Attached files
file | filename |
---|---|
8-K - FORM 8-K - Waste Connections US, Inc. | c15132e8vk.htm |
EX-4.5 - EXHIBIT 4.5 - Waste Connections US, Inc. | c15132exv4w5.htm |
EX-99.1 - EXHIBIT 99.1 - Waste Connections US, Inc. | c15132exv99w1.htm |
EX-99.2 - EXHIBIT 99.2 - Waste Connections US, Inc. | c15132exv99w2.htm |
Exhibit 2.1
STOCK PURCHASE AGREEMENT
Dated as of March 31, 2011, by and among
Waste Connections, Inc.,
on the one hand, and
Hudson Valley Waste Holding, Inc., and
County Waste and Recycling Service, Inc.,
and
Scott T. Earl, Clairvest Equity Partners III Limited Partnership,
CEP III Co-Investment Limited Partnership, James Horvath, Angela Horvath,
Paola Horvath and Ernest Palmer,
on the other hand
TABLE OF CONTENTS
Page | ||||
1. PURCHASE OF HOLDING COMPANYS STOCK AND REMAINING MEMBERSHIP INTERESTS |
1 | |||
1.1 Shares to be Purchased |
1 | |||
1.2 Purchase Price |
2 | |||
1.3 Allocation of the Purchase Price |
6 | |||
1.4 Excluded Assets |
7 | |||
2. CLOSING TIME AND PLACE |
7 | |||
2.1 Closing |
7 | |||
2.2 Termination |
7 | |||
2.3 Notice and Effect of Termination |
8 | |||
3. REPRESENTATIONS AND WARRANTIES OF THE HUDSON VALLEY GROUP COMPANIES AND THE SHAREHOLDERS |
9 | |||
3.1 Organization, Standing and Qualification |
9 | |||
3.2 Capitalization |
9 | |||
3.3 Authority for Agreement |
10 | |||
3.4 No Breach or Default |
10 | |||
3.5 Consents Required |
11 | |||
3.6 Subsidiaries |
11 | |||
3.7 Financial Statements |
12 | |||
3.8 Litigation |
12 | |||
3.9 Accurate and Complete Records |
12 | |||
3.10 Licenses and Permits |
13 | |||
3.11 Assets, etc., Necessary to Business |
13 | |||
3.12 Fixed Assets |
14 | |||
3.13 Real Property |
14 | |||
3.14 Contracts |
16 | |||
3.15 Insurance |
17 | |||
3.16 Personnel |
17 | |||
3.17 Benefit Plans and Union Contracts |
18 | |||
3.18 Taxes |
22 | |||
3.19 Copies Complete |
25 | |||
3.20 Customers, Billings, Current Receipts and Receivables |
25 | |||
3.21 No Change |
25 |
Stock Purchase Agreement
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current Liabilities |
27 | |||
3.23 Bank and Credit Card Accounts |
28 | |||
3.24 Compliance With Laws |
29 | |||
3.25 Related Party Transactions |
30 | |||
3.26 Underground Storage Tanks |
31 | |||
3.27 Powers of Attorney |
31 | |||
3.28 Patents, Trademarks, Trade Names, etc |
31 | |||
3.29 Suppliers and Customers |
32 | |||
3.30 Absence of Certain Business Practices |
32 | |||
3.31 Brokers; Finders |
32 | |||
3.32 No Other Representations or Warranties |
32 | |||
4. REPRESENTATIONS AND WARRANTIES OF WCI |
32 | |||
4.1 Existence and Good Standing |
32 | |||
4.2 Authorization of Agreement |
33 | |||
4.3 No Breach or Default |
33 | |||
4.4 Brokers; Finders |
33 | |||
5. COVENANTS FROM SIGNING TO CLOSING |
33 | |||
5.1 Operations |
33 | |||
5.2 No Change |
34 | |||
5.3 Obtain Consents |
35 | |||
5.4 Confidential Information |
35 | |||
5.5 Acquisition Transactions |
36 | |||
5.6 Schedules |
36 | |||
5.7 Termination of Certain Employees |
37 | |||
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE |
37 | |||
6.1 Representations and Warranties |
37 | |||
6.2 Conditions |
37 | |||
6.3 Certificates |
37 | |||
6.4 No Litigation |
37 | |||
6.5 Other Deliveries |
38 | |||
6.6 Governmental and Third Party Consents |
38 | |||
6.7 Receipt of Payoff Letters |
38 | |||
6.8 Title Insurance |
38 | |||
6.9 HSR Waiting Period |
38 | |||
6.10 Certificates of Good Standing |
38 | |||
6.11 Distribution of Excluded Assets |
38 |
Stock Purchase Agreement
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-ii-
TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS TO CLOSE |
38 | |||
7.1 Representations and Warranties |
38 | |||
7.2 Conditions |
39 | |||
7.3 Certificate |
39 | |||
7.4 No Litigation |
39 | |||
7.5 Other Deliveries |
39 | |||
7.6 HSR Waiting Period |
39 | |||
8. CLOSING DELIVERIES |
39 | |||
8.1 WCI Deliveries |
39 | |||
8.2 Shareholder Deliveries |
39 | |||
9. ADDITIONAL COVENANTS OF WCI, THE HUDSON VALLEY GROUP COMPANIES AND THE SHAREHOLDERS |
41 | |||
9.1 Agreement to Cooperate |
41 | |||
9.2 Confidentiality |
41 | |||
9.3 Brokers and Finders Fees |
41 | |||
9.4 Taxes |
41 | |||
9.5 Tax Returns |
42 | |||
9.6 General Release by Shareholders |
43 | |||
9.7 Shareholders Representatives |
43 | |||
10. INDEMNIFICATION |
44 | |||
10.1 Indemnity by the Principal Shareholder |
44 | |||
10.2 Indemnity by All Shareholders |
45 | |||
10.3 Indemnity by WCI |
45 | |||
10.4 Limitations on the Parties Indemnification Obligations |
46 | |||
10.5 Notice of Indemnity Claim |
47 | |||
10.6 Survival of Representations and Warranties and Indemnification Obligations |
49 | |||
10.7 No Exhaustion of Remedies or Subrogation |
49 | |||
10.8 Exclusion of Other Remedies |
49 | |||
10.9 No Waiver |
49 | |||
10.10 Adjustment to Purchase Price |
49 | |||
10.11 No Double Recovery |
49 | |||
10.12 Liability of Shareholders |
50 |
Stock Purchase Agreement
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-iii-
TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI |
50 | |||
11.1 Restrictive Covenants |
50 | |||
11.2 Rights and Remedies On Breach |
52 | |||
12. GENERAL |
53 | |||
12.1 Assignment |
53 | |||
12.2 Public Announcements |
53 | |||
12.3 Counterparts |
53 | |||
12.4 Notices |
54 | |||
12.5 Applicable Law; Attorneys Fees |
54 | |||
12.6 No Waiver Relating to Claims for Misconduct |
55 | |||
12.7 Payment of Fees and Expenses |
55 | |||
12.8 Incorporation by Reference |
55 | |||
12.9 Captions |
55 | |||
12.10 Number and Gender of Words |
55 | |||
12.11 Entire Agreement |
55 | |||
12.12 Waiver |
55 | |||
12.13 Severability |
56 | |||
12.14 Construction |
56 | |||
12.15 Equitable Remedies |
56 | |||
12.16 Remedies Cumulative |
57 | |||
12.17 Electronic Execution |
57 |
Stock Purchase Agreement
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-iv-
TABLE OF CONTENTS
GLOSSARY
The definitions of the terms used below can be found on the page indicated:
Page | ||||
A |
||||
Absolute Indemnity Cap |
46 | |||
Absolute Obligations |
45 | |||
Absolute Representation |
45 | |||
Absolute Representations |
45 | |||
Acquisition Transaction |
36 | |||
Adjustments |
3 | |||
Affiliate |
56 | |||
Agreement |
1 | |||
Annual Financial Statements |
12 | |||
B |
||||
Balance Sheet Date |
12 | |||
Budget |
2 | |||
Business |
1 | |||
business day |
56 | |||
C |
||||
Cap Ex Deficit |
2 | |||
Cap Ex Expenditures |
2 | |||
Cap Ex Surplus |
2 | |||
CERCLA |
29 | |||
CFO |
2 | |||
Charter Documents |
11 | |||
Claim |
47 | |||
Claims Notice |
47 | |||
Clairvest |
1 | |||
Closing |
7 | |||
Closing Date |
7 | |||
Closing Date Current Assets |
28 | |||
Closing Date Current Liabilities |
28 | |||
Closing Date Debt |
27 | |||
Closing Date Doubtful Account Allowance |
2 | |||
Closing Statement |
40 | |||
Code |
19 | |||
Confidential Information |
51 | |||
County Waste |
1 | |||
D |
||||
Damages |
44 | |||
day |
56 | |||
Delivered Documents |
25 | |||
E |
||||
Environmental Site |
44 | |||
Environmental Site Losses |
44 | |||
ERISA |
19 | |||
ERISA Affiliate |
19 | |||
ERISA Plans |
19 | |||
Excluded Assets |
7 | |||
Excluded Liabilities |
7 | |||
F |
||||
Facility |
15 | |||
Financial Statements |
12 | |||
Fixed Assets |
14 | |||
G |
||||
GAAP |
12 | |||
General Deductible Amount |
46 | |||
General Indemnity Cap |
46 | |||
Golden Parachute Payment |
22 | |||
H |
||||
Hazardous Material |
30 | |||
Hazardous Waste |
30 | |||
Holding Companys Stock |
1 | |||
Horvath Shareholders |
1 | |||
HSR Act |
11 | |||
Hudson Valley Group Companies |
1 | |||
Hudson Valley Group Company |
1 | |||
Hudson Valley Waste Holding |
1 | |||
I |
||||
Indemnifying Party |
47 | |||
Indemnitee |
47 | |||
IRS |
20 | |||
K |
||||
Kerkim Holding |
7 | |||
knowledge |
56 |
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-1-
TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
L |
||||
Laws |
29 | |||
Leased Property |
14 | |||
Licenses and Permits |
13 | |||
Litigation |
12 | |||
M |
||||
Material Contracts |
16 | |||
Minimum Claim Amount |
46 | |||
Misconduct |
46 | |||
N |
||||
New Business Aggregate Net Purchase Price |
2 | |||
Notifications |
30 | |||
O |
||||
Other Property |
14 | |||
Outside Shareholder |
1 | |||
Outside Shareholders |
1 | |||
Owned Property |
14 | |||
P |
||||
PBGC |
20 | |||
Plans |
19 | |||
Pre-Closing Acquisition |
2 | |||
Principal Shareholder |
1 | |||
Property Lease |
15 | |||
Purchase Price |
1 | |||
R |
||||
RCRA |
29 | |||
Real Property |
14 | |||
Reasonable efforts |
56 | |||
Recipient |
22 | |||
Release |
44 | |||
Required Governmental Consents |
11 | |||
Restrictive Agreements |
17 | |||
Restrictive Covenants |
52 | |||
Returns |
23 | |||
S |
||||
Shareholder |
1 | |||
Shareholder Expenses |
55 | |||
Shareholder Indemnitee |
45 | |||
Shareholder Indemnitees |
45 | |||
Shareholder Indemnity Event |
46 | |||
Shareholder Indemnity Events |
46 | |||
Shareholders |
1 | |||
Shareholders Representatives |
43 | |||
Signing Date |
1 | |||
SPD |
19 | |||
Straddle Periods |
42 | |||
Supplemental Material |
36 | |||
T |
||||
Tax |
22 | |||
Taxes |
22 | |||
Termination Date |
8 | |||
Third Party Claim |
47 | |||
Title Company |
38 | |||
True Up Calculations |
3 | |||
True Up Date |
2 | |||
U |
||||
Unpaid Taxes |
28 | |||
USTs |
31 | |||
W |
||||
WARN Act |
18 | |||
WCI |
1 | |||
WCI Indemnitee |
44 | |||
WCI Indemnitees |
44 | |||
WCI Indemnity Event |
44 | |||
WCI Indemnity Events |
44 | |||
Working Capital Deficit |
2 | |||
Working Capital Surplus |
2 |
Stock Purchase Agreement
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Hudson Valley Waste Holding, Inc.
-2-
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the Agreement), dated as of March 31, 2011 (the
Signing Date), is entered into by and among Waste Connections, Inc., a Delaware
corporation (WCI), on the one hand, and (i) Hudson Valley Waste Holding, Inc., a Delaware
corporation (Hudson Valley Waste Holding), and County Waste and Recycling Service, Inc.,
a New York corporation (County Waste), on behalf of themselves and each of their
respective Affiliates listed on Exhibit A attached hereto (each of Hudson Valley Waste Holding and
County Waste and their respective Affiliates sometimes being referred to herein individually as a
Hudson Valley Group Company and collectively as the Hudson Valley Group
Companies), (ii) Scott T. Earl (the Principal Shareholder), and (iii) James Horvath,
Angela Horvath and Paola Horvath (collectively, the Horvath Shareholders), Clairvest
Equity Partners III Limited Partnership and CEP III Co-Investment Limited Partnership
(collectively, Clairvest), and Ernest Palmer (each of the Horvath Shareholders, Clairvest
and Ernest Palmer sometimes being referred to herein individually as, an Outside
Shareholder and collectively as, the Outside Shareholders and each of the Principal
Shareholders and the Outside Shareholders sometimes being referred to herein individually as a
Shareholder and collectively as the Shareholders), on the other hand.
WHEREAS, the Hudson Valley Group Companies are engaged in the collection, transport, disposal,
recycling and processing of nonhazardous solid waste and recyclables, and the ownership, lease
and/or operation of real property and a transfer station in connection therewith, in the cities and
counties of the northeast region of the United States set forth on Exhibit A attached hereto,
together with other related activities (the Business);
WHEREAS, the Shareholders own all of the issued and outstanding capital stock of Hudson Valley
Waste Holding (the Holding Companys Stock); and
WHEREAS, WCI wishes to acquire from the Shareholders all of the Holding Companys Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements,
representations, warranties, provisions and covenants herein contained, the parties hereto, each
intending to be bound hereby, agree as follows:
1. PURCHASE OF HOLDING COMPANYS STOCK AND REMAINING MEMBERSHIP INTERESTS
1.1 Shares to be Purchased. At the Closing, the Shareholders shall sell and deliver to WCI,
and WCI shall purchase from the Shareholders, all of the Holding Companys Stock in exchange for
the delivery by WCI to or for the account of the Shareholders, at the
Closing or thereafter as provided by this Agreement, the purchase price described in Section
1.2 (the Purchase Price). The aggregate number of shares of the Holding Companys Stock
and the number and percentage ownership of such shares held by each Shareholder is set forth on
Schedule 3.2 attached hereto.
Stock Purchase Agreement
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Hudson Valley Waste Holding, Inc.
1.2 Purchase Price.
(a) The Purchase Price is: Two Hundred Ninety-Nine Million Dollars ($299,000,000), (i) minus
any Closing Date Debt, (ii) plus or minus, as applicable, that amount by which (A)
the Closing Date Current Assets, minus that amount by which any accounts receivable as of
the Closing Date is ninety (90) days or more past due (the Closing Date Doubtful Account
Allowance), are (B) greater than (the Working Capital Surplus) or less than (the
Working Capital Deficit) the Closing Date Current Liabilities, (iii) minus that
dollar amount, if any, by which the Hudson Valley Group Companies shall have incurred, between
January 1, 2011 and the Closing Date, capital expenditures, including deposits made on the purchase
of Fixed Assets (the Cap Ex Expenditures) of less than Five Million Three Hundred
Thousand Dollars ($5,300,000) (any such lesser dollar amount being referred to as, the Cap Ex
Deficit), as such Cap Ex Expenditures are described in County Wastes 2011 capital budget, a
copy of which is attached hereto as Exhibit B (the Budget), (iv) plus that dollar
amount, if any, by which the Hudson Valley Group Companies shall have incurred, between January 1,
2011 and the Closing Date, Cap Ex Expenditures of more than Five Million Three Hundred Thousand
Dollars ($5,300,000) (any such greater dollar amount being referred to as, the Cap Ex
Surplus), (v) plus the net purchase price actually paid by any Hudson Valley Group
Company to any third party(ies) (the New Business Aggregate Net Purchase Price) in
connection with the purchase and sale, between March 1, 2011 and the Closing Date, of all or
substantially all of the assets of any solid waste business owned by a non-Affiliated third party
(each, a Pre-Closing Acquisition), provided that WCI shall have given its prior written
approval to any such purchase and sale as required pursuant to Section 5.2(h). The Shareholders
shall provide to WCI, within three business days prior to the Signing Date and the Closing Date, a
good faith estimate of the amounts for each of the items described in clauses (i) through (v) of
this Section 1.2(a), it being acknowledged and agreed that the estimates of Closing Date Current
Assets and Closing Date Current Liabilities shall be calculated in accordance with GAAP and
Sections 3.22(b) and 3.22(c) and the principles set forth on Schedule 3.22(b) and Exhibit C.
(b) At Closing, the following portion of the Purchase Price shall be paid to the Shareholders
in immediately available funds by wire transfer in the respective amounts set forth on the Closing
Statement: Two Hundred Ninety-Nine Million Dollars ($299,000,000), (i) minus the estimated
Closing Date Debt, (ii) plus or minus, as applicable, the estimated Working Capital
Deficit or Working Capital Surplus, (iii) minus any Cap Ex Deficit, (iv) plus any
Cap Ex Surplus, (v) plus the New Business Aggregate Net Purchase Price, if any.
(c) Within ninety (90) days after the Closing Date (the True Up Date), WCI and Dan
Lombardi, the Chief Financial Officer of County Waste
as of the Signing Date (the CFO), shall jointly determine the actual amounts for
each of the items referred to in clauses (i) through (v) in Section 1.2(a) and agree on the final
Purchase Price Adjustments as set forth in Section 1.2(d), it being acknowledged and agreed that
the calculations of Closing Date Current Assets and Closing Date Current Liabilities shall be
finally determined in accordance with GAAP, Sections 1.2(d)(iii), 1.2(d)(iv), 3.22(b) and 3.22(c)
and the principles set forth on Schedule 3.22(b) and Exhibit C; provided, however, that the ten
percent (10%) retainage amount that is payable under the Material Contract with Global Foundry
shall be deemed to have been received even if not actually received by the True Up Date (unless the
reason for such
Stock Purchase Agreement
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2
amount not having been actually received is due to a breach by a Hudson Valley
Group Company of such Material Contract on or prior to the Closing Date) (the True Up
Calculations). For the avoidance of doubt, there will be no Purchase Price Adjustments for
any accounts receivable that are collected or uncollected after the True Up Calculations are
finally determined as set forth hereunder. No credit notes, rebates or discounts may be applied to
such accounts receivable. Also, collections shall be applied first to the oldest receivable unless
specifically identified. The Shareholders may retain, at the Shareholders sole expense, the CFO
as an independent contractor to assist with the True Up Calculations and WCI shall provide the CFO
with access to the books and accounts of the Hudson Valley Group Companies for that purpose. WCI
will provide the Shareholders Representatives with the True Up Calculations within ten (10) days
after they are completed. If the Shareholders Representatives accepts the True Up Calculations,
or if the Shareholders Representatives fail to give notice to WCI of any objection within ten (10)
days after receipt of the True Up Calculations, the True Up Calculations shall be the final and
binding calculation of the Purchase Price adjustments set forth in Section 1.2(d) (the
Adjustments). If WCI and the CFO cannot agree on the True Up Calculations within the
True Up Period or the Shareholders Representatives give notice to WCI of an objection to the True
Up Calculations within ten (10) days after receipt of the True Up Calculations, WCI and the
Shareholders Representatives shall attempt in good faith to resolve any such matters in dispute.
The Shareholders Representatives shall have the right to audit (or have the Hudson Valley Group
Companies former accountants audit), at the Shareholders sole expense, the books and records of
the Hudson Valley Group Companies related to the True Up Calculations. If WCI and the
Shareholders Representatives are able to resolve the matters in dispute, the True Up Calculations,
as modified to reflect the resolution of any matters in dispute, shall be the final and binding
calculation of the Purchase Price Adjustments. If, however, WCI and the Shareholders
Representatives are unable to resolve the matters in dispute, WCI and the Shareholders
Representatives shall submit any disputed items to an independent certified public accountant
reasonably satisfactory to WCI and the Shareholders Representatives for a resolution of the
dispute, the cost of which shall be shared equally by WCI and the Shareholders. The determination
of the independent certified public accountant shall be final and binding on WCI and the
Shareholders Representatives, and the True Up Calculations, as modified to reflect (A) those
differences, if any, that WCI and the Shareholders Representatives were able to resolve, and (B)
the independent certified public accountants determination with regard to the remaining disputed
items, shall be the final and binding resolution of the Purchase Price Adjustments, absent manifest
error.
(d) The following Purchase Price Adjustments, as applicable, shall be made within two (2)
business days after the True Up Calculations are finally determined pursuant to Section 1.2(c):
(i) If the actual Closing Date Debt as determined by the True Up Calculations is less than the
estimated Closing Date Debt as set forth on Schedule 3.22(a), WCI shall within two (2) business
days pay an amount equal to the difference to the Shareholders pro rata in accordance with Schedule
3.2 or as otherwise instructed in writing by the Shareholders Representatives.
(ii) If the actual Closing Date Debt as determined by the True Up Calculations exceeds the
estimated Closing Date Debt as set forth on Schedule 3.22(a), the Principal Shareholder (or the
Principal Shareholder and the other Shareholders based on their pro rata share in accordance with
Schedule 3.2) shall within two (2) business days pay an amount equal to the excess to WCI.
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3
(iii) If there was an estimated Working Capital Deficit as determined on the Closing Date, and
(A) if the actual Working Capital Deficit as determined by the True Up Calculations (after
reconciling the estimated Closing Date Doubtful Account Allowance with the actual amount of the
accounts receivable as of the Closing Date that was not collected on or before the ninety-day
(90-day) period after the Closing Date) exceeds the estimated Working Capital Deficit as determined
on the Closing Date, the Principal Shareholder (or the Principal Shareholder and the other
Shareholders based on their pro rata share in accordance with Schedule 3.2) shall within two (2)
business days pay to WCI an amount equal to the excess;
(B) if the actual Working Capital Deficit as determined by the True Up Calculations (after
reconciling the estimated Closing Date Doubtful Account Allowance with the actual amount of the
accounts receivable as of the Closing Date that was not collected on or before the ninety-day
(90-day) period after the Closing Date) is less than the estimated Working Capital Deficit as
determined on the Closing Date, WCI shall within two (2) business days pay an amount equal to the
difference to the Shareholders pro rata in accordance with Schedule 3.2 or as otherwise instructed
in writing by the Shareholders Representatives; or
(C) if there is an actual Working Capital Surplus as determined by the True Up Calculations
(after reconciling the estimated Closing Date Doubtful Account Allowance with the actual amount of
the accounts receivable as of the Closing Date that was not collected on or before the ninety-day
(90-day) period after the Closing Date), WCI shall within two (2) business days pay an amount equal
to the sum of (x) the amount of the estimated Working Capital Deficit as determined on the Closing
Date, and (y) the amount of the actual Working Capital Surplus as determined by the True Up
Calculations, to the Shareholders pro rata in accordance with Schedule 3.2 or as otherwise
instructed in writing by the Shareholders Representatives.
(iv) If there was an estimated Working Capital Surplus as determined on the Closing Date, and
(A) if the actual Working Capital Surplus as determined by the True Up Calculations (after
reconciling the estimated Closing Date Doubtful Account
Allowance with the actual amount of the accounts receivable as of the Closing Date that was
not collected on or before the ninety-day (90-day) period after the Closing Date) exceeds the
estimated Working Capital Surplus as determined on the Closing Date, WCI shall within two (2)
business days pay an amount equal to the excess to the Shareholders pro rata in accordance with
Schedule 3.2 or as otherwise instructed in writing by the Shareholders Representatives; or
(B) if the actual Working Capital Surplus as determined by the True Up Calculations (after
reconciling the estimated Closing Date Doubtful Account Allowance with the actual amount of the
accounts receivable as of the Closing Date that was not collected on or before the ninety-day
(90-day) period after the Closing Date) is less than the estimated Working Capital Surplus as
determined on the Closing Date, the Principal Shareholder (or the Principal Shareholder and the
other Shareholders based on their pro rata share in accordance with Schedule 3.2) shall within two
(2) business days pay to WCI an amount equal to the difference; or
Stock Purchase Agreement
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Hudson Valley Waste Holding, Inc.
4
(C) if there is an actual Working Capital Deficit as determined by the True Up Calculations
(after reconciling the estimated Closing Date Doubtful Account Allowance with the actual amount of
the accounts receivable as of the Closing Date that was not collected on or before the ninety-day
(90-day) period after the Closing Date), the Principal Shareholder (or the Principal Shareholder
and the other Shareholders based on their pro rata share in accordance with Schedule 3.2) shall
within two (2) business days pay to WCI an amount equal to the sum of (x) the amount of the
estimated Working Capital Surplus as determined on the Closing Date, and (y) the amount of the
actual Working Capital Deficit as determined by the True Up Calculations.
(v) If there was an estimated Cap Ex Deficit as determined on the Closing Date, and
(A) if the actual Cap Ex Deficit as determined by the True Up Calculations exceeds the
estimated Cap Ex Deficit as determined on the Closing Date, the Principal Shareholder (or the
Principal Shareholder and the other Shareholders based on their pro rata share in accordance with
Schedule 3.2) shall within two (2) business days pay to WCI an amount equal to the excess;
(B) if the actual Cap Ex Deficit as determined by the True Up Calculations is less than the
estimated Cap Ex Deficit as determined on the Closing Date, WCI shall within two (2) business days
pay an amount equal to the difference to the Shareholders pro rata in accordance with Schedule 3.2
or as otherwise instructed in writing by the Shareholders Representatives; or
(C) if there is an actual Cap Ex Surplus as determined by the True Up Calculations, WCI shall
within two (2) business days pay an amount equal to the sum of (x) the amount of the estimated Cap
Ex Deficit as determined on the Closing Date, and (y) the amount of the actual Cap Ex Surplus as
determined by the True Up Calculations, to the Shareholders pro rata in accordance with Schedule
3.2 or as otherwise instructed in writing by the Shareholders Representatives.
(vi) If there was an estimated Cap Ex Surplus as determined on the Closing Date, and
(A) if the actual Cap Ex Surplus as determined by the True Up Calculations exceeds the
estimated Cap Ex Surplus as determined on the Closing Date, WCI shall within two (2) business days
pay an amount equal to the excess to the Shareholders pro rata in accordance with Schedule 3.2 or
as otherwise instructed in writing by the Shareholders Representatives; or
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(B) if the actual Cap Ex Surplus as determined by the True Up Calculations is less than the
estimated Cap Ex Surplus as determined on the Closing Date, the Principal Shareholder (or the
Principal Shareholder and the other Shareholders based on their pro rata share in accordance with
Schedule 3.2) shall within two (2) business days pay to WCI an amount equal to the difference; or
(C) if there is an actual Cap Ex Deficit as determined by the True Up Calculations, the
Principal Shareholder (or the Principal Shareholder and the other Shareholders based on their pro
rata share in accordance with Schedule 3.2) shall within two (2) business days pay to WCI an amount
equal to the sum of (x) the amount of the estimated Cap Ex Surplus as determined on the Closing
Date, and (y) the amount of the actual Cap Ex Deficit as determined by the True Up Calculations.
(vii) If the actual New Business Aggregate Net Purchase Price as determined by the True Up
Calculations exceeds the estimated New Business Aggregate Net Purchase Price, WCI shall within two
(2) business days pay an amount equal to the excess to the Shareholders pro rata in accordance
with Schedule 3.2 or as otherwise instructed in writing by the Shareholders Representatives.
(viii) If the actual New Business Aggregate Net Purchase Price as determined by the True Up
Calculations is less than the estimated New Business Aggregate Net Purchase Price, the Principal
Shareholder (or the Principal Shareholder and the other Shareholders based on their pro rata share
in accordance with Schedule 3.2) shall within two (2) business days pay an amount equal to the
difference to WCI.
(ix) When the Shareholders have provided a copy of the Hudson Valley Group Companies short
year tax returns and evidence that the Shareholders have paid all Taxes shown as due on such
returns, WCI shall pay an amount equal to the Unpaid Taxes that were paid with respect to such
returns, if any, to the Shareholders pro rata in accordance with Schedule 3.2 or as otherwise
instructed in writing by the Shareholders Representatives to the extent such Unpaid Taxes were
included in Closing Date Current Liabilities. If WCI disputes the amount of Taxes shown as due on
such return, it may retain the amount in dispute from any payment due under this Section until such
dispute is resolved in accordance with Section 1.2(c).
Additional payments due between WCI and the Shareholders pursuant to this Section 1.2(d) may be
netted against each other and the net amount due shall be paid by the party owing the same in
immediately available funds by wire transfer. For the avoidance of doubt, WCI may demand
payment from the Principal Shareholder for, and the Principal Shareholder shall within two (2)
business days pay to WCI, the entire amount owed by the Principal Shareholder and/or any of the
other Shareholders to WCI pursuant to this Section 1.2(d) and, in such event, the Principal
Shareholder may seek reimbursement from the Other Shareholders pro rata in accordance with Schedule
3.2.
1.3 Allocation of the Purchase Price. One Million Dollars ($1,000,000) of the Purchase Price
shall be allocated to the Restrictive Covenants applicable to the Shareholders and the balance of
the Purchase Price shall be allocated among the assets of the Hudson Valley Group Companies as set
forth on Schedule 1.3, subject to final adjustment to the Purchase Price pursuant to Section
1.2(d). This allocation shall be binding on the parties for federal and state income tax purposes.
Notwithstanding the foregoing, WCI shall not be limited to such amount for damages arising from
breach of the Restrictive Covenants by the Shareholders or their Affiliates.
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1.4 Excluded Assets. Prior to the Closing, the assets of the Hudson Valley Group Companies
listed on Schedule 1.4, including all of the membership interests of Kerkim Holding Company, LLC, a
Virginia limited liability company (the Kerkim Holding), that are legally or beneficially
owned or otherwise held by County Waste (or any other Hudson Valley Group Company) (collectively,
the Excluded Assets), shall be distributed or otherwise transferred by the applicable
Hudson Valley Group Company to the Shareholders or other persons, and WCI shall not acquire or
assume any interest in, liability for or claim to any of the Excluded Assets, or any Damages or
Taxes associated with, related to or arising from or in connection with any Excluded Assets, the
ownership, operation or use thereof, or the distribution or transfer thereof by or from any Hudson
Valley Group Company to the Shareholders or any other person (the Excluded Liabilities).
2. CLOSING TIME AND PLACE
2.1 Closing. Subject to the terms and conditions of this Agreement, the closing of the
transactions contemplated herein (the Closing) shall take place as promptly as practical
(but in any event no later than three (3) Business days) after the date on which the last of the
conditions set forth in Sections 6 and 7 is fulfilled or waived or on such other date as WCI and
the Shareholders Representatives shall agree (the Closing Date). The Closing shall take
place at such time as mutually agreed by the parties through an exchange of consideration and
documents using overnight courier service, facsimile or electronic transmission; provided, however,
that, for financial reporting purposes, the Closing shall be deemed to have occurred at 12:01 a.m.
New York time on the Closing Date, which the parties anticipate will be on April 1, 2011. At the
Closing, WCI, the Hudson Valley Group Companies and the Shareholders shall deliver to each other
the documents, instruments and other items described in Section 8 of this Agreement.
2.2 Termination. Notwithstanding anything in this Agreement to the contrary, this Agreement
and the obligations of the parties hereunder may be terminated on or prior to Closing as follows:
(a) By the Shareholders Representatives (i) in the event the transactions contemplated by
this Agreement have been prohibited or enjoined by reason of any final, unappealable judgment,
decree or order entered or issued by a court of competent jurisdiction in litigation or
proceedings involving any of the parties hereto that was not entered at the request or with the
support of the Hudson Valley Group Companies or the Shareholders and if the Hudson Valley Group
Companies and the Shareholders shall have used reasonable efforts to prevent the entry of such
order; (ii) in the event WCI breaches a representation or warranty of WCI contained in this
Agreement which has not been cured and is not capable of being cured prior to the earlier of (A)
the expiration of thirty (30) days after notice of such breach is given by the Shareholders
Representatives to WCI and (B) the Termination Date; or (iii) if WCI fails to perform in any
material respect any of its covenants contained in this Agreement required to be performed prior
to the Closing and does not cure such failure prior to the earlier of (A) thirty (30) days after
written notice of such failure is given in writing to WCI by the Shareholders Representatives and
(B) the Termination Date, provided in no case may the Shareholders terminate this Agreement under
this subsection if the Shareholders have failed to perform any one or more of its obligations or
covenants under this Agreement to be performed at or prior to the Closing and the Closing has not
occurred because of such failure.
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(b) By WCI (i) in the event the transactions contemplated by this Agreement have been
prohibited or enjoined by reason of any final, unappealable judgment, decree or order entered or
issued by a court of competent jurisdiction in litigation or proceedings involving any of the
parties hereto that was not entered at the request or with the support of WCI and if WCI shall
have used reasonable efforts to prevent the entry of such order; or (ii) in the event any Hudson
Valley Group Company or any Shareholder breaches a representation or warranty of any Hudson Valley
Group Company or the Shareholders, respectively, contained in this Agreement which has not been
cured and is not capable of being cured prior to the earlier of (A) expiration of thirty (30) days
after written notice of such breach is given by WCI to the Shareholders Representatives and (B)
the Termination Date; or (iii) if any Hudson Valley Group Company or any Shareholder fails to
perform in any material respect any of their respective covenants contained in this Agreement
required to be performed by the Hudson Valley Group Companies or the Shareholders prior to the
Closing and the Hudson Valley Group Companies or the Shareholders, as the case may be, do not cure
such failure prior to the earlier of (A) thirty (30) days after written notice of such failure is
given in writing to the Shareholders Representatives by WCI, and (B) the Termination Date; or
(iv) pursuant to Section 5.6(b), provided in no case may WCI terminate this Agreement under this
subsection if it has failed to perform any one or more of its obligations or covenants under this
Agreement to be performed at or prior to Closing and the Closing has not occurred because of such
failure.
(c) By WCI or the Shareholders Representatives if the Closing hereunder shall not have taken
place by April 30, 2011, or, by such later date as may be agreed by WCI and the Shareholders
Representatives (the Termination Date), unless the Hudson Valley Group Companies and the
Shareholders have not then obtained all of the consents required by Section 6.6, in which event
this Agreement shall terminate ten (10) days after written notice from WCI to the Shareholders or
ten (10) days after the later of (i) if any such consent is denied, the latest time for filing any
appeal or further appeal of such denial has lapsed; and (ii) if any such consent is denied and
such denial is appealed, the day the last appeal of such denial has been dismissed, refused or
decided adversely to any Hudson Valley Group Company; provided that a party shall not have the right
to terminate under this Section 2.2(c) if the conditions precedent to such partys obligation to
close have been fully satisfied and such party has failed or refused to close after being
requested in writing to close by the other party.
(d) WCI and the Shareholders Representatives may terminate this Agreement by mutual consent.
2.3 Notice and Effect of Termination. On termination of this Agreement, the transactions
contemplated herein shall forthwith be abandoned and all continuing obligations of the parties
under or in connection with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability for any
misrepresentation, breach of warranty or breach of covenant contained in this Agreement prior to
such termination. Notwithstanding the foregoing, the confidentiality obligations set forth in
Sections 5.4 and 9.2 shall survive the termination of this Agreement for any reason. If this
Agreement has terminated due to the breach of any party, such party shall remain liable for any
damages arising from such breach.
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3. REPRESENTATIONS AND WARRANTIES OF THE HUDSON VALLEY GROUP COMPANIES AND THE SHAREHOLDERS
Each of the Hudson Valley Group Companies and the Principal Shareholder represents and
warrants to WCI that each of the following representations and warranties is true and correct as of
the Signing Date and will be true and correct as of the Closing, and the Outside Shareholders,
severally but not jointly (and, in the case of Sections 3.2, 3.25 and 3.3, individually), represent
and warrant that each of the following representations and warranties which are Absolute
Representations is true and correct as of the Signing Date and will be true and correct as of the
Closing, and all of the Shareholders agree that such representations and warranties shall survive
the Closing as provided in Section 10.6:
3.1 Organization, Standing and Qualification. Each Hudson Valley Group Company is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization or formation. Each Hudson Valley Group Company has full corporate power and authority
to own and lease its properties and to carry on the Business as now conducted. Except as set forth
on Schedule 3.1, none of the Hudson Valley Group Companies is required to be qualified or licensed
to conduct business as a foreign corporation or limited liability company in any other
jurisdiction.
3.2 Capitalization. Schedule 3.2 sets forth the authorized and outstanding capital stock or
membership interests, as applicable, of each Hudson Valley Group Company, the names of the record
and beneficial owners of all of the issued and outstanding capital stock or membership interests,
as applicable, of each Hudson Valley Group Company, the number of shares or membership interests so
owned, the allocation of the Purchase Price among the Shareholders as agreed to among themselves.
All of the issued and outstanding shares of the capital stock or membership interests, as
applicable, of each Hudson Valley Group Company are owned of record and beneficially by the persons
or entities as set forth on Schedule 3.2, and are and as of the Closing will be free and clear of
all liens, security interests, encumbrances, restrictions, pledges and claims of every kind except as set forth on Schedule 3.2. Hudson
Valley Waste Holding owns all of the issued and outstanding capital stock of County Waste and,
except as set forth on Schedule 3.2, County Waste owns, directly or indirectly, all of the
outstanding capital stock or membership interests, as applicable, of each of the other Hudson
Valley Group Companies. All of the shares of capital stock or membership interests, as applicable,
of each Hudson Valley Group Company are duly and validly authorized and issued, fully paid and
nonassessable, and none was issued in violation of any preemptive rights of any past or present
shareholder or member of any Hudson Valley Group Company. No option, warrant, call, conversion or
other right or commitment of any kind (including any of the foregoing created in connection with
any indebtedness of any Hudson Valley Group Company) exists that obligates any Hudson Valley Group
Company to issue any of its authorized but unissued capital stock, membership interest or other
equity interest or that obligates any of the Shareholders to transfer any of the Holding Companys
Stock to any person. Except as set forth on Schedule 3.2, neither any Hudson Valley Group Company
nor any Shareholder is a party to any, and there exist no, voting trusts, stockholder agreements,
pledge agreements, or other agreements relating to or restricting the transferability of any shares
of the Holding Companys Stock or any equity interest in Hudson Valley Waste Holding, County Waste
or any other Hudson Valley Group Company. No spouse of any Shareholder that is a natural person
and married has any community property or other interest of whatsoever nature or kind in or to any
of the Holding Companys Stock or any proceeds to be received from the ownership thereof. All of
the capital stock or membership interests, as applicable, of each Hudson Valley Group Company
(including the Holding Companys Stock) have been issued in accordance with all applicable federal
and state securities laws. The Holding Companys Stock being acquired by WCI hereunder constitutes
all of the outstanding capital stock of Hudson Valley Waste Holding.
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3.3 Authority for Agreement. Hudson Valley Waste Holding, County Waste and the Shareholders
have full right, power and authority to enter into this Agreement, and all documents and agreements
necessary to give effect to the provisions of this Agreement, and to perform its, his or her
obligations hereunder and thereunder. The execution and delivery of this Agreement by Hudson
Valley Waste Holding and County Waste has been duly authorized by each of Hudson Valley Waste
Holding and County Wastes Board of Directors and the consummation of the transactions contemplated
hereby by Hudson Valley Waste Holding have been duly authorized by Hudson Valley Waste Holdings
Board of Directors, and all other corporate actions and proceedings required to be taken by or on
behalf of Hudson Valley Waste Holding to enter into this Agreement and consummate the transactions
contemplated hereby have been duly and properly taken. This Agreement and all other agreements and
documents executed in connection herewith have been duly and validly executed and delivered by
Hudson Valley Waste Holding, County Waste and the Shareholders and, subject to the due
authorization, execution and delivery by WCI, constitute the legal, valid and binding obligations
of Hudson Valley Waste Holding, County Waste and the Shareholders enforceable against each of the
Hudson Valley Group Companies and the Shareholders in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors rights generally and by general principles of equity.
3.4 No Breach or Default. Except as disclosed on Schedule 3.4, the execution and delivery by
Hudson Valley Waste Holding, County Waste and the Shareholders of
this Agreement, and the consummation by the Shareholders of the transactions contemplated
hereby, will not, after the giving of notice or lapse of time or otherwise:
(a) subject to obtaining any third party consents listed on Schedule 3.5, violate or result in
the breach of any of the material terms or conditions of, or constitute a default under, or allow
for the acceleration or termination of, or in any manner release any party from any material
obligation under, or result in any lien, claim or encumbrance on the Holding Companys Stock or the
assets or equity of any Hudson Valley Group Company under, any of the Material Contracts,
Restrictive Agreements, Licenses and Permits or any mortgage, deed, lease, note, bond, indenture,
agreement, license or other instrument or obligation of any kind or nature to which any Hudson
Valley Group Company or any Shareholder is a party, or by which any Hudson Valley Group Company or
Shareholder, or any of a Hudson Valley Group Companys or any Shareholders assets, is or may be
bound or affected; or
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(b) subject to obtaining the Required Governmental Consents, violate any Law, or any order,
writ, injunction or decree of any court, administrative agency or governmental authority, or
require the approval, consent or permission of any governmental or regulatory authority; or
(c) violate the Articles of Incorporation, Bylaws, Operating Agreement or other charter
documents (collectively, the Charter Documents) of any Hudson Valley Group Company.
3.5 Consents Required. Except for any filings required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the HSR Act) and any consents and approvals listed on Schedule
3.4 or 3.5 none of the Delivered Documents nor the transactions contemplated by this Agreement
requires notice to, or consent or approval of, any governmental agency or other third party to any
of the transactions contemplated hereby the failure of which to obtain would have a material
adverse effect. For the purposes of this Agreement material adverse effect means any fact,
circumstance or occurrence that has had or would reasonably be expected to have a materially
adverse effect on business, results of operations, properties or condition (financial or otherwise)
of the Business taken as a whole, except those resulting from: (a) general economic, business or
financial market conditions, including changes in the markets or industry in which the Hudson
Valley Group Companies operate, provided and to the extent that the Hudson Valley Group Companies
are not disproportionately adversely affected thereby; (b) an outbreak or escalation of war, armed
hostilities, acts of terrorism, political instability or other national calamity, crisis or
emergency, or any governmental response to any of the foregoing, provided and to the extent that
the Hudson Valley Group Companies are not disproportionately adversely affected thereby; (c) the
announcement or pendency of any transactions contemplated by this Agreement; (d) any change in Law
or GAAP or interpretations thereof that applies to the Hudson Valley Group Companies, provided and
to the extent that the Hudson Valley Group Companies are not disproportionately adversely affected
thereby; or (e) any act or omission of the Hudson Valley Group Companies prior to the Closing Date
taken at the written request of WCI. For the avoidance of doubt, any fact, circumstance or
occurrence that has resulted in or would reasonably be expected to result in Damages to any of the
Hudson Valley Group Companies in the amount of at least Two Hundred Fifty Thousand Dollars
($250,000) shall be deemed to be material adverse effect for purposes
of this Agreement. Specifically, Schedule 3.5 also sets forth the name of any governmental
agency from whom any Hudson Valley Group Company, the Shareholders or WCI must obtain consent (the
Required Governmental Consents) in order to (i) execute this Agreement and consummate the
transactions contemplated herein, and (ii) effect a direct or indirect transfer of any of the
Material Contracts or Licenses and Permits required as a result of the consummation of the
transactions contemplated by this Agreement except where no material adverse effect.
3.6 Subsidiaries. Schedule 3.6 lists all direct and indirect subsidiaries of Hudson Valley
Waste Holding and County Waste and all securities or other interest in any other business entity,
including Kerkim Holding (whose membership interests shall be distributed to the Shareholders or
other persons prior to Closing as set forth in Section 1.4), owned by any Hudson Valley Group
Company. At the Closing, WCI shall obtain indirect beneficial ownership (through Hudson Valley
Waste Holding) of each such subsidiary, security and interest.
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3.7 Financial Statements. Attached to Schedule 3.7 are copies of the annual financial
statements (Annual Financial Statements) for the Hudson Valley Group Companies three (3)
most recent fiscal years and interim financial statements (together with the Annual Financial
Statements, the Financial Statements) for the Hudson Valley Group Companies for the
period from the first day of the current fiscal year to February 28, 2011 (the Balance Sheet
Date). The Annual Financial Statements have been audited by Marvin & Company. The Financial
Statements are true and correct in all material respects and fairly present (a) the financial
position of the Hudson Valley Group Companies as of the respective dates of the balance sheets
included in said statements; and (b) the results of operations for the respective periods
indicated. The Annual Financial Statements have been prepared in accordance with United States
generally accepted accounting principles (GAAP), applied consistently. The interim
financial statement as of the two-month (2-month) period ended February 28, 2011 exclude all
footnote disclosures but otherwise have been prepared in accordance with GAAP, consistently
applied. Except to the extent reflected or reserved against in the Hudson Valley Group Companies
balance sheet as of the Balance Sheet Date or as disclosed on Schedule 3.8 or 3.22(a) and 3.22(b),
or as brought forward in the True Up Calculation, the Hudson Valley Group Companies did not have as
of the Balance Sheet Date, nor will the Hudson Valley Group Companies have as of the Closing Date,
any liabilities of any nature required to be reflected in, reserved against or otherwise described
on the Balance Sheet or in the notes thereto in accordance with GAAP and were not so reflected,
whether accrued, absolute, contingent or otherwise, including Tax liabilities due or to become due,
other than current liabilities not exceeding One Hundred Thousand Dollars ($100,000) incurred in
the ordinary course of business. For the avoidance of doubt, liabilities or obligations relating
to tort, breach of contract or violation of law shall in no event be considered to be in the
ordinary course of business.
3.8 Litigation. Schedule 3.8 lists all claims, suits and proceedings or governmental
investigations or inquiries, either administrative or judicial (Litigation), pending, or
to the knowledge of any Hudson Valley Group Company or the Principal Shareholder, threatened
against any Hudson Valley Group Company, or any of the Hudson Valley Group Companies assets,
operations or personnel (while acting as an agent of
any Hudson Valley Group Company). Schedule 3.8 includes a summary description of each such
Litigation and the amount claimed and other relief sought. Except as set forth on Schedule 3.8, no
Litigation is pending or, to the knowledge of any Hudson Valley Group Company or the Principal
Shareholder, threatened involving any Hudson Valley Group Company (or its officers, directors,
employees or agents (while acting as an agent of any Hudson Valley Group Company)), the Holding
Companys Stock, or any of the assets, Business or operations of any Hudson Valley Group Company.
3.9 Accurate and Complete Records. The corporate minute books, stock ledgers, financial
records and other books, ledgers and records of the Hudson Valley Group Companies:
(a) have been made available to WCI and its agents at the Hudson Valley Group Companies
offices or at the offices of WCIs attorneys or the Hudson Valley Group Companies attorneys;
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(b) have been, in all material respects, maintained in accordance with all applicable laws,
rules and regulations; and
(c) are accurate and complete, reflect all material corporate transactions required to be
authorized by the Board of Directors and/or shareholders or members of the Hudson Valley Group
Companies and do not contain or reflect any material discrepancies.
3.10 Licenses and Permits. The Hudson Valley Group Companies have all franchises, licenses
and permits necessary for the applicable Hudson Valley Group Companies to occupy each Facility, own
its assets, and operate and conduct the Business as currently conducted, including all consents,
authorizations, zoning, land use and environmental permits, variances or approvals relating to the
operation of the Business, any Real Property or any Facility (the Licenses and Permits),
in all cases to the extent necessary for the Hudson Valley Group Companies to conduct the Business
as presently conducted or for the lease of or ownership and use of the Fixed Assets in compliance
with all applicable Laws, except where the failure to own, hold, possess, or lawfully use such
franchises, licenses and permits would not have a material adverse effect on the Business.
Schedule 3.10 is a complete and accurate list, and includes copies, of all Licenses and Permits.
All Licenses and Permits have been duly obtained and are in full force and effect and no
proceedings are pending or, to the knowledge of any Hudson Valley Group Company or the Principal
Shareholder, threatened that may result in the revocation, cancellation, suspension, limitation or
adverse modification of any of the same. The status of the Licenses and Permits related to the
disposal areas owned or operated by any Hudson Valley Group Company, including any conditions
thereto and, if applicable, the expiration dates thereof, are also described on Schedule 3.10.
Each employee of the Hudson Valley Group Companies has all Licenses and Permits required for each
such employee to perform his or her designated duties for the Hudson Valley Group Companies
(including valid drivers licenses), and no waivers, exemptions or defaults relating thereto exist,
nor do any grounds for revocation, suspension or limitation of any Licenses and Permits exist the
absence of which would have a material adverse effect. Neither any Hudson Valley Group Company nor
the Principal Shareholder has any knowledge of any reason why the Licenses and Permits will not
remain in effect after consummation of the transactions contemplated hereby
3.11 Assets, etc., Necessary to Business. The Hudson Valley Group Companies possess good,
valid and marketable title to all properties and assets (real, personal and mixed, tangible and
intangible) used or necessary for the conduct of the Business, free and clear of any lien,
encumbrance or charge of any kind (including mortgages, security interests, leases, covenants,
assessments, easements, options, rights of first refusal, restrictions, reservations, defects in
title, encroachments and other encumbrances) except: (a) liens for current taxes not yet due; (b)
minor imperfections of title and encumbrances reasonably acceptable to WCI, if any, that are de
minimis and do not impair the value or interfere with the present or continued use of such property
or asset and (c) those identified on Schedules 3.11, 3.12 and 3.13. For the avoidance of doubt,
any liens on any assets owned by any Hudson Valley Waste Company existing in respect of any Closing
Date Debt will be released promptly following the Closing on receipt of the applicable payoff
amounts to be paid at Closing and in no event shall any such liens be deemed permitted liens.
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3.12 Fixed Assets. Schedule 3.12 lists the fixed assets (other than real estate) owned or
leased by each Hudson Valley Group Company, including identification of each vehicle by description
and serial number as shown on the motor vehicle title or transferable registration, identification
of machinery, equipment and general description of parts, supplies and inventory (the Fixed
Assets). Also attached to Schedule 3.12 are copies of all motor vehicle titles, transferable
registrations and current registrations. Except as described on Schedule 3.12, all of the Fixed
Assets are in good working order and adequately perform the functions they are supposed to perform,
ordinary wear and tear excepted, and, to the knowledge of the Hudson Valley Group Companies and the
Principal Shareholder, are free of structural, mechanical, installation or engineering defects.
Except as set forth on Schedule 3.12, all motor vehicles and rolling stock owned or leased by the
Hudson Valley Group Companies are properly titled and registered as required by applicable Law.
All leases of Fixed Assets are listed on and attached to Schedule 3.14 and are in full force and
effect and binding on the parties thereto and neither any Hudson Valley Group Company nor, to the
knowledge of any Hudson Valley Group Company or the Principal Shareholder, any other party to such
leases is in breach of any of the material provisions thereof. Except as described on Schedule
3.14, no leases, options, rights of first refusal or any other agreements or arrangements, either
oral or written, exist that create or confer on any person or entity the right to acquire any of
the Fixed Assets or any portion thereof or, to the knowledge of any Hudson Valley Group Company or
the Principal Shareholder, create in or confer on any person or entity (other than the Hudson
Valley Group Companies) any right, title or interest therein or in any portion thereof.
The Hudson Valley Group Companies have prior to the date hereof, transferred the Excluded
Assets to the Shareholders or other Persons as reflected in the minutes of the meeting of the Board
of Directors of Hudson Valley Waste Holding contained in Hudson Valley Waste Holdings minute book.
All Excluded Assets have been transferred by the Hudson Valley Group Companies to the Shareholders
or other Persons AS IS, with all warranties, including the implied warranties of merchantability
and fitness for a particular purpose having been disclaimed. The Shareholders agree that none of
the Shareholders nor any successor, assign, executor or heir of any Shareholder shall have any
claim against any Hudson Valley Group Company, and hereby release each Hudson Valley Group Company
from, all liabilities, whether known or unknown, contingent or liquidated, in respect of or
relating to the Excluded Assets prior to, from or after the Closing Date. The Shareholders acknowledge that this paragraph is
a material inducement to WCI entering into this Agreement.
3.13 Real Property. Except for any parcel of real property that is an Excluded Asset,
Schedule 3.13 lists each parcel of real property owned by each Hudson Valley Group Company or that
is to be acquired by any Hudson Valley Group Company between the Signing Date and the Closing Date
(collectively, the Owned Property), leased by each Hudson Valley Group Company (the
Leased Property) or otherwise used by any Hudson Valley Group Company in connection with
the Business except real property at which the Hudson Valley Group Companies disposes of waste (the
Other Property and, collectively with the Owned Property and the Leased Property, the
Real Property).
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(a) For each parcel of Real Property Schedule 3.13 lists the street address thereof and a
general description of any buildings or other improvements located thereon (each, a
Facility), the status of such property as Owned Property, Leased Property or Other
Property. Schedule 3.13 also lists and, where applicable, includes copies of the following:
(i) for each parcel of Owned Property, the legal description thereof and a current preliminary
title report issued by the Title Company, and, to the extent in any Hudson Valley Group Companys
possession or control, (A) copies of all deeds, outstanding mortgages, deeds of trust and other
encumbrances, (B) copies of any existing surveys, (C) copies of any existing title insurance
policies or lawyers title opinions, and (D) copies of any other material document or instrument
affecting such property or title thereto, whether or not recorded, and not already included on
Schedule 3.10;
(ii) for each parcel of Leased Property, copies of all leases affecting such property (each a
Property Lease) or, if any such lease is oral, Schedule 3.13 contains a written summary
of the principal terms of such lease; and
(iii) for each parcel of Other Property, a description of the extent to which any Hudson
Valley Group Company utilizes such property including, without limitation, the manner of such use
and the terms and conditions affecting such use, together with a copy of any material documents
affecting such property or the use thereof, whether or not recorded.
(b) Except as otherwise set forth on Schedule 3.13:
(i) To the knowledge of each Hudson Valley Group Company and the Principal Shareholder, no
material physical, design or mechanical defects exist in or on any of the Real Property or any
Facility. To the knowledge of each Hudson Valley Group Company and the Principal Shareholder, none
of the Real Property nor any Facility is in material violation of any zoning, public health,
building code or other similar laws applicable thereto or to the ownership, occupancy and/or
operation thereof. To the knowledge of each Hudson Valley Group Company and the Principal
Shareholder, there are no encroachments on the Real Property or any Facility and no encroachment of
any improvements to each onto adjacent property other than as set forth in the preliminary title report issued by the Title Company for the
applicable parcel of property. To the knowledge of each Hudson Valley Group Company and the
Principal Shareholder, none of the improvements to the Real Property violate setback, building or
side lines, nor do they encroach on any easements located on the Real Property, and each Facility
is in good condition, ordinary wear and tear excepted, capable of being operated in the manner in
which such Facilities were operated by the Hudson Valley Group Companies prior to Closing, and in
material compliance with all applicable Laws.
(ii) Neither any Hudson Valley Group Company nor the Principal Shareholder knows of any facts
that would materially adversely affect the possession, use or occupancy of any of the Real Property
or any Facility other than as set forth in the preliminary title report issued by the Title Company
for the applicable parcel of property. No portion of the Real Property nor any Facility is
currently subject to condemnation proceedings, and, to the knowledge of each Hudson Valley Group
Company and the Principal Shareholder, no condemnation or taking is threatened or contemplated. To
the knowledge of each Hudson Valley Group Company and the Principal Shareholder, no public
improvements exist that may result in special assessments against or otherwise have a material
adverse effect with respect to the Real Property or any Facility.
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(iii) The Hudson Valley Group Companies have all material easements, rights, licenses, permits
and approvals necessary to continue operation of the Business including those related to the Real
Property and any Facility, copies of which, to the extent in any Hudson Valley Group Companys
possession or control, are set forth on Schedule 3.10 or 3.13.
(iv) To the knowledge of each Hudson Valley Group Company and the Principal Shareholder, all
utilities serving the Real Property and each Facility are adequate to operate each in the manner it
is currently operated and all utility lines, pipes, hook-ups and wires serving the Real Property
and each Facility are located within recorded easements for the benefit of each, and any associated
charges accrued to date have been fully paid.
(v) All of the Property Leases are in full force and effect and binding on the parties thereto
and neither any Hudson Valley Group Company nor, to the knowledge of either any Hudson Valley Group
Company or the Principal Shareholder, any other party to any such lease is in breach of any of the
material provisions thereof. Except as set forth on Schedule 3.4 or 3.5, the transactions
contemplated herein do not constitute an event of default under any Property Lease or require the
consent of any landlord thereto. No Hudson Valley Group Company has assigned, mortgaged, pledged
or hypothecated any portion of any Property Lease and, to the knowledge of each Hudson Valley Group
Company and the Principal Shareholder, the respective landlords interest in each Property Lease
has not been assigned to any third party nor has any such interest been mortgaged, pledged or
hypothecated. No Hudson Valley Group Company has sublet all or any part of the Leased Property or
leased all or any part of the Owned Property.
3.14 Contracts. Schedule 3.14 lists, and includes copies of, all material contracts and
agreements, and written summaries of principal terms of all material oral agreements, to which any
Hudson Valley Group Company is a party or by which it or any of its
property or equity (including the Holding Companys Stock) is bound (other than those items
included on Schedule 3.22(a)), including (i) franchises and service agreements pursuant to which
any Hudson Valley Group Company is authorized to collect and haul industrial, commercial and
residential solid waste involving the payment of greater than $100,000 per annum, (ii) leases,
(iii) joint venture or partnership agreements, (iv) indemnification agreements, guarantees,
suretyships or obligations to assure or incur any obligation of a third party, (v) contracts with
any labor organizations, (vi) employment and consulting agreements, (vii) promissory notes, loan
agreements, bonds, mortgages, deeds of trust, liens, pledges, conditional sales contracts or other
debt or security agreements, (viii) Restrictive Agreements, and (ix) any other agreements,
contracts or commitment that involves or could result in aggregate payments to or by the Hudson
Valley Group Companies in any twelve-month (12-month) period of Two Hundred Fifty Thousand Dollars
($250,000). (The term Material Contracts as used in this Agreement means any contract or
agreement referred to in clauses (i) through (ix) of this Section 3.14.) Except as disclosed on
Schedule 3.14, all Material Contracts have been duly obtained,
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are
in full force and effect and are
binding on the parties thereto, and no proceedings are pending or, to the knowledge of the Hudson
Valley Group Companies or the Principal Shareholder, threatened that may result in the revocation,
cancellation, suspension or adverse modification of the same. Except as set forth on Schedule
3.14, neither the Hudson Valley Group Companies nor, to any Hudson Valley Group Companys or the
Principal Shareholders knowledge, any other party to any Material Contract is in breach thereof,
and none of the parties has threatened to breach any of the material provisions thereof or notified
any Hudson Valley Group Company or any Shareholder of a default thereunder, or exercised any
options thereunder. Except as disclosed on Schedule 3.14, none of the Material Contracts has been
modified, amended, assigned or transferred and each is in full force and effect and is valid,
binding and enforceable in accordance with its respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors rights
generally and by general principles of equity. Except as set forth on Schedule 3.14, all Material
Contracts relating to any improvements to a Facility or the Real Property have been fully paid and
there are no mechanics or materialmens liens arising from any labor or material furnished to such
Facility or Real Property. Except as set forth on Schedule 3.14, none of the Material Contracts is
subject to any counterclaims or offsets nor to any security interest, lien, encumbrance or claim of
others created or suffered to exist on any interest created under any of the Material Contracts
(except for those that result from or relate to leased assets). The term Restrictive
Agreements mean any non-competition, non-solicitation or similar agreements or any agreement
that contains a non-competition, non-solicitation or similar provision related to the Business,
regardless of whether such agreements restrict or benefit any Hudson Valley Group Company, the
Shareholders or the Business.
3.15 Insurance. Schedule 3.15 is a complete list (including copies of the relevant insurance
binders) of all insurance policies currently in effect, or with respect to occurrence policies,
that were in effect, that relate to operation of the Business, cover the Real Property or any other
property used by any Hudson Valley Group Company. Also attached to Schedule 3.15 (but only to the
extent not included in Schedule 3.8) is (a) a list of pending claims relating to each Hudson Valley
Group Company and the Business, and a four-year claims history relating to each Hudson Valley Group
Company and the Business prepared by the applicable insurance carrier(s), including a list of all
insurance loss runs for workers compensation claims received in the last three (3) policy years;
and (b) the Hudson Valley Group Companies
National Council on Compensation Insurance (NCCI) Workers Compensation Experience Rating for
the last three (3) policy years. Such insurance is adequate to repair, replace or restore any of
the Hudson Valley Group Companies properties, assets or facilities that sustain damage to
substantially their current condition in accordance with the terms of the insurance policies. No
Hudson Valley Group Company is in default or breach with respect to any provision contained in any
such insurance policies, nor has any Hudson Valley Group Company failed to give any notice or to
present any claim thereunder in due and timely fashion.
3.16 Personnel.
(a) Schedule 3.16(a) lists all officers, directors and employees (by type or classification)
of each Hudson Valley Group Company and their respective rates of compensation, including (i) their
hourly or monthly base compensation and (ii) any bonuses to which they are entitled. Schedule
3.16(a) also lists the drivers license number for each driver of any Hudson Valley Group Companys
motor vehicles. Except as disclosed on Schedule 3.16(a), all written or oral employment contracts
with employees of each Hudson Valley Group Company are terminable at will without payment of
severance or other benefits (including stock options or other rights to obtain equity in any Hudson
Valley Group Company).
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(b) Schedule 3.16(b) when delivered at or prior to the Closing will list for each employee
(including any employees who are officers or directors) the following information for the period
from January 1st of the current year through the end of the last pay period prior to the
Closing: (i) gross earnings; (ii) federal income taxes withheld; (iii) state income taxes
withheld; (iv) state unemployment and disability taxes withheld; (v) federal unemployment taxes
withheld; (v) FICA taxes withheld; and (vi) 401(k) contributions withheld. Schedule 3.16(b) also
includes a copy of each Hudson Valley Group Companys most recent payroll tax return.
(c) Except as set forth on Schedule 3.16, since the date of incorporation or formation of each
Hudson Valley Group Company, there have been no federal, state or common law claims filed against
such Hudson Valley Group Company or any of its employees based on sex, sexual or other harassment,
employment, age, occupational health and safety, disability, or race or other illegal
discrimination, including claims of wrongful termination, by any employees of such Hudson Valley
Group Company or by any of the employees performing work for such Hudson Valley Group Company but
provided by an outside employment agency, and there are no facts or circumstances known to any
Hudson Valley Group Company or the Principal Shareholder that could reasonably be expected to give
rise to such complaint or claim. No Hudson Valley Group Company (A) has received any notice of any
claim that it has not complied in any material respect with any Law relating to employment,
including any provisions thereof relating to wages, hours, collective bargaining, the payment of
social security and similar taxes, equal employment opportunity, employment discrimination, the
Worker Adjustment and Retraining Notification Act (the WARN Act), employee safety, or (B)
has received any notice of any claim that it is liable for any arrearages of wages or any taxes or
penalties for failure to comply with any of the foregoing.
(d) Except to the extent included in Closing Date Current Liabilities, no Hudson Valley Group
Company has (i) any wage and hour obligation or liability or any
known obligation or liability for any arrears of wages with respect to any of its past or
current employees or independent contractors, nor (ii) any obligation or liability for any payment
to any trust or other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits for employees (other than
routine payments to be made in the normal course of business and consistent with past practice).
The representations and warranties set forth in this Section 3.16(d) shall be deemed to be
qualified by knowledge in the case of Clairvest.
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3.17 Benefit Plans and Union Contracts.
(a) Benefit Plans.
(i) Schedule 3.17(a) lists each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other stock-based
incentive, severance, change-in-control or termination pay, hospitalization or other medical,
disability, life or other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to be contributed to
by any Hudson Valley Group Company, or by any trade or business, whether or not incorporated (an
ERISA Affiliate), that together with the Hudson Valley Group Companies would be deemed a
single employer within the meaning of Section 400l(b)(l) of the Employment Retirement Income
Security Act of 1974, as amended (ERISA), or treated as a single employer under Section
414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended (the Code), for the
benefit of any current or former employee, independent contractor or director of any Hudson Valley
Group Company or any ERISA Affiliate (the Plans). Schedule 3.17(a) identifies each of
the Plans that is an employee welfare benefit plan, or employee pension benefit plan as such
terms are defined in Sections 3(1) and 3(2) of ERISA (the ERISA Plans). Except for
amendments that are required for the Plans to meet the requirements of applicable law,
tax-qualified status under Section 401(a) of the Code, or regulatory guidance, neither any Hudson
Valley Group Company nor any ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Plan or modify or change any existing Plan that would
affect any current or former employee, independent contractor or director of any Hudson Valley
Group Company or any ERISA Affiliate.
(ii) With respect to each of the Plans, Schedule 3.17(a) includes true and complete copies of
each of the following documents, as applicable:
(A) a copy of the Plan documents (including all amendments thereto) for each written Plan or a
written description of any Plan that is not otherwise in writing;
(B) a copy of the annual report or Internal Revenue Service Form 5500 Series, if required
under ERISA or the Code, with respect to each Plan for the last three (3) Plan years ending prior
to the date of this Agreement for which such a report was filed;
(C) a copy of the actuarial report, if required under ERISA, with respect to each ERISA Plan
for the last three (3) Plan years ending prior to the Signing Date for which a report was required;
(D) a copy of the most recent Summary Plan Description (SPD), together with all
Summaries of Material Modification issued with respect to such SPD, if required under ERISA, with
respect to each ERISA Plan, and all other material employee communications relating to each ERISA
Plan;
(E) if the Plan is funded through a trust or any other funding vehicle, a copy of the trust or
other funding agreement (including all amendments thereto) and the latest financial statements
thereof, if any;
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(F) all contracts relating to the Plans with respect to which any Hudson Valley Group Company
or any ERISA Affiliate may have any liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record keeping agreements; and
(G) the most recent determination letter received from the Internal Revenue Service
(IRS) with respect to each Plan that is intended to be qualified under Section 401(a) of
the Code.
(iii) Neither any Hudson Valley Group Company nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to any Hudson Valley Group Company or any ERISA Affiliate of incurring any
liability under such Title, other than liability for premiums due the Pension Benefit Guaranty
Company (PBGC), which payments have been or will be made when due. To the extent this
representation applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only
with respect to the ERISA Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which any Hudson Valley Group Company or
any current or former ERISA Affiliate made, or was required to make, contributions during the past
six (6) years.
(iv) The PBGC has not instituted proceedings pursuant to Section 4042 of ERISA to terminate
any of the ERISA Plans subject to Title IV of ERISA, and no condition exists that presents a
material risk that such proceedings will be instituted by the PBGC.
(v) With respect to each of the ERISA Plans that is subject to Title IV of ERISA, the present
value of accumulated benefit obligations under such Plan, as determined by the Plans actuary based
on the actuarial assumptions used for funding purposes in the most recent actuarial report prepared
by such Plans actuary with respect to such Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such Plan allocable to such accumulated benefit
obligations.
(vi) None of any Hudson Valley Group Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder, nor to any Hudson Valley Group
Companys or any Shareholders knowledge, any trustee, administrator or fiduciary thereof has
engaged in a transaction or has taken or failed to take any action in connection with which any
Hudson Valley Group Company or any ERISA Affiliate could be subject to any material liability for
civil penalties pursuant to Section 502(c), 502(i) or 502(l) of ERISA, or a taxes imposed pursuant
to Section 4975(a) or (b), 4976 or 4980B of the Code.
(vii) All contributions and premiums that each Hudson Valley Group Company and each ERISA
Affiliate is required to pay under the terms of each of the ERISA Plans and Section 412 of the
Code, have, to the extent due, been paid in full or properly recorded on the financial statements
or records of each Hudson Valley Group Company, and none of the ERISA Plans or any trust
established thereunder has incurred any accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the ERISA Plans ended prior to the Signing Date. No lien has been imposed
under Section 412(n) of the Code or Section 302(f) of ERISA on the assets of any Hudson Valley
Group Company or any ERISA Affiliate, and no event or circumstance has occurred that is reasonably
likely to result in the imposition of any such lien on any such assets on account of any ERISA
Plan.
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(viii) With respect to any ERISA Plan that is a multi-employer plan, as such term is defined
in Section 3(37) of ERISA, (a) neither any Hudson Valley Group Company nor any ERISA Affiliate has,
since September 26, 1980, made or suffered a complete withdrawal or a partial withdrawal, as
such terms are respectively defined in Sections 4203 and 4205 of ERISA, (b) no event has occurred
that presents a material risk of a complete or partial withdrawal, (c) neither any Hudson Valley
Group Company nor any ERISA Affiliate has any contingent liability under Section 4204 of ERISA, (d)
no circumstances exist that present a material risk that any such multi-employer plan will go into
reorganization, and (e) the aggregate withdrawal liability of the Hudson Valley Group Companies and
the ERISA Affiliates, computed as if a complete withdrawal by the Hudson Valley Group Companies
and all of their ERISA Affiliates had occurred under each such multi-employer plan on the date
hereof, would be zero (0).
(ix) Each of the Plans has been operated and administered in all material respects in
accordance with its terms and applicable laws, including ERISA and the Code.
(x) Each of the ERISA Plans that is intended to be qualified within the meaning of Section
401(a) of the Code is so qualified. the Hudson Valley Group Companies have applied for and
received a currently effective determination letter from the IRS stating that it is so qualified,
and no event has occurred that would affect such qualified status.
(xi) Any fund established under an ERISA Plan that is intended to satisfy the requirements of
Section 501(c)(9) of the Code has so satisfied such requirements.
(xii) No amounts payable under any of the Plans or any other contract, agreement or
arrangement with respect to which any Hudson Valley Group Company may have any liability could fail
to be deductible for federal income tax purposes by virtue of Section 162(m) or Section 280G of the
Code.
(xiii) Except for medical benefits provided to the Horvath Shareholders (which benefits shall
be terminated as of the Closing), no Plan provides benefits, including death or medical benefits
(whether or not insured), with respect to current or former employees of any Hudson Valley Group
Company or any ERISA Affiliate after retirement or other termination of service (other than (a)
coverage mandated by applicable laws, (b) death benefits or retirement benefits under any employee
pension plan, as that term is defined in Section 3(2) of ERISA, (c) deferred compensation benefits
accrued as liabilities on the books of the Hudson Valley Group Companies or an ERISA Affiliate, or
(d) benefits, the full direct cost of which is borne by the current or former employee (or
beneficiary thereof)).
(xiv) The consummation of the transactions contemplated by this Agreement will not, (a)
entitle any current or former employee, officer or director of any Hudson Valley Group Company or
any ERISA Affiliate to severance pay, unemployment compensation or any other similar termination
payment, or (b) accelerate the time of payment or vesting, or increase the amount of or otherwise
enhance any benefit due any such employee, officer or director.
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(xv) There are no pending or, to any Hudson Valley Group Companys or any Shareholders
knowledge, threatened or anticipated claims by or on behalf of any Plan, by any current or former
employee or beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefit).
(b) Union Contracts. Except as set forth on Schedule 3.17(b), no union contracts or
agreements between any Hudson Valley Group Company and any collective bargaining group are
currently in effect, nor have any such contracts ever been in effect. Except as set forth on
Schedule 3.17(b), no charge is pending nor, to any Hudson Valley Group Companys or the Principal
Shareholders knowledge, threatened, against any Hudson Valley Group Company before any court or
agency alleging unlawful discrimination in employment practices and no charge of or proceeding with
regard to any unfair labor practice against it is pending before the National Labor Relations Board
or any other tribunal. No labor strike, dispute, slow down or stoppage currently exists or, to the
knowledge of any Hudson Valley Group Company or the Principal Shareholder, is threatened against
any Hudson Valley Group Company, and no union organizational activity exists respecting employees
of any Hudson Valley Group Company. Schedule 3.17(b) contains a list of all arbitration or
grievance proceedings that have occurred since the Balance Sheet Date. Except as set forth on
Schedule 3.17(b), no one has petitioned within the last five (5) years, and no one is now
petitioning, for union representation of any employees of any Hudson Valley Group Company. No
Hudson Valley Group Company has experienced any labor strike, slow-down, work stoppage, labor
difficulty or other job action during the last five (5) years.
(c) Parachute Payments. No payment made to any employee, officer, director or
independent contractor of any Hudson Valley Group Company (the Recipient) pursuant to any
employment contract, severance agreement or other arrangement (the Golden Parachute
Payment) will be nondeductible by any Hudson Valley Group Company because of the application
of Sections 280G and 4999 of the Code to the Golden Parachute Payment, nor will any Hudson Valley
Group Company be required to compensate any Recipient because of the imposition of an excise tax
(including any interest or penalties related thereto) on the Recipient by reason of Sections 280G and 4999 of
the Code.
(d) The representations and warranties set forth in Sections 3.17(a)(iii)-(xv) and 3.17(c)
above shall be deemed to be qualified by knowledge in the case of Clairvest.
3.18 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, Tax or
Taxes refers (i) to any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to taxes, including taxes
based on or measured by gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, fuel, excise
and property taxes, together with all interest, penalties and additions imposed with respect to
such amounts, (ii) any obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for Taxes of a predecessor entity, and (iii)
any liability for amounts described in clause (i) of this section as a result of being a member of
an affiliated, consolidated, combined or unitary group.
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(b) Tax Returns and Audits. Except as otherwise disclosed on Schedule 3.18(b) or on
the balance sheet:
(i) Each Hudson Valley Group Company has timely filed all federal, state, local and foreign
returns, estimates, forms, information statements and reports (Returns) relating to Taxes
required to be filed by each Hudson Valley Group Company with any Tax authority. Each Hudson
Valley Group Company has paid all Taxes required to be paid whether or not shown to be due on such
Returns. Copies of (x) all Returns for the three (3) most recent years ending prior to the Signing
Date, and (y) the Hudson Valley Group Companies latest property tax statements are attached to
Schedule 3.18(b), and copies of all other Returns have been made available to WCI and are among the
records of the Hudson Valley Group Companies that will accrue to WCI at the Closing. Schedule
3.18(b) also describes the income Tax treatment of each Hudson Valley Group Company for federal and
state Tax reporting purposes.
(ii) Each Hudson Valley Group Company has withheld or paid, with respect to its employees, all
federal and state income Taxes, Taxes pursuant to the Federal Insurance Contribution Act, Taxes
pursuant to the Federal Unemployment Tax Act and other Taxes required to be withheld.
(iii) No Hudson Valley Group Company has been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, assessed or, to the knowledge of any Hudson Valley Group
Company or any Shareholder, proposed against any Hudson Valley Group Company. No Hudson Valley
Group Company has executed any unexpired waiver of any statute of limitations on or extension of
any period for the assessment or collection of any Tax.
(iv) No Hudson Valley Group Company or Shareholder has been notified of any audit or other
examination of any Return of any Hudson Valley Group Company by any Tax authority is presently in
progress, nor has any Hudson Valley Group Company been notified in writing of any request for such
an audit or other examination.
(v) No adjustment relating to any Returns filed or required to be filed by any Hudson Valley
Group Company has been proposed in writing by any Tax authority to any Hudson Valley Group Company
or any representative thereof.
(vi) No Hudson Valley Group Company has any liability for any Unpaid Taxes (whether or not
shown to be due on any Return) which has not been accrued for or reserved on the Hudson Valley
Group Companies balance sheet as of the Balance Sheet Date in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise, which is material to any Hudson Valley Group
Company. There are no liens with respect to Taxes on any of the assets of any Hudson Valley Group
Company, other than liens which are not individually or in the aggregate material, or customary
liens for current Taxes not yet due and payable.
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(vii) No Hudson Valley Group Company has filed any consent agreement under former Section
341(f) of the Code or agreed to have former Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as defined in former Section 341(f)(4) of the Code) owned by any Hudson
Valley Group Company.
(viii) No Hudson Valley Group Company (A) has ever been a member of a consolidated group other
than a consolidated group of which Hudson Valley Waste Holding is the parent corporation or (B) is
party to or has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement (other than such agreements existing as of the date hereof between current members of
Hudson Valley Waste Holdings affiliated group).
(ix) To the knowledge of any Hudson Valley Group Company or any Shareholder, none of any
Hudson Valley Group Companys assets are tax-exempt use property within the meaning of Section
168(h) of the Code.
(x) No Hudson Valley Group Company has constituted either a distributing corporation or a
controlled corporation in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (A) in the two (2) years prior to the Signing Date or (B) in a distribution which
could otherwise constitute part of a plan or series of related transactions (within the meaning
of Section 355(e) of the Code) in conjunction with this Agreement.
(xi) Each Hudson Valley Group Company is in full compliance with all terms and conditions of
any Tax exemptions, Tax holiday or other Tax reduction agreement or order of a territorial or
foreign government and the consummation of this Agreement will not have any material adverse effect
on the continued validity and effectiveness of any such Tax exemptions, Tax holiday or other Tax
reduction agreement or order.
(xii) No Hudson Valley Group Company has with respect to any open taxable period applied for
and been granted permission to adopt a change in its method of accounting requiring adjustments
under Section 481 of the Code or comparable state or foreign law.
(xiii) No Hudson Valley Group Company has made an election under Regulations Section
301.7701-3 with respect to any entity.
(xiv) Hudson Valley Waste Holding is not a U.S. Real Property Holding Corporation within the
meaning of Code section 897(c)(2).
(xv) No stock options, stock appreciation rights or other equity based awards issued or
granted by any Hudson Valley Group Company are not in material compliance with Code Section 409A.
Each nonqualified deferred compensation plan (as such term is defined in Code Section 409A and
the guidance thereunder) under which any Hudson Valley Group Company makes or is obligated to make
payments is in good faith operational compliance with the requirements of Code Section 409A and the
guidance thereunder. No payment to be made by any Hudson Valley Group Company is or will be
subject to penalties of Code Section 409A.
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3.19 Copies Complete. Except as disclosed on Schedule 3.19, the certified copies of the
Charter Documents of the Hudson Valley Group Companies, and the copies of all Material Contracts,
Licenses and Permits and all other leases, instruments, agreements, licenses, permits,
certificates, site assessments or other documents that have been delivered or made available to WCI
in connection with the transactions contemplated hereby (the Delivered Documents), are
complete and accurate and are true and correct copies of the originals thereof.
3.20 Customers, Billings, Current Receipts and Receivables. Schedule 3.20 is a current,
accurate and complete list, which can be provided in electronic form of, and includes:
(a) the customers that each Hudson Valley Group Company serves on an ongoing basis
representing the top ten (10) sorted by highest annual revenue, including name, location and
current billing rate;
(b) an accurate and complete summary of aging, by company, of all accounts and notes
receivable from customers as of the last day of the month preceding the Signing Date and the
Closing Date, showing amounts due in 30-day aging categories. Except to the extent of the
allowance for bad debts reflected on the Financial Statements or otherwise disclosed on Schedule
3.20, to the Hudson Valley Group Companies and the Principal Shareholders knowledge, each Hudson
Valley Group Companys accounts and notes receivable are fully collectible in the amounts shown on
Schedule 3.20;
(c) the average monthly revenues of each Hudson Valley Group Company derived from billings to
its customers for each of the twelve (12) months preceding the Signing Date. Except as set forth
on Schedule 3.20, neither any Hudson Valley Group Company nor the Principal Shareholder has any
knowledge of any reason why any Hudson Valley Group
Companys average monthly revenues derived from billings to its customers after the Closing
Date should not continue at approximately the same rate as before the Closing Date.
3.21 No Change. Except as set forth on Schedule 3.21, since the Balance Sheet Date, the
Business has been conducted only in the ordinary course and there has been no change in the
condition (financial or otherwise) of the assets, liabilities or operations of any Hudson Valley
Group Company other than changes in the ordinary course of business, none of which either singly or
in the aggregate has had a material adverse effect. Specifically, and without limiting the
generality of the foregoing, except as set forth on Schedules 1.4 and 3.21, with respect to any
Hudson Valley Group Company, since the Balance Sheet Date there has not been:
(a) any change in its financial condition, assets, liabilities (contingent or otherwise),
income, operations or business which would have a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), income, operations of any Hudson Valley
Group Company or the Business, taken as a whole;
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(b) any material damage, material destruction or material loss (whether or not covered by
insurance) adversely affecting any material portion of its properties or Business;
(c) except for the distribution or transfer of the membership interests of Kerkim Holding as
discussed in Section 1.4, any change in or agreement to change (i) its shareholders; (ii) ownership
of its authorized capital or outstanding securities, or (iii) its securities;
(d) any declaration or payment of, or any agreement to declare or pay, any dividend or
distribution in respect of its capital stock or any direct or indirect redemption, purchase or
other acquisition of any of its capital stock, except with respect to the distribution or transfer
of the membership interests of Kerkim Holding as described in Section 1.4;
(e) any increase or bonus or promised increase or bonus in the compensation payable or to
become payable by it, in excess of usual and customary practices, to any of its directors,
officers, employees or agents, or any accrual or arrangement for or payment of any bonus or other
special compensation to any director, officer, employee or agent or any severance or termination
pay paid to any of its present or former directors, officers, employees or agents;
(f) any labor dispute or any other event or condition of any character with respect to any
Hudson Valley Group Companys employees, materially adversely affecting the Business or future
prospects;
(g) any sale or transfer, or any agreement to sell or transfer, any of its material assets,
property or rights to any other person, including any Shareholder or any of their Affiliates;
(h) any cancellation, or agreement to cancel, any material indebtedness or other material
obligation owing to it, including any indebtedness or obligation of any Shareholder or any of their
Affiliates thereof;
(i) any plan, agreement or arrangement granting any preferential rights to purchase or acquire
any interest in any of its assets, property or rights or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement, plan or arrangement to purchase or
acquire, any of its property, rights or assets outside the ordinary course of the Business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any existing Material Contracts or Licenses and
Permits or other right to which it is a party; or
(m) except for the distribution or transfer of the membership interests in Kerkim Holding as
discussed in Section 1.4, any other material transaction outside the ordinary course of business.
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3.22 Closing Date Debt; Closing Date Current Assets and Closing Date Current Liabilities.
(a) Schedule 3.22(a) lists or when delivered at the Closing will list (i) the amount of the
aggregate debt (including interest rate swaps, derivatives or other hedging instruments and
promissory notes relating to outstanding covenants not to compete, whether or not such covenants
are to be performed prior to, on or after the Closing Date, but excluding current liabilities to
the extent reflected in Closing Date Current Liabilities) of each Hudson Valley Group Company
outstanding on the Closing Date required to be repaid by WCI or any Hudson Valley Group Company at
or immediately after the Closing Date and all prepayment penalties and costs incurred or to be
incurred by WCI or any Hudson Valley Group Company in connection with the repayment of any such
debt (including interest rate swaps, derivatives or other hedging instruments and promissory
notes); (ii) the amount of the aggregate debt (excluding current liabilities to the extent
reflected in Closing Date Current Liabilities) of any Hudson Valley Group Company outstanding on
the Closing Date which will remain outstanding obligations of any Hudson Valley Group Company after
the Closing Date, and all prepayment penalties and costs applicable to such debt if repaid prior to
maturity, including in each case all interest accrued through and including the Closing Date; (iii)
the aggregate amount of the present value as of the Closing Date, discounted at the lease rate
factor, if known, inherent in the lease or, if the lease rate factor is not known, at the rate
charged to the applicable Hudson Valley Group Company by a third party lender in connection with
its most recent borrowing to finance equipment, of all lease obligations of applicable Hudson
Valley Group Company that are not capitalized lease obligations other than Leases for office
equipment or Property Leases; (iv) the aggregate amount of the present value as of the Closing Date
of all capitalized lease obligations (determined in accordance with GAAP) of each Hudson Valley
Group Company; (v) the aggregate amount of all undischarged judgments against any Hudson Valley
Group Company; and (vi) the aggregate amount of all obligations secured by tax liens against any Hudson
Valley Group Companys assets (the Closing Date Debt). Notwithstanding the foregoing,
none of the ongoing obligations with respect to surety bonds, Property Leases or Hudson Valley
Group Companys leases with respect to office equipment shall be deemed Closing Date Debt for
purposes of this Agreement. The Closing Date Debt listed on Schedule 3.22(a) is an estimate of the
Closing Date Debt and is subject to the True Up Calculations described in Section 1.2. Schedule
3.22(a) includes or when delivered will include wire transfer instructions for creditors whose
Closing Date Debt WCI has designated for payment, and attached to Schedule 3.22(a) are pay-off
letters or instructions from such creditors in the form provided by WCIs bank or acceptable to
WCI. On WCIs payment of the Closing Date Debt associated with any Hudson Valley Group Companys
capitalized lease obligations, each Hudson Valley Group Company shall have good, marketable and
unencumbered title to all assets subject to such leases.
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(b) Schedule 3.22(b) is, on the Signing Date and when delivered at the Closing, an estimate of
the amount of the aggregate current liabilities (including trade payables, accrued vacation and
sick leave benefits and any reserve for unpaid Taxes, penalties and interest (Unpaid
Taxes), and the Shareholder Expenses (pursuant to Section 12.7) to the extent to be borne by
the Hudson Valley Group Companies, and Taxes payable for the Straddle Periods as set forth in
Section 9.5(b), but excluding the current portion of long-term debt to the extent such current
portion is included in Closing Date Debt) of each Hudson Valley Group Company as of the Closing
Date (the Closing Date Current Liabilities) and an estimate of the amount of the
aggregate current assets of each Hudson Valley Group Company as of the Closing Date (including
cash, prepaid expenses the benefit of which survives the Closing, and the accounts receivable of
each Hudson Valley Group Company earned prior to the Closing Date and collectible on or after the
Closing Date, less the Closing Date Doubtful Account Allowance (the Closing Date
Current Assets)). From the Balance Sheet Date through the Closing Date, all trade payables
have and will have been incurred only in the ordinary course of business consistent with comparable
prior periods. As of the Closing Date, there are will be no current payables that are more than
thirty (30) days past due.
(c) Notwithstanding anything to the contrary in this Agreement, for purpose of determining
Working Capital Surplus, Working Capital Deficit, Closing Date Current Assets, Closing Date Current
Liabilities and Closing Date Debt, no amounts will be credited or debited to reflect deferred tax
assets or deferred tax liabilities, including, without limitation, any deferred tax assets or
deferred tax liabilities established to reflect any difference between the adjusted tax basis of
assets and the current value of such assets. In addition, no value will be attributed for purposes
of determining Working Capital Surplus, Working Capital Deficit, Closing Date Current Assets,
Closing Date Current Liabilities and Closing Date Debt to any net operating loss that any Hudson
Valley Group Company may have as of the Closing Date, regardless of whether such net operating loss
is available to reduce tax liability for any period beginning on or after the Closing. For the
avoidance of doubt, (i) any amount included in the calculation of Closing Date Current Liabilities
shall not also be included in the calculation of Closing Date Debt, and vice versa, (ii) any amount
included in the calculation of Cap Ex Expenditures or New Business Aggregate Net Purchase Price as
to which any payment remains due by any Hudson Valley Group Company on or after the Closing Date
shall be included in the calculation of Closing Date Current Liabilities, and (iii) any amount included in the
calculation of Cap Ex Expenditures or New Business Aggregate Net Purchase Price as to which payment
has been fully made by any Hudson Valley Group Company prior to the Closing Date (including any
deposits made in connection therewith) shall be excluded from the calculation of Closing Date
Current Liabilities.
3.23 Bank and Credit Card Accounts.
(a) Schedule 3.23(a) is a complete and accurate list of:
(i) the name of each bank in which each Hudson Valley Group Company has accounts or safe
deposit boxes;
(ii) the name(s) in which the accounts or boxes are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw thereon or have access thereto.
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(b) Schedule 3.23(b) is a complete and accurate list of:
(i) each credit card or other charge account issued to each Hudson Valley Group Company; and
(ii) the name of each person to whom such credit cards or other charge accounts have been
issued.
3.24 Compliance With Laws. Except as disclosed on Schedule 3.24, each Hudson Valley Group
Company has complied, and is presently in compliance, with all Licenses and Permits, all federal,
state and local laws, ordinances, codes, rules, regulations, orders, judgments, awards, decrees,
consent judgments, consent orders and requirements of whatsoever nature or kind (collectively
Laws) applicable to it, the Business or its assets or the ownership, operation or use
thereof, including the Americans with Disabilities Act, the federal Occupational Safety and Health
Act, and Laws relating to the employment or employment practices, unfair labor practices, wrongful
discharge or discrimination, zoning, land use, the Resource Conservation Recovery Act, 42 US §6901
et seq. (RCRA), the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 (CERCLA) and other Laws relating to public health, safety or protection of the
environment, except where the failure to so comply would not have a material adverse effect.
Except as disclosed on Schedule 3.8 or 3.24, no party has asserted that any Hudson Valley Group
Company has violated, or is in violation of, any Laws. Specifically and without limiting the
generality of the foregoing, except as disclosed on Schedule 3.8 or 3.24:
(a) Except as permitted under applicable Laws, including the RCRA, (i) no Hudson Valley Group
Company has accepted, processed, handled, transferred, generated, treated, stored or disposed of
any Hazardous Material, and (ii) no Hudson Valley Group Company has accepted, processed, handled,
transferred, generated, treated, stored or disposed of
asbestos, medical waste or radioactive waste or municipal waste, except where the failure to
comply would not have a material adverse effect.
(b) During any Hudson Valley Group Companys ownership, leasing or use of any Real Property
and, to the knowledge of any Hudson Valley Group Company or the Principal Shareholder, prior to any
Hudson Valley Group Companys ownership, leasing or use of any Real Property, no Hazardous
Material, other than that allowed under applicable Laws, including the RCRA, has been disposed of,
or otherwise released on any Real Property.
(c) During any Hudson Valley Group Companys ownership, leasing or use of any Real Property
and, to the knowledge of any Hudson Valley Group Company or the Principal Shareholder, prior to any
Hudson Valley Group Companys ownership, leasing or use of any Real Property, no Real Property has
ever been subject to or received any notice of any private, administrative or judicial action, or
notice of any intended private, administrative or judicial action relating to the presence or
alleged presence of Hazardous Material in, under, on or emanating from any Real Property or any
real property now or previously owned or leased by any Hudson Valley Group Company. There are no
pending and, to any Hudson Valley Group Companys or the Principal Shareholders knowledge, no
threatened actions or proceedings from any governmental agency or any other entity involving
remediation of any condition of any Real Property, including petroleum contamination, pursuant to
applicable Laws.
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(d) Except as allowed under applicable Laws, no Hudson Valley Group Company has knowingly
sent, transported or arranged for the transportation or disposal of any Hazardous Material to any
site, location or facility.
(e) Schedule 3.24 includes a list and copies of: (i) all notifications to governmental
entities within twenty-four (24) months prior to the Closing (collectively, Notifications
) that (A) are material to the operation of the Business, (B) relate to the discharge or release
of materials into the environment and/or the handling or transportation of waste materials or
hazardous or toxic substances or otherwise relate to the protection of the public health or the
environment, or (C) were filed with or submitted to appropriate governmental agencies by any Hudson
Valley Group Company or the Principal Shareholder or their agents with respect to the Business; and
(ii) all material notifications from such governmental agencies to any Hudson Valley Group Company,
the Principal Shareholder or their agents in response to or relating to any of such Notifications.
Except as set forth on Schedule 3.24(e), none of the Hudson Valley Group Companies has received any
notification under Section 104(e) of CERCLA.
(f) As used in this Agreement, Hazardous Material means the substances (i) defined
as Hazardous Waste in 40 CFR 261, and substances defined in any comparable state statute
or regulation; (ii) any substance the presence of which requires remediation pursuant to any
applicable Laws; and (iii) any substance required to be disposed of in a manner expressly
prescribed by applicable Laws.
3.25 Related Party Transactions. Schedule 3.25 is an accurate list of the accounts and notes
receivable of each Hudson Valley Group Company from and advances to employees, former employees,
officers, directors, any Shareholder and any Affiliate of the
foregoing which have not been fully repaid. Neither the Shareholders nor any of their
Affiliates has entered into any transaction with or is a party to any agreement, lease or other
instrument or arrangement, or as of the Signing Date is indebted to or is owed money by any Hudson
Valley Group Company that is not disclosed in the Financial Statements or on Schedule 3.25. Except
as disclosed in the Financial Statements or on Schedule 3.25, neither the Shareholders nor any of
their Affiliates owns any direct or indirect interest of any kind in, or controls or is a director,
officer, employee, shareholder or partner of, or consultant or lender to or borrower from or has
the right to participate in the profits of, any person which is a competitor, supplier, customer,
landlord, tenant, creditor or debtor of any Hudson Valley Group Company. The representations and
warranties set forth in this Section 3.25 shall be deemed to be qualified by knowledge in the
case of the Outside Shareholders, except to the extent that any such Outside Shareholder is a party
to any agreement, lease or other instrument or arrangement to which the representation and warranty
relates, in which case the representations and warranties shall not be deemed to be so qualified.
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3.26 Underground Storage Tanks. Except as set forth on Schedule 3.26, no underground storage
tanks (USTs) containing petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280 or other Laws are currently or have been located on any Real Property.
Except as set forth on Schedule 3.26, to each Hudson Valley Group Companys and the Principal
Shareholders knowledge, no Hudson Valley Group Company has owned or leased any real property not
included in the Real Property having any USTs. As to each UST identified on Schedule 3.26, the
Hudson Valley Group Companies have provided to WCI on Schedule 3.26, the following to the extent
known by or in the possession or control of the Hudson Valley Group Companies:
(a) the location of the UST, information and material, including any available drawings and
photographs, showing the location, and whether the applicable Hudson Valley Group Company currently
owns or leases the property on which the UST is located (and if the applicable Hudson Valley Group
Company does not currently own or lease such property, the dates on which it did and the current
owner or lessee of such property);
(b) the date of installation and specific use or uses of the UST;
(c) copies of tank and piping tightness tests and cathodic protection tests and similar
studies or reports for the UST;
(d) a copy of each notice to or from a governmental body or agency relating to each UST;
(e) other material records with regard to the UST, including repair records, financial
assurance compliance records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to the above, a summary description of
instances, past or present, in which the UST failed to meet applicable standards and regulations
for tightness or otherwise and the extent of such failure, and any other operational or
environmental problems with regard to the UST, including spills (including spills
in connection with delivery of materials to the UST), releases from the UST and soil
contamination.
Except to the extent set forth on Schedule 3.26, each Hudson Valley Group Company has complied
with applicable Laws regarding the installation, use, testing, monitoring, operation and closure of
each UST described on Schedule 3.26.
3.27 Powers of Attorney. No Hudson Valley Group Company has granted any power of attorney
(except routine powers of attorney relating to representation before governmental agencies) or
entered into any agency or similar agreement whereby a third party may bind or commit any Hudson
Valley Group Company in any manner.
3.28 Patents, Trademarks, Trade Names, etc. Schedule 3.28 lists all patents, trade names,
domain names, fictitious business names, trademarks, service marks and copyrights owned by each
Hudson Valley Group Company or that it is licensed to use (other than licenses to use
commercially-available software for personal computer operating systems that were provided when the
computer was purchased and licenses to use software for personal computers that are granted to
retail purchasers of such software). To the knowledge of the Hudson Valley Group Companies and the
Principal Shareholder, no patents, trade secrets, know-how, intellectual property, trademarks,
trade names, assumed names, copyrights or designations used by any Hudson Valley Group Company in
the Business infringe on, or constitute a misappropriation or violation of, any patents,
trademarks, copyrights, trade secrets or any other rights of any person. Neither any Hudson Valley
Group Company nor the Principal Shareholder has knowledge of any claims of third parties to the use
of any such names or similar names or other intellectual property rights, or has knowledge of any
basis for any such claim or claims.
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3.29 Suppliers and Customers. No Hudson Valley Group Company has been notified that (a) any
of the suppliers supplying products, components, materials or providing use of, or access to,
landfills or disposal sites to any Hudson Valley Group Company intends to cease providing such
items to any Hudson Valley Group Company or (b) any of the customers of any Hudson Valley Group
Company intends to terminate, limit or reduce its business relations with any Hudson Valley Group
Company. Except for deposits on Fixed Assets and except as provided on the Hudson Valley Group
Companies balance sheet, no Hudson Valley Group Company had as of the Balance Sheet Date, nor will
any Hudson Valley Group Company have as of the Closing Date, any liabilities due or to become due
to suppliers, except the balances owing on the purchase of Fixed Assets for which deposits have
been made, whether accrued, absolute, contingent or otherwise, including Tax liabilities.
3.30 Absence of Certain Business Practices. Neither any Hudson Valley Group Company nor the
Principal Shareholder has directly or indirectly within the past five (5) years given or agreed to
give any gift or similar benefit to any customer, supplier, governmental employee or other person
in violation of any Law.
3.31 Brokers; Finders. No person has acted directly or indirectly as a broker, finder or
financial advisor for any Hudson Valley Group Company or any Shareholder in connection with the
transactions contemplated by this Agreement, and no person is entitled to any brokers, finders,
financial advisory or similar fee or payment in respect thereof based in
any way on any agreement, arrangement or understanding made by or on behalf of any Hudson
Valley Group Company or any Shareholder.
3.32 No Other Representations or Warranties. Except as set forth in this Agreement, neither
the Hudson Valley Group Companies nor the Shareholders are making any representations or
warranties, express or implied, of any nature whatsoever.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders that each of the following representations and
warranties is true and correct as of the Signing Date and will be true and correct as of the
Closing, and agrees that such representations and warranties shall survive the Closing as provided
in Section 10.6:
4.1 Existence and Good Standing. WCI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. WCI has full corporate power and authority
to own and lease its properties and to carry on its business as now conducted. WCI is not required
to be qualified or licensed to conduct business as a foreign corporation in any jurisdiction where
the failure to be so qualified would have a material adverse effect on its financial condition.
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4.2 Authorization of Agreement. WCI has full corporate right, power, and authority to enter
into this Agreement, and all documents and agreements necessary to give effect to the provisions of
this Agreement, and perform its obligations hereunder. The execution and delivery of this
Agreement by WCI and the consummation of the transactions contemplated hereby by WCI have been, or
prior to the Closing will have been, duly authorized by WCIs Board of Directors or by the
Executive Committee of WCIs Board of Directors. This Agreement and all other agreements and
documents executed in connection herewith have been or will be, as the case may be, duly
authorized, executed and delivered by WCI and, subject to the due authorization, execution and
delivery by the Hudson Valley Waste Holding, County Waste and the Shareholders, constitute the
legal, valid and binding obligations of WCI enforceable against WCI in accordance with their
respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally and by general principles of equity.
4.3 No Breach or Default. The execution and delivery by WCI of this Agreement and the
consummation of the transactions contemplated hereby will not, after the giving of notice, or the
lapse of time or otherwise: (a) violate any provision of any law, rule or regulation, or any order,
writ, injunction or decree of any court, administrative agency or governmental authority applicable
to WCI or require the approval, consent or permission of any governmental body or authority, except
as required under the HSR Act; (b) violate the Amended and Restated Certificate of Incorporation or
Amended and Restated Bylaws of WCI, or (c) conflict with, result in a breach of, or constitute a
default under any material agreement or instrument to which WCI is a party or by which it is bound.
4.4 Brokers; Finders. No person has acted directly or indirectly as a broker, finder or
financial advisor for WCI in connection with the transactions contemplated by this
Agreement and no person is entitled to any brokers, finders, financial advisory or similar
fee or payment in respect thereof based in any way on any agreement, arrangement or understanding
made by or on behalf of WCI.
Except as specifically set forth in this Agreement, WCI is not making any representations or
warranties, express or implied, of any nature whatsoever.
5. COVENANTS FROM SIGNING TO CLOSING
5.1 Operations. Between the Signing Date and the Closing, each Hudson Valley Group Company
will, and the Shareholders will cause each Hudson Valley Group Company to carry on the Business in
the ordinary course and, without limiting the generality of the foregoing, will:
(a) not introduce any new method, or discontinue any existing method, of operation or
accounting;
(b) use commercially reasonable efforts to maintain its properties and facilities, including
those held under leases, in as good working order and condition as at present, ordinary wear and
tear excepted;
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(c) keep in full force and effect present insurance policies or other comparable insurance
coverage;
(d) use commercially reasonable efforts to maintain and preserve its business organization
intact, retain its present employees (other than the individual(s) listed on Schedule 5.7) and
maintain its relationship with suppliers, customers and others having business relations with it;
(e) file on a timely basis all notices, reports or other filings required to be filed with or
reported to any federal, state, municipal or other governmental department, commission, board,
bureau, agency or any instrumentality of any of the foregoing wherever located with respect to the
continuing operations of each Hudson Valley Group Company;
(f) perform its obligations under all Material Contracts and comply with the terms and
conditions of all Licenses and Permits and all applicable laws, rules, regulations and consent
orders;
(g) file on a timely basis all complete and correct applications or other documents necessary
to maintain, renew or extend any site assessment, Permit, License, variance or any other approval
required by any governmental authority necessary and/or required for the continuing operation of
the Business, whether or not such approval would expire before or after the Closing; and
(h) advise WCI promptly in writing of any breach of any representation or warranty or any
covenant, or any material change in any document, Schedule, Exhibit, or other information delivered
pursuant to this Agreement.
5.2 No Change. Between the Signing Date and the Closing, no Hudson Valley Group Company will,
and the Shareholders will not permit any Hudson Valley Group Company to, take any action described
below without the prior written consent of WCI:
(a) make any change in its Charter Documents;
(b) authorize, issue, transfer, pledge, distribute or sell any capital stock (including any of
the Holding Companys Stock), membership interest or other equity of any Hudson Valley Group
Company or any rights to acquire, or instruments convertible into, any of capital stock, membership
interest or other equity of any Hudson Valley Group Company, except for the distribution or
transfer of the membership interests of Kerkim Holding as described in Section 1.4;
(c) except as provided in Section 1.4 with respect to the distribution of any Excluded Assets,
declare or pay any dividend or make any distribution in respect of its capital stock whether now or
hereafter outstanding, or purchase, redeem or otherwise acquire or retire for value any shares of
its capital stock;
(d) except for the Cap Ex Expenditures described in the Budget or as otherwise expressly
permitted or contemplated by this Agreement, enter into any contract or commitment or incur or
agree to incur any liability outside the ordinary course of business or make any single capital
expenditure in the ordinary course of business in excess of One Hundred Thousand Dollars ($100,000)
in the aggregate;
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(e) except as set forth on Schedule 3.16(a), change or promise to change the compensation
payable or to become payable to any director, officer, employee or agent, or make or promise to
make any bonus payment to any such person;
(f) create, assume or otherwise permit the imposition of any security interest, mortgage,
pledge or other lien or encumbrance on or grant any option or right of first refusal with respect
to any assets or properties whether now owned or hereafter acquired;
(g) sell, assign, lease or otherwise transfer or dispose of any property or equipment other
than in the ordinary course of business;
(h) purchase or acquire or agree to purchase or acquire business, assets, capital stock or
other equity of any firm, corporation or entity without the prior written approval of WCI;
provided, however, that, in the case of any Pre-Closing Acquisition, such approval shall not be
unreasonably withheld, conditioned or delayed;
(i) waive any rights or claims of third parties that would have a material adverse effect;
(j) amend, terminate or enter into any material agreement or any site assessment, permit,
license or other right;
(k) enter into any other transaction outside the ordinary course of any Hudson Valley Group
Companys Business or prohibited hereunder.
5.3 Obtain Consents. Within two (2) business days after the Signing Date, each of WCI, the
Hudson Valley Group Companies and the Shareholders shall (a) make or cause to be made all filings
that are required for it to consummate the purchase and sale of the Holding Companys Stock in
accordance with the terms of this Agreement; and (b) use commercially reasonable efforts to obtain,
or cause to be obtained, all Required Governmental Consents and third party consents listed in
Schedule 5.3.
5.4 Confidential Information. Until the Closing is completed in accordance with the terms
hereof, WCI will cause all information obtained from the Shareholders and the Hudson Valley Group
Companies in connection with the negotiation and performance of this Agreement to be treated as
confidential (except such information which is in the public domain or which WCI may be required to
disclose under applicable Law (including applicable securities laws) or pursuant to (i) the rules
or regulations of the New York Stock Exchange, or in connection with any HSR Act filing, (ii) any
governmental agency, or (iii) any court or regulatory agency order) and will not use, and will not
knowingly permit others to use, any such confidential information in a manner detrimental to the
Hudson Valley Group Companies or the Shareholders. The Hudson Valley Group Companies will not, and
the Shareholders will not and will cause the Hudson Valley Group Companies not to, disclose to any
third persons other than their accountants, bankers or counsel any of the terms or provisions of
this Agreement (except as required by Law or in connection with the HSR Act filing) prior to or
after the Closing without the prior written consent of WCI.
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5.5 Acquisition Transactions. From the Signing Date to the earlier of the Closing and the
Termination Date, neither any Hudson Valley Group Company nor any Shareholder shall initiate,
solicit, negotiate, encourage or provide information to facilitate, and neither any Hudson Valley
Group Company nor any Shareholder shall cause or knowingly permit any officer, director or employee
of any Hudson Valley Group Company, or any counsel, accountant, investment banker, financial
advisor or other agent retained by it or them to initiate, solicit, negotiate, encourage or provide
information to facilitate, any proposal or offer to acquire all or any substantial part of the
Business or properties of any Hudson Valley Group Company or any capital stock (including the
Holding Companys Stock) or membership interests of any Hudson Valley Group Company, whether by
merger, purchase of assets or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an Acquisition
Transaction). The Hudson Valley Group Companies and the Shareholders shall immediately notify
WCI after receipt of any proposal for an Acquisition Transaction, indication of interest or request
for information from a third party relating to any Hudson Valley Group Company in connection with
an Acquisition Transaction or for access to the properties, books or records of any Hudson Valley
Group Company by any person or entity that indicates to any Hudson Valley Group Company that such
third-party is considering making, or has made, a proposal for an Acquisition Transaction. Such
notice to WCI shall be made orally and in writing.
5.6 Schedules.
(a) Any matter disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed on every other Schedule that refers to such Schedule by cross reference so long as the
nature of the matter disclosed is obvious from a fair reading of the
Schedule on which the matter is disclosed. Nothing in any Schedule will be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the Schedule identifies
the exception with reasonable particularity and describes the relevant facts in reasonable detail.
(b) The Schedules shall be accurate and complete when delivered on or prior to the Signing
Date. From time to time after the Signing Date, but not more than two (2) business days prior to
the Closing Date, the Hudson Valley Group Companies and the Shareholders Representatives shall
have the right to supplement or amend the Schedules with respect to any matter hereafter arising or
discovered after the delivery of the Schedules as provided herein (the Supplemental
Material). If the Supplemental Material disclose facts that, absent such disclosure, would
constitute a material breach of either any Hudson Valley Group Companys or any Shareholders
representations or warranties, WCI shall within two (2) business days of receipt of such
Supplemental Material notify the Shareholders Representatives thereof, and the Hudson Valley Group
Companies or the Shareholders, as applicable, shall have two (2) business days to cure any such
breach, and if not cured within such two (2) business-day period and such breach has or reasonably
may be expected to have a material adverse effect, WCI may terminate this Agreement by delivering a
termination notice to the Shareholders Representatives pursuant to Section 2.2(b) within five (5)
days after expiration of the two (2) business-day cure period. If the Agreement shall not have
been terminated by WCI during such period, WCI shall have waived the right to terminate the
Agreement based on such Supplemental Material, and, subject to Section 10.4(b), such Supplemental
Material, if true and correct, shall be deemed to qualify the representation or warranty contained
in Section 3 as required hereunder in a timely manner for all purposes under this Agreement, and no
claim for any such breach may be made by WCI.
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5.7 Termination of Certain Employees. On or before the Closing Date, the Hudson Valley Group
Companies shall have terminated the individual(s) listed on Schedule 5.7, Jeff Earl and Dan
Lombardi, and the Shareholders shall be solely liable for any compensation, severance or other
amount due and payable by any Hudson Valley Group Company to such individual(s) of whatsoever
nature or kind.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE
The obligations of WCI under this Agreement are subject to the satisfaction, at or before
Closing, of all of the following conditions precedent, unless waived in writing by WCI:
6.1 Representations and Warranties. All representations and warranties of the Hudson Valley
Group Companies and the Shareholders contained in this Agreement shall be true, correct and
complete on and as of the date when made, shall be deemed to be made again at the Closing, and
shall then be true and correct as of the Closing, except where the failure to be so true and
correct would not have a material adverse effect on the Hudson Valley Group Companies and the
Business taken as a whole or the ability to consummate the transactions contemplated hereby;
provided, however, (a) if a representation and warranty is qualified by materiality or material
adverse effect, it must be true and correct in all respects after giving effect to such
qualification and (b) if a representation and warranty speaks only as of a specific date it only
needs to be true and correct as of that date.
6.2 Conditions. The Hudson Valley Group Companies and the Shareholders shall have performed,
satisfied and complied, in all material respects, with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them before the Closing.
6.3 Certificates. The President of each of Hudson Valley Waste Holding and County Waste shall
have delivered to WCI a certificate, dated as of the Closing Date, in form and substance reasonably
satisfactory to WCI, certifying to the fulfillment of the conditions set forth in Sections 6.1,
6.2, 6.4 and 6.11, and the Shareholders shall have delivered to WCI a certificate dated as of the
Closing Date, in form and substance reasonably satisfactory to WCI, certifying to the fulfillment
of the conditions set forth in Section 6.1, 6.2, 6.4 and 6.11 applicable to the Shareholders.
6.4 No Litigation. None of the transactions contemplated hereby shall have been enjoined by
any court or by any federal or state governmental branch, agency, commission or regulatory
authority and no suit or other proceeding challenging the transactions contemplated hereby shall
have been threatened or instituted and no investigative or other demand shall have been made by any
federal or state governmental branch, agency, commission or regulatory authority.
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6.5 Other Deliveries. The Shareholders shall have delivered the items which they are required
to deliver under Section 8 of this Agreement.
6.6 Governmental and Third Party Consents. All Required Governmental Consents and consents of
third parties with respect to each of the contracts listed on Schedule 3.5 shall have been received
by the applicable Hudson Valley Group Company, in each case in form and substance satisfactory to
WCI.
6.7 Receipt of Payoff Letters. All financial institutions or other lenders that have security
interests in assets of any Hudson Valley Group Company, and each of Jerry S. Cifor, the CFO and
Alfred Eldridge (in respect of their letter agreements with the Principal Shareholder), shall have
delivered payoff letters to WCI in form and substance satisfactory to WCI.
6.8 Title Insurance. Chicago Title Company (the Title Company) shall be irrevocably
committed to issue, subject to standard conditions, at Closing an ALTA Owners Policy of title
insurance for each parcel of Owned Property, insuring fee simple title to such Owned Property in
the applicable Hudson Valley Group Company, subject only to current real property taxes and
assessments, standard printed conditions and exceptions, and all utility and access easements and
matters listed in Schedule 3.13 that do not adversely affect the operation of the Business and
such title exceptions as shall have been accepted in writing by WCI prior to the Closing Date,
containing such endorsements as WCI may reasonably require.
6.9 HSR Waiting Period. The waiting period applicable to the consummation of this transaction
under the HSR Act shall have expired or been terminated.
6.10 Certificates of Good Standing. Shareholders shall have delivered to WCI a good standing
certificate, any applicable Tax clearance certificate or any other applicable certificate, dated
within five (5) business days of the Closing Date, evidencing that each Hudson Valley Group Company
is in good standing and is current in the payment of any Taxes due in the jurisdiction of its
incorporation or formation and in each jurisdiction in which each Hudson Valley Group Company is
qualified to do business as a foreign corporation or limited liability company.
6.11 Distribution of Excluded Assets. The distribution of the Excluded Assets, including the
membership interests of Kerkim Holding held by County Waste or any other Hudson Valley Group
Company, shall have been distributed to the Shareholders or other persons as set forth in Section
1.4.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS TO CLOSE
The obligations of the Shareholders under this Agreement are subject to the satisfaction, at
or before Closing, of all of the following conditions precedent, unless waived in writing by the
Shareholders:
7.1 Representations and Warranties. All representations and warranties of WCI contained in
this Agreement shall be true, correct and complete on and as of the date when made, shall be deemed
to be made again at the Closing, and shall then be true and correct as of the Closing, except where
the failure to be so true and correct would not have a material adverse effect on WCI taken as a
whole or the consummation of the transactions contemplated hereby; provided, however, (a) if a
representation and warranty is qualified by materiality or material adverse effect, it must be true
and correct in all respects after giving effect to such qualification and (b) if a representation
and warranty speaks only as of a specific date it only needs to be true and correct as of that
date.
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7.2 Conditions. WCI shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by
it before the Closing.
7.3 Certificate. WCI shall have delivered to the Shareholders a certificate, dated as of the
Closing Date, in form and substance reasonably satisfactory to the Shareholders, certifying to the
fulfillment of the conditions set forth in Sections 7.1, 7.2 and 7.4.
7.4 No Litigation. None of the transactions contemplated hereby shall have been enjoined by
any court or by any federal or state governmental branch, agency, commission or regulatory
authority and no suit or other proceeding challenging the transactions contemplated hereby shall
have been threatened or instituted and no investigative or other demand shall have been made by any
federal or state governmental branch, agency, commission or regulatory authority.
7.5 Other Deliveries. WCI shall have delivered the items that it is required to deliver under
Section 8 of this Agreement.
7.6 HSR Waiting Period. The waiting period applicable to the consummation of this transaction
under the HSR Act shall have expired or been terminated.
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries indicated below:
8.1 WCI Deliveries.
(a) WCI shall pay the Purchase Price payable to the Shareholders at the Closing pursuant to
Section 1.2(b).
(b) WCI shall execute and deliver to Hudson Valley Waste Holding and the Shareholders the
certificate described in Section 7.3.
8.2 Shareholder Deliveries.
(a) The Shareholders shall deliver to WCI the certificates representing the Holding Companys
Stock free and clear of all liens, security interests, encumbrances, restrictions, pledges and
claims, accompanied by a stock power duly executed in blank by each Shareholder.
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(b) The Shareholders shall deliver to WCI an opinion of counsel for the Shareholders, dated as
of the Closing Date, in substantially the form attached hereto as Exhibit D.
(c) The applicable Hudson Valley Group Companies shall deliver evidence reasonably
satisfactory to WCI that all consents necessary to satisfy the conditions described in Section 6.6
have been obtained.
(d) The Hudson Valley Group Companies and the Shareholders shall execute and deliver to WCI
the certificates described in Section 6.3.
(e) The Hudson Valley Group Companies shall deliver to WCI evidence satisfactory to WCI
showing that all written and oral employment contracts other than those that are terminable at
will without payment of severance (other than normal severance benefits approved by WCI) or other
benefits (including stock options or other rights to obtain equity in any Hudson Valley Group
Company) with non-union employees of any Hudson Valley Group Company have been terminated,
effective as of the Closing; provided, however, that the Employment Agreements between County Waste
and each of Alfred Eldridge (as amended by that certain Amendment to Employment Agreement dated
March 23, 2011) and Ernest Palmer shall not be terminated on or prior to the Closing Date.
(f) Each officer, director and/or manager of each Hudson Valley Group Company shall deliver a
resignation as an officer, director and/or manager thereof.
(g) Hudson Valley Waste Holding shall have delivered a certificate that the Holding Companys
Stock is not a U.S. real property interest substantially in the form of Exhibit E.
(h) The Shareholders shall deliver a copy of the resolutions of the Board of Directors of each
of Hudson Valley Waste Holding and County Waste and the Shareholders (along with a spousal consent
for any married Shareholder) approving this Agreement and the transactions described herein,
certified by the Secretary or Manager of each Hudson Valley Group Company.
(i) The Shareholders Representatives shall have executed and delivered to WCI a closing
statement reflecting the names, addresses and wiring instructions for each Shareholder, the number
and percentage of Holding Companys Stock held by each Shareholder, and the portion of the Purchase
Price payable to each Shareholder (the Closing Statement).
(j) Prior to the Closing (or promptly thereafter to the extent not capable of being performed
prior to the Closing), the Shareholders, the Hudson Valley Group Companies and WCI shall each
deliver or cause to be delivered at such times and places as shall be reasonably requested such
additional instruments as WCI or the Shareholders may reasonably request for the purpose of
carrying out this Agreement, including, with respect to the Hudson Valley Group Companies and the
Shareholders, any affidavits or other documents required by Title Company in order for WCI to
obtain title insurance policies confirming good and marketable title to each property owned or
being purchased by any Hudson Valley Group Company as of Closing. The Shareholders will cooperate
with WCI and/or the Hudson Valley Group Companies after the Closing in furnishing information,
evidence, testimony and other assistance in connection with any actions, proceedings or disputes of
any nature with respect to matters pertaining to all periods prior to the Closing. Notwithstanding
the foregoing, nothing herein shall be deemed to require the Shareholders to provide any
indemnification to the Title Company that expands the Shareholders indemnification obligations set
forth in Article 10.
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9. ADDITIONAL COVENANTS OF WCI, THE HUDSON VALLEY GROUP COMPANIES AND THE SHAREHOLDERS
9.1 Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each of the parties hereto shall use
reasonable efforts in good faith to take, or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated by this Agreement; provided, however, that in using its
reasonable efforts WCI shall not be required to take any action or to agree to any condition,
including any condition imposed by any government authority with respect to the transfer of any
License or Permit or obtaining any Required Governmental Consent, that, in WCIs judgment, imposes
a materially adverse financial burden or operating condition on WCI.
(b) In the event any litigation is commenced between the Signing Date and the Closing Date
against any Hudson Valley Group Company by any person or entity relating to the transactions
contemplated by this Agreement, WCI shall have the right, at its own expense, to participate
therein, and no Hudson Valley Group Company will settle any such litigation without the consent of
WCI, which consent will not be unreasonably withheld.
9.2 Confidentiality. Neither the Hudson Valley Group Companies nor the Shareholders shall
disclose or make any public announcement of the transactions contemplated by this Agreement without
the prior written consent of WCI, unless required to make such disclosure or announcement by Law or
in connection with any HSR Act filing, in which event the party making the disclosure or
announcement shall provide written notice to WCI at least twenty-four (24) hours before such
disclosure or announcement is expected to be made.
9.3 Brokers and Finders Fees. Each of the Shareholders shall pay or cause to be paid and be
responsible for any brokers, finders or financial advisory fee incurred by the Hudson Valley
Group Companies and/or the Shareholders in connection with the transactions contemplated by this
Agreement.
9.4 Taxes. WCI shall reasonably cooperate with the Shareholders, at the Shareholders
expense, with respect to any matters involving the Shareholders arising out of the Shareholders
ownership of Hudson Valley Waste Holding prior to the Closing, including matters relating to Tax
returns and any Tax audits, appeals, claims or litigation with respect to such Tax returns or the
preparation of such Tax returns for any Hudson Valley Group Company. In connection therewith, WCI
shall make available to the Shareholders such files, documents, books and records of the Hudson
Valley Group Companies for inspection and copying as may be reasonably requested by the
Shareholders and shall cooperate with the Shareholders with respect to retaining information and
documents which relate to such matters.
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9.5 Tax Returns.
(a) As soon as reasonably practicable after the Closing, the Shareholders shall prepare, at
their sole cost and expense, all short year federal, state, county, local and foreign tax returns
for each Hudson Valley Group Company for the period beginning with the first day of each such
companys fiscal year in which the Closing occurs and ending on the Closing Date. Such return
shall (a) be prepared consistent with past practice by Williams & Lombardi CPA (or, if unavailable,
another tax or accounting firm reasonably acceptable to WCI); (b) not, without WCIs prior written
consent, contain any elections that would have an adverse effect on the financial condition or tax
position of any Hudson Valley Group Company after the Closing Date; (c) compute any penalties and
interest due with the return; and (d) be delivered to WCI together with all necessary supporting
schedules within ninety (90) days following the Closing Date (or at least sixty (60) days prior to
the date on which such return is required to be filed, if earlier) for WCIs approval prior to its
filing (but such approval shall not relieve the Shareholders of their responsibility for the Taxes
assessed under these returns). The Shareholders shall be responsible for the execution of the
returns and payment of all Taxes, pro rata in accordance with Schedule 3.2,shown to be due or that
may come to be due on such returns or otherwise relating to the period prior to the Closing Date,
except to the extent included in the calculation of Closing Date Current Liabilities. At the time
of the filing of the returns, the
Shareholders shall contemporaneously deliver to WCI an executed copy of all final tax returns
along with copies of payments submitted with those returns.
(b) WCI shall prepare or cause to be prepared and file all Tax Returns with respect to each
Hudson Valley Group Company for all taxable periods that begin before and end after the Closing
Date (the Straddle Periods). The Shareholders shall pay or cause to be paid all Taxes of
each Hudson Valley Group Company that are allocable to the pre-Closing portion of Straddle Periods,
pro rata in accordance with Schedule 3.2, except to the extent included in the calculation of
Closing Date Current Liabilities. With respect to a Straddle Period, the parties hereto will, to
the extent permitted by applicable law, elect with the relevant taxing authorities to treat for all
purposes the Closing Date as the last day of a taxable period of each Hudson Valley Group Company.
In any case where applicable law does not permit any Hudson Valley Group Company to treat the
Closing Date as the last day of a taxable period, then for purposes of this Agreement, the portion
of such Taxes that is attributable to the pre-Closing portion of a Straddle Period shall be (i) in
the case of Taxes that are not based on income or gross receipts, the total amount of such Taxes
for the period in question multiplied by a fraction, the numerator of which is the number of days
in the period up to the Closing Date, and the denominator of which is the total number of days in
the entire period in question, and (ii) in the case of Taxes that are based on income or gross
receipts, the Taxes that would be due with respect to the period up to the Closing Date, as if such
period were a taxable period.
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9.6 General Release by Shareholders. Each Shareholder (and, if applicable, such Shareholder
in his, her or its capacity as an officer, director and/or manager of any Hudson Valley Group
Company) hereby fully releases and discharges each Hudson Valley Group Company and its directors,
officers, agents and employees from all rights, claims and actions, known or unknown, of any kind
whatsoever (including any right any Shareholder has to indemnification by any Hudson Valley Group
Company), which such Shareholder (and, if applicable, such Shareholder in his, her or its capacity
as an officer, director and/or manager of any Hudson Valley Group Company) now has against any
Hudson Valley Group Company and its directors, officers, agents and employees, arising out of or
relating to events arising prior to or on the Closing Date, except to the extent such
indemnification rights, claims and actions are covered by a tail insurance policy in favor of the
Shareholders and directors which is in effect on the Closing Date and which remains in effect
thereafter. Specifically, but not by way of limitation, each Shareholder (and, if applicable, such
Shareholder in his, her or its capacity as an officer, director and/or manager of any Hudson Valley
Group Company) waives any right of indemnification, contribution or other recourse against any
Hudson Valley Group Company which he now has or may hereafter have against any Hudson Valley Group
Company with respect to representations, warranties or covenants made in this Agreement by any
Hudson Valley Group Company, except to the extent such indemnification rights, claims and actions
are covered by a tail insurance policy in favor of the Shareholders and directors which is in
effect on the Closing Date and which is remains in effect thereafter.
9.7 Shareholders Representatives.
(a) In order to administer efficiently the rights and obligations of the Shareholders under
this Agreement, the Shareholders hereby designate and appoint the Principal Shareholder and Michael
Castellarin, acting together, as the Shareholders Representatives (the
Shareholders Representatives) to serve as the Shareholders agent and
attorney-in-fact for the limited purposes set forth in this Agreement.
(b) Each of the Shareholders hereby appoints the Shareholders Representatives as such
Shareholders agent, proxy and attorney-in-fact, with full power of substitution, for all purposes
set forth in this Agreement, including the full power and authority on such Shareholders behalf
(i) to consummate the transactions contemplated by this Agreement; (ii) to disburse any funds
received hereunder to the Shareholders; (iii) to execute and deliver on behalf of each Shareholder
any amendment of or waiver under this Agreement, and to agree to resolution of all Claims
hereunder; (iv) to retain legal counsel and other professional services, at the expense of the
Shareholders, in connection with the performance by the Shareholders Representatives of this
Agreement including all actions taken on behalf of the Shareholders as Indemnifying Party pursuant
to Section 10.5; and (v) to do each and every act and exercise any and all rights which such
Shareholder or Shareholders are permitted or required to do or exercise under this Agreement and
the other agreements, documents and certificates executed in connection herewith. Each of the
Shareholders agrees that such agency and proxy are coupled with an interest, are therefore
irrevocable without the consent of the Shareholders Representatives and shall survive the death,
bankruptcy or other incapacity of any Shareholder.
(c) Each of the Shareholders hereby agrees that any amendment or waiver under this Agreement,
and any action taken on behalf of the Shareholders to enforce the rights of the Shareholders under
this Agreement, and any action taken with respect to any Claim (including any action taken to
object to, defend, compromise or agree to the payment of such Claim), shall be effective if
approved in writing by the Shareholders Representatives, and that each and every action so taken
shall be binding and conclusive on every Shareholder, whether or not such Shareholder had notice
of, or approved, such amendment or waiver.
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(d) The Principal Shareholder and Michael Castellarin shall serve jointly as the Shareholders
Representatives until such individual either resigns or is otherwise unable or unwilling to serve.
In the event that a Shareholders Representative resigns from such position or is otherwise unable
or unwilling to serve, the remaining Shareholders shall select, by the vote of the holders of a
majority of the Holding Companys Stock immediately prior to the Closing, a successor
representative to fill such vacancy, shall provide prompt written notice to WCI of such change and
such substituted representative, together with any existing representative, shall then be deemed to
be a Shareholders Representative for all purposes of this Agreement.
10. INDEMNIFICATION
10.1 Indemnity by the Principal Shareholder. The Principal Shareholder, subject to the
limitations set forth in Section 10.4, covenants and agrees that he will indemnify and hold
harmless WCI and its Affiliates, each Hudson Valley Group Company, and their respective directors,
officers, agents, successors and assigns (individually a WCI Indemnitee and collectively
the WCI Indemnitees), from and after the Signing Date, against any and all losses,
damages (including exemplary damages), assessments, fines, penalties, adjustments, liabilities,
claims, deficiencies, costs and expenses (including specifically, reasonable attorneys fees, court
costs, witness fees and expenses of investigation) (collectively, Damages), suffered or incurred by any WCI
Indemnitee arising from, in connection with or related to any of the events, matters or
contingencies set forth below or in Section 10.2 (each, a WCI Indemnity Event, and
collectively, the WCI Indemnity Events):
(a) Any misrepresentation, breach of warranty, or nonfulfillment of any agreement or covenant
on the part of any Shareholder or any Hudson Valley Group Company pursuant to the terms of this
Agreement or any Exhibit or Schedule attached hereto.
(b) Any Environmental Site Losses at any Environmental Site (as hereinafter defined).
Environmental Site Losses shall mean any and all Damages and expenditures (including
expenses in connection with site evaluations, risk assessments and feasibility studies), arising
out of or required by an interim or final judicial or administrative decree, judgment, injunction,
mandate, interim or final permit condition or restriction, cease and desist order, abatement order,
compliance order, consent order, clean-up order, exhumation order, reclamation order or any other
remedial action that is required to be undertaken under federal, state or local law in respect of
operating activities on or affecting any Environmental Site, including (i) any actual or alleged
violation of any law or regulation respecting the protection of the environment, including RCRA and
CERCLA and (ii) any remedies or violations, whether by a private or public action, alleged or
sought to be assessed as a consequence, directly or indirectly, of any Hazardous Material existing,
on or prior to the Closing, at any Environmental Site, whether or not any Release resulting from
any such Hazardous Material Release is into the air, water (including groundwater) or land.
Environmental Site shall mean any Facility, UST and other waste storage, processing,
treatment or disposal facility, and any other business site or other real property owned, leased,
controlled, operated or used by any Hudson Valley Group Company or by any predecessor thereof prior
to the Closing. The term Release shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the
ambient environment. Notwithstanding anything in this Section to the contrary, a Release composed
solely of Hazardous Material contained in household waste lawfully disposed of in a landfill during
the time any Hudson Valley Group Company owned and/or operated such landfill does not constitute an
Environmental Site Loss.
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(c) Any actions, suits, arbitrations, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, reasonable attorneys fees and expenses of investigation)
incident to any of the foregoing.
10.2 Indemnity by All Shareholders. Without limiting the generality of Section 10.1 as it
applies to the Principal Shareholder, the Outside Shareholders, severally but not jointly (nor
jointly and severally), and the Principal Shareholder, jointly and severally with the Outside
Shareholders, all as is more fully set forth in Section 10.4 below, and subject to the limitations
set forth in Section 10.4, covenant and agree that they will indemnify and hold harmless each WCI
Indemnitee, from and after the Signing Date, against any and all Damages suffered or incurred by
any WCI Indemnitee arising from, in connection with or related to any WCI Indemnity Event set forth
below (collectively, the Absolute Obligations):
(a) Any misrepresentation or breach of any representation or warranty set forth in Section
3.1, 3.2, 3.3, 3.6, 3.16(d), 3.17(a)(iii)-(xv), 3.17(c), 3.18, 3.22, 3.25 or 3.31 (each, an
Absolute Representation, and collectively, the Absolute Representations), or
any breach or nonperformance of any covenant in Section 9.3, 9.5 or 11.1; provided, however, that,
in the case of Clairvest only, Section 11.1 shall not apply or be deemed an Absolute Obligation.
(b) Any Taxes incurred by any Hudson Valley Group Company for periods prior to or ending on
the Closing Date to the extent such Taxes exceed the reserve therefor included in Closing Date
Current Liabilities, reduced by any amounts paid by WCI pursuant to Section 1.2(d)(ix).
(c) Any Closing Date Debt or any claim by any person for brokerage or finders fees or
commissions or similar payments based on any agreement or understanding alleged to have been made
by any such person with any Hudson Valley Group Company any Shareholders in connection with any of
the transactions contemplated by this Agreement.
(d) Any liability based on, attributable to or resulting from the Excluded Assets or Excluded
Liabilities, whether arising prior to, on or after Closing.
(e) Any actions, suits, arbitrations, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, reasonable attorneys fees and expenses of investigation)
incident to any of the foregoing.
10.3 Indemnity by WCI. Subject to the limitations set forth in Section 10.4, WCI covenants
and agrees that it will indemnify and hold harmless the Shareholders and their respective
Affiliates, directors, officers, agents, successors and assigns (individually a Shareholder
Indemnitee and collectively the Shareholder Indemnitees), from and after the date of
this Agreement, against any and all Damages suffered or incurred by any Shareholder Indemnitee
arising from, in connection with or related to any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of WCI pursuant to the terms of this
Agreement or any Exhibit or Schedule attached hereto (each, a Shareholder Indemnity
Event, and collectively, the Shareholder Indemnity Events).
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10.4 Limitations on the Parties Indemnification Obligations.
(a) The obligation of the Principal Shareholder to indemnify the WCI Indemnitees for Damages
as provided in Section 10.1 shall only apply after the aggregate amount of such obligations exceeds
One Million Four Hundred Thousand Dollars ($1,400,000) (the General Deductible Amount),
and then only for the amount by which such Damages exceed the General Deductible Amount. The
Principal Shareholder shall have no obligation to make any payment for Damages as provided in
Section 10.1 for any single claim unless the amount of the Damages with respect to such claim is at
least Fifty Thousand Dollars ($50,000) (the Minimum Claim Amount). Notwithstanding any
provision of this Agreement to the contrary, neither the General Deductible Amount nor the Minimum
Claim Amount shall apply to any indemnification obligations on account of Misconduct or any breach
or nonperformance of any Absolute Obligations.
(b) Notwithstanding any disclosure contained in the Disclosure Schedule to qualify any
representation or warranty related to any Absolute Obligation, BUT SUBJECT TO SECTION 10.11 (NO
DOUBLE RECOVERY), any Damages related to, arising from or in connection with the subject matter so
disclosed shall be subject to indemnification pursuant to this Article 10 as if the disclosure had
not been made. By way of illustration but not limitation, if a disclosure is made that a Hudson
Valley Group Company is delinquent in the payment of any Taxes arising with respect to a
pre-Closing period, the Shareholders shall be liable (ON TERMS, AND SUBJECT TO THE CONDITIONS, SET
FORTH IN THIS AGREEMENT) for such Taxes notwithstanding the disclosure that was made. In the event
that a representation contained in this Agreement is breached and such representation is qualified
by words or phrases such as material, material adverse effect, materially, immaterial,
immaterially, nonmaterial, substantially, or words of similar import, such qualifiers shall
be disregarded for purposes of calculating the amount of any obligation of indemnity arising
pursuant to this Article 10. Absent Misconduct and except with respect to Damages arising from, in
connection with or related to the breach of any of the Absolute Obligations, the maximum amount
that the WCI Indemnitees can recover as a result of one or more WCI Indemnity Events pursuant to
the provisions hereof for Damages or Claims shall not in the aggregate exceed Twenty Million
Dollars ($20,000,000) (the General Indemnity Cap). Absent Misconduct, with respect to
Damages based on, arising from or related to the breach or nonperformance of any of the Absolute
Obligations or the breach or nonperformance
by WCI of its representations, warranties, covenants or agreements hereunder, the maximum
amount that any of the Indemnitees can recover shall not in the aggregate exceed Thirty-Five
Million Dollars ($35,000,000) (the Absolute Indemnity Cap), it being acknowledged and
agreed that, in the case of the liability of the Outside Shareholders, such recovery for Damages
shall be allocated among all of the Shareholders pro rata in accordance with Schedule 3.2 or as
otherwise instructed in writing by the Shareholders Representatives and (i) the Outside
Shareholders shall only be liable to WCI or any Indemnitee for their respective pro rata shares of
Damages as aforesaid, and (ii) the maximum aggregate liability of the Outside Shareholders to make
payment for Damages shall not exceed their respective pro rata shares of the Absolute Indemnity
Cap. For the avoidance of doubt and notwithstanding any provision in this Agreement to the
contrary, the Principal Shareholder shall be liable for, and each WCI Indemnitee may recover
against the Principal Shareholder for, the entire amount of Damages subject to indemnification
hereunder, subject to the General Liability Cap or the Absolute Indemnity Cap, if and as
applicable. For the purposes of this Section 10, Misconduct shall mean fraud, fraudulent
inducement, misappropriation or intentional misrepresentation or concealment.
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10.5 Notice of Indemnity Claim.
(a) In the event that any claim (Claim) is hereafter asserted against or arises with
respect to, as applicable, any WCI Indemnitee or Shareholder Indemnitee (each, an
Indemnitee) as to which an Indemnitee may be entitled to indemnification hereunder, the
Indemnitee shall notify (i) the Shareholders Representatives, if the Indemnitee is a WCI
Indemnitee, or (ii) WCI, if the Indemnitee is a Shareholder Indemnitee (each, an Indemnifying
Party), in writing thereof (the Claims Notice) within sixty (60) days after (i)
receipt of written notice of commencement of any third party litigation against the Indemnitee (a
Third Party Claim); (ii) receipt by the Indemnitee of written notice of any Third Party
Claim pursuant to an invoice, notice of claim or assessment against the Indemnitee; or (iii) the
Indemnitee becomes aware of the existence of any other event in respect of which indemnification
may be sought from the Indemnifying Party (including any inaccuracy of any representation or
warranty or breach of any covenant). The Claims Notice shall describe the Claim and the specific
facts and circumstances in reasonable detail, and shall indicate the amount, if known, or an
estimate, if possible, of the losses that have been or may be incurred or suffered by the
Indemnitee. The failure to timely deliver a Claims Notice pursuant to this Section 10.5(a) or
otherwise notify the Indemnifying Party of the commencement of such actions in accordance with the
terms hereof shall not relieve the Indemnifying Party from the obligation to indemnify hereunder,
subject to the limitations set forth in Section 10.4, except to the extent that the Indemnifying
Party establishes by competent evidence that it has been prejudiced thereby.
(b) The Indemnifying Party shall have the right to assume the defense of any Third Party Claim
with the Indemnifying Partys own counsel (which counsel shall be reasonably satisfactory to the
Indemnitee) if the Indemnifying Party provides written notice of its election to assume such
defense within thirty (30) days after the Indemnifying Party has received a Claims Notice with
respect to such Third Party Claim and such Third Party Claim is solely for money damages and the
cumulative total of all Claims (including such Claim) does not exceed
the Indemnity Cap at the time the Claim is made; provided, however, the Indemnifying Party
must conduct the defense of the Third Party Claim actively and diligently in order to preserve the
Indemnifying Partys rights and rights of the Indemnitee. The Indemnitee may participate, at the
Indemnitees own expense, in the defense of any Claim assumed by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying Partys receipt of a Claims Notice, the
Indemnifying Party shall not have elected to defend the Third Party Claim or if the Indemnifying
Party fails to diligently defend the Third Party Claim, the Indemnitee shall have the right to
assume control of the defense and/or compromise of such Third Party Claim subject to Section
10.5(f), and the costs and expenses of such defense, including reasonable attorneys fees, shall be
added to the Claim. The Indemnifying Party shall promptly, and in any event within thirty (30)
days after demand therefor, reimburse the Indemnitee for the costs of defending the Third Party
Claim, including reasonable attorneys fees and expenses.
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(d) The party assuming the defense of any Claim shall keep the other party reasonably informed
at all times of the progress and development of its or their defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement shall cooperate with
each other and make available to each other and their representatives all available relevant
records or other materials required by them for their use in defending, compromising or contesting
any Claim. The failure to timely deliver a Claims Notice or otherwise notify the Indemnifying
Party of the commencement of such actions in accordance with this Section 10.5 shall not relieve
the Indemnifying Party from the obligation to indemnify hereunder except to the extent that the
Indemnifying Party establishes by competent evidence that it has been prejudiced thereby.
(e) If the Indemnified Person undertakes the investigation and defense of a Third Party Claim,
the Indemnifying Party will not be bound by any determination of the Third Party Claim or any
compromise or settlement of the Third Party Claim effected without the consent of the Indemnifying
Party (which consent may not be unreasonably withheld, conditioned or delayed).
(f) The Indemnifying Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third-Party Claim without the prior consent of the Indemnitee (which
consent shall not be unreasonably withheld or delayed) unless the judgment or proposed settlement
(i) includes an unconditional release of all liability of each Indemnitee with respect to such
Third Party Claim, and (ii) involves only the payment of money damages by the Indemnifying Party
and does not impose an injunction or other equitable relief upon the Indemnitee or impose any
restrictions on the operation of the business of the Indemnitee or Affiliates of the Indemnitee.
So long as the Indemnifying Party has assumed and is conducting the defense of the Third-Party
Claim in accordance with Section 10.5(b) above, the Indemnitee will not consent to the entry of any
judgment or enter into any settlement with respect to the Third-Party Claim without the prior
written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or
delayed by the Indemnifying Party).
(g) In the event both the Indemnitee and the Indemnifying Party are named as defendants in a
Third Party Claim, they shall both be represented by the same counsel
(on whom they shall agree), unless such counsel, the Indemnitee or the Indemnifying Party
shall determine that such counsel has a conflict of interest in representing both the Indemnitee
and the Indemnifying Party in the same action or proceeding and the Indemnitee and the Indemnifying
Party do not waive such conflict to the satisfaction of such counsel.
(h) A Claims Notice delivered to the Shareholders Representative shall be deemed delivered to
each Shareholder, and actions required to be taken by any Shareholder in its, his or her capacity
as an Indemnifying Party shall be taken by the Shareholders Representatives on behalf of the
Indemnifying Party.
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10.6 Survival of Representations and Warranties and Indemnification Obligations. The
representations and warranties set forth in Articles 3 and 4 shall survive the Closing; provided,
however, that the indemnity and other obligations of the Principal Shareholder arising under
Section 10.1 shall survive the Closing for a period of twelve (12) months and thereupon shall
terminate, unless a Claims Notice shall have been delivered with respect thereto within such
period; and provided, further, that (a) the indemnity and other obligations of all the Shareholders
arising in connection with any Misconduct or breach or nonperformance of any Absolute Obligations
under Section 10.2 or any of their respective post-termination or post-Closing covenants, and (b)
the indemnity and other obligations of WCI arising in connection with any Misconduct or breach or
nonperformance of any of its representations or warranties or post-termination or post-Closing
covenants shall survive the Closing for the period of the applicable statute of limitations, unless
in each such case a Claims Notice shall have been delivered with respect thereto within such
period. For the avoidance of doubt, no obligation of an Indemnifying Party to indemnify and hold
harmless an Indemnitee hereunder shall terminate with respect to any matter as to which the
Indemnitee shall have, before the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such claim) to the Indemnitee.
10.7 No Exhaustion of Remedies or Subrogation. Subject to the terms of Section 10.4, each
Shareholder waives any right to require any Indemnitee to (a) proceed against any Hudson Valley
Group Company or any Shareholder; (b) proceed against any other person; or (c) pursue any other
remedy whatsoever in the power of any Indemnitee.
10.8 Exclusion of Other Remedies. Except in the case of Misconduct or as otherwise set forth
in Section 12.15, the rights to indemnification set forth in this Article 10 constitute the only
remedy of the Indemnitees for any breach or nonperformance by any Indemnifying Party of its
representations, warranties, covenants or agreements under this Agreement. The parties may
exercise their rights of termination in Section 2.
10.9 No Waiver. Nothing in this Agreement in any was restricts or limits the right of any
Indemnifying Party to claim Damages for the failure of any Indemnitee to comply with any general
obligation at Law of any Person to mitigate any loss which it may suffer or incur by reason of the
breach by any Party of any representation, warranty, covenant or obligation of such Party under
this Agreement.
10.10 Adjustment to Purchase Price. Any indemnification payment made by an Indemnifying Party
under this Article 10 is a dollar-for-dollar decrease in the Purchase Price.
10.11 No Double Recovery. Notwithstanding any provision of this Agreement to the contrary, no
Indemnitee shall be entitled to double recovery for any claims even though they may have resulted
from the breach of more than one of the representations, warranties, covenants and obligations of
the Indemnifying Party in this Agreement. No Shareholder shall have any liability or obligation
with respect to any claim for indemnification to the extent that such matter was reflected as an
adjustment to the Purchase Price in Section 1.2.
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10.12 Liability of Shareholders. Notwithstanding any provision in this Agreement to the
contrary, for the purposes of this Agreement, (i) in any provision which purports to make the
Outside Shareholders jointly liable to make any payment, whether on account of taxes, brokers fees,
expenses or otherwise (including Section 5.7, Section 9.3, Section 9.5 and Section 12.7), the
liability of the Outside Shareholders shall be pro rata among all of the Shareholders in accordance
with Schedule 3.2, (ii) no Outside Shareholder shall be liable to WCI or any Indemnitee for a
breach of covenant by any Shareholder other than itself, (iii) no Outside Shareholder shall be
liable to WCI or any Indemnitee for any breach of representation or warranty other than an Absolute
Representation as provided in Section 10.2, and (iv) the Principal Shareholder shall be jointly and
severally liable to the WCI Indemnitees for any Damages subject to indemnification pursuant to this
Article 10, and any WCI Indemnitee may recover from the Principal Shareholder, and the Principal
Shareholder shall pay to the WCI Indemnitees, the entire amount of Damages arising from, in
connection with or related to any WCI Indemnitee Event subject to indemnification pursuant to this
Article 10 (even if such Damages exceed the Principal Shareholders pro rata portion of such
Damages), and, with respect to any WCI Indemnity Event set forth in Section 10.2, the Principal
Shareholder may seek reimbursement from the Other Shareholders pro rata in accordance with Schedule
3.2.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS AND WCI
11.1 Restrictive Covenants. Each Hudson Valley Group Company, each Shareholder (other than
Clairvest and its Affiliates) and their respective Affiliates acknowledge that (a) WCI, as the
purchaser of the Holding Companys Stock, is and will be engaged in the same business as the
Business; (b) the Shareholders and their Affiliates are intimately familiar with the Business; (c)
the Business is currently conducted in the State of New York and WCI intends to continue the
Business in New York and intends, by acquisition or otherwise, to expand the Business into other
geographic areas where it is not presently conducted; (d) the Shareholders and their Affiliates
have had access to trade secrets of and confidential information concerning the Business; (e) the
agreements and covenants contained in this Section 11.1 are essential to protect the Business and
the goodwill being acquired; and (f) the Shareholders and their Affiliates have the means to
support themselves and their dependents other than by engaging in a business competitive with or
similar to the Business and the provisions of this Section 11 will not impair such ability. Each
Shareholder covenants and agrees as follows:
(a) Non-Compete. During the Restricted Period, the Shareholders (other than Clairvest
and its Affiliates) and their Affiliates shall not, anywhere within a fifty (50) mile radius of any
county listed on Exhibit A, directly or indirectly, acting individually or as the owner,
shareholder, partner, member or employee of any entity other than WCI or one of its subsidiaries,
directly or indirectly, (A) engage in or own or operate a business competitive with
or similar to the Business, including the operation of a solid waste collection,
transportation, disposal and/or composting business, transfer facility, recycling facility,
materials recovery facility or solid waste landfill competitive with or similar to the Business;
(B) whether or not for compensation, enter the employ of, or render any personal services to or for
the benefit of, or assist in or facilitate the solicitation of customers for, or receive
remuneration in the form of salary, commissions or otherwise from, any business competitive with or
similar to the Business; (C) as owner or lessor of real estate or personal property, rent to or
lease any facility, equipment or other assets to any business engaged in activities competitive
with or similar to the Business; or (D) receive or purchase a financial interest in, make a loan
to, or make a gift in support of, any such business in any capacity, including as a sole
proprietor, partner, shareholder, member, officer, director, principal, agent, trustee or lender;
provided, however, that any such Shareholder or an Affiliate may own, directly or
indirectly, solely as an investment, securities of any business traded on any national securities
exchange or NASDAQ, provided that such Shareholder or such Affiliate is not a controlling person
of, or a member of a group that controls, such business and further provided that any such
Shareholder or such Affiliates does not, in the aggregate, directly or indirectly, own two percent
(2%) or more of any class of securities of such business.
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For purposes of this Agreement, the term Restricted Period shall mean, in the case
of all the Shareholders (other than Clairvest and its Affiliates), the period beginning as of the
Signing Date and ending five (5) years thereafter; provided, however, that if a court of competent
jurisdiction determines that such period is unenforceable, Restricted Period shall mean the period
beginning as of the Signing Date and ending four (4) years thereafter; provided, however, that if a
court of competent jurisdiction determines that such period is unenforceable, Restricted Period
shall mean the period beginning as of the Signing Date and ending three (3) years thereafter;
provided, however, that if a court of competent jurisdiction determines that such period is
unenforceable, Restricted Period shall mean the period beginning as of the Signing Date and ending
two (2) years thereafter provided, however, that if a court of competent jurisdiction determines
that such period is unenforceable, Restricted Period shall mean the period beginning as of the
Signing Date and ending one (1) year thereafter, or such other period as the court shall determine
to be reasonable. The Restricted Period shall be extended by the number of days in any period in
which any Shareholder or an Affiliate of any Shareholder is determined by a court of competent
jurisdiction to be in default or breach of this Section 11.1.
(b) Confidential Information. Each Shareholder and each of their respective
Affiliates shall keep secret and retain in strictest confidence, and shall not use for the benefit
of themselves or others, all data and information relating to the Business (Confidential
Information), including know-how, trade secrets, customer lists, vehicle routing, supplier
lists, details of contracts, pricing policies, operational methods, marketing plans or strategies,
bidding information, practices, policies or procedures, product development techniques or plans,
and technical processes; provided, however, that the term Confidential Information shall
not include information that (i) is or becomes generally available to the public other than as a
result of disclosure by any Shareholder or an Affiliate or (ii) is general knowledge in the solid
waste handling and landfill business and not specifically related to the Business. Notwithstanding
the foregoing, the Shareholders and their Affiliates may disclose and discuss confidential
information in connection with any legal proceeding and shall provide WCI prior written notice of
such disclosure at least forty-eight (48) hours before such disclosure is made, if possible.
(c) Non-Solicitation. Without the consent of WCI, which may be granted or withheld by
WCI in its discretion, neither the Shareholders (other than Clairvest) nor any of their Affiliate
shall solicit any employees of any Hudson Valley Group Company or its Affiliates to leave the
employ of any Hudson Valley Group Company or its Affiliates and join any Shareholder or any of
their Affiliates in any business endeavor owned or pursued by any Shareholder, nor shall any
Shareholder (other than Clairvest) hire any employee of any Hudson Valley Group Company, WCI or any
of WCIs Affiliates within ninety (90) days after such employees employment with any Hudson Valley
Group Company, WCI or one of WCIs Affiliates terminates for any reason.
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11.2 Rights and Remedies On Breach. If any Shareholder or Affiliate of the Shareholder
breaches, or threatens to commit a breach of, any of the provisions of Section 11.1 (the
Restrictive Covenants), WCI shall have the following rights and remedies, each of which
rights and remedies shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available to WCI at law or in
equity:
(a) Specific Performance. Each Shareholder (other than Clairvest and its Affiliates,
except in the case of a breach of Section 11.1(b)) agrees that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to WCI and that money damages would not
provide an adequate remedy to WCI. Accordingly, in addition to any other rights or remedies, WCI
shall be entitled to exercise the remedies set forth in Section 12.15 and 12.16.
(b) Accounting. The right and remedy to require each Shareholder to account for and
pay over to WCI all compensation, profits, monies, accruals, increments or other benefits derived
or received by a Shareholder as the result of any transactions constituting a breach of the
Restrictive Covenants.
(c) Severability of Covenants. Each Shareholder (other than Clairvest and its
Affiliates) acknowledges and agrees that the Restrictive Covenants are reasonable and valid in
prohibited business activity and geographical and temporal scope and in all other respects. If the
business activities, period of time or geographical area covered by the Restrictive Covenants
should be deemed too extensive, then the parties intend that the Restrictive Covenants be construed
to cover the maximum scope of business activities, period of time and geographical area (not
exceeding those specifically set forth herein), if any, as may be permissible under applicable law.
(d) Blue-Penciling. If any court determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the scope of the business activities covered, the
duration or the geographic area, such court shall reduce the scope duration or area of such
provision, as the case may be, to the minimum extent necessary to render it enforceable and, in its
reduced form, such provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Shareholders (other than Clairvest)
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants on the courts of any
jurisdiction within the geographic scope of the Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants unenforceable
by reason of the breadth of such scope or otherwise, such determination shall not bar or in any way
affect WCIs right to the relief provided above in the courts of any other jurisdiction within the
geographic scope of the Restrictive Covenants as to breaches of such covenants in such other
respective jurisdictions, such covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
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12. GENERAL
12.1 Assignment. This Agreement shall be binding on and shall inure to the benefit of the
parties hereto, the successors or permitted assigns of WCI and the heirs, legal Representatives or
permitted assigns of the Shareholders. Neither this Agreement nor any of the rights or obligations
under this Agreement are assignable or transferable by any party without the prior written consent
of the other parties, provided, however, that WCI may assign this Agreement to an Affiliate;
provided, further, that WCI shall provide the Shareholders Representatives with prior written
notice thereof and remain liable jointly and severally with such Affiliate, as a principal and not
as a surety, for the due observance and performance of this Agreement by such Affiliate.
12.2 Public Announcements. Except as required by Law, the rules of the New York Stock
Exchange or in connection with the HSR Act filing, in which case the disclosing Party shall use
commercially reasonable efforts to obtain the approval of the other Parties, (a) no party shall
make any public announcement or filing with respect to the transactions provided for herein prior
to the Closing without the prior written consent of the other parties hereto and (b) the parties
shall jointly agree on the form, nature and extent of any proposed disclosure or announcement of
this Agreement and the transactions contemplated hereby.
12.3 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the same
instrument.
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12.4 Notices. All notices, requests, demands and other communications hereunder shall be
deemed to have been duly given if in writing and either delivered personally, sent by facsimile
transmission or by nationally recognized overnight delivery service, or mailed by postage prepaid
registered or certified U.S. mail, return receipt requested, to the addresses designated below or
such other addresses as may be designated in writing by notice given hereunder, and shall be
effective on personal delivery or facsimile transmission thereof or on delivery by registered or
certified U.S. mail or one (1) business day following deposit with a nationally recognized
overnight delivery service:
If to the Shareholders, c/o the Shareholders Representatives: | Scott T. Earl 4141 Bay Beach Lane 4h5 Fort Myers Beach, Florida 33139 |
|||
Michael Castellarin | ||||
22 St. Clair Avenue East, Suite 1700 | ||||
Toronto ON M4T 2S3 | ||||
Canada | ||||
With a copy to: | Murphy Sullivan Kronk | |||
P.O. Box 4485 | ||||
Burlington, VT 05406-4485 | ||||
Attention: Catherine Kronk, Esq. | ||||
Telephone No.: (802) 861-7000 | ||||
Facsimile No.: (802) 861-7007 | ||||
If to WCI: | Waste Connections, Inc. | |||
2295 Iron Point Road, Suite 200 | ||||
Folsom, CA 95630-8767 | ||||
Attention: Ronald J. Mittelstaedt | ||||
Telephone No.: (916) 608-8200 | ||||
Facsimile No.: (916) 351-5607 | ||||
With a copy to: | Shartsis Friese LLP | |||
One Maritime Plaza, 18th Floor | ||||
San Francisco, CA 94111-3598 | ||||
Attention: Derek H. Wilson, Esq. | ||||
Telephone No.: (415) 421-6500 | ||||
Facsimile No.: (415) 421-2922 |
12.5 Applicable Law; Attorneys Fees. Except as otherwise stated, this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware without giving
effect to its conflict of laws provisions. In the event of any dispute or controversy between WCI,
on the one hand, and any Hudson Valley Group Company or the Shareholders, on the other hand,
relating to the interpretation of this Agreement, the prevailing party shall be entitled to recover
from the other party reasonable attorneys fees and expenses incurred by the prevailing party, as
awarded by the court. Such award shall include post-judgment attorneys fees and costs.
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12.6 No Waiver Relating to Claims for Misconduct. Notwithstanding anything in this Agreement
to the contrary, none of the provisions set forth in this Agreement shall be deemed a waiver by any
party to this Agreement of any right or remedy which such party may have at law or equity based on
any other partys Misconduct, nor shall any such provisions limit, or be deemed to limit (a) the
amounts of recovery sought or awarded in any such claim for Misconduct; (b) the time period during
which such a claim for Misconduct may be brought, or (c) the recourse which any such party may seek
against another party with respect to such a claim for Misconduct. Notwithstanding the foregoing,
nothing in this Section shall allow any party to recover more than once for Damages or Claims based
on the same set of circumstances.
12.7 Payment of Fees and Expenses. Whether or not the transactions herein contemplated shall
be consummated, the Shareholders will pay the Shareholders and each Hudson Valley Group Companys
fees, expenses and disbursements incurred by them in connection herewith and all other costs and
expenses incurred in the performance and compliance with all conditions to be performed by them
hereunder (the Shareholder Expenses), and WCI will pay its fees, expenses and
disbursements incurred in connection herewith and all other costs and expenses incurred in the
performance and compliance with all conditions to be performed by it hereunder. Any sales,
transfer and use Taxes and escrow and recording fees incurred in connection with the transactions
contemplated by this Agreement shall be borne by WCI and paid when due. For the avoidance of
doubt, the Shareholders may cause the Hudson Valley Group Companies to pay the Shareholder Expenses
on their behalf, in which case such expenses shall be included in the calculation of Closing Date
Current Liabilities.
12.8 Incorporation by Reference. All Schedules and Exhibits attached hereto are incorporated
herein by reference as though fully set forth at each point referred to in this Agreement.
12.9 Captions. The captions in this Agreement are for convenience only and shall not be
considered a part hereof or affect the construction or interpretation of any provisions of this
Agreement.
12.10 Number and Gender of Words. Whenever the singular number is used herein, the same shall
include the plural where appropriate, and shall apply to all of such number, and to each of them,
jointly and severally, and words of any gender shall include each other gender where appropriate.
12.11 Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) and the
other documents delivered pursuant hereto constitute the entire agreement and understanding among
the Hudson Valley Group Companies, the Shareholders and WCI and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement may be modified or
amended only by a written instrument executed or approved by Hudson Valley Waste Holding, the
Shareholders and WCI.
12.12 Waiver. No waiver by any party hereto at any time of any breach of, or compliance with,
any condition or provision of this Agreement to be performed by any other
party hereto may be deemed a waiver of similar or dissimilar provisions or conditions at the
same time or at any prior or subsequent time.
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12.13 Severability. If any provision of this Agreement or the application of any provision
shall be held by a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
prohibited unenforceability. The remaining provisions of this Agreement shall otherwise remain
full force and effect and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
12.14 Construction. The language in all parts of this Agreement must be in all cases
construed simply according to its fair meaning and not strictly for or against any party. Unless
expressly stated otherwise, including means including but not limited to and all references
herein to a day are deemed to be a reference to a calendar day, and all references to
business day mean any day of the year other than a Saturday, Sunday or a public or bank
holiday in New York or California. Unless expressly stated otherwise, cross-references herein
refer to provisions within this Agreement and are not references to the overall transaction or to
any other document. For purposes of this Agreement, the term Affiliate means, with
respect to any person, any person that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with such person, and in the case of a
corporation or limited liability company includes its directors, officers and managers, in the case
of individuals includes the individuals spouse, father, father-in-law, mother, mother-in-law,
grandfather, grandmother, brothers, brothers-in-law, sisters, sisters-in-law, sons-in-law,
daughters-in-law, children and grandchildren, and in the case of a trust includes the grantors,
trustees and beneficiaries of the trust. Wherever reference is made in this Agreement to the
knowledge of the Principal Shareholder, such term means the actual knowledge of Scott T.
Earl or any knowledge which should have been obtained by him on reasonable inquiry. Wherever
reference is made in this Agreement to the knowledge of any Hudson Valley Group Company, such
term means the actual knowledge of Scott T. Earl, Jerry Cifor or the CFO, or any knowledge which
should have been obtained by any such person on reasonable inquiry. Wherever reference is made in
this Agreement to the knowledge of Clairvest, such term means the actual knowledge of
Michael Castellarin or Ken Rotman, or any knowledge which should have been obtained by either such
person on reasonable inquiry. Reasonable efforts means the efforts that a reasonable
person desirous of achieving the result would use in similar circumstances to ensure that such
result is achieved as soon as reasonably practicable.
12.15 Equitable Remedies. Subject to Section 10.8, in addition to any other rights or
remedies available at law or in equity, upon the breach or threatened breach of any of the
covenants, agreements or obligations of a Shareholder or, prior to the Closing, any Hudson Valley
Group Company under this Agreement, WCI shall be entitled to file an action for specific
performance or injunctive or other equitable relief without being required to post a bond or
provide any other security.
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12.16 Remedies Cumulative. Subject to Sections 10.4, 10.6 and 10.8 the remedies provided in
this Agreement shall be cumulative and shall not preclude any party from asserting any other right,
or seeking any other remedies, against any other party.
12.17 Electronic Execution. The exchange of copies of this Agreement and of signature pages
by facsimile transmission or by electronic transmission in PDF format shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or by
electronic transmission in PDF format shall be deemed to be their original signatures for all
purposes. At the request of any party, any facsimile or electronic document shall be re-executed
in original form by the parties who executed the facsimile or electronic document. At the request
of any party, any facsimile or electronic document shall be re-executed in original form by the
parties who executed the facsimile or electronic document.
[Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement by persons
thereunto duly authorized as of the date first above written.
WASTE CONNECTIONS, INC. | HUDSON VALLEY WASTE HOLDING, INC. | |||||||
By:
|
/s/ Ronald J. Mittelstaedt | By: | /s/ Scott T. Earl | |||||
Title: Chief Executive Officer | Title: President and CEO | |||||||
COUNTY WASTE AND RECYCLING SERVICE, INC. | ||||||||
By: | /s/ Scott T. Earl | |||||||
Title: President and CEO | ||||||||
SHAREHOLDERS: | ||||||||
/s/ Scott T. Earl | ||||||||
Scott T. Earl | ||||||||
CLAIRVEST EQUITY PARTNERS III LIMITED PARTNERSHIP, by its general partner, CLAIRVEST GP MANAGECO INC. | ||||||||
By: | /s/ Ken Rotman | |||||||
Title: Co-Chief Executive Officer | ||||||||
By: | /s/ Michael Castellarin | |||||||
Title: Authorizing Signing Officer |
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CEP III CO-INVESTMENT LIMITED PARTNERSHIP, by its general partner, CLAIRVEST GENERAL PARTNER III L.P., by its general partner, CLAIRVEST GP (GPLP) INC. | ||||
By: | /s/ Ken Rotman | |||
Name: | Ken Rotman | |||
Title: | Co-Chief Executive Officer | |||
By: | /s/ Michael Castellarin | |||
Name: | Michael Castellarin | |||
Title: | Authorizing Signing Officer | |||
/s/ James Horvath | ||||
James Horvath | ||||
/s/ Angela Horvath | ||||
Angela Horvath | ||||
/s/ Paola Horvath | ||||
Paola Horvath | ||||
/s/ Ernest Palmer | ||||
Ernest Palmer |
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