EXHIBIT 10.2
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
This Amendment No. 1, dated as of September 28, 1998, amends the terms and
conditions of that certain Stock Purchase Agreement between Eastern
Environmental Services, Inc. and the shareholders of Xxxxxxxx Xxxxxxx Disposal,
Inc., Xxxx X. Xxxxxxx & Sons Sanitation Services, Inc., Tri-State Recycling &
Fibers, Inc. and Interstate Recycling Corp., dated as of August 6, 1998 (the
"Stock Purchase Agreement" a copy of which is attached hereto), as set forth
herein:
RECITALS
WHEREAS, the Stock Purchase Agreement, together with all schedules and
exhibits thereto, was executed by Eastern Environmental Services, Inc.
("Eastern"), and Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx and Xxxxxx
Xxxxx Xxxxxxx (collectively, the "Sellers"); and
WHEREAS, Eastern and the Sellers have agreed that certain terms of the
Stock Purchase Agreement shall be modified as set forth herein, and that the
Stock Purchase Agreement, as amended, shall remain in full force and effect;
NOW, THEREFORE in consideration of the mutual promises, terms and
conditions set forth herein and other good and valuable consideration, received
to the full satisfaction of each of them, the parties hereto covenant and agree
as follows:
1. Amendments. The terms and conditions of the Stock Purchase Agreement
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are hereby amended as follows:
(a) Section 1.2 of the Stock Purchase Agreement is deleted in
its entirety and replaced by the following new Section 1.2:
"Section 1.2 Time and Place for Closing.
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Closing under this Agreement shall take place
within five (5) business days after all
conditions precedent including those set
forth in Section 7.7 and Section 8.5
(regarding governmental approvals and
consents) have been satisfied (provided that
all Schedules and all financial information
required to be delivered by Sellers to
Eastern have been delivered by that date),
and simultaneously with the Closing on that
certain Stock and Partnership Interest
Purchase Agreement of even date herewith
between Eastern as the Purchaser and Xxxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx,
and Xxxx Xxxxxxx as the Sellers, (the "Stock
and
Partnership Interest Purchase Agreement")
time being of the essence, at the office of
Eastern Environmental Services, Inc., 0000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxx
Xxxxxx 00000, or such other time and place as
the parties hereto may agree upon. The
parties expect to close by October 31, 1998.
The date that Closing occurs is referred to
hereinafter as the "Closing Date" and the act
of closing as "Closing." The exact Closing
Date shall be established by a written notice
sent by Eastern to Sellers."
(b) Section 1.3(a) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.3(a):
"Section 1.3 Agreement to Sell Stock of
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Companies; Consideration. (a) At the Closing,
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each of the Sellers agrees to transfer and
deliver to Eastern all of the Company Shares
owned by such Seller, as applicable, and
Eastern shall deliver to Sellers shares of
the common stock of Eastern having a value of
$6,250,000 (the "EESI Stock"), subject to
adjustment as provided herein in this Section
1.3, each share being valued at $30.50 ("Per
Share Value"). The value of the aggregate
number of shares of EESI Stock to be
delivered to Sellers shall be reduced, dollar
for dollar, by the amount of liabilities of
the Companies as of the Closing Date
("Company Debt"); except that if the Company
Debt is increased after the date hereof to
buy new equipment to service new customers,
and Eastern approves in writing the
acquisition of such new equipment, the
increase in liabilities to finance that new
equipment will not be included in Company
Debt for the purposes of computing the amount
of EESI Stock to be delivered to Sellers. The
Company Debt as of the date of this Agreement
is listed by creditor on Schedule 1.3(a)
attached hereto. Immediately prior to the
Closing, the Sellers shall update Schedule
1.3(a). In the Event that Eastern and Ocho
Acquisition Corporation, a Delaware
corporation, have consummated their
contemplated merger (the "Merger") prior to
the Closing, Eastern shall be permitted to
assign its rights and obligations hereunder
to its ultimate parent corporation, Waste
Management, Inc., a Delaware corporation
("WMI"), and then WMI
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may tender its freely tradeable registered
stock in an amount equal to the number of
shares that would have been issued pursuant
to the Merger with respect to the number of
Eastern shares that would have been tendered
by Eastern hereunder, provided, that to the
extent required by the Merger, cash may be
tendered for fractional shares."
(c) Schedule 1.3(b) is deleted in its entirety and replaced by the
new Schedule 1.3(b) attached hereto.
(d) Section 1.3(c) is added to the Stock Purchase Agreement and reads
as follows:
"Provided that the Companies have accrued at
least $1,000,000 of liability during the six
month period ending December 31, 1997 for
fines and costs to the New Jersey Department
of Environmental Protection, then all
obligations of the Companies which were
accrued for, payable to the State of New
Jersey, Department of Environmental
Protection, pursuant to the Administrative
Consent Order signed on behalf of the New
Jersey Department of Environmental Protection
on September 15, 1998 shall be deemed a
Company Debt to be taken into account under
Section 1.3(a) as a negative adjustment to
the consideration. Eastern will then take all
action necessary or appropriate to cause the
Companies to pay such obligation."
(e) Section 1.3(d) is added to the Stock Purchase Agreement and reads
as follows:
"Inter-company Debts. Attached hereto as
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Schedule 1.3(d) is a list of all inter-
company liabilities, together with a copy of
the applicable interest bearing demand notes
and applicable personal guarantees of the
Sellers other than Xxxx Xxxxxxx. Each demand
note is a bona fide obligation of the
obligor, is in full force and effect, and has
a fair market value equal to the balance due
thereon. Within two (2) days after the
Closing Date, Eastern shall take all action
necessary or appropriate to cause the inter-
company liabilities to be satisfied in full.
At such time as the inter-company liabilities
are satisfied, the applicable demand note
will be
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marked paid, and Eastern shall deliver to
each Seller a copy of his personal guarantee
marked satisfied. In addition, if Eastern
fails to cause the inter-company debt to be
satisfied in full, Eastern will indemnify the
Sellers on their personal guarantees.
(f) Section 1.5(b) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.5(b):
"(b) Intentionally Left Blank."
(g) Section 1.5(d) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.5(d):
"(d) by Eastern or Sellers, if the Closing
shall not have occurred by November 30, 1998,
or such other date as may be agreed to by the
parties hereto in writing, due to the non-
fulfillment of a condition precedent to such
party's obligation to close as set forth at
Articles VII or VIII hereof, as applicable
(through no fault or breach by the
terminating party). However, if the only
conditions to Closing which have not been
satisfied are the conditions set forth in
Sections 7.7 and 8.5 (relating to government
approvals and consents), the date of November
30, 1998, shall be extended by up to six (6)
months, at the option of Eastern or Sellers,
to be exercised through written notice to
Sellers or Eastern, as applicable."
(h) The last two sentences of Section 1.5 of the Stock Purchase
Agreement are deleted in their entirety and replaced by the following two
sentences:
"In the event this Agreement is terminated
pursuant to clauses (a) or (d) of this
Section 1.5, this Agreement shall become void
and be of no further force and effect and no
party hereto shall have any further liability
to any other party hereto, except that
Sections 1.5, Article IX, Section 10.1,
Section 10.2 and Section 10.16 shall survive
and continue in full force and effect,
notwithstanding termination. If this
Agreement is terminated, all due diligence
and other documentation delivered to Eastern
by the Companies and Sellers shall be
returned to the Sellers."
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(i) Schedule 1.7(g) is deleted in its entirety and replaced by the
new Schedule 1.7(g) attached hereto.
(j) Section 3.8(c) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 3.8(c):
"(c) At Closing, the Companies on a
consolidated basis shall have working capital
consisting of current assets (each determined
in accordance with GAAP) in an amount no less
than the amount they have had on an historic
basis as reflected on the Financial
Statements, but no less than zero. It is
acknowledged that current assets shall
include cash, cash equivalents, pre-paid
expenses and accounts receivable, and current
liabilities shall include accounts payable,
accrued expenses (including the current
portion of the Companies' payroll and sales
tax liability), and accrued vacation pay."
(k) Section 4.6 is added to the Stock Purchase Agreement and reads as
follows:
"Section 4.6 Due Diligence. Eastern
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acknowledges that Section 1.5(b) of the Stock
Purchase Agreement has been deleted and,
therefore, Eastern no longer has the right to
terminate in its sole discretion if it is not
satisfied with its due diligence."
(l) Section 9.5 of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 9.5:
"Section 9.5 Survival of Claim. All of the
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respective representations, warranties and obligations
of the parties to this Agreement shall survive
consummation of the transactions contemplated by this
Agreement as follows: (i) all representations and
warranties pertaining to federal, state and local
taxes, including, without limitation, the
representations and warranties set forth in Section
3.10 shall survive until the expiration of the
applicable statute of limitations on any claim which
can be brought against the Companies by tax authorities
or governmental agencies or governmental units and (ii)
all representations and warranties other than set forth
in (i) above shall survive until twelve (12) months
from the Closing Date. Notwithstanding the prior
sentence which provides that the representations and
warranties expire after certain stated periods of time,
if within the stated period of time, a notice of a
claim for indemnification or Indemnification Demand
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is given, or a suit or action based upon a
representation or warranty is commenced, the
Indemnified Party shall not be precluded from pursuing
such claim or action, or from recovering from the
Indemnifying Party (whether through the courts or
otherwise) on the claim or action, by reason of the
expiration of the representation or warranty."
(m) Section 9.6 of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 9.6:
"Section 9.6 Indemnification Threshold. No
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Indemnification Demand shall be made under this Article
IX until such time that the party making an
Indemnification Demand believes, in good faith, that it
has a claim or claims for indemnity totaling Thirty-one
Thousand Two Hundred and Fifty Dollars ($31,250) or
more, singly or in the aggregate, and no Indemnifying
Party shall have any liability to an Indemnified Party
until the damages to the Indemnified Party exceed a
cumulative aggregate total of $31,250. Once cumulative
aggregate damages exceed $31,250, the Indemnifying
Party shall be liable for all damages to the
Indemnified Party, including the first $31,250 of
damages. Notwithstanding anything else contained herein
to the contrary, the obligations of the Sellers
pursuant to the indemnification contained in Section
9.1 shall be limited to seventy-five percent (75%) of
the "Closing Date Value of the EESI Stock" (as defined
below) delivered in consideration for the purchase of
Xxxxxxxx Xxxxxxx Disposal, Inc., Xxxx X. Xxxxxxx & Sons
Sanitation Services, Inc., Tri-State Recycling &
Fibers, Inc., Empire Wrecking Corp., Interstate
Recycling Corp., Northeast Hauling Company, Inc.,
Hillside Maintenance Corporation and 0000 Xxxxxxxx
Xxxxxx Associates (a partnership). For purposes of this
Article IX, the term "Closing Date Value of the EESI
Stock" shall mean the value of the aggregate number of
shares of EESI Stock delivered multiplied by the
closing price of Eastern's common stock on the NASDAQ
Stock Market on the Closing Date."
2. Full Force and Effect. Except as specifically amended herein, all
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provisions of the Stock Purchase Agreement shall remain in full force and
effect.
3. Governing Law. This Amendment shall be governed by and construed in
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accordance with the internal laws of the State of New Jersey, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the applications of
the laws of any jurisdiction other than the State of New Jersey.
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4. Counterparts. This Amendment may be executed simultaneously in two or
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more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. This Amendment may be
executed by facsimile signatures.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
BY: /s/ XXXXXX X. XXXXXX
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TITLE: EXECUTIVE VICE PRESIDENT
SELLERS:
/s/ XXXXXXXX XXXXXXX /s/ XXXXXXX XXXXXXX
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XXXXXXXX XXXXXXX XXXXXXX XXXXXXX
/s/ XXXXXXXX XXXXXXX /s/ XXXXXX XXXXX XXXXXXX
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XXXXXXXX XXXXXXX XXXXXX XXXXX XXXXXXX
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