April 11, 1996, CWI, Recycling and certain Stockholders
entered into an acquisition agreement ("Recycling Agreement"), pursuant to
which, among other things, CWI agreed to purchase for the aggregate price of
$6,400,000 ("Recycling Purchase Price") all of the issued and outstanding
capital stock of Recycling. Unless otherwise defined in this Agreement,
capitalized terms used herein shall have the meanings assigned to them in the
Recycling Agreement.
B. On April 11, 1996, CWI, Statewide, and certain Stockholders
entered into an acquisition agreement ("Statewide Agreement"), pursuant to
which, among other things, CWI agreed to exchange a portion of its issued and
outstanding capital stock for all of the issued and outstanding capital stock of
Statewide and the assumption of a portion of Statewide's debt ("Statewide
Exchange Price").
C. On April 11, 1996, Karat Corp., as nominee of CWI, and Lomac
entered into an agreement of sale ("Lomac Agreement") pursuant to which Karat
Corp. agreed, among other things, to purchase for the purchase price of
$4,250,000 ("Lomac Purchase Price") certain property, including the real
property designated as Lot 27, Block 255 on the tax map of the Borough of South
Plainfield, Middlesex County, New Jersey (Lomac Agreement, together with the
Recycling Agreement and the Statewide Agreement, the "Acquisition Documents").
D. On April 11, 1996, Recycling, CWI and certain Individuals
entered into a non-compete agreement ("Non-Compete Agreement") pursuant to which
each Individual agreed not to engage in the operation of certain businesses
within the scope of the Non-Compete Agreement, for the aggregate consideration
of $1,600,000;
E. On this same date, Karat Corp. has assigned its rights and
obligations under the Lomac Agreement to CWI of NJ ("CWINJ").
F. The parties to this Agreement have determined it is in their
mutual best interests to: (a) adjust the Cash Portion of the Recycling Purchase
Price (b) adjust the cash portion of the Lomac Purchase Price, (c) adjust the
cash consideration payable pursuant to the Non-Compete Agreement and (d) modify
the terms of the Acquisition Documents, but only to the extent herein provided
below:
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be bound hereby, agree as follows:
1. Tender of Cash.
The aggregate amount of cash consideration to be delivered by CWI
pursuant to the Recycling Agreement, Lomac Agreement and Non-Compete Agreement
is reduced by $5,400,000, from $11,250,000 to $5,850,000.
2. Delivery of Unregistered Shares in Lieu of Cash
In lieu of the aggregate cash consideration of $5,400,000, CWI
shall deliver to Escrowee, as defined herein, 251,163 shares of unregistered CWI
common stock, issued to Stockholders as follows:
Mary Lemmo 75,349 shares
Nicholas Lemmo 25,116 shares
Frank Lotano 33,488 shares
Arline Lotano 33,488 shares
Don Lotano 33,489 shares
Maurice Kirchofer 50,233 shares
<PAGE>
3. CWI's Obligation to Register Shares.
Not later than July 5, 1996, CWI shall file with the Securities
and Exchange Commission a new registration statement (the "Registration
Statement") for the registration of all CWI Shares delivered pursuant the
Statewide Agreement and the shares delivered pursuant to this Agreement (the
"Additional Shares"). Thereafter, CWI shall use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and shall
thereafter use its best efforts to maintain the effectiveness thereof. Except as
modified by this Paragraph 3, the Registration Rights Agreement, annexed to the
Statewide Agreement as Schedule 2.2(L) is adopted in its entirety and
incorporated herein by reference. CWI shall promptly provide to Escrowee a
notice of effectiveness of the Registration Statement.
4. Escrow Arrangement.
All of the Additional Shares delivered by CWI to Escrowee pursuant
to this Agreement, together with CWI's letter of credit, effective not later
than July 2, 1996 and expiring at 5:00 p.m. on August 19, 1996, securing the
obligations of CWI herein (the "Letter of Credit"), shall be held in escrow by
Poe & Freireich, P.A., (the "Escrowee") on the terms and conditions set forth
herein.
(A) If the Registration Statement has not become effective
by August 5, 1996, then:
(i) Each Stockholder shall have the right, upon giving
notice to Escrowee and CWI, to elect to take cash in lieu of
Additional Shares, in which event Escrowee shall draw down upon
the Letter of Credit at rate of $21.50 per share and Escrowee
shall deliver the proceeds to each such Stockholder and the
corresponding Additional Shares to CWI; and
(ii) CWI shall have the right, upon giving notice to
Escrowee, to pay cash to Stockholders in lieu of Additional
Shares, in which event Escrowee shall draw down upon the Letter
of Credit at rate of $21.50 per Additional Share and Escrowee
shall deliver the proceeds to each such Stockholder and shall
deliver the corresponding Additional Shares to CWI;
(B) If the Additional Shares are registered prior to
August 5, 1996, then:
(i) Escrowee shall deliver the Additional Shares to the
corresponding Stockholder; and
(ii) For a period of 14 days from the date of receipt
by Escrowee of a notice of effectiveness of the Registration
Statement (the "Value Guaranty Period"), CWI shall guarantee
to Stockholders the difference between the sale price of the
Additional Shares and $21.50 per share. Upon the sale during
the Value Guaranty Period of the Additional Shares by any
Stockholder, Escrowee shall draw down upon the Letter of
Credit in the amount of the shortfall, if any, between the
sale price of the Additional Shares and $21.50, and shall
deliver the corresponding proceeds to each such Stockholder.
(C) In the event that any Stockholder fails to sell the Additional
Shares by the expiration of the Value Guaranty Period, CWI shall have no further
obligation with respect to the Additional Shares, and Escrowee shall have no
further authority to draw down upon the Letter of Credit and shall return the
Letter of Credit to CWI.
(D) Delivery by CWI of the Additional Shares and the Letter of
Credit is understood to fully discharge CWI's obligations in respect of the
payment of Additional Shares in lieu of cash as contemplated herein, and
Individuals hereby hold CWI harmless and indemnify CWI and its officers,
directors, and agents with respect to any claim all or any of them may have
against Escrowee for any of his acts and omissions.
5. Investment Letter. The representations and warranties set forth in that
certain Investment Letter, dated July 1, 1996, by the Stockholders are
incorporated herein as if set forth at length.
6. Recitals. The Recitals set forth above are incorporated herein as if set
forth at length.
-2-
<PAGE>
7. Headings. The Paragraph headings contained in this Agreement are for
reference only for the convenience of the parties. They shall not be deemed to
constitute a part of this Agreement nor shall they alter or supersede the
contents of the paragraphs themselves.
8. Governing Law. This Agreement shall be governed by construed in
accordance with the laws of the State of New Jersey.
9. Successors, Heirs and Assigns. This Agreement shall be binding upon the
parties hereto, their heirs, executors, administrators, successors and assigns.
10. Modification of Agreement. This Agreement may not be altered or
modified orally, except by written agreement executed by the parties hereto.
11. Inconsistencies. Any inconsistencies between the terms and conditions
of this Agreement and the Statewide, Lomac, Recycling Agreement, Non-Compete
Agreement or other Transaction Documents shall be resolved in favor of this
Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals and caused this Agreement to be executed the day and year first written
above.
ATTEST: CONTINENTAL WASTE INDUSTRIES, INC.,
a Delaware corporation
/s/ Jeffrey E. Levine By: /s/ Carlos E. Aguero
Jeffrey E. Levine, Secretary Carlos Aguero, President
ATTEST: CWI OF NJ, INC.
/s/ Jeffrey E. Levine By: /s/ Carlos E. Aguero
Jeffrey E. Levine, Secretary Carlos Aguero, President
ATTEST: STATEWIDE ENVIRONMENTAL
CONTRACTORS, INC.
/s/ Don J. Lotano By: /s/ Maurice Kirchofer
Don J. Lotano, Vice President Maurice Kirchofer, President
ATTEST: RECYCLING INDUSTRIES, INC.
/s/ Arline Lotano By: /s/ Don J. Lotano
Arline Lotano, Secretary Don J. Lotano, President
WITNESS AS TO EACH: LOMAC REALTY
/s/ Harvey R. Poe By: /s/ Don J. Lotano
Don J. Lotano, General Partner
By: /s/ Frank J. Lotano
Frank J. Lotano, General Partner
By: /s/ Arline M. Lotano
Arline M. Lotano, General Partner
/s/ Mary Lemmo
Mary Lemmo, Individual
/s/ Nicholas Lemmo
Nicholas Lemmo, Individual
/s/ Maurice Kirchofer
Maurice Kirchofer, Individual
/s/ Don J. Lotano
Don J. Lotano, Individual
/s/ Frank J. Lotano
Frank J. Lotano, Individual
/s/ Arline M. Lotano
Arline M. Lotano, Individual
/s/ Joseph Lemmo
Joseph Lemmo, Individual
-3-
SCHEDULE 2.2 (k)
NON-COMPETE AGREEMENT
FOR VALUABLE CONSIDERATION and in accordance with that certain acquisition
agreement dated April 11, 1996 among RECYCLING INDUSTRIES, INC. ("Recycling"),
CONTINENTAL WASTE INDUSTRIES, INC. ("CWI"), DON J. LOTANO, FRANK J. LOTANO and
ARLINE LOTANO (collectively, "Stockholders") (the "Acquisition Agreement"), and
with that certain letter agreement dated April 11, 1996, among CWI,
Stockholders, MAURICE KIRCHOFER and JOSEPH LEMMO ("Letter Agreement"), the
undersigned individuals (collectively, "Undersigned") hereby covenant,
represent, agree and warrant to CWI as follows:
1. Restrictive Covenants. As an inducement to cause CWI to consummate the
Acquisition Agreement, and in consideration of the agreement by CWI to make the
payments to Undersigned contemplated by the Letter Agreement, each of the
Undersigned hereby covenants and agrees with CWI that he or she will not,
anywhere within a 150 mile radius of South Plainfield, New Jersey, directly or
indirectly:
(a) Business. Engage in the operation of a solid waste hauling
business, a disposal, landfilling or waste transfer business or facility, a
recycling business or facility or composting business or facility;
(b) Remuneration. Enter the employ of, or render any personal services
to, or receive remuneration in the form of salary, commissions or
otherwise, from any business or facility engaged in such activities; or
(c) Financial Interest. Receive or purchase a financial interest in
any such business or facility in any capacity, including, without
limitation, as a sole proprietor, partner, shareholder, member, officer,
director, principal, agent or trustee; provided, however, that each of the
Undersigned may own, directly or indirectly, solely as an investment,
securities of any business traded on any national securities exchange or
NASDAQ provided such Undersigned is not a controlling person of, or a
member of a group which controls, such business and further provided that
such Undersigned does not, directly or indirectly, own five percent (5%) or
more of any class of securities of such business.
2. No Solicitation. Each of the Undersigned further covenants that he or
she will not solicit or induce any employee of Statewide Environmental
Contractors, Inc. ("Statewide") or Recycling to leave their employ and to work
for anyone in competition with CWI, Statewide or Recycling.
3. Confidential Information. Each of the Undersigned will regard and
preserve as confidential all trade secrets and other confidential information
pertaining to Statewide's and Recycling's business that have been or may be
obtained by Undersigned by reason of his or her employment or other affiliation
with Statewide or Recycling. Each of the Undersigned further agrees that all
documents, reports, plans, proposals, marketing and sales plans, customer lists,
or materials made by him or her or that came into his or her possession by
reason of his or her affiliation with Statewide or Recycling are the property of
Statewide and Recycling and shall not be used by him or her in any way. Each of
the Undersigned will not, without written consent from Statewide or Recycling to
do so, use for his or her own benefit or purposes, nor disclose to others, any
trade secret or other confidential information connected with the business or
operations of Statewide and Recycling; and none of the Undersigned will take or
retain or copy any of Statewide's or Recycling's information, customer lists, or
other documents or things. For purposes of this Agreement, the term "trade
secret" shall include, but not be limited to, information encompassed in all
plans, proposals, marketing and sales plans, customer lists, mailing lists,
financial information, costs, pricing information, and all concepts or ideas in
or reasonably related to the business of Statewide Environmental Contractors,
Inc. ("Statewide") and Recycling. This provision shall not apply with respect to
information which has been voluntarily disclosed to the public or otherwise
enters the public domain through lawful means.
4. Duration. The covenants contained in this Agreement will continue for a
period of five (5) years from and after the date hereof.
<PAGE>
5. Reasonable Scope. Each of the Undersigned acknowledges that he or she
has carefully read and considered all of the terms and conditions of this
Agreement, including the restraints imposed upon him or her hereunder. Each of
the Undersigned agrees that such restraints are necessary for the reasonable and
proper protection of Statewide and Recycling and to uphold the value of the
stock of Statewide and Recycling to be acquired by CWI on this date.
6. Rights and Remedies Upon Breach. If any of the Undersigned breaches, or
threatens to commit a breach of, any of the provisions of this Agreement, CWI
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to Recycling, Statewide or CWI under the Transaction Documents, at law or in
equity:
(a) Specific Performance. The right and remedy to have this Agreement
specifically enforced by any court of competent jurisdiction, it being
agreed that any breach or threatened breach of this Agreement would cause
irreparable injury to non-breaching party and that money damages would not
provide an adequate remedy to non-breaching party. Accordingly, in addition
to any other rights or remedies, non-breaching party shall be entitled to
injunctive relief to enforce the terms of this Agreement and to restrain
each of the Undersigned from any violation thereof;
(b) Accounting. The right and remedy to require each of the
Undersigned to account for and pay over to the non-breaching party, as the
case may be, all profits or other benefits derived or received by such
Undersigned as the result of any transactions constituting a breach of this
Agreement;
(c) Severability of Covenants. Each of the Undersigned acknowledges
and agrees that the covenants and other promises in this Agreement are
reasonable and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the covenants in this
Agreement, or any part thereof, is invalid or unenforceable, the remainder
of the covenants in this Agreement shall not thereby be affected and shall
be given full effect, without regard to the invalid portions;
(d) Blue-Penciling. If any court determines that any of the covenants
in this Agreement, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall reduce the
duration or scope of such provision, as the case may be, to the extent
necessary to render it enforceable and, in its reduced form, such provision
shall then be enforced;
(e) Enforceability in Jurisdiction. Each of the Undersigned intends to
and hereby confers jurisdiction to enforce this Agreement upon the courts
of any jurisdiction within the geographic scope of the covenants in this
Agreement. If the courts of any one or more of such jurisdictions hold this
Agreement or any covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties that such
determination not bar or in any way affect the non-breaching party's right
to the relief provided above in the courts of any other jurisdiction within
the geographic scope of the covenants, as to breaches of such covenants in
such other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
7. Service. Each of the Undersigned further agrees that a copy of a summons
and complaint seeking the entry of such order may be served upon him or her by
certified mail, return receipt requested, at the address set forth above or at
any other address which any Undersigned shall designate in a writing addressed
to Recycling.
8. Consideration. As consideration for each of the Undersigned's covenants
contained herein, CWI has paid the amounts set forth below:
Joseph Lemmo $380,000.00
Maurice Kirchofer $590,000.00
Arline Lotano $210,000.00
Don J. Lotano $210,000.00
Frank J. Lotano $210,000.00
-2-
<PAGE>
9. Controlling Document. With respect to all of the Undersigned who are
also Stockholders, this Agreement is in addition to, and not in substitution of,
any other terms or conditions in the Acquisition Agreement relating to the
subject matter hereof. With respect to Maurice Kirchofer, this Agreement is in
addition to, and not in substitution of, any other terms or conditions in the
Statewide Acquisition Agreement relating to the subject matter hereof. As to
Stockholders, in the event of a conflict between any term or provision in this
Agreement and in the Acquisition Agreement, the Acquisition Agreement shall
control and, as to Maurice Kirchofer, the terms of the Statewide Acquisition
Agreement shall control.
10. South Plainfield. Notwithstanding anything provided in this Agreement
to the contrary, Joseph Lemmo may continue, both in his individual capacity and
as a Trustee under the trust established by Nicholas Lemmo under Trust Indenture
dated May 23, 1983, to be employed by South Plainfield Transfer & Recycling
Corporation ("South Plainfield") and to otherwise engage in the business
operations of South Plainfield, subject to the limitations on such business
operations and assets as are set forth in the South Plainfield Agreement dated
this same date, involving Joseph Lemmo, South Plainfield, CWI and certain other
parties.
11. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and may not be
changed, waived, or terminated to any extent whatsoever, except by a
writing signed by or on behalf of the party against whom such change,
waiver, or termination is sought to be invoked or enforced.
(b) Preamble. The Preamble is part of this Agreement.
(c) Severance. Should any clause or paragraph of this Agreement be
declared void or unenforceable by a court of competent jurisdiction, that
portion of the Agreement shall be severed from the Agreement without
affecting the validity of the remainder of the Agreement.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey.
(e) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns.
(f) Defined Terms. Capitalized terms not defined in this Agreement
shall have the meanings assigned to them in the Acquisition Agreement.
IN WITNESS WHEREOF, each of the Undersigned has executed this Agreement as
of this 1st day of July, 1996.
WITNESS AS TO EACH: /s/ Joseph Lemmo
Joseph Lemmo, Individual
- --------------------------------- /s/ Maurice Kirchofer
Harvey R. Poe, Esq. Maurice Kirchofer, Individual
/s/ Arline Lotano
Arline Lotano, Individual
/s/ Don J. Lotano
Don J. Lotano, Individual
Frank J. Lotano
Frank J. Lotano, Individual
-3-
