SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Rutland, Vermont, on this 7th day of
August, 1997.
CASELLA WASTE SYSTEMS, INC.
By: /s/ John W. Casella
----------------------------------
John W. Casella
President and Chief Executive
Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers, directors and authorized representatives of
Casella Waste Systems, Inc. hereby severally constitute and appoint John W.
Casella, James W. Bohlig and Jeffrey A. Stein, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below, the
Registration Statement on Form S-1 filed herewith and any and all pre-effective
and post-effective amendments to said Registration Statement, and any
subsequent Registration Statement for the same offering which may be filed
under Rule 462(b), and generally to do all such things in our names and on our
behalf in our capacities as officers and directors to enable Casella Waste
Systems, Inc. to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Registration Statement and any and all
amendments thereto or to any subsequent Registration Statement for the same
offering which may be filed under Rule 462(b).
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ---------------------------- ----------------------------------- ---------------
/s/ John W. Casella President, Chief Executive Officer
- ------------------------- and Chairman
John W. Casella August 7, 1997
/s/ James W. Bohlig Senior Vice President and Chief
- ------------------------- Operating Officer, Director
James W. Bohlig August 7, 1997
/s/ Jerry S. Cifor Vice President and Chief Financial
- ------------------------- Officer (Principal Accounting and
Jerry S. Cifor Financial Officer) August 7, 1997
/s/ Douglas R. Casella Director August 7, 1997
- -------------------------
Douglas R. Casella
/s/ John F. Chapple III Director August 7, 1997
- -------------------------
John F. Chapple III
/s/ Kenneth H. Mead Director August 7, 1997
- -------------------------
Kenneth H. Mead
/s/ Michael F. Cronin Director August 7, 1997
- -------------------------
Michael F. Cronin
/s/ Gregory B. Peters Director August 7, 1997
- -------------------------
Gregory B. Peters
/s/ C. Andrew Russell Director August 7, 1997
- -------------------------
C. Andrew Russell
II-6
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CASELLA WASTE SYSTEMS, INC.,
a Delaware Corporation
Incorporated March 1, 1993
Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware
The undersigned, John W. Casella, is President and Secretary, of
Casella Waste Systems, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"). The
Corporation's Certificate of Incorporation was initially filed in the Office of
the Secretary of State of the State of Delaware on March 1, 1993. The
undersigned, as President and Secretary of the Corporation, do hereby certify
that (a) the Board of Directors duly adopted a resolution pursuant to Sections
242 and 245 of the General Corporation Law of the State of Delaware proposing
that this Amended and Restated Certificate of Incorporation (the "Restated
Certificate" or "Certificate of Incorporation") be approved and declaring the
adoption of such Restated Certificate to be advisable; and (b) the stockholders
of the Corporation duly approved this Restated Certificate by written consent in
accordance
-1-
with Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware, and written notice of such consent has been given to all stockholders
who have not consented in writing to this Restated Certificate.
FIRST. The name of the Corporation is:
Casella Waste Systems, Inc.
SECOND. The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 10,000,000 shares of Class A
Common Stock, $.01 par value per share ("Class A Common Stock"), (ii) 1,000,000
shares of Class B Common Stock, $.01 par value per share ("Class B Common
Stock", and collectively with the Class A Common Stock, the "Common Stock") and
(iii) 4,941,250 shares of Preferred Stock, $.01 par value per share ("Preferred
Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated in this Restated
Certificate or by the Board of Directors upon any issuance of the Preferred
Stock of any series.
-2-
2. Voting. The holders of the Class A Common Stock are entitled to one
vote for each share of Class A Common Stock held at all meetings of stockholders
(and written actions in lieu of meetings). The holders of the Class B Common
Stock are entitled to ten (10) votes for each share of Class B Common Stock held
at all meetings of stockholders (and written actions in lieu of meetings). The
holders of the Class A Common Stock and the Class B Common Stock shall vote
together as a single class. There shall be no cumulative voting.
The number of authorized shares of Class A Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote, irrespective of the provisions of Section
242(b)(2) of the General Corporation Law of Delaware.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock. The Corporation shall not declare or pay any
dividends or other distributions (as defined below) on shares of Class A Common
Stock until the holders of the Class B Common Stock then outstanding shall have
first received, or simultaneously receive, a cash dividend on each outstanding
share of Class B Common Stock in an amount at least equal to the product of (i)
the per share amount, if any, of the dividends or other distributions to be
declared, paid or set aside for the Class A Common Stock, multiplied by (ii) the
number of whole shares of Class A Common Stock into which such share of Class B
Common Stock is then convertible.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders (treating Class A Common Stock and Class B Common Stock equally for
this purpose), subject to any preferential rights of any then outstanding
Preferred Stock.
5. Optional Conversion of Class B Common Stock. The holders of the
Class B Common Stock shall have conversion rights as follows (the "Class B
Conversion Rights"):
(a) Right to Convert. Each holder of Class B Common
Stock shall have
-3-
the right, at any time, to convert any or all shares of Class B Common Stock
held by such holder, without the payment of additional consideration by the
holder thereof, into fully paid and nonassessable shares of Class A Common Stock
at a rate of one share of Class A Common Stock for each share of Class B Common
Stock so converted (subject to adjustment as provided below) (the "Conversion
Rate").
(b) Fractional Shares. No fractional shares of Class A Common
Stock shall be issued upon conversion of the Class B Common Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value per share of Class A Common Stock, as determined by the Board of Directors
in their reasonable judgment.
(c) Mechanics of Conversion.
(i) In order for a holder of Class B Common Stock to
convert shares of Class B Common Stock into shares of Class A Common Stock, such
holder shall surrender the certificate or certificates for such shares of Class
B Common Stock, at the office of the transfer agent for the Class B Common Stock
(or at the principal office of the Corporation if the Corporation serves as its
own transfer agent), together with written notice as to the number of shares of
Class B Common Stock that such holder elects to convert. Such notice shall state
such holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Class A Common Stock to be issued. If
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Class B
Common Stock, or to his or its nominees, (x) a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled, together with cash in lieu of any fraction of a share, and (y) a
certificate for the balance of the shares of Class B Common Stock represented by
the certificate or certificates surrendered to the Corporation, if any, not so
converted.
(ii) The Corporation shall at all times when the
Class B Common Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Class B Stock, such number of its duly authorized shares of Class A Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding Class B Common Stock.
-4-
(iii) Upon any such conversion, no adjustment to the
conversion rate shall be made for any declared but unpaid dividends on the Class
B Common Stock surrendered for conversion or on the Class A Common Stock
delivered upon conversion.
(iv) All shares of Class B Common Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the holders thereof
to receive shares of Class A Common Stock in exchange therefor and payment of
any dividends declared but unpaid thereon. Any shares of Class B Common Stock so
converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time take
such appropriate action as may be necessary to reduce the authorized Class B
Common Stock accordingly.
(v) The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issuance or delivery of shares
of Class A Common Stock upon conversion of shares of Class B Common Stock
pursuant to this Section 5. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Class A Common Stock in a name other than
that in which the shares of Class B Common Stock so converted were registered,
and no such issuance or delivery shall be made unless and until the person or
entity requesting such issuance has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid.
(d) Stock Splits and Combinations. The Corporation shall not
effect a subdivision or combination of the outstanding Class A Common Stock
unless an equal subdivision or combination shall have been effected on the Class
B Common Stock, and vice versa.
(e) Adjustment for Reclassification, Exchange, or
Substitution. If the Class A Common Stock issuable upon the conversion of the
Class B Common Stock shall be changed into the same or a different number of
shares of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a
-5-
reorganization, merger, consolidation, or sale of assets provided for below),
then and in each such event the holder of each such share of Class B Common
Stock shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Class A Common Stock into which such shares of Class B Common Stock
might have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation thereof, dividend rights, special voting rights, conversion rights,
redemption privileges and liquidation preferences, as shall be stated and
expressed in such resolutions, all to the full extent now or hereafter permitted
by the General Corporation Law of Delaware. Without limiting the generality of
the foregoing, the resolutions providing for issuance of any series of Preferred
Stock may provide that such series shall be superior or rank equally or be
junior to the Preferred Stock of any other series to the extent permitted by
law. Except as otherwise specifically provided in this Certificate of
Incorporation or otherwise by agreement, no vote of the holders of the Preferred
Stock or Common Stock shall be a prerequisite to the issuance of any shares of
any series of the Preferred Stock authorized by and complying with the
conditions of this Certificate of Incorporation, the right to have such vote
being expressly waived by all present and future holders of the capital stock of
the Corporation.
C. SERIES PREFERRED STOCK.
-6-
Six hundred sixteen thousand six hundred twenty (616,620) shares of the
authorized and unissued shares of Preferred Stock of the Corporation are hereby
designated "Series A Redeemable Preferred Stock" (the "Series A Preferred
Stock"), One million four hundred two thousand four hundred sixty-one
(1,402,461) shares of the authorized and unissued shares of Preferred Stock of
the Corporation are hereby designated "Series B Redeemable Preferred Stock" (the
"Series B Preferred Stock"), One million (1,000,000) shares of the authorized
and unissued shares of Preferred Stock of the Corporation are hereby designated
as "Series C Redeemable Preferred Stock" (the "Series C Preferred Stock"), and
One million nine hundred twenty-two thousand one hundred sixty-nine (1,922,169)
shares of the authorized and unissued shares of Preferred Stock of the
Corporation are hereby designated as "Series D Convertible Preferred Stock" (the
"Series D Preferred Stock"), with the following rights, preferences, powers,
privileges and restrictions, qualifications and limitations. Collectively, the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock and the Series D Preferred Stock are sometimes referred to as the "Series
Preferred Stock", and the Series D Preferred Stock is sometimes referred to as
the "Convertible Preferred Stock".
1. Dividends.
(a) The Corporation shall not declare or pay any dividends or
other distributions (as defined below) on shares of Common Stock until the
holders of the Convertible Preferred Stock then outstanding shall have first
received, or simultaneously receive, a cash dividend on each outstanding share
of Convertible Preferred Stock in an amount at least equal to the product of (i)
the per share amount, if any, of the dividends or other distributions to be
declared, paid or set aside for the Common Stock, multiplied by (ii) the number
of whole shares of Common Stock into which such share of Convertible Preferred
Stock is then convertible.
(b) For purposes of this Section 1, unless the context
requires otherwise, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable other
than in Common Stock or other securities of the Corporation, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common Stock
held by employees or directors of, or consultants to, the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase at a price equal to the original issue price of such shares and
other than redemptions in
-7-
liquidation or dissolution of the Corporation) for cash or property, including
any such transfer, purchase or redemption by a subsidiary of this Corporation.
2. Liquidation, Dissolution or Winding Up; Certain Mergers,
Consolidations and Asset Sales.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series Preferred Stock (collectively
referred to as "Senior Preferred Stock"), but before any payment shall be made
to the holders of Common Stock or any other class or series of stock ranking on
liquidation junior to the Series Preferred Stock (such Common Stock and other
stock being collectively referred to as "Junior Stock") by reason of their
ownership thereof, an amount equal (i)(A) $1.50 per share of Series A Preferred
Stock; (B) $2.00 per share of Series B Preferred Stock; (C) $7.00 per share of
Series C Preferred Stock; and (D) $7.00 per share of Series D Preferred Stock
(subject, in each case, to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), plus any cash dividends declared but unpaid thereon, or (ii) in
the case of Series D Preferred Stock, if greater than the amount described in
clause (i) above, such amount per share as would have been payable had such
share been converted into Common Stock pursuant to Section 4 immediately prior
to such liquidation, dissolution or winding up. If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the holders of shares of Series Preferred Stock the full amount to which
they shall be entitled, the holders of shares of Series Preferred Stock and any
class or series of stock ranking on liquidation on a parity with the Series
Preferred Stock shall share ratably in any distribution of the remaining assets
and funds of the Corporation in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid
in full.
(b) After the payment of all preferential amounts required to
be paid to the holders of Senior Preferred Stock, Series Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series Preferred Stock, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Junior Stock then
outstanding shall be entitled to receive the remaining assets and funds of the
Corporation available for distribution to
-8-
its stockholders.
(c) Any merger or consolidation of the Corporation into or
with another corporation (except one in which the holders of capital stock of
the Corporation immediately prior to such merger or consolidation continue to
hold, directly or indirectly, more than 50% by voting power of the capital stock
of the surviving corporation), or the sale of all or substantially all the
assets of the Corporation, shall be deemed to be a liquidation of the
Corporation, in which case each holder of Series Preferred Stock shall be
entitled to receive the amount payable to such holder pursuant to Subsection
2(a) above. The amount deemed distributed to the holders of Series Preferred
Stock upon any such merger or consolidation shall be the cash or the value of
the property, rights or securities distributed to such holders by the acquiring
person, firm or other entity. The value of such property, rights or other
securities shall be determined in good faith by the Board of Directors of the
Corporation.
3. Voting.
(a) Each holder of outstanding shares of Convertible Preferred
Stock shall be entitled to one vote for each whole share of Class A Common Stock
into which the shares of Convertible Preferred Stock held by such holder are
then convertible (as adjusted from time to time pursuant to Section 4 hereof),
at each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration. Except
as provided by law, by the provisions of Subsection 3(b) below or by the
provisions establishing any other series of Series Preferred Stock, holders of
Convertible Preferred Stock shall vote together with the holders of Common Stock
as a single class. The shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall be non-voting.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series Preferred Stock so as
to affect adversely the Series Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization of any shares of
capital stock with preference or priority over the Series Preferred Stock, or
any series thereof, as to the right to receive either dividends or amounts
distributable upon
-9-
liquidation, dissolution or winding up of the Corporation shall be deemed to
affect adversely the Series Preferred Stock, or any series thereof, and the
authorization of any shares of capital stock on a parity with Series Preferred
Stock, or any series thereof, as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series Preferred Stock.
The number of authorized shares of Series Preferred Stock may be increased or
decreased (but not below the number of shares then outstanding) by the directors
of the Corporation pursuant to Section 151 of the General Corporation Law of
Delaware or by the affirmative vote of the holders of a majority of the then
outstanding shares of the Common Stock, Series Preferred Stock and all other
classes or series of stock of the Corporation entitled to vote thereon, voting
as a single class, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.
4. Optional Conversion. The holders of the Convertible Preferred Stock
(i.e., not including the Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock) shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each holder of Convertible Preferred
Stock shall have the right, at any time, to convert all (and not less than all)
of the shares of a series of Convertible Preferred Stock held by such holder,
without the payment of additional consideration by the holder thereof, into such
number of fully paid and nonassessable shares of Class A Common Stock as is
determined by multiplying the number of shares of such series of Convertible
Preferred Stock held by such holder, times a fraction the numerator of which is
$7.00 in the case of Series D Preferred Stock and the denominator of which is
the applicable Conversion Price (as defined below) in effect at the time of
conversion. The "Conversion Price" shall initially be $7.00 in the case of
Series D Preferred Stock. Such initial Conversion Price, and the rate at which
shares of Convertible Preferred Stock may be converted into shares of Class A
Common Stock, shall be subject to adjustment as provided below.
(b) Fractional Shares. No fractional shares of Class A Common
Stock shall be issued upon conversion of the Convertible Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Convertible Preferred
Stock to convert shares of Convertible Preferred Stock into shares of Class A
Common Stock, such holder shall surrender the certificate or certificates for
such shares of Convertible
-10-
Preferred Stock, at the office of the transfer agent for the Convertible
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all of the shares of the Convertible Preferred
Stock represented by such certificate or certificates. Such notice shall state
such holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Class A Common Stock to be issued. If
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Convertible
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled, together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the
Convertible Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of its duly
authorized shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Convertible Preferred
Stock. Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Class A Common Stock
issuable upon conversion of the Convertible Preferred Stock, the Corporation
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any declared but unpaid dividends on the
Convertible Preferred Stock surrendered for conversion or on the Class A Common
Stock delivered upon conversion.
(iv) All shares of Convertible Preferred Stock which
shall have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to
-11-
receive notices and to vote, shall immediately cease and terminate on the
Conversion Date, except only the right of the holders thereof to receive shares
of Class A Common Stock in exchange therefor and payment of any dividends
declared but unpaid thereon. Any shares of Convertible Preferred Stock so
converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time take
such appropriate action as may be necessary to reduce the authorized Convertible
Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issuance or delivery of shares
of Class A Common Stock upon conversion of shares of Convertible Preferred Stock
pursuant to this Section 4. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Class A Common Stock in a name other than
that in which the shares of Convertible Preferred Stock so converted were
registered, and no such issuance or delivery shall be made unless and until the
person or entity requesting such issuance has paid to the Corporation the amount
of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this
Subsection 4(d), the following definitions shall apply:
(A) "Option" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding options described in Subsection 4(d)(i)(D)(IV)
below.
(B) "Original Issue Date" shall mean the
date on which a share of Convertible Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock"
shall mean all shares of Class A Common Stock issued (or, pursuant to Subsection
4(d)(iii) below, deemed to be issued) by the Corporation after the Original
Issue Date, other than shares of Class A Common Stock issued or issuable:
(I) upon conversion of any
Convertible Securities
-12-
outstanding on the Original Issue Date, or upon exercise of any Options
outstanding on the Original Issue Date;
(II) as a dividend or distribution
on Series Preferred Stock;
(III) by reason of a dividend, stock
split, split-up or other distribution on shares of Common Stock that is covered
by Subsection 4(e) or 4(f) below;
(IV) to employees or directors of,
or consultants to, the Corporation pursuant to plans adopted by the Board of
Directors of the Corporation; or
(V) upon the conversion or exercise
of the subordinated note or warrants issued or issuable in connection with the
acquisition by the Corporation of Sawyer Environmental Services and Sawyer
Environmental Recovery Facilities, Inc. (up to 158,590 shares in the aggregate),
upon the exercise of warrants issuable in connection with the acquisition by the
Corporation of Northeast Waste Services, Ltd. (up to 100,000 shares in the
aggregate), and upon the exercise of the warrant (no. R1995-1) issued to
Springer Sanitation Services, Inc.
(ii) No Adjustment of Conversion Price. No adjustment
in the number of shares of Common Stock into which any series of the Convertible
Preferred Stock is convertible shall be made, by adjustment in the applicable
Conversion Price thereof: (a) unless the consideration per share (determined
pursuant to Subsection 4(d)(v)) for an Additional Share of Common Stock issued
or deemed to be issued by the Corporation is less than the applicable Conversion
Price for such series in effect on the date of, and immediately prior to, the
issue of such Additional Shares, or (b) if prior to such issuance, the
Corporation receives written notice from the holders of more than 50% of the
then outstanding shares of such series of Series Preferred Stock agreeing that
no such adjustment shall be made as the result of the issuance of Additional
Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional
Shares of Common Stock.
-13-
If the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares of Common Stock (as set forth in the instrument relating thereto
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 4(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(B) If such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase
becoming effective, be recomputed to reflect such increase insofar as it affects
such Options or the rights of conversion or exchange under such Convertible
Securities;
(C) Upon the expiration or termination of
any unexercised Option, the Conversion Price shall be readjusted as if such
Option had never been issued; and
(D) In the event of any change in the number
of shares of Common Stock issuable upon the exercise, conversion or exchange of
any Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Conversion Price then
in effect shall forthwith be readjusted to such Conversion Price as would have
obtained had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or
-14-
converted prior to such change been made upon the basis of such change.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
In the event the Corporation shall at any time after the Original Issue
Date issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Subsection 4(d)(iii), but excluding
shares issued as a stock split or combination as provided in Subsection 4(e) or
upon a dividend or distribution as provided in Subsection 4(f)), without
consideration or for a consideration per share less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Conversion Price shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction, (A) the numerator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to such issue plus (2) the number of shares of Common Stock which the aggregate
consideration received or to be received by the Corporation for the total number
of Additional Shares of Common Stock so issued or deemed to be issued would
purchase at such Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued or deemed to
be issued; provided that, (i) for the purpose of this Subsection 4(d)(iv), all
shares of Common Stock issuable upon exercise or conversion of Options or
Convertible Securities outstanding immediately prior to such issue shall be
deemed to be outstanding, and (ii) the number of shares of Common Stock deemed
issuable upon exercise or conversion of such outstanding Options and Convertible
Securities shall not give effect to any adjustments to the conversion price or
conversion rate of such Options or Convertible Securities resulting from the
issuance of Additional Shares of Common Stock that is the subject of this
calculation.
(v) Determination of Consideration. For purposes of
this Subsection 4(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration
shall:
(I) insofar as it consists of cash,
be computed at
-15-
the aggregate of cash received by the Corporation, excluding amounts paid or
payable for accrued interest;
(II) insofar as it consists of
property other than cash, be computed at the fair market value thereof at the
time of such issue, as determined in good faith by the Board of Directors; and
(III) in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(I) and (II) above, as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 4(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Multiple Closing Dates. In the event the
Corporation shall issue on more than one date Additional Shares of Common Stock
which are comprised of shares of the same series or class of Preferred Stock,
and such issuance dates occur within a period of no more than 120 days, then the
Conversion Price shall be adjusted only once on account of such issuances, with
such adjustment to occur upon the final such issuance and to give effect to all
such issuances as if they occurred on the date of the final such issuance.
-16-
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Class A Common Stock, the Conversion
Prices then in effect immediately before that subdivision shall be
proportionately decreased. If the Corporation shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Class A
Common Stock, the Conversion Prices then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Class A Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Class A Common Stock, then and in each such
event the Conversion Prices for the Convertible Preferred Stock then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying each such Conversion Price for the Convertible Preferred
Stock then in effect by a fraction:
(1) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for each series of Convertible Preferred Stock
shall be recomputed accordingly as of the close of business on such record date
and thereafter each such Conversion Price shall be adjusted pursuant to this
paragraph as of the time of actual payment of such dividends or distributions;
and provided further, however, that no such adjustment shall be made if the
holders of such series of Convertible Preferred
-17-
Stock simultaneously receive a dividend or other distribution of shares of
Common Stock in a number equal to the number of shares of Common Stock as they
would have received if all outstanding shares of Convertible Preferred Stock had
been converted into Class A Common Stock on the date of such event.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Class A Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Class A Common
Stock, then and in each such event provision shall be made so that the holders
of the Convertible Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Class A Common Stock receivable thereupon,
the amount of securities of the Corporation that they would have received had
the Convertible Preferred Stock been converted into Class A Common Stock on the
date of such event and had they thereafter, during the period from the date of
such event to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, giving application to all
adjustments called for during such period under this paragraph with respect to
the rights of the holders of the Convertible Preferred Stock; and provided
further, however, that no such adjustment shall be made with respect to a series
of Convertible Preferred Stock if the holders of such series simultaneously
receive a dividend or other distribution of such securities in an amount equal
to the amount of such securities as they would have received if all outstanding
shares of such series had been converted into Class A Common Stock on the date
of such event.
(h) Adjustment for Reclassification, Exchange, or
Substitution. If the Class A Common Stock issuable upon the conversion of the
Convertible Preferred Stock shall be changed into the same or a different number
of shares of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each such
event the holder of each such share of Convertible Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Class A
Common Stock into which such shares of Convertible Preferred Stock might have
been converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.
(i) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets,
-18-
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Convertible Preferred Stock against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Convertible Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Convertible Preferred Stock, furnish or cause to be
furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Class A Common Stock and the amount, if any, of
other property which then would be received upon the conversion of such
Convertible Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Class A Common Stock payable in Class A Common
Stock or other securities of the Corporation;
(ii) that the Corporation subdivides or combines
its outstanding shares of Class A Common Stock;
(iii) of any reclassification of the Class A Common
Stock of the Corporation (other than a subdivision or combination of its
outstanding shares of Class A Common Stock or a stock dividend or stock
distribution thereon), or of any consolidation or merger of the Corporation into
or with another corporation, or of the sale of all or substantially all of the
assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation;
-19-
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Convertible Preferred Stock, and shall cause
to be mailed to the holders of the Convertible Preferred Stock at their last
addresses as shown on the records of the Corporation or such transfer agent, at
least ten days prior to the date specified in (A) below or twenty days before
the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Class A Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Class A
Common Stock of record shall be entitled to exchange their shares of Class A
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or winding up.
5. Mandatory Conversion.
With respect to each series of Convertible Preferred Stock:
(a) Upon the closing of the sale of shares of Class A Common
Stock of the Corporation, at a price at least equal to 175% of the
then-applicable Conversion Price for such series in a public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, resulting in at least $20 million of gross proceeds to the Corporation
(such offering being referred to as a "Qualified Offering" and the closing date
thereof being referred to as the "Mandatory Conversion Date"), (i) all
outstanding shares of such series of Convertible Preferred Stock shall
automatically be converted into shares of the Class A Common Stock, at the then
effective conversion rate and (ii) the number of authorized shares of Preferred
Stock shall be automatically reduced by the number of shares of Preferred Stock
that had been designated as such series of Convertible Preferred Stock, and all
provisions included under the caption "Series Preferred Stock", and all
references to such series of Series Preferred Stock insofar as they relate to
such series (but with no impact on any other series which is not so converted),
shall be deleted and shall be of no further force or effect.
(b) All holders of record of shares of such series of
Convertible Preferred Stock shall be given written notice of the Mandatory
Conversion Date and the
-20-
place designated for mandatory conversion of all such shares of such series of
Convertible Preferred Stock pursuant to this Section 5. Such notice need not be
given in advance of the occurrence of the Mandatory Conversion Date. Such notice
shall be sent by first class or registered mail, postage prepaid, to each record
holder of such series of Convertible Preferred Stock at such holder's address
last shown on the records of the transfer agent for such series of Convertible
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent). Upon receipt of such notice, each holder of shares of such
series of Convertible Preferred Stock shall surrender his or its certificate or
certificates for all such shares to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Public Offering Common Stock to which such holder is entitled pursuant to
this Section 5. On the Mandatory Conversion Date, all rights with respect to
such series of Convertible Preferred Stock so converted, including the rights,
if any, to receive notices and vote (other than as a holder of Public Offering
Common Stock) will terminate, except only the rights of the holders thereof,
upon surrender of their certificate or certificates therefor, to receive
certificates for the number of shares of Public Offering Common Stock into which
such series of Convertible Preferred Stock has been converted, and payment of
any declared but unpaid dividends thereon. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his or its attorney
duly authorized in writing. As soon as practicable after the Mandatory
Conversion Date and the surrender of the certificate or certificates for such
series of Convertible Preferred Stock, the Corporation shall cause to be issued
and delivered to such holder, or on his or its written order, a certificate or
certificates for the number of full shares of Public Offering Common Stock
issuable on such conversion in accordance with the provisions hereof and cash as
provided in Subsection 4(b) in respect of any fraction of a share of Public
Offering Common Stock otherwise issuable upon such conversion.
(c) All certificates evidencing shares of such series of
Convertible Preferred Stock which are required to be surrendered for conversion
in accordance with the provisions hereof shall, from and after the Mandatory
Conversion Date, be deemed to have been retired and cancelled and the shares of
such series of Convertible Preferred Stock represented thereby converted into
Public Offering Common Stock for all purposes, notwithstanding the failure of
the holder or holders thereof to surrender such certificates on or prior to such
date. The Corporation may thereafter take such appropriate action (without the
need for stockholder action) as may be necessary to
-21-
reduce the authorized shares of such series of Convertible
Preferred Stock accordingly.
6. Optional Redemption.
(a) At any time and from time to time, the Corporation may, at
the option of its Board of Directors, redeem the Series A Preferred Stock, the
Series B Preferred Stock and/or the Series C Preferred Stock (the "Redeemable
Preferred Stock"), in whole or in part, by paying: $1.50 per share of Series A
Preferred Stock; $2.00 per share of Series B Preferred Stock and $7.00 per share
of Series C Preferred Stock (subject to appropriate adjustment for stock splits,
stock dividends, combinations or other similar recapitalizations affecting such
shares) in cash (hereinafter referred to as the "Redemption Price") for the
applicable series.
(b) In the event of any redemption of only a part of a series
of the then outstanding Redeemable Preferred Stock, the Corporation shall effect
such redemption pro rata among the holders thereof based on the aggregate
redemption price payable for all of the outstanding shares of such series of
Redeemable Preferred Stock on the date of the Redemption Notice (as defined
below).
(c) At least 10 days prior to the date fixed for any
redemption of Redeemable Preferred Stock (hereinafter referred to as the
"Redemption Date"), written notice shall be mailed, by first class or registered
mail, postage prepaid, to each holder of record of shares of Redeemable
Preferred Stock to be redeemed, at his or its address last shown on the records
of the transfer agent of the Redeemable Preferred Stock (or the records of the
Corporation, if it serves as its own transfer agent), notifying such holder of
the election of the Corporation to redeem such shares, specifying the Redemption
Date and calling upon such holder to surrender to the Corporation, in the manner
and at the place designated, his or its certificate or certificates representing
the shares to be redeemed (such notice is hereinafter referred to as the
"Redemption Notice"). On or prior to the Redemption Date, each holder of
Redeemable Preferred Stock to be redeemed shall surrender his or its certificate
or certificates representing such shares to the Corporation, in the manner and
at the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares. From and after the Redemption
Date, unless there shall have been a default in payment of the Redemption Price,
all rights of the holders of the Redeemable Preferred Stock designated for
redemption in the Redemption Notice as holders of Redeemable Preferred Stock of
the Corporation (except the right to receive the Redemption Price without
interest upon
-22-
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
(d) Subject to the provisions hereof, the Board of Directors
of the Corporation shall have authority to prescribe the manner in which
Redeemable Preferred Stock shall be redeemed from time to time. Any shares of
Redeemable Preferred Stock so redeemed shall permanently be retired, shall no
longer be deemed outstanding and shall not under any circumstances be reissued,
and the Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Redeemable Preferred Stock accordingly.
Nothing herein contained shall prevent or restrict the purchase by the
Corporation, from time to time either at public or private sale, of the whole or
any part of the Redeemable Preferred Stock at such price or prices as the
Corporation may determine, subject to the provisions of applicable law.
7. Mandatory Redemption of Series C Preferred Stock
(a) Irrespective of the provisions of Section 6 above, the
Corporation will, subject to the conditions set forth in Section 9 below, upon
the closing of a Liquidity Event, redeem all shares of Series C Preferred Stock
outstanding as of the date thereof, at a price equal to the Series C Redemption
Price.
(b) In the event that a Liquidity Event has not closed on or
prior to December 31, 2000, the Corporation will, subject to the conditions set
forth in Section 9 below, redeem all shares of Series C Preferred Stock held by
a holder thereof at a price equal to the Series C Redemption Price
simultaneously with the Put Closing Date (as defined in the Repurchase Agreement
dated as of December 22, 1995 among the Corporation, BCI Growth III, L.P., North
Atlantic Venture Fund, L.P. and Vermont Venture Capital Fund, L.P. (the
"Repurchase Agreement")) with respect to the repurchase of the warrants dated
July 26, 1993 and May 25, 1994 (the "Warrants"), or of the shares of Common
Stock issued upon the exercise of the Warrants, held by such holder. In the
event a holder tenders fewer than all of the Warrants or shares of Common Stock
issued upon the exercise thereof, the Corporation shall redeem a proportional
amount of such holder's Series C Preferred Stock. Following the Put Closing Date
(as defined in the Repurchase Agreement), the Series C Preferred Stock shall be
deemed to have been redeemed in full and on such date all rights of the holders
of such shares as a stockholder of the Corporation shall cease, except the right
to receive
-23-
the Series C Redemption Price upon presentation and surrender of the certificate
representing the Series C Preferred Stock, and such Series C Preferred Stock
will not from and after the Put Closing Date be deemed to be outstanding.
(c) For purposes hereof, a "Liquidity Event" shall be
deemed to occur:
(i) upon the closing of a Qualified Offering; or
(ii) upon (i) a merger or consolidation of the Corporation
with or into any other corporation or corporations, other than (a) a merger of
consolidation of a subsidiary of the Corporation with or into the Corporation or
with or into any other subsidiary or (b) a merger in which the Corporation is
the surviving corporation and which does not result in more than 50% of any
class of the capital stock of the Corporation outstanding immediately after the
effective date of such merger being owned of record or beneficially by persons
other than the holders of such capital stock immediately prior to such merger;
(ii) the sale of all or substantially all the assets of the Corporation; (iii) a
sale, lease, transfer or other disposition (or the last such sale, lease,
transfer or other disposition in a series of related transactions) resulting in
the transfer of more than 50% of the outstanding capital stock of the
Corporation to an unrelated and unaffiliated third party purchaser; or (iv) any
other transaction (or the last such transaction in a series of related
transactions) resulting in the transfer by John W. Casella and/or Douglas R.
Casella to any one or more persons of an aggregate of more than twenty percent
(20%) of the shares of any class of the Corporation's stock held by John W.
Casella and/or Douglas R. Casella, or which creates in favor of any one or more
persons the right, directly or indirectly, to acquire from John W. Casella
and/or Douglas R. Casella shares which in the aggregate represent more than
twenty percent (20%) of the shares of any class of the Corporation's stock held
by John W. Casella and Douglas R. Casella
8. Stockholders' Right to Require Redemption of
Series Preferred Stock.
(a) On or after January 1, 2001, each of the holders of Series
D Convertible Preferred Stock shall have the option to tender all or any portion
of such shares held by such person (the "Series D Holder") to the
Corporation (the "Series D Put"), by delivering to the Corporation an instrument
in writing (the "Series D Put Notice") notifying the Corporation of such Series
D Holder's intention to tender to the Corporation all or a portion of such
shares. The Corporation shall immediately acknowledge receipt of the Series D
Put Notice by telex, telegram, telecopy or other similar electronic device, and
confirm such notification by first class mail, and at such time shall notify all
other holders of Series D Preferred Stock of its receipt thereof. The
-24-
Series D Put Notice shall specify the amount of shares of Series D Preferred
Stock that the Series D Holder proposes to tender to the Corporation. If the
Corporation receives additional Series D Put Notices from other Series D Holders
within ten (10) days of the receipt of the initial Series D Put Notice, the
Corporation shall consummate all Series D Puts subject thereto simultaneously.
(b) The redemption price for each share of Series D Preferred
Stock shall be equal to the greater of (x) the Fair Market Value Per Share (as
hereinafter defined) as of the date on which the Series D Put Notice shall have
been given, or (y) $7.00 per share (subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) (such amount in this clause (y) being
referred to as the "Series D Liquidation Amount", and the greater of the amounts
in clause (x) or clause (y) being referred to as the "Series D Redemption
Price".
(c) Within ten days after the determination of the Fair Market
Value Per Share, such Series D Holder shall elect the "Interest Option" or the
"Equity Option". If the Series D Holder elects the "Interest Option", the shares
of Series D Preferred Stock to be so redeemed shall be deemed to have been
redeemed in full on the date on which the first payment therefor is made (the
"Series D Put Closing Date"), and on such closing date all rights of the holder
of such shares as a holder thereof shall cease, except the right to receive the
Series D Redemption Price (together with any interest payable thereon) upon
presentation and surrender of the certificate representing such shares, and such
shares will not from and after such closing date, as the case may be, be deemed
to be outstanding. If the Series D Holder elects the Interest Option, the Series
D Liquidation Amount for each of the shares of Series D Preferred Stock to be so
redeemed shall be paid in eight (8) quarterly installments, commencing on the
Series D Put Closing Date, together with interest at a rate equal to 15% per
annum on the Series D Liquidation Amount. Any amount of the Series D Redemption
Price in excess of the Series D Liquidation Amount shall be paid not later than
the date on which the final installment of the Series D Liquidation Amount is
due, together with interest thereon at a rate equal to the prime rate announced
from time to time by Citibank, N.A. plus two percent (2%) per annum. Such
interest shall accrue from the date of the Series D Put Notice (but not prior to
December 31, 2000). All payments on account of the aggregate redemption price
for any shares of Series D Preferred Stock shall be deemed to be applied equally
to all of the shares of Series D Preferred Stock to be redeemed and shall be
deemed to be applied first to the payment of the interest on the Series D
Liquidation Amount; second, to the Series D Liquidation Amount; third, to the
interest due on the
-25-
amount of the Series D Redemption Price in excess of the Series D Liquidation
Amount; and fourth, to the amount of the Series D Redemption Price in excess of
the Series D Liquidation Amount. The Series D Put Closing Date shall be the
thirtieth (30th) day after determination of the redemption price pursuant to
paragraph (b) above, at the Corporation's headquarters, or such other date and
place as is mutually agreeable to the Corporation and the tendering Series D
Holders.
(d) If a Series D Holder elects the "Equity Option", (i) the
Corporation shall redeem, in eight quarterly installments commencing on the
Series D Put Closing Date, such number of shares of Series D Preferred Stock as
has an aggregate redemption price equal to the product of (X) the Series D
Liquidation Amount times (Y) the aggregate number of Series D Preferred Stock to
be so redeemed; and (ii) the Corporation shall redeem the remaining shares of
Series D Preferred stock to be so redeemed (if any) not later than the date on
which the final redemption of Series D Preferred Stock pursuant to clause (i)
above is due. The redemption price for the shares of Series D Preferred Stock
pursuant to the Equity Option shall be equal to the amount set forth in
paragraph (b) above. Notwithstanding the foregoing, at any time prior to the
first to occur of (I) the redemption by the Corporation of all of the remaining
shares of Series D Preferred Stock to be redeemed from such Holder; or (II) the
exercise by holders of the Series D Preferred Stock of their remedies under
Section 4.3 of the 1995 Stockholders Agreement among the Corporation and the
stockholders of the Corporation dated as of December 22, 1995, any Holder of
Series D Preferred Stock who has elected the Equity Option may revoke the Series
D Put Notice with respect to any shares of Series D Preferred Stock held by him
then outstanding and may repurchase from the Corporation all shares of Series D
Preferred Stock previously redeemed from such holder by the Corporation. The
price to be paid by the holder for such shares of Series D Preferred Stock shall
be equal to the price paid by the Corporation to the holder for such shares of
Series D Preferred Stock. Immediately upon the repurchase of such shares of
Series D Preferred Stock by such holder, such shares shall be automatically
converted into shares of Class A Common Stock in a manner consistent with the
provisions of Section 5(a) above at the then effective conversion rate. The
Corporation shall give at least ten days' notice to the holders of Series D
Preferred Stock which are being redeemed prior to redeeming any shares of Series
D Preferred Stock other than in accordance with clause (i) above. No interest
shall be paid on the purchase price of any Series D Preferred Stock if the
Series D Holder elects the Equity Option with respect thereto.
(e) Any holder of Series A Preferred Stock or Series B
Preferred Stock shall have the right to require the Corporation to redeem such
shares upon the following events:
-26-
(i) simultaneously with, or at any time following,
the exercise, for cash, of the Warrants. The aggregate redemption price so
payable to the holder on account of the redemption of the Series A Preferred
Stock or Series B Preferred Stock shall not exceed the aggregate cash amount so
received by the Corporation in payment of the exercise price of the Warrants.
The Corporation shall make payment for such shares in cash.
(ii) simultaneously with the exercise by such holder
of the Put (as defined in the Repurchase Agreement) with respect to the 1993
Warrants or the 1994 Warrants held by him. If the holder has exercised the
"Interest Option" with respect to such Put (as defined in the Repurchase
Agreement), the redemption price payable to the holder of the Series A Preferred
or the Series B Preferred to be so redeemed (the "Series A Redemption Price" or
the "Series B Redemption Price", as the case may be) shall bear interest at a
rate equal to 15% per annum from the date of the Put Notice (as defined in the
Repurchase Agreement) (but not prior to December 31, 2000). If the holder has
exercised the "Equity Option" with respect to such Put (as defined in the
Repurchase Agreement), the Series A Redemption Price and the Series B Redemption
Price shall not bear interest. The Series A Redemption Price and the Series B
Redemption Price shall be payable in eight quarterly installments, commencing on
the Put Closing Date (as defined in the Repurchase Agreement).
The redemption price payable by the Corporation for shares of Series A Preferred
Stock or Series B Preferred Stock to be redeemed pursuant to this paragraph (d)
shall be $1.50 per share of Series A Preferred Stock and $2.00 per share of
Series B Preferred Stock (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization
affecting such shares). At the closing, the holders whose shares are to be
redeemed shall deliver the stock certificates evidencing the shares to be
redeemed, duly endorsed for transfer to the Corporation, and free and clear of
any lien, charge or other encumbrance (and each such holder shall deliver to the
Corporation a certificate to the effect that the shares are good and marketable
and free of any lien, charge or other encumbrance). From and after the date on
which the first payment for the redemption of the shares of Series A Preferred
Stock or Series B Preferred Stock is made (regardless of whether the holder
thereof has elected the Interest Option or the Equity Option with respect to the
repurchase by the Corporation of the 1993 Warrants or the 1994 Warrants), all
rights of the holder with respect to the shares to be so redeemed will
terminate, except only the rights of the holders thereof to receive payment for
such shares as described above.
-27-
9. Limitation on Redemption Obligations.
Notwithstanding anything in this Article FOURTH to the contrary:
(a) If the funds of the Corporation legally available for
redemption of the capital stock of the Corporation on any date are insufficient
to redeem the number of shares of capital stock, and/or warrants exercisable
therefor, then required under Section 7 or 8 or under the Repurchase Agreement
to be redeemed or repurchased, those funds which are legally available will be
used to redeem the maximum possible number of such shares of capital stock
and/or warrants exercisable therefor ratably on the basis of the principal
amount of the redemption or repurchase price which would the be payable if the
funds of the Corporation legally available therefor had been sufficient to
redeem all shares of capital stock and/or warrants exercisable therefor then
required to be redeemed or repurchased. At any time thereafter when additional
funds of the Corporation become legally available for the redemption of the
capital stock of the Corporation, such funds will be used, at the end of the
next succeeding fiscal quarter, to redeem the balance of the shares and/or
warrants which the Corporation was theretofore obligated to redeem, ratably on
the basis set forth in the preceding sentence.
(b) Unless there shall have been a default in payment of the
Redemption Price pursuant to Section 6 or 7 or the Put Price pursuant to Section
8, no share of Series Preferred Stock (other than shares of Series D Preferred
Stock being repurchased pursuant to the Equity Option which have not yet been
repurchased by the Corporation) shall be entitled to any dividends declared
after its Redemption Date (with respect to Section 6 or 7) or the closing date
of any put (pursuant to Section 8), and on such Redemption Date or closing date
all rights of the holder of such share as a stockholder of the Corporation shall
cease, except the right to receive the redemption price or put price of such
shares (together with any interest payable thereon) upon presentation and
surrender of the certificate representing such share, and such share will not
from and after such Redemption Date or closing date, as the case may be, be
deemed to be outstanding.
(c) Any Series Preferred Stock redeemed pursuant to Section 6,
7 or 8 will be cancelled and will not under any circumstances be reissued, sold
or transferred (other than as expressly set forth in paragraph 8(c) above), and
the Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series Preferred Stock accordingly.
10. Definitions.
-28-
For purposes of this Article FOURTH, "Fair Market Value Per Share" of a
series of Convertible Preferred Stock means the fair market value of that number
of shares of Class A Common Stock into which a share of such series of
Convertible Preferred Stock is then convertible (treating, for purposes of such
determination, the Class B Common Stock as having equal per share voting rights
as the Class A Common Stock). Such determination shall be made by a nationally
known investment banking firm experienced in such valuations acceptable to the
Corporation and the holders of a majority of the shares to be redeemed. If the
Corporation and the holders of a majority of the shares of Convertible Preferred
Stock to be redeemed are unable to agree on the selection of such an investment
banking firm within 30 days after the date of the Election Notice, then each of
the Corporation, on the one hand, and the electing holders, on the other hand,
shall choose one investment banking firm so qualified, and such two firms shall
select a third such firm so qualified. The investment banking firm so selected
shall furnish the Corporation and the electing holders with a written valuation
(using one or more valuation methods that such firm, in its best professional
judgment, determines to be most appropriate) within 60 days of such selection,
setting forth its determination of the Fair Market Value Per Share. When
determining such fair market value, the investment banking firm shall consider,
among other factors, book value, replacement value, earnings and the value of
future cash flows of the Corporation as an on-going enterprise, shall consider
both the sale of various combinations of the individual assets of the
Corporation as well as a sale of the Corporation as a whole, choosing the manner
of sale which maximizes the aggregate value of the assets being sold, and shall
make no deduction, discount or other subtraction whatsoever for the possible
minority status of any such holder or for the restrictions on transfer contained
in Section 2 of the 1995 Stockholders Agreement to which the holders of the
shares to be redeemed are subject. The determination of the investment banking
firm shall be final and binding on the Corporation and the electing holders. The
costs of the valuation shall be borne equally by the Corporation, on one hand,
and the electing holders, on the other hand.
FIFTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt,
amend or repeal the By-Laws of the Corporation.
-29-
SIXTH. Except to the extent that the General Corporation Law of
Delaware prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability. No amendment to or repeal of this provision shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
SEVENTH. 1. Actions, Suits and Proceedings Other than by or in the
Right of the Corporation. The Corporation shall indemnify each person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. Notwithstanding
anything to the contrary in this Article, except as set forth in Section 7
below, the Corporation shall not indemnify an Indemnitee seeking indemnification
in connection with a proceeding (or part thereof) initiated by the Indemnitee
unless the initiation thereof was approved by the Board of Directors of the
Corporation. Notwithstanding anything to the contrary in this Article, the
Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is
reimbursed from the proceeds of insurance, and in the event the Corporation
makes any indemnification payments to an Indemnitee and such Indemnitee is
subsequently reimbursed from the proceeds of insurance, such Indemnitee shall
promptly refund such indemnification payments to the Corporation to the extent
of such insurance reimbursement.
-30-
2. Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware shall deem proper.
3. Indemnification for Expenses of Successful Party. Notwithstanding
the other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.
-31-
4. Notification and Defense of Claim. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6 below,
in the event that the Corporation does not assume the defense pursuant to
Section 4 of this Article of any action, suit, proceeding or investigation of
which the Corporation receives notice under this Article, any expenses
(including attorneys' fees) incurred by an Indemnitee in defending a civil or
criminal action, suit, proceeding or investigation or any appeal therefrom shall
be paid by the Corporation in advance of the final disposition of such matter;
provided, however, that the payment of such expenses incurred by an Indemnitee
in advance of the final disposition of such matter shall be made only upon
receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts
so advanced in the event that it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Corporation as authorized in
this Article. Such undertaking shall be accepted without reference to the
financial ability of the Indemnitee to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee
-32-
shall submit to the Corporation a written request, including in such request
such documentation and information as is reasonably available to the Indemnitee
and is reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification or advancement of expenses. Any such
indemnification or advancement of expenses shall be made promptly, and in any
event within 60 days after receipt by the Corporation of the written request of
the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60- day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (c)
independent legal counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation), or (d) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by
this Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to
-33-
indemnification under the provisions hereof with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the final adoption of such amendment,
termination or repeal.
9. Other Rights. The indemnification and advancement of expenses
provided by this Article shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity while holding office for the
Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
Article shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
Article. In addition, the Corporation may, to the extent authorized from time to
time by its Board of Directors, grant indemnification rights to other employees
or agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.
10. Partial Indemnification. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. Insurance. The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the General
Corporation Law of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising
-34-
out of or relating to any actions, transactions or facts occurring prior to the
date of such merger or consolidation.
13. Savings Clause. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. Definitions. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. Subsequent Legislation. If the General Corporation Law of Delaware
is amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
EXECUTED at Rutland, Vermont, on December 22, 1995.
----------------------------
President
ATTEST:
- --------------------
Secretary
[Corporate Seal]
-35-
AMENDED AND RESTATED
BY-LAWS
OF
CASELLA WASTE SYSTEMS, INC.
ARTICLE 1 - Stockholders
1.1 Place of Meetings. All meetings of stockholders shall be held at
such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors or the President or, if not so
designated, at the registered office of the corporation.
1.2 Annual Meeting. The annual meeting of stockholders for the election
of directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors or the President (which date shall not be a legal holiday in the place
where the meeting is to be held) at the time and place to be fixed by the Board
of Directors or the President and stated in the notice of the meeting. If no
annual meeting is held in accordance with the foregoing provisions, the Board of
Directors shall cause the meeting to be held as soon thereafter as convenient.
If no annual meeting is held in accordance with the foregoing provisions, a
special meeting may be held in lieu of the annual meeting, and any action taken
at that special meeting shall have the same effect as if it had been taken at
the annual meeting, and in such case all references in these By-laws to the
annual meeting of the stockholders shall be deemed to refer to such special
meeting.
1.3 Special Meetings. Special meetings of stockholders may be called at
any time by the President or by the Board of Directors. Business transacted at
any special meeting of stockholders shall be limited to matters relating to the
purpose or purposes stated in the notice of meeting.
1.4 Notice of Meetings. Except as otherwise provided by
law, written notice of each meeting of stockholders, whether annual or special,
shall be given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting. The notices of all
meetings shall state the place, date and hour of the meeting. The notice of a
special meeting shall state, in addition, the purpose or purposes for which the
meeting is called. If mailed, notice is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the corporation.
1.5 Voting List. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time of the meeting, and may be inspected by any
stockholder who is present.
1.6 Quorum. Except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 Adjournments. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
1.8 Voting and Proxies. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by
such stockholder and a proportionate vote for each fractional share so held,
unless otherwise provided in the Certificate of Incorporation. Each stockholder
of record entitled to vote at a meeting of stockholders, or to express consent
or dissent to corporate action in writing without a meeting, may vote or express
such consent or dissent in person or may authorize another person or persons to
vote or act for him by written proxy executed by the stockholder or his
authorized agent and delivered to the Secretary of the corporation. No such
proxy shall be voted or acted upon after three years from the date of its
execution, unless the proxy expressly provides for a longer period.
1.9 Action at Meeting. When a quorum is present at any meeting, the
holders of shares of stock representing a majority of the votes cast on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each such class, the holders of shares of stock of
that class representing a majority of the votes cast on a matter) shall decide
any matter to be voted upon by the stockholders at such meeting, except when a
different vote is required by express provision of law, the Certificate of
Incorporation or these By-Laws. When a quorum is present at any meeting, any
election by stockholders shall be determined by a plurality of the votes cast on
the election.
1.10 Action without Meeting. Any action required or permitted to be
taken at any annual or special meeting of stockholders of the corporation may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on such action were present and voted. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 2 - Directors
2.1 General Powers. The business and affairs of the corporation shall
be managed by or under the direction of a Board of Directors, who may exercise
all of the powers of the corporation except as otherwise provided by law or the
Certificate of Incorporation. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
2.2 Number; Election and Qualification. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the stockholders or the Board of Directors, but in no event shall be less
than one. The number of directors may be decreased at any time and from time to
time either by the stockholders or by a majority of the directors then in
office, but only to eliminate vacancies existing by reason of the death,
resignation, removal or expiration of the term of one or more directors. The
directors shall be elected at the annual meeting of stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the corporation.
2.3 Enlargement of the Board. The number of directors may be increased
at any time and from time to time by the stockholders or by a majority of the
directors then in office.
2.4 Tenure. Each director shall hold office until the next annual
meeting and until his successor is elected and qualified, or until his earlier
death, resignation or removal.
2.5 Vacancies. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, may be filled by vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, and a director chosen to fill a
position resulting from an increase in the number of directors shall hold office
until the next annual meeting of stockholders and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
2.6 Resignation. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
2.7 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
2.8 Special Meetings. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
2.9 Notice of Special Meetings. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in person or by telephone at
least 48 hours in advance of the meeting, (ii) by sending a telegram or telex,
or delivering written notice by hand, to his last known business or home address
at least 48 hours in advance of the meeting, or (iii) by mailing written notice
to his last known business or home address at least 72 hours in advance of the
meeting. A notice or waiver of notice of a meeting of the Board of Directors
need not specify the purposes of the meeting.
2.10 Meetings by Telephone Conference Calls. Directors or any members
of any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
2.11 Quorum. A majority of the total number of the whole Board of
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such director
so disqualified; provided, however, that in no case shall less than
one-third (1/3) of the number so fixed constitute a quorum. In the absence of a
quorum at any such meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice other than announcement at the
meeting, until a quorum shall be present.
2.12 Action at Meeting. At any meeting of the Board of Directors at
which a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law, the
Certificate of Incorporation or these By-Laws.
2.13 Action by Consent. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent to the action in writing, and the written
consents are filed with the minutes of proceedings of the Board or committee.
2.14 Removal. Except as otherwise provided by the General Corporation
Law of Delaware, any one or more or all of the directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors, except that the directors elected by the holders of
a particular class or series of stock may be removed without cause only by vote
of the holders of a majority of the outstanding shares of such class or series.
2.15 Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of the State of Delaware, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation and may authorize the
seal of the corporation to be affixed to all papers which may require it. Each
such committee shall keep minutes and make such reports as the Board of
Directors may from time to time request.
Except as the Board of Directors may otherwise determine, any committee may make
rules for the conduct of its business, but unless otherwise provided by the
directors or in such rules, its business shall be conducted as nearly as
possible in the same manner as is provided in these By-laws for the Board of
Directors.
Without limiting the generality of the foregoing, the Board of
Directors shall designate an audit committee and a compensation committee. The
audit committee shall recommend the annual appointment of the corporation's
auditors, review with such auditors the scope of the audit and non-audit
assignments and related fees, the accounting principles used by the corporation
in financial reporting, internal financial auditing procedures and the adequacy
of the corporation's internal control procedures. The compensation committee
shall administer the corporation's stock compensation plans, including the
selection of grantees and the timing of such grants, and review and monitor key
employee compensation and benefits policies and administer the corporation's
management compensation plans. The member of the Board of Directors, if any,
designated specifically by the holders of the Series D Convertible Preferred
Stock, if any, shall be a member of the audit and compensation committees.
2.16 Compensation of Directors. Directors may be paid such compensation
for their services and such reimbursement for expenses of attendance at meetings
as the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE 3 - Officers
3.1 Enumeration. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 Election. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 Qualification. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 Resignation and Removal. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event.
Any officer may be removed at any time, with or without cause, by vote
of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer
who resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
3.6 Vacancies. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 Chairman of the Board and Vice-Chairman of the Board. The Board of
Directors may appoint a Chairman of the Board and may designate the Chairman of
the Board as Chief Executive Officer. If the Board of Directors appoints a
Chairman of the Board, he shall perform such duties and possess such powers as
are assigned to him by the Board of Directors. If the Board of Directors
appoints a Vice-Chairman of the Board, he shall, in the absence or disability of
the Chairman of the Board, perform the duties and exercise the powers of the
Chairman of the Board and shall perform such other duties and possess such other
powers as may from time to time be vested in him by the Board of Directors.
3.8 President. The President shall, subject to the direction of the
Board of Directors, have general charge and supervision of the business of the
corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has designated
the Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the Chief Executive Officer of the corporation. The President
shall perform such other duties and shall have such other powers as the Board of
Directors may from time to time prescribe.
3.9 Vice Presidents. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the President may from time to
time prescribe. In the event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
3.10 Secretary and Assistant Secretaries. The Secretary shall perform
such duties and shall have such powers as the Board of Directors or the
President may from time to time prescribe. In addition, the Secretary shall
perform such duties and have such powers as are incident to the office of the
secretary, including without limitation the duty and power to give notices of
all meetings of stockholders and special meetings of the Board of Directors, to
attend all meetings of stockholders and the Board of Directors and keep a record
of the proceedings, to maintain a stock ledger and prepare lists of stockholders
and their addresses as required, to be custodian of corporate records and the
corporate seal and to affix and attest to the same on
documents.
Any Assistant Secretary shall perform such duties and possess such
powers as the Board of Directors, the President or the Secretary may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Secretary, the Assistant Secretary, (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer and Assistant Treasurers. The Treasurer shall perform
such duties and shall have such powers as may from time to time be assigned to
him by the Board of Directors or the President. In addition, the Treasurer shall
perform such duties and have such powers as are incident to the office of
treasurer, including without limitation the duty and power to keep and be
responsible for all funds and securities of the corporation, to deposit funds of
the corporation in depositories selected in accordance with these By-laws, to
disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such
powers as the Board of Directors, the President or the Treasurer may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Treasurer, the Assistant Treasurer, (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 Salaries. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
ARTICLE 4 - Capital Stock
4.1 Issuance of Stock. Unless otherwise voted by the
stockholders and subject to the provisions of the Certificate of Incorporation,
the whole or any part of any unissued balance of the authorized capital stock of
the corporation or the whole or any part of any unissued balance of the
authorized capital stock of the corporation held in its treasury may be issued,
sold, transferred or otherwise disposed of by vote of the Board of Directors in
such manner, for such consideration and on such terms as the Board of Directors
may determine.
4.2 Certificates of Stock. Every holder of stock of the corporation
shall be entitled to have a certificate, in such form as may be prescribed by
law and by the Board of Directors, certifying the number and class of shares
owned by him in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice-Chairman, if any, of the
Board of Directors, or the President or a Vice President, and the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-laws, applicable securities laws or any agreement among any number of
shareholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of each certificate representing shares of such
class or series of stock, provided that in lieu of the foregoing requirements
there may be set forth on the face or back of each certificate representing
shares of such class or series of stock a statement that the corporation will
furnish without charge to each stockholder who so requests a copy of the full
text of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
4.3 Transfers. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require.
Except as may be otherwise required by law, by the Certificate of Incorporation
or by these By-laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of such
stock until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-laws.
4.4 Lost, Stolen or Destroyed Certificates. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
4.5 Record Date. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent (or dissent) to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 10 days after the date of adoption of a
record date for a written consent without a meeting, nor more than 60 days prior
to any other action to which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is properly
delivered to the corporation. The record date for determining stockholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE 5 - General Provisions
5.1 Fiscal Year. Except as from time to time otherwise designated by
the Board of Directors, the fiscal year of the corporation shall begin on the
first day of May in each year and end on the last day of April in each year.
5.2 Corporate Seal. The corporate seal shall be in such form as shall
be approved by the Board of Directors.
5.3 Waiver of Notice. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.4 Voting of Securities. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at, any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
5.5 Evidence of Authority. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary,
as to any action taken by the stockholders, directors, a committee or any
officer or representative of the corporation shall as to all persons who rely on
the certificate in good faith be conclusive evidence of such action.
5.6 Certificate of Incorporation. All references in these By-laws to
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
5.7 Transactions with Interested Parties. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum;
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of
Directors, a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5.8 Severability. Any determination that any provision of these By-laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-laws.
5.9 Pronouns. All pronouns used in these By-laws shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons may require.
ARTICLE 6 - Amendments
6.1 By the Board of Directors. These By-laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present (provided that the second paragraph of
Section 2.15 may only be altered, amended or repealed pursuant to this Section
6.1 if the directors so voting in the affirmative include the director, if any,
designated by the holders of the Series D Preferred Stock of the Company).
6.2 By the Stockholders. These By-laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of the holders of
a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting (and provided that the second paragraph of
Section 2.15 may only be altered, amended or repealed pursuant to this Section
6.2 if the stockholders so voting in the affirmative include the holders of a
majority of the then outstanding Series D Preferred Stock of the Company).
Adopted by the Board of Directors on
December 15, 1995;
Approved by the Stockholders on
December 15, 1995.
These By-laws amend and restate and
supersede in their entirety all
previous versions of the By-laws of
Casella Waste Systems, Inc.
============================================================================
INCENTIVE STOCK OPTION PLAN
============================================================================
TABLE OF CONTENTS
-----------------
1. Purpose.................................................................1
2. Administration..........................................................1
3. Stock...................................................................2
4. Eligibility.............................................................2
5. Terms of the Option Agreement...........................................3
6. Method of Exercise, Payment of Purchase Price...........................5
7. Use of Proceeds from Stock..............................................5
8. Adjustment Upon Changes in Capitalization...............................6
9. Termination of Employment or Service....................................6
10.Amendment of Option Plan................................................7
11.Termination or Suspension of Option Plan................................8
12.Nonexclusivity of the Plan..............................................8
13.Government and other Regulations........................................8
14.Effective Date of Option Plan...........................................9
CASELLA WASTE SYSTEMS, INC.
INCENTIVE STOCK OPTION PLAN
---------------------------
1. Purpose
-------
This Stock Option Plan (the "Option Plan") is intended as a performance
incentive and to encourage stock ownership by officers and other key employees
of CASELLA WASTE SYSTEMS, INC. (the "Company") or of other corporations in which
stock possessing 50 percent or more of the total combined voting power is owned
by the Company (the "Subsidiaries"), so that the person to whom the option is
granted (the "Optionee") may acquire or increase his or her proprietary interest
in the success of the Company, and to encourage the Optionee to remain in the
employ or service of the Company or its Subsidiaries. It is intended that
options granted under the Option Plan will qualify as incentive stock options
(the "Incentive Options"), as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Administration
--------------
(a) The Option Plan shall be administered by a committee of not less than
three directors of the Company none of whom is an officer or other salaried
employee of the Company who shall participate in this Option Plan. The members
of this committee (the "Option Committee") shall be appointed by the Board of
Directors. A majority vote of the members of the Option Committee shall be
required for all its actions.
(b) The Option Committee shall have the power, subject to, and within the
limits of, the express provisions of the Option Plan:
(i) To determine from time to time which of the eligible persons
(other than members of the Option Committee) shall be granted
options under the Option Plan, and the time or times when, and the
number of shares for which, an option or options shall be granted
to such persons;
(ii) To prescribe the other terms and provisions (which need not be
identical) of each option granted under the Option Plan to
eligible persons (other than members of the Option Committee);
(iii) To construe and interpret the Option Plan and options granted
under it, and to establish, amend, and revoke rules and
regulations for administration. The Option Committee, in the
-1-
exercise of this power, may correct any defect or supply any
omission, or reconcile any inconsistency in the Option Plan, or in
any option agreement, in the manner and to the extent it shall
deem necessary or expedient to make the Option Plan fully
effective. In exercising this power, the Option Committee may
retain counsel at the expense of the Company. All decisions and
determinations by the Option Committee in exercising this power
shall be final and binding upon the Company and the Optionee;
(iv) To determine the duration and purposes of leaves of absence which
may be granted to an Optionee (other than a member of the Option
Committee) without constituting a termination of his or her
employment or service for the purposes of the Option Plan; and
(v) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interest of the
Company with respect to the Option Plan.
(c) The Board of Directors (with members of the Option Committee not voting)
shall administer the Option Plan with respect to options granted to members of
the Option Committee in accordance with the provisions of Section 4(c).
3. Stock
-----
(a) The stock subject to the options shall be shares of the Company's
authorized by unissued Class A Common Stock, par value $0.01 per share (the
"Common Stock"). The number of shares for which options may be granted,
excluding the shares involved in the unexercised portion of any canceled,
terminated or expired options, shall not exceed an aggregate of 300,000 shares
of Common Stock. Such number shall be subject to adjustment as provided in
Section 8 hereof.
(b) Whenever any outstanding option under the Option Plan expires, is
canceled or is otherwise terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to options under the
Option Plan.
4. Eligibility
-----------
(a) The persons who shall be eligible to receive options shall be officers,
key employees of the Company or its Subsidiaries. It is intended that the Option
Plan be used as an incentive for those officers and other key employees
responsible for the decision making, policy formation and personnel supervision
which most directly affect the earnings of the Company and the welfare of its
stockholders. The Option
-2-
Committee may from time to time grant options to one or more eligible persons
(other than members of the Option Committee). The Board of Directors (with
members of the Option Committee not voting) may from time to time grant options
to one or more members of the Option Committee. An optionee may hold more than
one option.
(b) No person shall be granted any Incentive Option if, at the time of the
grant, such person owns, directly or indirectly, more than ten percent of the
total combined voting power or value of the Company or of its Subsidiaries
unless the option price is at least 110 percent of the fair market value of the
Common Stock and the exercise period of such Incentive Option is by its terms
limited to five years.
(c) The total number of shares of Common Stock which may be granted under
the Option Plan to all eligible persons, not employed on a full-time salaried
basis by the Company or its Subsidiaries, shall not in the aggregate exceed nine
percent of the shares of Common Stock covered by the Option Plan. The maximum
number of shares of Common Stock for which options may be granted to any
employee-director shall not exceed 50 percent of the shares of Common Stock
covered by the Option Plan.
5. Terms of the Option Agreement
-----------------------------
Each option agreement shall contain such provisions as the Option Committee
(or the Board of Directors with respect to members of the Option Committee)
shall from time to time deem appropriate. Option agreements need not be
identical, but each option agreement by appropriate language shall include the
substance of all of the following provisions:
(a) Any option shall expire on the date specified in the option agreement,
which date shall not be later than the tenth anniversary of the date on
which the option was granted. All options must be granted by the tenth
anniversary of the effective date of the Option Plan.
(b) The minimum number of shares with respect to which an option may be
exercised at any one time shall be 100 shares, unless the number
purchased is the total number at the time available for purchase under
the option.
(c) Each option shall be exercisable in such installments (which need not be
equal) and at such times as designated by the Option Committee (or the
Board of Directors with respect to the Option Committee). To the extent
not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later
than the date the option expires. Unless otherwise designated, no option
shall be
-3-
exercisable within one year of the date on which the option was granted
except in the event of a change in control or threatened change in
control (as defined in Section 5(h) hereof) of the Company. In such
event, all options granted prior to such change in control or threatened
change in control shall become immediately exercisable.
(d) The purchase price per share of Common Stock under each option shall be
not less than the fair market value of the Common Stock subject to the
option on the date the option is granted. For this purpose, the fair
market value of the Common Stock shall be determined by the Option
Committee (or by the Board of Directors with respect to members of the
Option Committee); provided, however, the (i) if the Common Stock is
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System on the date the option is granted, fair
market value shall not be less than the average of the highest bid and
the lowest asked prices of the Common Stock on such System on such date,
or (ii) if the Common Stock is admitted to trading on a national
securities exchange on the date the option is granted, fair market value
shall not be less than the last sale price reported for the Common Stock
on such exchange on such date or on the last date preceding such date on
which a sale was reported.
(e) The Optionee shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock
subject to such option unless and until the option shall have been
exercised pursuant to the terms thereof, the Company shall have issued
and delivered the shares to the Optionee, and the Optionee's name shall
have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such shares of Common Stock.
(f) Except as provided in Section 9 hereof:
(i) All options granted pursuant to the Option Plan shall not be
transferable except by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee; and
(ii) No assignment or transfer of the option, or of the rights
represented thereby, whether voluntary or involuntary, by
operation of law or otherwise, shall vest in the assignee or
transferee any interest or right in the option whatsoever, but
-4-
immediately upon any attempt to assign or transfer the option the
same shall terminate and be of no force or effect.
(g) The option shall be subject to any provision necessary to assure
compliance with the federal and state securities laws.
(h) For purposes of the Option Plan, the term "change in control" shall be
deemed to have taken place if (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes the beneficial owner of shares of the Company having 30% or more
of the total number of votes that may be cast for the election of
directors of the Company; or (ii) as the result of, or in connection
with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of
the foregoing transactions, the persons who were directors of the
Company before such transaction shall cease to constitute a majority of
the Board of Directors of the Company or any successor Company.
(i) No person granted Incentive Options may exercise them for the first time
in any one year covering Common Stock having an aggregate fair market
value in excess of $100,000 at the date of the grant of the Incentive
Option.
6. Method of Exercise, Payment of Purchase Price
---------------------------------------------
(a) An option may be exercised by the Optionee delivering to the Option
Committee (or the Board of Directors with respect to members of the Optionee
Committee) on any business day a written notice specifying the number of shares
of Common Stock the Optionee then desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant to the
exercise of an option shall be in either (i) cash equal to the option price for
the number of shares specified in the Notice (the "Total Option price"), or (ii)
in the discretion of the Option Committee (or the Board of Directors with
respect to members of the Option Committee) shares of Common Stock of the Bank
with a fair market value, determined as provided in Section 5 hereof, equal to
or less than the Total Option Price, plus cash, for an amount equal to the
amount, if any, by which the Total Option Price exceeds the fair market value of
the Common Stock.
7. Use of Proceeds from Stock
--------------------------
Proceeds from the sale of Common Stock pursuant to options granted under the
Option Plan shall constitute general funds of the Company.
-5-
8. Adjustment Upon Changes in Capitalization
-----------------------------------------
(a) If the shares of the Company's Common Stock as a whole are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made in the number
and kinds of share subject to the Option Plan, and in the number, kinds, and per
share exercise price of shares subject to unexercised options or portions
thereof granted prior to any such change. Any such adjustment in an outstanding
option, however, shall be made without a change in the total price applicable to
the unexercised portion of the option but with a corresponding adjustment in the
price for each share of Common Stock covered by the option.
(b) Upon dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of substantially all of the property of
the Company to another corporation, the Option Plan and the options issued
thereunder shall terminate, unless provision is made in connection with such
transaction for the assumption of options theretofore granted, or the
substitution for such options of new options of the successor employer
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kinds of shares and the per share exercise prices. In the
event of such termination, all outstanding options shall be exercisable in full
for at least 30 days prior to the termination date whether or not exercisable
during such period.
(c) Adjustments under this Section shall be made by the Option Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be conclusive. The Option Committee shall have the discretion and
power in any such event to determine and to make effective provision for the
acceleration of the time during which the option may be exercised,
notwithstanding the provisions of the option setting forth the date or dates of
which all or any part of it may be exercised. No fractional shares of Common
Stock shall be issued under the option Plan on account of any adjustment
specified above.
9. Termination of Employment or Service
------------------------------------
(a) In the event of the death of an Optionee while in the employ or service
of the Company or its Subsidiaries, the option, whether or not exercisable at
the time of the death of the Optionee, may be exercised, as provided in Section
6 hereof, by the estate of the Optionee or by a person who acquired the right to
exercise such option by bequest or inheritance from such Optionee, within one
year after the date
-6-
of such death but not later than the date on which the option would otherwise
expire.
(b) If the employment or service of an Optionee is terminated by reason of
disability as defined in ss. 105(d)(4) of the Code, the options held by such
Optionee may be exercised, whether or not exercisable at the time of such
termination, within one year after such termination but not later than the date
on which the options would otherwise expire.
(c) If the employment or service of an Optionee is terminated for any reason
other than such death or disability, options held by such Optionee shall, to the
extent not theretofore exercised, be canceled upon such termination and shall
not thereafter be exercisable; provided, however, that an Optionee whose
employment is terminated by retirement in accordance with the Company's normal
retirement policies, as determined by the Option Committee, shall be permitted
to exercise Incentive Options, whether or not exercisable at the time of such
termination, within three months after the date of such termination, but not
later than the date on which the Incentive Option would otherwise expire, and
shall be permitted to exercise any options which are not Incentive Options not
later than the date on which options would otherwise expire; and, provided
further, that an Optionee whose employment or service is voluntary or
involuntarily terminated within six months after a change in control of the
Company, as defined in Section 5(c) hereof, shall be permitted to exercise
options, whether or not exercisable at the time of such termination, within
three months after the date of such termination but not later than the date on
which the options would otherwise expire.
10. Amendment of Option Plan
------------------------
The Board of Directors at any time, and from time to time, may amend the
Option Plan, subject to any required regulatory approval and to the limitation
that, except as provided in Section 8 hereof, no amendment shall be effective
unless approved by the affirmative vote of a majority of the outstanding shares
of the Company at an annual or special meeting held within twelve months before
or after the date of such amendment's adoption, where such amendment will:
(a) Increase the number of shares of Common Stock as to which options may be
granted under the Option Plan;
(b) Change in substance Section 4 hereof relating to eligibility to
participate in the Option Plan;
(c) Change the minimum option price; or
(d) Increase the maximum term of options provided herein.
-7-
Except as provided in Section 8 hereof, rights and obligations under any
option granted before amendment of the Option Plan shall not be altered or
impaired by amendment of the Option Plan, except with the consent of the person
to whom the option was granted.
11. Termination or Suspension of Option Plan
----------------------------------------
The Board of Directors at any time may terminate or suspend the Option Plan.
Unless sooner terminated, the Option Plan shall terminate on the tenth
anniversary of the effective date specified in Section 14 hereof, but such
termination shall not affect any option theretofore granted. An option may not
be granted while the Option Plan is suspended or after it is terminated.
Rights and obligations under any option granted while the Option Plan is in
effect shall not be altered nor impaired by suspension or termination of the
Option Plan except with the consent of the Optionee. An option may be terminated
by agreement between an Optionee and the Company and, in lieu of the terminated
option, a new option may be granted with an exercise period which may be higher
or lower than the exercise price of the terminated option.
12. Nonexclusivity of the Plan
--------------------------
Neither the adoption of the Option Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Option Plan, and such arrangements may be either applicable generally or only in
specific cases.
13. Government and other Regulations
--------------------------------
(a) The obligations of the Company to sell and deliver shares of Common
Stock under options granted under the Option Plan shall be subject to all
applicable laws, rules and regulations and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the Board
of Directors of the Company.
(b) The Option Plan is intended to comply with Rule 16b-3 under the
Securities Act of 1934. Any provision inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Option Plan.
-8-
14. Effective Date of Option Plan
-----------------------------
This Option Plan shall become effective with its approval by a majority of
the Company's stockholders.
APPROVED: July 26, 1993
-9-
CASELLA WASTE SYSTEMS, INC.
=============================================================================
NONSTATUTORY STOCK OPTION PLAN
=============================================================================
Adopted: May 18, 1994
TABLE OF CONTENTS
-----------------
1. Purpose..................................................................1
2. Administration...........................................................1
3. Stock....................................................................2
4. Eligibility..............................................................2
5. Terms of the Option Agreement............................................3
6. Method of Exercise, Payment of Purchase Price............................5
7. Use of Proceeds from Stock...............................................5
8. Adjustment Upon Changes in Capitalization................................5
9. Termination of Employment or Service.....................................6
10.Amendment of Option Plan.................................................7
11.Termination or Suspension of Option Plan.................................7
12.Nonexclusivity of the Plan...............................................7
13.Government and other Regulations.........................................8
14.Effective Date of Option Plan............................................8
CASELLA WASTE SYSTEMS, INC.
NONSTATUTORY STOCK OPTION PLAN
------------------------------
1. Purpose
-------
This Nonstatutory Stock Option Plan (the "Option Plan") is intended as a
performance incentive and to encourage stock ownership by officers and other key
employees of CASELLA WASTE SYSTEMS, INC. (the "Company") or of other
corporations in which stock possessing 50 percent or more of the total combined
voting power is owned by the Company (the "Subsidiaries"), so that the person to
whom the option is granted (the "Optionee") may acquire or increase his or her
proprietary interest in the success of the Company, and to encourage the
Optionee to remain in the employ or service of the Company or its Subsidiaries.
It is intended that options granted under the Option Plan will qualify as
nonstatutory stock options (the "Options"), which are subject to taxation under
Section 83 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Administration
--------------
(a) The Option Plan shall be administered by the Board of Directors or by a
committee of not less than three directors of the Company none of whom is an
officer or other salaried employee of the Company who shall participate in this
Option Plan. The members of this committee (the "Option Committee") shall be
appointed by the Board of Directors. A majority vote of the members of the
Option Committee shall be required for all its actions.
(b) The Board and/or the Option Committee shall have the power, subject to,
and within the limits of, the express provisions of the Option Plan:
(i) To determine from time to time which of the eligible persons shall
be granted options under the Option Plan, and the time or times
when, and the number of shares for which, an option or options
shall be granted to such persons;
(ii) To prescribe the other terms and provisions (which need not be
identical) of each option granted under the Option Plan to
eligible persons;
(iii) To construe and interpret the Option Plan and options granted
under it, and to establish, amend, and revoke rules and
regulations for administration. The Board of Directors and/or the
Option Committee, in the exercise of this power, may correct any
-1-
defect or supply any omission, or reconcile any inconsistency in
the Option Plan, or in any option agreement, in the manner and to
the extent it shall deem necessary or expedient to make the Option
Plan fully effective. In exercising this power, the Board of
Directors and/or the Option Committee may retain counsel at the
expense of the Company. All decisions and determinations by the
Board of Directors and/or the Option Committee in exercising this
power shall be final and binding upon the Company and the
Optionee;
(iv) To determine the duration and purposes of leaves of absence which
may be granted to an Optionee without constituting a termination
of his or her employment or service for the purposes of the Option
Plan; and
(v) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interest of the
Company with respect to the Option Plan.
(c) The Board of Directors (with members of the Option Committee not
voting) shall administer the Option Plan with respect to options granted to
members of the Option Committee.
3. Stock
-----
(a) The stock subject to the options shall be shares of the Company's
authorized but unissued Class A Common Stock, par value $0.01 per share (the
"Common Stock"). The number of shares for which options may be granted,
excluding the shares involved in the unexercised portion of any canceled,
terminated or expired options, shall not exceed an aggregate of 150,000 shares
of Common Stock. Such number shall be subject to adjustment as provided in
Section 8 hereof.
(b) Whenever any outstanding option under the Option Plan expires, is
canceled or is otherwise terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to options under the
Option Plan.
4. Eligibility
-----------
(a) The persons who shall be eligible to receive options shall be officers,
key employees of the Company or its Subsidiaries. It is intended that the Option
Plan be used as an incentive for those officers and other key employees
responsible for the decision making, policy formation and personnel supervision
which most directly affect the earnings of the Company and the welfare of its
stockholders. The Option
-2-
Committee may from time to time grant options to one or more eligible persons
(other than members of the Option Committee). The Board of Directors (with
members of the Option Committee not voting) may from time to time grant options
to one or more members of the Option Committee. An optionee may hold more than
one option.
5. Terms of the Option Agreement
-----------------------------
Each option agreement shall contain such provisions as the Board of
Directors and/or the Option Committee (or the Board of Directors with respect to
members of the Option Committee) shall from time to time deem appropriate.
Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following
provisions:
(a) Any option shall expire on the date specified in the option agreement,
which date shall not be later than the tenth anniversary of the date on
which the option was granted. All options must be granted by the tenth
anniversary of the effective date of the Option Plan.
(b) The minimum number of shares with respect to which an option may be
exercised at any one time shall be 100 shares, unless the number
purchased is the total number at the time available for purchase under
the option.
(c) Each option shall be exercisable in such installments (which need not be
equal) and at such times as designated by the Board of Directors and/or
the Option Committee (or the Board of Directors with respect to the
Option Committee). To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the option expires.
Unless otherwise designated, no option shall be exercisable within one
year of the date on which the option was granted except in the event of
a change in control or threatened change in control (as defined in
Section 5(h) hereof) of the Company. In such event, all options granted
prior to such change in control or threatened change in control shall
become immediately exercisable.
(d) The purchase price per share of Common Stock under each option shall be
not less than the fair market value of the Common Stock subject to the
option on the date the option is granted. For this purposes, the fair
market value of the Common Stock shall be determined by the Board of
Directors and/or the Option Committee (or by the Board of Directors with
respect to members of the Option Committee); provided, however, that (i)
if the Common Stock is admitted to quotation on the National
-3-
Association of Securities Dealers Automated Quotation System on the date
the option is granted, fair market value shall not be less than the
average of the highest bid and the lowest asked prices of the Common
Stock on such System on such date, or (ii) if the Common Stock is
admitted to trading on a national securities exchange on the date the
option is granted, fair market value shall not be less than the last
sale price reported for the Common Stock on such exchange on such date
or on the last date preceding such date on which a sale was reported.
(e) The Optionee shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock
subject to such option unless and until the option shall have been
exercised pursuant to the terms thereof, the Company shall have issued
and delivered the shares to the Optionee, and the Optionee's name shall
have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such shares of Common Stock.
(f) Except as provided in Section 9 hereof:
(i) All options granted pursuant to the Option Plan shall not be
transferable except by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee; and
(ii) No assignment or transfer of the option, or of the rights
represented thereby, whether voluntary or involuntary, by
operation of law or otherwise, shall vest in the assignee or
transferee any interest or right in the option whatsoever, but
immediately upon any attempt to assign or transfer the option the
same shall terminate and be of no force or effect.
(g) The option shall be subject to any provision necessary to assure
compliance with the federal and state securities laws.
(h) For purposes of the Option Plan, the term "change in control" shall be
deemed to have taken place if (i) a third person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the
beneficial owner of shares of the Company having 30% or more of the total number
of votes that may be cast for the election of directors of the Company; or (ii)
as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or contested election, or
any combination of the foregoing transactions, the persons who were directors of
the Company before such transaction
-4-
shall cease to constitute a majority of the Board of Directors of the Company or
any successor Company.
6. Method of Exercise, Payment of Purchase Price
---------------------------------------------
(a) An option may be exercised by the Optionee delivering to the Board of
Directors and/or the Option Committee (or the Board of Directors with respect to
members of the Optionee Committee), or their designee, on any business day a
written notice specifying the number of shares of Common Stock the Optionee then
desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant to the
exercise of an option shall be in either (i) cash equal to the option price for
the number of shares specified in the Notice (the "Total Option Price"), or (ii)
in the discretion of the Board of Directors and/or the Option Committee (or the
Board of Directors with respect to members of the Option Committee) previously
owned shares of Common Stock of the Company with a fair market value, determined
as provided in Section 5 hereof, equal to or less than the Total Option Price,
plus cash, for an amount equal to the amount, if any, by which the Total Option
Price exceeds the fair market value of the Common Stock.
7. Use of Proceeds from Stock
--------------------------
Proceeds from the sale of Common Stock pursuant to options granted
under the Option Plan shall constitute general funds of the Company.
8. Adjustment Upon Changes in Capitalization
-----------------------------------------
(a) If the shares of the Company's Common Stock as a whole are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made in the number
and kinds of share subject to the Option Plan, and in the number, kinds, and per
share exercise price of shares subject to unexercised options or portions
thereof granted prior to any such change. Any such adjustment in an outstanding
option, however, shall be made without a change in the total price applicable to
the unexercised portion of the option but with a corresponding adjustment in the
price for each share of Common Stock covered by the option.
(b) Upon dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of substantially all of the property of
the Company to
-5-
another corporation, the Option Plan and the options issued thereunder shall
terminate, unless provision is made in connection with such transaction for the
assumption of options theretofore granted, or the substitution for such options
of new options of the successor employer corporation or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
the per share exercise prices. In the event of such termination, all outstanding
options shall be exercisable in full for at least 30 days prior to the
termination date whether or not exercisable during such period.
(c) Adjustments under this Section shall be made by the Board of Directors
and/or the Option Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be conclusive. The Board of Directors and/or
the Option Committee shall have the discretion and power in any such event to
determine and to make effective provision for the acceleration of the time
during which the option may be exercised, notwithstanding the provisions of the
option setting forth the date or dates of which all or any part of it may be
exercised. No fractional shares of Common Stock shall be issued under the Option
Plan on account of any adjustment specified above.
9. Termination of Employment or Service
------------------------------------
(a) In the event of the death of an Optionee while in the employ or service
of the Company or its Subsidiaries, the option, whether or not exercisable at
the time of the death of the Optionee, may be exercised, as provided in Section
6 hereof, by the estate of the Optionee or by a person who acquired the right to
exercise such option by bequest or inheritance from such Optionee, within one
year after the date of such death but not later than the date on which the
option would otherwise expire.
(b) If the employment or service of an Optionee is terminated by reason of
disability as defined in ss. 105(d)(4)) of the Code, the options held by such
Optionee may be exercised, whether or not exercisable at the time of such
termination, within one year after such termination but not later than the date
on which the options would otherwise expire.
(c) If the employment or service of an Optionee is terminated for any reason
other than such death or disability, options held by such Optionee shall, to the
extent not theretofore exercised, be canceled upon such termination and shall
not thereafter be exercisable; provided, however, that an Optionee whose
employment is terminated by retirement in accordance with the Company's normal
retirement policies, as determined by the Option Committee, shall be permitted
to exercise Options, whether or not exercisable at the time of such termination,
within three months after the date of such termination, but not later than the
date on which the Option would otherwise expire, and shall be permitted to
exercise any options which
-6-
are not Options not later than the date on which options would otherwise expire;
and, provided further, that an Optionee whose employment or service is voluntary
or involuntarily terminated within six months after a change in control of the
Company, as defined in Section 5(h) hereof, shall be permitted to exercise
options, whether or not exercisable at the time of such termination, within
three months after the date of such termination but not later than the date on
which the options would otherwise expire.
10. Amendment of Option Plan
------------------------
The Board of Directors at any time, and from time to time, may amend the
Option Plan, subject to any required regulatory approval.
Except as provided in Section 8 hereof, rights and obligations under
any option granted before amendment of the Option Plan shall not be altered or
impaired by amendment of the Option Plan, except with the consent of the person
to whom the option was granted.
11. Termination or Suspension of Option Plan
----------------------------------------
The Board of Directors at any time may terminate or suspend the Option Plan.
Unless sooner terminated, the Option Plan shall terminate on the tenth
anniversary of the effective date specified in Section 14 hereof, but such
termination shall not affect any option theretofore granted. An option may not
be granted while the Option Plan is suspended or after it is terminated.
Rights and obligations under any option granted while the Option Plan is in
effect shall not be altered nor impaired by suspension or termination of the
Option Plan except with the consent of the Optionee. An option may be terminated
by agreement between an Optionee and the Company and, in lieu of the terminated
option, a new option may be granted with an exercise period which may be higher
or lower than the exercise price of the terminated option.
12. Nonexclusivity of the Plan
--------------------------
The adoption of the Option Plan by the Board of Directors shall not be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Option Plan, and such arrangements may be either applicable generally or only in
specific cases.
-7-
13. Government and other Regulations
--------------------------------
(a) The obligations of the Company to sell and deliver shares of Common
Stock under options granted under the Option Plan shall be subject to all
applicable laws, rules and regulations and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the Board
of Directors of the Company.
(b) The Option Plan is intended to comply with Rule 16b-3 under the
Securities Act of 1934. Any provision inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Option Plan.
14. Effective Date of Option Plan
-----------------------------
This Option Plan shall become effective May 18, 1994.
-8-
CASELLA WASTE SYSTEMS, INC.
1996 STOCK OPTION PLAN
Adopted by the Board of Directors on May 1, 1996
------------------------------------------------
1. Purpose.
--------
The purpose of this plan (the "Plan") is to secure for Casella Waste
Systems, Inc. (the "company") and its shareholders the benefits arising from
capital stock ownership by employees, officers and directors of, and consultants
or advisors to, the Company and its parent and subsidiary corporations who are
expected to contribute to the Company's future growth and success. Except where
the context otherwise requires, the term "Company" shall include the parent and
all present and future subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from
time to time (the "Code"). Those provisions of the Plan which make express
reference to Section 422 shall apply only to Incentive Stock Options (as that
term is defined in the Plan).
2. Type of Options and Administration.
-----------------------------------
(a) Types of Options. Options granted pursuant to the Plan may be either
incentive stock options ("Incentive Stock Options") meeting the requirements of
Section 422 of the Code or Non-Statutory Options which are not intended to meet
the requirements of Section 422 of the Code ("Non-Statutory Options").
(b) Administration.
---------------
(i) The Plan will be administered by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. The Board of Directors may in its sole
discretion grant options to purchase shares of the Company's Class A Common
Stock (hereinafter referred to as "Common Stock") and issue shares upon exercise
of such options as provided in the Plan. The Board shall have authority, subject
to the express provisions of the Plan, to construe the respective option
agreements and the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of the respective
option agreements, which need not be identical, and to make all other
determinations which are, in the judgment of the Board of Directors, necessary
or desirable for the administration of the Plan. The Board of Directors may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any option agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final judge
of such expediency. No director or person acting pursuant to authority delegated
by the Board of Directors shall be liable for any action or determination under
the Plan made in good faith.
(ii) The Board of Directors may, to the full extent permitted by or
consistent with applicable laws or regulations and Section 3(b) of this Plan
delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3"), or which are
required in order for certain option transactions to qualify for exemption under
Rule 16b-3, shall apply only to such persons as are required to file reports
under Section 16(a) of the Exchange Act (a "Reporting Person").
3. Eligibility.
------------
(a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company; provided, that the class of employees to whom Incentive Stock Options
may be granted shall be limited to all employees of the Company. A person who
has been granted an option may, if he or she is otherwise eligible, be granted
additional options if the Board of Directors shall so determine.
(b) Grant of Options to Directors and Officers. From and after the
registration of the Common Stock of the Company under the Exchange Act, the
selection of a director or an officer (as the terms "director" and "officer" are
defined for purposes of Rule 16b-3) as a recipient of an option, the timing of
the option grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of Directors,
of which all members shall be "disinterested persons" (as hereinafter defined),
or (ii) by two or more directors having full authority to act in the matter,
each of whom shall be a "disinterested person." For the purposes of the Plan, a
director shall be deemed to be a "disinterested person" only if such person
qualifies as a "disinterested person" within the meaning of Rule 16b-3, as such
term is interpreted from time to time.
4. Stock Subject to Plan.
----------------------
Subject to adjustment as provided in Section 15 below, the maximum number of
shares of Common Stock which may be issued and sold under the Plan is 418,135
shares. If an option granted under the Plan shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan. If shares issued upon exercise of an option under the Plan are tendered to
the Company in payment of the exercise price of an option granted under the
Plan, such tendered shares shall again be available for subsequent option grants
under the Plan; provided, that in no
-2-
event shall such shares be made available for issuance to Reporting Persons or
pursuant to exercise of Incentive Stock Options.
5. Forms of Option Agreements.
---------------------------
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. Purchase Price.
---------------
(a) General. Subject to Section 3(b), the purchase price per share of stock
deliverable upon the exercise of an option shall be determined by the Board of
Directors, provided, however, that in the case of an Incentive Stock Option, the
exercise price shall not be less than 100% of the fair market value of such
stock, as determined by the Board of Directors, at the time of grant of such
option, or less than 110% of such fair market value in the case of options
described in Section 11(b).
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or, to the extent provided in the applicable option agreement, (i) by delivery
to the Company of shares of Common Stock of the Company already owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised or (ii) by any other means (including, without
limitation, by delivery of a promissory note of the optionee payable on such
terms as are specified by the Board of Directors) which the Board of Directors
determines are consistent with the purpose of the Plan and with applicable laws
and regulations (including, without limitation, the provisions of Regulation T
promulgated by the Federal Reserve Board). The fair market value of any shares
of the Company's Common Stock or other non-cash consideration which may be
delivered upon exercise of an option shall be determined by the Board of
Directors.
7. Option Period.
--------------
Each option and all rights thereunder shall expire on such date as shall be
set forth in the applicable option agreement, except that, in the case of an
Incentive Stock Option, such date shall not be later than ten years after the
date on which the option is granted and, in all cases, options shall be subject
to earlier termination as provided in the Plan.
-3-
8. Exercise of Options.
--------------------
Each option granted under the Plan shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth
in the agreement evidencing such option, subject to the provisions of the Plan.
9. Nontransferability of Options.
------------------------------
Options shall not be assignable or transferable by the person to whom they
are granted, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, and, during the life of the optionee, shall be
exercisable only by the optionee; provided, however, that Non-Statutory Options
may be transferred pursuant to a qualified domestic relations order (as defined
in Rule 16b-3).
10. Effect of Termination of Employment or Other Relationship.
----------------------------------------------------------
Except as provided in Section 11(d) with respect to Incentive Stock Options,
and subject to the provisions of the Plan, the Board of Directors shall
determine the period of time during which an optionee may exercise an option
following (i) the termination of the optionee's employment or other relationship
with the Company or (ii) the death or disability of the optionee. Such periods
shall be set forth in the agreement evidencing such option.
11. Incentive Stock Options.
------------------------
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is to
be granted under the Plan is, at the time of the grant of such option, the owner
of stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (after taking into account the attribution of
stock ownership rules of Section 424(d) of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market value
of one share of Common Stock at the time of grant; and
-4-
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employee of the
Company (or within such lesser period as may be specified in the applicable
option agreement), provided, that the agreement with respect to such option
may designate a longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a non-statutory
option under the Plan;
(ii) if the optionee dies while in the employ of the Company, or within
three months after the optionee ceases to be such an employee, the Incentive
Stock Option may be exercised by the person to whom it is transferred by
will or the laws of descent and distribution within the period of one year
after the date of death (or within such lesser period as may be specified in
the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provision thereto) while in the employ
of the Company, the Incentive Stock Option may be exercised within the
period of one year after the date the optionee ceases to be such an employee
because of such disability (or within such lesser period as may be specified
in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
-5-
12. Additional Provisions.
----------------------
(a) Additional Option Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in option agreements covering options
granted under the Plan, including without limitation restrictions on transfer,
repurchase rights, commitments to pay cash bonuses, to make, arrange for or
guaranty loans or to transfer other property to optionees upon exercise of
options, or such other provisions as shall be determined by the Board of
Directors; provided that such additional provisions shall not be inconsistent
with any other term or condition of the Plan and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised.
13. General Restrictions.
---------------------
(a) Investment Representations. The Company may require any person to whom
an option is granted, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws, or with covenants or representations made by the Company in
connection with any public offering of its Common Stock.
(b) Compliance With Securities Laws. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.
-6-
14. Rights as a Shareholder.
------------------------
The holder of an option shall have no rights as a shareholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
15. Adjustment Provisions for Recapitalizations and Related Transactions.
---------------------------------------------------------------------
(a) General. If, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment may be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to any then outstanding options under the
Plan, and (z) the price for each share subject to any then outstanding options
under the Plan, without changing the aggregate purchase price as to which such
options remain exercisable. Notwithstanding the foregoing, no adjustment shall
be made pursuant to this Section 15 if such adjustment would cause the Plan to
fail to comply with Section 422 of the Code.
(b) Board Authority to Make Adjustments. Any adjustments under this Section
15 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
----------------------------------------------------
(a) General. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board of Director of the Company, or the board of directors of any
corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding options: (i)
provide that such options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such options
-7-
substituted for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, (ii) upon written notice to the optionees, provide that all
unexercised options will terminate immediately prior to the consummation of such
transaction unless exercised by the optionee within a specified period following
the date of such notice, (iii) in the event of a merger under the terms of which
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such outstanding options (to the extent then exercisable at
prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such outstanding options in exchange for the termination of such options,
and (iv) provide that all or any outstanding options shall become exercisable in
full immediately prior to such event.
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
17. No Special Employment Rights.
-----------------------------
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. Other Employee Benefits.
------------------------
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
-8-
19. Amendment of the Plan.
----------------------
(a) The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, or under Rule
16b-3, the Board of Directors may not effect such modification or amendment
without such approval.
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors may amend outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.
20. Withholding.
------------
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the
Company as of the date that the amount of tax to be withheld is to be
determined. An optionee who has made an election pursuant to this Section 20(a)
may only satisfy his or her withholding obligation with shares of Common Stock
which are not subject to any repurchase forfeiture, unfulfilled vesting or other
similar requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements of Rule 16b-3 (unless
it is intended that the transaction not qualify for exemption under Rule 16b-3).
-9-
21. Cancellation and New Grant of Options, Etc.
-------------------------------------------
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
cancelled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such
outstanding options.
22. Effective Date and Duration of the Plan.
----------------------------------------
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within twelve months
after the date of the Board's adoption of the Plan, options previously granted
under the Plan shall not vest and shall terminate and no options shall be
granted thereafter. Amendments to the Plan not requiring shareholder approval
shall become effective when adopted by the Board of Directors; amendments
requiring shareholder approval (as provided in Section 19) shall become
effective when adopted by the Board of Directors, but no option granted after
the date of such amendment shall become exercisable (to the extent that such
amendment to the Plan was required to enable the Company to grant such option to
a particular person) unless and until such amendment shall have been approved by
the Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any options granted on
or after the date of such amendment shall terminate to the extent that such
amendment was required to enable the Company to grant such option to a
particular optionee. Subject to this limitation, options may be granted under
the Plan at any time after the effective date and before the date fixed for
termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16, the
Plan shall terminate upon the close of business on the day next preceding the
tenth anniversary of the date of its adoption by the Board of Directors. Options
outstanding on such date shall continue to have force and effect in accordance
with the provisions of the instruments evidencing such options.
23. Provision for Foreign Participants.
-----------------------------------
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the
-10-
United States to recognize differences in laws, rules, regulations or customs of
such foreign jurisdictions with respect to tax, securities, currency, employee
benefit or other matters.
Adopted by the Board of Directors on May 1, 1996.
-11-
1995 STOCKHOLDERS AGREEMENT
This 1995 Stockholders Agreement, dated as of December 22, 1995, is among
Casella Waste Systems, Inc., a Delaware corporation (the"Company"), Norwest
Equity Partners V ("NEP"), Weston Presidio Capital II, L.P. ("WPC"), BCI Growth
III, L.P. ("BCI"), North Atlantic Venture Fund, L.P. ("NAVF"), Vermont Venture
Capital Fund, L.P. ("VVCF"), FSC Corp., Prudential Securities Incorporated,
Thomas S. Shattan (collectively, and together with their permitted successors
and assigns, the "Investors"), and the stockholders whose names appear on the
signature page hereof. The parties agree as follows:
1. CERTAIN DEF1NITIONS.
1.1. "Acceptance Period" is defined in Section 2.4(a).
1.2. "Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
other specified Person) and shall include (a) any Person who is an officer,
director or beneficial holder of at least 10 % of the outstanding capital stock
of the Company (or other specified Person), (b) any Person of which the Company
(or other specified Person) or an officer of the Company shall, directly or
indirectly, either beneficially own at least 10% of the outstanding equity
securities or constitute at least a 10% participant, and (c) in the case of a
specified Person who is an individual, Members of the Immediate Family of such
Person.
1.3. "BCI" is defined in the preamble.
1.4. "Bohlig Trusts" means the Blake Elizabeth Bohlig Trust and the
Christopher James Bohlig Trust, Edward V. Schwiebert, Trustee.
1.5. "By-laws" means all written rules, regulations, procedures and by-laws
and all other similar documents, relating to the management, governance or
internal regulation of a Person other than an individual, or interpretive of the
Charter of such Person, each as from time to time amended or modified.
1.6. "Casella Trusts" means the Lauren Elizabeth Casella Trust, the Michael
Anthony Casella Trust, the John William Casella H, Trust, the Stephanie Leigh
Casella Trust, the Elizabeth Ashley Casella Trust, and the Robert Livingstone
Casella Trust, Harry R. Ryan, Esq. Trustee and the Kristen Ann Casella Trust and
the Joseph Anthony Casella Trust, Matthew and Karen Potter, Trustees.
1.7. "Charter" means the articles or certificate of incorporation, statute,
constitution, joint venture or partnership agreement or articles or other
charter of any Person other than an individual, each as from time to time
amended or modified.
1.8. "Code" means the federal Internal Revenue Code of 1986 or any successor
statute, and the rules and regulations thereunder, and in the case of any
referenced section of any such statute, rules or regulation, any successor
section thereof, collectively and as from time to time amended and in effect.
1.9. "Common Stock" means the Company's Class A Common Stock, $0.01 par
value.
1.10. "Company" is defined in the preamble.
1.11. "Company Acceptance Notice" is defined in Section 2.4(a).
1.12. "Company Acceptance Period" is defined in Section 2.4(a).
1.13. "Contractual Obligation" means, with respect to any Person, any
contracts, agreements, deeds, mortgages, leases, licenses, other instruments,
commitments, undertakings, arrangements or understandings, written or oral, or
other documents, including any document or instrument evidencing indebtedness,
to which any such Person is a party or otherwise subject to or bound by or to
which any asset of any such Person is subject.
1.14. "Covered Stockholders" means John W. Casella, Douglas R. Casella, the
Casella Trusts and their permitted successors and assigns, but in no event
including the Investors.
1.15. "Distribution" means (a) the declaration or payment of any dividend on
or in respect of any shares of any class of capital stock of the Company, any of
its Subsidiaries or other specified Person, other than dividends payable solely
in shares of the common stock of the payor; (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of the Company, any
of its Subsidiaries or other specified Person directly, or indirectly through a
Subsidiary or otherwise; or (c) any other distribution on or in respect of any
shares of any class of capital stock of the Company, any of its Subsidiaries or
other specified Person.
1.16. "ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor statute and the rules and regulations thereunder, and in the case
of any referenced section of any such statute, rule or regulation, any successor
section thereof, collectively and as from time to time amended and in effect.
-2-
1.17. "Exchange Agreements" means the 1993 Exchange and Repurchase Agreement
and the 1994 Exchange and Repurchase Agreement, each dated as of December 22,
1995, among the Company and the noteholders of the Company named therein.
1.18. "GAAP" means generally accepted accounting principles, as in effect
from time to time, applied on a basis consistent with that used in preparation
of the financial statements referred to in Section 5.2(a).
1.19. "Investor" is defined in the preamble.
1.20. "Investor Securities" means the Preferred Stock and the Warrants,
together with any securities issued with respect thereto, upon exercise,
conversion or transfer thereof or in exchange therefor, including the Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants.
1.21. "Legal Requirement" means any federal, state, local or foreign law,
statute, standard, ordinance, code, order, rule, regulation, resolution,
promulgation or any final order, judgment or decree of any court, arbitrator,
tribunal or governmental authority, or any license, franchise, permit or similar
right granted under any of the foregoing.
1.22. "Management Stockholders" means each of the Stockholders specified as
a Management Stockholder on Schedule A, but only so long as such Management
Stockholder or the Settlor of any trust that is a Management Stockholder remains
an employee of the Company or one of its Subsidiaries.
1.23. "Material Adverse Effect" means a material adverse effect upon the
business, assets, financial condition or income of the Company and its
Subsidiaries on a consolidated basis.
1.24. "Material Event Notice" is defined in Section 5.2(d).
1.25. "Members of the Immediate Familv" as applied to any individual, means
each parent, spouse, child, brother, sister or the spouse of a child, brother or
sister of the individual, and each trust created for the benefit of one or more
of such persons and each custodian of a property of one or more such persons.
1.26. "NAVF" is defined in the preamble.
1.27. "Notice of Intention to Sell" is defined in Section 2.4(a).
1.28. "NWI" means National Waste Industries, Inc.
-3-
1.29. "Other Stockholders" means Stephen W. Houghton, Richard H. Lindgren,
Robert J. Lynch, Jr., the Ryan Trust, John F. Chapple, Marcia DeRosia, and NWI.
1.30. "Person" means an individual, partnership, corporation, company,
association, trust, joint venture, unincorporated organization and any
governmental department or agency or political subdivision.
1.31. "Preferred Director" means the directors designated by BCI, VVCF, NAVF
and the holders of Series D Preferred Stock pursuant to Section 4.1 and, after a
Remedy Event, Section 4.3.
1.32. "Preferred Stock" means the Company's Series A, B and D Convertible
Preferred Stock, par value $0.01 per share.
1.33. "Principal Holder" means each original holder of Preferred Stock and
any permitted transferee of such original holder who holds 20% or more of the
Investor Securities held by the original holder on the date hereof.
1.34. "Purchase Agreement" means the Preferred Stock Purchase Agreement
dated as of December 22, 1995, as from time to time in effect, among the Company
and the Investors named therein.
1.35. "Purchase Price" is defined in Section 2.4(a).
1.36. "Qualified Offering" is defined in Section C.5(a) of Article Fourth of
the Company's Amended and Restated Certificate of Incorporation.
1.37. "Registration Rights Agreement" means the 1995 Registration Rights
Agreement dated as of December 22, 1995, as from time to time in effect, among
the Company and the stockholders named therein.
1.38. "Rejection Notice" is defined in Section 2.4(a).
1.39. "Related Agreements" is defined in Section 4.1 of the Purchase
Agreement.
1.40. "Repurchase Agreement" means the 1995 Repurchase Agreement among the
Company and the Warrantholders named therein.
1.41. "Remedy Event" is defined in Section 4.5.
1.42. "Required Holders" means the holders at the relevant time (excluding
the Company or any of its Subsidiaries) of a majority or more of the voting
power of
-4-
all Investor Securities of all classes (calculated to give effect to the
conversion of all Preferred Stock that is convertible into Common Stock and the
exercise of all Warrants) voting together as a single class.
1.43. "Ryan Trust" means Jane O'Neill Ryan, Thomas R. Ryan, Daniel C. Crane
and Harry R. Ryan III, Trustees U/T/A dated March 17, 1994, Harry R. Ryan, III,
Settlor.
1.44. "SBA" means the Small Business Administration.
1.45. "SBIC" means a small business investment company licensed by the SBA
pursuant to the Small Business Investment Act.
1.46. "SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended or both.
1.47. "Securities" means (i) all shares of any class of capital stock of the
Company owned by any Stockholder or Other Stockholder, (ii) all Warrants and
(iii) all shares of capital stock or warrants issued with respect to, in
exchange for or upon conversion of any such Shares or Warrants.
1.48. "Selling Stockholder" means a Stockholder selling Securities under
Section 2 or Shares under Section 3.
1.49. "Shares" means (i) all shares of any class of capital stock of the
Company owned by any Stockholder or Other Stockholder (other than Series A, B or
C Preferred Stock), (ii) all Warrants and (iii) all shares of capital stock or
warrants issued with respect to, in exchange for or upon conversion of any such
Shares or Warrants.
1.50. "Stockholders" means the Management Stockholders, the Covered
Stockholders and the Investors, but in no event including the Other
Stockholders.
1.51. "Stockholder Notice of Election" is defined in Section 2.4(a).
1.52. "Subject Securities" is defined in Section 2.4(a).
1.53. "Transfer" means sell, assign, encumber, pledge, hypothecate, give
away or dispose of or transfer in any other manner, whether voluntarily,
involuntarily, by operation of law, pursuant to judicial process, divorce
decree, property settlement, bankruptcy or otherwise.
1.54. "VVCF" is defined in the preamble.
-5-
1.55. "Warrants" means the common stock purchase warrants issued to certain
Investors dated July 26, 1993 and May 25, 1994.
2. TRANSFER RESTRICTIONS AND PURCHASE RIGHTS.
2.1. Transfers of Securities. No Stockholder nor any Other Stockholder shall
Transfer any Securities or allow the power to vote Securities to be exercised by
any other Person (except through ordinary proxies, revocable at the option of
such Stockholder or Other Stockholder), except that a Stockholder or Other
Stockholder may make a Transfer as permitted under this Section 2 and, if
applicable, Section 3. Notwithstanding anything in this Agreement to the
contrary, no Stockholder or Other Stockholder (or permitted transferee of a
Stockholder or Other Stockholder) may Transfer Securities to a Person (other
than a Stockholder or Other Stockholder) in a business similar to that engaged
in by the Company; provided, however, that, subject to Section 9.4 below, an
Investor may Transfer Securities to any such competitor if there shall have
occurred and be continuing a Remedy Event.
2.2. Right of First Offer with respect to Stockholders. No Stockholder shall
Transfer any Securities to any Person (other than pursuant to Section 2.3)
unless such Selling Stockholder first gives the Company (and the Investors for
purposes of compliance with Section 3) written notice of its intent to Transfer
such Securities (the "Offer Notice"), which notice shall set forth the number of
Securities to be Transferred. The Company may offer to purchase all (but not
less than all) of the Securities specified in the Offer Notice by delivery of a
written offer (the "Offer"), which Offer shall specify the price and terms on
which the Company proposes to purchase the Securities, to the Selling
Stockholder as soon as practical but in any event within 15 days after the
delivery of the Offer Notice. The Company shall also send a copy of the Offer to
the Investors. Upon receipt of the Offer, the Selling Stockholder may elect (i)
to sell to the Company all of the Securities specified in the Offer Notice at
the price and on the terms specified in the Offer or (ii) to market and sell the
Securities to other potential purchasers for a period of 150 days following the
date of receipt; provided, however, that the Selling Stockholder shall not sell
any Securities to other potential purchasers during such 150 day period at a
price or otherwise on terms equal to or less favorable to the Selling
Stockholder than the price and terms set forth in the Offer. If the Company
shall fail to elect to purchase all of the Securities it has the right to
purchase under this Section 2.2, each Stockholder and Other Stockholder shall
have the right and option to elect to purchase, at the price and terms specified
in the Offer, a number of the Securities equal to the product obtained by
multiplying the Securities by a fraction, the numerator of which is the number
of Securities held by such Stockholder or Other Stockholder (assuming the
conversion and exercise of all Securities into Common Stock) and the denominator
of which is the aggregate number of Securities owned by all Stockholders or
Other Stockholders. Each Stockholder or Other Stockholder making such election
shall give written notice to the Company and the Selling Stockholder of its
interest in
-6-
purchasing Securities under this Section 2.2 within fifteen (15) days after the
earlier of the expiration of the 150 day period or the rejection by the Company
of the Offer. Each Stockholder or Other Stockholder shall also have the option
to purchase on a similar basis any Shares not purchased by other Investors.
2.3. Certain Permitted Transfers.
(a) Transfers to Immediate Familv. Any Stockholder or Other Stockholder
may Transfer his Securities to Members of the Immediate Family of
such Stockholder or Other Stockholder so long as each transferee
executes a counterpart of this Agreement as a Stockholder and, in
the case of a transfer by a Covered Stockholder, a Covered
Stockholder.
(b) Public Offering. A Stockholder or Other Stockholder may sell any
Securities in a public offering registered under the federal
Securities Act of 1933, as amended, or, following a public
offering, in a transaction permitted by Rule 144 thereunder.
(c) Investors. Any Investor may transfer Securities to an Affiliate of
such Investor so long as each transferee executes a counterpart of
this Agreement as a Stockholder and an Investor.
(d) Pledges by Other Stockholders. Any Other Stockholder may transfer
Securities owned by such Other Stockholder by a pledge which
creates a mere security interest in the Securities; provided
however that the pledgee thereof shall agree in writing in advance
with the parties hereto to be bound by and comply with all
applicable provisions of this Agreement to the same extent as if it
were the Other Stockholder making such pledge.
2.4. Right of First Offer with respect to Other Stockholders.
(a) If any Other Stockholder (the "Selling Stockholder") shall desire
at any time to Sell any of its Securities, and shall receive a bona
fide purchase offer therefor or the terms of a potential bona fide
purchase offer therefor (such offers being hereinafter referred to
as a "Purchase Offer"), then the Selling Stockholder shall promptly
deliver a notice of intention to sell (a "Notice of Intention to
Sell") to the Company, each Stockholder and each remaining Other
Stockholder setting forth the Securities to be sold (the "Subject
Securities") and the terms and conditions of such Purchase Offer,
which shall be for cash or obligations to pay cash. The Company
shall have the right and option, for a period of 15 days after
receipt of the Notice of Intention to Sell (the "Company Acceptance
Period"), to elect to purchase, at a price and on the terms and
conditions stated in the Notice of Intention to Sell, all but not
less than all of the Subject Securities. The Company shall give
written notice of its
-7-
election to purchase (a "Company Acceptance Notice") or not to
purchase (a "Rejection Notice") to the Selling Stockholder, each
Stockholder and each remaining Other Stockholder prior to the
expiration of the Company Acceptance Period. If the Company shall
fail to elect to purchase all of the Subject Securities in
accordance with the provisions of this paragraph (a), each
Stockholder and each remaining Other Stockholder shall have the
right and option to elect to purchase, at the price and on the
terms stated in the Notice of Intention to Sell, a number of the
Subject Securities equal to the product obtained by multiplying the
Subject Securities by a fraction (x) the numerator of which is
equal to the number of Securities (assuming full conversion and
exercise into Common Stock) at the time owned by such Stockholder
or Other Stockholder and (y) the denominator of which is equal to
the aggregate number of Securities (assuming full conversion and
exercise into Common Stock) at the time owned by all Stockholders
and all Other Stockholders. Each Stockholder and each Other
Stockholder making such election shall give written notice (a
"Stockholder Notice of Election") to the Selling Stockholder, to
each Stockholder, each Other Stockholder and to the Company within
fifteen (15) days after the earlier of the expiration of the
Company Acceptance Period or the receipt by such Stockholder of a
Notice of Rejection, as the case may be (the "Acceptance Period").
Each Stockholder and each Other Stockholder shall also have the
option, exercisable by so specifying in the Stockholder Notice of
Election, to purchase on a pm rata basis similar to that described
above any remaining Subject Securities not purchased by
Stockholders or Other Stockholders, in which case the Stockholders
or Other Stockholders exercising such further option shall be
deemed to have elected to purchase such remaining Subject
Securities on such pro rata basis.
(b) If effective acceptances shall not be received pursuant to
paragraph (a) above in respect of all the Subject Securities, then
the Selling Stockholder may, at its election, either: (i) sell to
the Stockholders and remaining Other Stockholders pursuant to their
elections and sell any remaining Subject Securities to one or more
outside purchasers on terms not more favorable to such purchaser(s)
than those stated in the Notice of Intention to Sell; or (ii)
rescind its Notice of Intention to Sell, which rescission shall be
effected by notice in writing delivered to each Stockholder and
each Other Stockholder that shall have elected to purchase and to
the Company within ten (10) days after expiration of the Acceptance
Period, and keep all (but not less than all) of its Subject
Securities. Any outside purchaser must purchase no more than sixty
(60) days after the end of the Acceptance Period.
2.5. Closing on Stock Sales. The purchase of the Securities by the Company
under Section 2.2 shall occur at a closing on the date specified in the Offer,
which date shall be no fewer than 30 nor more than 45 days after the date on
which the Selling Stockholder receives the Offer. The purchase of the Subject
Securities by the
-8-
Company under Section 2.4 shall occur at a closing on the date specified in the
Company Acceptance Notice, which date shall be no fewer than 30 nor more than 45
days after the date on which the Selling Stockholder receives the Company
Acceptance Notice. At the closing (under either Section 2.2 or 2.4), the Company
shall pay the purchase price in the form and amount specified in the Offer to
the order of the Selling Stockholder. Certificates for the Securities to be
purchased, duly endorsed or accompanied by duly executed stock powers, in each
case with signatures guaranteed, shall be delivered at the closing by the
Selling Stockholder.
2.6. Sale of Warrants. In the event that the sale of Securities involves a
sale of Warrants, each such Selling Stockholder may deliver to the Company as
its agent, the Warrants for the issuance of Securities and executed subscription
forms specifying the number of Securities that Selling Stockholder elects to
receive upon exercise and sell under Section 2. The Selling Stockholder shall
tender payment therefor, or, at its option, specify that payment shall be made
out of the proceeds of the sale of Securities to the purchaser, and the Company
shall be authorized to sell the Securities to the purchaser on such Selling
Stockholder's behalf; provided, however, that the Selling Stockholder directs in
writing that payment of the proceeds in an amount equal to the exercise price be
made directly to the Company. Any unexercised portion of the Warrants shall be
returned to the Selling Stockholder.
3. TAG-ALONG RESTRICTIONS. A Covered Stockholder may sell any Shares in
accordance with Section 2.2 to any other Person (the "Proposed Buyer") only if
such Covered Stockholder complies with the terms set forth in this Section 3.
3.1. Offer. A notice (the "Tag-Along Notice") shall be delivered by the
Selling Stockholder to each Investor and each Other Stockholder at least 30 days
prior to the date of any Proposed Sale (as defined below). The Tag-Along Notice
shall include:
(a) A copy of a bona fide offer from the Proposed Buyer, which shall
set forth the material terms of the proposed sale, including the number of
Shares proposed to be purchased, the purchase price, the name and address of
the Proposed Buyer and the other principal terms of the proposed transaction
(the "Proposed Sale");
(b) An offer by the Selling Stockholder to include in the Proposed Sale
to the Proposed Buyer, at the option of each Investor and each Other
Stockholder, that number of Shares as is determined in accordance with
Section 3.2, on the same terms and conditions as the Selling Stockholder
shall sell his Shares; and
-9-
(c) An agreement from the Proposed Buyer to purchase from the Investors
and the Other Stockholders such number of Shares as shall be includable in
such Proposed Sale pursuant to Section 3.2.
3.2. Time and Manner of Exercise. If any of the Investors or Other
Stockholders desires to accept the offer contained in the Tag-Along Notice, he
or it shall notify the Selling Stockholder in writing within 20 days after
receipt of the Tag-Along Notice. If an Investor or Other Stockholder has not
accepted such offer in writing, he or it shall be deemed to have waived all
rights with respect to the Proposed Sale. Any acceptance of the offer contained
in the Tag-Along Notice shall be irrevocable except as hereinafter provided.
Each Investor and Selling Stockholder who has elected to participate in such
Proposed Sale shall be entitled to sell in the Proposed Sale, on the same terms
and conditions as the Selling Stockholder (treating any Shares that are
Preferred Stock and Warrants as if they had been converted into or exercised for
Common Stock), such number of its Shares equal to the number (rounded to the
nearest whole share) of all Shares to be included in the Proposed Sale times a
fraction, the numerator of which is the total number of Shares held by such
Investor or Other Stockholder (on an as-converted or as-exercised basis)
immediately before the Proposed Sale and the denominator of which is the sum of
the total number of Shares held by all Investors and Selling Stockholders who
exercised their rights under this Section 3 plus the total number of Shares held
by the Selling Stockholder immediately before the Proposed Sale.
3.3. Time and Manner of Closing. Each of the Investors and Other
Stockholders participating in any Proposed Sale shall take such actions and
execute such documents and instruments as shall be reasonably necessary in order
to consummate the Proposed Sale expeditiously on the same terms as the Selling
Stockholder. If at the end of 180 days following the date on which the Tag-Along
Notice was given the Selling Stockholder has not completed the Proposed Sale in
accordance with the terms hereof, the Investors and Other Stockholders shall be
released from their obligations hereunder. At the closing of any sale under this
Section 3.3, each Investor and Other Stockholder shall deliver certificates
representing the Shares to be sold by it, duly endorsed for transfer and (if
requested in writing by the Proposed Buyer) with signature guaranteed, and with
any stock transfer tax stamps affixed, against delivery of the applicable
purchase price. Any shares sold to the Proposed Buyer in accordance with this
Section 3.3 shall no longer be subject to this Agreement.
4. VOTING AGREEMENT.
4.1. Board Representation. Each Stockholder agrees (a) to vote its Shares to
fix the number of directors at nine until a Remedy Event occurs and thereafter
to fix the number of directors at the number contemplated by Section 4.3 and (b)
to vote all Shares owned by such party (i) to elect as directors, three persons
nominated by the
-10-
Covered Stockholders, which persons shall initially be John W. Casella, Douglas
R. Casella and James W. Bohlig, (ii) to elect as a director a person designated
by BCI, so long as BCI holds Investor Securities, which person shall initially
be Donald P. Remey, (iii) to elect as a director a person designated jointly by
NAVF and VVCF, so long as each holds Investor Securities, which person shall
initially be Gregory B. Peters, (iv) to elect as a director a person designated
by the holders of a majority of the shares of Series D Preferred Stock, which
person shall initially be Michael F. Cronin, (v) to elect as a director a person
designated by NWI, which person shall initially be C. Andrew Russell; provided;
however, that if NWI shall fail to designate such a person, the Required Holders
may designate a person to fill such position; (vi) to elect as directors two
independent representatives, one of which shall be designated by the Covered
Stockholders and one of which shall be designated by a majority of the eight
directors designated pursuant to this Section 4.1, which person shall initially
be John F. Chapple, provided, however, that no independent representative shall
be an Affiliate of either the Company, any of the Required Holders or the
Management Stockholders and (vii) after a Remedy Event has occurred, to elect as
additional directors of the Company such persons nominated by the Investors as
is contemplated by Section 4.3 and to continue to vote for such persons (or any
successors nominated by the Investors, as the case may be) as directors of the
Company until the Remedy Event is cured.
4.2. Votes Per Share: Notices; Record holders of Preferred Stock shall be
entitled to notice of any stockholders' meeting or solicitation of stockholders'
consents in the manner provided in the Bylaws of the Company for general
notices.
4.3. Election after Remedv Event. Upon the occurrence and during the
continuation of any Remedy Event (as defined in Section 4.5), then, upon notice
to the Company given by the Required Holders, the number of directors shall be
increased to thirteen and the Required Holders shall have the right to
designate four directors in addition to the persons designated in clauses (ii),
(iii), and (iv) of Section 4.1 above. Following the rectification or cure of the
Remedy Event, whereupon such right of the Required Holders to elect a majority
of the Board of Directors of the Company as set forth above shall cease, (and
the maximum number of directors shall be reduced to nine and shall be designated
pursuant to Section 4.1 above), subject to being again revived from time to time
upon the reoccurrence of the conditions above described.
4.4. Tenure. Each Preferred Director shall serve for a term of the lesser of
(a) one year and until such Preferred Director's successor is elected and
qualified, or (b) until the right to elect such Preferred Director ceases (at
which time such Preferred Director will be deemed to be removed). So long as the
holders of Preferred Stock are entitled to elect Preferred Directors, any
vacancy in the position of a Preferred Director may be filled only by vote of
the holders of a majority of the shares of the series of Preferred Stock
entitled to vote for such Preferred Director. A
-11-
Preferred Director may, during such Preferred Director's term of office, be
removed at any time, with or without cause, only by the affirmative vote of the
holders of record of a majority of the outstanding shares of Preferred Stock of
the respective series.
4.5. Remedy Event. The term "Remedy Event" shall mean the occurrence and
continuance of any of the following events for a period exceeding 150 days
(unless otherwise specified below) after written notice of the occurrence of
such event has been furnished to the Company:
(a) The Company shall fail to make any payment in respect of dividends
declared on any shares of Preferred Stock.
(b) (Capitalized terms used in this Section 4.5(b) and in Section
4.5(d) and not otherwise defined shall have the meanings set forth in the
Amended and Restated Certificate of Incorporation). If at any time after
December 31, 2000, a Series D Holder delivers a Series D Put Notice, the
Company shall fail to pay (i) any quarterly installment payment in respect
of shares of Series D Preferred Stock representing one-eighth of the Series
D Liquidation Amount, plus, in the case of a holder that selects the
Interest Option, interest thereon at a rate equal to 15% per annum on the
Series D Liquidation Amount or (ii) by the expiration of the seven quarters
commencing on the Series D Put Closing Date, the full amount of the Series D
Purchase Price, plus, in the case of a holder that selects the Interest
Option, interest at a rate of 15% per annum on the Liquidation Amount and
prime plus two percent per annum on the amount of the Series D Purchase
Price in excess of the Series D Liquidation Amount.
(c) (Capitalized terms used in this Section 4.5(c) and not otherwise
defined shall have the meanings set forth in the Repurchase Agreement). If
at any time after December 31, 2000, any Holder shall deliver a Put Notice,
the Company shall fail to pay (i) any quarterly installment payment in
respect of Put Securities that are Warrant Shares representing one-eighth of
the Initial Investment Amount, plus, in the case of a Holder that selects
the Interest Option, interest thereon at a rate of 15% per annum on the
Initial Investment Amount or (ii) by the expiration of the seven quarters
commencing on the Put Closing Date, the full amount of the Purchase Price
(determined in accordance with Section 2 of the Repurchase Agreement) for
the Put Securities, plus, in the case of a Holder that selects the Interest
Option, interest thereon (at the rates specified in Section 3(b) of the
Repurchase Agreement).
(d) (Unless otherwise noted, capitalized terms used in this Section
4.5(d) and not otherwise defined shall have the meanings set forth in the
Repurchase Agreement). If at any time after December 31, 2000, upon the
-12-
delivery of a Put Notice by the Holders of the Warrants pursuant to the
Repurchase Agreement, the Company shall fail to pay the full amount of the
Series C Redemption Price (as defined in the Amended and Restated
Certificate of Incorporation) together with the required interest thereon
within 180 days after the Put Closing Date (as defined in the Repurchase
Agreement).
(e) The Management Stockholders shall have known or, in the exercise of
reasonable diligence and inquiry, should have known, that the Company was
not in compliance in all material respects with all applicable Environmental
Laws (as defined in the Purchase Agreement) at the date hereof.
(f) The Company shall fail to issue the requisite number of shares of
Common Stock upon the conversion by the holders thereof of the Preferred
Stock or upon exercise of the Warrants.
(g) The Company or any Subsidiary or Subsidiaries owning an aggregate
of at least 50% of the consolidated assets or contributing over the past
fiscal year an aggregate of at least 50% of the consolidated cash flow
shall:
(i) commence a voluntary case under Title 11 of the United States
as from time to time in effect, or authorize, by appropriate
proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) have filed against it a petition commencing an involuntary
case under such Title 11;
(iii) seek relief as a debtor under any applicable law, other than
such Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors of the Company generally, or consent to or
acquiesce in such relief;
(iv) have entered against it any order by a court of competent
jurisdiction (A) finding it to be bankrupt or insolvent, (B) ordering
or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (C) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial
part of its property; or
(v) make an assignment for the benefit of, or enter into a
composition with, its creditors, or appoint or consent to the
appointment
-13-
of a receiver or other custodian for all or a substantial part of its
property.
(h) John W. Casella shall cease for any reason to be the Chief
Executive Officer of the Company and James W. Bohlig shall cease for any
reason to be the Chief Operating Officer of the Company and replacements
reasonably satisfactory to the Required Holders shall not be in place within
nine months from the date on which the later to depart of Mr. Casella and
Mr. Bohlig ceases to hold his office.
4.6. Voting. As to any matter on which holders of Common Stock of the
Company are entitled to vote their shares in accordance with the Company's
Amended and Restated Certificate of Incorporation and the Delaware General
Corporation Law, other than the election of directors, which is governed by the
above paragraphs of this Section 4, the Company shall be responsible for first
obtaining indications of voting preferences from each Stockholder and Other
Stockholder, each of which will be entitled to state a preference as to the
number of shares of Common Stock that he then holds or that he has the right to
acquire upon exercise or conversion of Shares that are not Common Stock. The
Company shall notify each Stockholder and Other Stockholder of respective
percentages, based on the aggregate number of shares of Common Stock as to which
preferences can be stated, that were in favor of the matter, that were against
the matter, that abstained from voting, and that did not vote. Except as
otherwise required by law, each Stockholder and Other Stockholder that holds of
record shares of Common Stock entitled to vote on any matter as to which a
preference has been stated agrees to votes his shares in accordance with the
percentages determined by the Company from the foregoing process. In connection
with any matters as to which a vote of the Preferred Stock, voting as a single
class, is required, the Company shall obtain such preferences only from
Stockholders and Other Stockholders who hold Preferred Stock.
5. COVENANTS. The Company covenants that it will comply, and will cause each
of its Subsidiaries to comply, with the following provisions:
5.1. Covenants Relating to the Company's Board of Directors.
(a) Board of Directors. The Board of Directors of the Company shall
meet at least once each fiscal quarter and each original holder of Preferred
Stock so long as it holds Investor Securities originally purchased at an
aggregate cost of at least $1,000,000 shall be notified at least 10 days in
advance of such regular meetings of the Board of Directors and each such
original holder shall have the right to have a representative attend all
such meetings in a nonvoting observer capacity. The Board of Directors shall
establish and maintain an Audit Committee and a Compensation Committee, on
each of which committees there shall be at least one Preferred Director and
-14-
persons who are not employees of the Company shall constitute a majority of
the members.
(b) Directors Expenses. The Company will pay all direct out-of-pocket
expenses reasonably incurred by any Preferred Director in attending each
meeting of the Board of Directors, or any committee thereof. All other
Director fees and incentives shall be subject to the approval of a majority
of the Board of Directors, which majority shall include a majority of the
Preferred Directors.
(c) Indemnity. The Company and each of its Subsidiaries will adopt and
maintain in their respective Charter or Bylaws provisions indemnifying the
directors of each such Person to the fullest extent permitted by applicable
law.
5.2. Information and Reports to be Furnished to Principal Holders. The
Company and its Subsidiaries will maintain a system of accounting in which
correct and complete entries will be made of all dealings and transactions in
relation to their business and affairs in accordance with GAAP. The Company's
internal financial control systems will at all times be reasonably satisfactory
to the Required Holders. The Company will furnish the following information to
each Principal Holder (except as otherwise provided below):
(a) Annual Statements. As soon as available, and in any event within 90
days after the end of each fiscal year of the Company, the audited
consolidated balance sheet of the Company and its Subsidiaries as of the end
of such fiscal year and the audited consolidated statements of income,
stockholders' equity and cash flows for such year of the Company and its
Subsidiaries, together with the consolidated figures for the preceding
fiscal year, if any (all in reasonable detail), such statements being
accompanied by the reports thereon of independent certified public
accountants, reasonably satisfactory to the Required Holders, to the effect
that such consolidated financial statements have been prepared in accordance
with GAAP and present fairly in all material respects the financial position
of the Company and its Subsidiaries as of the dates specified and the
results of their operations and changes in financial position with respect
to the periods specified.
(b) Certificate of Chief Financial Officer. As soon as available, and
in any event within 45 days after the end of each of the first three fiscal
quarters in each fiscal year of the Company, the Company shall deliver a
certificate of the Chief Financial Officer of the Company to the effect that
the Company and its Subsidiaries have complied with all restrictive
covenants contained in Sections 5.4 and 5.5.
-15-
(c) Monthly Reports. As soon as practicable, and in any event within 30
days after the end of each calendar month, the financial statements of the
Company and its Subsidiaries as of the end of such month in the form
customarily prepared by management for internal use, together with a
discussion and analysis of the Company's financial condition and results of
operations as of and for such period.
(d) Notice of Litigation, Defaults. etc. The Company will promptly give
written notice to each Principal Holder of (i) any litigation or any
administrative proceeding to which it or any of its Subsidiaries may
hereafter become a party which after giving effect to applicable insurance
may result in a charge against income in excess of $50,000, (ii) any
resignation of or other change in senior management of the Company or any
serious illness of any member of such senior management, and (iii) any
credible offers to purchase a majority (or greater) interest in the Company
(whether by means of purchase of securities or assets or otherwise). The
Company will promptly, and in any event within seven days after any officer
of the Company or any of its Subsidiaries obtains knowledge of any material
default by the Company under this Agreement, any other Related Agreement or
any other Contractual Obligation, furnish notice to each Principal Holder
specifying the nature of the material default and stating the action the
Company has taken or proposes to take with respect thereto. Promptly after
the receipt thereof, the Company will furnish to each Principal Holder
copies of any reports as to adequacies in accounting controls submitted by
independent accountants. Any notice containing the information contemplated
by this Section 5.2(d) is referred to herein as a "Material Event Notice".
(e) Other Information. From time to time upon the reasonable request of
any Principal Holder, the Company will furnish to any such Principal Holder
such information regarding the business, assets or financial condition of
the Company and its Subsidiaries as it may reasonably request. Each such
Principal Holder shall have the right during normal business hours at
reasonable intervals and upon reasonable notice to examine the books and
records of the Company and its Subsidiaries, to make copies and notes
therefrom, and to make an independent examination of the books and records
of the Company and its Subsidiaries at the expense of such Principal Holder
and in a manner that does not interfere with the business operations of the
Company and its Subsidiaries.
(f) Confidentiality. Each Stockholder will maintain the confidential
nature of information obtained from the Company concerning the Company and
its Subsidiaries; provided, however, that such Stockholder shall not be
precluded from making disclosure regarding such information: (a) to counsel
for any such Stockholder, accountants or other professional advisors on a
-16-
need-to-know basis, (b) to any other Stockholder, (c) as required by
law or applicable regulation (provided that the Stockholder notifies
the Company in advance of any such disclosure and cooperates with the
Company in minimizing the same), (d) to any Person to whom Shares are
proposed to be Transferred in accordance with the provisions hereof so
long as such transferee agrees to be bound by this Section 5.2(f) or
(e) to the extent that such information has become publicly available
other than as a result of the violation of this Section 5.2(f).
5.3. Information and Reports to be Furnished to the Board of Directors. The
Company and its Subsidiaries will furnish to each member of the Board of
Directors of the Company the information below.
(a) Management Letters of Accountants. As soon as available, all
management letters prepared by the Company's independent certified public
accountants and management's written response thereto if any.
(b) Annual Budget. Not later than the end of each fiscal year of the
Company, a proposed month-by-month operating and capital budget for the
following fiscal year of the Company, including projected cash flows.
(c) Notice of Litigation Defaults etc. Promptly, and in any event
within 30 days after the Company has knowledge of such event, a Material
Event Notice to each Director.
(d) SEC Filings. Promptly, and in any event within 15 days after filing
with the SEC, copies of all forms, reports, notices, proxy statements,
registration statements and other documents filed with the SEC.
5.4. Restrictive Covenants Requiring Consent of Required Holders. Without
the consent of the Required Holders (except as otherwise provided below),
neither the Company nor any of its Subsidiaries will:
(a) Issuance of Senior Securities. Authorize or issue, or agree to
authorize or issue, any class or series of capital stock senior to any
Series of Preferred Stock with respect to dividend rights, liquidations
preferences or redemption or repurchase rights.
(b) Restrictive Agreements. Become or remain a party to, or be bound
by, or agree to any amendment or modification of, any Contractual Obligation
that restricts or limits the Company's right to perform its obligations
under this Agreement or the Stock Purchase Agreement.
-17-
(c) Charter Amendment etc. Without the consent of a majority of Shares
of any series of Preferred Stock that is adversely affected, the Company
shall not amend its Charter or By-laws if such amendment would adversely
affect the rights of such series of Preferred Stock.
(d) Merger Consolidation and Sale of Assets. Other than a merger of a
wholly owned Subsidiary of the Company into the Company or another wholly
owned Subsidiary of the Company, become a party to or authorize any merger
or consolidation, or any agreement to sell, lease, or otherwise transfer or
dispose of all or substantially all of its assets, other than sales of
inventory in the normal course of business and transfers of assets among the
Company and its wholly owned Subsidiaries. Notwithstanding anything to the
contrary contained in this Section 5.4(d), in the event that the Required
Holders approve a transaction for which their consent is required by this
Section 5.4(d), and the transaction would result in the consideration to be
received by the holders of Series D Preferred Stock of less than the
internal rate of return as set forth in and calculated in accordance with
Schedule C through December 31, 1997 and the internal rate of return as set
forth in and calculated in accordance with Schedule C thereafter, then the
consent of the holders of a majority of the Series D Preferred Stock, voting
as a separate class, shall be required in order for the Company to enter
into any such transaction.
(e) Liquidation. Enter into or authorize any liquidation, dissolution
or winding up.
5.5. Restrictive Covenants Requiring Consent of Board of Directors. Without
the approval of the Board of Directors, with at least a majority of the
Preferred Directors voting in favor, neither the Company nor any of its
Subsidiaries shall:
(a) Distributions. Make any Distribution except (i) any Subsidiary may
make Distributions to the Company or to any wholly owned Subsidiary which is
its immediate parent, (ii) the Company may repurchase shares of Preferred
Stock in accordance with the Company's Charter, (iii) the Company may
repurchase shares of Common Stock from its employees at cost or fair market
value upon termination of employment, (iv) the Company may make the
repurchase contemplated in the Exchange Agreements and the Repurchase
Agreement.
(b) Amendment of Employee Plans. Amend any stock or stock option plan
or other material employee benefit plan or arrangement in any material
respect.
(c) Transaction with Affiliates. Except for transactions expressly
contemplated by the Related Agreement or disclosed in a schedule to the
-18-
Purchase Agreement, effect or remain obligated with respect to any
transaction with any Affiliate (other than with the Company or any
wholly owned Subsidiary of the Company) or any Member of the Immediate
Family of any Affiliate or amend the terms of any such permitted
arrangement.
(d) Line of Business. Not engage in any line of business other than the
business of providing integrated non-hazardous solid waste management
services to commercial, municipal, industrial and residential customers.
5.6. Conduct of Business. Each of the Company and its Subsidiaries will:
(a) Maintenance of Properties, etc. Keep its properties and assets in
such repair, working order and condition, and will from time to time make
such repairs, renewals, replacements, additions and improvements thereto, as
its management deems reasonably necessary and appropriate, and will comply
at all times in all material respects with the provisions of all material
Contractual Obligations (including its Charter, Bylaws and senior bank
credit facility) applicable to it so as to prevent any loss or forfeiture
thereof or thereunder unless compliance therewith is being at the time
contested in good faith by appropriate proceedings, or management considers
it prudent business judgment not to comply, and will do all things necessary
to preserve, renew and keep in full force and effect and in good Standing
its corporate existence and authority necessary to continue its business.
(b) Compliance with Legal Requirements. Comply in all material respects
with all Legal Requirement, as in effect from time to time, applicable to
it, except where compliance therewith shall at the time be contested in good
faith by appropriate proceedings.
(c) Insurance. Keep its assets which are of an insurable character
insured against loss or damage by fire, explosion or other hazards which may
be insured against by extended coverage in an amount sufficient to prevent
it from becoming a co-insurer and in any event not less than 80% of the
insurable value of the property insured, and will maintain insurance against
liability to persons and property and other hazards and risks to the extent
and in the manner customary in the judgment of the Board of Directors of the
Company for companies in similar businesses similarly situated. All such
insurance shall be provided by reputable insurers licensed to write
insurance in the jurisdiction where the insured entity is located; provided,
however, that the Company and its Subsidiaries may effect workers'
compensation insurance or similar coverage with respect to operations in any
particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction.
-19-
(d) Foreign Qualification. Be qualified as a foreign corporation in
each jurisdition in which it is required to qualify, except for such
jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.
5.7. Replacement of Chief Executive. Upon the death, resignation, retirement
or removal of John W. Casella as Chief Executive Officer of the Company, the
Required Holders shall have the right to participate in the search for, and
shall approve (not to be unreasonably withheld), his replacement.
5.8. Ownership of Subsidiary Stock. The Company shall not have any
Subsidiary that is not a wholly owned Subsidiary other than Subsidiaries for
which the Required Holders have provided their written consent, which may not be
unreasonably withheld.
5.9. Compliance with ERISA etc. The Company and its Subsidiaries will meet
all minimum funding requirements imposed by ERISA or the Code (without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted) and will at all times comply in all
material respects with all other provisions of ERISA and the Code.
5.10. Annual Meeting. Within 180 days after the Company's annual financial
statements are required to be furnished in accordance with Section 5.2(a) and on
not less than 10 days prior written notice, the Company will hold an annual
stockholders meeting. At such annual meeting the principal executive, financial
and operation officers of the Company and its Subsidiaries will present a review
of, and will discuss with those in attendance in reasonable detail, the general
affairs, management, financial condition, results of operation and business
prospects of the Company and its Subsidiaries.
5.11. SBA Requirements. Each of the Company and its Subsidiaries will:
(a) Information. Promptly furnish to the Investors that are SBICs upon
request all forms that may be required to be filed with the SBA from time to
time in connection with the transactions contemplated by the Related
Agreement and such Investors' Ownership of Investor Securities and shall
provide such Investors and the SBA with such other information and forms
(including all information necessary for the Investors to prepare SBA Form
468 and an accompanying assessment of economic impact under 13 CFR
ss.197.304(c)) as such Investors, in their reasonable discretion, or the SBA
may from time to time request with respect to the transactions completed by
this Agreement and such Investors' ownership of Investor Securities. The
Company shall at all times permit any Investor that is an SBIC and, if
necessary, a representative of the SBA, reasonable access to the Company's
-20-
records during normal business hours upon prior notice and the Company shall
provide such information as such Investor or the SBA may reasonably request
in order to verify compliance with this Section 5.11, including an
officer's certificate indicating such compliance.
(b) Compliance: Rescission Right. Not engage in any discriminatory
activities prohibited by 13 CFR parts 112, 113 and 117. The Company will not
use directly or indirectly the proceeds of the issuance and sale of the
Investor Securities for any purpose for which an SBIC is prohibited from
providing funds under 13 CFR ss. 107.901. The Company shall not change its
business activity in any manner which, by reason of such change in business
activity, would render the Company ineligible as a "small business concern"
under the Small Business Investment Act. The Company acknowledges and agrees
that (a) any diversion of the proceeds from their intended use or (b) the
Company's becoming ineligible as a "small business concern" by reason of a
change in the Company's business activity within one year from the closing
under the Purchase Agreement, shall entitle any Investor that constitutes an
SBIC, upon demand, and in addition to any other remedies that may exist, to
immediate rescission of the Related Agreements and repayment in full of the
funds invested by it as contemplated by 13 CFR ss. 107.305 and 13 CFR ss.
107.706.
5.12. Real Property Holding Corporation. If at any time in the future the
Company or any of its Subsidiaries shall become such a "United States real
property holding corporation" as defined in Section 897(c)(2) of the Code and
Treasury Regulation section 1.897-2(b), the Company shall notify each foreign
Investor of such event as promptly as practicable. Within 30 days after receipt
of a request from a foreign Investor, the Company shall prepare and deliver to
such foreign Investor the statement required under Treasury Regulation section
1.897-2(h) and, subject to the succeeding sentence, either or both of the
following documents: (a) an affidavit in conformance with the requirements of
section 1445(b)(3) of the Code and the regulations thereunder or (b) a notarized
statement, executed by an officer having actual knowledge of the fact, that the
Shares held by such foreign Investor are of a class that is regularly traded on
an established securities market, within the meaning of section 1445(b)(6) of
the Code and the regulations thereunder. If the Company is unable to provide
either of the documents described in clauses (a) or (b) above upon request, it
shall promptly, and in any event within 30 days, notify such foreign Investor in
writing of the reason for such inability. Finally, upon the request of a foreign
Investor and without regard to whether either document described in clauses (a)
or (b) above has been requested, the Company shall reasonably cooperate with the
efforts of such foreign Investor to obtain a "qualifying statement" within the
meaning of section 1445(b)(4) of the Code and the regulations thereunder or such
other documents as would excuse a transferee of a foreign Investor's interest
from withholding of income tax imposed pursuant to section 897(a) of the Code.
-21-
6. RIGHTS TO PARTICIPATE IN FUTURE OFFERINGS.
6.1. Right of First Offer. The Company shall not issue or sell any Common
Stock (including securities convertible into, or options, warrants or other
rights to purchase Common Stock, but excluding the shares described in Section
6.7) (collectively, the "Offered Shares") without first providing each
Stockholder and each Other Stockholder the right to subscribe for its
Proportionate Percentage of the Offered Shares at a price and on such other
terms which are at least as favorable as the Company shall have offered or
proposes to offer and which the Company shall have specified in a notice
delivered to each Stockholder and each Other Stockholder (the "Proposal");
provided, however that each Stockholder and each Other Stockholder shall have
the option to purchase Offered Shares for cash, regardless of the form of
consideration the Company proposes. The Proposal by its terms shall remain open
and irrevocable for a period of 30 days from the date it is delivered by the
Company to each Stockholder and each Other Stockholder (the "Exercise Period").
The Proposal shall also certify that the Company either (a) has received a bona
fide offer from a prospective purchaser, who shall be identified in the
Proposal, for consideration having a fair market value set forth in such Offer
or (b) intends in good faith to offer the Offered Shares at the price and on the
terms set forth in such Proposal.
"Proportionage Percentage" means, for any Stockholder or Other Stockholder,
a percentage of Offered Shares covered by the Proposal equal to (i) the number
of shares of Common Stock held by such Stockholder or Other Stockholder (on an
as-converted and as exercised basis) divided by (ii) the total number of shares
of Common Stock outstanding at the time of delivery of the Proposal (assuming
the conversion and exercise of all options, warrants, rights and shares of
capital stock that are convertible into or exercisable for Common Stock).
6.2. Notice. Notice of each Stockholder's or Other Stockholder's intention
to accept the Proposal made pursuant to Section 6.1 shall be evidenced by a
writing signed by such Stockholder or Other Stockholder and delivered to the
Company prior to the end of the Exercise Period (the "Notice of Purchase")
setting forth that portion of the Offered Shares such holder elects to purchase
(the "Accepted Shares").
6.3. Full Acceptance. In the event that all Stockholders and Other
Stockholders elect to purchase all of the Offered Shares offered in the
Proposal, the Company shall sell to each such holder, pursuant to Section 6.6,
the number of Accepted Shares set forth in such holder's Notice of Purchase.
6.4. Partial Acceptance. In the event that one or more Stockholders or Other
Stockholders do not elect to purchase all of the Offered Shares offered in the
Proposal, the Company shall sell to each holder that has so elected to purchase,
pursuant to Section 6.6, the number of Accepted Shares, if any, set forth in
such
-22-
holder's Notice of Purchase. Stockholders or Other Stockholders may purchase any
remaining shares offered in the Proposal not purchased by the other Stockholders
or Other Stockholders pro rata based on their respective Proportionate
Percentages, or as they may otherwise agree.
6.5. No Fractional Shares. For the purpose of avoiding fractions as to
Offered Shares, the Company may adjust upward or downward by not more than one
full share the number of Offered Shares which any Stockholder or Other
Stockholder would otherwise be entitled to purchase.
6.6. Sale of Shares. No later than 30 days after the expiration of the
Exercise Period, the Company shall deliver to each Stockholder and each Other
Stockholder who has submitted a Notice of Purchase to the Company a notice
indicating the number of Offered Shares which the Company shall sell to such
holder pursuant to this Section 6 and the terms and conditions of such sale,
which shall be in all respects (including, without limitation, unit price and
interest rates) the same as specified in the proposal. The sale to such holders
of such Offered Shares shall take place not later than 10 days after receipt of
such notice.
Any sale of Offered Shares that were not selected for purchase by the
Stockholders or Other Stockholders as provided above shall take place not later
than 180 days after the expiration of the Exercise Period. Such sale shall be
upon terms and conditions in all respects (including, without limitation, unit
price and interest rates) which are no less favorable to the Company than those
set forth in the Proposal. Any refused Offered Shares not purchased as
contemplated by the Proposal within the 90-day period specified above shall
remain subject to this Section 6.
6.7. Exclusion of Certain Shares. Notwithstanding any contrary provision of
this Section 6, Offered Shares shall not include (i) shares of Common Stock
issuable upon conversion of the Preferred Stock, (ii) shares of Common Stock
issued or issuable upon exercise of the Warrants (iii) shares of Common Stock
issued or issuable as a dividend or distribution by the Company, (iv) shares of
capital stock issued to employees, officers or directors pursuant to options,
warrants or rights outstanding on the date hereof, pursuant to plans approved by
the Board of Directors or pursuant to arrangements permitted under this
Agreement, (v) shares of capital stock issued as consideration for the
acquisition of a business or (vi) shares of capital stock issued in a
transaction or series of related transactions in which the Company receives
consideration of less than $500,000 and in which the purchase price per share is
not less than the then-applicable conversion price per share of the Series D
Preferred Stock, provided that the aggregate amount of all such transactions
shall not exceed $500,000 per year.
-23-
6.8. Waivers. The parties hereto waive the provisions of Section 4 of the
Amended and Restated Stockholders Agreement dated May 25, 1994, as amended, with
respect to the offer and sale of Series D Convertible Preferred Stock of the
Company, and the issuance of Series A Redeemable Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, including all notice requirements
relating thereto.
7. LEGEND. Each certificate evidencing Shares shall contain the following
legend:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER RESTRICTIONS AS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF
DECEMBER 22,1995 A COPY OF WHICH IS ON FILE IN THE OFFICES OF THE
CORPORATION ON AND WILL BE FURNISHED TO THE HOLDER HEREOF WITHOUT CHARGE
UPON WRITTEN REQUEST
8. TERMINATION. This Agreement shall terminate upon the first to occur of (i) a
Qualified Offering or (ii) any merger or consolidation of the Company into or
with another corporation (except one in which the holders of the capital stock
of the Corporation immediately prior to such merger or consolidation continue to
hold, directly or indirectly, more than 50% by voting power of the capital stock
of the surviving corporation), or the sale of all or substantially all the
assets of the Company.
9. GENERAL.
9.1. Remedies. The parties shall have all remedies for breach of this
Agreement available to them provided by law or equity. Without limiting the
generality of the foregoing, in addition to all other rights and remedies
available at law or in equity, the parties shall be entitled to obtain specific
performance of the obligations of each party to this Agreement and immediate
injunctive relief. In the event any action or proceeding is brought in equity to
enforce the same, neither the Company nor any party will urge, as a defense,
that an adequate remedy at law exists.
9.2. Notices. All notices or other communications required or permitted to
be delivered hereunder shall be in writing and shall be delivered to each of the
parties at their respective addresses as set forth in Schedules A or B.
Any party to this Agreement may at any time change the address to which
notice to such party shall be delivered by giving notice of such change to the
other parties and such notice shall be deemed given when received by the other
parties. Notices shall be deemed effectively given when personally delivered or
sent to the
-24-
recipient at the address set forth above by telex or a facsimile transmission,
one business day after having been delivered to a receipted, nationally
recognized courier, properly addressed or five business days after having been
deposited into the United States mail, postage prepaid, provided, that any
notice to any party outside of the United States shall be sent by telecopy and
confirmed by overnight or two-day courier.
9.3. Amendments, Waiver and Consents. Any provision in this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement may be made,
and compliance with any covenant or provision herein set forth may be omitted or
waived, if the Company (a) shall obtain consent thereto in writing from the
Required Holders and (b) shall, in each such case, deliver copies of such
consent in writing to any parties who did not execute the same.
9.4. Binding Effect: Assignment. This Agreement shall be binding upon and
inure to the benefit of the personal representatives, successors and assigns of
the respective parties hereto. The Company shall not have the right to assign
its rights or obligations hereunder or any interest herein without obtaining the
prior written consent of the Required Holders. The Covered Stockholders and the
Investors may assign or transfer their rights under this Agreement to the extent
permitted herein and by the other agreements between the respective parties and
the Company. Each of BCI, NAF and VVCF may transfer its rights to designate a
member of the Board of Directors of the Company pursuant to Section 4.1 hereof
so long as such transfer of rights is accompanied by a Transfer of 50% of the
Warrants held by such Investor immediately after the Closing (as defined in the
Purchase Agreement) after giving effect to the transactions contemplated by the
Related Agreements; provided, however, that neither BCI, VVCF nor NAV may
transfer any rights to designate a member of the Board of Directors to any
Person in a business similar to that engaged in by the Company. The holders of
Series D Preferred Stock shall cease to have the right to designate a Director
pursuant to Section 4.1 at such time as a majority of the Shares of Series D
Preferred Stock is owned by a Person in a business similar to that engaged in by
the Company.
9.5 Severability. If any provision of this Agreement shall be found by any
court of competent jurisdiction to be invalid or unenforceable, the parties
waive such provision to the extent that it is found to be invalid or
unenforceable. Such provision shall, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable and, as modified, shall be
enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.
9.6. Entire Agreement. This Agreement and the Related Agreements constitute
the entire agreement of the parties with respect to the subject matter hereof
and thereof and supersede all prior and contemporaneous understandings, whether
written or oral, including without limitation, the Amended and Restated
Stockholders
-25-
Agreement, dated May 25, 1994, as amended, by and among the Company and the
Stockholders Party thereto.
9.7. Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one and the same instrument.
9.8. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.9. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
The parties hereto have executed this Agreement under seal as of the date
first above written.
CASELLA WASTE SYSTEMS, INC.
By _________________________
Title:
NORWEST EQUITY PARTNERS V
By: Itasca Partners
By_________________________
Title:
WESTON PRESIDIO CAPITAL II, L.P.
By: Weston Presidio Capital Management, II, L.P.
Its General Partner
By__________________________
Title:
-26-
BCI GROWTH III, L.P.
By: Teaneck Associates
Its General Partner
By________________________
Donald P. Remey
General Partner
EDWARD V. SCHWIEBERT, TRUSTEE
FOR BLAKE ELIZABETH BOHLIG
TRUST FUND #1 U/T/A DATED
DECEMBER __, 1995
By: _____________________________
Edward V. Schwiebert, Trustee
EDWARD V. SCHWIEBERT, TRUSTEE
FOR CHRISTOPHER JAMES BOHLIG
TRUST FUND #1 U/T/A DATED
DECEMBER__ 1995
By: ______________________________
Edward V. Schwiebert, Trustee
HARRY R. RYAN, III, TRUSTEE
FOR ELIZABETH ASHLEY CASELLA
TRUST FUND #1 U/T/A DATED
DECEMBER __,1995
By: _______________________________
Harry R. Ryan, III, Trustee
HARRY R. RYAN, III, TRUSTEE
FOR JOHN WILLIAM CASELLA, II
TRUST FUND #1 U/T/A DATED
DECEMBER__, 1995
By: _______________________________
Harry R. Ryan, H, Trustee
-27-
HARRY R. RYAN, III, TRUSTEE
FOR LAUREN ELIZABETH CASELLA
TRUST FUND #1 U/T/A DATED
DECEMBER_,1995
By:
---------------------------------
Harry R. Ryan, III, Trustee
NORTH ATLANTIC VENTURE FUND, L.P.
By: North Atlantic Capital Partners, L.P.
Its General Partner
By
---------------------------------
Title:
VERMONT VENTURE CAPITAL FUND, L.P.
By: Vermont Venture Capital Partners, L.P.
Its General Partner
By
---------------------------------
Title:
NATIONAL WASTE INDUSTRIES, INC.
By
---------------------------------
Title:
FSC CORP
By
---------------------------------
Mary J. Reilly
Vice President
PRUDENTIAL SECURITIES INCORPORATED
By
---------------------------------
Title:
---------------------------------
Thomas S. Shattan
-28-
--------------------------
John W Casella
--------------------------
Douglas R. Casella
--------------------------
James W. Bohlig
--------------------------
Stephen W. Houghton
--------------------------
Richard H. Lindgren
--------------------------
Robert J. Lynch, Jr.
--------------------------
John F. Chapple
--------------------------
Marcia DeRosia
JANE O'NElLL RYAN, THOMAS R. RYAN,
DANIEL C. CRANE AND HARRY R. RYAN,
III, TRUSTEES U/T/A DATED MARCH
17,1994, HARRY R. RYAN, III, SETTLOR
By
---------------------------------
Title:
HARRY R. RYAN, III, TRUSTEE
FOR MICHAEL ANTHONY CASELLA
TRUST FUND #1 U/T/A DATED
DECEMBER ___, 1995
By:
---------------------------------
Harry R. Ryan, III, Trustee
-29-
HARRY R. RYAN, III, TRUSTEE
FOR ROBERT LIVlNGSTONE CASELLA
TRUST FUND #1 U/T/A DATED
DECEMBER __, 1995
By:
---------------------------------
Harry R. Ryan, III, Trustee
HARRY R. RYAN, III, TRUSTEE
FOR STEPANIE LEIGH CASELLA
TRUST FUND #1 U/T/A
DATED DECEMBER __,1995
By:
---------------------------------
Harry R. Ryan, III, Trustee
KAREN POTTER AND MATTHEW
POTTER, TRUSTEES FOR JOSEPH
ANTHONY CASELLA TRUST FUND
#1 U/T/A DATED DECEMBER ___ 1995
By:
---------------------------------
Karen Potter, Trustee
By:
---------------------------------
Matthew Potter, Trustee
KAREN POTTER AND MATTHEW
POTTER, TRUSTEES FOR KRISTEN
ANN CASELLA TRUST FUND
#l U/T/A DATED DECEMBER ___ 1995
By:
---------------------------------
Karen Potter, Trustee
By:
---------------------------------
Matthew Potter, Trustee
-30-
SCHEDULE A TO STOCKHOLDERS AGREEMENT
------------------------------------
Management Stockholders
- -----------------------
John W. Casella
Douglas R. Casella
James W. Bohlig
The Bohlig Trusts
The Casella Trusts
SCHEDULE B TO STOCKHOLDERS AGREEMENT
Number of Shares
Investors and Address Held On Date Hereof
- --------------------- -------------------
Weston Presidio Capital II, L.P. 775,370
40 William Street - Suite 300
Wellesley, MA 02181
Telephone: (617) 237-4700
Telecopy: (617) 237-6270
Norwest Equity Partners V 818,227
40 William Street - Suite 305
Wellesley, Massachusetts 02l8l-3902
Telephone: (617) 237-5870
Telecopy: (617) 237-6270
BCI Growth III, L.P. 1,635,795
Glenpoint Centre West
Teaneck, NJ 07666
Telephone: (201) 836-3900
Telecopy: (201) 836-6368
North Atlantic Venture Fund, L.P. 309,972
70 Center Street
Portland, ME 04101
Telephone: (207) 772-4470
Telecopy: (207) 772-3257
Vermont Venture Capital Fund, L.P. 206,648
Corporate Plaza, Suite 600
76 St. Paul Street
Burlington, VT 05401
Telephone: (802) 658-7840
Telecopy: (802) 658-5757
Number of Shares
Investors and Address Held On Date Hereof
- --------------------- -------------------
FSC Corp. 71,429
100 Federal Street
Mail Stop 01-32-01
Boston, MA 02110
Telephone: (617) 434-7890
Telecopy: (617) 434-1153
Prudential Securities Incorporated 8,572
One New York Plaza, 18th Floor
New York, NY 10292-2018
Telephone: (212) 778-1000
Telecopy (212) 778-5718
Thomas S Shattan 5,714
930 Park Avenue
New York, NY 10028
Telephone: (212) 734-8218
Telecopy: (212) 734-8218
B-2
SCHEDULE C TO STOCKHOLDERS AGREEMENT
------------------------------------
Internal Rate of Return (as defined below) through December 31, 1997
- --------------------------------------------------------------------
Internal Rate of Return after December 31, 1997
- -----------------------------------------------
Calculation of Internal Rate of Return
- --------------------------------------
B-3
1995 REGISTRATION RIGHTS AGREEMENT
This Agreement dated as of December __, 1995 is entered into by and among
Casella Waste Systems, Inc., a Delaware corporation (the "Company"), the persons
listed on Schedule I attached hereto (the "Purchasers") and the persons listed
on Schedule II attached hereto (the "Management Stockholders").
WHEREAS, the Company, the Purchasers and the Management Stockholders desire
to provide for certain arrangements with respect to the registration of shares
of capital stock of the Company under the Securities Act of 1933;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
--------------------
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means the Class A Common Stock, $.0l par value per share, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"Prudential Warrant" means the Class A Common Stock Purchase Warrant for
96,108 shares issued to Prudential Securities Incorporated, dated as of the date
hereof.
"Registration Statement" means a registration statement filed by the Company
with the Commission for a public offering and sale of Common Stock (other than a
registration statement on Form S-8 or Form S-4, or their successors, or any
other form for a similar limited purpose, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation).
"Registration Expenses" means the expenses described in Section 5.
1
"Registrable Shares" means (i) with respect to the Purchasers other than
Prudential Securities Incorporated, the shares of Common Stock issued or
issuable upon conversion of the Shares or upon the exercise of the Warrants,
(ii) with respect to the Management Stockholders, the shares of Common Stock
held by them or issuable upon conversion of the Class B Common Stock of the
Company held by them, (iii) with respect to the holder of the Prudential
Warrant, the shares of Common Stock issued or issuable upon exercise of the
Prudential Warrant, or (iv) any other shares of Common Stock issued in respect
of such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of Common
Stock which are Registrable Shares shall cease to be Registrable Shares (i) upon
any public sale pursuant to a Registration Statement or Rule 144 under the
Securities Act or (ii) upon any sale in any manner to a person or entity which,
by virtue of Section 14 of this Agreement, is not entitled to the rights
provided by this Agreement. Wherever reference is made in this Agreement to a
request or consent of holders of a certain percentage of Registrable Shares, the
determination of such percentage shall include shares of Common Stock issuable
upon conversion of the Shares even if such conversion has not yet been effected.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"Shares" shall mean the Company's Series D Convertible Preferred Stock.
"Stockholders" means the Purchasers and any persons or entities to whom the
rights granted under this Agreement are transferred by any Purchasers, their
successors or assigns pursuant to Section 14 hereof.
"Warrants" means the warrants dated July 26, 1993 and May 25, 1994 held
by certain Purchasers.
2. Required Registrations.
-----------------------
(a) At any time after the earlier of the second anniversary of the date
hereof or 180 days following the closing of the Company's first underwritten
public offering of shares of Common Stock pursuant to a Registration Statement
(the "First Eligible Demand Registration Date"), a Stockholder or Stockholders
(other than the holder of the Prudential Warrant) holding in the aggregate more
than 50% of the Registrable Shares may request, in writing, that the Company
effect the registration of Registrable Shares owned by such Stockholder or
Stockholders having an aggregate anticipated offering price of at least
$5,000,000 (based on the then current market price or fair value). If the
holders initiating the registration intend to distribute the Registrable Shares
by means of an underwriting, they shall so advise the Company in their request.
In the event such registration is underwritten, the right of other
2
Stockholders and Management Stockholders to participate shall be conditioned on
such person's participation in such underwriting (provided that the terms of the
underwriting are consistent with this Agreement). Upon receipt of any such
request, the Company shall promptly give written notice of such proposed
registration to all Stockholders and to the Management Stockholders. Such
Stockholders and Management Stockholders shall have the right, by giving written
notice to the Company within 10 days after the Company provides its notice, to
elect to have included in such registration such of their Registrable Shares as
such Stockholders and Management Stockholders may request in such notice of
election; provided that if the underwriter (if any) managing the offering
determines that, because of marketing factors, all of the Registrable Shares
requested to be registered by all Stockholders and Management Stockholders may
not be included in the offering, then all Stockholders and Management
Stockholders who have requested registration shall participate in the
registration pro rata based upon their total ownership of shares of Common Stock
(giving effect to the conversion into Common Stock of all securities convertible
thereinto). Thereupon, subject to the foregoing, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration of
all Registrable Shares which the Company has been requested to so register.
Notwithstanding anything to the contrary contained herein, no request may be
made under this Section 2 within 180 days after the effective date of a
Registration Statement filed by the Company covering an underwritten public
offering.
(b) The Company shall not be required to effect more than two registrations
pursuant to paragraph (a) above; provided, however, that a registration shall
not count for such purposes if the aggregate number of Registrable Shares which
constitutes Common Stock issued or issuable upon conversion of the Series D
Convertible Preferred Stock constitutes less than 25% of the aggregate
Registrable Shares included in the offering.
(c) If at the time of any request to register Registrable Shares pursuant to
this Section 2, the Company is engaged or has fixed plans to engage within 30
days of the time of the request in a registered public offering as to which the
Stockholders may include Registrable Shares pursuant to Section 3 or is engaged
in any other activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested registration to
the material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period not in excess of six months from the
effective date of such offering or the date of commencement of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any two-year period.
3
3. Incidental Registration.
------------------------
(a) Whenever the Company proposes to file a Registration Statement (other
than pursuant to Section 2) at any time and from time to time, it will, prior to
such filing, give written notice to all Stockholders and Management Stockholders
of its intention to do so and, upon the written request of Stockholders and/or
Management Stockholders given within 10 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Stockholders
and/or Management Stockholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
such Stockholders and/or Management Stockholders; provided that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 3 without obligation to any Stockholder.
(b) In connection with any registration under this Section 3 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such registration unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (provided that such terms must be consistent with this Agreement). If in the
opinion of the managing underwriter it is appropriate because of marketing
factors to limit the number of Registrable Shares to be included in the
offering, then the Company shall be required to include in the registration only
that number of Registrable Shares, if any, which the managing underwriter
believes should be included therein; provided that no persons or entities other
than the Company, the Stockholders, the Management Stockholders and persons or
entities holding registration rights granted in accordance with Section 10
hereof shall be permitted to include securities in the offering. If the number
of Registrable Shares to be included in the offering in accordance with the
foregoing is less than the total number of shares which the holders of
Registrable Shares have requested to be included, then the holders of
Registrable Shares who have requested registration and other holders of
securities entitled to include them in such registration shall participate in
the registration pro rata based upon their total ownership of shares of Common
Stock (giving effect to the conversion into Common Stock of all securities
convertible thereinto). If any holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata in the manner described in the
preceding sentence.
(c) Notwithstanding anything to the contrary contained in this Section 3, in
connection with any registration under this Section 3 involving an underwriting,
in the event that a Stockholder and/or Management Stockholder does not elect to
sell his, her or its Registrable Shares to the underwriters in connection with
such offering,
4
such holder shall refrain from selling such Registrable Shares so registered
pursuant to this Section 3 during the period of distribution of the Company's
securities by such underwriters and the period in which the underwriting
syndicate participates in the aftermarket; provided however, that such holder
shall, in any event, be entitled to sell its Registrable Shares in connection
with such registration commencing on the 90th day after the effective date of
such registration statement.
4. Registration Procedures. If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with respect to such
Registrable Shares and use its best efforts to cause that Registration Statement
to become and remain effective;
(b) as expeditiously as possible prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it and, in the case of any other offering, until the
earlier of the sale of all Registrable Shares covered thereby or 120 days after
the effective date thereof;
(c) as expeditiously as possible furnish to each selling Stockholder and
Management Stockholder such reasonable numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the selling Stockholder and
Management Stockholder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Shares owned by the selling
Stockholder or Management Stockholder;
(d) as expeditiously as possible use its best efforts to register or qualify
the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the selling Stockholders and
Management Stockholders shall reasonably request, and do any and all other acts
and things that may be necessary or desirable to enable the selling Stockholders
and Management Stockholders to consummate the public sale or other disposition
in such states of the Registrable Shares owned by the selling Stockholder or
Management Stockholder; provided, however, that the Company shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;
(e) in connection with an underwritten public offering, to furnish to each
selling Stockholder a signed counterpart, addressed to all such selling
Stockholders,
5
of an opinion of counsel for the Company experienced in securities law matters
covering substantially the same matters with respect to the registration
statement and the prospectus as are customarily covered in opinions of issuer's
counsel delivered to underwriters in underwritten public offerings of
securities;
(f) use its best efforts to comply with all applicable rules and regulations
of the Commission and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Company (in form complying
with the provisions of Rule 158 under the Securities Act) covering the period of
at least 12 months beginning with the first month following the effective date
of the registration statement; and
(g) use its best efforts to either list the shares of Common Stock on a
national securities exchange or have them designated as national market system
securities by the National Association of Securities Dealers, Inc.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and Management Stockholders and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the
Company shall promptly notify the selling Stockholders and Management
Stockholders and, if requested, the selling Stockholders and Management
Stockholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company. The Company shall promptly provide the
selling Stockholders and Management Stockholders with revised prospectuses and,
following receipt of the revised prospectuses, the selling Stockholders and
Management Stockholders shall be free to resume making offers of the Registrable
Shares.
5. Allocation of Expenses. The Company will pay all Registration Expenses of
all registration under Section 2; provided, however, that if a registration
under Section 2 is withdrawn at the request of the Stockholders requesting such
registration and if the requesting Stockholders elect not to have such
registration counted as a registration requested under Section 2, the requesting
Stockholders shall pay the Registration Expenses of such registration pro rata
in accordance with the number of their Registrable Shares included in such
registration. The Company, the requesting Stockholders and any other persons or
entities holding registration rights granted in accordance with Section 10
hereof shall pay all Registration Expenses of all registrations under Section 3
pro rata in accordance with the number of their shares included in the offering.
For purposes of this Section 5, the term "Registration Expenses" shall mean all
expenses incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing fees,
printing expenses, fees and expenses of counsel for the Company and the fees and
expenses of one counsel selected by the selling Stockholders to represent the
selling Stockholders, state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but excluding
underwriting
6
discounts, selling commissions and the fees and expenses of selling
Stockholders' own counsel (other than the counsel selected to represent all
selling Stockholders).
6. Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless the seller of such Registrable Shares, its partners, directors,
officers and employees and fund manager or fiduciary (which persons shall be
deemed to be included in the term seller in this Section 6(a)) each underwriter
of such Registrable Shares, and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act or the Exchange
Act against any losses, claims, damages or liabilities, joint or several, to
which such seller, underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such seller, underwriter
and each such controlling person for any legal or any other expenses reasonably
incurred by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or final prospectus, or any such amendment or supplement,
in. reliance upon and in conformity with information furnished to the Company,
in writing, by or on behalf of such seller, underwriter or controlling person
specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
7
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller Specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of each Stockholder and
Management Stockholder hereunder shall be limited to an amount equal to the
proceeds to such Stockholder or Management Stockholder of Registrable Shares
sold in connection with such registration.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 6. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Shares exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case
8
notwithstanding the fact that this Section 6 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any such selling Stockholder or any such controlling person or a
Management Stockholder in circumstances for which indemnification is provided
under this Section 6; then, in each such case, the Company and such Stockholder
or Management Stockholder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the holder of Registrable Shares and the Company as well as any other equitable
considerations including, without limitation, the parties' relative knowledge
and access to information concerning the matter with respect to which any claim
is asserted and the opportunity to correct and prevent any such statement or
omission resulting in such loss, claim, damage or liability; provided, however,
that, in, any such case, (A) no such holder will be required to contribute any
amount in excess of the proceeds to it of all Registrable Shares sold by it
pursuant to such Registration Statement, and (B) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or entity who
is not guilty of such fraudulent misrepresentation.
7. Procedures with Respect to Underwritten Offering. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2, the Company agrees to enter into an
underwriting agreement containing customary representations and warranties with
respect to the business and operations of an issuer of the securities being
registered and customary covenants and agreements to be performed by such
issuer, including without limitation the indemnification and contribution
provisions of Section 6 and any other customary provisions with respect to
indemnification by the Company of the underwriters of such offering. Whenever a
registration is for an underwritten offering pursuant to Section 2, the Company
will have the right to select the managing underwriter or underwriters for the
offering, which selection shall be subject to the approval of the holders of a
majority of the Registrable Shares requesting the offering.
8. Information by Holder. Each Stockholder and Management Stockholder
including Registrable Shares in any registration shall furnish to the Company
such information regarding such Stockholder or Management Stockholder and the
distribution Proposed by such Stockholder or Management Stockholder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
9. "Stand-Off" Agreement. Each Stockholder and Management Stockholder, if
requested by the Company and the managing underwriter of an offering by the
Company of Common Stock or other securities of the Company pursuant to a
Registration Statement, shall agree not to sell publicly or otherwise
9
transfer or dispose of any Registrable Shares of the Company held by such
Stockholder for the Period of time beginning 20 days prior to and ending 180
days (in the case of an initial public offering), or 120 days (in the case of a
public offering following the initial public offering) after the effective date
of the Registration Statement; provided, that (i) all Stockholders holding not
less than the number of shares of Common Stock held by such Stockholder
(including shares of Common Stock issuable upon the conversion of Shares, or
other convertible securities, or upon the exercise of options, warrants or
rights) and all officers and directors of the Company enter into similar
agreement and (ii) all Stockholders and Management Stockholders shall be
released from such Stand-off agreement, if any Stockholders or Management
Stockholders are released, on a pro rata basis, with no Stockholder or
Management Stockholder having any right to offer and sell Registrable Shares
free from such stand-off provisions before any other Stockholder or Management
Stockholder.
10. Limitations on Subsequent Registration Rights. The Company shall not,
without the prior written consent of Stockholders holding more than 50% of the
Registrable Shares, enter into any agreement (other than this Agreement) with
any holder or prospective holder of any securities of the Company which would
allow such holder or prospective holder (a) to include securities of the Company
in any Registration Statement, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only on terms substantially similar to the terms on which holders
of Registrable Shares may include shares in such registration, or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the First Eligible Demand Registration Date.
11. Rule 144 Requirements. After the earliest of (i) the closing of the sale
of securities of the Company pursuant to a Registration Statement, (ii) the
registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(a) comply with the requirements of Rule 144(c) under the Securities Act
with respect to current public information about the Company;
(b) use its best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) furnish to any holder of Registrable Shares upon request (i) a written
statement by the Company as to its compliance with the requirements of said Rule
144(c), and the reporting requirements of the Securities Act and the Exchange
Act (at
10
any time after it has become subject to such reporting requirements), (ii) a
copy of the most recent annual or quarterly report of the Company, and (iii)
such other reports and documents of the Company as such holder may reasonably
request to avail itself of any similar rule or regulation of the Commission
allowing it to sell any such securities without registration.
12. Mergers, Etc. The Company shall not, directly or indirectly, enter into
any merger, consolidation or reorganization in which the Company shall not be
the surviving corporation unless the proposed surviving corporation shall, prior
to such merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Shares" shall be deemed to be references to the
securities which the Stockholders and/or Management Stockholders would be
entitled to receive in exchange for Registrable Shares under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
Section 12 shall not apply in the event of any merger, consolidation or
reorganization in which the Company is not the surviving corporation if all
Stockholders and Management Stockholders are entitled to receive in exchange for
their Registrable Shares consideration consisting solely of (i) cash, (ii)
securities of the acquiring corporation which may be immediately sold to the
public without registration under the Securities Act, or (iii) securities of the
acquiring corporation which the acquiring corporation has agreed to register
within 90 days of completion of the transaction for resale to the public
pursuant to the Securities Act.
13. Termination. All of the Company's obligations to register Registrable
Shares under this Agreement (and the obligations of the Stockholders and
Management Stockholders to execute a stand-off agreement) shall terminate on the
fourth anniversary of the closing of the Company's first underwritten public
offering of shares of Common Stock pursuant to a Registration Statement.
14. Transfers of Rights. This Agreement, and the rights and obligations of
each Purchaser hereunder, may be assigned by such Purchaser to any person or
entity to which at least 350,000 Shares are transferred by such Purchaser, and
such transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company.
15. Warrants. In connection with any underwritten public offering including
any Shares which are issuable upon exercise of the Warrants, the holders of the
Warrants may, with the consent of the managing underwriters, sell the Warrants
to the underwriters for exercise and sale of the Registrable Shares issuable
upon exercise thereof.
11
16. General.
--------
(a) Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to the Company, at 25 Greens Hill Lane, Box 866, Rutland, VT 05702,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Stockholders and the Management
Stockholders, with a copy to 02109; or Jeffrey A. Stein, Esq., Hale and Dorr, 60
State Street, Boston, MA; 02109; or
If to a Stockholder or a Management Stockholder, at his or its address set
forth on Exhibit A, or at such other address or addresses as may have been
furnished to the Company in writing by such person, with a copy (in the case of
notices to Purchasers to: Keith F. Higgin, Esq., Ropes & Gray, One International
Place, Boston, MA 02110.
Notices provided in accordance with this Section 15(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. Without limiting the generality of the foregoing, this Agreement
amends and restates and supersedes in its entirety the Amended and Restated
Registration Rights Agreement dated May 25, 1994, which shall be of no further
force or effect.
(c) Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of more than 50% of the
Registrable Shares; provided, that this Agreement may be amended with the
consent of the holders of less than all Registrable Shares only in a manner
which affects all Registrable Shares in the same fashion. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or Provision.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
12
(e) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Executed as of the date first written above.
COMPANY:
CASELLA WASTE SYSTEMS, INC.
By:
-----------------------------------
Title:
-----------------------------------
PURCHASERS:
NORWEST EQUITY PARTNERS
V, A MINNESOTA
LIMITED PARTNERSHIP
By:
-----------------------------------
Ernest C. Parizeau
General Partner
WESTON PRESIDIO
CAPITAL II, L.P.
By:
-----------------------------------
Michael F. Cronin,
General Partner
13
BCI GROWTH, L.P.
By:
-----------------------------------
Donald P. Remey
General Partner
THE VERMONT VENTURE
CAPITAL FUND, L.P.
By:
-----------------------------------
Gregory B. Peters,
General Partner
NORTH ATLANTIC VENTURE FUND
By:
-----------------------------------
Gregory B. Peters,
General Partner
PRUDENTIAL SECURITIES
INCORPORATED
By:
-----------------------------------
-----------------------------------
Thomas S. Shattan
-----------------------------------
John W. Casella
-----------------------------------
Douglas Casella
14
-----------------------------------
James W. Bohlig
FSC Corp.
By:
-----------------------------------
15
Schedule I
----------
List of Purchasers
NORWEST EQUITY PARTNERS
V, A MINNESOTA
LIMITED PARTNERSHIP
WESTON PRESIDIO
CAPITAL II, L.P.
BCI GROWTH, L.P.
THE VERMONT VENTURE
CAPITAL FUND, L.P.
NORTH ATLANTIC VENTURE FUND
PRUDENTIAL SECURITIES INCORPORATED
THOMAS S. SHATTAN
FSC CORP.
16
Schedule II
-----------
List of Management Stockholders
Douglas R. Casella
John W. Casella
James W. Bohlig
17
Exhibit 10.9
1995 REPURCHASE AGREEMENT
This 1995 Repurchase Agreement (the "Repurchase Agreement"), is among
CASELLA WASTE SYSTEMS, INC., a Delaware corporation (the "Company"), BCI GROWTH
III, L.P., a Delaware limited partnership ("BCI"), THE VERMONT VENTURE CAPITAL
FUND, L.P., a Vermont limited partnership ("VVCF") and NORTH ATLANTIC VENTURE
FUND, L.P., a Delaware limited partnership ("North Atlantic"). BCI, VVCF and
North Atlantic are sometimes referred to herein separately as a "Warrantholder"
and collectively as the "Warrantholders".
Background
----------
1. The Warrantholders own stock purchase warrants (the "1993 Warrants" and
the "1994 Warrants") to purchase shares (the "1993 Warrant Shares" and the "1994
Warrant Shares") of Class A Common Stock, $.01 par value (the "Class A Common
Stock"), of the Company. Collectively, the 1993 Warrants and the 1994 Warrants
are sometimes hereinafter referred to as the "Warrants"; and the 1993 Warrant
Shares and the 1994 Warrant Shares are sometimes hereinafter referred to as the
"Warrant Shares."
2. The Company and the Warrantholders desire to provide a mechanism for the
sale of the Warrants or the Warrant Shares, as the case may be (the Warrants and
the Warrant Shares being herein referred to collectively as the "Securities"),
by the Warrantholders or any other holder thereof (the Warrantholders and any
such holder being herein referred to individually as a "Holder" and collectively
as the "Holders") to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
Section 1. Put Option. In the event that a Qualified Offering has not
occurred on or prior to December 31, 2000, each of the Holders shall have the
option to tender all or any portion of the Securities held by such Holder to the
Company (the "Put"), by delivering to the Company an instrument in writing (the
"Put Notice") notifying the Company of such Holder's intention to tender to the
Company all or a portion of such Securities. The Company shall immediately
acknowledge receipt of the Put Notice by telex, telegram, telecopy or other
similar electronic device, and confirm such notification by first class mail,
and at such time shall notify all other Holders of its receipt thereof. The Put
Notice shall specify the amount of Securities that the Holder proposes to tender
to the Company (the "Put Securities"). If the Company
receives additional Put Notices from other Holders within ten (10) days of the
receipt of the initial Put Notice, the Company shall consummate all Puts subject
thereto simultaneously.
Section 2. Purchase Price for the Put Securities. The purchase price for Put
Securities which are Warrant Shares shall be equal, for each Warrant Share, to
the greater of (x) the Fair Market Value Per Warrant Share (as hereinafter
defined) as of the date on which the Put Notice shall have been given, or (y)
$1.50 per 1993 Warrant Share or $2.00 per 1994 Warrant Share (subject, in each
case, to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares) (such
amount in this clause (y) being referred to as the "1993 Liquidation Amount" or
the "1994 Liquidation Amount," as the case may be, and the greater of the
amounts in clause (x) or clause (y) being referred to as the "1993 Warrant Share
Purchase Price" or the "1994 Warrant Share Purchase Price," as the case may be).
The purchase price for Put Securities which are 1993 Warrants (the "1993 Warrant
Purchase Price") shall be (for each Warrant Share for which such Warrant is then
exercisable) an amount equal to the 1993 Warrant Share Purchase Price less the
1993 Liquidation Amount. The purchase price for Put Securities which are 1994
Warrants (the "1994 Warrant Purchase Price") shall be (for each Warrant Share
for which such Warrant is then exercisable) an amount equal to the 1994 Warrant
Share Purchase Price less the 1994 Liquidation Amount.
For purposes of this Section, "Fair Market Value Per Warrant Share" means
the fair market value of a share of Class A Common Stock (treating, for purposes
of such determination, the Class B Common Stock as having equal per share voting
rights as the Class A Common Stock). Such determination shall be made by a
nationally known investment banking firm experienced in such valuations
acceptable to the Company and the Holders of a majority of the Put Securities to
be redeemed. If the Company and the Holders of a majority of the Put Securities
to be redeemed are unable to agree on the selection of such an investment
banking firm within thirty (30) days after the date of the Election Notice, then
each of the Company, on the one hand, and the electing Holders, on the other
hand, shall choose one investment banking firm so qualified, and such two firms
shall select a third such firm so qualified. The investment banking firm so
selected shall furnish the Company and the electing Holders with a written
valuation (using one or more valuation methods that such firm, in its best
professional judgment, determines to be most appropriate) within sixty (60) days
of such selection, setting forth its determination of the Fair Market Value Per
Warrant Share. When determining such fair market value, the investment banking
firm shall consider, among other factors, book value, replacement value,
earnings and the value of future cash flows of the Company as an on-going
enterprise, shall consider both the sale of various combinations of the
individual assets of the Company as well as a sale of the Company as a whole,
choosing the manner of sale which maximizes the aggregate value of the assets
being sold, and shall make no deduction, discount or other subtraction
whatsoever for the possible
-2-
minority status of any such holder or for the restrictions on transfer contained
in Section 2 of the 1995 Stockholders Agreement to which the Holders are
subject. The determination of the investment banking firm shall be final and
binding on the Company and the electing Holders. The costs of the valuation
shall be borne equally by the Company, on one hand, and the electing holders, on
the other hand.
Section 3. Payment for the Put Securities.
(a) Within ten days after the determination of the Fair Market Value Per
Warrant Share pursuant to Section 2 above, each Holder shall elect the "Interest
Option" or the "Equity Option".
(b) If the Holder elects the "Interest Option", the Put Securities shall be
deemed to have been purchased in full on the date on which the first payment
therefor is made (the "Put Closing Date"), and on such closing date all rights
of the holder of such Put Securities as a stockholder or warrantholder of the
Company shall cease, except the right to receive the purchase price of such Put
Securities (together with any interest payable thereon) upon presentation and
surrender of the certificate representing such Put Securities, and such Put
Securities will not from and after such closing date, as the case may be, be
deemed to be outstanding. If the Holder elects the Interest Option, the Initial
Investment Amount (if any) for each of the Put Securities shall be paid in eight
(8) equal quarterly installments, commencing on the Put Closing Date, together
with interest on the Initial Investment Amount at a rate equal to 15% per annum
on the Initial Investment Amount. Any amount of the purchase price in excess of
the Initial Investment Amount shall be paid not later than the date on which the
final installment of the Initial Investment Amount is due, together with
interest thereon at a rate equal to the prime rate announced from time to time
by Citibank, N.A. plus two percent (2%) per annum. Such interest shall accrue
from the date of the Put Notice (but not prior to December 31, 2000). For
purposes hereof, the "Initial Investment Amount" for the 1993 Warrant Shares
shall mean $1.50 (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares); the "Initial Investment Amount" for the 1994 Warrant Shares shall
mean $2.00 (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares); and the "Initial Investment Amount" for the Warrants shall be
zero. All payments on account of the aggregate purchase price for any Put
Securities shall be deemed to be applied equally to all of the Put Securities to
be redeemed and shall be deemed to be applied first to the payment of the
interest on the Initial Investment Amount; second, to the Initial Investment
Amount; third, to the interest due on the amount of the purchase price for the
Put Securities in excess of the Initial Amount; and fourth, to the amount of the
purchase price for the Put Securities in excess of the Initial Investment
Amount. The Put Closing Date shall be the thirtieth (30th) day after
determination of the purchase price pursuant to Section 2 hereof, as the case
may be, at the Company's
-3-
headquarters, or such other date and place as is mutually agreeable to the
Company and the tendering Holders.
(c) If a Holder elects the "Equity Option", (i) the Company shall purchase,
in eight equal quarterly installments commencing on the Put Closing Date, such
number of the Put Securities as has an aggregate purchase price equal to the
product of (X) the Initial Investment Amount (if any) times (Y) the aggregate
number of Put Securities; and (ii) the Company shall purchase the remaining Put
Securities (if any) no later than the date on which the final purchase of Put
Securities pursuant to clause (i) above is due. The purchase price for all of
the Put Securities pursuant to the Equity Option (whenever purchased) shall be
equal to the amount set forth in Section 2 above. Notwithstanding the foregoing,
at any time prior to the first to occur of (I) the purchase by the Company of
all of the remaining Put Securities held by such Holder; or (II) the exercise by
holders of the Put Securities of their remedies under Section 4.3 of the 1995
Stockholders Agreement among the Company and the stockholders of the Company
dated as of December 22, 1995, any holder of Put Securities who has elected the
Equity Option may revoke the Put Notice with respect to any Put Securities held
by him then outstanding and may repurchase from the Company all Put Securities
previously purchased from such holder by the Company. The price to be paid by
the holder for such Put Securities shall be equal to the price paid by the
Company to the holder for such Put Securities. The Company shall give at least
ten days' notice to the holders of the Put Securities prior to repurchasing any
Put Securities other than in accordance with clause (i) above. No interest shall
be paid on the purchase price of any Put Securities if the Holder elects the
Equity Option with respect thereto.
Section 4. Redemption of Series C Shares held bv North Atlantic; VVCF. The
Company agrees to repurchase an aggregate of 21,429 shares of Series C Preferred
Stock held by North Atlantic and VVCF (in proportion to the number of shares of
Series C Preferred Stock held by them) on each of January 31, 1997, July 31,
1997 and January 31, 1998, at a purchase price of $7.00 per share, upon delivery
of the certificates therefor to the Company.
Section 5. Limitation on Redemption Obligations.
Notwithstanding anything in this Agreement to the contrary, if the funds of
the Company legally available for redemption of the capital stock of the Company
on any date are insufficient to redeem the number of shares of capital stock,
and/or warrants exercisable therefor, then required under this Repurchase
Agreement or under Section 7 or 8 of the Amended and Restated Certificate of
Incorporation of the Company, to be redeemed or repurchased, those funds which
are legally available will be used to redeem the maximum possible number of such
shares of capital stock and/or warrants exercisable therefor ratably on the
basis of the principal amount of the redemption or repurchase price which would
then be payable if the funds of the
-4-
Company legally available therefor had been sufficient to redeem all shares of
capital stock and/or warrants exercisable therefor then required to be redeemed
or repurchased. At any time thereafter when additional funds of the Company
become legally available for the redemption of the capital stock of the Company,
such funds will be used, at the end of the next succeeding fiscal quarter, to
redeem the balance of the shares and/or warrants which the Company was
theretofore obligated to redeem, ratably on the basis set forth in the preceding
sentence.
Section 6. Notices. Except as otherwise expressly provided herein, any and
all notices, consents or other communications provided for herein shall be given
in writing by overnight courier service, registered or certified mail, postage
prepaid, or by telex or telecopy transmission, addressed as follows:
(a) If to the Company: P.O. Box 866
Rutland, VT 05702
Attn: Mr. John W. Casella
Telecopier No.: (802)775-6198
(b) If to the Warrantholders:
BCI Growth III, L.P.: Glenpointe Centre West
Teaneck, NJ 07666
Attn: Mr. Donald P. Remey
General Partner
Telecopier No.: (201)836-6368
The Vermont Venture
Capital Fund, L.P.: Corporate Plaza, Suite 600
76 St. Paul Street
Burlington, VT 05401
Attn: Mr. Gregory B. Peters
Telecopier No.: (802)658-5757
North Atlantic Venture
Fund: 70 Center Street
Portland, ME 04140
Attn: Mr. David M. Coit
Telecopier No: (207)772-3257
or to such other address or addresses as shall have been furnished in writing to
the other parties hereto. All notices hereunder shall be effective on the date
of transmission if transmitted by telex or telecopy, on the first day after
delivery to an overnight national courier service if sent by such service and on
the date of receipt if sent by mail.
-5-
Section 7. Parties in Interest. This Repurchase Agreement is designed to
benefit the Holders, including any third parties acquiring Securities from the
Holders. Accordingly, the Company specifically acknowledges that any third-part
purchaser of the Securities is a beneficiary of this Repurchase Agreement and
entitled to the same rights and privileges as the Warrantholders; provided,
however, that such third party purchaser shall have acquired the Securities in a
transaction in compliance with the provisions of the 1995 Registration Rights
Agreement of even date and the Stockholders Agreement of even date, each among
the Company, the Warrantholders and others.
Section 8. Amendments, Etc. This Repurchase Agreement may be amended,
modified or revoked in whole or in part, but only by a written instrument that
specifically refers to this Repurchase Agreement and expressly states that it
constitutes an amendment, modification or revocation hereof, as the case may be,
and only if such written instrument has been signed by the Company and by
Holders holding in the aggregate at least seventy-five percent (75%) of the
aggregate number of 1993 Warrant Shares and 1994 Warrant Shares and shares
issuable upon exercise of the Warrants; provided, however, that the Holders
agree to vote to amend the provision of this Repurchase Agreement to conform
with similar amendments that may be adopted from time to time to Section C.8(a)
or (b) of Article FOURTH of the Company's Amended and Restated Certificate of
Incorporation.
Section 9. Severability. The provisions of this Repurchase Agreement shall
be applied and interpreted in a manner consistent with each other so as to carry
out the purposes and intent of the parties hereto, but if for any reason any
provision hereof is determined to be unenforceable or invalid, such provision or
such part thereof as may be unenforceable or invalid shall be deemed severed
from this Repurchase Agreement and the remaining provisions carried out with the
same force and effect as if the severed provision or part thereof had not been a
part of this Repurchase Agreement.
Section 10. Expenses. Any expenses incurred in connection with this
Repurchase Agreement, including the enforcement hereof, and the procedure for
selling or purchasing the Securities shall be borne by the Company.
Section 11. LAW GOVERNING. THIS REPURCHASE AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
Section 12. Termination of 1994 Repurchase Agreement and 1994 Pledge
Agreement. VVCF, North Atlantic, BCI and the Company hereby agree that from and
after the date hereof, the Amended and Restated Repurchase Agreement dated May
25, 1994 shall no longer apply or be effective and is terminated, and that the
rights of VVCF, North Atlantic and BCI with respect to the sale of the 1993
Warrants,
-6-
the 1993 Warrant Shares, the 1994 Warrants and the 1994 Warrant Shares to the
Company shall be solely as set forth in this Repurchase Agreement. In addition,
VVCF, North Atlantic, BCI and the Company hereby agree that the Amended and
Restated Pledge Agreement, dated as of May 25, 1994, is hereby terminated.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Repurchase Agreement as of the ___ day of December, 1995.
CASELLA WASTE SYSTEMS, INC.
By:________________________________
President
BCI GROWTH III, L.P.
By: Teaneck Associates
Its General Partner
By:________________________________
Donald P. Remey
General Partner Director
THE VERMONT VENTURE
CAPITAL FUND, L.P.
By: Vermont Venture Capital
Partners, L.P.
Its General Partner
By:_______________________________
Gregory B. Peters
General Partner
-7-
NORTH ATLANTIC VENTURE FUND, L.P.
By: North Atlantic Capital
Partners, L.P.
Its General Partner
By: /s/ Gregory B. Peters
--------------------------------
Gregory B. Peters
General Partner
-8-
MANAGEMENT SERVICES AGREEMENT
This agreement dated as of December 22, 1995 is among Casella Waste Systems,
Inc. (the "Company"), BCI Growth III, L.P. ("BCI"), North Atlantic Venture Fund,
L.P. ("NAV") and Vermont Venture Capital Fund, L.P. ("VVCF"). BCI, NAV and VVCF
are sometimes hereinafter referred to as the "Advisors".
Background
----------
The Advisors are experienced in working with privately held companies
such as the Company and in providing financial advisory services to such
companies for purposes of enhancing shareholder value and positioning such
companies for initial public offerings or sale.
The Company wishes to retain the Advisors to provide such services.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and the Advisors hereby agree as
follows:
1. The Advisors shall provide such financial advisory services to the
Company from time to time as the Company may reasonably request in order to
assist the Company in enhancing shareholder value and positioning the Company
for an initial public offering or sale. Such services shall include, without
limitation, the following:
a. reviewing the business and operations of the Company and analyzing its
current and projected financial and operating performance;
b. advising the Company on various financing strategies;
c. evaluating the financing proposals that the Company may consider from
time to time, including formulating negotiation strategy and assisting in
negotiations, as requested;
d. advising the Company on the selection of underwriters and the
appropriate timing for an initial public offering, if requested by the Company;
and
e. assisting and advising the Company on any other matters related to the
closing of any financing transaction in which the Company may be engaged.
2. In consideration of the Advisors' agreement to provide the foregoing
services, the Company shall pay to the Advisors a mutually acceptable fee. Such
fee
-1-
shall be allocated among the Advisors in such proportions as they may agree
among themselves and shall be payable only upon the following events:
a. Upon the closing of the sale of shares of Class A Common Stock of the
Company at a price at least equal to 175% of the then applicable Conversion
Price of the Series D Preferred Stock (as defined in the Company's Amended and
Restated Certificate of Incorporation) in a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
resulting in at least $20 million of gross proceeds to the Corporation;
b. Upon (i) a merger or consolidation of the Company with or into any
other corporation or corporations, other than (a) a merger of consolidation of a
subsidiary of the Company with or into the Company or with or into any other
subsidiary or (b) a merger in which the Company is the surviving corporation and
which does not result in more than 50% of any class of the capital stock of the
Company outstanding immediately after the effective date of such merger being
owned of record or beneficially by persons other than the holders of such
capital stock immediately prior to such merger; (ii) the sale of all or
substantially all the assets of the Company; (iii) a sale, lease, transfer or
other disposition (or the last such sale, lease, transfer or other disposition
in a series of related transactions) resulting in the transfer of more than 50%
of the outstanding capital stock of the Company to an unrelated and unaffiliated
third party purchaser; or (iv) any other transaction (or the last such
transaction in a series of related transactions) resulting in the transfer by
John W. Casella and/or Douglas R. Casella to any one or more persons of an
aggregate of more than twenty percent (20%) of the shares of any class of the
Company's stock held by John W. Casella and/or Douglas R. Casella, or which
creates in favor of any one or more persons the right, directly or indirectly,
to acquire from John W. Casella and/or Douglas R. Casella shares which in the
aggregate represent more than twenty percent (20%) of the shares of any class of
the Company's stock held by John W. Casella and Douglas R. Casella; or
c. upon the repurchase by the Company after December 31, 2000 of the
warrants dated July 26, 1993 and May 25, 1994, or of the shares of Common Stock
issued upon the exercise of such warrants, pursuant to the terms of the
Repurchase Agreement dated as of December 22, 1995 between the Company and the
holders of such warrants.
-2-
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement under
seal as of the date set forth above.
CASELLA WASTE SYSTEMS, INC.
By:
--------------------------------
BCI GROWTH III, L.P.
By:
--------------------------------
NORTH ATLANTIC VENTURE FUND, L.P.
By:
--------------------------------
VERMONT VENTURE CAPITAL FUND, L.P.
By:
--------------------------------
-3-
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement under
seal as of the date set forth above.
CASELLA WASTE SYSTEMS, INC.
By:
--------------------------------
BCI GROWTH III, L.P.
BY: TEANECK ASSOCIATES GENERAL
PARTNER
By:
--------------------------------
Donald P. Remey
General Partner
NORTH ATLANTIC VENTURE FUND, L.P.
By:
--------------------------------
VERMONT VENTURE CAPITAL FUND, L.P.
By:
--------------------------------
-4-
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement under
seal as of the date set forth above.
CASELLA WASTE SYSTEMS, INC.
By: /s/ John W. Casella
--------------------------------
BCI GROWTH III, L.P.
By: /s/ Donald P. Remey
--------------------------------
NORTH ATLANTIC VENTURE FUND, L.P.
BY: NORTH ATLANTIC CAPITAL
PARTNERS, L.P.
By: /s/ Gregory B. Peters
--------------------------------
General Partner
VERMONT VENTURE CAPITAL FUND, L.P.
BY: VERMONT VENTURE CAPITAL
PARTNERS, L.P.
By: /s/ Gregory B. Peters
--------------------------------
General Partner
-5-
Execution copy #1
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated as of January 17, 1997 by and among KENNETH
H. MEAD (the "Stockholder"), KERKIM, INC., a New York corporation ("KERKIM," or
the "Seller"), and CASELLA WASTE MANAGEMENT OF N.Y., INC., a New York
corporation (the "Buyer"). The Stockholder, the Seller and the Buyer are
sometimes referred to collectively as the "Parties" or individually as a
"Party."
W I T N E S S E T H:
WHEREAS, the Stockholder owns all of the shares of capital stock of the
Seller; and
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
substantially all of its assets and business, for the consideration set forth
below and the assumption of the Seller's liabilities set forth below, subject to
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto do hereby agree as follows:
1. Purchase and Sale of the Assets.
a. Delivery of the Assets. Subject to and upon the terms and
conditions of this Agreement, at the closing of the transactions contemplated by
this Agreement (the "Closing"), the Seller shall sell, transfer, convey, assign
and deliver to the Buyer, and the Buyer shall purchase from the Seller, all of
the following properties and assets of the Seller:
i. all inventories, including of office supplies, maintenance
supplies, packaging materials, spare parts and similar items (collectively, the
"Inventory") which exist on the Closing Date (as defined below);
ii. all accounts, accounts receivable, notes and notes receivable
existing on the Closing Date which are payable to the Seller, including any
security held by the Seller for the payment thereof (collectively, the "Accounts
Receivable");
iii. all cash, prepaid expenses, deposits, bank accounts and
other similar assets of the Seller existing on the Closing Date, including the
cash represented by such assets;
iv. all rights of the Seller under the contracts, agreements,
leases, licenses and other instruments set forth on Section 2(o) of the
Disclosure Schedule (collectively, the "Contract Rights");
v. all real property of the Seller set forth on Section 2(k) of
the Disclosure Schedule, together with all buildings, fixtures and improvements
located on or attached thereto, including such Seller's right, title and
interest in and to all leases, subleases, franchises, licenses, permits,
easements and rights-of-way which are appurtenant to said real property
(collectively, the "Real Property");
vi. all books, records and accounts, correspondence, production
records, technical, accounting, manufacturing and procedural manuals, customer
lists, employment records, studies, reports or summaries relating to any
environmental conditions or consequences of any operation, present or former, as
well as all studies, reports or summaries relating to any environmental aspect
or the general condition of the Assets, and any confidential information which
has been reduced to writing relating to or arising out of the business of the
Seller;
vii. All rights of the Seller under express or implied warranties
from the suppliers of the Seller;
viii. the motor vehicles and other rolling stock owned by the
Seller on the Closing Date;
ix. all of the machinery, containers, equipment, tools,
production reels and spools, tooling, dies, production fixtures, maintenance
machinery and equipment, furniture, leasehold improvements and construction in
progress owned by the Seller on the Closing Date whether or not reflected as
capital assets in the accounting records of the Seller (collectively, the "Fixed
Assets");
x. all of the Seller's right, title and interest in and to all
intangible property rights, including but not limited to trade secrets,
processes, know-how, trade names, including the name "Kerkim, Inc." and "SDS of
New York" or any derivation thereof and any assumed names under which the Seller
has operated, owned or, where not owned, used by the Seller in its business and
all licenses and other agreements to which the Seller is a party (as licensor or
licensee) or by which the Seller is bound relating to any of the foregoing kinds
of property or rights to any "know-how" or disclosure or use of ideas
(collectively, the "Intangible Property"); and
xi. except as specifically provided in Section 1(b) below, all
other assets, properties, claims, rights and interests of the Seller which exist
on the Closing Date, of every kind and nature and description, whether tangible
or intangible, real, personal or mixed.
-2-
b. Notwithstanding the provisions of Section 1(a) above, the assets to
be transferred to the Buyer under this Agreement shall not include any assets
listed on Schedule 1(b) attached hereto (the "Excluded Assets").
c. The Inventory, Accounts Receivable, Contract Rights, Real Property,
Fixed Assets, Intangible Property and other properties, assets and businesses of
the Seller described in Section 1(a) above, other than the Excluded Assets,
shall be referred to collectively as the "Assets". The Effective Date of this
Agreement is December 31, 1996.
d. Further Assurances. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration, the Seller
promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
e. Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be the sum of $3,500,000 plus the aggregate amount of the Assumed
Liabilities (not to exceed $2,945,000 as of December 31, 1996). The Purchase
Price shall be paid as follows:
i. The Buyer shall assume the liabilities of the Seller
pursuant to the Instrument of Assumption described in
paragraph f below; and
ii. An aggregate of $3,500,000 shall be paid in cash at the
Closing in the form of wire transfer or check.
f. Assumption of Liabilities. At the Closing, the Buyer shall execute
and deliver an Instrument of Assumption of Liabilities (the "Instrument of
Assumption") substantially in the form attached hereto as Exhibit B, pursuant to
which it shall assume and agree to perform, pay and discharge the following
liabilities, obligations and commitments of the Seller (the "Assumed
Liabilities") (and the Seller and the Stockholder represent that the Assumed
Liabilities do not exceed $2,945,000 as of December 31, 1996):
i. All trade accounts payable reflected on the balance sheet of
the Seller as of December 31, 1996 previously delivered to the Buyer (the
"Current Balance Sheet");
-3-
ii. All obligations of the Seller continuing after the Closing
under the leases, contracts and employee benefit plans set forth on Schedule
1(f) attached hereto which become due and payable after the Closing Date; and
iii. All other liabilities and obligations of the Seller
specifically set forth in Schedule 1(f) attached hereto.
The Buyer shall not at the Closing assume or agree to perform, pay or discharge,
and the Seller shall remain unconditionally liable for, all liabilities,
obligations and commitments, fixed or contingent, of the Seller other than the
Assumed Liabilities. Without limiting the foregoing, any and all liabilities of
the Seller arising from environmental laws and, except as provided above, in any
way related to events prior to the Closing, shall be the sole responsibility of
the Seller.
g. Closing. The closing of the purchase and sale of the Assets and the
(the "Closing") shall take place at the offices of Earl D. Butler, P.C., 231-241
Man Street, Vestal, New York 13160, or at such other place as the parties may
mutually agree at 10:00 AM., on January ___, 1997 or as soon as practicable
thereafter (the "Closing Date").
h. Certain Tax Matters. The aggregate amount of the Purchase Price and
the Assumed Liabilities shall be allocated among the Assets as set forth on
Schedule 1(h) attached hereto. Such allocation shall be subject to adjustment to
the extent that the Purchase Price is adjusted pursuant to Section 1(i) hereof
in the manner specified in such subsections.
2. Joint and Several Representations and Warranties of the Stockholder and
the Seller. Each of the Seller and the Stockholder, jointly and severally,
represent and warrant to the Buyer that the statements contained in this Article
II are true and correct, except as set forth in the disclosure schedule attached
hereto (the "Disclosure Schedule").
a. Organization, Qualification and Corporate Power. The Seller is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of New York. The Seller is duly qualified
to conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification. The Seller has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. The Seller
has furnished to the Buyer true and complete copies of its charter and Bylaws,
each as amended and as in effect on the date hereof. The Seller is not in
default under or in violation of any provision of its charter or Bylaws.
-4-
b. Capitalization. The authorized, issued and outstanding shares of
capital stock of the Seller are as set forth in Section 2(b) of the Disclosure
Schedule. Section 2(b) of the Disclosure Schedule sets forth a complete and
accurate list of all beneficial and record stockholders of the Seller,
indicating the number of shares of the Seller held by each stockholder. All of
the issued and outstanding shares of capital stock of the Seller are duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. There are no outstanding or authorized options, warrants, rights,
agreements or commitments to which the Seller is a party or which are binding
upon the Seller providing for the issuance, disposition or acquisition of any of
its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Seller. There are no
agreements, voting trusts, proxies, or understandings with respect to the
voting, or registration under the Securities Act, of any shares of capital stock
of the Seller. All of the issued and outstanding shares of capital stock of the
Seller were issued in compliance with applicable federal and state securities
laws. The Stockholder has not entered into any agreement to sell, pledge or
otherwise encumber any of his shares of the capital stock of the Seller.
c. Authorization of Transaction. The Seller has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement, the
performance by the Seller of this Agreement and the consummation by the Seller
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Seller. This Agreement has
been duly and validly executed and delivered by the Stockholder and the Seller
and constitutes a valid and binding obligation of the Stockholder and the
Seller, enforceable against such persons in accordance with its terms.
d. Noncontravention. Neither the execution and delivery of this
Agreement by Stockholder and the Seller, nor the consummation by the Stockholder
and the Seller of the transactions contemplated hereby, will (a) conflict with
or violate any provision of the charter or By-laws of the Seller, (b) require on
the part of the Stockholder or the Seller any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity"), (c) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Stockholder or the Seller is a party or by which the Stockholder or the
Seller is bound or to which any of their assets is subject, (d) result in the
imposition of any Security Interest upon any assets of the Stockholder or the
Seller or (e) violate any order, writ, injunction,
-5-
decree, statute, rule or regulation applicable to the Stockholder or the Seller,
or any of their properties or assets. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of law), other than (i)
mechanic's, materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) ("Ordinary Course of Business") of the Seller and not
material to the Seller.
e. Subsidiaries. The Seller does not control directly or indirectly or
have any direct or indirect equity participation in any corporation,
partnership, trust, or other business association.
f. Financial Statements. The Seller has provided to the Buyer (a) the
balance sheets and statements of income, changes in stockholders' equity and
cash flows for each of the Seller's fiscal years ending on or prior to December
31, 1995 (each of which has been reviewed in accordance with standards
established by the American Institute of Certified Public Accountants); and (b)
the unaudited balance sheet and statements of income, changes in stockholders'
equity and cash flows as of and for the year ended December 31, 1996 (the "Most
Recent Fiscal Period End"). Such financial statements (collectively, the
"Financial Statements") have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby, fairly present the financial condition,
results of operations and cash flows of the Seller as of the respective dates
thereof and for the periods referred to therein and are consistent with the
books and records of the Seller; provided, however, that the Financial
Statements referred to in clause (b) above are subject to normal recurring
year-end adjustments (which will not be material) and do not include footnotes.
g. Absence of Certain Changes. Since the Most Recent Fiscal Period
End, (a) there has not been any material adverse change in the assets, business,
financial condition or results of operations of the Seller, nor has there
occurred any event or development which could reasonably be foreseen to result
in such a material adverse change in the future, and (b) the Seller has not
taken any actions not in the Ordinary Course of Business.
h. Undisclosed Liabilities. The Seller has no liability (whether known
or unknown, whether absolute or contingent, whether liquidated or unliquidated
and whether due or to become due), except for (a) liabilities shown on the
balance sheet referred to in clause (b) of Section 2(f) (the "Most Recent
Balance Sheet"), (b) liabilities which have arisen since the Most Recent Fiscal
Period End in the Ordinary Course of Business and which are similar in nature
and amount to the
-6-
liabilities which arose during the comparable period of time in the immediately
preceding fiscal period and (c) contractual liabilities incurred in the Ordinary
Course of Business which are not required by GAAP to be reflected on a balance
sheet.
i. Tax Matters.
i. Each of the Stockholder and the Seller has filed all Tax
Returns (as defined below) that he or it was required to file and all such Tax
Returns were correct and complete in all material respects. Each of the
Stockholder and the Seller has paid all Taxes (as defined below) that are shown
to be due on any such Tax Returns. The unpaid Taxes of the Seller for tax
periods through the date of the Most Recent Balance Sheet do not exceed the
accruals and reserves for Taxes set forth on the Most Recent Balance Sheet. The
Seller has no actual or potential liability for any Tax obligation of any
taxpayer (including without limitation the Stockholder or any affiliated group
of corporations or other entities that included the Seller during a prior
period) other than the Seller. All Taxes that the Seller are or were required by
law to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Entity. For purposes
of this Agreement, "Taxes" means all taxes, charges, fees, levies or other
similar assessments or liabilities, including without limitation income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof. For purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
ii. The Seller has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by any of the Seller since January 1,
1990. The federal income Tax Returns of the Seller have been audited by the
Internal Revenue Service or are closed by the applicable statute of limitations
for all taxable years through December 31, 1992. No examination or audit of any
Tax Returns of the Seller by any Governmental Entity is currently in progress
or, to the knowledge of the Seller or the Stockholder, threatened or
contemplated. The Seller has not waived any statute of limitations with respect
to taxes or agreed to an extension of time with respect to a tax assessment or
deficiency.
iii. The Sellers is not a "consenting corporation" within the
meaning of Section 341(f) of the Code and none of the assets of the Seller are
subject to an election under Section 341(f) of the Code. The Seller has not been
a United
-7-
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Code. The Seller is not a party to any Tax allocation or sharing
agreement.
iv. The Seller is not and has never been a member of an
"affiliated group" of corporations (within the meaning of Section 1504 of the
Code). The Seller has not made an election under Treasury Reg. Section
1.1502-20(g). The Seller is not and has never been required to make a basis
reduction pursuant to Treasury Reg. Section 1. 1502-20(b) or Treasury Reg.
Section 1.337(d)-2T(b).
j. Assets. The Seller owns or leases all tangible assets necessary for
the conduct of its businesses as presently conducted and as presently proposed
to be conducted. Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used. No asset of the Seller
(tangible or intangible) is subject to any Security Interest. A list of the
Fixed Assets is set forth on Section 2(j) of the Disclosure Schedule.
k. Owned Real Property. Section 2(k) of the Disclosure Schedule lists
and describes briefly all real property that the Sellers owns. With respect to
each parcel of such real property:
i. the identified owner has good and clear record and marketable
title to such parcel, insurable by a recognized national title insurance company
at standard rates, free and clear of any Security Interest, easement, covenant
or other restriction, except for recorded easements, covenants and other
restrictions which do not impair the uses, occupancy or value of such parcel in
their current uses (the "Intended Uses");
ii. there are no (i) pending or, to the knowledge of the Seller,
threatened condemnation proceedings relating to such parcel, (ii) pending or, to
the knowledge of the Seller, threatened litigation or administrative actions
relating to such parcel, or (iii) other matters affecting adversely the Intended
Uses, occupancy or value thereof;
iii. the legal description for such parcel contained in the deed
thereof describes such parcel fully and adequately; the buildings and
improvements may be used as of right under applicable zoning and land use laws
for the Intended Uses, and such buildings and improvements are located within
the boundary lines of the described parcels of land, are not in violation of
current setback requirements, zoning laws and ordinances and do not encroach on
any easement which may burden the land; the land does not serve any adjoining
property for any purpose inconsistent with the Intended Uses; and such parcel is
not located within any flood
-8-
plain or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained;
iv. there are no leases, subleases, licenses or agreements,
written or oral, granting to any party or parties (other than the Seller) the
right of use or occupancy of any portion of such parcel;
v. there are no outstanding options or rights of first refusal to
purchase such parcel, or any portion thereof or interest therein;
vi. all facilities located on such parcel are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer and storm sewer,
all of which services are adequate for the Intended Uses and in accordance with
all applicable laws, ordinances, rules and regulations and are provided via
public roads or via permanent, irrevocable, appurtenant easements benefiting
such parcel;
vii. such parcel abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable, appurtenant
easement benefiting such parcel;
viii. neither the Stockholder nor the Seller have received notice
of, and to the best of the Seller's knowledge, there is no proposed or pending
proceeding to change or redefine the zoning classification of all or any portion
of the parcels;
ix. the improvements constructed on the parcels are in good
condition and proper order, free of roof leaks, insect infestation, and material
construction defects, and all mechanical and utility systems servicing such
improvements are in good condition and proper working order, free of material
defects; and
x. each parcel is an independent unit which does not rely on any
facilities (other than the facilities of public utilities) located on any other
property (i) to fulfill any zoning, building code, or other municipal or
governmental requirement, (ii) for structural support or the furnishing of any
essential building systems or utilities, including, but not limited to electric,
plumbing, mechanical, heating, ventilating, and air conditioning systems, or
(iii) to fulfill the requirements of any lease. No building or other improvement
not included in the parcels relies on any part of the parcels to fulfill any
zoning, building code, or other municipal or governmental requirement or for
structural support or the furnishing of any essential building systems or
utilities. Each of the parcels is assessed by local property assessors as a tax
parcel or parcels separate from all other tax parcels.
-9-
l. Intellectual Property. The Seller owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights, and any applications for such patents,
trademarks, trade names, service marks and copyrights, schematics, technology,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material (collectively, "Intellectual Property") that
are used to conduct its business as currently conducted or planned to be
conducted.
m. Inventory. All inventory of the Seller whether or not reflected on
the Most Recent Balance Sheet, consists of a quality and quantity usable and
saleable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, all of which have been written-off or written-down
to net realizable value on the Most Recent Balance Sheet. All inventories not
written-off have been priced at the lower of cost or market on a last-in,
first-out basis.
n. Real Property Leases. Section 2(n) of the Disclosure Schedule lists
and describes briefly all real property leased or subleased to the Seller. The
Seller has delivered to the Buyer correct and complete copies of the leases and
subleases (as amended to date) listed in Section 2(n) of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 2(n) of the
Disclosure Schedule:
i. the lease or sublease is legal, valid, binding, enforceable
and in full force and effect;
ii. the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
iii. no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
iv. there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
v. the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold;
vi. all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities;
vii. to the knowledge of the Seller, the owner of the facility
leased or subleased has good and clear record and marketable title to the parcel
of
-10-
real property, free and clear of any Security Interest, easement, covenant or
other restriction, except for recorded easements, covenants, and other
restrictions which do not impair the Intended Uses, occupancy or value of the
property subject thereto; and
viii. the Seller has obtained non-disturbance agreements from the
holder of each superior Security Interest and ground lease in connection with
each such lease or sublease (each of which is listed in Section 2(n) of the
Disclosure Schedule); and the representations and warranties set forth in
clauses (i) through (iv) of this Section 2(n) with respect to leases and
subleases are true and correct with respect to such nondisturbance agreements.
o. Contracts. Section 2(o) of the Disclosure Schedule lists the
following written arrangements (including without limitation written agreements)
to which the Seller is a party:
i. any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $1,000 per annum;
ii. any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials, commodities, supplies,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance over a period of more than one year, (ii) which
involves more than the sum of $25,000, or (iii) in which the Seller has granted
exclusive rights relating to any products, services or territory or has agreed
to purchase a minimum quantity of goods or services or has agreed to purchase
goods or services exclusively from a certain party;
iii. any written arrangement establishing a partnership or joint
venture;
iv. any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or guaranteed (or
may create, incur, assume, or guarantee) indebtedness (including capitalized
lease obligations) or under which it has imposed (or may impose) a Security
Interest on any of its assets, tangible or intangible;
v. any written arrangement concerning confidentiality or
noncompetition;
vi. any written arrangement between the Seller and the
Stockholder or any of his relatives or affiliates;
-11-
vii. any written arrangement under which the consequences of a
default or termination could have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Seller; and
viii. any other written arrangement (or group of related written
arrangements) either involving more than $25,000 or not entered into in the
Ordinary Course of Business.
The Seller has delivered to the Buyer a correct and complete copy of each
written arrangement (as amended to date) listed in Section 2(o) of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration, under the written arrangement. The
Seller is not a party to any oral contract, agreement or other arrangement
which, if reduced to written form, would be required to be listed in Section
2(o) of the Disclosure Schedule under the terms of this Section 2(o).
p. Accounts Receivable. All accounts receivable of the Seller
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and collectible to the best of the
Seller's knowledge, net of the applicable reserve for bad debts on the Most
Recent Balance Sheet. All accounts receivable reflected in the financial or
accounting records of the Seller that have arisen since the Most Recent Fiscal
Period End are valid receivables subject to no setoffs or counterclaims and are
collectible, net of a reserve for bad debts in an amount proportionate to the
reserve shown on the Most Recent Balance Sheet.
q. Powers of Attorney; Bank Accounts. There are no outstanding
powers of attorney executed on behalf of any of the Seller. A list of the bank
accounts of the Seller is set forth on Section 2(q) of the Disclosure Schedule.
r. Insurance. Section 2(r) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Seller has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years:
i. the name of the insurer, the name of the policyholder and the
name of each covered insured;
-12-
ii. the policy number and the period of coverage;
iii. the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
iv. a description of any retroactive premium adjustments or other
loss-sharing arrangements.
(i) Each such insurance policy is enforceable and in full force and effect; (ii)
such policy will continue to be enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing; (iii) the Seller is not in breach or default
(including with respect to the payment of premiums or the giving of notices)
under such policy, and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination,
modification or acceleration, under such policy; and (iv) the Seller has not
received any notice from the insurer disclaiming coverage or reserving rights
with respect to a particular claim or such policy in general. The Seller has not
incurred any loss, damage, expense or liability covered by any such insurance
policy for which it has not properly asserted a claim under such policy. The
Seller is not covered by insurance in scope and amount customary and reasonable
for the businesses in which it is engaged.
s. Litigation. Section 2(s) of the Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Seller is a party or, to the knowledge of the Seller
is threatened to be made a party. None of the complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 2(s) of the
Disclosure Schedule could have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Seller.
t. Employees. Section 2(t) of the Disclosure Schedule contains a list
of all employees of the Seller, along with the position and the annual rate of
compensation of each such person. To the knowledge of the Seller, no key
employee or group of employees has any plans to terminate employment with the
Seller. The Seller is not a party to or bound by any collective bargaining
agreement, and has not experienced any strikes, grievances, claims of unfair
labor practices or other collective bargaining disputes. The Seller has no
knowledge of any organizational effort made or threatened, either currently or
within the past two years, by or on behalf of any labor union with respect to
employees of the Seller.
-13-
u. Employee Benefits.
i. Section 2(u) of the Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans (as defined below) maintained,
or contributed to, by the Seller, or any ERISA Affiliate (as defined below). For
purposes of this Agreement, "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), any "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA), and any other written or oral plan,
agreement or arrangement involving direct or indirect compensation, including
without limitation insurance coverage, severance benefits, disability benefits,
deferred compensation, bonuses, stock options, stock purchase, phantom stock,
stock appreciation or other forms of incentive compensation or post-retirement
compensation. For purposes of this Agreement, "ERISA Affiliate" means any entity
which is a member of (i) a controlled group of corporations (as defined in
Section 414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Code or the regulations
under Section 414(o) of the Code), any of which includes the Seller. Complete
and accurate copies of (i) all Employee Benefit Plans which have been reduced to
writing, (ii) written summaries of all unwritten Employee Benefit Plans, (iii)
all related trust agreements, insurance contracts and summary plan descriptions,
and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R for the last
five plan years for each Employee Benefit Plan, have been delivered to the
Buyer. Each Employee Benefit Plan has been administered in all material respects
in accordance with its terms and the Seller, and the ERISA Affiliates have in
all material respects met their obligations with respect to such Employee
Benefit Plan and has made all required contributions thereto. The Seller and all
Employee Benefit Plans are in compliance in all material respects with the
currently applicable provisions of ERISA and the Code and the regulations
thereunder.
ii. There are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders) suits or proceedings against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any material
liability.
iii. All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are qualified and the plans and the trusts related thereto are exempt from
federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent
-14-
determination letter or application therefor in any respect, and no act or
omission has occurred, that would adversely affect its qualification or
materially increase its cost.
iv. Neither the Seller nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Code or Title
IV of ERISA.
v. At no time has the Seller, or any ERISA Affiliate been
obligated to contribute to any "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA).
vi. There are no unfunded obligations under any Employee Benefit
Plan providing benefits after termination of employment to any employee of any
of the Sellers (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code and insurance conversion privileges under state law.
vii. No act or omission has occurred and no condition exists with
respect to any Employee Benefit Plan maintained by the Seller or any ERISA
Affiliate that would subject the Seller or any ERISA Affiliate to any material
fine, penalty, tax or liability of any kind imposed under ERISA or the Code.
viii. No Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
ix. No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits the Seller from amending or terminating any
such Employee Benefit Plan.
x. Section 2(u) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Seller (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from the Company that may be subject
to the tax imposed by Section 4999 of the Code or included in the determination
of such person's "parachute payment" under Section 280G of the Code; and (iii)
agreement or plan binding the Company, including without limitation any stock
option plan, stock appreciation right plan,
-15-
restricted stock plan, stock purchase plan, severance benefit plan, or any
Employee Benefit Plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
v. Environmental Matters.
i. The Stockholder and the Seller has complied with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of the Seller, threatened civil or criminal litigation, written notice
of violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Seller. For purposes of this Agreement, "Environmental Law"
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including
without limitation any statute, regulation or order pertaining to (i) treatment,
storage, disposal, generation and transportation of industrial, toxic or
hazardous substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
substances, or solid or hazardous waste, including without limitation emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of wild life, marine sanctuaries and wetlands,
including without limitation all endangered and threatened species; (vi) storage
tanks, vessels and containers; (vii) underground and other storage tanks or
vessels, abandoned, disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms "release" and "environment" shall have the
meaning set forth in the federal Comprehensive Environmental Compensation,
Liability and Response Act of 1980 ("CERCLA").
ii. There have been no releases of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Stockholder or the Seller. With respect to any such releases of Materials of
Environmental Concern, the Stockholder and the Seller have given all required
notices to Governmental Entities (copies of which have been provided to the
Buyer). Neither the Stockholder nor the Seller are aware of any releases of
Materials of Environmental Concern at parcels of real property or facilities
other than those owned, operated or controlled by the Stockholder or the Seller
that could reasonably be expected to have an impact on the real property or
facilities owned, operated or
-16-
controlled by the Stockholder or the Seller. For purposes of this Agreement,
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resources Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
iii. Set forth in Section 2(v) of the Disclosure Schedule is a
list of all environmental reports, investigations and audits relating to
premises currently or previously owned or operated by the Stockholder or the
Seller (whether conducted by or on behalf of the Stockholder or Seller or a
third party, and whether done at the initiative of the Stockholder or the Seller
or directed by a Governmental Entity or other third party) which any of the
Stockholder or the Sellers has possession of or access to. Complete and accurate
copies of each such report, or the results of each such investigation or audit,
have been provided to the Buyer.
iv. Set forth in Section 2(v) of the Disclosure Schedule is a
list of all of the solid and hazardous waste transporters and treatment, storage
and disposal facilities that have been utilized by the Stockholder or the
Seller. The Seller is not aware of any material environmental liability of any
such transporter or facility.
w. Legal Compliance. The Seller, and the conduct and operations
of its business, are in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Seller or business,
except for any violation of or default under a law referred to in clause (b)
above which reasonably may be expected not to have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Seller.
x. Permits. Section 2(x) of the Disclosure Schedule sets forth a
list of all permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued or
required under Environmental Laws and those relating to the occupancy or use of
owned or leased real property) ("Permits") issued to or held by the Seller. Such
listed Permits are the only Permits that are required for the Seller to conduct
its business as presently conducted or as proposed to be conducted, except for
those the absence of which would not have any material adverse effect on the
assets, business, financial condition, results of operations or future prospects
of the Seller. Each such Permit is in full force and effect and, to the best of
the knowledge of the Seller, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewed upon expiration. Each such Permit will continue in full force and effect
following the Closing.
-17-
y. Certain Business Relationships With Affiliates. Except as set
forth in Section 2(y) of the Disclosure Schedule, no affiliate of the Seller (a)
owns any property or right, tangible or intangible, which is used in the
business of the Seller, (b) has any claim or cause of action against the Seller,
or (c) owes any money to the Seller. Section 2(y) of the Disclosure Schedule
describes any transactions or relationships between the Seller and any affiliate
thereof.
z. Brokers' Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
aa. Books and Records. The minute books and other similar records of
the Seller contain true and complete records of all actions taken at any
meetings of the Seller's stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. The books and records of the Seller accurately reflect in all material
respects the assets, liabilities, business, financial condition and results of
operations of the Seller and have been maintained in accordance with good
business and bookkeeping practices.
bb. Customers and Suppliers. No unfilled customer order or commitment
obligating the Seller to deliver products or perform services will result in a
loss to the Seller upon completion of performance. No purchase order or
commitment of the Seller is in excess of normal requirements, nor are prices
provided therein in excess of current market prices for the products or services
to be provided thereunder.
cc. Disclosure. No representation or warranty by the Stockholder or
the Seller contained in this Agreement, and no statement contained in the
Disclosure Schedule or any other document, certificate or other instrument
delivered to or to be delivered by or on behalf of the Stockholders or the
Seller pursuant to this Agreement, and no other statement made by the
Stockholder or the Seller or any of their representatives in connection with
this Agreement, contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading. The Stockholder and the Seller have
disclosed to the Buyer all material information relating to the Assets and the
business of the Seller or the transactions contemplated by this Agreement.
3. Representations and Warranties of the Buyer. The Buyer represents and
warranties to the Stockholder and the Seller as follows:
a. Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
-18-
b. Authorization of Transaction. The Buyer has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Buyer and the performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby by the Buyer have been duly and
validly authorized by all necessary corporate action on the part of the Buyer.
This Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding obligation of the Buyer enforceable against it
in accordance with its terms.
c. Noncontravention. Neither the execution and delivery of this
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict with or violate any provision
of the charter or Bylaws of the Buyer, (b) require on the part of the Buyer any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party any right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Buyer is a party or by which it is bound or to which
its assets are subject, or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or any of its properties or
assets.
d. Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
4. Covenants.
a. Best Efforts. Each of the Parties shall use its best efforts, to
the extent commercially reasonable, to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement.
b. Notices and Consents. The Stockholder and the Seller shall use
their best efforts to obtain, at the Seller's expense, all such waivers,
permits, consents, approvals or other authorizations from third parties and
Governmental Entities, and to effect all such registrations, filings and notices
with or to third parties and Governmental Entities, as may be required by or
with respect to the Seller in connection with the transactions contemplated by
this Agreement (including without limitation those listed in Section 2(d) or
Section 2(x) of the Disclosure Schedule).
c. Operation of Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date,
-19-
the Seller shall conduct its operations only in the Ordinary Course of Business
and in compliance with all applicable laws and regulations and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its current
business organization, keep its physical assets in good working condition, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect.
d. Full Access. The Stockholder and the Seller shall permit
representatives of the Buyer to have full access (at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Seller) to all premises, properties, financial and accounting records,
contracts, other records and documents, and personnel, of or pertaining to the
Seller. The Buyer (a) shall treat and hold as confidential any Confidential
Information (as defined below), (b) shall not use any of the Confidential
Information except in connection with this Agreement, and (c) if this Agreement
is terminated for any reason whatsoever, shall return to the Seller all tangible
embodiments (and all copies) thereof which are in its possession. For purposes
of this Agreement, "Confidential Information" means any confidential or
proprietary information of the Seller that is furnished in writing to the Buyer
by the Seller in connection with this Agreement and is labelled confidential or
proprietary; provided, however, that it shall not include any information (i)
which, at the time of disclosure, is available publicly, (ii) which, after
disclosure, becomes available publicly through no fault of the Buyer, or (iii)
which the Buyer knew or to which the Buyer had access prior to disclosure.
e. Notice of Breaches. The Stockholder and the Seller shall promptly
deliver to the Buyer written notice of any event or development that would (a)
render any statement, representation or warranty of the Stockholder or the
Seller in this Agreement (including the Disclosure Schedule) inaccurate or
incomplete in any material respect, or (b) constitute or result in a breach by
the Stockholder or the Seller of, or a failure by the Stockholder or the Seller
to comply with, any agreement or covenant in this Agreement applicable to such
party. The Buyer shall promptly deliver to the Stockholder and the Seller
written notice of any event or development that would (i) render any statement,
representation or warranty of the Buyer in this Agreement inaccurate or
incomplete in any material respect, or (ii) constitute or result in a breach by
the Buyer of, or a failure by the Buyer to comply with, any agreement or
covenant in this Agreement applicable to the Buyer. No such disclosure shall be
deemed to avoid or cure any such misrepresentation or breach.
f. Exclusivity. The Stockholder and the Seller shall not, and the
Seller shall use its best efforts to cause each of its officers, directors,
employees, representatives and agents not to, directly or indirectly, (a)
encourage, solicit, initiate, engage or participate in discussions or
negotiations with any person or entity (other than the Buyer) concerning any
merger, consolidation, sale of material assets, tender
-20-
offer, recapitalization, purchase of shares, proxy solicitation or other
business combination involving the Seller, or any division of the Seller or (b)
provide any non-public information concerning the business, properties or assets
of the Seller to any person or entity (other than the Buyer). The Seller shall
immediately notify the Buyer of, and shall disclose to the Buyer all details of,
any inquiries, discussions or negotiations of the nature described in the first
sentence of this Section 4(f).
5. Conditions to Consummation of Asset Purchase.
a. Conditions to Each Party's Obligations. The respective obligations
of the Seller and the Buyer to consummate the transactions contemplated by this
Agreement to occur at the Closing are subject to the condition that no action,
suit or proceeding shall be pending or threatened by or before any Governmental
Entity wherein an unfavorable judgment, order, decree, stipulation or injunction
would (i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation or (iii) affect adversely the right of the
Buyer to own, operate or control the Assets following the Closing, and no such
judgment, order, decree, stipulation or injunction shall be in effect.
b. Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions contemplated by this Agreement to occur at the
Closing is subject to the satisfaction of the following additional conditions:
i. the Seller shall have obtained all of the waivers, permits,
consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, referred to in Section 4(b);
ii. the representations and warranties of the Stockholder and the
Seller set forth in Section 2 shall be true and correct when made on the date
hereof and shall be true and correct as of the Closing as if made as of such
Closing, except for representations and warranties made as of a specific date,
which shall be true and correct as of such date;
iii. the Seller shall have performed or complied with their
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the Closing;
iv. the Seller shall have delivered to the Buyer a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that the conditions specified in Section 5(a) and clauses (i) through
(iii) of this Section 5(b) are satisfied in all respects;
-21-
v. the Buyer shall have received from counsel to the Seller an
opinion with respect to the matters set forth in Exhibit C attached hereto,
addressed to the Buyer and dated as of the Closing Date;
vi. all actions to be taken by the Seller in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Buyer;
vii. the Buyer shall have received at or prior to the Closing
such documents, instruments or certificates as the Buyer may reasonably request
including, without limitation:
a. a bill of sale substantially in the form of Exhibit E;
b. such instruments of conveyance, assignment and transfer,
in form and substance satisfactory to the Buyer, as shall be appropriate to
convey, transfer and assign to, and to vest in, the Buyer, good, clear, record
and marketable title to the Assets other than the Real Property (including all
necessary bills of sale and certificates of title for motor vehicles owned by
the Seller);
c. such warranty deeds and instruments of conveyance,
assignment and transfer, in form and substance satisfactory to the Buyer, as
shall be appropriate to convey, transfer and assign to, and to vest in, the
Buyer, good, clear, record, marketable and insurable title to the Real Property;
d. all literature and other documentation relating to the
Seller's business, all in form and substance satisfactory to the Buyer;
e. such contracts, files and other data and documents
pertaining to the Assets or the Seller's business as the Buyer may reasonably
request;
f. [intentionally deleted]
g. such certificates of the Seller's officers and such other
documents evidencing satisfaction of the conditions specified in Section 5(b) as
the Buyer shall reasonably request;
h. certificates of the Secretary of State of the State of
New York as to the legal existence and good standing (including tax) of the
Seller in their respective states of incorporation;
i. certificates of the Secretary of the Seller attesting to
the incumbency of the Seller's officers, the authenticity of the resolutions
authorizing
-22-
the transactions contemplated by the Agreement, and the authenticity and
continuing
validity of the charter documents delivered pursuant to Section 2;
j. estoppel certificates from each lessor from whom the
Seller leases real or personal property consenting to the assumption of such
lease by the Buyer and representing that there are no outstanding claims against
the Seller under any such lease;
k. estoppel certificates from each tenant to whom the Seller
leases real property consenting to the assumption of such lease by the Buyer and
representing that there are no outstanding claims against the Seller under any
such lease;
l. a cross receipt executed by the Buyer and the Seller;
m. such other documents, instruments or certificates as the
Buyer may reasonably request.
c. Conditions to Obligations of the Seller. The obligation of the
Seller to consummate the transactions contemplated by this Agreement to occur at
the Closing is subject to the satisfaction of the following additional
conditions:
i. the representations and warranties of the Buyer set forth in
Section 3 shall be true and correct when made on the date hereof and shall be
true and correct as of the respective Effective Time as if made as of the
respective Effective Time, except for representations and warranties made as of
a specific date, which shall be true and correct as of such date;
ii. the Buyer shall have performed or complied with its
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the respective Effective Time;
iii. the Buyer shall have delivered to the Seller a certificate
(without qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified in clauses (i) and (ii) of this
Section 5(c) is satisfied in all respects;
iv. the Seller shall have received from New York counsel to the
Buyer an opinion with respect to the matters set forth in Exhibit D attached
hereto, addressed to the Seller and dated as of the Closing Date;
v. all actions to be taken by the Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions,
-23-
instruments and other documents required to effect the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to the Seller; and
vii. The Seller shall have received at or prior to the Closing
such documents, instruments or certificates as the Seller may reasonably request
including, without limitation:
a. such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section
5(c) as the Seller shall reasonably request;
b. a certificate of the Secretary of State of the State of
New York as to the legal existence and good standing of the Buyer in New York;
c. a certificate of the Secretary of the Buyer attesting to
the incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents and by-laws;
d. payment of the cash portion of the Purchase Price;
e. the Instrument of Assumption executed by the Buyer and
accepted by the Seller; and
h. a cross receipt executed by the Buyer and the Seller.
6. Indemnification.
a. Indemnification. The Stockholder and the Seller, jointly and
severally, shall indemnify the Buyer and its officers, directors, stockholders
and affiliates (and the officers, directors and stockholders of its affiliates)
(the "Indemnified Parties") and hold the Indemnified Parties harmless against,
any and all debts, obligations and other liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether known or unknown, or due or to become
due or otherwise), monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
amounts paid in settlement, interest, court costs, costs of investigators, fees
and expenses of attorneys, accountants, financial advisors and other experts,
and other expenses of litigation) incurred or suffered by the Indemnified
Parties ("Damages"):
i. resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any covenant or
agreement of the Stockholder or the Seller contained in this Agreement or in any
-24-
document delivered by the Stockholder or the Seller pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement;
ii. resulting from any claims against, or liabilities or
obligations of, the Seller or against the Assets not specifically assumed by the
Buyer pursuant to this Agreement;
iii. resulting from any tax liabilities or obligations of the
Seller;
iv. resulting from any violation by the Seller of, or any failure
by the Seller to comply with any law, ruling, order, decree, regulation or
zoning, environmental or permit requirement applicable to the Seller to its
business or properties, whether or not any such failure or violation has been
disclosed to the Buyer, including any costs incurred by the Buyer (A) in order
to bring the Assets into compliance with environmental laws as a result of
noncompliance with such laws on or before the Closing Date or (B) in connection
with the transfer of the Asset;
v. resulting from the failure of the Buyer or the Seller to
obtain the protections afforded by compliance with the notification and other
requirements of the bulk sales laws in force in the jurisdictions in which such
laws may be applicable to the Seller or the transactions contemplated by this
Agreement;
vi. resulting from any claims against, or liabilities or
obligations of, the Seller with respect to obligations under Employee Plans not
specifically assumed by the Buyer pursuant to this Agreement;
vii. resulting from any claims against the Seller or the Assets
by or on behalf of Allied Waste Industries, Inc.; and
viii. resulting from any claims against the Seller, the
Stockholder, or the Assets by or on behalf of Robert Seymour.
b. Method of Asserting Claims.
i. If a third party asserts that an Indemnified Party is liable
to such third party for a monetary or other obligation which may constitute or
result in Damages for which the Indemnified Party may be entitled to
indemnification pursuant to this Section 6, and the Indemnified Party reasonably
determines that it has a valid business reason to fulfill such obligation, then
(i) the Indemnified Party shall be entitled to satisfy such obligation, without
prior notice to or consent from the Seller, (ii) the Indemnified Party may make
a claim for indemnification pursuant to this Section 6, and (iii) the
Indemnified Party shall be reimbursed for any such Damages for which it is
entitled to indemnification pursuant to this Section 6 (subject
-25-
to the right of the Seller to dispute the Indemnified Parties entitlement to
indemnification under the terms of this Section 6).
ii. The Buyer shall give prompt written notification to the
Seller of the commencement of any action, suit or proceeding relating to a third
party claim for which indemnification pursuant to this Section 6 may be sought;
provided, however, that no delay on the part of the Buyer in notifying the
Seller shall relieve the Seller of any liability or obligation hereunder except
to the extent of any damage or liability caused by or arising out of such
failure. Within 20 days after delivery of such notification, the Seller may,
upon written notice thereof to the Buyer, assume control of the defense of such
action, suit or proceeding with counsel reasonably satisfactory to the Buyer,
provided the Seller acknowledges in writing to the Buyer that any damages,
fines, costs or other liabilities that may be assessed against the Indemnified
Parties in connection with such action, suit or proceeding constitute Damages
for which the Indemnified Parties shall be entitled to indemnification pursuant
to this Section 6. If the Seller does not so assume control of such defense, the
Buyer shall control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Seller assumes
control of such defense and the Buyer reasonably concludes that the indemnifying
parties and the Indemnified Parties have conflicting interests or different
defenses available with respect to such action, suit or proceeding, the
reasonable fees and expenses of counsel to the Indemnified Parties shall be
considered "Damages" for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. The Buyer shall
not agree to any settlement of such action, suit or proceeding without the prior
written consent of the Seller, which shall not be unreasonably withheld. The
Seller shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of the Buyer, which shall not be unreasonably
withheld.
c. Survival. The representations and warranties of the
Stockholder and the Sellers set forth in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby and
continue until the fifth anniversary of the Closing Date and shall not be
affected by any examination made for or on behalf of the Buyer or the knowledge
of any of the Buyer's officers, directors, stockholders, employees or agents. If
a notice is given before the expiration of such periods, then (notwithstanding
the expiration of such time period) the representation or warranty applicable to
such claim shall survive until, but only for purposes of, the resolution of such
claim.
d. Limitations. Except with respect to claims based on fraud, the
rights of the Buyer under this Section 6 shall be the exclusive remedy of the
Buyer with respect to claims resulting from or relating to any
misrepresentation, breach of
-26-
warranty or failure to perform any covenant or agreement of the Stockholder or
the Sellers contained in this Agreement (provided that nothing contained in this
Agreement shall limit or restrict any right or remedy the Buyer may have under
any Environmental Law).
7. Termination.
a. Termination of Agreement. This Agreement may be terminated prior to
the Closing Date as provided below:
i. the Stockholder, the Sellers and the Buyer may terminate this
Agreement by mutual written consent;
ii. the Buyer may terminate this Agreement by giving written
notice to the Seller in the event the Stockholder or the Seller is in breach,
and the Stockholder and the Seller may terminate this Agreement by giving
written notice to the Buyer in the event the Buyer is in breach, of any material
representation, warranty or covenant contained in this Agreement, and such
breach is not remedied within 10 days of delivery of written notice thereof;
iii. the Buyer may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or before the
60th day following the date of this Agreement by reason of the failure of any
condition precedent under Section 5(a) or 5(b) hereof (unless the failure
results primarily from a breach by the Buyer of any representation, warranty or
covenant contained in this Agreement);
iv. the Stockholder and the Seller may terminate this Agreement
by giving written notice to the Buyer if the Closing shall not have occurred on
or before the 60th day following the date of this Agreement by reason of the
failure of any condition precedent under Section 5(a) or 5(c) hereof (unless the
failure results primarily from a breach by the Stockholder or any Seller of any
representation, warranty or covenant contained in this Agreement).
b. Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a), all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement); provided, however, that
the confidentiality provisions contained in Section 4(d) shall survive any such
termination.
8. Miscellaneous.
a. Press Releases and Announcements. No Party shall issue any press
release or public disclosure relating to the subject matter of this Agreement
-27-
without the prior written approval of the other Parties; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
b. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
c. Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.
d. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided, however, that the Buyer may assign its rights
and obligations hereunder to CWS or any affiliate thereof.
e. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
f. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
g. Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Seller or to the Stockholder: Copy to:
--------------------------------------- --------
c/o Kenneth H. Mead Earl D. Butler, P.C.
1669 N.W. 114th Loop Vestal Professional Building Annex
Ocala, FL 34475 231-241 Main Street
Vestal, NY 13850
-28-
If to the Buyer: Copy to:
---------------- --------
Casella Waste Management of Jeffrey A. Stein, Esq.
N.Y., Inc. Hale and Dorr
Box 866 60 State Street
25 Greens Hill Lane Boston, MA 02109
Rutland, VT 05702
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
h. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
New York.
i. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
j. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
-29-
k. Expenses. Each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
l. Specific Performance. Each of the Parties acknowledges and agrees
that one or more of the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions of
Section 8(m)), in addition to any other remedy to which it may be entitled, at
law or in equity.
m. Submission to Jurisdiction. Each of the Parties (a) submits to the
jurisdiction of any state or federal court sitting in the State of Vermont in
any action or proceeding arising out of or relating to this Agreement, (b)
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other Party with respect thereto. Any
Party may make service on another Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 8(g). Nothing in this Section 8(m), however,
shall affect the right of any Party to serve legal process in any other manner
permitted by law.
n. Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
-30-
o. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
CASELLA WASTE MANAGEMENT
OF N.Y., INC.
By:
----------------------------------
Title:
------------------------------
KERKIM, INC.
By:
----------------------------------
Title:
------------------------------
--------------------------------------
KENNETH H. MEAD
-31-
Execution Copy #1
REORGANIZATION AGREEMENT
Asset Purchase Agreement dated as of January 17, 1997 by and among
KENNETH H. MEAD (the "Stockholder"), SUPERIOR DISPOSAL SERVICES, INC., a New
York corporation ("Superior"), KENSUE, INC., a Pennsylvania corporation
("KENSUE"), S.D.S. at PA, INC., a Pennsylvania corporation and a wholly-owned
subsidiary of Kensue ("SDS"), CLAWS REFUSE, INC., a Pennsylvania corporation and
a wholly-owned subsidiary of Kensue ("CLAWS," and collectively with Superior,
Kensue and SDS, the "Sellers"; the Sellers each being referred to as a
"Seller"), and CASELLA WASTE MANAGEMENT OF N.Y., INC., a New York corporation
(the "New York Buyer") and CASELLA WASTE MANAGEMENT OF PENNSYLVANIA, INC., a
Pennsylvania corporation (the "Pennsylvania Buyer"). The Stockholder, the
Sellers and the Buyer are sometimes referred to collectively as the "Parties" or
individually as a "Party." The New York Buyer and the Pennsylvania Buyer are
referred to collectively as the "Buyer".
This Agreement contemplates a tax-free reorganization within the
meaning of Section 368(C) of the Internal Revenue Code of 1986, as amended, by
providing for an exchange by the Sellers (as defined herein) of all of the
assets of the Sellers for the capital stock of Casella Waste Systems, Inc., the
parent company of the Buyer.
W I T N E S S E T H:
WHEREAS, the Stockholder owns all of the shares of capital stock of
each of Superior and Kensue; and
WHEREAS, the Buyer desires to purchase, and each Seller desires to
sell, substantially all of its assets and business, for the consideration set
forth below and the assumption of certain of the Sellers' liabilities set forth
below, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto do hereby agree as follows:
1. Purchase and Sale of the Assets.
a. Delivery of the Assets. Subject to and upon the terms and
conditions of this Agreement, at the closing of the transactions contemplated by
this Agreement (the "Closing"), Superior shall sell, transfer, convey, assign
and deliver to the New York Buyer, and each of Kensue, SDS and Claws shall sell,
transfer, convey, assign and deliver to the Pennsylvania Buyer, and the
respective Buyer shall
purchase from the respective Seller(s), all of the following properties and
assets of each such Seller:
i. all inventories, including of office supplies,
maintenance supplies, packaging materials, spare parts and similar items
(collectively, the "Inventory") which exist on the Closing Date (as defined
below);
ii. all accounts, accounts receivable, notes and
notes receivable existing on the Closing Date which are payable to such Seller,
including any security held by such Seller for the payment thereof
(collectively, the "Accounts Receivable");
iii. all cash, prepaid expenses, deposits, bank
accounts and other similar assets of such Seller existing on the Closing Date,
including the cash represented by such assets;
iv. all rights of such Seller under the contracts,
agreements, leases, licenses and other instruments set forth on Section 2(o) of
the Disclosure Schedule (collectively, the "Contract Rights");
v. all real property of such Seller set forth on
Section 2(k) of the Disclosure Schedule, together with all buildings, fixtures
and improvements located on or attached thereto, including such Seller's right,
title and interest in and to all leases, subleases, franchises, licenses,
permits, easements and rights-of-way which are appurtenant to said real property
(collectively, the "Real Property");
vi. all books, records and accounts, correspondence,
production records, technical, accounting, manufacturing and procedural manuals,
customer lists, employment records, studies, reports or summaries relating to
any environmental conditions or consequences of any operation, present or
former, as well as all studies, reports or summaries relating to any
environmental aspect or the general condition of the Assets, and any
confidential information which has been reduced to writing relating to or
arising out of the business of such Seller;
vii. All rights of such Seller under express or
implied warranties from the suppliers of such Seller;
viii. the motor vehicles and other rolling stock
owned by such Seller on the Closing Date;
ix. all of the machinery, containers, equipment,
tools, production reels and spools, tooling, dies, production fixtures,
maintenance machinery and equipment, furniture, leasehold improvements and
construction in
-2-
progress owned by such Seller on the Closing Date whether or not reflected as
capital assets in the accounting records of such Seller (collectively, the
"Fixed Assets");
x. all of such Seller's right, title and interest in
and to all intangible property rights, including but not limited to trade
secrets, processes, know-how, trade names, including, as applicable to the
respective Seller, the names "Superior Disposal Services, Inc.," "Kensue, Inc.,"
"S.D.S. at PA, Inc." and "Claws Refuse, Inc." or any derivation thereof and any
assumed names under which such Seller has operated, owned or, where not owned,
used by such Seller in its business and all licenses and other agreements to
which such Seller is a party (as licensor or licensee) or by which such Seller
is bound relating to any of the foregoing kinds of property or rights to any
"know-how" or disclosure or use of ideas (collectively, the "Intangible
Property"); and
xi. except as specifically provided in Section 1(b)
below, all other assets, properties, claims, rights and interests of each Seller
which exist on the Closing Date, of every kind and nature and description,
whether tangible or intangible, real, personal or mixed.
b. Notwithstanding the provisions of Section 1(a) above, the
assets to be transferred to the Buyer under this Agreement shall not include any
interest of any of the Sellers in or to [the landfill located in Covert, New
York] (the "Covert Landfill") or any other assets listed on Schedule 1(b)
attached hereto (the "Excluded Assets").
c. The Inventory, Accounts Receivable, Contract Rights, Real
Property, Fixed Assets, Intangible Property and other properties, assets and
businesses of the Sellers described in Section 1(a) above, other than the
Excluded Assets, shall be referred to collectively as the "Assets."
d. Further Assurances. At any time and from time to time after
the Closing, at the Buyer's request and without further consideration, each
Seller promptly shall execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, as the
Buyer may reasonably request to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
e. Base Purchase Price. The purchase price for the Assets (the
"Purchase Price") shall be Six Hundred Thirty-Four Thousand Four Hundred
(634,400) shares of the Class A Common Stock of Casella Waste Systems, Inc., a
Delaware corporation (Casella Waste Systems, Inc. being hereinafter referred to
as "CWS" and the Class A Common Stock of CWS being hereinafter referred to as
the
-3-
"CWS Common Stock"), subject to adjustment as provided below. The Purchase Price
shall be paid as follows: (A) at the Closing (as defined below), the Buyer will
deliver to the Sellers certificates representing Five Hundred Seventy Thousand
Nine Hundred Sixty (570,960) shares of CWS Common Stock (the "Initial Shares");
and (B) on the first anniversary of the Closing, the Buyer will deliver to the
Sellers a certificate representing Sixty-Three Thousand Four Hundred Forty
(63,440) shares of CWS Common Stock (the "Retained Shares"), subject to
adjustment pursuant to the indemnification obligations of the Stockholder and
the Sellers set forth in this Agreement and the adjustment provisions set forth
in Section 1(g). The Initial Shares and the Retained Shares are hereinafter
referred to as the "Shares."
The Parties agree that the calculation of the Purchase Price has been
based in part on assumptions made by each of the Parties as to the valuation of
the Buyer and of CWS. Accordingly, the parties hereby further agree that the
Buyer will issue additional shares of CWS Common Stock or the Sellers (or the
Stockholder) will surrender certain of the Shares, as follows:
i. In the event that (A) CWS completes an underwritten
registered initial public offering
of the CWS Common Stock and (I) the
public offering price (with respect
to any Shares which are sold in such
offering) or (II) the average
closing sale price per share of the
CWS Common Stock over the ten
trading days ending on the twentieth
day after the date of the final
prospectus relating to such offering
(with respect to Shares not sold in
such offering) (the "Public Market
Price") is less than $20 (subject to
appropriate adjustment in the event
of any stock dividend, stock split,
combination or other
recapitalization affecting such
shares) ("Twenty Dollars Per
Share"); or
(B) CWS is acquired (whether by merger,
asset purchase, stock sale or
otherwise) in a transaction in which
the holders of the CWS Common Stock
receive publicly traded shares of
the acquiror, and the value of the
CWS Common Stock in such acquisition
(the "Acquisition Price") is less
than Twenty Dollars Per Share,
then the Buyer will issue additional shares of CWS Common
Stock as follows:
-4-
If the Public Market Price or Then the Buyer will issue the
the Acquisition Price is: following number of additional
shares of CWS Common
Stock:
Between $19 and $20 Pro rata between 33,389 and 0
$19 33,389
Between $18 and $19 Pro rata between 70,489 and
33,389
$18 or less 70,489
ii. In the event that (A) CWS completes an underwritten
registered initial public offering
of the CWS Common Stock and the
Public Market Price is greater than
Twenty Dollars Per Share; or
(B) CWS is acquired (whether by merger,
asset purchase, stock sale or
otherwise) in a transaction in which
the holders of the CWS Common Stock
receive publicly traded shares of
the acquiror, and the Acquisition
Price is greater than Twenty Dollars
Per Share,
then the Sellers and the Stockholder shall, jointly and
severally, be liable to return to the Buyer a number of Shares
as follows:
If the Public Market Price or Then the Seller and the
the Acquisition Price is: Stockholder will return to the
Buyer the following number of
shares of CWS Common
Stock:
Between $20 and 521 Pro rata between 0 and 30,210
$21 or more 30,210
Notwithstanding the foregoing, no shares of CWS Common Stock shall be issued by
the Buyer or returned by the Sellers or the Stockholder if the event giving rise
to such
-5-
adjustment is on or after the fifth anniversary of the Closing. The foregoing
right shall not be assignable by the Stockholders or the Sellers.
f. Assumption of Liabilities. At the Closing, the Buyer shall
execute and deliver an Instrument of Assumption of Liabilities (the "Asset
Instrument of Assumption") substantially in the form attached hereto as Exhibit
B-1, pursuant to which it shall assume and agree to perform, pay and discharge
the following liabilities, obligations and commitments of each of the Sellers
(the "Assumed Liabilities"):
i. All trade accounts payable reflected on the
balance sheet of such Seller as of December 31, 1996 previously delivered to the
Buyer (the "Current Balance Sheet"), less any payments made from December 31,
1996 (the "Balance Sheet Date") to the Closing Date and less any trade accounts
payable of such Seller to any affiliate of such Seller;
ii. All obligations of such Seller continuing after
the Closing under the leases, contracts and employee benefit plans set forth on
Schedule 1(f) attached hereto which become due and payable after the Closing
Date; and
iii. All other liabilities and obligations of such
Seller specifically set forth in Schedule 1(f) attached hereto.
The Buyer shall not at the Closing assume or agree to perform, pay or discharge,
and each Seller shall each remain unconditionally liable for, all liabilities,
obligations and commitments, fixed or contingent, of such Seller other than the
Assumed Liabilities. Without limiting the foregoing, any and all liabilities of
any Seller arising from environmental laws (including with respect to the Covert
Landfill) and, except as provided above, in any way related to events prior to
the Closing, shall be the sole responsibility of such Seller.
g. Purchase Price Adjustments.
i. As promptly as possible following the Closing
Date, the Buyer shall cause Piaker & Lyons, independent public accountants (the
"Closing Auditors"), to conduct a review of the balance sheet of the Sellers as
of the Closing Date. Not later than 60 days after the Closing Date, the Buyer
shall cause the Closing Auditors to deliver a balance sheet with respect to the
Sellers as of the Closing Date (as corrected pursuant to this Section 1(g), the
"Closing Balance Sheet") to the Buyer and to the Sellers. The Closing Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles, applied consistently with the Sellers' past practices and methods
(to the extent applicable under generally accepted accounting principles).
-6-
ii. The Seller and one firm of independent public
accountants acting on behalf of the Sellers (the "Sellers' Advisors") shall have
the right to review the work papers of the Closing Auditors utilized in
preparing the Closing Balance Sheet, and shall have full access to the books,
records, properties and personnel of the Sellers (and Buyer's personnel
participating in the review) for purposes of verifying the accuracy and fairness
of the presentation of the Closing Balance Sheet.
iii. The values or amounts for each item reflected
on the Closing Balance Sheet shall be binding upon the Buyer and the Sellers
unless the Sellers give written notice, within 30 calendar days after their
receipt of the Closing Balance Sheet, of disagreement with any values or amounts
shown on the Closing Balance Sheet, specifying, as to each such item in
reasonable detail, the nature and extent of such disagreement (the "Dispute
Notice"). If the Buyer and the Sellers are unable to resolve any such
disagreement within 30 days after the date of the Dispute Notice, the
disagreement shall be submitted to arbitration in Syracuse, New York in
accordance with the rules of the American Arbitration Association. If, as a
result of the resolution of any disputes by agreement pursuant to this Section
1(g), or by arbitration, any amount shown on the Closing Balance Sheet is
determined to be erroneous, such erroneous amount shall be deleted from the
Closing Balance Sheet and the correct amount shall be inserted in lieu thereof.
The Closing Balance Sheet, as so corrected, shall constitute the Closing Balance
Sheet for purposes of this Agreement.
iv. The Buyer shall pay the fees and disbursements of
the Closing Auditors. The fees and disbursements of the Sellers' Advisors shall
be paid by the Sellers.
v. Immediately upon the expiration of the 30 calendar
day period following the Sellers' receipt of the Closing Balance Sheet, if no
Dispute Notice is given by the end of such period, or immediately upon the
resolution of disputes, if any, pursuant to this Section 1(g), the Purchase
Price shall be adjusted as follows, based upon the Closing Balance Sheet (as so
adjusted, the "Final Purchase Price");
x. If the combined liabilities as shown on
the Closing Balance Sheet (excluding trade accounts payable and accrued
liabilities) is greater than [$7,552,103 less debt on Rt 49 Property] ("Excess
Liabilities"), and/or if the combined sum of the cash and trade receivables of
the Sellers exceeds the combined sum of the trade accounts payable and accrued
liabilities of the Sellers as shown on the Closing Balance Sheet by less than
the corresponding calculation shown on the Current Balance Sheet (a "Working
Capital Deficiency"), the Purchase Price shall be reduced by one share of CWS
Common Stock for every Twenty Dollars ($20) of Excess Liabilities or Working
Capital Deficiency (provided that if there exists both Excess Liabilities and a
Working Capital Deficiency, the adjustment shall be in the amount of the greater
of such amount and not the aggregate thereof).
-7-
y. If the combined liabilities of the
Sellers (excluding trade accounts payable and accrued liabilities) is less than
[$7,552,103 less debt on Rt 49 Property] (the "Favorable Liabilities Variance")
and if the combined sum of the cash and trade receivables of the Sellers
(excluding receivables from affiliates of the Sellers) exceeds the combined sum
of the trade accounts payable and accrued liabilities of the Sellers ("Excess
Working Capital") as shown on the Closing Balance Sheet by more than the
corresponding calculation shown on the Current Balance Sheet ("Excess Working
Capital"), Buyer shall deliver to Sellers one additional share of CWS Common
Stock for each Twenty Dollars ($20) of the lesser of (A) such Favorable
Liabilities Variance, or (B) such Excess Working Capital.
vi. Any adjustment in the Purchase Price payable to
the Buyer shall be satisfied first from the Retained Shares. To the extent that
the Retained Shares shall not be sufficient to satisfy any adjustment provided
for herein, the Stockholder and the Sellers shall be jointly and severally
liable for any deficiency (provided, however, that the Stockholder and the
Sellers may satisfy such obligation by surrendering Initial Shares at a value of
$20 per share).
h. Closing. The closing of the purchase and sale of the Assets
(the "Closing") shall take place at the offices of Earl D. Butler, P.C., 231-241
Man Street, Vestal, New York 13160, or at such other place as the parties may
mutually agree at 10:00 A.M., on January __ 1997 or as soon as practicable
thereafter (the "Closing Date").
i. Apportionment. Prepaid premiums on insurance if assigned as
herein provided, water and sewer use charges, transfer taxes and recording fees,
if any, incurred in connection with the transfer of the Assets contemplated
hereby, and the real property taxes for the then current tax period, shall be
apportioned and adjusted as of the Closing Date and the net amount thereof shall
be added to or deducted from, as the case may be, the Purchase Price at a rate
of one share of CWS Common Stock for every $20 of such adjustment. If the amount
of said real property taxes has not been determined at the Closing Date, they
shall be apportioned on the basis of such taxes assessed for the preceding year,
with a reapportionment as soon as the new tax rate and valuation can be
ascertained; and, if the taxes which are to be apportioned shall thereafter be
reduced by abatement, the amount of such abatement, less the reasonable cost of
obtaining the same, shall be apportioned between the parties, provided that no
party shall be obligated to institute or prosecute proceedings for an abatement
unless otherwise agreed. If such proceedings are commenced, the parties
commencing the same shall give the other party notice thereof and shall
prosecute such proceedings and not discontinue the same without first giving the
other party notice of its intention so to do and reasonable opportunity to be
substituted in such proceedings; and the other party agrees to cooperate in such
proceedings without being obligated to incur any expense in connection
therewith.
-8-
2. Joint and Several Representations and Warranties of the Stockholder
and the Sellers. Each of the Sellers and the Stockholder, jointly and severally,
represent and warrant to the Buyer that the statements contained in this Article
II are true and correct, except as set forth in the disclosure schedule attached
hereto (the "Disclosure Schedule").
a. Organization, Qualification and Corporate Power. Each of
the Sellers is a corporation duly organized, validly existing and in corporate
and tax good standing under the laws of the state of its incorporation. Each of
the Sellers is duly qualified to conduct business and is in corporate and tax
good standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification. Each of the Sellers has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. Each of the Sellers has furnished to the
Buyer true and complete copies of its charter and Bylaws, each as amended and as
in effect on the date hereof. None of the Sellers is in default under or in
violation of any provision of its charter or Bylaws.
b. Capitalization. The authorized, issued and outstanding
shares of capital stock of each of the Sellers are as set forth in Section 2(b)
of the Disclosure Schedule. Section 2(b) of the Disclosure Schedule sets forth a
complete and accurate list of all beneficial and record stockholders of each
Seller, indicating the number of shares of each Seller held by each stockholder.
All of the issued and outstanding shares of capital stock of the Sellers are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights. There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which any of the Sellers is a party or
which are binding upon any of the Sellers providing for the issuance,
disposition or acquisition of any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect
to any Seller. There are no agreements, voting trusts, proxies, or
understandings with respect to the voting, or registration under the Securities
Act, of any shares of capital stock of the Sellers. All of the issued and
outstanding shares of capital stock of the Sellers were issued in compliance
with applicable federal and state securities laws. The Stockholder has not
entered into any agreement to sell, pledge or otherwise encumber any of his
shares of the capital stock of the Sellers.
c. Authorization of Transaction. Each of the Sellers has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement,
the performance by the Sellers of this Agreement and the consummation by the
Sellers of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Sellers. This
Agreement has been duly and validly executed and delivered by the Stockholder
and the Sellers and constitutes
-9-
a valid and binding obligation of the Stockholder and the Sellers, enforceable
against such persons in accordance with its terms.
d. Noncontravention. Neither the execution and delivery of
this Agreement by Stockholder and the Sellers, nor the consummation by the
Sellers of the transactions contemplated hereby, will (a) conflict with or
violate any provision of the charter or By-laws of any of the Sellers, (b)
require on the part of the Stockholder or the Sellers any filing with, or any
permit, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (c) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Stockholder or any of the Sellers is a party or by which the Stockholder or
any of the Sellers is bound or to which any of their assets is subject, (d)
result in the imposition of any Security Interest upon any assets of the
Stockholder or any of the Sellers or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Stockholder or any of the
Sellers, or any of their properties or assets. For purposes of this Agreement,
"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge, or other lien (whether arising by contract or by operation of law),
other than (i) mechanic's, materialmen's, and similar liens, (ii) liens arising
under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation, and (iii) liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the
ordinary course of business consistent with past custom and practice (including
with respect to frequency and amount) ("Ordinary Course of Business") of the
Sellers and not material to the Sellers.
e. Subsidiaries. Except as set forth in Section 2(e) of the
Disclosure Schedule, none of the Sellers controls directly or indirectly or has
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association.
f. Financial Statements. The Sellers have provided to the
Buyer (a) the balance sheets and statements of income, changes in stockholders'
equity and cash flows for each of the three fiscal years for each of the Sellers
in the three-year period ending December 31, 1995 (each of which has been
reviewed in accordance with standards established by the American Institute of
Certified Public Accountants); and (b) the unaudited balance sheet and
statements of income, changes in stockholders' equity and cash flows as of and
for the fiscal year ended as of December 31, 1996 (the "Most Recent Fiscal
Period End"). Such financial statements (collectively, the "Financial
Statements") have been prepared in accordance with
-10-
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods covered thereby, fairly present the
financial condition, results of operations and cash flows of the Sellers as of
the respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Sellers; provided, however, that
the Financial Statements referred to in clause (b) above are subject to normal
recurring year-end adjustments (which will not be material) and do not include
footnotes.
g. Absence of Certain Changes. Since the Most Recent Fiscal
Period End, (a) there has not been any material adverse change in the assets,
business, financial condition or results of operations of any of the Sellers,
nor has there occurred any event or development which could reasonably be
foreseen to result in such a material adverse change in the future, and (b) none
of the Sellers has taken any of the actions not in the Ordinary Course of
Business.
h. Undisclosed Liabilities. None of the Sellers has any
liability (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), except for (a)
liabilities shown on the balance sheet referred to in clause (b) of Section 2(f)
(the "Most Recent Balance Sheet"), (b) liabilities which have arisen since the
Most Recent Fiscal Period End in the Ordinary Course of Business and which are
similar in nature and amount to the liabilities which arose during the
comparable period of time in the immediately preceding fiscal period and (c)
contractual liabilities incurred in the Ordinary Course of Business which are
not required by GAAP to be reflected on a balance sheet.
i. Tax Matters.
i. Each of the Stockholder and the Sellers has filed
all Tax Returns (as defined below) that he or it was required to file and all
such Tax Returns were correct and complete in all material respects. Each of the
Stockholder and the Sellers has paid all Taxes (as defined below) that are shown
to be due on any such Tax Returns. The unpaid Taxes of the Sellers for tax
periods through the date of the Most Recent Balance Sheet do not exceed the
accruals and reserves for Taxes set forth on the Most Recent Balance Sheet. None
of the Sellers has any actual or potential liability for any Tax obligation of
any taxpayer (including without limitation the Stockholder or any affiliated
group of corporations or other entities that included any of the Sellers during
a prior period) other than the Sellers. All Taxes that the Sellers are or were
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Entity. For
purposes of this Agreement, "Taxes" means all taxes, charges, fees, levies or
other similar assessments or liabilities, including without limitation income,
gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment, payroll and
franchise taxes imposed by the United States of America or any state, local or
foreign government, or any agency
-11-
thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements or other information required to
be supplied to a taxing authority in connection with Taxes.
ii. The Sellers have delivered to the Buyer correct
and complete copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by any of the Sellers
since January 1, 1990. The federal income Tax Returns of the Sellers have been
audited by the Internal Revenue Service or are closed by the applicable statute
of limitations for all taxable years through December 31, 1992. No examination
or audit of any Tax Returns of any of the Sellers by any Governmental Entity is
currently in progress or, to the knowledge of the Sellers or the Stockholder,
threatened or contemplated. None of the Sellers has waived any statute of
limitations with respect to taxes or agreed to an extension of time with respect
to a tax assessment or deficiency.
iii. None of the Sellers is a "consenting
corporation" within the meaning of Section 341(f) of the Code and none of the
assets of the Sellers are subject to an election under Section 341(f) of the
Code. None of the Sellers has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. None of the
Sellers is a party to any Tax allocation or sharing agreement.
iv. None of the Sellers is or has ever been a member
of an "affiliated group" of corporations (within the meaning of Section 1504 of
the Code), other than a group of which only the Sellers are members. None of the
Sellers has made an election under Treasury Reg. Section 1.1502-20(g). None of
the Sellers is or has been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b).
j. Assets. Each of the Sellers owns or leases all tangible
assets necessary for the conduct of its businesses as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. No asset
of any of the Sellers (tangible or intangible) is subject to any Security
Interest. A list of the Fixed Assets is attached hereto as Section 2(j) of the
Disclosure Schedule.
-12-
k. Owned Real Property. Section 2(k) of the Disclosure
Schedule lists and describes briefly all real property that any of the Sellers
owns. With respect to each parcel of such real property:
i. the identified owner has good and clear record and
marketable title to such parcel, insurable by a recognized national title
insurance company at standard rates, free and clear of any Security Interest,
easement, covenant or other restriction, except for recorded easements,
covenants and other restrictions which do not impair the uses, occupancy or
value of such parcel in their current uses (the "Intended Uses");
ii. there are no (i) pending or, to the knowledge of
the Sellers, threatened condemnation proceedings relating to such parcel, (ii)
pending or, to the knowledge of the Sellers, threatened litigation or
administrative actions relating to such parcel, or (iii) other matters affecting
adversely the Intended Uses, occupancy or value thereof;
iii. the legal description for such parcel contained
in the deed thereof describes such parcel fully and adequately; the buildings
and improvements may be used as of right under applicable zoning and land use
laws for the Intended Uses, and such buildings and improvements are located
within the boundary lines of the described parcels of land, are not in violation
of current setback requirements, zoning laws and ordinances and do not encroach
on any easement which may burden the land; the land does not serve any adjoining
property for any purpose inconsistent with the Intended Uses; and such parcel is
not located within any flood plain or subject to any similar type restriction
for which any permits or licenses necessary to the use thereof have not been
obtained;
iv. there are no leases, subleases, licenses or
agreements, written or oral, granting to any party or parties (other than the
Sellers) the right of use or occupancy of any portion of such parcel;
v. there are no outstanding options or rights of
first refusal to purchase such parcel, or any portion thereof or interest
therein;
vi. all facilities located on such parcel are
supplied with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer and
storm sewer, all of which services are adequate for the Intended Uses and in
accordance with all applicable laws, ordinances, rules and regulations and are
provided via public roads or via permanent, irrevocable, appurtenant easements
benefiting such parcel;
-13-
vii. such parcel abuts on and has direct vehicular
access to a public road or access to a public road via a permanent, irrevocable,
appurtenant easement benefiting such parcel;
viii. the Sellers have not received notice of, and to
the best of the Sellers' knowledge, there is no proposed or pending proceeding
to change or redefine the zoning classification of all or any portion of the
parcels;
ix. the improvements constructed on the parcels are
in good condition and proper order, free of roof leaks, insect infestation, and
material construction defects, and all mechanical and utility systems servicing
such improvements are in good condition and proper working order, free of
material defects; and
x. each parcel is an independent unit which does not
rely on any facilities (other than the facilities of public utilities) located
on any other property (i) to fulfill any zoning, building code, or other
municipal or governmental requirement, (ii) for structural support or the
furnishing of any essential building systems or utilities, including, but not
limited to electric, plumbing, mechanical, heating, ventilating, and air
conditioning systems, or (iii) to fulfill the requirements of any lease. No
building or other improvement not included in the parcels relies on any part of
the parcels to fulfill any zoning, building code, or other municipal or
governmental requirement or for structural support or the furnishing of any
essential building systems or utilities. Each of the parcels is assessed by
local property assessors as a tax parcel or parcels separate from all other tax
parcels.
l. Intellectual Property. Each of the Sellers owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications for
such patents, trademarks, trade names, service marks and copyrights, schematics,
technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material (collectively, "Intellectual
Property") that are used to conduct its business as currently conducted or
planned to be conducted.
m. Inventory. All inventory of the Sellers whether or not
reflected on the Most Recent Balance Sheet, consists of a quality and quantity
usable and saleable in the Ordinary Course of Business, except for obsolete
items and items of below-standard quality, all of which have been written-off or
written-down to net realizable value on the Most Recent Balance Sheet. All
inventories not written-off have been priced at the lower of cost or market on a
last-in, firstout basis.
n. Real Property Leases. Section 2(n) of the Disclosure
Schedule lists and describes briefly all real property leased or subleased to
any of the Sellers. The Sellers have delivered to the Buyer correct and complete
copies of the leases and
-14-
subleases (as amended to date) listed in Section 2(n) of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 2(n) of the
Disclosure Schedule:
i. the lease or sublease is legal, valid, binding,
enforceable and in frill force and effect;
ii. the lease or sublease will continue to be legal,
valid, binding, enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect prior to the
Closing;
iii. no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
iv. there are no disputes, oral agreements or
forbearance programs in effect as to the lease or sublease;
v. none of the Sellers has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
vi. all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of said
facilities;
vii. to the knowledge of the Sellers, the owner of
the facility leased or subleased has good and clear record and marketable title
to the parcel of real property, free and clear of any Security Interest,
easement, covenant or other restriction, except for recorded easements,
covenants, and other restrictions which do not impair the Intended Uses,
occupancy or value of the property subject thereto; and
viii. the Sellers have obtained non-disturbance
agreements from the holder of each superior Security Interest and ground lease
in connection with each such lease or sublease (each of which is listed in
Section 2(n) of the Disclosure Schedule); and the representations and warranties
set forth in clauses (i) through (iv) of this Section 2(n) with respect to
leases and subleases are true and correct with respect to such nondisturbance
agreements.
o. Contracts. Section 2(o) of the Disclosure Schedule lists
the following written arrangements (including without limitation written
agreements) to which any of the Sellers is a party:
-15-
i. any written arrangement (or group of related
written arrangements) for the lease of personal property from or to third
parties providing for lease payments in excess of $1,000 per annum;
ii. any written arrangement (or group of related
written arrangements) for the purchase or sale of raw materials, commodities,
supplies, products or other personal property or for the furnishing or receipt
of services (i) which calls for performance over a period of more than one year,
(ii) which involves more than the sum of $25,000, or (iii) in which any of the
Sellers has granted exclusive rights relating to any products, services or
territory or has agreed to purchase a minimum quantity of goods or services or
has agreed to purchase goods or services exclusively from a certain party;
iii. any written arrangement establishing a
partnership or joint venture;
iv. any written arrangement (or group of related
written arrangements) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness (including
capitalized lease obligations) or under which it has imposed (or may impose) a
Security Interest on any of its assets, tangible or intangible;
v. any written arrangement concerning confidentiality
or noncompetition;
vi. any written arrangement between any of the
Sellers and the Stockholder or any of his relatives or affiliates;
vii. any written arrangement under which the
consequences of a default or termination could have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of any of the Sellers; and
viii. any other written arrangement (or group of
related written arrangements) either involving more than $25,000 or not entered
into in the Ordinary Course of Business.
The Sellers have delivered to the Buyer a correct and complete copy of each
written arrangement (as amended to date) listed in Section 2(o) of the
Disclosure Schedule. With respect to each written arrangement so listed: (i) the
written arrangement is legal, valid, binding and enforceable and in full force
and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
and (iii) no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default
-16-
or permit termination, modification, or acceleration, under the written
arrangement. None of the Sellers is a party to any oral contract, agreement or
other arrangement which, if reduced to written form, would be required to be
listed in Section 2(o) of the Disclosure Schedule under the terms of this
Section 2(o).
p. Accounts Receivable. All accounts receivable of the Sellers
reflected on the Most Recent Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and collectible to the best of the
Sellers' knowledge, net of the applicable reserve for bad debts on the Most
Recent Balance Sheet. All accounts receivable reflected in the financial or
accounting records of the Sellers that have arisen since the Most Recent Fiscal
Period End are valid receivables subject to no setoffs or counterclaims and are
collectible, net of a reserve for bad debts in an amount proportionate to the
reserve shown on the Most Recent Balance Sheet.
q. Powers of Attorney; Bank Accounts. There are no outstanding
powers of attorney executed on behalf of any of the Sellers. A list of the bank
accounts of the Sellers is set forth on Section 2(q) of the Disclosure Schedule.
r. Insurance. Section 2(r) of the Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
fire, theft, casualty, general liability, workers compensation, business
interruption, environmental, product liability and automobile insurance policies
and bond and surety arrangements) to which the Sellers have been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past five years:
i. the name of the insurer, the name of the
policyholder and the name of each covered insured;
ii. the policy number and the period of coverage;
iii. the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and
iv. a description of any retroactive premium
adjustments or other loss-sharing arrangements.
(i) Each such insurance policy is enforceable and in full for