Exhibit 10.1
MERGER AGREEMENT
BETWEEN
EASTERN ENVIRONMENTAL SERVICES, INC.
and
THE SHAREHOLDERS OF
XXXX'X SANITATION, INC., AND
H.S.S., INC.
TABLE OF CONTENTS
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Page
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RECITALS................................................................. 1
ARTICLE I - CLOSING...................................................... 2
ARTICLE II - TITLE INSURANCE............................................. 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS.................. 4
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF EASTERN................... 13
ARTICLE V - ADDITIONAL AGREEMENTS OF SELLERS............................. 14
ARTICLE VI - ADDITIONAL AGREEMENTS OF EASTERN............................ 16
ARTICLE VII - CONDITIONS OF EASTERN...................................... 17
ARTICLE VIII - CONDITIONS OF SELLERS..................................... 18
ARTICLE IX - INDEMNIFICATION............................................. 19
ARTICLE X - OTHER PROVISIONS............................................. 22
SECTION OF DISCLOSURE SCHEDULE
ATTACHED TO THIS AGREEMENT
1.6(b) Opinion of Eastern Counsel
1.6(c) Noncompetition Agreement
1.7(e) Opinion of Sellers Counsel
1.7(f) Release
ATTACHED AS PART OF DISCLOSURE BINDER
1.3(a) Company Debt
1.3(b) Capital Structure; Share Allocation
2.2 Permitted Exceptions to Real Property Title
3.1 Subsidiaries
3.3 Contracts, Permits, Mortgages and Material Documents
3.4(b) Rolling Stock
3.4(c) Containers
3.5 Customer Contracts
3.6 Real Property
3.7 Adverse Changes
3.8(a)(iii) Liabilities not in Ordinary Course of Business
3.9 Fiscal Condition of Companies
3.10 Tax Status of Companies
3.11 Insurance Policies, Performance Bonds and Letters of Credit
3.12(a) Contracts with Employees
3.12(b) Employees
3.12(c) Benefit Plans
3.13(a) Violations of federal, state or local laws or regulations
3.13(b) Environmental Violations
3.13(f) List and Synopsis of All Litigation
3.15 Required Consents
3.18 Related Party Transactions
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement"), is made and entered into on September
16, 1997, by and between Eastern Environmental Services, Inc., a Delaware
corporation ("Eastern"), on one part, and Xxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxxx
Xxxxxxxx, Keilley Xxxxxxxx, individually and by her trustee, Xxxxxxx Xxxx, Xxxxx
Xxxx, individually and by his Trustee Xxxxxxx Xxxx, Xxxxx Xxxxxxxx, and Xxxx
Xxxxxxxx (collectively, the "Sellers"), on the other part.
RECITALS
Eastern is a waste services company engaged in the collection,
transportation and disposal of residential, commercial and industrial waste in
several eastern, southern, and Midwestern states. Xxxx'x Sanitation, Inc.
("Xxxx") is a waste services company engaged in the collection and disposal of
residential, commercial and industrial waste in the state of New Jersey, and
H.S.S., Inc. ("HSS") is a company engaged in residential, commercial and
industrial waste recycling in the state of New Jersey. Sellers own all of the
issued and outstanding shares of the capital stock of Xxxx and HSS ("Company
Shares"). For purposes of this Agreement, Xxxx and HSS are hereinafter referred
to as the "Xxxx Companies," and Eastern is sometimes hereinafter referred to as
"Purchaser."
In accordance with the provisions of this Agreement, Eastern has recently
formed two wholly-owned subsidiaries, Eastern of Sussex County, Inc. ("Eastern
SC"), and Eastern Recycling of Sussex County, Inc. ("Eastern Recycling"). The
parties hereto desire to merge Eastern SC into Xxxx and exchange all of the
outstanding common stock of the surviving corporation for common stock of
Eastern, and merge Eastern Recycling into HSS and exchange all of the
outstanding common stock of the surviving corporation for common stock of
Eastern, all on the terms contained herein. The parties intend that the
transactions contemplated hereby qualify as a reorganization, within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended, and be treated as a "pooling of interests" for accounting purposes.
Throughout this Agreement various Schedules are referenced as being
attached to this Agreement. Notwithstanding the fact that all Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead appear in a Disclosure Binder prepared by the Sellers. The
Disclosure Binder is organized under subheadings which correspond to the various
Schedules described in this Agreement. For purposes of identification, the
Disclosure Binder has been identified by the parties by a written statement
executed by the parties and appearing as the first page of the Disclosure
Binder. For purposes of this Agreement, a disclosure by Sellers of any fact on
a Schedule shall be deemed a disclosure on every Schedule of Sellers to the
extent such disclosure properly could have been made thereon but was not made,
provided a cross-reference thereon sets forth the Schedule where disclosure is
made.
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ARTICLE I
Merger and Closing
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Section 1.1 Incorporation of Recitals. The recitals set forth above
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are incorporated herein by reference and are a part of this Agreement.
Section 1.2 Time and Place for Closing. Closing under this Agreement
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shall take place within fifteen days of the conditions set forth in Article VII
and Article VIII being satisfied or waived, time being of the essence, at the
offices of Eastern, 1000 Xxxxxxxx Place, Mount Laurel, New Jersey, or such other
place as the parties hereto may agree upon. 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 Purchaser to Sellers, or by Sellers to Purchasers.
Section 1.3 Merger; Conversion.
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(a) At the Closing, pursuant to the provisions of New Jersey General
Corporation Law, effective on the Closing Date, Xxxx shall be merged with
Eastern SC, with the survivor of the merger being Xxxx, and HSS shall be merged
with Eastern Recycling, with the survivor of the merger being HSS. At the
Closing, (i) the outstanding common stock of Eastern SC shall be automatically
converted into the common stock of Xxxx and delivered to Eastern, (ii) the
outstanding common stock of Eastern Recycling shall be automatically converted
into the common stock of HSS and delivered to Eastern, (iii) all of the Company
Shares previously outstanding shall be delivered to Eastern, and (iii) Eastern
shall deliver to Sellers, subject to adjustment as provided herein in this
Section 1.3, a number of shares of Eastern's common stock ("EESI Stock") having
a value of $17,050,400, each share being valued at $20.00 ("Per Share Value").
At the Closing, the Xxxx Companies shall have total liabilities, excluding
accounts payable, of $1,000,000.00, as set forth on Schedule 1.3(a) attached
("Company Debt"). If the Company Debt, at Closing, is less than or more than
$1,000,000.00, the EESI Stock to be delivered at Closing shall be increased or
decreased, dollar for dollar, by the amount by which the principal and accrued
interest owed on the Company Debt at Closing is less than or exceeds
$1,000,000.00. The increase or decrease, as applicable, shall be calculated by
valuing the EESI Stock at $20.00 per share.
(b) The EESI Stock shall be allocated between Xxxx and HSS as set
forth on Schedule 1.3(b). The Sellers shall receive the shares of EESI Stock as
allocated among the Xxxx Companies and in the same proportions that the Sellers
own shares in each of the Xxxx Companies, as set forth on Schedule 1.3(b).
(c) At Closing, Eastern SC and Xxxx shall execute the Plan of Merger
attached hereto as Schedule 1.3(c)(i), and Eastern Recycling and HSS shall
execute the Plan of Merger attached hereto as Schedule 1.3(c)(ii) (collectively,
the "Plans of Merger"), and the parties shall file the Plan of Merger with the
Secretary of State of New Jersey.
Section 1.4 Closing. Following execution of this Agreement,
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Purchaser and Sellers shall be obligated to conclude the transaction strictly in
accordance with its terms within fifteen (15) days
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after the conditions of Closing set forth in Article VII and Article VIII have
been satisfied or waived, time being of the essence. If the failure to conclude
this transaction is due to the refusal and failure of Sellers to perform their
obligations under this Agreement, Purchaser may seek to enforce this Agreement
with an action of specific performance, in addition to, and not in limitation
of, any other rights and remedies available to the Purchaser under this
Agreement, or at law or in equity, including, without limitation an action to
recover their actual damages resulting from the default of Sellers. If the
failure to conclude this transaction is due to the refusal and failure of
Purchaser to perform its obligations under this Agreement, Sellers may seek to
enforce this Agreement with an action of specific performance, in addition to
and not in limitation of any other rights and remedies available to the Sellers
under this Agreement, or at law or in equity, bring legal action to recover
their actual damages resulting from the default of Purchaser.
Section 1.5 Termination. This Agreement and the transactions
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contemplated hereby may be terminated at any time prior to the Closing Date:
(a) by mutual written agreement of Eastern and Sellers;
(b) by Eastern within thirty (30) days of the date of this Agreement,
if the due diligence Eastern has conducted on the Xxxx Companies discloses a
condition which makes the transactions contemplated herein not economically
beneficial to Eastern, in Eastern's sole discretion;
(c) by Eastern or Sellers, in the event the other makes a material
misrepresentation under the representations, warranties and provisions of this
Agreement or breaches a material covenant or agreement under this Agreement
which cannot be remedied by Sellers before the Closing Date; for purposes of
this provision, "material" shall mean anything which imposes a detriment of
$200,000 or more;
(d) by Eastern or Sellers, if the Closing shall not have occurred by
March 1, 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 Article VII or VIII hereof, as applicable
(through no fault or breach by the terminating party); or
In the event this Agreement is terminated as provided herein, 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 10.15 shall
survive and continue in full force and effect, notwithstanding termination. The
termination of this Agreement shall not limit, waive or prejudice the remedies
available to the parties, at law or in equity, for a breach of this Agreement.
If this agreement is terminated, all due diligence and other documentation and
any copies thereof delivered to Eastern by the Xxxx Companies and Sellers shall
be returned to the Sellers.
Section 1.6 Deliveries by Eastern. At the Closing, Eastern shall
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deliver or cause to be delivered, all duly and properly executed, authorized and
issued (where applicable):
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(a) Certificates representing shares of EESI, as provided in Section
1.3 above, to be delivered upon approval of the New Jersey Secretary of State of
the filing of the Plans of Merger;
(b) A favorable opinion from counsel for Eastern, dated the Closing
Date, in the form attached as Schedule 1.6(b);
(c) Noncompetition Agreements with each of the Sellers, in the form
and content attached hereto as Schedule 1.6(c) (the "Noncompetition
Agreements");
(d) A copy of resolutions of the directors of Eastern authorizing
the execution and delivery of this Agreement and each other agreement to be
executed in connection herewith (collectively, the "Collateral Documents") and
the consummation of the transactions contemplated herein and therein; and
(e) The plans of Merger.
Section 1.7 Deliveries by Sellers. At the Closing, Sellers shall
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deliver to Eastern or cause to be delivered, all duly and properly executed,
authorized and issued (where applicable) the following:
(a) Duly executed certificates in valid form evidencing all of the
Company Shares owned by each Seller, duly endorsed in blank or accompanied by
duly executed stock powers attached or otherwise executed in the presence of
authorized representatives of Purchaser;
(b) Except as may be otherwise required by Eastern, the written
resignations of all officers and directors of the Xxxx Companies as of the time
of Closing;
(c) Noncompetition Agreements with each of the Sellers, in the form
and content attached hereto as Schedule 1.6(c) (the "Noncompetition
Agreements");
(d) A current certificate of good standing for each of the Xxxx
Companies from each applicable jurisdiction of incorporation and admission;
(e) A favorable opinion from counsel for Sellers, dated the Closing
Date, in form attached as Schedule 1.7(e);
(f) A release from each Seller, in a form and content satisfactory to
Purchaser, which provides that the Sellers are releasing the Xxxx Companies from
any and all claims, causes of action, debts and obligations whatsoever existing
on the Closing Date;
(g) The Certificate described at Section 7.1 executed by the
President of each of the Xxxx Companies;
(h) The Plans of Merger; and
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(i) The books and records of the Xxxx Companies, including, without
limitation, all original financial and operating records, the corporate minute
books and seals, the corporate stock ledgers, and all title documents.
ARTICLE II
Title Insurance
Section 2.1 Owners Title Policy. At Closing, the Xxxx Companies
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shall own, with respect to all real property owned by the Xxxx Companies, an
extended coverage owners policy of title insurance from a title company
acceptable to Purchaser (the "Title Company"), dated as of the Closing Date, in
the amount equal to the fair market value of such real property. The title
policies shall include comprehensive, access and contiguity endorsements, and
shall insure title to the real property to be in fee simple in each company
subject only to the Permitted Exceptions permitted by Section 2.2 hereof (the
"Owners Policy"). Purchaser shall bear the cost of the Owners Policy.
Section 2.2 Permitted Exceptions. The Owners Policy shall insure
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each company's interest in its real property to be free and clear of all
encumbrances and exceptions whatsoever except those listed on Schedule 2.2
attached hereto.
Section 2.3 Survey. The Sellers shall furnish Purchaser with a
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survey relating to all of the real property owned by the Xxxx Companies that is
sufficiently current that the Title Company shall not have included a survey
exception in the Owner's Policy. If an update to an existing survey is
required, Purchaser shall bear the cost of such update. If a new survey is
required, Sellers and Purchaser shall share the cost of such survey.
ARTICLE III
Representations and Warranties of Sellers
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With knowledge that Eastern is relying upon the representations,
warranties and covenants herein contained, Sellers each represent and warrant to
Eastern and make the following covenants for Eastern's benefit. When the phrase
"to Sellers' knowledge" or any equivalent phrase is used in this Agreement, the
phrase shall mean the actual knowledge of any Seller.
Section 3.1 Organization and Standing. The Xxxx Companies are
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corporations duly organized, validly existing and in good standing under the
laws of the state of their incorporation, with full power and authority to own
their properties and conduct their business as now being conducted. Except as
listed in Schedule 3.1, the Xxxx Companies do not own any stock or interest in
any other corporation, partnership, or other business organization. Sellers own
all of the outstanding securities issued by the Xxxx Companies, as set forth on
Schedule 1.3(b).
Section 3.2 Securities. The Xxxx Companies have the authorized and
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outstanding securities set forth on Schedule 1.3(b). All outstanding shares of
stock are legally and validly authorized and issued, fully-paid and
nonassessable. There are no outstanding rights of any kind to acquire
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additional shares of any class of stock of the Xxxx Companies, except as set
forth on Schedule 1.3(b).
Section 3.3 Contracts, Permits and Material Documents. The items
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listed in Schedule 3.3 attached hereto are all of the following ("Material
Documents") with respect to the Xxxx Companies which provide a benefit or
imposes a detriment of a value of $25,000 or more: (i) leases for real and
personal property, (ii) licenses, (iii) franchises, (iv) promissory notes,
guarantees, bonds, mortgages, liens, pledges, and security agreements under
which any of the Xxxx Companies are bound or under which any of the Xxxx
Companies are the beneficiary, (v) collective bargaining agreements, (vi)
patents, trademarks, trade names, copyrights, trade secrets, proprietary rights,
symbols, service marks, and logos, (vii) all permits, licenses, consents and
other approvals from governments, governmental agencies (federal, state and
local) and/or third parties relating to, used in or required for the operation
of any of the business of the Xxxx Companies, (viii) all surety bonds, closure
bonds or any other obligation which the Xxxx Companies have liability for with
respect to their operations and (ix) other contracts, agreements and instruments
not listed on another Schedule attached to this Agreement (such as the customer
contracts listed on Schedule 3.5) which are binding on any of the Xxxx Companies
or any of their property and pursuant to which the Xxxx Companies derive a
benefit or incur a detriment having a value of $25,000 or more. The Material
Documents listed on Schedule 3.3 are organized under separate headings for each
of the Xxxx Companies and under subheadings for each of the different type of
documents listed. Except as set forth on Schedule 3.3, neither the Xxxx
Companies nor any person or party to any of the Material Documents or bound
thereby is in material or knowing default under any of the Material Documents,
and, to the knowledge of Sellers, no act or event has occurred which with notice
or lapse of time, or both, would constitute such a default. The Xxxx Companies
are not a party to, and none of Xxxx Companies' properties are bound by, any
agreement or instrument which is material to the continued conduct of business
operations of the Xxxx Companies, as now being conducted, except as listed in
Schedule 3.3.
Section 3.4 Personal Property.
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(a) All furniture, office equipment, computer equipment, and radio
equipment, owned or leased by the Xxxx Companies is in reasonably good
condition, normal wear and tear excepted, and is sufficient in type, quantity
and quality to operate the Xxxx Companies' businesses as they are currently
being conducted on the date of this Agreement.
(b) Listed on Schedule 3.4(b) is all of the rolling stock, including
motor vehicles, trucks, front and rear end loaders, and compactors and
accessories and attachments used in the business of the Xxxx Companies together
with information as to the make, description of body and chassis, model number,
serial number and year of each such vehicle ("Rolling Stock"). The Rolling
Stock is owned or leased by each of the Xxxx Companies as listed on Schedule
3.4(b). The Rolling Stock is in reasonably good condition, normal wear and tear
excepted, except as noted on Schedule 3.4(b). The Xxxx Companies own and/ or
lease a sufficient number and type of Rolling Stock to service their customers
as they are currently being serviced on the date of this Agreement.
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(c) Schedule 3.4(c), attached hereto, lists by each of the Xxxx
Companies the containers used in the business of each of the Xxxx Companies
which are ten yards or greater together with information as to container size.
All of the containers owned and used by the Xxxx Companies are in reasonably
good condition, normal wear and tear excepted, except as noted on Schedule
3.4(c). The Xxxx Companies own and/ or lease a sufficient number and type of
containers to service their customers as they are currently being serviced on
the date of this Agreement.
(d) The inventory of parts, tires and accessories and the shop tools
owned by the Xxxx Companies are in reasonably good condition, normal wear and
tear excepted, and are sufficient in type, quantity and quality to operate the
Xxxx Companies' businesses as they are currently being conducted on the date of
this Agreement.
(e) All recycling equipment and other equipment not listed on one of
the above schedules owned or leased by the Xxxx Companies is in reasonably good
condition, normal wear and tear excepted, and is sufficient in type, quantity
and quality to operate the Xxxx Companies' businesses as they are currently
being conducted on the date of this Agreement.
Section 3.5 Customers. A list of customers each of the Xxxx
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Companies serves together with information as to the services rendered to each
such customer, frequency of service and rates charged and the contractual rights
of each customer, whether oral or in writing, is listed on Schedule 3.5 attached
hereto, with identifying information redacted. None of the Xxxx Companies and,
to Sellers' knowledge, no other person or party to any of the customer contracts
is in material or knowing default under any of the customer contracts, except
those defaults which are remedied by Sellers prior to Closing, and no act or
event has occurred which with notice or lapse of time, or both, would constitute
such a default. The purchase of the Xxxx Companies by Eastern will not create a
default under any customer contract.
Section 3.6 Title.
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(a) Listed on Schedule 3.6 attached are the addresses and ownership
interest which each Xxxx Company has in any real property, including, without
limitation, fee ownership, lease, license or other form of interest.
(b) The Xxxx Companies have good and marketable title to, or a valid
leasehold interest in, all of their assets both real property and personal
property, each free and clear of any mortgages, pledges, liens, encumbrances,
charge, claim, security agreement or title retention or other security
arrangement ("Liens"), except the types of liens set forth in subparagraphs (i)
through (iii), and the items listed on Schedule 3.6 ("Permitted Encumbrances").
(i) Liens imposed by law and incurred in the ordinary course of
business for indebtedness not yet due to carriers, warehousemen, laborers or
materialmen and the like;
(ii) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation; and
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(iii) Liens for property taxes, assessments, or governmental
charges not yet subject to penalties for nonpayment.
Section 3.7 Financial Statements. Sellers have delivered to Eastern
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true and correct copies of the following financial statements of the Xxxx
Companies (the "Financial Statements"):
(a) Balance sheets of the Xxxx Companies as of December 31, 1994,
December 31, 1995, and December 31, 1996, and a statement of income, cash flow
and retained earnings for the periods ended December 31, 1994, December 31,
1995, and December 31, 1996, all prepared on an accrual basis and compiled by
Caristia, Kulsar, and Xxxx, P.A.; and
(b) A balance sheet as of June 30, 1997 ("Most Recent Balance
Sheet"), and a statement of income, cash flow and retained earnings for the
period ended June 30, 1997 ("Most Recent Income Statement"), with respect to the
Xxxx Companies, both prepared on an accrual basis internally by the Xxxx
Companies. The Most Recent Balance Sheet and Most Recent Income Statement are
hereafter referred to as the "Most Recent Financial Statements."
The Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis in
accordance with past custom and practice of the Xxxx Companies. The balance
sheets present fairly, in all material respects, the financial condition of the
Xxxx Companies as of the dates indicated thereon and the statements of income
present fairly, in all material respects, on an accrual basis the results of the
operations of the Xxxx Companies for the periods indicated thereon. Since the
date of the Most Recent Balance Sheet, the Xxxx Companies have not (i) made any
material change in their accounting policies or (ii) effected any prior period
adjustment to, or other restatement of, their financial statements for any
period. The Financial Statements are consistent with the books and records of
the Xxxx Companies (which books and records are correct and complete in all
material respects). Since the date of the Most Recent Financial Statements,
except as set forth on Schedule 3.7, there has not been any material adverse
change in the income, expenses or assets of the Xxxx Companies.
Section 3.8 Liabilities; Accounts Receivable and Working
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Capital.
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(a) The Xxxx Companies do not have any liabilities, fixed or
contingent, other than:
(i) liabilities fully reflected in the Most Recent Balance
Sheet, except for liabilities not required to be disclosed therein in accordance
with GAAP;
(ii) accounts payable arising since the date of the Most
Recent Balance Sheet arising during the normal course of business consistent
with past custom and practice; and
(iii) liabilities listed on schedule 3.8(a)(iii) attached.
(b) All accounts receivable of the Xxxx Companies are, and all
accounts receivable arising since the date of this Agreement, will be valid and
enforceable accounts receivable, and will be fully collectable in the ordinary
course of business, less an allowance for bad debt set forth on Most
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Recent Balance Statement. All accounts receivable have been generated in the
ordinary course of business of the Xxxx Companies consistent with past practice.
To Sellers' knowledge, there are no defenses or set-offs to any of the accounts
receivable.
(c) At Closing, the Xxxx Companies shall have working capital
consisting of current assets in excess of current liabilities (each determined
in accordance with generally accepted accounting principles) in an amount no
less than they have had on an historic basis as reflected on the Financial
Statements. It is acknowledged that current assets shall include cash, cash
equivalents, pre-paid expenses and accounts receivable (less a bad debt
allowance), and current liabilities shall include accounts payable, accrued
expenses, accrued vacation pay, and the current portion of any long-term
liabilities.
Section 3.9 Fiscal Condition of the Xxxx Companies. Since the date
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of the Most Recent Balance Sheet, except as set forth in Schedule 3.9, there has
not (except as otherwise specifically permitted by this Agreement or as set
forth in the Schedules to this Agreement) been:
(a) Any material adverse change in the financial condition, business
organization or personnel of the Xxxx Companies or in the relationships of the
Xxxx Companies with suppliers, customers or others;
(b) Any disposition by any of the Xxxx Companies of any of its
capital stock or any grant of any option or right to acquire any of its capital
stock, or any acquisition or retirement by any of the Xxxx Companies of any of
its capital stock or any declaration or payment of any dividend or other
distribution of its capital stock, other than those dividends made by HSS of an
amount and type consistent with past distributions by HSS made during the two
years prior to the date of this Agreement;
(c) Any sale or other disposition of any asset owned by any of the
Xxxx Companies at the close of business on the date of the Most Recent Balance
Sheet, or acquired by it since that date, other than in the ordinary course of
business consistent with past practice;
(d) Any expenditure or commitment by the Xxxx Companies for the
acquisition of any single asset or any single business, except in the ordinary
course of business consistent with past practices and having an acquisition
price of $25,000 or less;
(e) Any damage, destruction or loss (whether or not insured)
adversely affecting the property, business or prospects of the Xxxx Companies
taken as a whole, except damage, destruction or loss which does not exceed
$25,000 in the aggregate;
(f) Any material bonuses or increases in the compensation payable or
to become payable by the Xxxx Companies to any officer or key employee, except
in the ordinary course of business or as required by law or pursuant to a
contract which is listed on a Schedule to this Agreement;
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(g) Any loans or advances to or by any of the Xxxx Companies other
than renewals or extensions of existing indebtedness and other than in the
ordinary course of business consistent with past practice; or
(h) Any change in accounting method or practice.
Section 3.10 Tax Returns. The Xxxx Companies have filed all Federal
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and other tax returns for all periods on or before the due date of such return
(as may have been extended by any valid extension of time) and have paid all
taxes due for the periods covered by the said returns. Xxxx is a Subchapter "C"
corporation and HSS is a Subchapter "S" corporation under the Internal Revenue
Code of 1986, as amended (the "Code"). The reserves for all taxes reflected in
the Most Recent Balance Sheet, if any, are adequate to cover all taxes, interest
and penalties in connection therewith that may be assessed with respect to the
property and business operations for the period(s) ending on the Closing Date
and for all prior periods. The Xxxx Companies have filed, and will file (if
due), in a timely manner all requisite federal, state, local and other tax
returns due for all fiscal periods ended on or before the date hereof, and as of
the Closing shall have or will in a timely manner file all such returns due for
all periods ended on or before the Closing Date.
Section 3.11 Policies of Insurance. All insurance policies,
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performance bonds, and letters of credit insuring the Xxxx Companies or which
the Xxxx Companies have had issued and which have not expired are listed on
Schedule 3.11 attached hereto. Schedule 3.11 includes the names and addresses
of the insurers and sureties, policy and bond numbers, types of coverage or
bond, time periods or projects covered and the names and addresses of all known
banks, beneficiaries, agents or agencies with respect to each listed insurance
policy, performance bond and letter of credit. All current insurance policies,
performance bonds and letters of credits of the Xxxx Companies are in force and
effect and the premiums thereon are not delinquent. Except as set forth in
Schedule 3.11, the Xxxx Companies have not received any notification from any
insurance carrier denying or disputing any claim made by any of the Xxxx
Companies or denying or disputing any coverage for any such claim or denying or
disputing the amount of any claim. The Xxxx Companies have no claim against any
of their insurance carriers under any of policies insuring them pending or
anticipated and there has been no occurrence of any kind which would give rise
to any such claim.
Section 3.12 Employees, Pensions, and ERISA.
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(a) The Xxxx Companies do not have any contract of employment with an
officer or other employee, except as listed on Schedule 3.12(a).
(b) Except as set forth on Schedule 3.12(b), no employee of the Xxxx
Companies is represented by any union. A list of the name, address and social
security number and current rate of compensation of each of the Xxxx Companies'
employees and capacity in which each person is employed is set forth on Schedule
3.12(b). There is no pending or threatened dispute between any of the Xxxx
Companies and any of its employees which might materially and adversely affect
the continuance of the business operations of the Xxxx Companies.
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(c) Attached hereto made a part hereof and marked Schedule 3.12(c)
lists all employee benefit plans, funds or programs (within the meaning of the
Code or the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) which are currently maintained and/or were established or sponsored
by any of the Xxxx Companies (whether or not they are now terminated) or to
which any of the Xxxx Companies currently contributes, or has an obligation to
contribute in the future, including, without limitation, employment agreements
and any other agreements containing "golden parachute" provisions ("Plans"),
whether or not the Plans are or are intended to be (i) covered or qualified
under the Code, ERISA or any other applicable law, (ii) written or oral, (iii)
funded or unfunded, or (iv) generally available to all employees of the Xxxx
Companies.
(d) The Sellers have delivered to Eastern (i) true and complete
copies of all Plan documents and other instruments relating thereto, (ii) true
and complete copies of the most recent financial statements with respect to the
Plans, (iii) true and complete copies of all annual reports for any Plan
prepared within the past 5 years, and (iv) all material filings submitted to and
any correspondence received from any government agency relating to any Plan
within the past 5 years.
(e) Each Plan which is intended to be qualified under Section 401(a)
and exempt from tax under Section 501(a) of the Code has been determined by the
IRS to be so qualified and such determination remains in effect and has not been
revoked. Except as set forth in the Disclosure Schedule, nothing has occurred
since the date of any such determination which may adversely affect such
qualification or exemption, or result in the imposition of excise taxes or tax
on unrelated business income under the Code or ERISA. No Plan is funded through
a trust intended to be exempt from tax under Section 501(c) of the Code.
(f) No reportable event (as defined in Section 4043 of ERISA or the
regulations thereunder) for which the reporting requirements have not been fully
waived, or accumulated funding deficiency whether or not waived (as defined in
Section 302 of ERISA), or liability to the Pension Benefit Guaranty Corporation
("PBGC") under Section 4062 of ERISA, nor any prohibited transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code), has occurred or exists
with respect to any Plan. All Plans are in substantial compliance with all
material applicable provisions of ERISA and the regulations issued thereunder,
as well as with all other material law applicable to such Plans, and, in all
material respects, have been administered, operated and managed in substantial
accordance with the governing documents of the Plan and the requirements of
ERISA.
(g) There is no matter, action, audit, suit or claim pending or, to
the best knowledge of Sellers, threatened relating to any Plan, fiduciary of any
Plan or assets of any Plan, before any court, tribunal or government agency.
(h) Each most recent Plan audit report, actuarial report and annual
report, certified by the Plan's actuaries and auditors, as the case may be,
fairly presents the actuarial status and the financial condition of the Plan as
at the date thereof and the results of operations of the Plan for the plan year
reflected therein and, subject to changes in amounts attributable to investment
performance and normal employee turnover, there has been no adverse change in
the condition of the Plan since the date of the most recent Form 5500, audited
annual financial statement or actuarial valuation report.
11
(i) The transaction contemplated herein will not accelerate any
liability under the Plans because of an acceleration of any rights or benefits
to which any employee may be entitled thereunder.
Section 3.13 Legality of Operation. In regard to the Xxxx Companies:
---------------------
(a) Except as disclosed in Schedule 3.13(a) to this Agreement, and
except as to Environmental Laws, as hereinafter defined in Section 3.13(b)
below, the Xxxx Companies are in material compliance with all Federal, state and
local laws, rules and regulations including, without limitation, the following
laws: land use or zoning laws; payroll, employment, labor, or safety laws; or
federal, state or local "anti-trust" or "unfair competition" or "racketeering"
laws such as but not limited to the Xxxxxxx Act, Xxxxxxx Act, Xxxxxxxx Xxxxxx
Act, Federal Trade Commission Act, or Racketeer Influenced and Corrupt
Organization Act ("Law"). Except as disclosed in Schedule 3.13(a), the Xxxx
Companies are in material compliance with all permits, franchises, licenses, and
orders that have been issued with respect to the Laws and are or may be
applicable to any of their property and operations, including, without
limitation, any order, decree or directive of any court or federal, state,
municipal, or other governmental department, commission, board, bureau, agency
or instrumentality wherever located, federal, state and local permits, orders,
franchises and consents. Except as set forth on Schedule 3.13(a), with respect
to any Law there are no claims, actions, suits, investigations or proceedings
pending, or threatened against or affecting any of the Xxxx Companies, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, wherever
located, which would result in any adverse change in the financial condition or
business of the Xxxx Companies or which would invalidate this Agreement or any
action taken in connection with this Agreement. Except as disclosed in Schedule
3.13(a), the Xxxx Companies have received no notification of any past or present
failure by any of the Xxxx Companies to comply with any Law applicable to it or
its assets.
(b) Except as disclosed in Schedule 3.13(b) to this Agreement, the
Xxxx Companies are in compliance with all Federal, state and local laws, rules
and regulations relating to environmental issues of any kind and/or the receipt,
transport or disposal of any hazardous or non-hazardous waste materials from any
source ("Environmental Law"). Except as disclosed in Schedule 3.13(b), with
respect to any Environmental Law, the Xxxx Companies are in material compliance
with all permits, licenses, and orders related thereto or issued thereunder, as
are or may be applicable to the property and operations of the Xxxx Companies,
including, without limitation, any order, decree or directive of any court or
federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality wherever located. Except as set forth on
Schedule 3.13(b), there are no Environmental Law related claims, actions, suits
or proceedings pending or threatened against or affecting the Xxxx Companies, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
wherever located, which would result in an adverse change in the financial
condition or business of the Xxxx Companies or which would invalidate this
Agreement or any action taken in connection with this Agreement. Except as set
forth on Schedule 3.13(b), the Xxxx Companies have not transported, stored,
treated or disposed of, nor to Sellers' knowledge have the Xxxx Companies
allowed any third persons, on their behalf, to transport, store, treat or
dispose of waste to or at (i) any location other than a site lawfully permitted
to receive such waste for such purpose or, (ii) any
12
location currently designated for remedial action pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any similar
federal or state statute; nor have the Xxxx Companies performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of state or federal laws and regulations or in any other manner
which may result in any liability for contamination of the environment; and the
Xxxx Companies have not disposed of, nor have the Xxxx Companies knowingly
allowed third parties to dispose of waste upon property owned or leased by the
Xxxx Companies other than as permitted by, and in conformity with, applicable
Environmental Law. Except as disclosed in Schedule 3.13(b), within the last two
years, the Xxxx Companies have not received any notification of any unremedied
past or present failure by the Xxxx Companies to comply with any Environmental
Law applicable to their operations or their assets. Without limiting the
generality of the foregoing, except as set forth in Schedule 3.13(b), the Xxxx
Companies have not received any written notification (including requests for
information directed to the Xxxx Companies or an owner thereof) from any
governmental agency asserting that any of the Xxxx Companies is or may be a
"potentially responsible person" for a remedial action at a waste storage,
treatment or disposal facility, pursuant to the provisions of CERCLA, or any
similar federal or state statute assigning responsibility for the costs of
investigating or remediating releases of contaminants into the environment. To
Sellers' knowledge, the Xxxx Companies have not received any hazardous waste as
defined in the Resource Conservation and Recovery Act, 42 USCA Section 6901 et
--
seq., or in any similar federal or state statute.
---
(c) Except for the businesses which the Xxxx Companies currently
conduct, the Xxxx Companies have never owned, operated, had an interest in,
engaged in and/or leased a waste transfer, recycling, treatment, storage,
landfill or other disposal facility, other than the H. S. L. Facility located at
Lafayette, New Jersey, operated by Xxxx until 1979. The Xxxx Companies have
obtained and maintained, when required to do so under applicable Environmental
Laws, trip tickets, signed by the applicable waste generators demonstrating the
nature of all waste deposited and or transported by the Xxxx Companies. To
Sellers' knowledge, no employee, contractor or agent of the Xxxx Companies has,
in the course and scope of employment with the Xxxx Companies, been harmed by
exposure to hazardous materials, as defined under the Environmental Laws. No
liens with respect to environmental liability have been imposed against the Xxxx
Companies under CERCLA, any comparable state statute or any other applicable
Environmental Law, and Sellers have no knowledge that any facts or circumstances
exist which would give rise to the same.
(d) Schedules 3.13(a) and 3.13(b) list all remedied violations of
Laws and Environmental Laws which existed within the past two years and all
outstanding unremedied notices of violations issued to the Xxxx Companies by any
federal, state or local regulatory agency.
(e) To Sellers' knowledge, no employee, officer, director, or
shareholder of the Xxxx Companies is under investigation by the Attorney General
of any state, by the District Attorney of any county of any state, or by any
United States Attorney or any other governmental investigative agency for the
violation of any Laws, including, without limitation, the violation of any anti-
trust, racketeering, or unfair competition Laws.
13
(f) All pending or threatened litigation and administrative or
judicial proceedings involving the Xxxx Companies, or their assets or
liabilities, are set forth on Schedule 3.13(f) attached, together with a
description of each such proceeding.
Section 3.14 Corrupt Practices. The Xxxx Companies have not made,
-----------------
offered or agreed to offer anything of value to any employees of any customers
of the Xxxx Companies (except in conformity with Law) for the purpose of
attracting business to any of the Xxxx Companies or any foreign or domestic
governmental official, political party or candidate for government office or any
of their respective employees or representatives, nor have the Xxxx Companies
otherwise taken any action which would cause them to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended.
Section 3.15 Legal Compliance. Sellers have the right, power, legal
----------------
capacity and authority to enter into, and perform their obligations under this
Agreement, and, except as set forth in Schedule 3.15, no approvals or consents
of any other persons, business or governmental units are necessary to be
obtained by Sellers or the Xxxx Companies in connection with the transactions,
filings with or notices to, contemplated by this Agreement. Except as disclosed
in Schedule 3.15 to this Agreement and as set forth in Section 7.7, the
execution and performance of this Agreement will not result in a material breach
of or constitute a material default or result in the loss of any material right
or benefit under:
(a) Any charter, by-law, agreement or other document to which the
Xxxx Companies are a party or by which the Xxxx Companies or any of their
properties are bound, including, without limitation, any agreement by or between
any shareholder of either Xxxx Company; or
(b) Any decree, order or rule of any court or governmental authority
which is binding on any of the Xxxx Companies or on any property of the Xxxx
Companies; or
(c) Any permit, certificate or license issued by any governmental
authority under which any of the Xxxx Companies operate or pursuant to which any
of the property of the Xxxx Companies is bound; or
(d) Any agreement to which the Xxxx Companies are bound, including,
without limitation, bank loan documents, agreements with customers or suppliers
and leases for equipment.
Section 3.16 Transaction Intermediaries. Except as disclosed in
--------------------------
Schedule 3.16, no agent, broker, financial advisor or other person acting
pursuant to the express authority of any of the Xxxx Companies is entitled to
any commission or finder's fee in connection with the transactions contemplated
by this Agreement.
Section 3.17 Intellectual Property. To Sellers' knowledge, the Xxxx
---------------------
Companies have not infringed, and are not now infringing, on any trade name,
trademark, service xxxx or copyright belonging to any person, firm or
corporation ("Intellectual Property") and no one has or is infringing any
Intellectual Property right of the Xxxx Companies. The Xxxx Companies own or
have legal
14
use of all computer software used in connection with their business and have not
infringed, and are not now infringing, on the rights of any third parties by
their use of computer software.
Section 3.18 Competition. Except as set forth on Schedule 3.18, no
-----------
salaried officer, nor any spouse or child of any of them, has any direct or
indirect interest in any competitor of the Xxxx Companies within the
geographical area in which the Xxxx Companies currently conduct business, or an
interest in any supplier or customer of the Xxxx Companies or in any person from
whom or to whom the Xxxx Companies lease any real or personal property, or in
any other person with whom the Xxxx Companies are doing business.
Section 3.19 Disclosure. The representations and warranties of
----------
Sellers contained in this Agreement, or in any Schedule or other document
delivered by Sellers pursuant hereto, do not contain any untrue statement of a
material fact, or omit any statement of a material fact necessary to make the
statements contained not misleading. If, prior to Closing, Sellers become aware
of any inaccuracy or misrepresentation or omission in any of the Schedules, they
shall immediately advise Eastern in writing of the inaccuracy, misrepresentation
or omission.
ARTICLE IV
Representations and Warranties of Eastern
-----------------------------------------
With knowledge that Sellers are relying upon the representations,
warranties and covenants contained herein, Eastern represents and warrants to
Sellers and makes the following covenants for Sellers' benefit.
Section 4.1 Organization and Existence. Eastern is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted. Eastern has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement.
Section 4.2 Authority Relative to this Agreement. The execution,
------------------------------------
delivery and performance of this Agreement by Eastern has been duly authorized
and approved by the Board of Directors of Eastern. No further corporate action
is necessary on the part of Eastern to consummate this Agreement in accordance
with its terms. Eastern has full authority to enter into and perform its
obligations under this Agreement, and neither the execution, delivery nor
performance by Eastern of this Agreement will (i) result in a violation or
breach of any term or provision nor constitute a default under the certificate
of incorporation or bylaws of Eastern or under any contract or agreement to
which Eastern is a party or by which it is bound, or violate any order, writ,
injunction or decree of any court, administrative agency or governmental body,
or (ii) result in a violation or breach of any term or provision, or constitute
a default or accelerate the performance required, under any indenture, mortgage,
deed of trust or other contract or agreement to which Eastern is a party or by
which it or its properties is bound.
Section 4.3 Commission Filings. Eastern has delivered to Sellers
------------------
current (for the quarter ending March 31, 1997) and all historical filings made
by Eastern on Forms 8-K, 10-K, 10-Q and
15
Proxy Statements timely filed with the Securities and Exchange Commission
("SEC") for fiscal year ending June 30, 1997 (the "Public Reports"). The Public
Reports accurately and completely describe, in all material respects, Eastern's
financial status, business operations and prospects as of the date of such
filings and as of the date hereof, and do not omit any material fact(s)
necessary to make the information contained in the filings not misleading.
Section 4.4 Issued Common Stock. The EESI Stock to be issued
-------------------
pursuant to this Agreement have been duly authorized and, when issued, will be
validly issued, fully paid and nonassessable.
ARTICLE V
Additional Agreements of the Parties and Sellers
------------------------------------------------
The parties hereto covenant and agree with the other, as applicable,
as follows:
Section 5.1 Plan of Reorganization. This Agreement contemplates the
----------------------
acquisition of all the outstanding stock of the Xxxx Companies solely in
exchange for voting stock of Eastern in a transaction intended to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, and shall
constitute a "plan of reorganization" within the meaning of the Code. The
parties hereto agree to take no action inconsistent with the treatment of such
exchange as a reorganization under Code Section 368(a)(1)(A) and to comply with
all IRS filing and other requirements for such exchange. Eastern and Sellers
agree that a material factor in their execution of this Agreement is that the
transactions contemplated by this Agreement shall constitute a "plan of
reorganization" within the meaning of the Code. If for any reason a provision
in this Agreement would prevent the transaction from qualifying as a
reorganization within the meaning of the Code, the parties agree to negotiate in
good faith to modify the Agreement so the transaction can qualify as a
reorganization, as long as the economics of the transaction are not changed.
Section 5.2 Pooling Restrictions. Eastern and Sellers have agreed
--------------------
that a material factor in their execution of this Agreement is that the
transactions contemplated by this Agreement be treated as a "pooling of
interests" for accounting purposes. If for any reason a provision in this
Agreement would prevent the transaction being accounted for as a "pooling of
interests," the parties agree to negotiate in good faith to modify the Agreement
so the transaction can be accounted for as a "pooling of interests."
Notwithstanding any other provision of this Agreement, prior to the publication
and dissemination by Eastern of consolidated financial results which include
results of combined operations of the Xxxx Companies and Eastern for at least 30
days on a consolidated basis following the Closing Date, Sellers shall not sell
or otherwise transfer or dispose of, or in any way reduce their risk relative
to, any shares of the EESI Stock received by Sellers (including by way of
example and not limitation, engaging in put, call, short-sale, straddle or
similar market transactions). Eastern agrees that such consolidated financial
results shall be published and disseminated no later than 120 days after the
Closing Date. The Securities Exchange Commission ("SEC") has issued Accounting
Series Release Nos. 130 and 135, as amended (collectively, the "ASRs"), setting
forth certain restrictions applicable to the availability of "pooling-of-
interests" accounting treatment in transactions of the type contemplated by this
Agreement. Sellers therefore covenant and agree with Eastern to hold the EESI
Stock and to comply with the ASRs until the
16
requirements of the ASRs have been met. In addition, the certificates
evidencing the EESI Stock to be received by Sellers will bear a legend
substantially in the form set forth below:
"The shares represented by this certificate may not be sold, transferred or
assigned, and Eastern Environmental Services, Inc., shall not be required
to give effect to any attempted sale, transfer or assignment prior to the
publication and dissemination of financial statements by Eastern
Environmental Services, Inc., which include the results of at least 30 days
of combined operations of Eastern Environmental Services, Inc., and the
companies acquired by Eastern Environmental Services, Inc., for which these
shares are issued. Upon the written request of the holder hereof directed
to Eastern Environmental Services, Inc., the issuer agrees to remove this
restrictive legend (and any stop order places with the transfer agents)
when the requirements of Accounting Series Releases Nos. 130 and 135, as
amended, of the Securities Exchange Commission have been met."
Section 5.3 Restrictions on Transfer of Unregistered Stock. Sellers
----------------------------------------------
understand and agree that the following restrictions and limitations are
applicable to the Sellers' purchase and resale or other transfer of the EESI
Stock, pursuant to the Securities Act of 1933 (the "Act"):
(a) Sellers agree that the EESI Stock shall not be sold or otherwise
transferred, unless the EESI Stock is registered under the Act and state
securities laws or is exempt therefrom.
(b) Until the EESI Stock is registered under the Act, a legend in
substantially the following form will be placed on the certificates evidencing
the EESI Stock to be issued to the Sellers:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities act. These shares
have been acquired for investment and may not be sold, transferred, pledged
or hypothecated unless (i) they shall have been registered under the
Securities Act of 1933 and any applicable states securities act or (ii)
Eastern Environmental Services, Inc., shall have been furnished with an
opinion of counsel, reasonably satisfactory to counsel for Eastern
Environmental Services, Inc., that registration is not required under any
such acts."
(c) Stop transfer instructions will be imposed with respect to the EESI
Stock issued to Sellers pursuant to this Agreement so as to restrict resale or
other transfer thereof except in accordance with the foregoing provisions of
this Agreement.
Section 5.4 Representations as to Private Offering. The EESI Stock is
--------------------------------------
being delivered to the Sellers in a private placement under Section 4.2 of the
Act and under Regulation D promulgated under the Act. To induce Eastern to
issue the EESI Stock, each Seller represents and warrants as follows:
(a) Each Seller represents and warrants that he or she is a resident of
New Jersey and is an accredited investor, as that term is defined in Regulation
D under the Act.
17
(b) Each Seller acknowledges that they have received a copy of the Public
Reports.
(c) The Sellers represent and warrant that the EESI Stock is being
acquired for their own account without a view to public distribution or resale
and that the Sellers have no contract, undertaking, agreement or arrangement to
sell or otherwise transfer or dispose of EESI Stock, or any portion thereof, to
any other person.
(d) The Sellers represent and warrant that, in determining to acquire the
EESI Stock, they have relied solely upon their independent investigation,
including the advice of their legal counsel and accountants or other financial
advisers or purchaser representatives, and have, during the course of
discussions concerning their acquisition of the EESI Stock, been offered the
opportunity to ask such questions and inspect such documents concerning Eastern
and its business and affairs as they have requested so as to more fully
understand the nature of the investment and to verify the accuracy of the
information supplied.
(e) THE SELLERS ACKNOWLEDGE THAT THE ACQUISITION OF THE EESI STOCK
INVOLVES A HIGH DEGREE OF RISK, and represents and warrants that they can bear
the economic risk of the acquisition of the EESI Stock, including the total loss
of their investment.
(f) The Sellers represent and warrant that (i) they have adequate means of
providing for their current needs and financial contingencies, and (ii) they
have no need for liquidity in this investment.
(g) The Sellers understand that no federal or state agency has approved or
disapproved the EESI Stock or made any finding or determination as to the
fairness of the EESI Stock for investment.
(h) The Sellers understand that the EESI Stock is being offered and sold
in reliance on specific exemptions from the registration requirements of federal
and state securities laws and that Eastern is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings set forth herein in order to determine the applicability of such
exemption and the suitability of Sellers to acquire the EESI Stock.
Section 5.5 Access to Records. Sellers will give to Eastern and its
-----------------
representatives, from the date hereof until the Closing Date, full access during
normal business hours, upon reasonable notice, to all of the properties, books,
contracts, documents and records of the Xxxx Companies at the Xxxx Sparta
office, and will make available to Eastern and its representatives all
additional financial statements of and all information with respect to the
business and affairs of the Xxxx Companies that the other party may reasonably
request.
Section 5.6 Continuation of Business. Sellers will operate the businesses
------------------------
of the Xxxx Companies until the Closing Date in the ordinary course of business,
consistent with past practice, so as to preserve its business organizations
intact, to assure, to the extent possible, the availability to Eastern of the
present key employees of the Xxxx Companies and to preserve for Eastern the
relationships of the Xxxx Companies with suppliers, customers, and others.
18
Section 5.7 Continuation of Insurance. Sellers will keep in existence all
-------------------------
policies of insurance insuring the Xxxx Companies against liability and property
damage, fire and other casualty through the Closing Date, consistent with the
policies currently in effect.
Section 5.8 Standstill Agreement. Until the Closing Date, unless this
--------------------
Agreement is earlier terminated pursuant to the provisions hereof, Sellers will
not, directly or indirectly, solicit offers for the shares or the assets of the
Xxxx Companies or for a merger or consolidation involving any of the Xxxx
Companies, or respond to inquiries from, share information with, negotiate with
or in any way facilitate inquiries or offers from, third parties who express or
who have heretofore expressed an interest in acquiring any or all of the Xxxx
Companies by merger, consolidation or other combination or acquiring any of the
Xxxx Companies' assets.
Section 5.9 Consents. Sellers and Eastern shall cooperate with each other
--------
and use their best efforts and act in good faith to obtain all governmental
approvals, authorizations and consents required to be obtained under law to
consummate the transaction set forth in this Agreement. Any filings and
applications to the New Jersey Department of Environmental Protection ("NJDEP"),
and any filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Act shall be made jointly
by Purchaser and Sellers.
Section 5.10 Audited Financial Statements. Sellers agree to have prepared
----------------------------
audited balance sheets for the Xxxx Companies as of June 30, 1995, June 30,
1996, and June 30, 1997, and statements of income, cash flow and retained
earnings for the Companies for the twelve-month periods ended June 30, 1995,
June 30, 1996, and June 30, 1997 ("Historical Financial Statements"), as
rapidly as possible, but no later than the Closing Date. Sellers shall prepare
a compiled stub balance sheets and statements of income, cash flow and retained
earnings for the period commencing July 1, 1996 and ending on the last day of
the last calendar quarter ending prior to Closing ("Interim Financial
Statements"). The Interim Financial Statements are to be delivered no later
than the Closing Date. Purchaser will waive the requirement to have received
the Historical Financial Statements and the Interim Financial Statements by the
Closing Date, provided it is satisfied they will be delivered no later than
sixty days after the Closing Date. The Historical Financial Statements and the
Interim Financial Statements shall be prepared by Ernst & Young at Eastern's
cost. Sellers shall cause the Xxxx Companies' usual accountants to cooperate
with Ernst & Young. Sellers shall cooperate with Ernst & Young and shall
execute any industry standard audit representation letter requested by Ernst &
Young. Eastern shall pay for the cost of the Xxxx Companies' usual accountants.
ARTICLE VI
Additional Agreements of the Parties and Eastern
------------------------------------------------
The parties hereto covenant and agree with the other, as applicable, as
follows:
Section 6.1 Payment of Expenses. Eastern will pay all expenses incurred
-------------------
by Eastern in connection with the negotiation, execution and performance of this
Agreement and the Collateral Documents. Sellers will pay all legal and
accounting expenses incurred by Sellers and the Xxxx Companies in connection
with the negotiation, execution and performance of this Agreement and
19
the Collateral Documents, except as provided in Section 5.10. In addition,
Eastern will pay any filing fee in connection with the filing required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Act.
Section 6.2 Registration Rights.
-------------------
(a) Eastern shall prepare and, on the later of (i) February 28, 1998, or
(ii) the fifteenth day following the Closing Date, file with the SEC a
registration statement on Form S-3 (or other appropriate form, if Form S-3 is
not available under Rule 415 of the Act) the "Registration Statement") to effect
a registration of one-third of the EESI Stock and any common stock or other
securities issued or issuable in respect of such shares of common stock by way
of combination of shares, merger, consolidation or other reorganization, stock
dividend or stock split or other stock distribution, recapitalization or
reclassification ("Registrable Securities") covering the resale of the
Registrable Securities. The Registrable Securities shall be allocated pro rata
--- ----
among the Sellers based on the number of shares of EESI stock held by each
Seller, unless otherwise agreed to in writing by the Sellers. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
resale of such Registrable Securities shall have become effective under the Act
and such securities shall have been disposed of in accordance with such
Registration statement, or (ii) such securities such securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Eastern or disposition
of them shall not require registration of them under the Act or any state
securities or blue sky law then in force, or (iii) such securities shall have
ceased to be outstanding. Eastern shall cause the Registration Statement to
become effective as soon as possible.
(b) Eastern will give written notice to the Sellers of the "shelf
registration" at least 15 days before the Registration Statement is filed.
After receiving the notice of the "shelf" registration, each Seller will advise
Eastern in writing of the intended method of disposition of the Registrable
Securities to be registered. Notwithstanding the above, Eastern's obligation to
file the Registration Statement and/or keep the shelf registration continuously
effective shall be suspended during any period that there exists material, non-
public information relating to Eastern.
(c) Eastern represents and warrants that it meets the requirements for the
use of Form S-3 for registration of the resale by Sellers of the Registrable
Securities and Eastern shall file all reports required to be filed by eastern
under the Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations adopted thereunder in a timely manner so as
to maintain such eligibility for the use of Form S-3.
(d) The Registration Statement (and each amendment thereto) shall be
provided to a representative of the Sellers (the "Sellers' Representative") and
counsel to the Sellers prior to its filing. The Sellers' Representative shall
be one of the Sellers appointed by the Sellers to act in such capacity in
connection with this Agreement and the transactions contemplated hereby.
Sellers shall agree to the selection of a Sellers' Representative and shall
notify Eastern of the identity of the Sellers' Representative in writing prior
to the Closing Date.
20
(e) So long as any Seller beneficially owns any of the EESI stock, Eastern
shall timely file all reports required to be filed by it under the Exchange Act
and the rules and regulations adopted by the SEC thereunder. Upon the request
of any Seller, Eastern will deliver to such Seller a written statement as to
whether it has complied with such requirements.
(f) Eastern will take all action necessary to list and to continue the
listing and trading of its common stock, including the EESI stock as and when
eligible, on the Nasdaq Stock Market or other nationally recognized stock
market, and will comply in all respects with Eastern's reporting, filing and
other obligations under the bylaws or rules of the National Association of
Securities Dealers, Inc. ("NASD") and such exchange.
(g) Upon any registration under the Act of any of the Registrable
Securities, Eastern shall indemnify Sellers in accordance with the provisions of
Article IX from and against any and all losses, claims, damages and liabilities
(collectively a "Security Liability") to which Sellers may become subject under
the Act, any state securities or "blue sky" law, any other statute or at common
law, insofar as such Security Liability (or action in respect thereof) arises
out of or is based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any Registration Statement under which such
Registrable Securities were registered, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto or any
filing or other application under the Act or applicable federal or state
securities law or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein (i.e., in any Registration
Statement, prospectus, application or filing) or necessary in order to make the
statements therein not misleading or (iii) any violation or alleged violation by
Eastern to which such Seller may become subject under the Act, or other Federal
or state laws or regulations, at common law or otherwise. Notwithstanding the
above, Eastern shall not be liable to Sellers if and to the extent that any
Security Liability arises out of or is based upon any untrue statement or
omission made in such registration statement, preliminary or final prospectus or
amendment or supplement thereto, in reliance upon and in conformity with
information furnished to Eastern by Sellers which is intended for such use; and
provided further, that Eastern shall not be required to indemnify Sellers
against any Security Liability which arises out of the failure of Sellers to
deliver a prospectus.
(h) All expenses incurred in effecting the registrations provided for in
this Section 6.2 shall be paid by Eastern, including, without limitation, (i)
all SEC and stock exchange or NASD registration and filing fees, (ii) printing,
messenger and delivery expenses, (iii) fees and disbursements of counsel for
Eastern and of its independent public accountants, (iv) underwriting expenses
(other than commissions or discounts which shall be shared by the parties
registering shares of Eastern's common stock in proportion to the number of
shares registered in each particular offering), and (v) expenses of complying
with the securities or "blue sky" laws of any jurisdictions.
Section 6.3 Books and Records. From the Closing Date to six years after
-----------------
the Closing Date, the Purchaser shall allow the Sellers and their professional
advisers access to all business records and files of the Xxxx Companies
pertaining to the operation of the Xxxx Companies prior to the Closing Date
which were delivered to the Purchaser in accordance with this Agreement
("Records") where the Sellers requires access to the Records for the purpose of
preparing their tax returns, responding to any audit or informational request
regarding their tax returns or if required by them
21
for use in a judicial proceeding in which they are a party. Access to the
records shall be during normal working hours at the location where such Records
are stored. The Sellers shall have the right, at their own expense, to make
copies of any Records provided, however, that any such access or copying shall
be had or done in such a manner so as not to interfere unreasonably with the
normal conduct of the Purchaser's business. For a period of six years after the
Closing Date, the Purchaser shall not dispose of or destroy any material Records
without first providing written notice to the Sellers at least 30 days prior to
the proposed date of such disposition or destruction.
ARTICLE VII
Conditions of Eastern
---------------------
The obligations of Eastern to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following items which are conditions to the Closing:
Section 7.1 Compliance by Sellers. Sellers and the Xxxx Companies shall
---------------------
have performed and complied with all material obligations and conditions
required by this Agreement to be performed or complied with by Sellers and the
Xxxx Companies at or prior to the Closing Date. All representations and
warranties of Sellers contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date, except for changes
expressly permitted by this Agreement, and Eastern shall have received a
Certificate duly executed by the President of each Xxxx Company representing and
warranting the foregoing.
Section 7.2 Litigation Affecting This Transaction. There shall be no
-------------------------------------
actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transaction contemplated by this Agreement or which
might affect the right of Eastern to own, operate in its entirety or control the
Xxxx Companies or the business the Xxxx Companies operate, which, as a result of
the transaction contemplated by this Agreement, might affect such right as to
Eastern or any affiliate thereof subsequent to the Closing Date and which, in
the judgment of the Board of Directors of Eastern, made in good faith and based
upon advice of its counsel, makes it inadvisable to proceed with the transaction
contemplated by this Agreement.
Section 7.3 Fiscal Condition of Business. There shall have been no
----------------------------
material adverse change in the results of operations, financial condition or
business of the Xxxx Companies, and the Xxxx Companies shall have not suffered
any material loss or damage or any of its properties or assets, whether or not
covered by insurance, since the date of the Most Recent Balance Sheet.
Section 7.4 Opinion of Counsel. Sellers shall have delivered to the
------------------
Eastern the opinion of counsel, dated the Closing Date, in the form annexed
hereto as Schedule 1.8(e).
Section 7.5 Noncompetition Agreements. The Sellers shall have executed and
-------------------------
delivered to Eastern the Noncompetition Agreements.
22
Section 7.6 Release. Sellers shall have executed and delivered to Eastern
-------
the Release described at Section 1.7(f).
Section 7.7 Consents. All approvals, authorizations and consents required
--------
by law to be obtained shall have been obtained, including, without limitation,
the consent of the New Jersey Department of Environmental Protection to the
change in control of the Xxxx Companies, and the consent of the Federal Trade
Commission under the Xxxx-Xxxxx-Xxxxxx Antitrust Act. Eastern shall have been
furnished with appropriate evidence, reasonably satisfactory to Eastern and its
counsel, of the granting of such approvals, authorizations and consents.
ARTICLE VIII
Conditions of Sellers
---------------------
The obligations of Sellers to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
Section 8.1 Compliance by Eastern. Eastern shall have performed and
---------------------
complied with all material obligations and conditions required by this Agreement
to be performed or complied with by it at or prior to the Closing Date. All
representations and warranties of Eastern contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, with
the same force and effect as though made at and as of the Closing Date, except
for changes expressly permitted by this Agreement, and Sellers shall have
received a Certificate duly executed by an officer of Purchaser representing and
warranting the foregoing.
Section 8.2 Litigation Affecting This Transaction. There shall be no
-------------------------------------
actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transaction contemplated by this Agreement or which
might affect the right of Eastern to own, operate in its entirety or control the
Xxxx Companies or the business the Xxxx Companies operate which, as a result of
the transaction contemplated by this Agreement, might affect such right as to
Eastern or any affiliate thereof subsequent to the Closing Date and which, in
the judgment of Sellers, made in good faith and based upon advice of their
counsel, makes it inadvisable to proceed with the transaction contemplated by
this Agreement.
Section 8.3 Material Adverse Change. There shall not have been, and on
-----------------------
the Closing Date shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in, any material adverse
change in the condition (financial or otherwise), assets, real property,
personal property, results of operations, business or prospects of Eastern and
its subsidiaries taken as a whole.
Section 8.4 Noncompetition Agreements. Eastern shall have executed and
-------------------------
delivered the Noncompetition Agreements.
Section 8.5 Opinion of Counsel. Eastern shall have delivered to Sellers
------------------
the opinion of counsel to Eastern, dated the Closing Date, in the form annexed
hereto as Schedule 1.7(c).
23
ARTICLE IX
Indemnification
---------------
Section 9.1 Indemnification by Sellers. Each Seller severally agrees
--------------------------
that it will indemnify, defend, protect and hold harmless Eastern and its
officers, shareholders, directors, divisions, subdivisions, affiliates,
subsidiaries, parents, agents, employees, legal representatives, successors and
assigns from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, penalties, costs and expenses whatsoever
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation) whether equitable or legal, matured or contingent,
known or unknown to such Seller, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, whether arising out of occurrences prior to,
at, or after the date of this Agreement, from: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties by the Seller, set forth in this Agreement or in the Schedules
attached to this Agreement or in the Collateral Documents; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of a Seller
made in this Agreement and to be performed by Seller before or after the Closing
Date; (c) violation of the requirements of any governmental authority relating
to the reporting and payment (to the extent payment exceeds the amount reserved
for in the Most Recent Financial Statement) of federal, state, local or other
income, sales, use, franchise, excise or property tax liabilities of the Xxxx
Companies arising or accrued prior to the Closing Date; (d) any violation of any
federal, state or local "anti-trust" or "racketeering" or "unfair competition
law", including, without limitation, the Xxxxxxx Act, Xxxxxxx Act, Xxxxxxxx
Xxxxxx Act, Federal Trade Commission Act, or Racketeer Influenced and Corrupt
Organization Act; and (e) any claim by a third party that, if true, would mean
that a condition for indemnification set forth in subsections (a), (b), (c) or
(d) of this Section 9.1 of this Agreement has occurred.
Section 9.2 Indemnification by Eastern. Eastern agrees that it will
--------------------------
indemnify, defend, protect and hold harmless Sellers and their officers,
shareholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parents, agents, employees, heirs, legal representatives, successors and
assigns, as applicable, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, penalties, costs and expenses
whatsoever (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by it, as a result of or
incident to: (a) any breach of, misrepresentation in, untruth in or inaccuracy
in the representations and warranties of Eastern set forth in this Agreement or
in the Schedule attached to this Agreement or in the Collateral Documents; (b)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of Eastern made in this Agreement and to be performed by Eastern before or
after the Closing Date; (c) any failure by Eastern to pay, discharge or perform
any of the Company Debt, or any asserted liability resulting from any dispute or
claim against Sellers concerning non-payment of the Company Debt; (d) any claim
by a third party that, if true, would mean that a condition for indemnification
set forth in subsections (a), (b), or (c) of this Section 9.2 has occurred.
Section 9.3 Procedure for Indemnification with Respect to Third
---------------------------------------------------
Party Claims.
------------
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") that may
give rise to a claim for indemnification
24
against any other party to this Agreement (the "Indemnifying Party") under this
Article IX, then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing, as set forth in Section 10.6; provided, however, that
no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is thereby prejudiced.
Such notice shall state the amount of the claim and the relevant details
thereof.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within ten days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party pursuant to the provisions of Article IX, as
applicable, from and against the entirety of any adverse consequences (which
will include, without limitation, all losses, claims, liens, and attorneys' fees
and related expenses) the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim, (ii)
the Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves only
monetary damages and does not seek an injunction or equitable relief, (iv)
settlement of, or adverse judgment with respect to the Third Party Claim is not,
in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in (but not control) the defense of the Third Party Claim, (ii)
the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (which will not be unreasonably
withheld), and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (which will not be
unreasonably withheld). In the case of (c)(ii) or (c)(iii) above, any such
consent to judgment or settlement shall include, as an unconditional term
thereof, the release of the Indemnifying Party from all liability in connection
therewith.
(d) If any condition set forth in Section 9.3(b) above is or becomes
unsatisfied, (i) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim and any matter it may deem appropriate and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith, (ii) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the cost of defending against the Third
Party Claim (including attorneys' fees and expenses), and (iii) the Indemnifying
Party will remain responsible for any adverse consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this Article
IX.
25
Section 9.4 Procedure for Non-Third Party Claims. If Eastern or any
------------------------------------
Seller wishes to make a claim for indemnity under Section 9.1 or Section 9.2, as
applicable, and the claim does not arise out of a third party notification which
makes the provisions of Section 9.3 applicable, the party desiring
indemnification ("Indemnified Party") shall deliver to the party as set forth in
Section 10.6 from which indemnification is sought ("Indemnifying Party") a
written demand for indemnification ("Indemnification Demand"). The
Indemnification Demand shall state: (a) the amount of losses, damages or
expenses to which the Indemnified Party has incurred or has suffered or is
expected to incur or suffer to which the Indemnified Party is entitled to
indemnification pursuant to Section 9.1 or Section 9.2, as applicable; (b) the
nature of the event or occurrence which entitles the Indemnified Party to
receive payment under Section 9.1 or Section 9.2, as applicable. If the
Indemnifying Party wishes to object to an Indemnification Demand, the
Indemnifying Party must send written notice to the Indemnified Party stating the
objections and the grounds for the objections ("Indemnification Objection"). If
no Indemnification Objection is sent within forty-five (45) days after the
Indemnification Demand is sent, the Indemnifying Party shall be deemed to have
acknowledged the correctness of the claim or claims specified in the
Indemnification Demand and shall pay the full amount claimed in the
Indemnification Demand within sixty (60) days of the day the Indemnification
Demand is dated. If for any reason the Indemnifying Party does not pay the
amounts claimed in the Indemnification Demand, within thirty days of the
Indemnification Demand's date, the Indemnified Party may institute legal
proceedings to enforce payment of the indemnification claim contained in the
Indemnification Demand and any other claim for indemnification that the
Indemnified Party may have.
Section 9.5 Indemnification Threshold. No 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 One Hundred Thousand Dollars ($100,000) 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 $100,000. Once cumulative aggregate damages exceed $100,000,
the Indemnifying Party shall be liable for all damages to the Indemnified Party,
including the first $100,000 of damages.
Section 9.6 Survival of Claim. All of the 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 and obligations 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 Xxxx Companies by tax authorities or governmental agencies
or governmental units and (ii) all representations and warranties and
obligations other than set forth in (i) above shall survive until two years from
the Closing Date. Notwithstanding the prior sentence which provides that the
representations and warranties and obligations expire after certain stated
periods of time, if within the stated period of time, a notice of a claim for
indemnification or Indemnification Demand is given, or a suit or action based
upon 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.
26
Section 9.7 Prompt Payment. In the event that any party is required
--------------
to make any payment under this Article IX, such party shall promptly pay the
Indemnifying Party the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity obligation owed under
this Article IX, the Indemnifying Party shall, nevertheless, pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
portion in dispute shall be paid upon a final and non-appealable resolution of
such dispute. Upon the payment in full of any claim, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person
with respect to the subject matter of such claim.
Section 9.8 Limitation of Liability. Notwithstanding anything else
-----------------------
contained herein to the contrary, the obligations of each of the Sellers
pursuant to the indemnification contained in Section 9.1 shall be limited to the
aggregate of the value of the EESI Stock delivered to each Seller at Closing,
valued at the Per Share Value.
ARTICLE X
Other Provisions
----------------
Section 10.1 Nondisclosure by Sellers. Sellers recognize and
------------------------
acknowledge that they have in the past, currently have, and in the future will
have certain confidential information of Eastern such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of Eastern. Sellers agree that for a period of ten (10) years
from the Closing Date they will not disclose such confidential information to
any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except to authorized representatives of Eastern, unless (i)
such information becomes known to the public generally through no fault of any
Seller, (ii) a Seller is compelled to disclose such information by a
governmental entity or pursuant to a court proceeding, or (iii) the Closing does
not take place. In the event of a breach or threatened breach by any Seller of
the provisions of this Section, Eastern shall be entitled to an injunction
restraining such Seller from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting Eastern from
pursuing any other available remedy for such breach or threatened breach,
including, without limitation, the recovery of damages.
Section 10.2 Nondisclosure by Eastern. Eastern recognizes and
------------------------
acknowledges that it has in the past, currently has, and prior to the Closing
Date, will have access to certain confidential information of the Xxxx
Companies, such as lists of customers, operational policies, and pricing and
cost policies that are valuable, special and unique assets of the Xxxx
Companies. Eastern agrees that it will not utilize such information in the
business or operation of Eastern or any of its affiliates or disclose such
confidential information to any person, firm, corporation, association, or other
entity for any purpose or reason whatsoever, unless (i) such information becomes
known to the public generally through no fault of Eastern or any of its
affiliates, (ii) Eastern is compelled to disclose such information by a
governmental entity or pursuant to a court proceeding, or (iii) Closing takes
place. In the event of a breach or threatened breach by Eastern of the
provisions of this Section, Sellers shall be entitled to an injunction
restraining Eastern from utilizing or disclosing, in whole or in part, such
confidential information. Nothing contained herein shall be construed as
prohibiting Sellers from pursuing any other available remedy for such breach or
threatened breach, including, without limitation, the recovery of damages.
27
Section 10.3 Assignment; Binding Effect; Amendment. This Agreement
-------------------------------------
and the rights of the parties hereunder may not be assigned (except after
Closing by operation of law by the merger of Eastern) and shall be binding upon
and shall inure to the benefit of the parties hereto, and the successors of
Eastern. This Agreement, upon execution and delivery, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by all
parties hereto.
Section 10.4 Entire Agreement. This Agreement, is the final,
----------------
complete and exclusive statement and expression of the agreement among the
parties hereto with relation to the subject matter of this Agreement, it being
understood that there are no oral representations, understandings or agreements
covering the same subject matter as the Agreement. The Agreement supersedes,
and cannot be varied, contradicted or supplemented by evidence of any prior to
contemporaneous discussions, correspondence, or oral or written agreements of
any kind. The parties to this Agreement have relied on their own advisors for
all legal, accounting, tax or other advice whatsoever with respect to the
Agreement and the transactions contemplated hereby.
Section 10.5 Counterparts. This Agreement may be executed
------------
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
Section 10.6 Notices. All notices or other communications required
-------
or permitted hereunder shall be in writing and may be given by depositing the
same in United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, by overnight
courier or by delivering the same in person to such party.
(a) If to Eastern, addressed to it at:
President
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxxx & Associates, P.C.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
(b) If to Sellers, addressed to them at:
P. O. Xxx 0000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
with a copy to:
28
Xxxxxxx X. Xxxxxx, Esq.
Interstate 287 and XxXxxxxx
P. X. Xxx 000
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three business days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received, if earlier. Any
party may change the address for notice by notifying the other parties of such
change in accordance with this Section 10.6.
Section 10.7 Governing Law. This Agreement shall be governed by and
-------------
construed in 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 application of the laws of any jurisdiction other than the State of New
Jersey. The Superior Court of the State of New Jersey shall have jurisdiction
to hear and determine any claims or disputes pertaining directly or indirectly
to this Agreement or to any matter arising therefrom. Each of the parties hereby
expressly submits and consents in advance to such jurisdiction and venue in any
action or proceeding commenced by the other in such court.
Section 10.8 No Waiver. No delay of or omission in the exercise of
---------
any right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach of default occurring before or after that waiver.
Section 10.9 Time of the Essence. Time is of the essence of this
-------------------
Agreement.
Section 10.10 Captions. The headings of this Agreement are inserted
--------
for convenience only, shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
Section 10.11 Severability. In case any provision of this Agreement
------------
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
Section 10.12 Construction. The parties have participated jointly in
------------
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be
29
deemed to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "Including" means included, without
limitation.
Section 10.13 Extension or Waiver of Performance. Either Sellers or
-----------------------------------
Eastern may extend the time for or waive the performance of any of the
obligations of the other, waive any inaccuracies in the representations or
warranties by the other, or waive compliance by the other with any of the
covenants or conditions contained in this Agreement, provided that any such
extension or waiver shall be in writing and signed by Sellers and Eastern.
Section 10.14 Liabilities of Third Parties. Nothing in this
----------------------------
Agreement, whether expressed or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective officers, shareholders, directors,
affiliates, subsidiaries, parents, agents, employees, legal representatives,
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provisions give any third person any rights of
subrogation or action over or against any party to this Agreement.
Section 10.15 Publicity. Prior to Closing, except as may be required
---------
by law, no party to this Agreement shall issue any press release or otherwise
make any statement with respect to the transactions contemplated by this
Agreement without the prior consent of the other party, which shall not be
unreasonably withheld.
30
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------------
Xxxxx X. Xxxxxxx, Xx.
President
SELLERS:
/s/ Xxxxxxx Xxxx /s/ Xxxxxxx Xxxx
--------------------------------- -------------------------------
Xxxxxxx Xxxx Xxxxxxx Xxxx
/s/ Xxxxxxxxx Xxxxxxxx /s/ Keilley Xxxxxxxx
--------------------------------- -------------------------------
Xxxxxxxxx Xxxxxxxx Keilley Xxxxxxxx
/s/ Xxxxx Xxxx /s/ Xxxxx Xxxxxxxx, Xx.
--------------------------------- -------------------------------
Xxxxx Xxxx Xxxxx Xxxxxxxx, Xx.
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx Xxxx
--------------------------------- -------------------------------
Xxxx Xxxxxxxx Xxxxxxx Xxxx, as Trustee for
Keilley Xxxxxxxx
/s/ Xxxxxxx Xxxx
---------------------------------
Xxxxxxx Xxxx, as Trustee for
Xxxxx Xxxx
31
