UNITED STATES
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
April 1, 1997
Date of Report (Date of earliest event reported)
AMERICAN DISPOSAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-28652 13-3858494
(State or other Commission File (I.R.S. Employer
jurisdiction of Number Identification
incorporation Number)
or organization)
745 McClintock Drive, Suite 305, Burr Ridge, Illinois 60521
(Address of Principal Executive Offices)
(708) 655-1105
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition
On April 1, 1997, American Disposal Services, Inc. (the
"Company") acquired the Evansville, Indiana operations of Waste
Management of Indiana, LLC (the "Acquisition") for approximately
$28 million plus an additional payment for accounts receivable.
As part of the Acquisition, the Company acquired a landfill, two
collection companies, an exclusive transfer station contract and
a permit to develop a new transfer station, all located in the
southwestern Indiana region. The Company funded the Acquisition
with proceeds from the Company's revolving and term loan credit
facility. As part of the Acquisition, the Company acquired the
Blackfoot landfill in Evansville, Indiana. The landfill consists
of approximately 379 acres, of which approximately 166 are
permitted acres. The site recently received a permit which
increases the available capacity to approximately 17.9 million
cubic yards of airspace. The Blackfoot landfill has
approximately 45 years of total site life at current disposal
levels.
Item 5. Other Events
On March 24, 1997, the Company entered into a definitive
agreement to acquire substantially all of the assets of Liberty
Disposal, Inc. ("Liberty Disposal"), a privately held waste
management operation in Rhode Island, for approximately $14.5
million plus an additional payment for accounts receivable (the
"Pending Acquisition"). The Company anticipates that it will
fund the Pending Acquisition with proceeds from a public offering
of the Company's Common Stock. The Company believes that Liberty
Disposal, which operates 25 routes and offers commercial,
residential and industrial waste collection and recycling
services, is on a revenue basis the largest privately owned waste
collection company in Rhode Island. In addition, the Company
believes that the Pending Acquisition will nearly double the
Company's revenue base in the Rhode Island region, will result in
the Company owning and operating one of the three largest
collection companies in Rhode Island and will position the
Company to expand further its market share in the region and the
contiguous markets.
On March 21, 1997, the Company entered into an Amendment No.
2 to the Amended and Restated Credit Agreement with ING (U.S.)
Capital Corporation, as Administrative Agent, Morgan Guaranty
Trust Company of New York, as Documentation Agent, and certain
other financial institutions as Lenders pursuant to which the
Company's existing credit facility was increased by $15 million
to an aggregate of $125 million (the "Credit Facility"). The
Credit Facility provides the Company with a term loan of $25
million, a $5 million revolving credit facility for working
capital purposes and a $95 million expansion facility to be used
for acquisitions. In addition, the Credit Facility allows for
certain prepayments to be re-borrowed as expansion loans.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Incorporated by reference to the Company's Registration
Statement on Form S-1 (Registration No. 333-24103).
(b) Pro Forma Financial Information. Incorporated by
reference to the Company's Registration Statement on
Form S-1 (Registration No. 333-24103).
(c) The following document is furnished as an Exhibit to
this Current Report on Form 8-K pursuant to Item 601 of
Regulation S-K:
10.1 Asset Purchase Agreement dated as of March 25, 1997
by and between American Disposal Services of
Missouri, Inc. and Waste Management of Indiana, LLC.
10.2 Asset Purchase Agreement dated as of March 24, 1997
by and among Liberty Disposal, Inc., John M.
Harpootian, Trustee, The Liberty Disposal, Inc.
Charitable Remainder Annual Trust--1997 and the
Company.
10.3 Amendment No. 2 to the Credit Agreement dated as of
March 21, 1997 among the Company, (U.S.) Capital
Corporation (formerly, Internationale Nederlander
(U.S.) Capital Corporation) as Administrative Agent,
Morgan Guaranty Trust Company of New York, as
Documentation Agent, and certain other financial
institutions, as Lenders.*
____________
* Filed as an exhibit to the Company's annual report on Form
10-K for the year ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
AMERICAN DISPOSAL SERVICES, INC.
Date: April 14, 1997
/s/ Stephen P. Lavey
Stephen P. Lavey
Vice President and Chief Financial
Officer
Exhibit 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made this 25th
day of March, 1997 by and between American Disposal Services of
Missouri, Inc., an Oklahoma corporation (the "Purchaser"), and
Waste Management of Indiana, LLC, a Delaware limited Liability
company (the "Seller").
Recitals
The Seller desires to sell, transfer and assign to the Purchaser
and the Purchaser desires to purchase from the Seller certain of
the assets, properties and business of the Seller, all as
hereinafter provided.
Agreements
In consideration of the premises and the mutual representations,
warranties and covenants and subject to the conditions herein
contained and intending to be legally bound, the parties agree as
follows:
1. Purchase and Sale of Assets; Closing.
Section 1.1 Purchased Assets. The Seller agrees to and
will sell, transfer, assign and deliver to the Purchaser at the
Closing (as hereinafter defined), free and clear of all liens,
claims and encumbrances (except those which the Purchaser has
expressly agreed to assume in Section 1.3(a)(2) hereof), the
following assets used in the Seller's business of providing to
the Customer Accounts (as hereinafter defined) solid waste
collection, hauling and disposal services (the "Business") in the
Evansville, Indiana area (the "Purchased Assets"):
(a) the machinery, equipment, leasehold improvements,
construction in progress, furniture and fixtures, trucks,
automobiles, vehicles, refuse containers, computers and other
operating assets owned or leased by the Seller and used in the
Business and identified on Exhibit 1.1 (a) (the "Operating
Assets");
(b) the tools and supplies of the Seller used solely in
connection with the Business, including any shop tools and
equipment, supplies of fuel, lubricants, tires, spare parts,
office equipment and supplies and other consumable supplies (the
"Supplies");
(c) Seller's right, title and interest in the commercial,
industrial and residential customer accounts, customer account
contracts, and other rights to provide services to the customers
of the Seller's Business identified on Exhibit 1.1 (c) (the
"Customer Accounts");
(d) to the extent transferable, the Business' permits,
licenses, governmental approvals, franchises and franchise
rights, telephone numbers, and other proprietary rights
identified on Exhibit 1.1(d) (the "Proprietary Rights");
(e) the operating data, books, files, documents and records
of the Seller relating to the Business, including without
limitation customer lists, credit records, marketing information,
correspondence, and other similar documents and records (the
"Records");
(f) all of the Seller's right, title and interest in and to
the owned real property (the "Owned Real Property") and the
leased real property (the "Leased Real Property"), as identified
on Exhibit 1.1(f) (collectively, the "Real Property");
(g) all accounts receivable of the Business arising from
service in the ordinary course of Business, as shall be
identified on a receivables aging schedule to be provided to
Purchaser at or about the Time of Closing (the "Receivables");
and
(h) any and all goodwill related to the foregoing.
Section 1.2 Excluded Assets. Anything to the contrary in
Section 1.1 notwithstanding, the Purchased Assets shall exclude
the following assets of the Seller (collectively, the "Excluded
Assets"):
(a) the cash consideration to be paid by the Purchaser and
the Seller's other rights under this Agreement;
(b) any assets of Seller used in businesses other than the
Business;
(c) the corporate minute books, stock records and other
records of the Seller;
(d) all cash and cash equivalents and investments, whether
short term or long term of the Business, including prepaid
expenses, bank accounts, certificates of deposit, treasury bills
and securities;
(e) proprietary rights of the Seller not listed on Exhibit
1.1 (d), including Seller's service marks and proprietary
software; and
(f) any assets of the Seller used in other operations of
the Seller or not specifically described in Section 1. 1.
Section 1.3 Purchase Price; Allocation; Payment. (a) As
consideration for the Purchased Assets and the Covenant Not to
Compete in Section 4.7 herein, the Purchaser agrees, subject to
the terms, conditions and limitations set forth in this
Agreement:
(1) to pay to the Seller in the manner specified
below, the total sum of $28,000,000 plus an amount equal to 100%
of the face value of the Receivables aged 59 days or less at the
Time of Closing, 90% of the face value of Receivables aged 60 89
days at the Time of Closing, 70% of the face value of the
Receivables aged 90 119 days at the Time of Closing and 50% of
the face value of the Receivables aged greater than 120 days (the
"Purchase Price");
(2) to assume and discharge when lawfully due those
liabilities, contracts, commitments and other obligations of the
Seller set forth in Exhibit 1.3(a)(2) (the "Assumed
Liabilities"), if any.
(b) the parties agree that the consideration for the
Purchased Assets shall be allocated as follows:
Buildings $1,130,000
Vehicles $875,000
Containers $800,000
Supplies $100,500
Machinery and Equipment $200,000
Real Property $720,000
Goodwill, Customer Accounts, and
Proprietary Rights $7,075,000
Covenant Not to Compete $100,000
Landfill Permit $17,000,000
(c) Purchaser agrees, subject to the terms, conditions and
limitations set forth in this Agreement, that:
(1) an amount equal to $26,000,000, representing the
cash portion of the base purchase price, excluding Receivables,
plus $1,000,000, representing the estimated purchase price for
the Receivables net of Pre Billed Accounts (as hereinafter
defined), for an aggregate of $27,000,000, shall be paid by wire
transfer from Purchaser to Seller at Mellon Bank, Pittsburgh,
Pennsylvania, ABA No. 043000261, Account No. 1979409, at the Time
of Closing;
(2) the aggregate of all sums billed and collected by
Seller on the Customer Accounts for services to be rendered by
Purchaser after the Time of Closing (the "Pre Billed Accounts"),
as such accounts, Pre Billed amounts and billing periods are
identified on Exhibit 1.3(c)(2), shall be credited against the
cash portion of the Purchase Price in favor of Purchaser, as
contemplated in Section 1.3(c)(1) above;
(3) the Purchaser shall deliver to the Seller at the
Time of Closing a promissory note (the "Note") in the aggregate
principal amount of $2,000,000, payable 18 months after the date
of the definitive written agreement and
(4) the Purchaser shall be responsible for any
transfer, sales or other taxes or levies (including any motor
vehicle transfer taxes) that may be payable as a result of the
transaction contemplated hereby and shall pay to Seller promptly
upon request an amount equal to the amount of any such taxes that
may be payable by Seller as a result of such transaction.
(d) Except as otherwise specifically provided in this
Agreement, all expenses, taxes and obligations relating to the
ownership and operation of the Business, including without
limitation, real and personal property taxes and utilities costs,
shall be pro rated between Purchaser and Seller as of midnight of
the day preceding the Closing Date, and the cash portion of the
Purchase Price payable at the Time of Closing shall be adjusted
by such apportionment. Whether amounts are allocable for the
above purposes for the period before or after Closing shall be
determined in accordance with generally accepted accounting
principles using the accrual method. It is anticipated that
Purchaser will pay certain invoices to be delivered to Purchaser
at Closing for additional capital equipment ordered by Seller for
the Business prior to the Time of Closing, as previously
disclosed to Purchaser. On or before the date 10 business days
after the Time of Closing the Seller shall provide to Purchaser a
receivables aging schedule. Within five days of such date the
Seller shall pay to Purchaser (if the Purchaser has overpaid) or
Purchaser shall pay to Seller (if the Purchaser has underpaid),
as appropriate, an amount equal to the difference between the
value of the Receivables and the estimated value of Receivables.
Section 1.4 Excluded Liabilities. Anything to the
contrary in Section 1.3 notwithstanding, Purchaser shall have no
responsibility whatsoever with respect to the following
liabilities, contracts, commitments and other obligations of the
Seller (the "Excluded Liabilities"):
(a) any obligations or liabilities of the Seller arising
under this Agreement;
(b) any obligation of the Seller for federal, state or
local income tax liability (including interest and penalties)
arising from the operations of the Seller up to the Time of
Closing or arising out of the sale by the Seller of the Purchased
Assets pursuant hereto;
(c) any obligation of the Seller for expenses incurred in
connection with the sale of the Purchased Assets pursuant hereto;
or
(d) any other liability or obligation of the Seller which
is not assumed by the Purchaser pursuant to Section 1. 3 (a)(2).
Without limiting the generality of the foregoing statement,
Purchaser shall not assume any CERCLA or other environmental
liability of any nature, including without limitation, the
remediation of any real property or groundwater which relates to
the generation, collection, transportation or disposal of any
materials, relating to Seller's operation and ownership of the
Business prior to the Time of Closing. Anything herein to the
contrary notwithstanding, Purchaser shall be responsible for
closure and post closure liabilities for the Blackfoot landfill.
Section 1.5 Time and Place of the Closing. (a) The
Closing of the sale of the Purchased Assets (the "Closing") shall
take place at the offices of the Seller in Oak Brook, Illinois at
10:00 A.M., local time, on the later of March 31, 1997 and the
date five business days after all of the conditions precedent set
forth in Sections 5 and 6 have been satisfied or waived (the
"Time of Closing"); provided further, however, that if the
Closing shall not have occurred on or before April 30, 1997, then
any party hereto may terminate this agreement upon five days
written notice to the other party.
(b) To the extent that any of the transactions contemplated
hereby constitutes or would be deemed to be the sale, assignment,
transfer, conveyance or delivery, or attempted sale, assignment,
transfer, conveyance or delivery, to the Purchaser of any permit,
contract or agreement and such transaction would be prohibited by
any applicable law or would require any governmental or third
party authorizations, approvals, consents or waivers and such
authorizations, approvals, consents or waivers shall not have
been obtained prior to the Closing, this Agreement shall not
constitute a sale, assignment, transfer, conveyance or delivery,
or an attempted sale, assignment, transfer, conveyance or
delivery thereof. Following the Closing, the parties shall use
reasonable efforts, and cooperate with each other, to obtain
promptly such authorizations, approvals, consents or waivers, to
obtain novations or other agreements if appropriate and, after
obtaining such, to complete the transactions contemplated hereby.
Pending such authorization, approval, novation, consent or
waiver, the parties shall cooperate with each other in any
reasonable and lawful arrangement designed to provide the
economic benefits and burdens of use of such permits, contracts
and agreements to the Purchaser. To the extent possible,
performance obligations of the Seller with respect to any such
permits, contracts, or agreements shall be deemed to be
subcontracted to the Purchaser. To the extent that any contract
or agreement cannot be transferred following the Closing pursuant
to this Section 1.5(b), Seller and Purchaser agree to negotiate
in good faith a mutually acceptable resolution with respect to
such contract or agreement.
(c) The parties acknowledge that at the Closing the Seller
will not be transferring to Purchaser the applicable permits for
the ownership and operation of the Blackfoot landfill, as such
transfer will require the prior written consent of the Indiana
Department of Environmental Management (or reissuance of the
permits), which is expected to occur on or about the date 60 days
after the date hereof. Pending such transfer, the Purchaser
shall operate the landfill as a Subcontractor under Seller's
permits, in full compliance with such permits and all applicable
laws, regulations, orders, ordinances or other applicable
regulatory requirements. Seller shall have the right (but not
the obligation) to require the Purchaser to take whatever action
Seller may reasonably request to comply with such permits and
applicable regulatory requirements. With respect to the period
after Closing, Purchaser shall be entitled to all benefits and
responsible for all burdens of ownership of such landfill pending
such transfer. Upon transfer or reissuance of applicable
permits, the Purchaser shall record the deeds for the landfill
property. If the Indiana Department of Environmental Management
does not approve the transfer on or before December 31, 1997
(unless the parties agree to extend such period), the Purchaser
shall reconvey the Purchased Assets to Seller and Seller shall
refund the Purchase Price to Purchaser, and the parties shall
negotiate in good faith all necessary and proper arrangements to
unwind the transactions contemplated hereby and put each party in
the same position they would have been in had the transactions
not taken place, except that Purchaser shall continue to be
responsible for its actions during the period it operated the
Business and shall be entitled to the benefit of operations
thereof, as well as the burdens thereof for such period.
Section 1.6 Procedure at the Closing. At the Closing,
the following actions will be taken by the parties and the
completion of each action shall be a further condition to the
Closing:
(a) the Seller shall deliver to the Purchaser, in form
satisfactory to the Purchaser, such deeds, bills of sale,
endorsements, assignments, receipts and other instruments, as
shall be sufficient to vest in the Purchaser good and marketable
title to the Purchased Assets, free and clear of all liens,
claims and encumbrances, except as otherwise permitted by this
Agreement; and
(b) the Purchaser shall deliver to the Seller by wire
transfer of immediately available funds the cash portion of the
Purchase Price less the amount of the Prebilled Accounts, if any,
and other prorations, plus the estimated value of the
Receivables, the Note and an assignment and assumption agreement
in form reasonably satisfactory to Seller.
2. Representations and Warranties of the Seller. The
Seller makes the following representations and warranties:
Section 2.1 Organization, Power and Authority. The
Seller is a limited liability company duly organized and legally
existing in good standing under the laws of the State of
Delaware, and has full corporate power and authority (a) to own
or lease its properties and to carry on its business as it is now
being conducted, (b) to enter into this Agreement and to sell,
convey, assist, transfer and deliver the Purchased Assets to the
Purchaser as provided herein, and (c) to carry out the other
transactions and agreements contemplated hereby.
Section 2.2 Financial Statements. Attached as Exhibit
2.2 are the following financial statements with respect to the
Business:
(a) Balance Sheet as of December 31, 1996; and
(b) Income Statement for the 12 month period ended December
31, 1996;
(c) Balance Sheet as of February 28, 1997; and
(d) Income Statement for the 2 month period ended February
28, 1997.
Such financial statements present fairly in all material
respects the financial position of the Business as of the date of
such balance sheet and the results of its operations for the
period covered, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis, except that such financial statements do not contain
footnote disclosure and are subject to normal recurring year end
adjustments.
Section 2.3 Real Property. (a) With respect to the
Owned Real Property, if any, Exhibit 1.1(f) accurately describes
the location, approximate area and recording data for the
relevant deed or assignment to the Seller and applicable title
insurance policy numbers and dates. With respect to the Leased
Real Property, if any, Exhibit 1.1(f) accurately sets forth the
name of the lessor, the approximate area covered by the lease,
the duration of the lease and any renewals, the current annual
rent and the amount of any security deposits. True and complete
copies of all deeds, surveys and title insurance policies (and
any recorded documents postdating said title insurance policies)
relating to the Owned Real Property and of all leases relating to
the Leased Real Property have been delivered to the Purchaser.
The leases described in Exhibit 1.1(f) are in full force and
effect and to Seller's knowledge there are no defaults
thereunder.
(b) Seller has not received any written or, to Seller's
knowledge, oral notice that any structures or improvements on the
Real Property fail in any material respect to conform to any
applicable laws, use restrictions, building ordinances or health
and safety ordinances of any governmental entity.
(c) No work for municipal improvements has been commenced
on or in connection with the Real Property or any street adjacent
thereto and no assessment for public improvements has been made
against the Real Property which remains unpaid. No written or,
to Seller's knowledge, oral notice from any governmental entity
has been served upon the Real Property or received by Seller
requiring any work, repair, construction, alteration or
installation on or in connection with the Real Property, except
for notices with which Seller has fully complied and completed.
(d) Seller has received no written, or to Seller's
knowledge oral, notice, from any governmental entity that the
assessed value of the Real Property has been determined to be
greater than that upon which county, township or school tax was
paid for the most recent tax year applicable to each such tax,
and none of the Real Property or any portion thereof is subject
to any assessment which is payable and has not been paid.
(e) Seller has received no written or, to Seller's
knowledge, oral notices that any governmental entity having the
power of eminent domain over the Real Property has commenced or
intends to exercise the power of eminent domain or a similar
power with respect to all or any part of the Real Property.
Section 2.4 Ownership of Purchased Assets. The Seller
has good and marketable title to, or a valid leasehold interest
in, all of the Purchased Assets, free and clear of all title
defects, liens, claims or other encumbrances of any kind or
character, except liabilities set forth in Exhibit 1.3(a)(2);
and
(a) liens for current taxes, assessments and governmental
charges not yet due and payable;
and
(b) liens, imperfections of title and easements referenced
in title insurance policies reflected on Exhibit 1.1(f) or which
do not, either individually or in the aggregate, materially
detract from the value of, or interfere with the present use of,
properties subject thereto.
Section 2.5 Condition of the Purchased Assets. (a) The
Purchased Assets are being sold AS IS, WHERE IS, and, except as
expressly set forth herein, Seller makes no representations or
warranties with respect to the Purchased Assets. Seller
expressly disclaims any warranties of merchantability or fitness
for any particular purpose, whether express or implied.
Section 2.6 Proprietary Rights. The Seller possesses all
of the Proprietary Rights listed on Exhibit 1.1 (d). The
Proprietary Rights are sufficient to conduct such business
substantially as it is now or heretofore has been conducted, are
in good standing with no known conflict with or infringement of
the asserted or actual rights of others, default or violations.
To Seller's knowledge, no third party has infringed on, asserted
rights in or threatened loss of any of the Proprietary Rights nor
to Seller's knowledge has Seller not taken or omitted to take
action which would have the effect of waiving or releasing a
Proprietary Right and Seller has not received any written notice
of the foregoing.
Section 2.7 Adequacy of the Purchased Assets. The
Purchased Assets constitute, in the aggregate, substantially all
of the property necessary for the conduct of the Business in the
manner in which and to the extent to which it is currently being
conducted.
Section 2.8 Material Contracts. (a) Exhibit 2.8
attached hereto contains a list of each agreement, contract or
commitment to witch the Seller is a party or by which it is bound
and which is material to the operation of the Business.
(b) Neither the Seller nor to Seller's knowledge any party
thereto or bound thereby is in default under any of the
contracts, agreements or instruments comprising Exhibit 2.8, and
to Seller's knowledge no act or event has occurred which with a
notice or lapse of time, or both, would constitute such a
default.
Section 2.9 Performance Bonds. Exhibit 2.9 lists all
performance bonds, guarantys and letters of credit securing any
obligations of the Seller with respect to the Customer Accounts.
All such performance bonds and letters of credit are in good
standing, have not been threatened with withdrawal or termination
and no amounts have been collected by protected parties under the
performance bonds, guarantys and letters of credit.
Section 2.10 Litigation. Except as set forth in Exhibit
2.10, there are no actions, suits, claims, governmental
investigations or arbitration proceedings pending or to the
knowledge of the Seller threatened against or affecting the
Business or any of the Purchased Assets. Except as set forth on
Exhibit 2.10, there are no orders, decrees, judgments or
stipulations currently in effect issued by any local, state or
federal governmental authority in any proceeding relating to the
Business to which the Seller is or was a party or by which the
Seller is bound.
Section 2.11 Compliance with Laws. (a) The Seller has
operated the Business, legally and in substantial compliance with
all applicable laws, regulations, permits, franchises, licenses
and orders. Without limiting the generality of the foregoing, in
the conduct of the Business, the Seller has not transported,
stored, treated or disposed, nor has it allowed or arranged for
any third persons to transport, store, treat or dispose regulated
quantities of waste to or at any location other than a site
lawfully permitted to receive such waste for such purposes; nor
has it performed, arranged for or allowed by any method or
procedure such transportation or disposal in contravention of any
laws or regulations or in any other manner which may result in
material liability for contamination of the environment; nor are
there any underground storage tanks at the Real Property or the
Leased Property.
(b) Except as set forth on Exhibit 2.11, with respect to
the conduct of the Business, the Seller has not received any
notification of any past or present failure by the Seller to
comply in any material respect with any laws, regulations,
permits, franchises, licenses or orders applicable to it or the
Purchased Assets. Except as set forth on Exhibit 2.11, with
respect to the operation of the Business, the Seller has not
received any notification (including requests for information
directed to the Seller) from any governmental agency asserting
that Seller is or may be a "potentially responsible person" for a
remedial action at a waste storage, treatment or disposal
facility, pursuant to the provisions of CERCLA, or any federal,
state or local statute or ordinance assigning responsibility for
the costs of investigating or remediating releases of
contaminants into the environment.
Section 2.12 Due Authorization; Binding Obligation. The
execution, delivery and performance of this Agreement and each of
the other agreements contemplated hereby and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action of the Seller. This Agreement has
been duly executed and delivered by the Seller and is a valid and
binding obligation of the Seller, enforceable in accordance with
its terms. Assuming that all requisite consents are obtained
with respect to the permits required for the Business, neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will: (a) conflict with
or violate any provision of the Seller's articles of
incorporation or bylaws, or of any law, ordinance or regulation
or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or
enforceable against the Seller; or (b) result in any breach of or
default under any material mortgage, contract, agreement,
indenture, will, trust or other instrument which is either
binding upon or enforceable against the Seller or the Purchased
Assets.
Section 2.14 Employee Matters. (a) Set forth on Exhibit
2.14 is a list of the name, residence, address, social security
number, years of service, present position, and rate of
compensation of the employees of the Business. To the knowledge
of the Seller, such employees will be available for employment by
the Purchaser after the Time of Closing.
(b) Except as set forth in Exhibit 2.14, the Seller is not
a party to or bound by any employment agreement, 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
Business into one or more collective bargaining units. There is
not pending or, to the best of the knowledge of the Seller,
threatened, any labor dispute, strike or work stoppage which may
affect the Business or which may interfere with its continued
operation. No collective bargaining or union agreement is
currently being negotiated by the Seller with respect to the
Business.
(c) The Seller has no unfunded liability to, and is not
delinquent in any contribution to, any pension or employee
benefit plan (as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended). After the Time of
Closing, the Purchaser will have no liability with respect to any
of the Seller's pension or employee benefit plans.
Section 2.15 Conduct of Business. Since December 31,1996,
the Seller has conducted the Business and operations in
substantially the same manner in which they have traditionally
been conducted, there has been no material adverse change in the
Purchased Assets, and the Seller has not entered into any
material agreements relating to the Business which extend beyond
the Time of Closing.
3. Representations and Warranties of Purchaser. The
Purchaser makes the following representations and warranties:
Section 3.1 Organization, Power and Authority. The
Purchaser is a corporation duly organized and validly existing
under the laws of the State of Oklahoma, with full corporate
power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 3.2 Due Authorization; Binding Obligation. The
execution, delivery and performance of this Agreement and all
other agreements contemplated hereby and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser
and is a valid and binding obligation of the Purchaser
enforceable in accordance with its terms. Assuming that all
requisite consents are obtained with respect to the permits
required for the Business, neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will: (a) conflict with or violate any
provision of the Purchaser's articles of incorporation or bylaws,
or of any law, ordinance or regulation or any decree or order of
any court or administrative or other governmental body which is
either applicable to, binding upon or enforceable against the
Purchaser; (b) result in any breach of or default under any
material mortgage, contract, agreement, indenture, will, trust or
other instrument which is either binding upon or enforceable
against the Purchaser.
Section 3.3 Investigation. Purchaser has been afforded
an opportunity to conduct its investigation of the Purchased
Assets. Except as disclosed to Seller by Purchaser in writing,
Purchaser has no actual knowledge of any breach by Seller of any
of its representations or warranties contained herein.
Section 3.4 Solvency. Purchaser anticipates that it will
obtain the necessary financing to consummate the transactions
contemplated herein. Purchaser is not, and immediately after
consummation of the transactions contemplated hereunder will not
be "insolvent" within the meaning of the United States Bankruptcy
Code as in effect on the date hereof. The assets of the
Purchaser are not, and immediately following the closing will not
be, unreasonably small in relation to the business in which the
Purchaser shall be engaged. Purchaser does not intend to, or
believe that it will, incur debts beyond its ability to pay such
debts as they mature.
4. Additional Agreements.
Section 4.1 Conduct of Business Pending the Closing.
From and after the date hereof, and until the Time of Closing,
except as otherwise provided by the prior written consent of the
Purchaser, the Seller will conduct its business and operations in
substantially the same manner in which the same have
traditionally been conducted, and it will use reasonable
commercial efforts to (a) preserve its business organization
intact, (b) keep available to the Purchaser the services of its
officers, employees, agents and distributors, and (c) preserve
its relationships with its customers and suppliers.
Section 4.2 Access to the Seller's Plants, Properties and
Records. From and after the execution and delivery of this
Agreement, the Seller will afford to the representatives of the
Purchaser, including Purchaser's lenders, access, during normal
business hours and upon reasonable notice, to the Seller's
premises sufficient to enable the Purchaser to inspect the
Purchased Assets, and the Seller will furnish to such
representatives during such period all such information relating
to the foregoing investigation as the Purchaser may reasonably
request. Seller will cooperate with Purchaser to enable
Purchaser to audit the Business for the years ended December 31,
1995 and 1996. Purchaser will provide a copy thereof to Seller.
After the Time of Closing the Purchaser will provide to Seller
reasonable access to the Records and will not dispose of such
Records without giving Seller an opportunity to copy such
Records.
Section 4.3 Liability for Expenses. The Purchaser will
pay all expenses incurred by the Purchaser, in connection with
the negotiation, execution and performance of this Agreement,
whether or not the transactions contemplated hereby are
consummated, including the fees and expenses of agents,
representatives, accountants and counsel for the Purchaser. The
Seller will pay all expenses incurred by it in connection with
the negotiation, execution and performance of this Agreement,
whether or not the transaction contemplated hereby is
consummated, including the fees and expenses of its counsel and
auditors.
Section 4.4 Indemnification. (a) From and after the
Time of Closing, the Seller agrees to defend, indemnify and hold
the Purchaser and its affiliates harmless from and against all
indemnifiable damages of the Purchaser. For this purpose,
"indemnifiable damages" of the Purchaser means the aggregate of
all expenses, losses, costs, deficiencies, liabilities and
damages (including attorneys' fees and court costs) incurred or
suffered by the Purchaser, or any of its directors, agents,
employees or affiliates or its affiliates' directors, agents or
employees, as a result of or in connection with: (i) any
inaccurate representation or warranty made by the Seller in or
pursuant to this Agreement, (ii) any default in the performance
of any of the covenants or agreements made by the Seller in this
Agreement, (iii) any failure of the Seller to pay, discharge or
perform any of the Excluded Liabilities, or any asserted
liability resulting from any dispute or claim against Purchaser
concerning any of the Excluded Liabilities, or (iv) any third
parry claim which relates to or arises out of the operation of
the Business or the use of the Purchased Assets prior to the
Closing.
(b) From and after the Time of Closing, the Purchaser
agrees to defend, indemnify and hold the Seller and its
affiliates harmless from and against all indemnifiable damages of
the Seller. For this purpose, "indemnifiable damages" of the
Seller means the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including attorneys' fees
and court costs) incurred or suffered by the Seller, or any of
its directors, agents, employees or affiliates or its affiliates'
directors, agents or employees, as a result of or in connection
with: (i) any inaccurate representation or warranty made by the
Purchaser in or pursuant to this Agreement, (ii) any default in
the performance of any of the covenants or agreements made by the
Purchaser in this Agreement, (iii) any failure of the Purchaser
to pay, discharge or perform any of the Assumed Liabilities, or
any asserted liability resulting from any dispute or claim
against Seller concerning any of the Assumed Liabilities, or (iv)
any third party claim which relates to or arises out of the
operation of the Business or the use of the Purchased Assets at
or after the Closing.
(c) Anything herein to the contrary notwithstanding, the
Purchaser and the Seller shall have no obligation to provide
indemnification hereunder (i) until the indemnifiable damages of
the other party exceed $250,000, in which event the indemnifying
party shall be liable for the full amount of such indemnifiable
damages, (ii) in excess of $2,500,000 or (iii) after the date one
year from the date hereto, at which time all obligation to
provide indemnification hereunder shall cease, provided that the
obligation to provide indemnification shall not terminate with
respect to claims brought before the expiration of the applicable
period. Except for actions to specifically enforce covenants
contained herein, the indemnification contemplated hereby shall
be the parties' sole remedy for any breach of this Agreement.
Section 4.5 Covenant Not to Compete. The Seller agrees
that for a period of five (5) years from and after the Time of
Closing, (a) the Seller and its affiliates that are wholly owned
subsidiaries of WMX Technologies, Inc. will not engage (as an
individual or as a stockholder, trustee, partner, financier,
agent, employee or representative of any person, firm,
corporation or association), or have any interest, direct or
indirect, in any business in competition with the Business, as
that business is constituted at the Time of Closing (whether or
not such business is subsequently carried on by the Purchaser or
by any successor or subsequent purchaser of such business), in
any area in the state of Indiana or Illinois within a 50 mile
radius of the Evansville facility or within a 50 mile radius in
Indiana to the West of the Huntingberg facility and (b) the
Seller and its affiliates will not directly or indirectly solicit
the Customer Accounts to provide services in competition with the
Business or intentionally work with a broker to solicit specific
Customer Accounts to provide services in competition with the
Business; provided that this Covenant Not to Compete Agreement
shall not prevent the Seller or the Owner from (i) acquiring and
holding not to exceed two percent (2%) of the outstanding shares
of any corporation engaged in such a competitive business if such
shares are available to the general public on a national
securities exchange, (ii) from providing disposal services, not
including collection or transportation, for wastes generated in
such area; or (iii) from providing services in competition with
the Business in the area marked on the map attached as Exhibit
4.5, which is the area serviced by an affiliate of Seller.
Section 4.6 Title Policies. With respect to each parcel
of Owned Real Estate, or real estate under option or contract to
be purchased by the Seller (all of which are fisted on Exhibit
1.1(f) hereto), the Seller will, at Seller's cost and expense, at
the Time of Closing, deliver or cause to be delivered to
Purchaser, title insurance policies of a reasonably current date
or binding commitments with extended coverage over general
exceptions (except as to matters as may be approved in writing by
Purchaser) to issue such policies in the name of Purchaser or its
nominee as may be appropriate considering the party to ultimately
hold the subject fee title or option rights. Such policies or
commitments shall be issued by a title insurance company
acceptable to Purchaser in an amount equal to the fair market
value of such real property interest as reasonably determined by
Purchaser.
Section 4.7 Surety Bonds. The Purchaser agrees to obtain
the release of all of the Surety bonds, guaranties and letters of
credit listed on Exhibit 2.9 promptly after the Closing and shall
indemnify, defend and hold the Seller harmless from any
liability, loss, cost or expense that may arise under or in
connection with such surety bonds, guaranties and letters of
credit.
Section 4.8 Arbitration of Disputes. (a) It is
acknowledged by the parties that a quick and efficient resolution
of all claims, disputes and other matters in question under this
Agreement after the Closing ("Dispute") is critical to the
implementation of the terms of this Agreement. In order to
effectuate such intent, the parties hereby establish this Dispute
resolution procedure. All Disputes arising under this Agreement
shall be subject to this Section 4.8. Prior to submission of any
Dispute for resolution in accordance with this Section 4.8, the
parties will negotiate in good faith to resolve such Dispute. If
such parties cannot reach agreement within thirty (30) days of
written notice by any party to the other party that a Dispute
exists, the Dispute shall be submitted for resolution in
accordance with this Section 4.8. Any such dispute shall be
arbitrated upon the filing by either party of a written demand,
with notice to the other party, to and under the rules of a
provider of dispute resolution services (the "Arbitration
Service" acceptable to the parties (to the extent such rules are
not inconsistent with this Section 4.8) in Chicago, Illinois
before a panel of three arbitrators. One arbitrator shall be
appointed by each party with each being appointed within ten days
after the Arbitration Service has given notice of the filing of
the demand for arbitration. The two arbitrators so selected, or
if such arbitrators are unable to select another arbitrator, the
Arbitration Service, shall select a third arbitrator within five
days after the date the latter of the first two arbitrators is
selected. Within ten (10) days after receipt of written notice
of the Dispute being brought to the arbitrators, each party shall
submit to the arbitrators a best and final offer with respect to
each issue submitted to the arbitrators and an accompanying
statement of position containing supporting facts and data. Upon
such Dispute being submitted to the arbitrators for resolution,
the arbitrators shall assume exclusive jurisdiction over the
Dispute, and shall utilize such consultants or experts as they
shall deem appropriate under the circumstances, to assist in the
resolution of the dispute and will be required to authorize a
final, binding determinations not, subject to appeal within
fifteen (15) days of the date of submission. For each issue
decided by the arbitrators, they shall choose the best and final
offer of one party with respect to the issue decided, and the
arbitrators shall not have discretion to modify said best and
final offer. For each issue decided by the arbitrators, they
shall award the expenses of the proceeding, including reasonable
attorneys' fees, to the prevailing party with respect to such
issue. In arriving at their decision, the arbitrators shall
consider the pertinent facts and circumstances as presented in
evidence and be guided by the terms and provisions of this
Agreement and applicable law.
(b) Any arbitration award may be entered as a judgment in
the Federal courts or the courts of the State of Illinois. A
printed transcript of any such arbitration proceeding shall be
kept and each of the parties shall have the right to request a
copy of such transcript.
(c) The parties shall continue to perform their respective
obligations under this Agreement, including payment, during any
Dispute proceeding, unless otherwise agreed in writing by the
parties.
(d) This Section 4.8 shall survive the termination of this
Agreement for a period of three years.
Section 4.9 Transitional Matters. Purchaser agrees to
remove all marks, tradenames, logos and other evidence of
ownership by Seller or any division of Seller from the Purchased
Assets promptly upon request by Seller and in any event within 45
days after the Time of Closing.
Section 4.10 Employees. Prior to the Closing, the
Purchaser shall provide the Seller with a list of all employees
of the Business to be hired by the Purchaser. Purchaser shall
have no liability relating to employees of the Business prior to
the Time of Closing, including liabilities for compensation,
benefits, accrued vacation, workers compensation, disability or
pension benefits, or severance benefits for employees not hired
by Purchaser.
Section 4.11 WARN Act. Purchaser shall not, at any time
prior to the date ninety (90) days after the Time of Closing,
implement any employment terminations, layoffs or hours
reductions of 50% or more that result in a "plant closing" or
"mass layoff' as those terms are defined in The Worker Adjustment
and Retraining Notification Act of 1988 ("WARN") affecting in
whole or in part any facility, site of employment, operating unit
or any employee employed by the conduct of the Business without
complying in all material respects with the requirements of WARN.
Section 4.12 National Accounts. Purchaser acknowledges
that Seller is not transferring to Purchaser Seller's National
Account or regional account customers identified in Exhibit
1.1(c) as part of the Purchased Assets. Seller agrees to notify
National Account customers with locations heretofore serviced by
the Business that Seller has sold the Purchased Assets to the
Purchaser and suggest that such customers contact Purchaser to
arrange for continued service. In any event, neither Seller nor
any affiliate or subcontractor (other than Purchaser) shall
service any of such customers at a location heretofore serviced
by the Business for the duration of the period contemplated in
Section 4.5.
Section 4.13 Billing Assistance. Seller shall mail bills
on behalf of Purchaser to Customer Accounts (residential and
commercial) scheduled to be billed in March and April for
services to be performed by Purchaser, and Purchaser shall
reimburse Seller at a rate of $.50 per invoice.
5. Conditions to the Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Purchased Assets
shall be subject to the fulfillment at or prior to the Time of
Closing of each of the following conditions:
Section 5.1 Closing Certificate. The representations and
warranties of the Seller contained in this Agreement and the
Exhibits hereto shall have been true, complete and correct in all
respects as of the date hereof and they shall be true and correct
in all respects as of the Time of Closing. The Seller shall have
performed and complied in all respects with all of its
obligations required by this Agreement to be performed or
complied with at or prior to the Time of Closing. The Seller
shall have delivered to the Purchaser a certificate, dated as of
the date of the Closing, certifying that such representations and
warranties are true, complete and correct in all respects and
that all such obligations have been performed and complied with
in all respects.
Section 5.2 Certified Resolutions. The Seller shall have
delivered to the Purchaser copies of resolutions adopted by the
board of directors of the Seller authorizing the transactions
contemplated by this Agreement, certified as of the Time of
Closing by the Secretary or Assistant Secretary of the Seller.
Section 5.3 Receipt of Necessary Consents. Except as
contemplated by Section 1.5(c), all necessary pre closing
consents or approvals of any regulatory agency, Grey Farms, Inc.
to any of the transactions contemplated hereby, the absence of
which would adversely affect the Purchaser's rights hereunder
shall have been obtained and evidenced by written documentation
satisfactory to the Purchaser.
Section 5.4 No Adverse Litigation. There shall not be
pending or threatened any action or proceeding by or before any
court or other governmental body which shall seek to restrict,
prohibit or invalidate the sale of the Purchased Assets to the
Purchaser or any other transaction contemplated hereby, and
which, in the reasonable judgment of the Purchaser, makes it
inadvisable to proceed with the transaction contemplated hereby.
Section 5.5 Hart Scott Rodino Requirements. The waiting
period, if any, under the Hart Scott Rodino Antitrust
Improvements Act of 1976 applicable to the acquisition of the
Purchased Assets shall have expired or been terminated.
6. Conditions to Obligations of the Seller. The obligations of
the Seller to sell the Purchased Assets shall be subject to the
fulfillment at or prior to the Time of Closing of each of the
following conditions:
Section 6.1 Closing Certificate. The representations
and warranties of the Purchaser contained in this Agreement shall
have been true and correct in all respects as of the date hereof,
and they shall be true and correct in all respects as of the Time
of Closing. The Purchaser shall have performed and compiled in
all respects with all of its obligations required by this
Agreement to be performed or complied with at or prior to the
Time of Closing. The Purchaser shall have delivered to the
Seller a certificate, dated as of the date of the Closing,
certifying that such representations and warranties are true and
correct in all respects and that all such obligations have been
performed and compiled with in all respects.
Section 6.2 Certified Resolutions. The Purchaser shall
have delivered to the Seller copies of resolutions adopted by the
board of directors and the shareholders of the Purchaser
authorizing the transactions contemplated by this Agreement,
certified in each case as of the Time of Closing by the Secretary
or Assistant Secretary of the Seller.
Section 6.3 Receipt of Necessary Consents. Except as
contemplated by Section 1.5(c), all necessary pre closing
consents or approvals of any regulatory agency to any of the
transactions contemplated hereby, the absence of which would
adversely affect the Seller's rights hereunder shall have been
obtained and evidenced by written documentation satisfactory to
the Seller.
Section 6.4 No Adverse Litigation. There shall not be
pending or threatened any action or proceeding by or before any
court or other governmental body which shall seek to restrain,
prohibit or invalidate the sale of the Purchased Assets to the
Purchaser or any other transaction contemplated hereby, and
which, in the reasonable judgment of the Seller, makes it
inadvisable to proceed with the transaction contemplated hereby.
Section 6.5 Hart Scott Rodino Requirements. The waiting
period, if any, under the Hart Scott Rodino Antitrust
Improvements Act of 1976 applicable to the acquisition of the
Purchased Assets shall have expired or been terminated.
7. Additional Agreements of the Parties.
Section 7.1 [Intentionally left blank].
Section 7.2 Execution of Further Documents. From and
after the Time of Closing, upon the reasonable request of any
party hereto, the other party hereto shall execute, acknowledge
and deliver all such further documents as may be required to
convey and transfer to and vest in the Purchaser and protect its
right, title and interest in all of the Purchased Assets, and as
may be appropriate otherwise to carry out the transactions
contemplated by this Agreement. Following the Closing the
parties shall cooperate with each other and provide reasonable
access to such information as either party may reasonably
request.
8. General Provisions.
Section 8.1 Survival of Representations and Warranties.
All of the respective representations and warranties of the
parties to this Agreement shall survive the consummation of the
transactions contemplated hereby for the periods contemplated by
Section 4.4(c)(iii).
Section 8.2 Brokers' Commission. Each party hereto will
indemnify and hold harmless each other party from any commission,
fee or claim of any person, firm or corporation employed or
retained or claiming to be employed or retained by the
indemnifying party to bring about, or to represent it in, the
transactions contemplated hereby.
Section 8.3 Amendment and Modification. The parties
hereto may amend, modify and supplement this Agreement in such
manner as may be agreed upon by them in writing.
Section 8.4 Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors, assigns, heirs and legal
representatives.
Section 8.5 Entire Agreement. This instrument and the
Exhibits attached hereto contain the entire agreement of the
parties hereto with respect to the purchase of the Purchased
Assets and the other transactions contemplated herein, and
supersede all prior understandings and agreements of the parties
with respect to the subject matter hereof. Any reference herein
to this Agreement shall be deemed to include the Exhibits
attached hereto.
Section 8.6 Headings. The descriptive headings in this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
Section 8.7 Execution in Counterparts. This Agreement
may be executed in any number of counterparts, each of which
shall be deemed an original.
Section 8.8 Notices. Any notice, request, information or
other document to be given hereunder to any of the parties by any
other party shall be in writing and shall be hand delivered or
sent by certified or registered mail, postage prepaid, or by
overnight courier service requesting evidence of receipt as part
of its service, as follows:
(a) If to the Seller, addressed to:
Waste Management of Indiana, LLC
Two Westboro Corporate Center
Suite 1000
Westchester, Illinois 60154
Facsimile No. 7084090773
Attention: General Counsel
Copy to: Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60521
Facsimile No. 6306847061
Attention: General Counsel
(b) If to the Purchaser, addressed to:
American Disposal Services of Missouri, Inc
745 McClintock Drive, Suite 305
Burr Ridge, IL 60521
Facsimile No.6306551455
Attention: General Counsel
Copy to: Waste Management, Inc
3003 Butterfield Road
Oak Brook, IL 60521
Attention: General Counsel
Any party may change the address to which notices hereunder are
to be sent to it by giving written notice of such change of
address as herein provided. Any notice given hereunder shall be
deemed given on the date of mailing.
Section 8.9 Severability. If any provision of this
Agreement is determined to be illegal or unenforceable, such
provision will be deemed amended to the extent necessary to
conform to applicable law or, if it cannot be so amended without
materially altering the intention of the parties, it will be
deemed stricken and the remainder of the Agreement will remain in
full force and effect.
Section 8.10 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Illinois applicable to contracts made and to be
performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
American Disposal Services of Missouri, Inc.
("Purchaser")
By: /s/Richard De Young
Name Richard De Young
Title President
Waste Management of Indiana, LLC ("Seller")
By: /s/William B. Terry
Name William B. Terry
Title President
Seller's FEIN:
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of the 24th
day of March, 1997, by and among LIBERTY DISPOSAL, INC., JOHN M.
HARPOOTIAN, Trustee, THE LIBERTY DISPOSAL, INC. CHARITABLE
REMAINDER ANNUITY TRUST 1997 (collectively "Seller") and
AMERICAN DISPOSAL SERVICES OF MISSOURI, INC., an Oklahoma
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell to Buyer and Buyer
desires to purchase Seller's tangible assets as set forth on
Schedule 3(a), all contractual rights, accounts receivable,
customer lists maintained by Seller in connection with its trash
collection operations (the "Business"), the name Liberty
Disposal, Inc. and all goodwill associated therewith as more
specifically described in paragraph 3 below (the "Assets"), and
Seller desires to grant to Buyer and Buyer desires to acquire
from seller a covenant not to compete for a period of five (5)
years, all upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and
mutual covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged, it is hereby mutually agreed as follows:
1. Seller's Warranties and Representations. To
induce the making of the transaction hereinafter provided for,
Seller represents and warrants as follows:
(a) Financial Materials. Seller has heretofore
delivered to Buyer sales and expenses information with respect to
periods prior to December 31, 1996 (the "Balance Sheet Date") of
its trash collection and disposal operations which are complete,
true and accurate in all material respects, and which are
attached hereto on Schedule 1(a). Seller will deliver to Buyer a
compilation financial statement prepared by Anthony J. Damiani,
Inc. for the Seller for the period ending March 31, 1997, which
shall contain a balance sheet and income and expense statement,
which financial statement shall be complete, true and accurate in
all material respects.
(b) Title to Assets and Absence of Encumbrances.
Except as set forth on Schedule 1 (b), Seller owns, and on the
Closing Date will own and have good and marketable title to, the
Assets, such assets to be free and clear of all liens and
encumbrances of every kind and nature as of the Closing Date,
including, without limitation, any liabilities related to unpaid
sales tax, use tax, or bulk sales tax. Seller has not entered
into any contract to sell, mortgage, or otherwise encumber any of
the Assets except in the ordinary course of business, and there
are not, and at the time of closing will not be, any judgments,
tax liens, other liens, actions or proceedings in any court
against such assets or property other than as itemized on
Schedule 1(b) attached. Seller has not received any notice of
violation of any laws, regulations, ordinances or other laws,
regulations or requirements relating to the operation of the
Business or the Assets.
(c) Operating Condition. To the best of Seller's
knowledge, all containers, equipment and other tangible assets
being sold hereunder are in operating condition, subject only to
normal wear and tear thereof.
(d) Conduct of Business. Since the Balance Sheet
Date, there has not been:
(i) Any adverse change in the condition
(financial or other) of the trash collection and disposal
business of Seller, except changes in the ordinary course of
business, none of which has had a material effect on Seller;
(ii) Any damage, destruction or loss (whether or
not covered by insurance) materially or adversely affecting the
Assets or the Business;
(iii) Any sale of inventory, containers,
equipment and other assets other than in the ordinary course of
business; or
(iv) Any other occurrence, event or condition
which materially adversely affects or may materially adversely
affect the Business or the Assets.
(e) Seller's Records. Seller will make available to
Buyer all of its trash service business records, including
specifically, but not exclusively, accounts receivable and sales
and gross profit records showing details concerning purchases and
payments by customers, payroll and workers compensation records.
Buyer agrees to use such information only for the express purpose
of Buyer's Diligence as hereinafter defined and will maintain
such information in a confidential manner, consistent with the
provisions of the Letter of Intent executed by the parties hereto
on December 18, 1996.
(f) Contracts; Deposits. Except as disclosed on
Schedule 1(f) (the "Business Contracts"), neither Seller nor any
agent or employee of Seller is a party to any contract, agreement
or arrangement, whether written or otherwise, which relates to
the Business and (i) provides for Seller providing trash
collection services to any other person, (ii) provides for any
person to provide to Seller services or supplies, inventory,
equipment or other goods, (iii) is an employment contract or
otherwise provides for the paying of any salary, bonus or benefit
to any employee, (iv) which is a lease or sublease with respect
to any real or personal property, whether as lessor or lessee,
(v) is an advertising contract or contract for public relation
services or (vi) which is not terminable without cost or other
liability at will. Except as disclosed on Schedule 1(k)
regarding consent to assignment of contracts, neither Seller nor
any agent or employee of Seller is a party to any contract,
license agreement, or restriction, whether written or otherwise,
which limits or restricts the sale, lease or use of the Assets.
Seller does not have any arrangements, commitments or
undertakings with any customers or suppliers which requires any
special undertakings, commitments or efforts on the part of
Seller or which do not permit Seller from billing for Seller's
services at Seller's going rates. Without limiting the
generality of the foregoing, Seller is under no obligation to
provide and has not provided any bags, containers or equipment
(other than those included in the Assets) or any additional or
reduced rate collection times to any of its customers. Seller
has provided to Buyer a current pick up schedule for Seller's
customers. There have been no statements, notices, threats or
other indications that the validity, enforceability or term of
any of the Business Contracts may be challenged, questioned or
otherwise adversely affected. There exists no condition or event
which, after notice or lapse of time or both, would constitute a
default under any of the Business Contracts. Seller has not
received and is not obligated to pay or refund to any customer
any deposits, security deposits or prepaid amounts (except as
accounted for pursuant to paragraph 5, below).
(g) Customer List. Seller will provide to Buyer prior
to closing a Schedule 1 (g) list of its principal customers in
its trash collection and disposal service operations and a
description of all contracts under which such services are
performed. Such list provided on Schedule 1 (g) will be true and
accurate as of the date set forth on such list and Seller has not
received any notice in writing that any customer listed will not
continue as a customer of Buyer after the closing.
(h) Business. Seller shall use its best efforts to
maintain the goodwill of Seller's suppliers, customers and others
having business relations with Seller.
(i) Adequacy of Rights. Other than the rights and
assets to be conveyed pursuant to this Agreement, no additional
franchises, licenses or other rights to trade names or trademarks
are necessary for Buyer to effectively use and sell the Assets
and conduct the Business previously conducted by Seller.
(j) Authority Relative to this Agreement. Seller has
full and requisite power and authority to execute and deliver
this Agreement and to carry out its obligations hereunder.
(k) No Conflicts. Except as disclosed on Schedule
1(k) hereto, neither the execution, delivery nor performance of
this Agreement will violate any law, statute, rule or regulation
of any governmental agency or authority, nor will conflict with
or result in a breach of, or constitute a default under, any
term, condition or provision of any judgment, order, injunction
or decree, any permit, Business Contract or any agreement or
instrument to which Seller is a party or by which it or any of
the Assets are bound, nor result in the creation of any lien,
charge or encumbrance of any of the Assets. Buyer agrees that it
will obtain legal advice concerning the applicability of the Hart
Scott Rodino Antitrust Improvements Act of 1976 to this
transaction, and Buyer acknowledges and agrees that Seller makes
no representation hereunder with respect to the applicability of
the Hart Scott Rodino Anti trust Improvements Act of 1976 to this
transaction.
(l) Accounts Receivable. The accounts receivable of
Seller have arisen in bona fide transactions in the ordinary
course of business.
(m) Environmental Matters. Except as specifically
outlined on Schedule 1(m), the following statements are true and
correct:
(i) In connection with the use, ownership,
condition or operation of the Business and the Assets, Seller and
each person or entity owning or having owned any interest (lease
hold, fee or otherwise) in, or operating or having operated, the
Assets, has complied in all material respects with all laws,
ordinances, permits, orders, statutes, rules, permitting and
licensing requirements, determinations and regulations
promulgated or issued or applied by any municipal, local, city,
county, state or federal court, agency, board, legislature,
commission or other legislative, judicial, administrative or
regulatory body ("Governmental Body") relating to the protection
of the environment (including, without limitation, ambient air,
surface water, groundwater and land, natural resources, wildlife
or human health) ("Environmental Laws") (including, without
limitation, all Environmental Laws concerning (i) emissions,
discharges, spills, leaks, releases or threatened releases
("Releases") of petroleum (including, without limitation, oil,
used oil, waste oil, gasoline, constituents thereof and petroleum
based fuels), petroleum by products, petroleum wastes, petroleum
contaminated soils, salt water, asbestos, wastes associated with
oil and gas drilling, exploration and production activities,
pollutants, contaminants, deleterious substances, chemicals,
special waste, or radioactive substances and materials, or
"hazardous substances," "toxic substances," or "hazardous
wastes," as those terms are defined in any Environmental Law
(hereinafter individually and collectively called "Pollutants"),
into the environment, or (ii) the production, manufacture,
processing, distribution, generation, use, treatment, storage,
disposal, transportation, or handling of Pollutants), in
connection with which the failure to comply could reasonably be
expected to result in the Seller or Buyer incurring an expense,
cost, loss or liability of more than $5,000 individually or in
the aggregate.
(ii) Seller is not aware, and has not received
notice from any Governmental Body, person or entity, of any
Release, event, condition, circumstance, activity, practice or
incident concerning the Business or the Assets that (i) may
interfere with or prevent compliance or continued compliance by
the Company with any Environmental Law, (ii) may give rise to or
result in any common law or other liability of Seller or Buyer to
any person, entity or Governmental Body for damage or injury to
natural resources, wildlife, human health or the environment, or
(iii) could reasonably be expected to result in Seller or Buyer
incurring an expense, cost, loss or liability of more than $5,000
individually or in the aggregate.
(iii) There is no civil, criminal, or
administrative action, lawsuit, demand, litigation, claim,
hearing, notice of violation, investigation, proceeding,
injunction, writ, restricting order or other order of any nature
pending or threatened against the Seller, or any present or
former owner of any interest in, or operator of, the Assets
respecting the maintenance of a nuisance, or the violation of any
Environmental Law, or any duty arising at common law to any
person, entity or Governmental Body.
(iv) There is not now and there has never been,
any underground tank or container situated in, at or on any
premises owned or operated by Seller which was used to store or
as a container for any Pollutant. Aboveground tanks are
identified on Schedule 1(m).
(v) Seller has obtained or has taken appropriate
steps, as required by Environmental Laws, to obtain all
environmental, health and safety permits necessary for his
operations as currently conducted, all such permits are in good
standing, and Seller is currently in compliance with all terms
and conditions of such permits.
(n) Revenue. The average monthly revenue of Seller
from the Business has been at least $583,000.00 during the
immediately preceding 6 months. The average monthly revenue
collected from the Business as defined during the three months of
May, June and July immediately following the Closing Date (the
"Test Period") shall be at least $550,000.00 (the "Guaranteed
Revenue"). At Seller's option the Test Period may be extended
up to an additional three months, through October 31, 1997. If
actual average monthly revenue collected from the Business for
work during the Test Period, or the Test Period as extended, is
less than Guaranteed Revenue and the average monthly deficiency
is attributable to:
(i) a material change in service by Buyer; or
(ii) any increase in pricing,
then Guaranteed Revenue shall be reduced by the amount of the
average monthly deficiency ("Adjusted Guaranteed Revenue"). If
actual average monthly revenue from the Business as defined
herein for the Test Period is less than Guaranteed Revenue or
Adjusted Guaranteed Revenue, then an amount equal to 20 times the
average monthly deficiency shall be deemed to be Buyer's loss,
damage or expense resulting from Seller's breach of this
representation and warranty.
For purposes of this Paragraph 1(n) the Seller and Buyer agree
that during the Test Period,
(iii) all of the Business of Seller and Buyer
doing business as T&J Container Systems ("T&J") will be kept
separate, however, if Seller opts to extend the Test Period
pursuant to this Paragraph 1(n), then Buyer may consolidate the
Business of Seller with that of T&J during the extended Test
Period (August, September and October, 1997). Notwithstanding
the foregoing, Buyer shall put in place its own insurance
coverage during the Test Period and further, Buyer shall deposit
all monies collected from the Business into Buyer's banking
account and shall pay all accounts payable out of Buyer's banking
account. In other words, all cash deposits and accounts payable
will be converted to Buyer's accounting systems as of the Closing
Date.
(iv) If Buyer doing business as T&J disposes of
construction and demolition material at Seller's processing
facility, Buyer shall credit Seller at the agreed upon price of
thirty five dollars ($35.00) per ton and such revenues will be
included in computing Seller's actual average monthly revenue for
purposes of meeting the Guaranteed Revenue amount;
(v) If accounts receivable attributable to
municipal contracts for North Providence, East Providence,
Warren, Somerset and Swansea have not been collected during the
Test Period but Seller verifies that such municipality(ies) have
been billed, then the revenues attributable to such municipal
contract(s) will be included in computing Seller's actual average
monthly revenue for purposes of meeting the Guaranteed Revenue
amount.
(vi) All of Seller's customers will be invoiced on
Seller's existing invoice stock, utilizing Seller's computerized
billing system as it exists on the Closing Date;
(vii) Seller's telephone lines will be
maintained separately from Buyer doing business as T&J and any
person calling Seller's existing telephone number for new or
additional service will be included in computing Seller's actual
average monthly revenue for purposes of meeting the Guaranteed
Revenue amount. However, notwithstanding the foregoing, any new
customer of Seller which is an existing customer of Buyer as of
the Closing Date shall not be included in computing Seller's
actual average monthly revenue, and conversely any new customer
of Buyer which is an existing customer of Seller as of the
Closing Date shall be included in computing Seller's actual
average monthly revenue.
(viii) Except as legally required, during the
Test Period (and any extension thereof) Buyer will not disclose
to the general public through a press release or other public
announcement its acquisition of assets of Seller. However, Buyer
shall be entitled any time on or after the Closing Date to make
any and all submissions of information which are either legally
required, or are necessary in Buyer's sole opinion, to any
governmental body including but not limited to the Securities
Exchange Commission.
(ix) During the Test Period Seller and Buyer agree
that no short term (less than one year) work which is priced
below the pricing floors outlined on the price list attached as
Schedule 1 (n) (ix) will be included in computing Seller's actual
average monthly revenue for purposes of meeting the Guaranteed
Revenue amount, unless consented to by Buyer.
2. Buyer's Warranties and Representations. To induce
the making of this transaction hereinafter provided for, Buyer
represents and warrants as follows:
(a) Corporation. Buyer (i) is a corporation duly
organized validly existing and in good standing under the laws of
the State of Oklahoma, (ii) is authorized to transact business in
the State of Rhode Island and (iii) has the corporate power and
authority to purchase the property being sold hereunder.
(b) Compliance with Laws. The execution, delivery and
performance of this Agreement by the Buyer including, without
limitation, the purchase and acceptance contemplated hereby have
been or will be prior to closing duly and effectively authorized
by Buyer's Board of Directors and do not and will not violate the
Hart Scott Rodino Antitrust Improvements Act of 1976 or any
provision of any judicial or governmental decree, order or
judgement or conflict with or result in a breach or constitute a
default under, the Certificate of Incorporation or Bylaws of
Buyer. In addition the execution, delivery and performance of
this Agreement will not violate any law, statute, rule or
regulation of any agency or governmental authority which is
applicable to Buyer prior to the Closing Date, and will not
conflict with, breach or constitute an event of default under any
judgment, order, injunction, decree, permit, contract, agreement
or instrument to which the Buyer is a party prior to the Closing
Date.
3. Purchase and Sale. Subject to and upon the terms
and conditions hereinafter set forth, Seller hereby agrees to
sell, transfer, convey and assign to Buyer pursuant to the
Assignment and Bill of Sale attached hereto as Exhibit A, and the
Assignment of Business Contracts attached hereto as Exhibit B,
and Buyer agrees to purchase from Seller, all of the following
described Assets:
(a) The equipment and other operating assets described
on Schedule 3(a), together with approximately 2,014 containers
and 39 compactors, which shall be identified on a revised
Schedule 3(a) to be delivered by Seller to Buyer at Closing.
(b) The Accounts Receivable of Seller determined in
accordance with Paragraph 6(a).
(c) The Business Contracts, customer lists, business
property, the name "Liberty Disposal, Inc.", and all other
contract rights, intangible assets and the goodwill associated
with any of the foregoing used or useful in the Business and all
records, documents and all information in Seller's possession as
may be reasonably necessary to enable Buyer to efficiently use
the Assets.
Buyer does not intend to purchase any interest in,
and the term "Assets" shall not include, Seller's employee
benefit plans, cash or equivalents, certificates of deposits,
income tax refunds or real property. Buyer shall not assume and
Seller expressly agrees to retain and satisfy, any liability or
obligation of Seller which arises directly or indirectly out of
acts or omissions of the Seller prior to the Closing. Other than
as specifically and expressly assumed in writing by Buyer, and
identified on Schedule 3(c), Buyer shall not assume and Seller
expressly agrees to retain and satisfy any liability or
obligation of Seller arising prior to or after the Closing.
4. Consideration for Such Purchase Sale. As and for
the purchase price of the Assets and for the covenant not to
compete, Buyer agrees to pay, and Seller agrees to accept same:
(a) For the Assets described in Paragraph 3(a),
$2,600,000.00, unless adjusted pursuant to Schedule 4(a).
(b) For the Accounts Receivable, the AR Amount as
determined and adjusted in accordance with Paragraph 6.
(c) For the Assets described in Paragraph 3(c),
$11,800,000.00, plus monthly purchase price payments of $12,500
per month for 24 months subject to termination in accordance with
the terms and conditions of Schedule 12 attached.
(d) For the covenant not to compete provided for in
Paragraph 8 $100,000.00.
(e) For the approved capital expenditures and prorated
truck registration payments, that amount identified on Schedule
4(e).
5. Holdback. The purchase price specified in
Paragraph 4 above for the Assets and the covenant not to compete
shall be paid to Seller as follows:
(a) Eleven million, six hundred thousand dollars
($11,600,000.00) plus the AR Amount plus those additional amounts
identified on Schedule 4(e) for approved capital expenditures and
truck registration payments shall be paid in cash to Seller at
Closing.
(b) Two million, nine hundred thousand dollars
($2,900,000.00) shall be held in an Escrow Account established by
Seller and Buyer in Rhode Island (the "Holdback") for a period
of 120 days from the Effective Date or for a period of 30 days
beyond the end of the Test Period if Seller opts to extend the
Test Period under Paragraph 1(n), or as provided in paragraph
5(c) or 5(d) below to protect Buyer against breach of any of
Seller's warranties, representations and covenants, specifically
including but not limited to, those relating to Accounts
Receivable.
(c) The Holdback amount shall be returned to Seller as
follows:
(i) if Buyer makes no claim of breach of any of
Seller's representations, warranties or covenants, then the
Holdback shall be paid in full in cash to Seller within one
hundred and twenty days of the Effective Date, or no later than
thirty (30) days beyond the end of the Test Period if Seller opts
to extend the Test Period under Paragraph 1(n).
(ii) if Buyer asserts there has been a breach of
any of Seller's representations, warranties or covenants, then
Buyer shall notify Seller in writing setting forth the nature of
the breach and/or the amount of loss, damage, cost or expense,
which amount shall remain in the Holdback until the dispute is
resolved. A claim by Buyer against the Holdback must total at
least five thousand dollars ($5,000.00) in the aggregate before
Buyer shall notify Seller, however, once Buyer's claim(s) total
at least five thousand dollars ($5,000.00) in the aggregate, then
Seller shall be liable for the full amount of such claim(s) and
not just for the incremental amount above $5,000.00. The amount
of the Holdback which is not in dispute shall be returned to
Seller pursuant to paragraph 5(c)(i) above. The balance of the
Holdback shall be returned to Seller on the date on which any
unresolved claim asserted by Buyer against Seller is finally
resolved.
(iii) if Seller disputes Buyer's assertion of
breach or loss or damage, then Seller shall notify Buyer of the
dispute in writing. The parties shall then negotiate in good
faith to resolve the dispute within a thirty (30) day period
following Seller's notice to Buyer. If the dispute is not
resolved within the thirty (30) day period, then both parties
reserve all their rights and remedies to resolve the matter.
(d) The Holdback amount shall be deposited in an
Escrow account created by the Seller at a bank located in Rhode
Island and approved by the Buyer subject to the following terms,
conditions and restrictions:
(i) the term of the Escrow shall extend at a
minimum to a date one hundred and twenty (120) days from the
Effective Date, or to a date thirty days from the end of the
Test Period if Seller opts to extend the Test Period under
Paragraph 1(n), and shall terminate on such date if none of the
Holdback amount is in dispute, at which time all funds in the
Escrow which are not subject to an unresolved claim of the Buyer,
shall be distributed to the Seller;
(ii) if the Buyer makes a claim, it shall be
satisfied from the Holdback amount in the Escrow account as soon
as it is authorized by the parties;
(iii) no withdrawals or distributions shall be
made from the Escrow account without the written authorization of
Seller and Buyer, neither of which shall unreasonably withhold
the same;
(iv) when all funds have been fully and completely
distributed, the Escrow account shall automatically terminate.
6. Determination of Accounts Receivable; Prepaids.
(a) As used herein, "Accounts Receivable" means those
accounts receivable of Seller attributable to the Business;
provided, however, Accounts Receivable shall not include: (i)
any accounts which are more than ninety (90) days past due on the
Closing Date, or (ii) any accounts no longer serviced by Seller.
Seller shall provide Buyer with an Accounts Receivable aging
schedule dated immediately prior to the Closing Date. The aging
schedule will identify Accounts Receivable for work performed in
March, 1997 as 30 days past due, work performed in February, 1997
as 60 days past due and work performed in January, 1997 as 90
days past due.
(b) Buyer shall collect on all Accounts Receivable in
the ordinary course of business. In furtherance of the
foregoing, checks and other payments received by the Buyer after
the Closing Date shall be applied as received to the oldest
outstanding balance of the Accounts Receivable. Buyer shall be
under no obligation to institute any legal proceedings or
otherwise take any action to collect accounts receivable not
purchased from Seller if it would require the Buyer to make any
out of pocket expenditures. However, on a twice monthly basis
the Buyer shall remit to Seller any amounts collected which are
in excess of Accounts Receivable and are therefore attributable
to those accounts receivable of Seller which were not purchased
by Buyer, minus any undisputed accounts payable incurred by the
Seller prior to the Closing Date, along with a description of the
accounts paid. Seller shall be entitled to pursue by all lawful
methods or actions any of Seller's uncollected accounts
receivable which were not purchased by Buyer. The purchase price
for the Accounts Receivable purchased hereunder shall be 85% of
their aggregate face value minus any amounts of the Accounts
Receivable which are attributable to services to be rendered by
Buyer on or after the Closing Date (collectively, the "AR
Amount").
(c) It is understood and agreed that any amounts which
have been received by Seller from any customers which are to be
serviced by Buyer and which are attributable to periods on or
after the Closing Date shall be pro rated and the portion
attributable to such post closing periods shall be paid by Seller
to Buyer ("Prepaid Amounts"). At Closing Seller shall deliver to
Buyer a schedule of the Prepaid Amounts as of the close of
business the day immediately preceding closing (detailing by
customer the amount received and the time period covered
thereby). For purposes of the payment to Seller at Closing, the
Prepaid Amount shall be deducted from the AR Amount.
7. Creditors: Diligence.
(a) Seller acknowledges that Buyer may conduct
business with some or all of Seller's trade creditors and that it
could interfere with Buyer's business if such parties are not
paid. Seller agrees that it will, within any grace periods
provided by Seller's creditors, cause all trade creditors to be
paid in full. Seller may, in good faith, dispute any amounts
claimed to be owed to such creditors. Seller shall furnish to
Buyer such information about Seller's creditors as Buyer may
reasonably request. At least ten (10) days prior to Closing,
Seller shall furnish a list of its existing creditors and the
amounts owed. Such list shall include any contingent liabilities
and disputed amounts.
(b) Seller shall allow Buyer at its own expense,
during regular business hours through Buyer's employees, agents
and representatives, to make such investigation of the business,
properties, books and records of Seller, and to conduct such
examination of the condition of the Assets and Seller's business
as Buyer deems necessary or advisable to familiarize itself
further with such business, properties, books, records, condition
and other matters, to verify the representations and warranties
of Seller hereunder ("Buyer's Diligence"). Buyer's Diligence may
include the performance of an environmental audit by persons
chosen by Buyer. Without limiting the scope of this provision,
it is understood that Buyer will conduct an audit of the Assets
and operations of Seller, will verify that the historical
revenues from the operations of Seller are at least $583,000.00
per month, that there are no liens, claims or encumbrances on any
of the Assets, that the Assets and operations of Seller are
generally suitable to Buyer and that Buyer can expect the
existing customers of Seller to continue with Buyer after
Closing. Seller agrees to cooperate fully in Buyer's conduct of
a financial audit and further agrees to provide Buyer with
whatever help may be necessary, including the assistance of both
its employees and its independent public accountant to facilitate
conclusion of Buyer's financial audit as soon as possible.
Seller acknowledges that time is of the essence in the conduct of
the audit. Seller hereby consents to the release by any
governmental body, agency, commission, department, or other
governmental entity of any and all information concerning Seller,
its business and the Assets.
8. Covenant Not to Compete. Seller and Joseph L.
Vinagro will deliver to Buyer at Closing a separate agreement
whereby Seller and Joseph L. Vinagro will covenant and agree with
Buyer, for the benefit of Buyer, its successors and assigns, that
Seller and Joseph L. Vinagro will not, without the written
consent of Buyer for the period commencing on the date of Closing
and ending five (5) years from such date, engage or be
interested, directly or indirectly, whether alone or together
with or on behalf of or through any other person, firm,
association, trust, venture or corporation whether as partner,
stockholder, agent, officer, director, employee, technical
adviser, lender, trustee, beneficiary or otherwise, in any phase
of the solid waste collection, recycling and disposal business.
The term "engage or be interested" directly or
indirectly, as used herein, shall include giving advice or
technical or financial assistance, by loan, guarantee, stock
transactions or in any other manner to any person, firm,
association, trust, venture or corporation, doing such trash
collection or disposal service in a geographic area comprising a
75 mile radius from the center of Johnston, Rhode Island.
9. Filing of Fictitious Name. If Buyer chooses to
operate the Business under the name "Liberty Disposal, " Buyer
shall either file an application for use of such fictitious name,
or incorporate a subsidiary using such name, with the Secretary
of State of Rhode Island to be effective on the Closing Date.
Seller shall not operate the Business, or operate any business or
other activity under the name "Liberty Disposal, Inc." or
similar name on or after the Closing Date, unless otherwise
permitted in writing by Buyer.
10. Conditions of Buyer to Closing. All obligations
of Buyer under this Agreement are subject to fulfillment of each
of the following conditions:
(a) The representations and warranties of Seller
contained in the Agreement or in any certificate or document
delivered pursuant hereto or in connection with the transaction
contemplated hereby, shall be true and correct on and as of
closing date as though such representations and warranties were
made on and as of such date, and Seller shall have complied with
all of its covenants and agreements herein. At Closing, Seller
shall deliver to Buyer a certificate that the foregoing is true
and correct.
(b) Buyer shall have been given unfettered opportunity
to review Seller's books and records and conduct Buyer's
Diligence including completion of a 1995 and 1996 financial audit
by March 31, 1997.
(c) Between December 31, 1996 and the date of Closing,
there will not have been any materially adverse change in the
Assets, the Business or the business prospects of the Business.
(d) No claim, action, suit or proceedings shall be
pending or threatened against Seller or Buyer, which, if
adversely determined, would prevent or hinder the consummation of
the transaction and other actions contemplated hereby or result
in the payment of substantial damages as a result of such
transaction and actions.
(e) Between December 31, 1996 and the date of
Closing, Seller shall have operated the Business in a manner
consistent with past practices and made no material change in
Seller's operations.
(f) Seller shall deliver releases of all security
interests covering the Assets being purchased by Buyer hereunder.
(g) Seller shall deliver all necessary assignments of
the Business Contracts.
(h) Seller, Joseph L. Vinagro and Buyer shall have
entered into a Covenant Not to Compete as contemplated by
Paragraph 8 and substantially in the form of Exhibit C.
(i) Buyer shall have reached a satisfactory conclusion
of its due diligence review (its Diligence) and Buyer shall have
made a finding, in its sole opinion, of no legal, environmental,
financial or operational conditions which would prohibit or
impede Buyer's operation of Liberty Disposal, Inc. after Closing.
(j) Buyer shall have received approval from its Board
of the proposed transaction, and if required, approval from the
Federal Trade Commission with respect to the Hart Scott Rodino
Antitrust Improvements Act of 1976.
(k) Buyer and Seller shall have received approval or
consent as required for assignment of Swansea, Mass., Warren, RI,
East Providence, RI, Somerset, Mass., North Providence, RI, and
Little Compton, RI municipal contracts and the contract with the
Solid Waste Management Corporation as described on Schedule 1(f)
of Seller on terms and conditions acceptable to Buyer.
(l) Buyer shall have entered an employment agreement
with Joseph L. Vinagro on terms and conditions mutually
acceptable as shown on attached Schedule 10(l).
(m) Buyer shall have raised sufficient equity to pay
Seller the Purchase Price in accordance with paragraph 4 and 5 of
this Agreement by the Closing Date.
11. Conditions of Seller Closing. All obligations of
Seller under this Agreement are subject to fulfillment of each of
the following conditions:
(a) The representations and warranties of Buyer
contained in the Agreement or in any certificate or document
pursuant to the direction hereof or in connection with the
transaction contemplated hereby, shall be true and correct on and
as of Closing Date as though such representations and warranties
were made on and as of such date, and Buyer shall have fully and
completely satisfied and performed all of its duties, obligations
and covenants set forth in this Agreement.
(b) No claim, action, suit or proceedings shall be
pending or threatened against Seller or Buyer, which, if
adversely determined, would prevent or hinder the consummation of
the transaction and other actions contemplated hereby or result
in the payment of substantial damages as a result of such
transaction and actions.
(c) Buyer shall offer those key employees of Seller
identified on attached Schedule 11(c) employment for two years
from the Effective Date on terms which continue those terms in
place as of December 16, 1996, except that, with respect to those
employees of Seller who have enjoyed free health insurance
benefits, Buyer shall offer a salary adjustment to compensate
such employees for health insurance premiums payable under
Buyer's health insurance plan after the Effective Date. In
addition, Buyer shall offer Joseph R. Vinagro, Anthony Vinagro,
Lisa Leonard and Cheri Riccio employment on those terms and
conditions outlined in the attached Employment Agreements which
are also identified as Schedule 11(c).
12. Transition Period. Buyer shall have the right to
occupy Seller's premises at 116 Shun Pike in Johnston, Rhode
Island during the transition period following the Closing Date
under those terms and conditions outlined in the Transition
Period Agreement attached hereto as Schedule 12. Such occupancy
by Buyer shall not exceed a transition period of twenty four
months. Buyer shall give Seller sixty (60) days advance notice
of its intention to terminate occupancy of Seller's premises.
During the transition period and thereafter Seller shall retain
all liabilities, obligations, contracts or commitments of Seller
as outlined in Section 17 of this Agreement. Buyer shall be
liable for payment of real estate taxes, utilities and
maintenance and repairs necessitated by Buyer's occupancy of
Seller's premises during the transition period. It is the
intention of both Buyer and Seller that Buyer shall not incur any
liability for pre existing or current environmental conditions at
Seller's premises. However, Buyer shall be responsible for any
act or omission of Buyer during its occupancy of Seller's
premises which results in environmental liability at the
premises.
13. Conduct of Seller's Business and Pending Closing.
Between the date of this Agreement to and including the time of
Closing, Seller will conduct the Business only in the ordinary
course. Without limitation of the foregoing, Seller will not
take any action inconsistent with the following:
(a) Neither the Assets or Seller's business shall have
been materially adversely
affected, as a result of any fire, casualty, act of God, or the
public enemy, or any labor disputes or disturbance.
(b) Seller shall use its best efforts to maintain its
business relations with its customers, suppliers and employees.
(c) There shall have been no amendment, waiver,
termination or materially adverse changes in any of the Business
Contracts.
(d) There shall have been made no new contracts or
commitments for the Business except in the ordinary course of
business and any contracts not terminable at will must have been
approved in advance in writing by Buyer.
(e) There shall exist no violation of any law or
regulation materially adversely affecting any of the Assets or
the Business and Seller shall comply with all such laws and
regulations.
(f) Seller shall not have incurred any additional
indebtedness except such indebtedness as may arise as a result of
normal and usual transactions in the ordinary course of Seller's
business.
(g) Seller shall keep and maintain all tangible Assets
in good working order and repair and shall maintain insurance in
the ordinary course of business.
14. Survival of Warranties. All representations and
warranties herein made shall survive for a period of one year
after the Closing hereunder, and the truth and accuracy of the
same shall constitute conditions of Buyer's obligations to close
hereunder and to pay the purchase price herein provided for, any
of which conditions, however, may be waived by Buyer in whole or
in part at Buyer's option.
15. Assignment. This Agreement may not be assigned in
whole or in part without the written consent of the other party.
16. Closing.
(a) At the time of execution of this Agreement, Buyer
shall pay Seller one hundred thousand dollars ($100,000.00) (the
"Earnest Money") of the Purchase Price described in Paragraph 4.
The Earnest Money shall be deposited in the Escrow Account
established by Buyer and Seller. The date of closing shall be
May 1, 1997, if all conditions to closing have been satisfied, or
such other date as the parties shall mutually agree after the
satisfaction of all conditions (the "Closing Date"). The
effective date of this transaction shall be May 1, 1997 (the
"Effective Date"), or such other date as the parties shall
mutually agree upon. However, the parties mutually agree that
time is of the essence in Closing this transaction.
(b) At said Closing, Buyer shall pay the purchase
price in accordance with Paragraph 4 and 5, deducting the Earnest
Money previously paid by Buyer to Seller at the time of execution
of this Agreement. Contemporaneously therewith, Seller shall
transfer title to and convey to Buyer at the offices of Seller's
Counsel all of the Assets and shall execute and deliver to Buyer
such bills of sale and other instruments as may be appropriate or
necessary to transfer title to the Assets. The form of all
instruments of transfer shall be subject to approval by counsel
for Buyer.
17. Termination of Agreement.
(a) This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the date of
closing:
(i) By mutual consent of Buyer and Seller;
(ii) By Buyer if there has been a material
misrepresentation or breach of any of the representations,
warranties or covenants of the Seller set forth herein (or in any
schedule or certificate delivered pursuant hereto);
(iii) By Buyer if the conditions of Buyer to
closing cannot be satisfied;
(iv) By Seller if there has been a material
misrepresentation or breach of any of the representations,
warranties or covenants of Buyer set forth herein or if Seller's
conditions to closing cannot be satisfied; or
(v) By either Buyer or Seller if the Closing has
not occurred on or before June 1, 1997.
(b) In the event this Agreement shall be terminated
pursuant to Paragraph 17 (a) all further obligations of Buyer and
Seller under this Agreement shall terminate without further
liability to either party, subject to the following:
(i) A termination pursuant to Section 17(a)(i) or
(ii) shall result in immediate release of the Earnest Money from
Escrow and return of the Earnest Money to Buyer. Both Buyer and
Seller shall instruct the Escrow Agent to release the Earnest
Money to Buyer.
(ii) A termination pursuant to Section 17(a)(iii),
(excluding however a termination due to the failure to satisfy
Buyer's condition Section 10(i), Section 10(j) or Section 10(m)
of this Agreement) shall result in immediate release of the
Earnest Money from Escrow and return of the Earnest Money to
Buyer. Both Buyer and Seller shall instruct the Escrow Agent to
release the Earnest Money to Buyer.
(iii) A termination pursuant to Section
17(a)(iv) or (v) or a termination pursuant to Section 17(a)(iii)
if such termination is caused by a failure of Buyer to satisfy
conditions Sections 10(i), (j) or (m), shall result in immediate
release of the Earnest Money from Escrow and payment of the
Earnest Money to Seller. Both Buyer and Seller shall instruct
the Escrow Agent to release the Earnest Money to Seller.
18. Indemnification of Buyer. Buyer is not assuming
any of the liabilities, obligations, contracts or commitments of
Seller, other than the contractual obligations to Seller's
customers pursuant to the Business Contracts and then only to the
extent such obligations arise after Closing and were specifically
disclosed to Buyer. Specifically, Buyer is not assuming any of
the liabilities, obligations, contracts or commitments of Seller
with respect to any environmental conditions at, on , under or
migrating from property owned or leased by Seller. Seller does
hereby agree to retain responsibility for and defend, indemnify
and hold harmless Buyer and its affiliates, from, against and in
respect to any and all liabilities, losses, costs, damages,
penalties or deficiencies (including, without limitation,
reasonable attorney's fees) relating to or resulting from (i) any
breach by Seller of any covenant, warranty or representation
contained in this Agreement or any inaccuracy of any document
delivered by Seller to Buyer pursuant to the terms of this
Agreement, including without limitation, any exhibit or schedule
thereto; (ii) any actions or inactions of Seller or any
operations of Seller's business and the Assets prior to the
Closing, including, without limitation, the liabilities of Seller
for any matters relating to Seller's employees, whether or not
hired by Buyer, all existing contractual liability (whether or
not assumed by Buyer), all claims and demands of Seller's
customers relating to periods prior to Closing, and any
liabilities related to unpaid sales tax, use tax, or bulk sales
tax, (iii) failure to comply with all Environmental Laws prior to
Closing; (iv) any liability arising under 42 U.S.C. Section 9601
et seq. as amended or pursuant to any state, local or private
remediation request, requirement or demand arising before or
after the Closing Date excluding however any liability which is
attributable to Buyer's acts or omissions during occupancy of
Seller's premises in the transition period described in Section
12 of this Agreement; and (v) any failure of Seller or Buyer to
comply with applicable bulk sales, bulk sales tax or similar
laws.
19. Indemnification of Seller. Buyer does hereby
agree to retain responsibility for and defend, indemnify and hold
harmless Seller from, against and in respect to any and all
liabilities, losses, costs, damages, penalties or deficiencies
(including, without limitation, reasonable attorney's fees)
relating to or resulting from (i) any breach by Buyer of any
covenant, warranty or representation contained in this Agreement
or any inaccuracy of any document delivered by Buyer to Seller
pursuant to the terms of this Agreement, including without
limitation, any exhibit or schedule thereto; (ii) any actions or
inactions of Buyer or any operations of the Business and the
Assets after the Closing, including, without limitation, the
liabilities of Buyer for any matters relating to Buyer's
employees, and all claims and demands of Buyer's customers
relating to periods after the Closing; (iii) failure to comply
with all Environmental Laws after the Closing; (iv) any liability
arising under 42 U.S.C. Section 9601 et seq. as amended or
pursuant to any state, local or private remediation request,
requirement or demand arising after the Closing Date which is
attributable to Buyer's acts or omissions during occupancy of
Seller's premises in the transition period described in Section
12 of this Agreement.
20. Employees of Seller. Except as provided in
paragraph 10(l) and paragraph 11(c), Buyer will accept
application for employment from employees of Seller employed in
its trash collection and disposal business as of the time of
acquiring the Assets, and consider hiring such employees but will
not be obligated to hire such employees.
21. Notices. Any and all notices provided for in this
Agreement shall be given as follows:
To the Buyer: American Disposal Services of Missouri,
Inc.
745 McClintock Drive, Suite 305
Burr Ridge, Illinois 60521
Attn: Richard T. Kogler
To the Seller: Liberty Disposal, Inc.
116 Shun Pike
Johnston, RI 02919
Attn: Joseph L. Vinagro
John M. Harpootian, Trustee
One Providence Washington Place
Providence, RI 02903
To Seller's Counsel:Robert D. Wieck
MacAdams and Wieck Incorporated
108 Dyer Street
Providence, RI 02903
21. Brokers. Seller represents that it has not
engaged or employed any brokers, finders or consultants in
connection with this Agreement and the transaction herein
contained, and Seller shall hold Buyer harmless against any and
all claims or liabilities asserted by or due to any such person
upon the basis of an engagement by Seller. Buyer represents that
it has not engaged or employed any brokers, finders, or
consultants in connection with this Agreement and the transaction
herein contained, and Buyer shall hold Seller harmless against
any and all claims or liabilities asserted by or due to any such
person upon the basis of an engagement by Buyer.
22. Expenses. The parties hereto shall pay their own
expenses in connection with the transaction herein contained
whether or not the same is consummated, other than those expenses
of Seller resulting from Buyer's conduct of a financial audit of
the Business, which expenses (estimated not to exceed $5,000.00)
shall be borne by Buyer.
23. Receipt of Funds. Buyer covenants to deliver to
Seller any funds received by Buyer which apply to any accounts
receivable of Seller not purchased by Buyer. Seller covenants to
deliver to Buyer any funds received by Seller which apply to any
accounts receivable purchased or owned by Buyer.
24. Books and Records. Seller may retain the
originals of all books and records (other than customer
contracts, bills of sale and other evidence of ownership) but
will provide copies of such books and records to Buyer.
Subsequent to the Closing, the Seller will, until such time as
Buyer requests that the originals of all books and records
relating to the Assets or operation of the Business are delivered
to Buyer, or for four years, whichever occurs sooner, (i) retain
and, as the Buyer may from time to time request, permit the Buyer
and its agents to inspect and copy at Buyer's expense, all books
and records (including, without limitation, all data bases and
computer generated records) of the Seller which relate to the
operation of the Assets or the Business and (ii) assist in
arranging discussions with (and the calling as witnesses of )
officers, directors, employees and agents of the Seller on
matters which relate to the Assets or the Business. All books
and records will be kept in their current location until Buyer
has either received the original or a copy of such books and
records, or for a period of four years, whichever occurs sooner.
To the extent Buyer obtains the originals of any books and
records relating to the Business, Buyer will permit Seller and
its agents reasonable access to such books and records as needed
for income tax, accounting and resolution of any disputes.
Seller will maintain all information pertaining to the Assets and
Business in strictest confidence and will not use such
information to the detriment of Buyer or disclose such
information to any third parties, except as may be required by
law and then only after written notice to Buyer at least 30 days
in advance of such disclosure.
25. Parties in Interest. This Agreement shall inure
to the benefit of and bind the parties hereto, and their
successors and assigns.
SELLER: LIBERTY DISPOSAL, INC.
/s/Joseph L. Vinagro
Joseph L. Vinagro
Date: 3/24/97
/s/John M. Harpootian
JOHN M. HARPOOTIAN, Trustee,
THE LIBERTY DISPOSAL, INC. CHARITABLE
TRUST 1997
Date: 3/24/97
BUYER: AMERICAN DISPOSAL SERVICES OF MISSOURI, INC.
By /s/Richard T. Kogler
Richard T. Kogler
Vice President and Chief Operating Officer
Date: 3/24/97
