EXHIBIT 10.2
SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT
--------------------------------------------------
THIS SUPPLEMENTAL AGREEMENT TO STOCK PURCHASE AGREEMENT ("Supplemental
Agreement") is made and entered into as of August 31, 1998, by and between
Eastern Environmental Services, Inc, a Delaware corporation ("Eastern"), and
Transcor Waste Services, Inc, a Florida corporation ("Transcor" or "Seller").
Xxxxxxx Corp., a Delaware corporation ("Xxxxxxx"), has entered into this
Supplemental Agreement for the purpose of giving limited representations and
warranties and a limited indemnity, all as specifically set forth herein.
R E C I T A L S
---------------
Eastern, Transcor and Xxxxxxx have heretofore entered into that certain
Stock Purchase Agreement dated July 17, 1998 ("Agreement") for the purpose of
the acquisition of the stock of Xxxxxxx Recycling Corp. (the "Company") by
Eastern from Transcor and the joinder by Xxxxxxx as the owner of 74% of the
outstanding capital stock of Transcor, for the purposes of making certain
representations and warranties and providing a limited indemnity, as set forth
in the Agreement.
In consideration of the parties' efforts to complete the transaction set
forth in the Agreement, additional terms, conditions, covenants and agreements
have been determined by the parties to be necessary and, therefore, the parties
have agreed to entered into this Supplemental Agreement.
THEREFORE, in consideration of the premises and the mutual covenants
provided herein, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS TO AGREEMENT
-----------------------
Section 1.1 Incorporation of Recitals. The recitals set forth above are
-------------------------
incorporated herein by reference and are a part of this Supplemental Agreement.
Section 1.2 Amendment to Agreement. The provisions of the Supplemental
----------------------
Agreement shall be and are agreed by the parties hereto to constitute amendments
and additional terms to the Agreement. The terms and conditions hereof shall be
considered superior to the terms and conditions set forth in the Agreement,
where, and to the extent such terms shall differ. All other terms and
conditions of the Agreement, as well as the definitions and references therein
shall be incorporated into this Supplemental Agreement. Capitalized terms in
this Supplemental Agreement shall have the same meaning as such capitalized
terms have in the Agreement.
Section 1.3 Closing. Subject to the terms of Article X, the closing of
-------
this transaction shall take place at Miami, Florida on the date set forth below
when this Supplemental Agreement is executed. Determinations of amounts are
made as of the 31st day of August, 1998 which shall be deemed to be the
"Effective Date" of the transaction contemplated in the Agreement.
Section 1.4 Purchase Price. The Purchase Price for this transaction has
--------------
been redetermined by the parties and increased by the amount of $6,699,355.71
due to the purchase of certain additional assets and equipment which shall exist
at the Effective Date as part of the Personal Property, as set forth in Section
3.4 of the Agreement, over the amount of equipment previously contemplated, as
specifically described in part in Schedule 3.4(b)(ii) of the Agreement. The
additional Purchase Price consideration shall be paid in the Cash Portion of the
Purchase Price, subject to adjustments as provided hereafter.
The Stock Portion of the Purchase Price is hereby increased by
$7,000,000.00 to a total of $17,000,000.00 and the Cash Portion is hereby
reduced by $7,000,000.00 to $40,799,356.00, subject to adjustments and credits
as provided herein.
Transcor has contributed $2,000,000.00 as a pre-paid asset to the
Company at the time of the transaction and is an asset included in the Stock
Purchase Agreement.
Section 1.5 Absence of Long-Term Liabilities. As of the Effective Date,
--------------------------------
the Company shall not have any Long-Term Liabilities whatsoever. Any such
obligations which might have existed prior to such date shall be assumed or
satisfied by Transcor as of the Effective Date.
Section 1.6 Absence of any Liens, Claims or Mortgages. As of the
-----------------------------------------
Effective Date, the assets of the Company, including all real property and
personal property, shall not be subject to any liens, claims, mortgages or
encumbrances whatsoever except as provided in the Working Capital Adjustment,
set forth in Section 2.1. Any such liens, claims, mortgages or encumbrances
which might have existed prior to the Effective Date shall be extinguished or
satisfied by Transcor as of the Effective Date.
Section 1.7 Determination of Stock Portion. Notwithstanding the terms
------------------------------
of the Agreement, the parties have determined the Purchase Value of the EESI
Stock to be $30.6125 per share and thus have determined that the number of
shares to be issued in the transaction shall in all events, notwithstanding the
actual date of closing, to be 555,329 shares.
ARTICLE II
DETERMINATION OF WORKING CAPITAL COMPUTATION
--------------------------------------------
Section 2.1 The Working Capital Computation is agreed by the parties to
be as follows for this transaction, as of the Effective Date, is Six Million Six
Hundred and Sixty-Eight Thousand, Six Hundred and 00/100 Dollars
($6,668,600.00).
ARTICLE III
TERMINATION OF SEPARATE AGREEMENTS
----------------------------------
Section 3.1 Termination. The following agreements or arrangements are
-----------
terminated as of the Effective Date:
2
(a) That certain Management Agreement between the Company and Xxxxxxx
and all management fees or similar costs;
(b) That certain tax-sharing agreement between the Company, Transcor
and Xxxxxxx.
ARTICLE IV
USE OF XXXXXXX NAME
-------------------
Section 4.1 The Company shall be entitled to retain the name of Xxxxxxx
and to use the name without restriction in a normal businesslike manner for the
period of twelve (12) months from and after the Effective Date, after which
Eastern agrees to cause the Company to change its corporate name to some other
name dissimilar to "Xxxxxxx." Eastern shall ensure that the "Xxxxxxx" name is
at all times used in only a professional and reputable manner. Upon notice from
Transcor, Company and Eastern shall immediately cease and desist from the use of
the Kimmins' name in any manner which Transcor, in its reasonable discretion,
shall be deemed to be a disreputable use.
ARTICLE V
SATISFACTION OF LONG-TERM DEBT AND RELEASE OF LIENS
---------------------------------------------------
Section 5.1 Satisfaction of Long-Term Debt. On the Closing Date
------------------------------
Transcor shall cause to be satisfied all Long-Term Liabilities of the Company
(and the appropriate short-term or current portions thereof) which may have been
previous obligations of the Company, whether to any affiliate or to third
parties, without cost, expense or liability to the Company and shall diligently
pursue the evidence of satisfaction thereof and the delivery of same to, and to
the satisfaction of, Eastern within ten (10) days after the Closing Date. All
such obligations shall be assumed by Transcor to the extent not fully satisfied
or extinguished with respect to the Company.
Section 5.2 Satisfaction of Liens, Claims and Mortgages. On the Closing
-------------------------------------------
Date, Transcor shall cause to be satisfied, removed or terminated any and all
liens, claims, mortgages or encumbrances against or applicable to the Company or
any of its subsidiaries, or any of their assets, without cost, expense or
liability to the Company and Transcor shall diligently pursue and shall obtain
and deliver to Eastern appropriate releases of liens, UCC termination
statements, mortgage and lien satisfactions and title certificates (without
liens) as soon as possible and in no event longer than twenty (20) days after
the Closing Date. All such obligations reflected by any liens, claims,
3
mortgages or encumbrances of any kind shall be assumed by Transcor to the extent
not fully satisfied or extinguished with respect to the Company.
ARTICLE VI
INDEMNIFICATION
---------------
Section 6.1 The parties hereby reaffirm and restate their
indemnification obligations as set forth in Article IX of the Agreement. In
addition, Transcor and Xxxxxxx jointly and severally, hereby agree to indemnify,
defend, protect and hold harmless Eastern, KRC and its officers, directors,
subsidiaries, agents, employees, successors and assigns from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
penalties, costs and expenses whatsoever (including specifically but without
limitations reasonable attorneys' fees and expenses of investigation) whether
equitable or legal, matured or contingent, known or unknown to Seller, foreseen
or unforeseen, ordinary or extraordinary, patent or latent, whether arising out
of occurrences prior to, at, or after the Effective Date but, in every instance
prior to the Closing Date resulting from or with respect to the Company, any
claim, debt, obligation or requirement whatsoever relating to the ESOP, its
trust, or any employees eligible with respect thereto; any claim, debt,
obligation or requirement whatsoever relating to any 401(k) Plan or arrangement,
or any other qualified or unqualified employment or employee plan, agreement,
arrangement, trust or benefit arrangement whatsoever.
ARTICLE VII
PENDING PROCEDURES
------------------
Section 7.1 The parties acknowledge that certain proceeds from the
transaction shall be escrowed with Xxxxxx & Poliakoff, P.A. ("Escrow Agent"),
subsequent to the Closing, for the purposes set forth herein (the "Escrow
Amount"). The sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) shall be escrowed in connection with the pending litigation styled
Reliable Group, Incorporated x. Xxxxxxx Recycling Corp., Case No. 98-5287(I)
-------------------------------------------------------
(the "Reliable Litigation"). The sum of Fifteen Thousand and No/100 Dollars
($15,000.00) shall be escrowed in connection with the Warning Notice filed by
the Environmental Protection Commission of Hillsborough County ("HCEPC"), Case
No. 98-18191 (the "EPC Matter"). Subsequent to Closing, Transcor shall
diligently proceed to defend and resolve the Reliable Litigation and the EPC
Matter, at its sole cost and expense, and on behalf of the Company. Eastern
shall cooperate with Transcor to resolve such matters, including, without
limitation, the execution of settlement agreements, documents and other matters
reasonably required to resolve the proceedings. Transcor shall provide Eastern
with evidence reasonably satisfactory to Eastern of the resolution of such
matters, together or independently, at which time the portion of the Escrow
Amount allocable to such matter shall be released to Transcor. Eastern shall
approve the release of the Escrow Amount, by written notice to Escrow Agent,
within ten (10) days after receipt of notice that the pending proceedings have
been satisfied. In the event that either or both of the pending proceedings have
not been satisfied within two (2) years, then the remaining Escrow Amount shall
be paid to KRC and all responsibility for such proceedings shall be assumed by
Transcor.
4
ARTICLE VIII
GUARANTY BY TRANSCOR
--------------------
Section 8.1 Transcor shall maintain and continue its guaranty with
respect to the performance by the Company of its obligations under that certain
Agreement with Hillsborough County for a period of two (2) years. The Company
and Eastern, its successors and assigns, jointly and severally agree to
indemnify, defend, protect, and hold harmless Transcor from and against any and
all liability to which it may be subject pursuant to the guaranty, which
indemnity shall be governed by and construed pursuant to the terms of Article IX
of the Agreement.
ARTICLE IX
COOPERATION
-----------
Section 9.1 The parties agree that subsequent to the closing they shall
mutually cooperate to execute such documents, provide such materials, and
otherwise take such action as reasonably required to effectuate the transaction
contemplated herein and in the Agreement. Each party shall pay its own expense
with respect to any post-closing matters.
ARTICLE X
DOCUMENTS IN ESCROW
-------------------
Section 10.1 The parties agree that, upon the execution of this
Agreement, all documents necessary to effectuate the transaction have been
executed (the "Closing Documents") and all conditions precedent to Purchaser's
obligation to close have been waived or satisfied. The Closing Documents have
been delivered to Escrow Agent. The Closing Documents shall be held in escrow by
Escrow Agent pending delivery to Escrow Agent by Purchaser of the Cash Portion
of the Purchase Price, and written confirmation from Seller that the Stock
Portion of the Purchase Price has been delivered to Seller (the "Payment
Event"). In the event that the Payment Event shall not have occurred on or
before 5:00 p.m. Eastern Standard Time on Thursday, September 3, 1998 (the
"Payment Event Deadline"), then Escrow Agent shall return the Closing Documents
to counsel for the respective parties, and the parties shall proceed to Closing
pursuant to the terms of the Agreement; provided, however, that the parties,
upon written notice to Escrow Agent, may extend the Payment Event Deadline until
Tuesday, September 8, 1998. For each day that the Payment Event Deadline extends
beyond September 4, 1998, the Purchaser shall pay to Seller an additional sum of
Twenty Thousand and 00/100 Dollars ($20,000.00), payable with the Cash Portion
of the Purchase Price.
Section 10.2 The parties hereby release and relieve Escrow Agent from and
against any and all liability for loss, cost, expense, or damage resulting from
its performance of the escrow obligations hereunder. In the event of any dispute
between the parties pertaining to the distribution of the Closing Documents or
the Purchase Price, Escrow Agent shall retain the Escrow Documents and place the
disputed portion of the Purchase Price into the registry of the Circuit Court in
and for
5
the Thirteenth Judicial Circuit, Hillsborough County, Florida, and shall advise
the parties accordingly. Purchaser acknowledges that Escrow Agent is counsel for
Seller, and shall not assert any conflict of interest against Seller or Escrow
Agent in connection with or resulting from Escrow Agent's continued
representation of Seller in connection with the Agreement or this transaction.
ARTICLE XI
GENERAL
-------
Section 11.1 Headings. The headings or subheadings of paragraphs
--------
contained herein are used for convenience and ease of reference and shall not
limit the scope or intent of the paragraph.
Section 11.2 Governing Law This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Florida, without regard
to the principles of choice of law of the State of Florida.
Section 11.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 11.4 Severability. If any provisions of this Agreement shall,
------------
for any reason, be held violative of any applicable law, and so much of this
Agreement is held to be unenforceable, then the invalidity of such specific
provision herein shall not be held to invalidate any other provision herein
which shall remain in full force and effect.
Section 11.5 Entire Agreement Together with the Agreement, this
----------------
Supplemental Agreement shall constitute the entire agreement of the parties
respecting the subject matter hereof and shall supersede all previous
communications and understandings, either written or oral, between the parties
relative to the subject matter hereof.
Section 11.6 Binding of Successors. This Agreement shall be binding upon
---------------------
the heirs, executors, administrators, successors and assigns of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this
2/nd/ day of September, 1998.
EASTERN ENVIRONMENTAL SERVICES,
INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
---------------------------------
Its: Vice President
----------------------------------
XXXXXXX CORP., a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
------------------------------------
Its: Secretary
-------------------------------------
TRANSCOR WASTE SERVICES, INC., a
Florida corporation
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
------------------------------------
Its: President
-------------------------------------
7
