PURCHASE AND SALE AGREEMENT (the “Agreement”), dated as of May 3, 2006, by and between SITA U.S.A., Inc., a Delaware corporation (“Seller”), and Clean Harbors, Inc., a Massachusetts corporation (“Buyer”).
RECITALS
WHEREAS, Seller owns all of the outstanding membership interests (the “Membership Interests”) in Teris L.L.C., a Delaware limited liability company (the “Company”);
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Membership Interests in the Company outstanding on the Closing Date (as defined in Section 2.1 hereof) upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements, undertakings and obligations set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows (with certain terms having the respective meanings set forth in Section 10.14 hereof and Exhibit 1.2 hereto):
ARTICLE I
SALE AND PURCHASE OF MEMBERSHIP INTERESTS
SECTION 1.1 Sale and Purchase of Membership Interests. Upon the terms and subject to the conditions set forth in this Agreement and on the basis of the representations, warranties, covenants, agreements, undertakings and obligations contained herein, at the Closing, Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from Seller, all of the Membership Interests, free and clear of any and all Liens, for the consideration specified in this Article I.
SECTION 1.2 Purchase Price. The purchase price for the Membership Interests shall be an amount equal to the Purchase Price, as calculated in accordance with Exhibit 1.2. Buyer shall pay to Seller at the Closing the Closing Payment by delivery of cash by wire transfer of immediately available funds. The Purchase Price shall be subject to final determination as provided in Section 1.3.
SECTION 1.3 Final Determination of Purchase Price.
(a) Calculation of Purchase Price. As soon as reasonably practicable, but in no event later than ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller the calculation of the Purchase Price.
(b) Examination by Seller. Upon receipt of Buyer’s calculation of the Purchase Price, Seller and Seller’s Representatives shall be permitted during the succeeding forty-five (45) day period (the “Review Period”) full access at all reasonable times to the books and records of the Company, and the personnel of, and work papers prepared by, Buyer and/or Buyer’s Representatives to the extent that they relate to the Company and to such historical financial information relating to the Company as Seller may reasonably request for the purpose of reviewing
Buyer’s calculation of the Purchase Price Adjustment Items. The parties hereto acknowledge and agree that Seller may retain Moore Stephens Frost for the purpose of assisting Seller in its review of Buyer’s calculation of the Purchase Price Adjustment Items.
(c) Objection by Seller. On or prior to the last day of the Review Period, Seller may object to Buyer’s calculation of the Purchase Price Adjustment Items by delivering to Buyer a written statement setting forth a reasonable basis for Seller’s objections to Buyer’s calculation of the Purchase Price Adjustment Items (the “Statement of Objections”). If Seller fails to deliver the Statement of Objections within the Review Period, Buyer’s calculation of the Purchase Price Adjustment Items shall be deemed to have been accepted by Seller and shall be used in computing the difference between the Purchase Price and the Closing Payment (the “Adjustment Amount”). If Seller delivers the Statement of Objections within the Review Period, Seller and Buyer shall negotiate in good faith to resolve such objections, and, if the same are so resolved, the calculation of the Purchase Price with such changes to the Purchase Price Adjustment Items as may have been previously agreed in writing by Seller and Buyer shall be final and binding.
(d) Resolution of Disputes. If Seller and Buyer shall fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections, then such matters shall, not later than fifteen (15) days after one of the parties affirmatively terminates discussions in writing with respect to the Statement of Objections, be submitted for resolution to the New York office of KPMG LLP (the “Accounting Expert”) who shall, acting as experts and not as arbitrators, resolve the disputes set forth in the Statement of Objections and make any adjustments to the calculation of the Purchase Price.
(e) Fees of the Accounting Expert. The fees of the Accounting Expert shall be divided equally between Seller and Buyer.
(f) Access to Supporting Documentation. Subject to, and to the extent permitted by, any applicable Laws, Seller and Buyer and their respective Representatives shall each make readily available to the Accounting Expert all relevant work papers and books and records relating to the Company and those relating to Seller (but only to the extent that they relate to the Company), and copies of all such materials and information provided by a party to the Accounting Expert shall be concurrently delivered to the other party to the proceeding.
(g) Determination by Accounting Expert. The parties shall jointly instruct the Accounting Expert to make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after its engagement and its resolution of the dispute and its adjustments to the calculation of the Purchase Price shall be conclusive and binding upon the parties hereto.
(h) Payment of Adjustment Amount. Within two (2) Business Days of the later of (i) acceptance of Buyer’s calculation of the Purchase Price Adjustment Items or (ii) the resolution of Seller’s objections in connection therewith, to the extent that the Purchase Price is less than or more than the Closing Payment, Seller shall pay to Buyer (if the Purchase Price is less than the Closing Payment) or Buyer shall pay to Seller (if the Purchase Price is greater than the Closing Payment), as the case may be, the Adjustment Amount together with interest thereon
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equal to LIBOR calculated on the basis of a 360-day year and the actual number of days elapsed from the Closing Date to the date on which the Adjustment Amount is paid. Any such payment shall be in United States dollars in federal or other immediately available funds as directed by Buyer or Seller, as the case may be.
ARTICLE II
CLOSING
SECTION 2.1 Closing. Unless otherwise mutually agreed in writing between Seller and Buyer, the closing for the sale and purchase of the Membership Interests (the “Closing”) shall take place at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York, at 9:00 A.M. on the later of (i) July 31, 2006 or (ii) the third (3rd) Business Day (the “Closing Date”) following the day on which the last to be fulfilled or waived of the conditions set forth in Article VI (other than those conditions that either by their nature or expressly are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date hereof as follows:
SECTION 3.1 Organization and Good Standing.
(a) Each of Seller and the Company is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, with full corporate or limited liability company power and authority, as the case may be, to conduct its business as it is now being conducted, to own or use the properties or assets that it purports to own or use, and to perform all of its respective obligations under this Agreement. The Company is duly qualified or licensed to do business as a foreign limited liability company and is in good standing as a foreign limited liability company in each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such licensing, qualification or good standing, except for any failure to be so licensed, qualified or in such good standing which is not reasonably likely to have a Material Adverse Effect on the Company.
(b) Seller has made available or delivered to Buyer a true, complete and correct copy of the Company’s Certificate of Formation and Third Amended and Restated Limited Liability Company Agreement and Operating Agreement, each as amended to date (collectively, the “Company’s Organizational Documents”). The Company’s Organizational Documents so made available or delivered are in full force and effect.
(c) The Company does not have any Subsidiaries. Except as set forth in Schedule 3.1(c) of the Disclosure Schedule, the Company is not party to any Contract to acquire any capital stock or equity interest, investment or other securities of any Person or any direct or indirect equity or ownership interest in any other business.
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SECTION 3.2 Capitalization.
(a) The Membership Interests constitute the entire membership interest in the Company.
(b) Seller is and shall be on the Closing Date the sole record and beneficial owner of the Membership Interests, free and clear of all Liens.
(c) There are no membership interests of the Company reserved for issuance or subject to preemptive rights, or any outstanding subscriptions, options, warrants, calls, rights, convertible securities or other agreements or other instruments outstanding or in effect giving any Person the right to acquire any membership interests of the Company. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the Membership Interests on any matter.
SECTION 3.3 Corporate Authority; Enforceability. Seller has the full legal right, requisite corporate power and corporate authority, and has taken all corporate action necessary in order, to execute, deliver and perform fully its obligations under this Agreement and to consummate the transactions contemplated herein. This Agreement is a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy Exception”). Seller Parent has the full legal right, requisite corporate power and corporate authority, and prior to delivery of the Seller Parent Guarantee, Seller Parent will have taken all corporate action necessary, in order to execute, deliver and perform fully its obligations under the Seller Parent Guarantee. Upon delivery of the Seller Parent Guarantee, the Seller Parent Guarantee will be a valid and binding agreement of Seller Parent, enforceable against Seller Parent in accordance with its terms, subject to the Bankruptcy Exception.
SECTION 3.4 Consents and Approvals. Except as set forth in Schedule 3.4 of the Disclosure Schedule, no notices, reports, submissions, applications or other filings are required to be made by Seller with, nor are any consents, registrations, approvals, declarations, permits, expiration of any applicable waiting periods or authorizations required to be obtained by Seller from, any Governmental Entity, in connection with the execution or delivery of this Agreement by Seller, the performance by Seller of its obligations hereunder or the consummation by Seller of the transactions contemplated herein, the failure to make or obtain any or all of which is reasonably likely to have a Material Adverse Effect on the Company.
SECTION 3.5 No Violations. Assuming the making of the filings and the procurement of the consents set forth in Schedule 3.4 of the Disclosure Schedule and the obtaining of the consents described in Schedule 3.5 of the Disclosure Schedule, the execution and delivery of this Agreement by Seller does not, and the performance and consummation by Seller of any of the transactions contemplated herein will not, with respect to each of Seller and the Company, directly or indirectly (with or without the giving of notice or the lapse of time or both):
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(a) violate the Certificate of Incorporation or By-laws of Seller or the Company’s Organizational Documents;
(b) contravene, conflict with, or constitute or result in a breach or violation of, or a default under, or the cancellation, modification or termination of, or the acceleration of, or the creation of a Lien on any properties or assets owned or used by the Company pursuant to, any provision of any Contract under which Seller or the Company is bound or by which any of their respective assets are bound, in each case other than as set forth in Schedule 3.5(b) of the Disclosure Schedule;
(c) require the Company to obtain the consent, waiver, authorization or approval of, or give notice to, any Person under any Contract of the Company, other than as set forth in Schedule 3.5(c) of the Disclosure Schedule; or
(d) violate any applicable Law,
except, in the case of each of (b) through (d), inclusive, as is not reasonably likely to have a Material Adverse Effect on the Company.
SECTION 3.6 Financial Statements.
(a) Schedule 3.6(a)-1 of the Disclosure Schedule sets forth (i) the audited balance sheets of the Company as at December 31, 2005 (the “Balance Sheet”) and December 31, 2004 and the audited statements of income of the Company for the fiscal years ended December 31, 2005, December 31, 2004 and December 31, 2003 and (ii) the unaudited balance sheet of the Company as at March 31, 2006 (the “Interim Balance Sheet”) and the unaudited statement of income of the Company for the three months ended March 31, 2006 (collectively, the “Financial Statements”). Prior to Closing, in accordance with Section 5.1(f), Seller shall deliver to Buyer the unaudited balance sheet of the Company as at June 30, 2006 and the unaudited statement of income of the Company for the six months ended June 30, 2006 (collectively, the “Unaudited June 30 Financial Statements”). Except as set forth on Schedule 3.6(a)-2 of the Disclosure Schedule, the Financial Statements have been, and the Unaudited June 30 Financial Statements will be, prepared in conformity with GAAP (except that the financial statements in (ii) above do not, and the Unaudited June 30 Financial Statements will not, reflect year-end adjustments, and that GAAP may require financial statements to be accompanied by footnotes, and the financial statements in (ii) above are not, and the Unaudited June 30 Financial Statements will not be, accompanied by footnotes) consistently applied during the periods involved, and present, or will present, fairly in all material respects the financial condition and results of operations of the Company as of the dates thereof and for the periods indicated therein. Schedule 3.6(a)-3 of the Disclosure Schedule sets forth the unaudited balance sheet of Seller Parent as at December 31, 2005 and the unaudited statement of income of Seller Parent for the fiscal year ended December 31, 2005 (collectively, the “Seller Parent Financial Statements”). The Seller Parent Financial Statements have been prepared in conformity with IFRS consistently applied during the period involved, and present fairly in all material respects the financial condition and results of operation of Seller Parent as of and for the period indicated.
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(b) Except as set forth in Schedule 3.6(b) of the Disclosure Schedule, the Company has no Liabilities or obligations of any nature required by GAAP to be reflected on the Interim Balance Sheet except for (i) Liabilities or obligations in the amounts disclosed, reflected or reserved against in the Interim Balance Sheet and (ii) Liabilities incurred in the Ordinary Course of Business since March 31, 2006.
(c) All accounts receivable of the Company that are reflected on the Interim Balance Sheet or on the accounting records of the Company as of the Closing Date (collectively, the “Accounts Receivable”) represent or will represent obligations arising from sales actually made or services actually performed in the Ordinary Course of Business, and Seller knows of no reason why any of such accounts receivable, over and above any reserves stated on the Interim Balance Sheet, should not be fully collectible in the Ordinary Course of Business.
(d) Since the date of the Interim Balance Sheet through the date hereof, there have not been any write-offs of any Accounts Receivable of the Company except for write-offs that were made in the Ordinary Course of Business and that will be reflected in the calculation of the Purchase Price.
SECTION 3.7 Absence of Certain Changes and Events. Except as set forth in Schedule 3.7 of the Disclosure Schedule and other than actions taken in respect of the transactions contemplated herein, since December 31, 2005, the Company has operated only in, and has not engaged in any transaction other than in, the Ordinary Course of Business, and there has not been any:
(a) event, occurrence or development of which Seller has knowledge that has had, or is reasonably likely to have, a Material Adverse Effect on the Company;
(b) material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company that is reasonably likely to have a Material Adverse Effect on the Company;
(c) (i) increase in the bonus, salary, severance or other compensation payable by the Company or to become payable by the Company to the officers or employees of the Company (except for increases made in accordance with existing Seller Benefit Plans, required by Law or made in the Ordinary Course of Business) or (ii) adoption or amendment of, or increase in the payments to or benefits under, any profit sharing, bonus, thrift, stock option, deferred pension, retirement, or other employment benefit plan payable by the Company in respect of any officer or employee of the Company (other than as required by Law or made in the Ordinary Course of Business);
(d) effectuation by the Company of (i) a “plant closing” (as defined in the Worker Adjustment and Retraining Act of 1988, as amended (the “WARN Act”)) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facilities
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of the Company, except, in either case, after fully complying with the notice and other requirements of the WARN Act;
(e) sale, lease, alteration, or other disposition of, or write down of the book value of (except with respect to amortization and depreciation calculated in a manner consistent with the Financial Statements) any material asset of the Company reflected on the Interim Balance Sheet which has a book value in excess of $500,000 or any items of property, plant and equipment which in the aggregate have a book value in excess of $1,000,000;
(f) (i) acquisition (including by merger, consolidation or acquisition of stock or assets) by the Company of any Person or any division thereof or material portion of the assets thereof; or (ii) liquidation, dissolution or winding up of the Company;
(g) entry into, amendment to, termination of, or receipt of notice of termination of (i) any material Contract or transaction involving a total remaining commitment by the Company extending for more than one (1) year and of at least $500,000; or (ii) any material leases or subleases for all or any portion of the Leased Real Property;
(h) (i) incurrence of any indebtedness by the Company for borrowed money (other than intercompany payables), guarantee issued by the Company of the obligations of any Person, or any loans or advances made by the Company (other than intercompany receivables), in each case except in the Ordinary Course of Business; or (ii) creation or assumption by the Company of any Lien on any material asset other than in the Ordinary Course of Business and in an amount less than $250,000 individually or $500,000 in the aggregate for all such Liens;
(i) (i) cancellation, settlement, compromise, release or waiver of any claims or rights with a value to the Company in excess of $500,000; (ii) settlement, release or compromise of any material Action in connection with the Company, other than such Actions in which the amount paid in settlement, release or compromise, including the cost to the Company of complying with any provision of such settlement, release or compromise other than cash payments, does not exceed $500,000; or (iii) modification, amendment, cancellation or termination of any material Contract of the Company or waiver, release or assignment of any material rights or claims other than in the Ordinary Course of Business; or
(j) entry into any Contract by the Company to do any of the foregoing.
SECTION 3.8 Litigation; Orders.
(a) Except as set forth in Schedule 3.8(a) of the Disclosure Schedule, (i) there are no Actions pending or, to the knowledge of Seller, threatened against or involving Seller or the Company that have resulted or could be reasonably expected, individually or in the aggregate, to result in a Material Adverse Effect on the Company and (ii) as of the date hereof, there are no Actions pending or, to the knowledge of Seller, threatened, against Seller or the Company that are reasonably likely to question, challenge the validity of, or have the effect of preventing, delaying, making illegal or otherwise interfering with, this Agreement, the transactions contemplated herein
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or any action taken or proposed to be taken by Seller or the Company pursuant hereto or in connection with the transactions contemplated herein.
(b) Except as set forth in Schedule 3.8(b) of the Disclosure Schedule, since January 1, 2005, no Governmental Entity of competent jurisdiction or any arbitrator or arbitrators or dispute resolution body has issued any Order that has resulted in or could be reasonably expected to have a Material Adverse Effect on the Company.
SECTION 3.9 Taxes. Except as set forth in Schedule 3.9 of the Disclosure Schedule, (a) all Tax Returns required to have been filed by or for the Company have been timely filed (taking into account any extensions); (b) all Taxes shown to be payable on such Tax Returns have been or will be timely paid;(c) no Governmental Entity has asserted or assessed in writing a deficiency for any Tax against the Company that has not been satisfied by payment, settled or withdrawn; (d) no Governmental Entity has asserted in writing that the Company is required to file a Tax Return in any jurisdiction where it has not filed a Tax Return; (e) the Company has not made an election to be treated as a corporation for United States federal income tax purposes pursuant to Section 301.7701-3 of the Code; and (f) Seller is a United States person as defined in Section 7701(a)(30) of the Code.
SECTION 3.10 Employee Benefits; ERISA; Employees.
(a) Schedule 3.10(a) of the Disclosure Schedule contains a list of all “employee pension benefit plans” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder (“ERISA”)), “employee welfare benefit plans” (as defined in Section 3(1) of ERISA), and all other employee benefit plans, programs, arrangements, or individual contracts providing employee benefits, formal or informal, funded or unfunded, registered or unregistered, which in each case is maintained, or contributed to, by Seller, the Company or any other ERISA Affiliate of Seller for the benefit of any current employees, officers or members of the board of managers of the Company or any former employee, including without limitation bonus, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, stock appreciation, retirement, vacation, severance, retention, disability, death benefit, fringe benefit, hospitalization, medical, retiree medical, dental, tuition, sick leave, maternity, paternity or family leave, health care reimbursement, dependent care assistance, or other similar benefit arrangements (the “Seller Benefit Plans”) but excluding for this purpose any plan maintained by a Governmental Entity (including, without limitation, the U.S. Social Security system, Medicare and other similar programs).
(b) Schedule 3.10(b) of the Disclosure Schedule contains a list of the name, job title, location, current base salary and the amount of any bonus paid in respect of the 2005 fiscal year, and Service Date of each employee of the Company.
SECTION 3.11 Labor Matters. As of the date of this Agreement, except as set forth in Schedule 3.11 of the Disclosure Schedule:
(a) The Company is not a party to or otherwise bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor
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organization, nor, as of the date hereof, is the Company the subject of any material proceeding asserting that the Company has committed an unfair labor practice or seeking to compel it to bargain with any labor union or labor organization nor is there pending or, to the knowledge of Seller, threatened, nor has there been for the past two (2) years, any labor strike, dispute, walk-out, work stoppage or slow-down involving the Company.
(b) There is no lockout (or other similar action) of any employees by the Company, and no such action is contemplated as of the date hereof by the Company.
(c) The Company is not delinquent in payments to any employees for any wages, salaries, commissions, bonuses or other compensation for any services performed by them relating to the Company or amounts required to be reimbursed to such employees.
SECTION 3.12 Compliance with Laws; Governmental Authorizations.
(a) Except as set forth in Schedule 3.12(a) of the Disclosure Schedule:
(i) The Company has not been, and is not being, operated in violation of any Laws, except for violations or possible violations that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on the Company.
(ii) No investigation or review by any Governmental Entity with respect to the Company is pending or, to the knowledge of Seller, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for those the outcome of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Company.
(iii) The Company has obtained and is in compliance in all material respects with all material governmental permits, licenses, franchises, registrations, certifications, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct its business as presently conducted except those the absence of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Company.
(b) This Section 3.12 does not relate to tax matters or environmental matters, such matters being the subject of Section 3.9 and Section 3.16, respectively.
SECTION 3.13 Title to Properties.
(a) Except as set forth in Schedule 3.13(a) of the Disclosure Schedule, as of the Closing Date, the Company will have good and valid title to all assets reflected on the Interim Balance Sheet or acquired after the date of the Interim Balance Sheet, except those sold or otherwise disposed of since the date of the Interim Balance Sheet in the Ordinary Course of Business and not in violation of this Agreement and, in each case, free and clear of all Liens of any
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kind except (i) mechanics’, carriers’, workmen’s, repairmen’s, warehouseman’s or other like statutory Liens arising or incurred in the Ordinary Course of Business, (ii) Liens for Taxes, assessments not yet due and payable or due but not delinquent and (iii) other imperfections of title or encumbrances, if any, which individually, or in the aggregate, are not material in amount and which do not materially impair the continued use and operation of the assets to which they relate in the business of the Company as presently conducted (collectively, the “Permitted Liens”). This Section 3.13(a) does not relate to Owned Real Property or Leased Real Property, such items being the subject of Section 3.13(b) and (c), respectively, or intellectual property, which is the subject of Section 3.17.
(b) Schedule 3.13(b)-1 of the Disclosure Schedule contains a true, complete and correct list of all real property that is owned in fee by the Company (the “Owned Real Property”). The Company has good and marketable title to and is the record owner of the Owned Real Property, free and clear of all Liens except for Permitted Liens, except as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Company. Except as set forth in Schedule 3.13(b)-2 of the Disclosure Schedule, none of the Owned Real Property is subject to any right or option of any other Person to purchase or lease an interest in such Owned Real Property, and no Person (other than the Company) has any right to use, occupy or lease any of the Owned Real Property, other than any right pursuant to a Permitted Lien.
(c) Schedule 3.13(c) of the Disclosure Schedule contains a true, complete and correct list of all real property leased or subleased to the Company (the “Leased Real Property”). The Company is not in material breach of or default under any such lease or sublease except for breaches or defaults that would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Company, and the Company has not received any written notice alleging any material breach or default by the Company or notice of termination, modification or acceleration by any third party thereunder, except for such breaches, defaults, terminations, modifications or accelerations that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Company. Seller has made available to Buyer true and correct copies of each lease or sublease pursuant to which the Company has the right to occupy any Leased Real Property (the “Real Property Leases”).
(d) Neither the Company nor Seller has received notice of any proceeding to change or redefine the zoning classification of all or any portion of the Company’s Owned Real Property or Leased Real Property, nor to the knowledge of Seller is any such proceeding proposed or pending, except in each case as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Company.
SECTION 3.14 Contracts; No Default.
(a) Schedule 3.14 of the Disclosure Schedule contains a list of all of the following Contracts relating to the Company as of the date of this Agreement:
(i) each Contract for the purchase of materials or personal property with any supplier or for the furnishing of services to the Company under the terms
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of which the Company is obligated to pay or otherwise give annual consideration of more than $500,000;
(ii) each Contract for the sale of personal property by the Company that is reasonably likely to involve annual consideration of more than $500,000;
(iii) all Contracts that limit or purport to limit the ability of the Company in any material respect to compete in any line of business or with any Person or in any geographic area or during any period of time, or otherwise materially restrict the conduct of the Company or the use of the assets of the Company as presently conducted and used (other than leases for personal property or software licenses);
(iv) all Contracts that will continue after the Closing of the transactions contemplated hereunder between or among Seller or any of its Affiliates (other than the Company), on the one hand, and the Company, on the other hand;
(v) any material Contract that requires the Company to conduct business exclusively with one or more Persons in any particular geographic area or with respect to any particular product or service;
(vi) other than as disclosed on Schedule 3.10(a) of the Disclosure Schedule, any Contract presently in effect between the Company and any current or former officer, manager, consultant or other employee (or group thereof) retained or employed by the Company;
(vii) any material partnership or joint venture Contracts to which the Company is a party;
(viii) any bonds or agreements of guarantee or indemnification in which the Company acts as surety, guarantor or indemnitor;
(ix) any nondisclosure, confidentiality or standstill Contract with any Person (excluding nondisclosure or confidentiality agreements with any Person entered into in the Ordinary Course of Business) to which the Company is a party; and
(x) the ENSCO Agreement and the HEAT Settlement Agreement.
(b) Based on Seller’s knowledge, the Company and each other Person that is a party thereto is in compliance in all material respects under each such Contract, except for such noncompliance as would not have, individually or in the aggregate, a Material Adverse Effect on the Company.
(c) Except as set forth in Section 3.14(a) of the Disclosure Schedule, Seller has made available to Buyer copies of all such written Contracts, and such copies are complete and correct in all material respects, and include all material amendments and modifications thereto.
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(d) Each of the ENSCO Agreement and the HEAT Settlement Agreement is in full force and effect and, to Seller’s knowledge, there are no defenses to the Company’s enforcement of its rights thereunder. Schedule 3.14(d) of the Disclosure Schedule sets forth the aggregate dollar amount of costs and expenses and related liabilities incurred by the Company, as of March 31, 2006, that the Company asserts to be applicable to the $10,000,000 minimum amount specified in the first sentence of Section 1.3(c) of the ENSCO Agreement.
SECTION 3.15 Insurance.
(a) Schedule 3.15(a)-1 of the Disclosure Schedule sets forth a true, complete and correct list of all insurance policies maintained by the Company as of the date hereof. Except as set forth in Schedule 3.15(a)-1 of the Disclosure Schedule, Seller has made available to Buyer true, complete and correct copies of all such policies. Schedule 3.15(a)-2 of the Disclosure Schedule sets forth a true, complete and correct list of all insurance policies maintained by Seller or its Affiliates (other than the Company) with respect to the Company or its assets and properties as of the date hereof. All such policies are in full force and effect, all premiums due and payable under such policies have been paid, and no notice of cancellation or termination has been received with respect to any such policy which has not been replaced on substantially similar terms prior to the date of such cancellation or termination.
(b) There is no material default by the Company or, to the knowledge of Seller, any other Person, with respect to any provision contained in any such policy or binder listed in Schedule 3.15(a)-1 or Schedule 3.15(a)-2 of the Disclosure Schedule.
(c) Each of the insurance policies set forth on Schedule 3.15(a)-2 of the Disclosure Schedule will terminate with respect to the Company upon Closing.
(d) Seller has provided Buyer with a description of each claim made and currently outstanding under any insurance policy, whether now in effect or no longer in effect but under which the Company retains a right to payment, covering the business or properties of the Company.
SECTION 3.16 Environmental Matters.
(a) Except as set forth in Schedule 3.16(a) of the Disclosure Schedule:
(i) the Company is in compliance with all Environmental Laws applicable to the operation of the Company except for such noncompliance that is not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company;
(ii) the Company possesses all permits, licenses, registrations, identification numbers, authorizations and approvals required under applicable Environmental Laws for the operation of the Company as currently conducted except for such failures to possess that are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company;
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(iii) the Company has not received any written claim, notice of violation, citation, formal administrative proceeding, or investigation, inquiry or information request (including, without limitation, any “potentially responsible person” notices) from any Governmental Entity or other Person concerning any violation or alleged violation of, or any potential liability (either directly or indirectly through a claim for indemnity or contribution) arising under, any applicable Environmental Law, except for matters that have been finally resolved or are no longer outstanding or that are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company; and
(iv) there are no currently effective Orders, or any Actions pending or, to the knowledge of Seller, threatened, concerning compliance by the Company or its facilities or operations with any Environmental Law, except for matters that have been finally resolved or are no longer outstanding or that are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company.
(b) Schedule 3.16(b) of the Disclosure Schedule sets forth all third-party solid and hazardous waste treatment, storage and disposal facilities and locations used by the Company at any time since July 25, 2001.
(c) Notwithstanding any other representation and warranty in Article III, the representations and warranties contained in this Section 3.16 constitute the sole representations and warranties of Seller relating to any Environmental Law.
SECTION 3.17 Intellectual Property.
(a) Except as set forth in Schedule 3.17 of the Disclosure Schedule, to the knowledge of Seller, the Company owns, is licensed or otherwise possesses all necessary rights to use (i) all trademarks, service marks, trade names, logos and Internet domain names, and all goodwill associated therewith, and registrations and applications therefor, including any and all renewals; (ii) all processes, methods, inventions, patents, registrations, and applications therefor, including but not limited to divisionals, continuations, continuations-in-part, reexaminations and reissues; (iii) tangible works of expression and copyrights, including but not limited to computer software programs, and any registrations or applications therefor including extensions, renewals, restorations and applications therefor; (iv) confidential and/or proprietary information, and trade secrets; and (v) similar intellectual property rights in the United States ((i) through (v) collectively, “IP Rights”), in each case that are used in the business of the Company as currently conducted, except for any such failures to own, be licensed or possess that are, individually or in the aggregate, not reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as is not reasonably likely to have a Material Adverse Effect on the Company:
(i) no claims have been asserted with respect to (A) the Company’s exclusive rights in, to and under any of the IP Rights owned by the Company; or
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(B) the Company’s violation, misappropriation, wrongful use and/or infringement of any other Person’s rights in, to or under any IP Rights; and
(ii) to the knowledge of Seller, there is no unauthorized use, infringement or other violation of any of the IP Rights owned by the Company or the IP Rights exclusively licensed by the Company by any Person, including but not limited to any employee or former employee of the Company.
SECTION 3.18 Brokers and Finders. Except for Deutsche Bank AG, whose fees, if any, shall be paid by Seller, no agent, broker, investment banker, intermediary, finder, Person or firm acting on behalf of Seller or the Company or which has been retained by or is authorized to act on behalf of Seller or the Company is or would be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, from any of the parties hereto in connection with the execution of this Agreement or upon consummation of the transactions contemplated herein.
SECTION 3.19 Financial Assurances. Schedule 3.19 of the Disclosure Schedule sets forth a true, complete and correct list in all material respects of each guaranty, performance bond, letter of credit or similar instrument (collectively, “Financial Assurances”) under which Seller or one of its Affiliates (other than the Company) is the obligor for the benefit of the Company.
SECTION 3.20 Insurance Relating to El Dorado Incidents. The Company maintains insurance policies, or has adequate reserves on the Interim Balance Sheet, in such coverage amounts as are adequate to insure against all costs, expenses and damages to the Company (including the costs of defense and without deductible or retainage amounts) arising out of third-party claims in respect of the El Dorado Incidents.
SECTION 3.21 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, none of Seller, the Company or any other Person makes any other express or implied representation or warranty on behalf of or with respect to Seller or the Company, and Seller, on behalf of itself, the Company and each of its Representatives, hereby disclaims any such representation or warranty.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date hereof as follows:
SECTION 4.1 Organization and Good Standing. Buyer is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties or assets that it purports to own or use. Buyer is duly qualified or licensed to do business as a foreign corporation and is in good standing as a foreign corporation in each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such licensing, qualification or good standing, except for
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any failure to be so licensed, qualified or in such good standing, which is not reasonably likely to have a Material Adverse Effect on Buyer.
SECTION 4.2 Corporate Authority; Enforceability. Buyer has the full legal right, requisite corporate power and corporate authority and has taken all corporate action necessary in order to execute, deliver and perform fully its obligations under this Agreement and to consummate the transactions contemplated herein. This Agreement is a valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, subject to the Bankruptcy Exception.
SECTION 4.3 Consents and Approvals. Except as set forth in Schedule 3.4 of the Disclosure Schedule, and assuming that the representations and warranties of Seller set forth in Section 3.4 are true and correct, no notices, reports, submissions, applications or other filings are required to be made by Buyer with, nor are any consents, registrations, approvals, declarations, permits, expiration of any applicable waiting periods or authorizations required to be obtained by Buyer from, any Governmental Entity, in connection with the execution or delivery of this Agreement by Buyer, the performance by Buyer of its obligations hereunder or the consummation by Buyer of the transactions contemplated herein the failure to make or obtain any or all of which is reasonably likely to have a Material Adverse Effect on Buyer. In addition, the parties hereto acknowledge that Buyer will file one or more Current Reports on Form 8-K with the SEC relating to the transactions contemplated herein.
SECTION 4.4 No Violations. Assuming the making of the filings and procurement of the consents described in Section 4.3, the execution and delivery of this Agreement by Buyer does not, and the performance and consummation by Buyer of any of the transactions contemplated herein will not, directly or indirectly (with or without the giving of notice or the lapse of time or both):
(a) violate the Articles of Organization or By-Laws of Buyer;
(b) contravene, conflict with, or constitute or result in a breach or violation of, or a default under, or the cancellation, modification or termination of, or the acceleration of, any provision of any Contract by which Buyer is bound, or to which any assets or property of Buyer is subject;
(c) require Buyer to obtain the consent, waiver, authorization or approval of, or give notice to, any Person under any Contract by which Buyer is bound, or to which any assets or property of Buyer is subject; or
(d) violate any applicable Law,
except, in the case of each of (b) through (d), inclusive, which is not reasonably likely to have a Material Adverse Effect on Buyer.
SECTION 4.5 Securities Act. Buyer is acquiring the Membership Interests for its own account and not with a view to their distribution within the meaning of Section 2(11) of the
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SECTION 8.7 Mitigation of Damages.
(a) If any event shall occur which would otherwise entitle an Indemnified Party to assert a claim for indemnification hereunder, no Damages shall be deemed to have been sustained by such Indemnified Party to the extent of any:
(i) net proceeds received by such Indemnified Party from any insurance policy of the Company in effect at any time prior to the Closing (less the costs of recovering such proceeds, retrospective premium adjustments, experience-based premium adjustments or other forms of self-insurance), with respect thereto, from which policies the parties hereto shall make claims for recovery; or
(ii) any offsetting Tax benefits received or to be received by the Indemnified Party.
(b) An Indemnified Party shall pay over to the Indemnifying Party, immediately upon receipt thereof, (i) all insurance recoveries received by the Indemnified Party in respect of, and (ii) all other amounts recovered by the Indemnified Party in reduction, refund or rebate of, or credit for, in each case, any Liability in respect of which the Indemnifying Party has made a payment to the Indemnified Party pursuant to this Article VIII.
SECTION 8.8 Exclusive Remedy. The parties hereto acknowledge and agree that, subject to the provisions of Sections 10.6 and 10.8(e) of this Agreement, the foregoing indemnification provisions in this Article VIII shall be the exclusive remedy of the parties with respect to the transactions contemplated by this Agreement (other than as otherwise expressly provided herein). Each party hereto hereby waives, to the extent that it may do so, any other rights or remedies that may arise at law or in equity, including under any applicable statute, rule or regulation.
ARTICLE IX
TAX MATTERS
SECTION 9.1 Liability for Taxes and Related Matters.
(a) Seller Liability for Taxes. Except to the extent treated as a liability in the calculation of the Working Capital Adjustment, Seller shall be liable for and indemnify Buyer for all Taxes imposed on or due from the Company (i) for any taxable year or period that ends on or before the Closing Date (a “Pre-Closing Period”), and (ii) with respect to any taxable year or period beginning before and ending after the Closing Date (a “Straddle Period”), the portion of such taxable year ending on and including the Closing Date. Except to the extent treated as an asset in the calculation of the Working Capital Adjustment, Seller shall be entitled to any refund of Taxes of the Company received for such periods.
(b) Buyer Liability for Taxes. Buyer shall be liable for and indemnify Seller for all Taxes imposed on or due from the Company for any taxable year or period that begins after
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the Closing Date (a “Post-Closing Period”) and, with respect to any Straddle Period, the portion of such taxable year beginning after the Closing Date.
(c) Taxes for Straddle Periods. To the extent permitted by law or administrative practice in each relevant jurisdiction, the taxable year of the Company shall be closed at the close of business on the Closing Date. To the extent that the taxable year of the Company is not closed pursuant to the previous sentence and it is therefore necessary to determine the liability for Taxes for a Straddle Period, the determination of the Taxes for the portion of the year or period ending on, and the portion of the year or period beginning after, the Closing Date shall be determined by assuming that the Company had a taxable year or period which ended at the close of business on the Closing Date, except that exemptions, allowances or deductions that are calculated on an annual basis (other than net operating losses and tax credits carried forward from years ending prior to the Closing Date), shall be prorated on the basis of the number of days in the annual period elapsed through the Closing Date as compared to the number of days in the annual period elapsing after the Closing Date. Net operating losses and tax credits carried forward from year ending prior to the Closing shall be allocated first, to the extent that they can be utilized, to the taxable year or period ending on the Closing Date.
(d) Adjustment to Purchase Price. Any payment by Buyer, on the one hand, or Seller, on the other hand, under this Section 9.1, pursuant to Article VIII or pursuant to Section 1.3 will be treated as an adjustment to the Purchase Price for all Tax purposes.
(e) Tax Returns. Seller shall file, or cause to be filed, when due all Tax Returns that are required to be filed by or for the Company for taxable years or periods ending on or before the Closing Date, and Buyer shall file, or cause to be filed, when due all Tax Returns that are required to be filed by or for the Company for taxable years or periods ending after the Closing Date. If Seller could be liable for any Taxes with respect to any Tax Return filed by Buyer, Buyer shall (i) cause such Tax Return to be prepared on a basis which is consistent with the Company’s Tax Returns previously filed and in accordance with past practices, (ii) deliver a copy of such Tax Return along with accompanying work papers to Seller not less than thirty (30) days prior to the due date (as extended, if applicable) for the filing of such Tax Return (the “Due Date”), (iii) if, at any time prior to the Due Date, Seller notifies Buyer that Seller objects to any item reflected on such Tax Return which item may affect Seller’s liability for Taxes, Buyer shall, prior to the Due Date, make any and all changes to such item or items requested by the Seller and Buyer shall not file any such Tax Return until it has made such changes and received Seller’s agreement thereto. If Buyer has fully complied with this Section 9.1(e) with respect to a Tax Return to be filed by Buyer, Seller shall pay Buyer the Taxes for which Seller is liable pursuant to Section 9.1(a) but which are payable with such Tax Return within five (5) days (x) prior to the Due Date for the filing of such Tax Returns or (y) after the date that Buyer has provided Seller with the revised Tax Return referred to in clause (iii) of the previous sentence, whichever is later. If Buyer fails to satisfy any of its obligations pursuant to this Section 9.1(e) with respect to any Tax Return, Seller shall, in addition to any other remedies available to Seller, have no obligation to indemnify Buyer for any Taxes reflected on such Tax Return.
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(f) Contest Provisions. Buyer shall promptly notify Seller and provide a copy of such notification to the Tax Director of Seller Parent in writing upon receipt by Buyer, any of its Affiliates or the Company of notice of any pending, proposed, threatened or actual Tax audit or Tax deficiency, assessment or other claim which may affect the Taxes for any Pre-Closing Period or any Straddle Period for which Seller would be liable pursuant to Section 9.1(a). Seller shall promptly notify Buyer in writing upon receipt by Seller or any of its Affiliates of notice of any pending, proposed, threatened or actual Tax audit or Tax deficiency, assessment or other claim which may affect the Taxes for any Straddle Period for which Buyer would be liable pursuant to Section 9.1(b). Seller shall have the sole right to control the defense in any Tax audit or administrative or court proceeding (a “Tax Contest”) relating to any Pre-Closing Period of the Company and to employ counsel and other advisors of its choice at its expense.
In the event of any Tax Contest relating to a Straddle Period of the Company, (i) to the extent the issues can be separated into those for which Seller would be liable under Section 9.1(a) and those for which Buyer would be liable under Section 9.1(b), then each of Seller and Buyer shall control the defense of those issues for which it would be liable, employing counsel and other advisors of its own choice, at its expense, (ii) with respect to all other issues, Buyer shall be entitled to control the defense employing counsel and other advisors of its choice at its expense, provided that Seller (along with counsel and other advisors of its choice) shall be entitled to participate in the defense of and to take over such defense if Buyer is not prosecuting the defense diligently, vigorously and professionally. Neither Buyer nor the Company may agree to settle any Tax claim which may affect the Taxes for which Seller would be liable under Section 9.1(a) without the prior written consent of Seller, which consent shall not be unreasonably withheld.
SECTION 9.2 Transfer Taxes. Any transfer taxes arising from the sale of the Membership Interests shall be borne by Buyer.
SECTION 9.3 Allocation of Purchase Price. Buyer and Seller acknowledge that for U.S. Federal income tax purpose and certain state income tax purposes, the purchase of the Company will be treated as the purchase of assets and the assumption of liabilities by the Buyer. Buyer and Seller agree to determine the total amount of the consideration for such purchase (which shall include the Purchase Price, all adjustments thereto and the amount of the liabilities of the Company treated as assumed by the Buyer for Tax purposes) and to allocate such consideration among the assets of the Company for all Tax purposes in accordance with the rules under Section 1060 of the Code. Prior to Closing, Seller will prepare and provider to Buyer a preliminary allocation schedule setting forth the estimated amount of the consideration and its allocation, and such schedule shall be finalized and agreed to after the Purchase Price is determined. Seller and Buyer agree to file IRS Forms 8594 reporting such determination and allocation and to follow such determination and allocation for all Tax reporting purposes. If the total consideration is adjusted after the final allocation schedule has been prepared and agreed to, Seller will prepare and provide to Buyer a revised allocation schedule and Buyer and Seller will file amended IRS Forms 8594 reflecting the revised allocation schedule.
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SECTION 9.4 No Tax Withholding. Provided that Seller has delivered the certificate described in Section 6.3(a)(vi), Buyer shall not withhold any amount in respect of Taxes from the Purchase Price.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Assignments; Successors; No Third Party Rights. No party may assign any of its rights under this Agreement without the prior written consent of the other party hereto (which may not be unreasonably withheld or delayed), and any purported such assignment without such consent shall be void. Subject to the foregoing, this Agreement and all of the provisions hereof shall apply to, be binding upon, and inure to the benefit of the parties hereto and their successors and permitted assigns and the parties indemnified pursuant to Article VIII. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto any rights or remedies of any nature whatsoever under or by reason of this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns.
SECTION 10.2 Entire Agreement. This Agreement, including the Disclosure Schedule and exhibits hereto and the other agreements and written understandings referred to herein or otherwise entered into by the parties hereto on the date hereof, constitutes the entire agreement and understanding and supersedes all other prior covenants, agreements, undertakings, obligations, promises, arrangements, communications, representations and warranties, whether oral or written, by any party hereto or by any director, manager, officer, employee, agent, Related Person or Representative of any party hereto. There are no covenants, agreements, undertakings or obligations with respect to the subject matter of this Agreement other than those expressly set forth or referred to herein and no representations or warranties of any kind or nature whatsoever, express or implied, including any implied warranties of merchantability or fitness for a particular purpose, are made or shall be deemed to be made herein by the parties hereto except those expressly made herein.
SECTION 10.3 Amendment or Modification. This Agreement may be amended or modified only by written instrument signed by all of the parties hereto.
SECTION 10.4 Notices. All notices, requests, instructions, claims, demands, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given on the date delivered by hand or by courier service (such as Federal Express), or by other messenger (or, if delivery is refused, upon presentment), or upon receipt by facsimile transmission, or upon delivery by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses:
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(a) If to Buyer:
Clean Harbors, Inc.
1501 Washington Street
Braintree, MA 02185
Telephone: 781-849-1800
Facsimile: 781-848-1632
Attention: Chief Financial Officer
With a copy to:
Davis, Malm & D’Agostine, P.C.
One Boston Place, 37th Floor
Boston, MA 02108
Telephone: 617-589-3803
Facsimile: 617-305-3103
Attention: C. Michael Malm
(b) If to Seller:
SITA U.S.A., Inc.
c/o Suez Environnement, S.A.
1, Rue d’Astorg
75383 Paris Cedex 08 France
Telephone: +33 (0) 1-58-185000
Facsimile: +33 (0) 1-58-184863
Attention: Directeur Juridique
With a copy to:
Suez Environnement, S.A.
1, Rue d’Astorg
75383 Paris Cedex 08 France
Telephone: +33 (0) 1-58-185000
Facsimile: +33 (0) 1-58-184863
Attention: Directeur Juridique
And a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: Richard A. Pollack
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or to such other persons or addresses as the person to whom notice is given may have previously furnished to the other in writing in the manner set forth above (provided that notice of any change of address shall be effective only upon receipt thereof).
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 10.6 Arbitration.
(a) Except as set forth in Section 10.6(b), any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration administered by the American Arbitration Association (the “AAA”) in accordance with its Commercial Arbitration Rules, and Title 9 of the U.S. Code. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The number of arbitrators shall be one (1), and such arbitrator shall be selected by mutual agreement of the parties, if possible, and thereafter by the administering authority, and the place of arbitration shall be New York, New York. The arbitrator may award the costs of the arbitration to the prevailing party and should in so doing consider the extent (in percentage terms, if possible) to which each party has prevailed on its claims or counterclaims. The arbitrator will have no authority to award punitive damages or any other damages not measured by the prevailing party’s actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of the Agreement. Either party may make an application to the arbitrator seeking injunctive relief to maintain the status quo until such time as the arbitration award is rendered or the controversy is otherwise resolved. Either party may apply to any court having jurisdiction hereof and seek injunctive relief in order to maintain the status quo until such time as the arbitration award is rendered or the controversy is otherwise resolved.
(b) The provisions of Section 10.6(a) shall not apply to the matters described in Section 1.3 of this Agreement, which shall be resolved as described therein.
SECTION 10.7 Severability. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without invalidating the remainder of such provision or provisions or the remaining provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein, unless such a construction would be unreasonable.
SECTION 10.8 Confidentiality.
(a) Following the Closing, Seller shall treat as confidential and shall safeguard and not use to the detriment of Buyer or its Affiliates any and all information, knowledge and data of the Company by using the same degree of care, but no less than a reasonable standard of care, to
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prevent the unauthorized use, dissemination or disclosure of such information, knowledge and data as Seller used with respect thereto prior to the execution of this Agreement.
(b) Buyer shall treat as confidential and shall safeguard and not use to the detriment of Seller or its Affiliates any information relating to the business of Seller and its Affiliates; provided, however, that nothing in this Section 10.8(b) shall prevent the disclosure of any such information, knowledge or data to any directors, officers or employees of Buyer to whom such disclosure is necessary or desirable in the conduct of the business of the Company following the Closing if such Persons are informed by Buyer of the confidential nature of such information and are directed by Buyer to comply with the provisions of this Section 10.8(b). Buyer acknowledges that its failure to maintain as confidential any and all information of Seller and its Affiliates, in accordance with this Section 10.8(b), could cause Seller and its Affiliates irreparable harm and, thus, it agrees to use its best efforts to maintain as confidential and safeguard such information.
(c) The parties hereto acknowledge that the confidentiality obligations set forth herein shall not extend to information, knowledge and data that (i) is or becomes generally available to the public other than as a result of disclosure of a party in breach of this Section 10.8, (ii) is required to be disclosed by a court or Governmental Entity of competent jurisdiction, (iii) was or becomes available to a party hereto on a non-confidential basis from a source (other than the party owing a duty of confidentiality under this Section 10.8) or (iv) is necessary or appropriate to be disclosed in making a filing required by Law or for obtaining any consent or approval required for the consummation of the transactions contemplated herein.
(d) If the transactions contemplated by this Agreement are not consummated for any reason, the parties hereto shall promptly return to each other all books, records and any other information (whether written or in electronic form) furnished by a party, its Affiliates or Representatives (including all copies, if any, thereof).
(e) In the event of a breach of the obligations hereunder by Buyer or Seller, the aggrieved party, in addition to all other available remedies, will be entitled to injunctive relief to enforce the provisions of this Section 10.8 in any court of competent jurisdiction.
SECTION 10.9 Actions of the Company. Whenever this Agreement requires the Company to take any action, such requirement shall be deemed to involve, with respect to actions to be taken at or prior to the Closing, an undertaking on the part of Seller to cause the Company to take such action and, with respect to actions to be taken after the Closing, an undertaking on the part of Buyer to cause the Company to take such action.
SECTION 10.10 Descriptive Headings; Construction. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning, construction or interpretation of, this Agreement. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “or” has the inclusive
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meaning frequently identified with the phrase “and/or,” (d) “including” has the inclusive meaning frequently identified with the phrase “including, but not limited to,” and (e) references to “hereunder” or “herein” relate to this Agreement.
SECTION 10.11 Counterparts. For the convenience of the parties hereto, this Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.
SECTION 10.12 Knowledge. When references are made in this Agreement to information being “to the knowledge of Seller” or similar language, such knowledge shall refer to the knowledge of the officers set forth in Schedule 10.12 of the Disclosure Schedule. Such individuals shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact or other matter (and shall not include any deemed or constructive knowledge or awareness).
SECTION 10.13 Schedules. The disclosure of any matter in any schedule to the Disclosure Schedule shall be deemed to be a disclosure for all other schedules of the Disclosure Schedule in respect of which it is evident such matter relates, but shall expressly not be deemed to constitute an admission by Seller or Buyer or to otherwise imply that any such matter is material for the purposes of this Agreement.
SECTION 10.14 Definitions. For the purposes of this Agreement:
“AAA” has the meaning set forth in Section 10.6(a) herein.
“Accounting Expert” has the meaning set forth in Section 1.3(d) herein.
“Accounts Receivable” has the meaning set forth in Section 3.6(c) herein.
“Acquired Employee” means any active employee of the Company on the Closing Date, plus any employee of the Company who is on leave of absence, paid or unpaid, or who is otherwise absent from active employment for any other reason and whose employer-employee relationship with the Company has not been terminated by the Company prior to the Closing Date.
“Action” means a civil, criminal or administrative action, suit, demand, claim, hearing, proceeding (including without limitation any dispute resolution proceeding) or investigation.
“Adjustment Amount” has the meaning set forth in Section 1.3(c) herein.
“Affiliate” means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person, including, without limitation, each Subsidiary of such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through ownership of voting securities or by contract, credit arrangement or
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otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agreement” has the meaning set forth in the preamble hereto.
“Balance Sheet” has the meaning set forth in Section 3.6(a) herein.
“Bankruptcy Exception” has the meaning set forth in Section 3.3 herein.
“Business Day” means any day other than a Saturday, Sunday or a day on which banks are required or authorized to be closed in the City of New York.
“Buyer” has the meaning set forth in the preamble hereto.
“Buyer’s Advisors” has the meaning set forth in Section 5.2(a) herein.
“Buyer Indemnified Persons” has the meaning set forth in Section 8.2 herein.
“Cap” has the meaning set forth in Section 8.4(a) herein.
“Closing” has the meaning set forth in Section 2.1 herein.
“Closing Date” has the meaning set forth in Section 2.1 herein.
“Closing Payment” has the meaning set forth in Exhibit 1.2 hereto.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“Company” has the meaning set forth in the recitals herein.
“Company’s Organizational Documents” has the meaning set forth in Section 3.1(b) herein.
“Competing Business” has the meaning set forth in Section 5.9(a) herein.
“Contract” means an agreement, license, lease, sublease, insurance policy, understanding, contract, license, instrument of indebtedness, mortgage, indenture, promise, undertaking or other commitment or obligation.
“Damages” has the meaning set forth in Section 8.2 herein.
“De Minimis Loss” has the meaning set forth in Section 8.4(b) herein.
“Dollars” and the sign “$” each mean the lawful money of the United States of America.
“Due Date” has the meaning set forth in Section 9.1(e) herein.
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“El Dorado Incidents” means the fires at the Company’s El Dorado facility on January 2, 2005 and July 2, 2005.
“ENSCO Agreement” means the Asset Purchase Agreement, by and among the Company, Environmental Systems Company, ENSCO, Inc., MSE Environmental, Inc. and ENSCO West, Inc., dated as of June 27, 2001, as amended by the Settlement and Release Agreement and Amendment No. 1 to the Asset Purchase Agreement, dated October 30, 2003.
“Environmental Law” means any and all federal, state or local law, the common law, or judicial or administrative decision, regulation or order, regulating, pertaining to or imposing liability, penalties or fines for: (i) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (ii) the manufacture, recycling, sale, handling, transport, use, reuse, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; (iii) pollution of the environment or the protection of human health, safety or welfare from exposure to any Hazardous Substance; or (iv) the protection of the environment, wildlife, marine sanctuaries and wetlands, including but not limited to all endangered and threatened species. Environmental Laws shall include, without limitation, the federal Comprehensive Environmental Response, Compensation and Liability Act; the Solid Waste Disposal Act; the Toxic Substances Control Act; the Atomic Energy Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Clean Water Act; the Clean Air Act; the Oil Pollution Act of 1990; the Emergency Planning and Community Right to Know Act; the National Environmental Policy Act; the Endangered Species Act; and the Safe Drinking Water Act, in each case, as amended.
“ERISA” has the meaning set forth in Section 3.10(a) herein.
“ERISA Affiliate” means any entity required to be treated as a single employer with Seller under Section 414 of the Code or Section 4001 of ERISA, other than the Company.
“Finally determined” has the meaning set forth in Section 8.5(b) herein.
“Financial Assurances” has the meaning set forth in Section 3.19 herein.
“Financial Debt” has the meaning set forth in Exhibit 1.2 hereto.
“Financial Statements” has the meaning set forth in Section 3.6(a) herein.
“GAAP” means generally accepted accounting principles in the United States of America as in effect immediately prior to the Closing.
“Governmental Entity” means any federal, state, local, municipal, county or other governmental, quasi-governmental, judicial, legislative, administrative or regulatory authority, body, agency, court, tribunal, commission or other similar entity (including any branch, department or official thereof).
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“Hazardous Substance” means (i) those materials, pollutants and/or substances defined as such in the following federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum products including crude oil and any fractions thereof; (iii) natural gas, synthetic gas and any mixtures thereof; and (iv) radon.
“HEAT Settlement Agreement” means HEAT Site, Sales and Marketing, and Procurement Settlement Agreement, among Seller Parent, Seller, the Company, Rhodia, Inc., Rhodia S.A. and HEAT Treatment Services Inc., dated December 13, 2004.
“HEAT Site” means the real property formerly owned by the Company located at 4460 Singleton Boulevard, Dallas, Texas, 75212.
“IFRS” means International Financial Reporting Standards as in effect immediately prior to the Closing.
“Indemnified Party” has the meaning set forth in Section 8.1 herein.
“Indemnifying Party” has the meaning set forth in Section 8.1 herein.
“Interim Balance Sheet” has the meaning set forth in Section 3.6(a) herein.
“IP Rights” has the meaning set forth in Section 3.17(a) herein.
“IRS” means the United States Internal Revenue Service.
“Knowledge” has the meaning set forth in Section 10.12 herein.
“Law” means any federal, state, foreign or local law, statute, ordinance, rule, regulation, Order, judgment, award, declaration, decision or decree by any Governmental Entity.
“Leased Real Property” has the meaning set forth in Section 3.13(c) herein.
“Liability” means any debt, liability, commitment or obligation of any kind, character or nature whatsoever, whether known or unknown, choate or inchoate, secured or unsecured, accrued, fixed, absolute, contingent or otherwise, and whether due or to become due.
“LIBOR” means (i) an one-month London interbank offered rate shown on page 3750 of Telerate or any successor page as the composite offered rate for London interbank dollar deposits as shown under the heading “USD,” as of 11:00 a.m. London time on the second Business Day preceding the Closing Date; (ii) if the rate specified in clause (i) of this definition does not appear, an interest rate per annum based on the rates at which dollar deposits for such specified period are displayed on page ”LIBO” of the Reuters Monitor Money Rates Service or such other page as may
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replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks as of 11:00 a.m. London time on the second Business Day preceding the Closing Date, it being understood that if two or more rates appear on such page, LIBOR will be the arithmetic average of such displayed rates and if fewer than two such rates are displayed, this clause (ii) of this definition shall not be applicable; and (iii) if the rate specified in clause (i) does not appear and if clause (ii) of this definition is not applicable, an interest rate per annum equal to the average of the rates per annum at which dollar deposits for such specified period in immediately available funds for delivery two (2) Business Days thereafter are offered by four leading banks in the London interbank dollar market selected by Seller at approximately 11:00 a.m. London time on such day.
“Liens” means any charges, claims, community property interests, conditions, conditional sale or other title retention agreements, covenants, easements, encumbrances, equitable interests, exceptions, liens, mortgages, options, pledges, reservations, rights of first refusal, building use restrictions, rights of way, security interests, servitudes, statutory liens, variances, warrants, or restrictions of any kind, including any restrictions on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.
“Material Adverse Effect” on a Person means a material adverse effect on the financial condition, properties, business, operations, assets, results of operations or prospects of the Person and its Subsidiaries, taken as a whole; provided, however, that a Material Adverse Effect shall not include an effect resulting from any change (i) in Law (with respect to the Company, other than any change in Law that has a materially disproportionate effect on the operations of the Company’s El Dorado facility as compared to the industry as a whole) or GAAP or interpretations thereof that apply to the Person, (ii) that is the result of factors generally affecting the industries in which the Person or its operations participates, (iii) in local, regional, national or international conditions affecting the business of such Person generally, (iv) in the United States economy or financial markets generally, (v) that is the result of an unplanned shutdown or extended outage of the Company’s El Dorado facility that has been remedied prior to Closing or (vi) that is the result of the public announcement of the transactions contemplated hereunder.
“Membership Interests” has the meaning set forth in the recitals herein.
“Order” means any award, decision, injunction, judgment, decree, settlement, order, process, ruling or verdict entered, issued, made or rendered by any court, administrative agency, arbitrator, other Governmental Entity or other tribunal of competent jurisdiction.
“Ordinary Course of Business” means, with respect to any Person, the ordinary and usual course of business of such Person, in a manner consistent with such Person’s past practice.
“Outside Date” has the meaning set forth in Section 7.1(b) herein.
“Owned Real Property” has the meaning set forth in Section 3.13(b) herein.
“Permitted Liens” has the meaning set forth in Section 3.13(a) herein.
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“Person” means any individual, firm, corporation, general or limited partnership, limited liability company, Governmental Entity, joint venture, estate, trust, association, organization or other entity of any kind or nature.
“Post-Closing Period” has the meaning set forth in Section 9.1(b) herein.
“Pre-Closing Period” has the meaning set forth in Section 9.1(a) herein.
“Purchase Price” has the meaning set forth in Exhibit 1.2 hereto.
“Purchase Price Adjustment Items” has the meaning set forth in Exhibit 1.2 hereto.
“Real Property Leases” has the meaning set forth in Section 3.13(c) herein.
“Related Person” means, with respect to a Person, any Affiliate of such Person, and any officer, director, manager, partner, stockholder, member, employee, agent or representative of such Person or of any such Person’s Affiliates.
“Representatives” means, with respect to a Person, the officers, directors, managers, employees, agents, consultants, advisors or other representative of such Person, including legal counsel, accountants and financial advisors.
“Retained Employees” has the meaning set forth in Section 5.9(b) herein.
“Review Period” has the meaning set forth in Section 1.3(b) herein.
“Securities Act” means the Securities Act of 1933, as amended.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Seller” has the meaning set forth in the preamble hereto.
“Seller Benefit Plans” has the meaning set forth in Section 3.10(a) herein.
“Seller Group” means any “affiliated group” (as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(b) of the Code) that includes Seller or any predecessor of or successor to Seller (or another such predecessor or successor).
“Seller Indemnified Persons” has the meaning set forth in Section 8.3 herein.
“Seller Parent” means Suez Environnement, S.A.
“Seller Parent Financial Statements” has the meaning set forth in Section 3.6(a) herein.
“Seller Parent Guarantee” has the meaning set forth in Section 6.1(f) herein.
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“Service Date” means, with respect to an employee of the Company, the earlier of (i) the date such employee commenced employment at the Company or (ii) the date on which such employee is deemed to have commenced employment at the Company for purposes of the Seller Benefit Plans by reason of credit for employment by a prior employer.
“Statement of Objections” has the meaning set forth in Section 1.3(c) herein.
“Straddle Period” has the meaning set forth in Section 9.1(a) herein.
“Subject Company” has the meaning set forth in Section 5.9(a) herein.
“Subsidiary” means with respect to any Person, any corporation or other entity of which such Person has, directly or indirectly, ownership of securities or other interests having the power to elect a majority of such corporation’s board of directors (or similar governing body), or otherwise having the power to direct the business and policies of that corporation other than securities or interests having such power only upon the happening of a contingency that has not occurred.
“Tax” or “Taxes” shall mean all federal, state, local or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, employment, withholding or similar taxes imposed on the income, properties or operations of the Company or the Seller Group, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Tax Contest” has the meaning set forth in Section 9.1(f) herein.
“Tax Returns” means any return, report, notice, form, declaration, claim for refund, estimate, election, or information statement or other document relating to any Tax, including any schedule or attachment thereto, and any amendment thereof.
“Third Party Claim” has the meaning set forth in Section 8.6(a) herein.
“Ultimate Parent” means Suez, S.A.
“Unaudited June 30 Financial Statements” has the meaning set forth in Section 3.6(a) herein.
“WARN Act” has the meaning set forth in Section 3.7(d) herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers duly authorized as of the date first written above.
| | SITA U.S.A., INC. |
| | |
| By: | /s/ ERIC GERNATH |
| | Name: Eric Gernath |
| | Title: Chief Executive Officer |
| | |
| | CLEAN HARBORS, INC. |
| | |
| By: | /s/ ALAN S. McKIM |
| | Name: Alan S. McKim |
| | Title: Chief Executive Officer |
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EXHIBIT 1.2
The Purchase Price shall be calculated in accordance with the table and defined terms as set forth below:
| | Amount | | |
Beginning with | | $52,700,000(1) | | (the Closing Payment), |
then plus (if positive) or minus (if negative) | | $ | | (the CapEx Adjustment), |
then plus (if positive) or minus (if negative) | | $ | | (the Working Capital Adjustment), |
then plus | | $ | | (the Cash Balance at Closing), |
equals | | $ | | (the “Purchase Price”), subject to the Purchase Price Cap. |
(1) Reflects a reduction in respect of anticipated severance expenses, which are for Buyer’s account.
where:
“Closing Payment” means $52,700,000. For the avoidance of doubt, the Closing Payment shall be determined without taking into account the Financial Debt;
“Financial Debt” means the aggregate principal amount outstanding of the (i) Tax-Exempt Adjustable Mode Environmental Facilities Revenue Bonds (Ensco, Inc. Project) Series 2000, (ii) Tax-Exempt Adjustable Mode Environmental Facilities Revenue Bonds (Ensco, Inc. Project) Series 2001, and (iii) Tax-Exempt Variable Rate Demand/Fixed Rate Environmental Facilities Revenue Bonds (Teris L.L.C. Project) Series 2000, each of which was issued by the Arkansas Development Finance Authority;
“CapEx Adjustment” means the difference between (a) the aggregate amount of capital expenditures that were included in the “2006 Budget Month by month.xls” file (attached as Annex 1 hereto) and actually made by the Company during the period beginning on January 1, 2006 and ending on the Closing Date and (b) the aggregate amount of capital expenditures that were anticipated to have been made by the Company during such period, according to the “2006 Budget Month by month.xls” file (with proration as required to the extent that the Closing Date occurs between measurement dates therein);
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“Working Capital Adjustment” means the difference between (a) Working Capital as of Closing and (b) Working Capital as of March 31, 2006, which is calculated (utilizing the defined terms below) as follows:
Current Assets
Trade Accounts Receivables, net | | 22,627,000 | |
Other Accounts Receivable | | 4,235,000 | |
Parts Inventories | | 5,908,000 | |
Prepaids and Other Current Assets | | 2,278,000 | |
| | | |
Subtotal | | 35,048,000 | |
| | | |
LESS: Affiliate Receivables | | (2,179,000 | ) |
Receivables for Expected Insurance Reimbursement | | (1,980,000 | ) |
| | | |
Total Current Assets | | 30,889,000 | |
Current Liabilities
Accounts Payable | | 11,067,000 | |
Accrued Liabilities | | 6,218,000 | |
Accrued Disposal Costs | | 3,485,000 | |
| | | |
Subtotal | | 20,770,000 | |
| | | |
LESS: Partial Reversal of Reserves | | (200,000 | ) |
| | | |
Total Current Liabilities | | 20,570,000 | |
| | | |
WORKING CAPITAL AS OF MARCH 31, 2006 | | 10,319,000 | |
“Working Capital” means the difference between:
(a) “Current Assets”, which for purposes of this Agreement is the sum of (i) trade accounts receivables, net, (ii) other accounts receivables, (iii) parts inventories and (iv) prepaid and other current assets, less (x) receivables for expected insurance reimbursement (which, as of March 31, 2006, was in the amount of $1,980,000)(2) and (y) receivables, if any, from any Affiliate of the Company, but (z) does not include cash; and
(2) To the extent such expected insurance reimbursement (or recoveries for deductibles or other uninsured loss related thereto) is not received by the Company prior to Closing, Seller shall have the option to cause the assignment by the Company of such claims to Seller or any of its Affiliates. If Seller does not elect to cause such assignment, or if such assignment is determined to be illegal or impermissible, then Buyer shall use its reasonable best efforts to cause the Company to pursue such claims and to promptly pay over any recoveries received following the Closing to Seller. See Section 5.18.
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(b) “Current Liabilities”, which for purposes of this Agreement is the sum of (i) accounts payables, (ii) accrued liabilities (including interest on the Financial Debt and any benefits accrued by Acquired Employees under the Company’s vacation policy and sick leave program) and (iii) accrued disposal cost (as calculated based upon a physical inventory conducted by Buyer as of the Closing Date, and using the same methodology employed by the Company in preparing the Balance Sheet), less (x) $200,000 (representing a partial reversal of reserves), but does not include (y) the Company’s obligations in respect of the Financial Debt;
“Cash Balance at Closing” means the amount of cash in the Company’s cash account as of Closing; and
“Purchase Price Adjustment Items” means, collectively, the CapEx Adjustment, the Working Capital Adjustment and the Cash Balance at Closing.
“Purchase Price Cap” means $56,000,000. For the avoidance of doubt, in no event shall the Purchase Price (as adjusted by all Purchase Price Adjustment Items) exceed $56,000,000.
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ANNEX 6.1(f)
GUARANTEE
GUARANTEE dated as of ______________, 2006 by Suez Environnement, S.A., a société anonyme incorporated under the laws of France (the “Guarantor”), in favor of Clean Harbors, Inc., a Massachusetts corporation (the “Guaranteed Party”).
Section 1. Guarantee. The Guarantor absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party the prompt payment when due, subject to any applicable grace period, of all present and future payment obligations (the “Obligations”) of SITA U.S.A., Inc. (the “Obligor”) to the Guaranteed Party under Section 8.2 and Section 9.1(a) of the Purchase and Sale Agreement, dated as of May 3, 2006 (the “Guaranteed Agreement”), between the Obligor and the Guaranteed Party. For the avoidance of doubt, Guarantor’s obligations hereunder shall be subject to compliance by the Guaranteed Party with the provisions of Article VIII and Article IX, as the case may be, of the Guaranteed Agreement, and in no event shall exceed the limitations on the Obligor’s indemnification obligations set forth in Section 8.4 of the Guaranteed Agreement.
Section 2. Nature of Guarantee. The Guarantor’s obligations hereunder shall not be affected by the existence, validity, enforceability, perfection or extent of any collateral for the Obligations or by any other circumstance relating to the Obligations that might otherwise constitute a legal or equitable discharge of or defense to the Guarantor, except that, save as expressly provided herein, the Guarantor does not waive any defense that is available to the Obligor. The Guarantor agrees that the Guaranteed Party may resort to the Guarantor for payment of any of the Obligations whether or not such Guaranteed Party shall have resorted to any collateral therefor or shall have proceeded against the Obligor or any other obligor principally or secondarily obligated with respect to any of the Obligations. The Guaranteed Party shall not be obligated to file any claim relating to the Obligations in the event that the Obligor becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party so to file shall not affect the Guarantor’s obligations hereunder. In the event that any payment to the Guaranteed Party in respect of any Obligation is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligation as if such payment had not been made. The Guarantor reserves the right to assert defenses which the Obligor may have to payment of any Obligation other than (a) defenses arising from the bankruptcy or insolvency of the Obligor and (b) defenses based on (i) the corporate status of the Obligor and (ii) the power and authority of the Obligor to enter into the Guaranteed Agreement and to perform its obligations thereunder or the failure by the Obligor to obtain any necessary consents to enter into any of the Guaranteed Agreement or to perform the said obligations.
Section 3. Subrogation. The Guarantor will not exercise any rights which it may acquire by way of subrogation until all the Obligations to the Guaranteed Party shall have been indefeasibly paid in full. Subject to the foregoing, upon payment of any of the Obligations, the Guarantor shall be subrogated to the rights of the Guaranteed Party against the Obligor with respect to the Obligations, and the Guaranteed Party agree to take at the Guarantor’s expense such steps as the Guarantor may reasonably request to implement such subrogation.
Section 4. No Waiver; Cumulative Rights. No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. Each and every right, remedy and power hereby granted to the Guaranteed Party or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 5. Representations and Warranties. The Guarantor hereby represents and warrants as of the date of this Guarantee that:
(a) the Guarantor is duly organized, validly existing and in good standing under the laws of France and has full corporate power to execute, deliver and perform this Guarantee;
(b) the execution, delivery and performance of this Guarantee have been and remain duly authorized by all necessary corporate action and do not contravene any provision of the Guarantor’s certificate of incorporation or bylaws, as amended to date, or any law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets; and
(c) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
Section 6. Assignment. Neither the Guarantor nor the Guaranteed Party may assign its rights, interests or obligations hereunder to any other person (except by operation of law) without the prior written consent of the Guarantor or the Guaranteed Party, as the case may be.
Section 7. Notices. All notices or demands on the Guarantor shall be deemed effective when received, shall be in writing and shall be delivered by hand or by registered mail, or by facsimile transmission promptly confirmed by registered mail, addressed to the Guarantor at:
Suez Environnement, S.A.
1, Rue d’Astorg
75383 Paris Cedex 08 France
Telephone: +33 (0) 1-58-185000
Facsimile: +33 (0) 1-58-184863
Attention: Directeur Juridique
With a copy to:
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: Richard A. Pollack
or to such other address or facsimile number as the Guarantor shall have notified the Guaranteed Party in a written notice delivered to the Guaranteed Party in accordance with the Guaranteed Agreement.
Section 8. Continuing Guarantee. This Guarantee shall remain in full force and effect and shall be binding on the Guarantor, its successors and assigns until all of the Obligations have been satisfied in full.
Section 9. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 10. Arbitration. Any controversy or claim arising out of or relating to this Guarantee or the breach hereof shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and Title 9 of the U.S. Code. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The number of arbitrators shall be one (1), and such arbitrator shall be selected by mutual agreement of the Guarantor and the Guaranteed Party, if possible, and thereafter by the administering authority, and the place of arbitration shall be New York, New York. The arbitrator may award the costs of the arbitration to the prevailing party and should in so doing consider the extent (in percentage terms, if possible) to which each party has prevailed on its claims or counterclaims. The arbitrator will have no authority to award punitive damages or any other damages not measured by the prevailing party’s actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Guarantee.
IN WITNESS WHEREOF, this Guarantee has been duly executed and delivered by the Guarantor to the Guaranteed Party as of the date first above written.
SUEZ ENVIRONNEMENT, S.A.
