EXHIBIT 10.1
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AMENDED AND RESTATED
PURCHASE AND SALE OF ASSETS AGREEMENT
AMONG
EASTERN ENVIRONMENTAL SERVICES, INC.
AND
EASTERN ENVIRONMENTAL SERVICES OF FLORIDA, INC.
AND
ENVIRONMENTAL WASTE SYSTEMS, INC.
AND
XXXX XXXXXXXXXX AND XXXXXX XXXXXXXXXX
(THE SHAREHOLDERS OF ENVIRONMENTAL WASTE SYSTEMS, INC.)
Table of Contents
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ARTICLE I. - SALE OF ASSETS.................................................................. 1
Section 1.1. Description of Assets..................................................... 1
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Section 1.2. Excluded Assets........................................................... 3
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Section 1.3. Assumption of Obligations/Payment of Seller's Debt........................ 3
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Section 1.4. Non-Assignment of Certain Obligations..................................... 3
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Section 1.5. Non-Assignment of Permits................................................. 4
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Section 1.6. Non-Assumption of Liabilities............................................. 4
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ARTICLE II. - PURCHASE PRICE................................................................. 5
Section 2.1. Purchase Price............................................................ 5
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Section 2.2. Adjustments to Purchase Price............................................. 5
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Section 2.3. Restrictions on Transfer of Unregistered Shares........................... 6
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Section 2.4. Registration Rights....................................................... 6
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ARTICLE III. - CLOSING....................................................................... 8
Section 3.1. Time and Place of Closing................................................. 8
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Section 3.2. Deliveries by Seller and Shareholders..................................... 8
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Section 3.3. Deliveries by Buyer....................................................... 9
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ARTICLE IV. - POST CLOSING COVENANTS......................................................... 9
Section 4.1. Change of Name............................................................ 9
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Section 4.2. Further Assurance......................................................... 10
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Section 4.3. Transition................................................................ 10
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ARTICLE V. - REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS....................... 10
Section 5.1. Organization; Authority................................................... 11
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Section 5.2. Share Ownership; Absence of Adverse Claims................................ 11
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Section 5.3. Predecessor Entities and Subsidiaries..................................... 11
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Section 5.4. Financial Statements...................................................... 11
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Section 5.5. Personal Property......................................................... 12
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Section 5.6. Debt...................................................................... 13
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Section 5.7. Contracts................................................................. 13
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Section 5.8. Leases.................................................................... 14
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Section 5.9. Approvals and Compliance With Laws........................................ 14
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Section 5.10. Proprietary Rights....................................................... 14
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Section 5.11. Environmental Documents.................................................. 15
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Section 5.12. Hazardous Materials; Disposal Sites...................................... 15
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Section 5.13. Insurance Policies....................................................... 16
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Section 5.14. Employees; Compensation.................................................. 16
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Section 5.15. Employee Relations and Benefit Plans..................................... 16
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Section 5.16. Taxes.................................................................... 16
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Section 5.17. Litigation............................................................... 17
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Section 5.18. Absence of Price Renegotiation Contracts................................. 17
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Section 5.19. Conduct of Seller's Business Since Balance Sheet Date.................... 17
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Section 5.20. Corrupt Practices........................................................ 17
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Section 5.21. Complete Disclosure...................................................... 18
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Section 5.22. Representations as to Private Offering................................... 18
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Section 5.23. Leased Real Property..................................................... 19
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ARTICLE VI. - REPRESENTATIONS AND WARRANTIES OF BUYER AND EESI............................... 20
Section 6.1. Corporate Organization.................................................... 20
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Section 6.2. Corporate Authority....................................................... 21
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Section 6.3. Binding Agreement......................................................... 21
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Section 6.4. Complete Disclosure....................................................... 21
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ARTICLE VII. - COVENANTS OF SELLER PRIOR TO CLOSING.......................................... 21
Section 7.1. Access to Records/Inspection of Assets.................................... 21
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Section 7.2. Activities of Seller Prior to Closing..................................... 22
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Section 7.3. Prohibited Activities Prior to Closing.................................... 23
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Section 7.4. Contact with Government Officials......................................... 24
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ARTICLE VIII. - CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER................................ 24
Section 8.1. Representations, and Warranties........................................... 24
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Section 8.2. Covenants................................................................. 24
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Section 8.3. No Adverse Proceeding..................................................... 24
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Section 8.4. Employment Agreements..................................................... 24
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ARTICLE IX. - CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND EESI.......................... 24
Section 9.1. Representations and Warranties and Obligations............................ 25
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Section 9.2. Covenants................................................................. 25
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Section 9.3. No Adverse Proceeding..................................................... 25
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Section 9.4. No Adverse Change......................................................... 25
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Section 9.5. Conditions................................................................ 25
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Section 9.6. Transferability of Permits................................................ 25
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Section 9.7. Environmental Review...................................................... 25
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Section 9.8. Legal Opinion to be given to Buyer on Behalf of Shareholders.............. 26
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Section 9.9. General................................................................... 26
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Section 9.10. Simultaneous Closing of Purchases of Companion Transactions.............. 26
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ARTICLE X. - INDEMNIFICATION................................................................. 26
Section 10.1. Indemnification by Seller and Shareholders............................... 26
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Section 10.2. Indemnification by Buyer................................................. 26
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Section 10.3. Procedure for Indemnification with Respect to Third Party Claims......... 27
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Section 10.4. Procedure for Non-Third Party Claims..................................... 28
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ARTICLE XI. - TERMINATION OF AGREEMENT....................................................... 28
Section 11.1. Termination by Buyer..................................................... 28
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Section 11.2. Termination by Seller.................................................... 29
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ARTICLE XII. - NONDISCLOSURE OF CONFIDENTIAL INFORMATION..................................... 29
Section 12.1. Nondisclosure by Seller.................................................. 29
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Section 12.2. Nondisclosure by Buyer................................................... 29
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ARTICLE XIII. - GENERAL...................................................................... 30
Section 13.1. Assignment; Binding Effect; Amendment.................................... 30
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Section 13.2. Entire Agreement......................................................... 30
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Section 13.3. Counterparts............................................................. 30
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Section 13.4. Expenses of Transaction.................................................. 30
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Section 13.5. Notices.................................................................. 30
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Section 13.6. Governing Law............................................................ 31
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Section 13.7. No Waiver................................................................ 32
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Section 13.8. Time of the Essence...................................................... 32
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Section 13.9. Captions................................................................. 32
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Section 13.10. Severability............................................................ 32
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Section 13.11. Construction............................................................ 32
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Section 13.12. No Shop Agreement....................................................... 32
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Section 13.13. Survival................................................................ 32
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Section 13.14. Incorporation of Schedules.............................................. 33
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Section 13.15. Arbitration............................................................. 33
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AMENDED AND RESTATED PURCHASE AND SALE OF ASSETS AGREEMENT
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This AMENDED AND RESTATED PURCHASE AND SALE OF ASSETS AGREEMENT (the
"Agreement") is dated as of May 8, 1997, by and among EASTERN ENVIRONMENTAL
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SERVICES, INC., a Delaware corporation ("EESI"); EASTERN ENVIRONMENTAL SERVICES
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OF FLORIDA, INC., a Florida corporation ("Buyer"); ENVIRONMENTAL WASTE SYSTEMS,
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INC., a Florida corporation ("Seller"); and XXXX XXXXXXXXXX and XXXXXX
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XXXXXXXXXX, the sole shareholders of Seller (the "Shareholders").
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RECITALS
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Seller operates a waste collection, recycling, transportation and disposal
business located in the Dade and Broward Counties, Florida (the "Business").
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Buyer is a wholly owned subsidiary of EESI. Buyer desires to purchase and
Seller desires to sell the assets, properties and contractual rights used in
connection with the Business. Shareholders own all of the issued and outstanding
shares of Seller. EESI and Buyer are unwilling to enter into this Agreement
without certain covenants and promises from the Shareholders, and the
Shareholders are willing to make the covenants and promises set forth in this
Agreement. The parties hereto have entered into this Agreement to evidence their
understandings and agreements.
The parties entered into that certain Purchase and Sale of Assets Agreement
dated March 18, 1997, as amended April 15, 1997 (the "Agreement"). In order to
resolve certain concerns raised by Acquirer's due diligence regarding the
Assets, the parties have agreed to amend and restate the Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement and other good and valuable consideration, received
to the full satisfaction of each of them, the parties hereby agree as follows:
ARTICLE I.
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SALE OF ASSETS
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SECTION 1.1. DESCRIPTION OF ASSETS. Upon the terms and subject to the
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conditions set forth in this Agreement, Seller does hereby agree to grant,
convey, sell, transfer and assign to Buyer all of Seller's right, title, and
interest in the following assets, properties and contractual rights of Seller,
wherever located as set forth below:
(a) all of the containers, carts and compactors (the "Containers and
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Compactors") described by capacity, location, type and serial number on Schedule
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1.1(a);
(b) all of the motor vehicles and all attachments, accessories and
materials handling equipment (the "Rolling Stock"), as the same are more
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completely described by manufacturer, model number and model year on Schedule
1.1(b);
(c) all of the recycling equipment ("Recycling Equipment"), as is
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more completely described on Schedule 1.1(c);
(d) all radios located in the Rolling Stock, the radio base station,
and all manual and automated routing and billing systems and components thereof,
including, without limitation, all computerized routing and billing software and
programs, and all computer hardware, including without limitation, printers,
CPU's, keyboards and monitors, all of which are listed on Schedule 1.1(d);
(e) all inventory of parts, tires and accessories (the "Parts
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Inventory") each of which is listed on Schedule 1.1(e);
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(f) all trade secrets, proprietary rights, symbols, trademarks,
service marks, logos and trade names used in the Business and owned by Seller as
listed on Schedule 5.10;
(g) all contractual rights of Seller with its customers (whether oral
or in writing) relating to the conduct of the Business (the "Customer
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Contracts"). A complete and accurate list of the Customer Contracts, is listed
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on Schedule 1.1(g);
(h) all right, title and interest of Seller to all accounts
receivable generated by the Business as of the Closing Date whether or not
billed to clients ("Accounts Receivable") and all prepaid deposits ("Prepaid
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Deposits"); a complete and accurate list of the Accounts Receivable and Prepaid
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Deposits generated by the Business as of the date of this Agreement, by customer
code and age, is listed on Schedule 1.1(h) attached hereto and made a part
hereof;
(i) all permits, licenses, franchises, 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 the Business
including but not limited to, any pending application for same (the Approvals").
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A complete and accurate list of the Approvals is set forth on Schedule 1.1(i);
hereof;
(j) the exclusive right to use the name "Environmental Waste Systems"
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and all similar names (the "Business Name") in connection with any and all
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aspects of the waste disposal industry, including without limitation, waste
collection, waste recycling, waste transfer and landfills;
(k) all the telephone number(s) used in the conduct of the Business:
000-000-0000 and 000-000-0000;
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(l) all shop tools relating to the Business ("Shop Tools"). A
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complete and accurate list of the Shop Tools is set forth on Schedule 1.1(l);
(m) all furniture and office or other equipment ("Furniture and
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Equipment"). A complete and accurate list of the Furniture and Equipment is set
forth on Schedule 1.1(m);
(n) all in the leases ("Leases") under which Seller rents any real
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property (the "Leased Real Property") or personal property. A complete and
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accurate list of all leases the Seller is a party to is set forth on Schedule
1.1(n);
(o) [THIS SPACE INTENTIONALLY LEFT BLANK];
(p) all of the goodwill of the Business; and
All of the foregoing assets, properties and contractual rights are sometimes
collectively called in this Agreement the "Assets." Seller and Shareholders
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represent and warrant to Buyer that the Assets include all the tangible and
intangible property owned by the Seller used in connection with the Business.
SECTION 1.2. EXCLUDED ASSETS. The parties agree that the only tangible
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and intangible property owned by the Seller and not being sold to the Buyer (the
"Excluded Assets") are:
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(a) the corporate records of the Seller;
(b) all security deposits for telephone service and all other
utilities and landfill disposal services, a correct and complete list of which
are set forth on Schedule 1.2(b);
(c) all cash on hand and on deposit in bank accounts on the day of
closing; and
(d) all proceeds of those certain litigation matters identified on
Schedule 5.17.
SECTION 1.3. ASSUMPTION OF OBLIGATIONS/PAYMENT OF SELLER'S DEBT.
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(a) At Closing, Buyer agrees to assume and perform all of Seller's
obligations under the Customer Contracts, to the extent, and only to the extent,
such obligations first mature and are required to be performed subsequent to the
close of business on the date of Closing, as defined below. The Buyer agrees to
defend and indemnify Seller, their successors and permitted assigns, and hold
Sellers harmless from all losses, claims, causes of action, damages,
liabilities, expenses and costs of any kind or amount whatsoever (including,
without limitation, reasonable attorneys' fees) with respect to the Customer
Contracts, to the extent assumed by Buyer.
(b) At Closing, Seller shall pay all of Seller's outstanding
obligations as of the Closing date, whether fixed or contingent (the "Seller's
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Debt"), a complete and correct summary
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of which is set forth on Schedule 1.3, showing in each instance the payee, the
amount owing, and other information reasonably necessary to identify the
Seller's Debt.
SECTION 1.4. NON-ASSIGNMENT OF CERTAIN OBLIGATIONS. Schedule 1.4 is a
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list of all Customer Contracts requiring consent to their assignment.
Notwithstanding anything to the contrary in this Agreement, to the extent that
the assignment and assumption by Buyer of any Customer Contract shall require
the consent of any third party, neither this Agreement nor any action taken
pursuant to its provisions shall constitute an assignment or an agreement to
assign, if such assignment or attempted assignment would constitute a breach of
the Customer Contract; provided, however, that in each such case, Seller shall
use its best efforts to obtain the consent of such other party to such
assignment and assumption by Buyer. If such consent is not obtained, Seller
shall cooperate with Buyer in any reasonable arrangement designed to provide for
Buyer the benefits under any such Customer Contract, including, without
limitation, enforcement for the account and benefit of Buyer, of any and all
rights of Seller against any other person arising out of the breach or
cancellation of any such Customer Contract, by such other person or otherwise.
The failure or refusal of any customer to agree to an assignment of any Customer
Contract shall not affect Buyer's obligations under this Agreement.
SECTION 1.5. NON-ASSIGNMENT OF PERMITS. Notwithstanding anything to the
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contrary in this Agreement, to the extent that the assignment of the Approvals
shall require the consent of any government or governmental agency, neither this
Agreement nor any action taken pursuant to its provisions shall constitute an
assignment or an agreement to assign, if such assignment or attempted assignment
would not be permitted under the Approval. Seller shall use its best efforts to
aid Buyer to obtain a transfer of the Approvals or new licenses, permits,
consents or approvals in Buyer's name for any Approvals which cannot be
assigned. Schedule 1.5 a list of all the Approvals requiring consent to
assignment.
SECTION 1.6. NON-ASSUMPTION OF LIABILITIES. Except as explicitly set
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forth in Section 1.3 above, Buyer shall not, by the execution and performance of
this Agreement or otherwise, assume, become responsible for, or incur any
liability or obligation of any nature of Seller, whether legal or equitable,
matured or contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, whether arising out of occurrences prior to,
at, or after the date of this Agreement, including, without limiting the
generality of the foregoing, any liability or obligation arising out of or
relating to: (a) any occurrence or circumstance (whether known or unknown) which
occurs or exists on or prior to the Closing Date and constitutes, or which by
the lapse of time or giving notice (or both) would constitute, a breach or
default under any lease, contract, or other instrument or agreement or
obligation (whether written or oral); (b) injury to or death of any person or
damage to or destruction of any property, whether based on negligence, breach of
warranty, or any other theory; (c) violation of the requirements of any
governmental authority or of the rights of any third person, including, without
limitation, any requirements relating to the reporting and payment of federal,
state, local or other income, sales, use, franchise, excise or property tax
liabilities of Seller; (d) the generation, collection, transportation, storage
or disposal by Seller of any materials, including, without limitation,
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Hazardous Materials (as defined in Section 5.12); (e) any agreement or
arrangement between Seller and the employees of Seller or any labor or
collective bargaining unit representing any such employees; (f) any severance
pay obligation of Seller or Shareholder or any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended) or any other fringe benefit program maintained or sponsored by
Seller or to which Seller contributes or any contributions, benefits or
liabilities therefor or any liability for the withdrawal or partial withdrawal
from or termination of any such plan or program by Seller; (g) the debts and
obligations of Seller, or Shareholders; and (h) liabilities or obligations of
the Seller or Shareholders for brokerage or other commissions relative to this
Agreement or the transactions contemplated hereunder. Seller and Shareholders
hereby jointly and severally agree to indemnify Buyer, its successors and
assigns from and against all of the above liabilities and obligations in
accordance with Section 10.1 of this Agreement.
ARTICLE II.
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PURCHASE PRICE
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SECTION 2.1. PURCHASE PRICE. In exchange for the Assets, Buyer and EESI
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shall pay the Seller a total amount, subject to adjustment as set forth in
Section 2.2 below, of Six Million ($6,000,000) Dollars ("Purchase Price"). The
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Purchase Price shall be paid as follows:
(a) One Million dollars ($1,000,000) shall be paid in the common shares of
EESI (the "Shares") based on the per share price of $12.25 per share.
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(b) Five Million dollars ($5,000,000) in a combination of cash, wire
transferred funds, or EESI's agreement to pay or assume liabilities of the
Seller, subject to adjustment as more particularly set forth in this Agreement.
The Purchase Price shall be allocated among the Assets, as set forth on
Schedule 2.1.
SECTION 2.2. ADJUSTMENTS TO PURCHASE PRICE.
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(a) CONTINGENT PURCHASE PRICE. Three Hundred Thousand Dollars
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($300,000.00) of the Purchase Price comprising a portion of the Stock
Consideration (the "Unissued Stock Consideration") shall be retained by the
Buyer for a period of one hundred twenty (120) days (the "Claims Period"). The
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Unissued Stock Consideration shall be used to satisfy any Third Party Claim or
Indemnification Demand made by or on behalf of Buyer under Article X, including
without limitation: (A) any portion of Seller's Debt or (B) any claim, expense,
loss, obligation, debt, demand, or liability of the Seller, whether fixed or
contingent, existing or arising out of the Seller's business or operations
before the Closing ("Pre-Closing Debt") that: (i) has not been paid prior to
Closing or (ii) is not expressly set forth on Schedule 1.3 and expressly assumed
by Buyer at Closing under this Agreement. The amount of the deduction to the
Unissued Stock Consideration shall be calculated by valuing each share of the
Unissued Share Consideration at the Per Share Price.
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In the event any Third Party Claim or Indemnification Demand arises within the
Claims Period which is not resolved to the satisfaction of Buyer prior to the
expiration of the Claims Period, the Unissued Stock Consideration shall be
reduced in an amount sufficient to satisfy the Third Party Claim or
Indemnification Demand and the Claims Period shall be extended with respect to
that sum until such Third Party Claim or Indemnification Demand has been
resolved to the satisfaction of Buyer, or becomes subject to a right of set off
under Article X, in which case Buyer may satisfy such Third Party Claim or
Indemnification Demand from the the Unissued Stock Consideration. Upon the
expiration of the Claim Period as it may be extended under this Subsection
2.2(a), the Buyer shall deliver the amount remaining of the Unissued Stock
Consideration in the Shares of EESI calculated at the Per Share Price, along
with a list of all payments made on the Seller's behalf, if any.
(b) Buyer shall receive a credit against the purchase price for Prepaid
Deposits.
(c) At the Closing, the Purchase Price shall be increased by the amount of
the Accounts Receivable as of the Closing Date, subject to the following
discount schedule:
(1) 0-30 days - 5% discount (on the amount of such Accounts Receivable that are
0-30 days less the amount of any unearned revenue allocated to such
receivables); 31-60 days - 10% discount; (3) 61-90 days - 40% discount; (4) over
90 days - 90% discount.
SECTION 2.3. RESTRICTIONS ON TRANSFER OF UNREGISTERED SHARES. None of the
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Shares to be delivered to Seller and Shareholders in payment of the Purchase
Price or in consideration of the Non-Competition Agreements delivered to Buyer
hereunder will be registered under the Securities Act of 1933 ("Act") at the
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time of delivery ("Unregistered Shares"). In accordance with Section 2.4 below,
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EESI has agreed to register a portion of the Unregistered Shares. The Seller and
Shareholders understand and agree that the following restrictions and
limitations are applicable to the purchase and resale or other transfer of the
Unregistered Shares pursuant to the Act and the terms of this Agreement.
(a) Except for that portion of the Unregistered Shares which are
registered under the Act by EESI pursuant to Section 2.4(a), below, Seller and
Shareholders agree that the Unregistered Shares shall not be sold or otherwise
transferred until the eighteen (18) month anniversary of the Closing Date under
this Agreement.
(b) A legend in substantially the following form will be placed on the
certificates to be issued hereunder evidencing one third (1/3) of the
Unregistered Shares to be issued to Seller and Shareholders:
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
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have been furnished with an opinion of counsel, satisfactory to
counsel for Eastern Environmental Services, Inc. that
registration is not required under any such acts.
(c) A legend in substantially the following form will be placed on the
certificates evidencing the remaining two thirds (2/3) of the Unregistered
Shares to be issued Seller and Shareholders:
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 until _____[insert date which is the eighteen (18) month
anniversary of the Closing Date]____.
(d) Stop transfer instructions will be imposed with respect to the
Unregistered Shares issued to Seller and Shareholders pursuant to this Agreement
so as to restrict resale or other transfer thereof except in accordance with the
foregoing provisions of this Section 2.3.
SECTION 2.4. REGISTRATION RIGHTS.
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(a) EESI shall file a registration statement to register one-third (1/3)
of the Unregistered Shares under the Act for sale to the public pursuant to a
"shelf registration" under Rule 415 of the Act within: (i) one hundred twenty
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(120) days after the Closing Date; or (ii) within thirty (30) days from the
effective date of any registration statement filed by EESI for a public
underwritten sale of stock, whichever shall first occur. Seller and Shareholder
agree that in the event that their Unregistered Shares are registered under
subsection (ii), then Seller and Shareholder will sign an industry standard
ninety (90) day "lock-up" agreement with the underwriter for the public sale of
stock, pursuant to which Seller and Shareholder will agree not to sell or
encumber any of the Unregistered Shares for a period commencing on the effective
date of the public registration statement and ending ninety (90) days
thereafter. EESI will give written notice to the Seller of the "shelf"
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registration at least 15 days before the registration statement is filed. After
receiving the notice of the "shelf" registration, Seller will advise EESI in
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writing of the intended method of disposition of the Unregistered Shares to be
registered. Notwithstanding the foregoing provisions, EESI may withdraw any
registration statement referred to in this paragraph without incurring any
liability to Seller. Notwithstanding the above, EESI's obligation to file the
shelf registration and/or keep the shelf registration continuously effective
shall be suspended, for any period that there exists material, non-public
information relating to EESI.
(b) With respect to the registration of the Unregistered Shares, EESI
will, as expeditiously as possible: (i) furnish to the Seller a prospectus,
including copies of a preliminary prospectus, prepared in conformity with the
requirements of the Act, and such other documents, as Seller may reasonably
request in order to facilitate the public sale or other disposition of the
securities to be sold by Seller; (ii) before filing the registration statement,
prospectus or amendments or supplements thereto, furnish to counsel for Seller
copies of all such documents proposed to be filed.
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(c) Upon any registration under the Act of any of the Unregistered Shares,
EESI shall indemnify Seller in accordance with the provisions of Article X from
and against any and all losses, claims, damages and liabilities (collectively a
"Security Liability") to which Seller may become subject under the Act, any
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state securities or "blue sky" law, any other statute or at common law, insofar
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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 securities were
registered, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. Notwithstanding the above,
EESI shall not be liable to Seller 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 written information
furnished to EESI by Seller which is stated in writing to be specifically
intended for such use; and provided further, that EESI shall not be required to
indemnify Seller against (i) any Security Liability which arises out of the
failure of Seller to deliver, or cause to be delivered, a prospectus as required
by the Act or (ii) any Security Liability arising from any untrue or misleading
statement contained in or omission from any preliminary prospectus, if such
deficiency is corrected in the final prospectus.
(d) All expenses incurred in effecting the registrations provided for in
this Section 2.4 shall be paid by EESI, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for EESI, fees and disbursement of counsel for Seller (up to $2,000 per
year), underwriting expenses (other than commissions or discounts which shall be
shared by the parties registering shares of EESI's common shares in proportion
to the number of shares registered in each particular offering), expenses of any
audits incident to or required by any such registration and expenses of
complying with the securities or "blue sky" laws of any jurisdictions.
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ARTICLE III.
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CLOSING
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SECTION 3.1. TIME AND PLACE OF CLOSING. Unless otherwise agreed to by the
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parties, this transaction shall be closed ("Closing") within fifteen (15) days
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of the date that the conditions to Closing set forth in Articles VIII and IX are
satisfied or waived by the Buyer or Seller, as the case may be. If Closing does
not occur on or before ninety (90) days from the date of this Agreement, the
parties have the right to terminate this Agreement as set forth in Article XI of
this Agreement. If a written notice of termination is sent to all parties to
this Agreement, in accordance with the provisions of Article XI, the parties
shall have no further obligations to each other under this Agreement. The time
of Closing shall be established in a written notice sent by Buyer to all other
parties to this Agreement. Buyer may not set the Closing Date for a date within
three (3) days of the date of the notice. On the Closing Date, the Closing may
be adjourned, reconvened and/or continued as necessary to effectuate the
Closing. The Closing shall take place at the offices of Carlton, Fields, Xxxx,
Xxxxxxxx, Xxxxx & Xxxxxx, P.A., in West Palm Beach, Florida, at Buyer's
election. The date on which the Closing occurs shall be referred to as the
("Closing Date").
-------------
8
SECTION 3.2. DELIVERIES BY SELLER AND SHAREHOLDERS. At the Closing,
----------- -------------------------------------
Seller shall deliver to Buyer, all duly executed the following:
(a) a General Conveyance, Assignment and Xxxx of Sale with full
warranties of title in form and substance satisfactory to Buyer and Seller,
conveying, selling, transferring and assigning to Buyer all of the Assets (the
"Xxxx of Sale");
------------
(b) all motor vehicle Certificates of Title and registrations to the
Rolling Stock executed for transfer to the Buyer;
(c) an Assignment of Leases in form and substance reasonably
satisfactory to Buyer and Seller, conveying, selling, transferring and assigning
to Buyer all of the Leases (the "Assignment of Leases");
--------------------
(d) certified copies of resolutions of the Seller authorizing the
execution of this Agreement, and the execution of all documents to be executed
by Seller to consummate the transactions contemplated in this Agreement, along
with an Incumbency Certificate of Seller;
(e) Employment Agreements between the Buyer and Xxxx Xxxxxxxxxx, Xxxx
X. Xxxxxxxxxx, Xx. and Xxxxxx Xxxxxxxxxx in form and substance as set forth on
Schedule 3.2(f) (the "Employment Agreements")
---------------------
(f) fully executed consents to the assignment of the Customer
Contracts, identified on Schedule 1.4 in form and substance satisfactory to
Buyer and Seller;
(g) the documents required by Section 4.1 concerning the Business
Name;
(h) the original of all Customer Contracts;
(i) a true and correct list of all Accounts Receivable and Prepaid
Deposits in existence on the Closing Date along with all documents, books and
records needed to support and enforce the collection of the Accounts Receivable;
(j) physical possession of all of the tangible Assets and keys to all
locks, labeled as to which Asset the key relates; and
(k) a Lease with Option to Purchase that certain real property more
particularly described on Schedule 1.1(n) (the "Real Property") from Xxxxxx
-------------
Xxxxxxxxxx, as Trustee in form and substance as set forth on Schedule 3.2(l),
subject only to those matters set forth on Schedule 7.2(g)
(l) the Title Insurance Policy described in Section 7.2(g), below.
9
SECTION 3.3. DELIVERIES BY BUYER. At the Closing, Buyer and EESI shall
----------- -------------------
deliver, all duly and properly executed (where applicable):
(a) the Purchase Price, as provided in Article II to be paid by
Buyer;
(b) a certified copy of resolutions of the directors of Buyer and
EESI authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated in this Agreement; and
(c) the Employment Agreements.
ARTICLE IV.
-----------
POST CLOSING COVENANTS
----------------------
SECTION 4.1. CHANGE OF NAME. Effective on the date of Closing, Seller
----------- --------------
conveys to Buyer the sole right to use to use the Business Name, including,
without limitation, the right to use the Business Name in connection with any
and all aspect of the waste disposal industry, including waste collection, waste
transfer, waste recycling, and landfills ("Waste Disposal Industry"). Seller
-----------------------
shall, on and after the date of Closing, deliver to Buyer, in form suitable for
filing, such certificates, consents and other documents as are necessary to
allow Buyer to legally reserve and/or trade under the Business Name in the State
of Florida and any other State or jurisdiction requested by Buyer. On and After
Closing Seller shall change its name and may not use the Business Name in any
way or manner or grant any third party the right to use the Business Name. On
and after Closing, Buyer shall have the right to bring suit in the name of Buyer
or Seller, at Buyer's expense, to enforce against Seller or third parties,
Buyer's exclusive right to use the Business Name.
SECTION 4.2. FURTHER ASSURANCE. From time to time on and after the
----------- -----------------
Closing and without further consideration, the parties hereto shall each deliver
or cause to be delivered to any other party at such times and places as shall be
reasonably requested, such additional instruments as any of the others may
reasonably request for the purpose of carrying out this Agreement and the
transactions contemplated hereby. Without further consideration to Seller,
Seller and Shareholders agree to cooperate with Buyer and to use their
reasonable efforts to have the officers and employees of Seller cooperate on and
after the Closing Date in furnishing to Buyer information, evidence, testimony,
and other assistance in connection all aspects of the Business, including,
without limitation, (i) the accounting and business records of Seller, (ii)
obtaining and keeping in full force and effect all necessary permits and
approvals for the Business and (iii) in connection with any actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
SECTION 4.3. TRANSITION. Seller and Shareholders will not take any action
----------- ----------
that is designed or intended to have the effect of discouraging any customer or
business associate of Seller from maintaining the same business relationships
with Buyer after the Closing that it maintained with
10
Seller before the Closing. Seller will refer all customer inquiries relating to
the Business to Buyer from and after the Closing. Seller agrees that for a
period of 60 days following the Closing Date, Seller will assist Buyer with the
orderly transition of the operations of the Business from Seller to Buyer,
including, without limitation, answering phones and forwarding messages to Buyer
from Seller's office.
ARTICLE V.
----------
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
---------------------------------------------------------
Each of the Seller and Shareholders, jointly and severally, represent and
warrant to Buyer that the statements contained in this Article V, including the
information to be set forth in the Schedules to this Agreement, to be delivered
by Seller to Buyer (such schedules are collectively referred to below as the
"Schedules" and, individually, as a "Schedule") are correct and complete in all
--------- --------
material respects as of the date they are delivered and will be correct and
complete in all material respects as of the Closing Date. Any representation or
warranty of Seller or Shareholders made in this Agreement regarding matters of
title, tax or environmental disclosure or liabilities, or any knowing
misrepresentation or falsehood made herein, shall survive survive the Closing
for a period of two years. All other representations or warranties of Seller of
Shareholders shall survive for a period of one year.
SECTION 5.1. ORGANIZATION; AUTHORITY.
----------- -----------------------
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and is now and has been at
all times since its creation, duly authorized, qualified and licensed under all
laws, regulations, ordinances and orders of public authorities to carry on its
businesses in the places and in the manner as conducted at the time such
activities were conducted, except for where failure to be so authorized,
qualified or licensed would not have a material adverse effect on Seller's
business. Copies of Seller's Certificate of Incorporation and a good standing
certificate (certified by the Secretary of State of the Florida), are attached
hereto as Schedule 5.1(a).
(b) Seller and Shareholders have full legal right, power and
authority (corporate and otherwise) to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, including, without
limitation, the execution and delivery of this Agreement, and all documents
required for this Agreement for the Closing. Each individual Shareholder is
competent and under no legal restraint or duress. Neither Seller, nor any
Shareholder need give any notice to, or make any filing with, or obtain the
authorization, consent or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
(c) The execution, delivery and performance of this Agreement, the
consummation of any transactions in this Agreement referred to or contemplated
hereby and the fulfillment of the terms hereof and thereof will not: (i)
conflict with, or result in a breach or
11
violation of the Articles of Incorporation or By-Laws of Seller; (ii) conflict
with, or result in a breach under any document, agreement or other instrument to
which Seller or any Shareholder is a party, or result in the creation or
imposition of any lien, charge or encumbrance on any properties of Seller, or
Shareholder pursuant to any applicable law or judgment, order or decree to which
Seller, or Shareholders are bound or any of their respective property is
subject; or (iii) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of Seller.
SECTION 5.2. SHARE OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. All of the
----------- ------------------------------------------
issued and outstanding shares of Seller are owned of record and beneficially by
Xxxx Xxxxxxxxxx and Xxxxxx Xxxxxxxxxx and are free and clear of all security
interests, liens and claims of third parties. This Agreement is the valid and
binding obligation of Shareholders, enforceable against each of them in
accordance with its terms.
SECTION 5.3. PREDECESSOR ENTITIES AND SUBSIDIARIES. There are no
----------- -------------------------------------
predecessors to Seller or subsidiaries of Seller having any interest in the
Assets, except as more particularly described on Schedule 5.3. Seller has always
conducted the Business under the Business Name, except as more particularly
described on Schedule 5.3.
SECTION 5.4. FINANCIAL STATEMENTS. Seller has delivered to Buyer, and
----------- --------------------
will provide at Closing, true and correct copies of the following financial
statements compiled by Seller's certified public accountants (the "Financial
---------
Statements"):
----------
Seller's balance sheet for the 12 month period ending June 30, 1996, the 9
month period ending March 31, 1997, and an interim balance sheet as of the
end of the most recent calendar month prior to Closing (the "Balance Sheet
-------------
Date"), and a statement of income, cash flow and retained earnings for the
----
12 month period ended June 30, 1996, the 9 month period ending March 31,
1997, and through the end of the most recent calendar month prior to
Closing, all prepared on an accrual basis.
The Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"), applied on a consistent basis
----
throughout the periods indicated, except that no adjustments have been made for
deferred tax liabilities and other matters, which matters would not materially
already change the Financial Statements. The Financial Statements have been
compiled. To the best of Seller's knowledge each of the Financial Statements
(including all footnotes thereto) is true, complete and correct. The balance
sheets present fairly the financial condition of Seller as of the dates
indicated thereon and the statements of income present fairly on an accrual
basis the results of the operations of Seller for the periods indicated thereon.
Since formation, Seller has not (i) made any material change in its accounting
policies or (ii) effected any prior period adjustment to, or other restatement
of, its financial statements for any period. The Financial Statements are
consistent with the books and records of Seller (which books and
12
records are correct and complete). Since the date of the Financial Statements,
there has not been any material adverse change in the income, expenses or assets
of Seller.
In addition to the foregoing, prior and after the Closing, Seller and
Shareholders shall make available all books and records, and shall cooperate
with Buyer and Buyer's accounting firm, Ernst & Young (E&Y), in the completion
of a year-end audit of Seller's Financial Statements by E&Y. The cost of such
audit shall be borne equally by the Buyer and Seller.
SECTION 5.5. PERSONAL PROPERTY.
----------- -----------------
(a) Listed on Schedule 1.1(a) is a complete and accurate list of all
Containers and Compactors. The Containers and Compactors have no material
defects known to Seller or Shareholders which the Seller or Shareholders have
failed to disclose to Buyer. Listed on Schedule 1.1(a) next to each item
comprising the Containers and Compactors are all defects to each item of
Containers and Compactors.
(b) Listed on Schedule 1.1(b) is a complete and accurate list of all
Rolling Stock. The Rolling Stock is in good operating condition, subject to
normal wear and tear. Listed on Schedule 1.1(b) next to each item comprising the
Rolling Stock are all defects to each item of Rolling Stock.
(c) Listed on Schedule 1.1(c) is a complete and accurate list of all
Recycling Equipment. The Recycling equipment is in good operating condition,
subject to normal wear and tear. Listed on Schedule 1.1(c) next to each item
comprising the Recycling Equipment are all defects to each item of Recycling
Equipment.
(d) Listed on Schedule 1.1(d) is a complete and accurate list of all
radios located in the Rolling Stock, the radio base station and all manual and
automated routing and billing systems and components, including without
limitation associated computer hardware and software. The radios and automated
routing and billing systems and components are in good operating condition and
have no material defects known to Seller which the Seller has failed to disclose
to Buyer.
(e) Listed on Schedule 1.1(e) is a complete and accurate list of
substantially all of Seller's inventory of parts, tires and accessories of every
kind, nature, and description including specifically those items having a value
of over $250.00 each, used by Seller in the Business. All items forming a part
of the Parts Inventory are in good condition and have no material defects known
to Seller which the Seller has failed to disclose to Buyer.
(f) The Accounts Receivable and Prepaid Deposits to be conveyed to
Buyer from Seller include all the Accounts Receivable and Prepaid Deposits in
existence as of the Closing Date. Each of the Accounts Receivable and Prepaid
Deposits were generated in the ordinary course of Seller's Business. All work
required to be performed for the Accounts Receivable to
13
be due and owing by the account debtors, were performed prior to the Closing. To
Seller's best knowledge no debtor on an Account Receivable has any defense to
the Account Receivable and no debtor on an Account Receivable is entitled to any
right of set off.
(g) Listed on Schedule 1.1(m) is a complete and accurate list of all
Furniture and Equipment used by Seller in connection with the Business. The
Furniture and Equipment have no material defects known to Sellers which the
Sellers have failed to disclose to Buyer.
(h) All of the Assets are owned by Seller. On Closing, Seller will
convey good and marketable title to all Assets free and clear of all liens,
leases, security interests or other claims. The Assets constitute all of the
personal property owned by Seller on the Closing Date. The Assets are not
materially different in type, quality and quantity from the personal property
used by Seller in the operation of the Business during the twelve months prior
to Closing, including without limitation, personal property owned by Seller or
owned by others and used by Seller. The Assets include all the personal property
used by Seller for the conduct of the Business during the twelve months prior to
Closing, except for personal property purchased, sold or retired from use in the
ordinary course of Business.
SECTION 5.6. DEBT. Seller has good and marketable title to the Assets,
----------- ----
free and clear of all liens, encumbrances, leases, security interests, equities
or restrictions whatsoever. By virtue of the grant, conveyance, sale, transfer,
and assignment of the Assets hereunder, Buyer shall receive good and marketable
title to the assets, free and clear of all liens, encumbrances, leases, security
interests, equities or restrictions whatsoever. At Closing the Seller's Debt
will not exceed Five Million and no/100 Dollars ($5,000,000.00).
-----------------------------------------------
SECTION 5.7. CONTRACTS. The Customer Contracts and list of Customer
----------- ---------
Contracts to be delivered to Buyer at Closing will be true and correct. To the
best of Seller's knowledge in all material respects, all Customer Contracts are
and on the Closing Date will be in full force and effect, valid, binding and
enforceable against the respective parties thereto in accordance with their
respective provisions. To the best of Seller's knowledge after due inquiry,
Seller is not in default in, nor has there occurred an event or condition
(including Seller's execution and delivery of or performance under this
Agreement) which with the passage of time or the giving of notice, or both,
would constitute a default, with regard to the payment or performance of any
obligation under any Customer Contract; no claim of such a default has been
asserted and there is no reasonable basis upon which such a claim could validly
be made. Seller has not received any written notice that any person intends or
desires to modify, waive, amend, rescind, release, cancel or terminate any
Customer Contract. By virtue of the grant, conveyance, sale, transfer and
assignment of the Customer Contracts by Seller to Buyer hereunder, Buyer shall
own and hold all right, title and interest of Seller in and to the Customer
Contracts, without the consent or approval of any other person or entity.
SECTION 5.8. LEASES. The Leases delivered to Buyer for its review are
----------- ------
true and correct copies of the Leases. The Leases listed in Schedule 1.1(n) are
all the Leases to which Seller is
14
a party and the Leases have not been amended, except as set forth on Schedule
1.1(n). The Leases are and on the Closing Date will be in full force and effect,
valid, binding and enforceable against the respective parties thereto in
accordance with their respective provisions. Seller is not in default in, nor
has there occurred an event or condition (including Seller's execution and
delivery of or performance under this Agreement) which with the passage of time
or the giving of notice, or both, would constitute a default, with regard to the
payment or performance of any obligation under any Lease; no claim of such a
default has been asserted and there is no reasonable basis upon which such a
claim could validly be made. Seller has not received any written notice that any
person intends or desires to modify, waive, amend, rescind, release, cancel or
terminate any of Leases. By virtue of the grant, conveyance, sale, transfer and
assignment of the Leases by Seller to Buyer hereunder, Buyer shall own and hold
all right, title and interest of Seller in and to the Leases, without the
consent or approval of any other person or entity.
SECTION 5.9. APPROVALS AND COMPLIANCE WITH LAWS. Listed on Schedule
----------- ----------------------------------
1.1(h) hereto is a complete and accurate list of all Approvals. All Approvals
are in full force and effect. Except as set forth on Schedule 5.9 attached
hereto, to the best of Sellers' knowledge, Seller has in the past complied, and
is in compliance with all the Approvals and all federal, state and local
statutes, laws, rules, regulations, orders (including, without limitation,
zoning restrictions environmental laws and land use requirements) and licenses
and all administrative and judicial judgments, rulings, decisions and orders
affecting or otherwise applicable to the protection of the environment, the
Assets, and the conduct of the Business (collectively, the "Applicable Laws").
Seller and Shareholders have not received any formal written notice, or to the
best of Sellers' knowledge, any informal notice of any violation of the
Approvals or Applicable Laws, except as set forth on Schedule 5.9.
SECTION 5.10. PROPRIETARY RIGHTS. Schedule 5.10 is a complete and accurate
------------ ------------------
list and summary description as of the date hereof of all trademarks, trade
names, patents, patent applications and copyrights owned or held by Seller and
to the best of Seller's knowledge, none of the trademarks, tradenames, patents,
patent applications and copyrights, infringe on the rights of others and all of
which are now valid, in good standing and in full force and effect.
SECTION 5.11. ENVIRONMENTAL DOCUMENTS. Seller has delivered to Buyer, a
------------ -----------------------
description of and copies, as of the date of this Agreement, of all records of
Seller, correspondence to or from government regulatory agencies, official
reports, notifications, permits, pending permit applications, licenses and
pending license applications, environmental impact studies, assessments and
audits and all official notifications from governmental agencies and any other
person or entity and any other documents in the possession or control of Seller
relating to: (a) each actual and alleged violation of Applicable Laws (as
defined in Section 5.9) by Seller or otherwise relating to the Business or the
Assets and all, if any, claims thereof; (b) each actual or threatened claim or
lawsuit against Seller, affecting or relating to all or any portion of the
Assets; (c) the discharge, leakage, spillage, transport, disposal or release of
any material into the environment by Seller; (d) the arrangement for transport,
disposal or release of material into the environment by Seller; and (e) the
health of employees of Seller (whether direct or indirect), public health or the
15
environment (collectively, the "Environmental Documents"). Seller, has provided
-----------------------
to the government agencies requiring the same, all reports, notices, filings and
other disclosures required by Applicable Laws and all such reports, notices,
filings and other documents were complete and accurate in all material respects
at the time provided to said government agencies.
SECTION 5.12. HAZARDOUS MATERIALS; DISPOSAL SITES. To Seller's and
------------ -----------------------------------
Shareholder's best knowledge after due inquiry, Seller has never generated,
transported, stored, handled, recycled, reclaimed, disposed of, or contracted
for the disposal of, hazardous materials, hazardous wastes, hazardous
substances, toxic wastes or substances, infectious or medical waste, radioactive
waste or sewage sludge, as those terms are defined by the Resource Conservation
and Recovery Act of 1976; the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"); the Atomic Energy Act of 1954; the Toxic
------
Substances Control Act; the Occupational Health and Safety Act; Ch. 376 and 403,
Fla. Stat. and any other comparable or similar Florida statute; or the rules and
----------
regulations promulgated under any of the foregoing, as each of the foregoing may
have been from time to time amended (collectively, "Hazardous Materials").
-------------------
Seller has never owned, operated, had an interest in, engaged in and/or leased a
waste transfer, recycling, treatment, storage or disposal facility, business or
activity other than the Business. Seller has obtained and maintained, when
required to do so under Applicable Laws, trip tickets, signed by the applicable
waste generators demonstrating the nature of all waste transported in connection
with the Business. To the best knowledge of Seller and the Shareholders, no
employee, contractor or agent of Seller has, in the course and scope of
employment with Seller, been harmed by exposure to Hazardous Materials. Attached
hereto as Schedule 5.12 is a complete list and address of all disposal sites at
any time now or in the past utilized by Seller or any predecessor of Seller or
to the best of Seller's knowledge after due inquiry any prior owner of the
Assets or any portion thereof, none of which sites is listed on the CERCLIS list
or the National Priorities List of hazardous waste sites, except as noted on
Schedule 5.12. Except as set forth on Schedule 5.12, attached hereto, neither of
the Seller, or the Shareholders is listed as a potentially responsible party
under CERCLA or any comparable or similar Florida statute and neither Seller,
nor Shareholders has received notice of such a listing. No liens with respect to
environmental liability have been imposed against Seller, or the Shareholders
under CERCLA, any comparable Florida statute or other Applicable Law, and no
facts or circumstances exist which would give rise to the same.
SECTION 5.13. INSURANCE POLICIES. Attached as Schedule 5.13 is a complete
------------ ------------------
and accurate list as of the date hereof of all insurance policies carried by
Seller and an accurate list of all insurance loss runs and workers' compensation
claims received for the past three policy years. Seller at Closing will deliver
to Buyer true and correct copies of Seller's insurance policies. All current
insurance policies are in full force and effect and shall remain in full force
and effect through the Closing Date. Except as set forth on Schedule 5.13,
Seller's insurance has never been cancelled, and Seller has not been denied
coverage within the last three years.
SECTION 5.14. EMPLOYEES; COMPENSATION. Attached as Schedule 5.14 is a
------------ -----------------------
complete and accurate list of all employees of Seller and their rate of
compensation (including a breakdown of
16
the portion thereof attributable to salary, bonus and other compensation,
respectively) as of the date hereof. Except as set forth on Schedule 5.14, each
employee of Seller is an employee at will.
SECTION 5.15. EMPLOYEE RELATIONS AND BENEFIT PLANS. Set forth on Schedule
------------ ------------------------------------
5.15 is an accurate and complete list of all agreements of any kind between
Seller and its employees or group of employees, including, without limitation,
employment agreements, collective bargaining agreements and benefit plans. Buyer
shall not, by the execution and delivery of this Agreement or otherwise, become
obligated to employ any employee of Seller or assume any liabilities or
contractual obligations with respect to such employees or otherwise become
liable for or obligated in any manner (contractual or otherwise) to any employee
of Seller, including, without limiting the generality of the foregoing, any
liability or obligation pursuant to any collective bargaining agreement,
employment agreement, or pension, profit sharing or other employee benefit plan
(within the meaning of Section 3(3) of the Employment Retirement Income Security
Act of 1974, as amended (or any other fringe benefit program maintained by
Seller or to which Seller contributes or any liability for the withdrawal or
partial withdrawal from or termination of any such plan or program by Seller.
There are no current or former employees owed any accrued benefits, including
without limitation, sick time or vacation time.
SECTION 5.16. TAXES. Except as set forth in Schedule 5.16 attached hereto,
------------ -----
Seller has filed, or will file, 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 filed in a timely manner all such
returns due for all periods ended on or before the Closing Date. No federal,
state, local or other tax returns or reports filed by Seller (whether filed
prior to, on, or after the date hereof) with respect to the Business, will
result in any taxes, assessments, fees or other governmental charges upon the
Assets, or Buyer, whether as a transferee of the assets or otherwise. All
federal, state and local taxes due and payable, on the Assets have been paid,
including, without limiting the generality of the foregoing, all federal, state
and local income, sales, use, franchise, excise and property taxes. There are no
open years, examinations in progress or claims against Seller for federal,
state, local and other taxes (including penalties and interest) for any period
or periods prior to and including the date hereof (and as of the Closing Date)
and no notice of any claim, whether pending or threatened, for taxes has been
received. There are no tax liens upon any on the Seller's properties or Assets,
except liens for current taxes not yet due or payable.
SECTION 5.17. LITIGATION. Except as set forth on Schedule 5.17, there is
------------ ----------
no claim, litigation, action, suit or proceeding, formal arbitration, informal
arbitration or mediation, administrative, judicial or otherwise, pending or, to
the best knowledge of Seller, threatened against Seller, or otherwise relating
to the Assets, or Business, at law or in equity, before any federal, state or
local court or regulatory agency, or other governmental or private authority,
and no notice of any of the above has been received by Seller, or either
Shareholder. Also listed on Schedule 5.17 are all instances where Seller is the
plaintiff, or complaining or moving party, under any of the above types of
proceedings or otherwise.
17
SECTION 5.18. ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Seller is not now
------------ ----------------------------------------
and has never been a party to any governmental contracts subject to price
redetermination or renegotiation.
SECTION 5.19. CONDUCT OF SELLER'S BUSINESS SINCE BALANCE SHEET DATE. Since
------------ -----------------------------------------------------
the Balance Sheet Date, as set forth in Section 5.4 there has not been any:
(a) work interruption, labor grievance or claim filed against Seller;
(b) proposed law or regulation, to the best knowledge of Seller,
relating in any way to the operations of Seller, or other event or condition of
any character which, singly or in the aggregate with other such events or
conditions, materially and adversely affects the Business or future prospects of
the Business;
(c) any agreement to sell or transfer, any of the Assets or any plan,
agreement or arrangement granting any preferential right to purchase or acquire
any interest in any of the Assets, or requiring consent of any party to the
transfer and assignment of any of the Assets;
(d) any transaction by Seller outside the ordinary course of its
business.
SECTION 5.20. CORRUPT PRACTICES. Seller has not made, offered or agreed to
------------ -----------------
offer anything of value to any employees of any customers of Seller for the
purpose of attracting business to Seller, or any foreign or domestic
governmental official, political party or candidate for government office or any
of their respective employees or representatives, nor has it otherwise taken any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, nor has Seller or Shareholders otherwise given which
act, gift or similar benefit, if not given any gift or similar benefit which, if
not given in the past, would have materially and adversely affected the Seller's
prospects, business, properties or assets.
SECTION 5.21. COMPLETE DISCLOSURE. This Agreement and the schedules hereto
------------ -------------------
and all other documents and information furnished to Buyer by Seller in writing
and their representatives pursuant hereto or pursuant to the negotiation of this
transaction or the investigations conducted by Buyer or its employees or
representatives, taken as a whole, do not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. If either Seller, or any Shareholder
becomes aware of any fact or circumstance which would materially change a
representation or warranty of the Seller or Shareholders in this Agreement or
any other statement made or document provided to Buyer, the party with such
knowledge shall immediately give notice of such fact or circumstance to Buyer.
The truth and accuracy of each representation and warranty of the Seller in this
Agreement, shall be a precondition to the consummation of this transaction.
SECTION 5.22. REPRESENTATIONS AS TO PRIVATE OFFERING. The EESI Shares are
------------ --------------------------------------
being delivered to the Sellers in a private placement under Section 4.2 of the
Act and under Regulation
18
D promulgated under the Act. To induce Buyer to issue the EESI Shares, each
Shareholder represents and warrants as follows:
(a) The Shareholders maintain their residence in Florida and have no
intention of changing such domicile prior to the Closing.
(b) Each Shareholder acknowledges that they have received a copy of
EESI's Public Reports as hereinafter defined;
(c) The Shareholders represent and warrant that the EESI Shares is
being acquired for their own account without a view to public distribution or
resale and that the Shareholders have no contract, undertaking, agreement or
arrangement to sell or otherwise transfer or dispose of EESI Shares, or any
portion thereof, to any other person.
(d) The Shareholders represent and warrant that, in determining to
acquire the EESI Shares, 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 Shares, been
offered the opportunity to ask such questions and inspect such documents
concerning EESI 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 SHAREHOLDERS ACKNOWLEDGE THAT THE ACQUISITION OF THE EESI
SHARES INVOLVES A HIGH DEGREE OF RISK, and represent and warrant that they can
bear the economic risk of the acquisition of the EESI Shares, including the
total loss of their investment.
(f) The Shareholders represent and warrant that (i) they have
adequate means of providing for their current needs and financial contingencies,
(ii) they have no need for liquidity in this investment, (iii) they have no
debts or other obligations, and cannot reasonably foresee any other
circumstances, that are likely in the future to require them to dispose of the
EESI Shares, and (iv) all their investments in and commitments to non-liquid
investments are, and after their acquisition of the EESI Shares, will be
reasonable in relation to their net worth and current needs.
(g) The Shareholders understand that no federal or state agency has
approved or disapproved the EESI Shares or made any finding or determination as
to the fairness of the EESI Shares for investment.
(h) The Shareholders understand that the EESI Shares are being
offered and sold in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that Buyer is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgements and understandings set forth in this Agreement in
19
order to determine the applicability of such exemption and the suitability of
Shareholder to acquire the EESI Shares.
(i) Shareholders have not entered into any contract, agreement,
undertaking, or arrangement to sell or otherwise transfer or dispose of the
Common Shares or any portion thereof to any other person.
(j) Shareholders hereby agree that he or she will not, directly or
indirectly, offer, sell, transfer, pledge, hypothecate, or otherwise dispose of
any Common Shares (or solicit any offers to buy, purchase, or otherwise acquire
or take a pledge of any Common Shares), unless (i) the Common Shares are
registered under the Securities Act and the securities laws of all other
applicable jurisdictions, and the rules and regulations promulgated thereunder,
or (ii) Shareholder obtains an opinion of counsel which is reasonably
satisfactory to EESI that an exemption from such registration requirements is
available.
(k) Shareholder further acknowledges that he or she is familiar with
the operations of EESI, and that he or she has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares.
(l) Shareholder's net worth exceeds One Million and no/100 Dollars
($1,000,000.00), and, for the past two (2) years, Shareholder has had annual
income of at least Two Hundred Thousand and no/100 Dollars.
SECTION 5.23. LEASED REAL PROPERTY. With respect to the Leased Real
------------ --------------------
Property:
(a) Xxxxxx Xxxxxxxxxx, as Trustee, holds good and marketable fee
simple absolute title to the Leased Real Property free and clear of any and all
liens and encumbrances except for those matters set forth on Schedule 5.23(a)
("the Permitted Exceptions").
------------------------
(b) There are no known defects or conditions of the Leased Real
Property or the soil or geology thereof that exist or which impair the current
or planned use of the Leased Real Property for operation of the Business
thereon, as described in the Lease set forth on Schedule 3.2 ("Buyer's Intended
----------------
Use").
---
(c) The Leased Real Property is not known to be in violation of any,
applicable federal, state or local statutes, ordinances, orders, requirements,
laws, rules or regulations (including, without limitation, any building, land
use, zoning or environmental laws) affecting the Leased Real Property.
(d) No notice of violation of any applicable federal, state or local
statute, law, ordinance, rule, regulation, order or requirement, or of any
covenant, condition, restriction or easement affecting the Leased Real Property
or with regard to the use or occupancy of the Leased
20
Real Property, has been given by any governmental authority having jurisdiction
over the Leased Real Property or by any other person entitled to enforce the
same.
(e) The Leased Real Property is zoned "Heavy Industrial", which
----------------
permits the operation of the Business thereon.
(f) The operation of the Business on the Leased Real Property is
consistent with the Comprehensive Plan adopted by Broward County ("County") as
------
required by the Local Government Comprehensive Planning and Land Development
Regulation Act, Chapter 163, Part II, Fla. Stat. ("Growth Management Act"), and
---------- ---------------------
any subsequent amendments thereto, and complies with all those certain specified
land development regulations required pursuant to the Growth Management Act to
be adopted by County and to be consistent with and implement the Plan.
ARTICLE VI.
-----------
REPRESENTATIONS AND WARRANTIES OF BUYER AND EESI
------------------------------------------------
Buyer and EESI, jointly and severally, represent and warrant that the
statements contained in this Section 6 are correct and complete as of the date
of this Agreement; and shall survive the Closing for a period of one year.
SECTION 6.1. CORPORATE ORGANIZATION.
----------- ----------------------
(a) Buyer and EESI are corporations duly organized, validly existing
and in good standing under the laws of the State of Florida and Delaware,
respectively, and are now and have been at all times since their creation, duly
authorized, qualified and licensed under all laws, regulations, ordinances and
orders of public authorities to carry on their business.
(b) Buyer and EESI have full legal right, power and authority
(corporate and otherwise) to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. Buyer and EESI do not need to give
any notice to, or make any filing with, or obtain the authorization, consent or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) The execution, delivery and performance of this Agreement, the
consummation of any transactions referred to in this Agreement or contemplated
by this Agreement and the fulfillment of the terms hereof and thereof will not:
(i) conflict with, or result in a breach or violation of the Articles of
Incorporation or By-Laws of Buyer or EESI; or (ii) conflict with, or result in
a breach under any document, agreement or other instrument to which Buyer or
EESI is a party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer or which its property is subject.
SECTION 6.2. CORPORATE AUTHORITY. The officer of Buyer and EESI executing
----------- -------------------
this Agreement has the corporate authority to enter into and bind Buyer and
EESI, as applicable, to
21
the terms of this Agreement, and Buyer and EESI have taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. All corporate action by Buyer and EESI necessary to approve the
transaction, including both shareholder and director approvals, have been taken.
As set forth in Article III, Buyer shall deliver to Seller a copy of a corporate
resolution authorizing Buyer to enter into this transaction, including, without
limitation, the execution and delivery of this Agreement and all agreements to
be delivered at Closing.
SECTION 6.3. BINDING AGREEMENT. This Agreement is the binding and valid
----------- -----------------
obligation of Buyer and EESI, enforceable against them in accordance with its
terms.
SECTION 6.4. COMPLETE DISCLOSURE. This Agreement and the schedules hereto
----------- -------------------
and all other documents and information furnished to Seller by Buyer in writing
and their representatives pursuant hereto or pursuant to the negotiation of this
transaction or the investigations conducted by Seller or its employees or
representatives, taken as a whole, do not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. If Buyer becomes aware of any fact or
circumstance which would materially change a representation or warranty of the
Buyer in this Agreement or any other statement made or document provided to
Seller, Buyer shall immediately give notice of such fact or circumstance to
Seller. The truth and accuracy of each representation and warranty of the Buyer
in this Agreement, shall be a precondition to the consummation of this
transaction. EESI has made all filings with Securities and Exchange Commission
that it is required to make under the Securities Act of 1933 (the "Act") and the
---
Securities Exchange Act of 1934 (the "Exchange Act"), as amended (collectively,
------------
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 do not contain any untrue
statement of a material fact or omit any material fact(s) necessary to make the
information contained in the filings not misleading.
ARTICLE VII.
------------
COVENANTS OF SELLER PRIOR TO CLOSING
------------------------------------
SECTION 7.1. ACCESS TO RECORDS/INSPECTION OF ASSETS. Between the date of
----------- --------------------------------------
this Agreement and the Closing Date, Seller shall afford to or obtain for the
officers and authorized representatives of Buyer access to all of the books and
records of Seller, including, without limitation, the Environmental Documents,
at all reasonable times and upon reasonable notice and will furnish Buyer with
such additional financial and operating data and other information as to the
Business and Assets of Seller as Buyer may from time to time reasonably request.
Seller will cooperate with Buyer, its representatives, engineers, auditors and
counsel in the preparation of any documents or other material which may be
required in connection with any documents or materials required by any
governmental agency. Buyer will cause all information obtained in connection
with the negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Article XII.
22
Buyer shall have the right after the Effective Date of this Agreement to
conduct a Feasibility and Engineering Study ("Feasibility Study") for the use
-----------------
of the Leased Real Property, and shall conduct such Feasibility Study on or in
connection with the Leased Real Property as it deems advisable, including but
not limited to (i) having the zoning laws and other laws and ordinances and
requirements affecting the Leased Real Property and the use and development
thereof examined or reviewed by Buyer's representative, and (ii) entering the
Leased Real Property to examine the Leased Real Property, making such soil
tests, environmental assessments, test borings, surveys and staking of property
as Buyer deems necessary. Seller agrees that Buyer and its employees, agents and
engineers may enter upon the Leased Real Property or any portion thereof at all
times during the term of this Contract and do all things Buyer deems necessary
in connection with any such Feasibility Study on the Leased Real Property.
Buyer agrees (i) to indemnify, save and hold harmless Seller from any and
all claims, damages and liability that Seller may incur by reason of, arising
out of or resulting from any entry by Buyer or its employees, agents or
engineers on the Leased Real Property in connection with such Feasibility Study,
and (ii) in the event Buyer fails to close the purchase of the Leased Real
Property under the terms of this Contract, to repair any damage to the Leased
Real Property by reason of, arising out of or resulting from Buyer's said
Feasibility Study on the Leased Real Property.
SECTION 7.2. ACTIVITIES OF SELLER PRIOR TO CLOSING. Between the date of
----------- -------------------------------------
this Agreement and the Closing Date, Seller shall:
(a) maintain the Assets in as good working order and condition as at
present, ordinary wear and tear excepted;
(b) perform all of its obligations under the Customer Contracts or
other agreements material to the Business;
(c) keep in full force and effect present insurance policies or other
comparable insurance coverage with reputable insurers;
(d) use reasonable efforts to maintain its relationships with
suppliers, customers, consultants, independent contractors and others having
business relations with Seller;
(e) maintain compliance with all Applicable Laws and the Approvals;
and
(f) provide all reasonable assistance to Buyer to provide for an
orderly transfer of the Assets from Seller to Buyer.
(g) Title Insurance. No later than 10 days after the execution of
this Agreement, Seller shall provide to Buyer, at Seller's sole cost and expense
a title insurance commitment of a reputable title insurance company reasonably
acceptable to Buyer, to issue a policy of title insurance insuring Buyer's
marketable leasehold interest in the Leased Real Property in an amount equal
to the fair market value of the Leased Real Property, naming the Buyer as the
insured, with an extended coverage endorsement insuring over the general
exceptions customarily contained in such policies (including the "gap"), and
---
with such customary title insurance endorsements as Buyer may reasonably
require, subject only to the Permitted Exceptions set forth on Schedule 7.2(g)
(the "Title Insurance Policy.")
----------------------
Upon receipt of the foregoing, Buyer shall have 5 business days in which to
raise policy objections by written notice to Seller. If Buyer so notifies
Seller of any such matters within the 5 business
23
days, Seller shall, at the Seller's sole cost and expense, use its best efforts
to have such unpermitted exceptions removed from the commitment, or, to the
extent acceptable to Buyer, have the title insurer commit to insure, by its
customary form of endorsement, against loss or damage that may be occasioned by
such exceptions. In the event that Seller is unable to cure or correct such
objections to Buyer's satisfaction by Closing, Seller shall exercise all
reasonable diligence and efforts, at Seller' sole expense, that Buyer or the
Title Company may reasonably request to correct or cure all title defects. If
Seller cannot cure the title defects prior to Closing, Buyer, in its sole
discretion, may elect to either terminate this Agreement or to proceed with
Closing, with the right to deduct from the Purchase Price the amount of any
unpermitted liens or encumbrances of a definite or ascertainable amount. On the
Closing Date, Buyer shall obtain a later date of such insurance commitment,
showing the title or leasehold interest to be good in the Seller, subject only
to the Permitted Exceptions or otherwise waived in writing by Buyer. Costs of
this commitment, the premium for the policy and the survey shall be borne and
paid for exclusively by the Seller.
Seller shall provide Buyer with any survey(s) of the Leased Real Property.
At Buyer's election, Buyer may obtain a current survey of the Leased Real
Property at is sole expense. Buyer shall have 5 business days from receipt of a
current survey in which to raise survey objections by written notice to Seller.
Any survey exceptions shall be treated as title defects subject to the
provisions of the preceding paragraph.
SECTION 7.3. PROHIBITED ACTIVITIES PRIOR TO CLOSING. Between the date of
----------- --------------------------------------
this Agreement and the Closing Date, Seller agrees that is shall not, without
the prior written consent of Buyer:
(a) issue any shares, or grant any options, warrants, puts, calls,
conversion rights or commitments relating to any securities of Seller of any
kind;
(b) amend or terminate, any Customer Contract, except in the ordinary
course of the Business; or
(c) knowingly breach any Customer Contract; or
24
(d) make any oral or written announcement concerning this
transaction, except as may be required by law, all of which announcements, if
any, shall be forwarded to Buyer for review and comment at least seven days
prior to dissemination.
SECTION 7.4. CONTACT WITH GOVERNMENT OFFICIALS. Seller shall use its best
----------- ---------------------------------
efforts to cooperate with Buyer in making contact with the appropriate
governmental agencies and officials having information about or jurisdiction
over Seller, Assets Approvals or obligations or rights of Seller, including,
without limitation, environmental and land use agencies and officials, in order
to assist Buyer in completing its regulatory evaluation of Seller and their
respective obligations.
ARTICLE VIII.
-------------
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller, and Shareholders hereunder are subject to the
completion, satisfaction, or at their option, waiver, on or prior to the Closing
Date, of the following conditions.
SECTION 8.1. REPRESENTATIONS, AND WARRANTIES. The representations and
----------- -------------------------------
warranties of Buyer and EESI contained in this Agreement shall be accurate on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date.
SECTION 8.2. COVENANTS. Each and all of the terms, covenants and
----------- ---------
conditions of this Agreement to be complied with and performed by Buyer and EESI
on or before the Closing Date shall have been duly complied with and performed.
SECTION 8.3. NO ADVERSE PROCEEDING. No action or proceeding before a
----------- ---------------------
court or any other governmental agency or body shall have been instituted or, to
the best of Seller's knowledge, threatened to restrain or prohibit any of the
transactions contemplated by this Agreement due to the actions of Buyer or EESI.
SECTION 8.4. EMPLOYMENT AGREEMENTS. Buyer shall have executed and
----------- ---------------------
delivered at the Closing the Employment Agreements.
ARTICLE IX.
-----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND EESI
-----------------------------------------------------
The obligations of Buyer and EESI hereunder are subject to the completion,
satisfaction or, at their option, waiver, on or prior to the Closing Date, of
the following conditions.
SECTION 9.1. REPRESENTATIONS AND WARRANTIES AND OBLIGATIONS. The
----------- ----------------------------------------------
representations and warranties of Seller and the Shareholders contained in this
Agreement shall be accurate on and
25
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date.
SECTION 9.2. COVENANTS. Each and all of the terms, covenants and
----------- ---------
conditions of this Agreement to be complied with and performed by Seller and
Shareholders on or before the Closing Date shall have been duly complied with
and performed .
SECTION 9.3. NO ADVERSE PROCEEDING. No action or proceeding before a
----------- ---------------------
court or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit any of the transactions contemplated by this
Agreement, and no governmental agency or body shall have taken any other action
or made any request of Buyer as a result of which the management of Buyer deems
it inadvisable to proceed with the Closing.
SECTION 9.4. NO ADVERSE CHANGE. No material and adverse change in the
----------- -----------------
Business and Assets shall have occurred since the Balance Sheet Date. Seller
shall not have suffered any loss or damage to any of its properties or assets,
whether or not covered by insurance, since the Balance Sheet Date, which change,
loss or damage would materially affect or impair the ability of Buyer to conduct
the Business.
SECTION 9.5. CONDITIONS. All consents or Approvals required by any
----------- ----------
governmental authority or agency or other third party relating to the
consummation of the transactions contemplated in this Agreement shall have been
obtained and made.
SECTION 9.6. TRANSFERABILITY OF PERMITS. Buyer shall have determined,
----------- --------------------------
in its sole discretion, that all licenses, permits and other approvals required
for the operation of the Business have been obtained by Buyer, transferred to
Buyer, or can be so obtained or transferred, including, without limitation the
franchise hauling agreements with Dade and Broward Counties.
SECTION 9.7. ENVIRONMENTAL REVIEW. Buyer, through its authorized
----------- --------------------
representatives, has completed a review (including, without limitation, all
testing, inspections and other procedures, review of existing files of, and
discussions with, governmental agencies and officials having jurisdiction over
Seller of the environmental and land use practices, procedures, operations and
activities of Seller; the results of which review, without limiting the
generality of the foregoing, reflects compliance with all Applicable Laws
governing the operations of Seller, discloses no actual or probable violations,
compliance problems, required capital expenditures or other substantive
environmental, land use or real estate related concerns and are otherwise
satisfactory in all respects to Buyer in its sole discretion. Buyer will use
its reasonable best efforts to complete the environmental review as soon as
reasonably possible.
SECTION 9.8. LEGAL OPINION TO BE GIVEN TO BUYER ON BEHALF OF SHAREHOLDERS.
----------- ------------------------------------------------------------
At the Closing, Seller will deliver to Buyer a legal opinion of Florida counsel
reasonably acceptable to Buyer with respect to the matters set forth in Schedule
9.8.
26
SECTION 9.9. GENERAL. All actions taken by Seller and Shareholders in
----------- -------
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
SECTION 9.10. SIMULTANEOUS CLOSING OF PURCHASES OF COMPANION TRANSACTIONS.
------------ -----------------------------------------------------------
EESI and the Buyer's obligation to close the transaction contemplated by this
Agreement, including without limitation the payment of the purchase price to
Seller and Shareholder and the delivery of the Employment Agreements, is
conditioned upon the Buyer's ability to simultaneously close the purchase of the
assets of Environmental Waste Systems of Palm Beach, Inc., unless expressly
waived by Buyer in writing.
SECTION 9.11. BANK APPROVAL. EESI's lending institution shall have
------------ -------------
approved this Agreement and the purchase of the assets of Environmental Waste
Systems of Palm Beach, Inc.
ARTICLE X.
----------
INDEMNIFICATION
---------------
SECTION 10.1. INDEMNIFICATION BY SELLER AND SHAREHOLDER. Seller and
------------ -----------------------------------------
Shareholder agree that they will, jointly and severally, indemnify, defend,
protect and hold harmless Buyer, its officers, shareholders, directors, agents,
employees, successors and assigns at all times from and after the date of this
Agreement 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 Buyer as a result of or incident to: (a)
any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties by Seller or Shareholder, set forth in this
Agreement or in the Schedules, Exhibits or certificates attached to this
Agreement or delivered pursuant to this Agreement; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of Seller or
Shareholder made in this Agreement and to be performed on after or before the
Closing Date; or (c) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in subsections (a) or (b) of this
Section 10.1 or Section 1.6 of this Agreement has occurred; or (d) any claim
arising out of those litigation matters set forth on Section 5.17. Buyer
agrees that it will not make a claim for indemnification under this Section 10.1
for matters in the aggregate having a value of less than $5,000.00
SECTION 10.2. INDEMNIFICATION BY BUYER. Buyer and EESI agree that they
------------ ------------------------
will indemnify, defend, protect and hold harmless Seller and Shareholder at all
times from and after the date of this Agreement 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 Seller or Shareholder as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties of Buyer or EESI set forth in this Agreement; (b) nonfulfillment of
any agreement, covenant or condition on
27
the part of Buyer or EESI made in this Agreement; (c) any Security Liability;
and (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
10.2 has occurred. Seller and Shareholder(s) agree that they will not make a
claim for indemnification under this Section 10.2 for matters in the aggregate
having a value of less than $5,000.00
SECTION 10.3. 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 ("Third Party Claim") that may
------------------ -----------------
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article X, then the Indemnified
------------------
Party shall promptly notify each Indemnifying Party thereof in writing;
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.
(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 (10) days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any adverse consequences (which will include, without limitation,
all losses, claims, liens, and reasonable 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 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 10.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in 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).
28
(d) If any of the conditions set forth in Section 10.3(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 X. If the Indemnified Party is Buyer or EESI, then in addition to
the foregoing, for any sum owing the Indemnified Party, Buyer may set off such
sum against the Escrowed Purchase Price pursuant to Section 2.2(a).
SECTION 10.4. PROCEDURE FOR NON-THIRD PARTY CLAIMS. If Buyer, EESI,
------------ ------------------------------------
Seller, or Shareholder wish to make a claim for indemnity under Section 10.1 or
Section 10.2, as applicable, and the claim does not arise out of a third party
notification which makes the provisions of Section 10.3 applicable, the party
desiring indemnification ("Indemnified Party") shall deliver to the parties 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 10.1 or
Section 10.2, as the case may be; (b) the nature of the event or occurrence
which entitles the Indemnified Party to receive payment under Section 10.1 or
Section 10.2, as the case may be. 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
-------------------------
fifteen (15) days after the Indemnification Demand, 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 thirty (30) 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 (30) 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 or if the Indemnified Party is the Buyer or EESI,
then Buyer may set off the amount of the Indemnification Demand against the
Escrowed Purchase Price pursuant to Section 2.2(a).
ARTICLE XI.
-----------
TERMINATION OF AGREEMENT
------------------------
SECTION 11.1. TERMINATION BY BUYER. Buyer, by notice in the manner
------------ --------------------
provided below on or before the Closing Date, may terminate this Agreement in
the event of (i) a material breach by Seller, or Shareholders in the observance
or in the due and timely performance of any of the
29
material agreements or conditions contained in this Agreement on their part to
be performed, and such breach shall not have been cured on or before the Closing
Date, or (ii) the falsity of any material representation or warranty given by
Seller, or Shareholders in this Agreement.
SECTION 11.2. TERMINATION BY SELLER. Seller may, by notice in the manner
------------ ---------------------
provided below on or before the Closing Date, terminate this Agreement in the
event of (i) a breach by Buyer or EESI in the observance or in the due and
timely performance of any of the material agreements or conditions contained in
this Agreement on the part of Buyer to be performed, and such breach shall not
have been cured on or before the Closing Date, or (ii) the falsity of any
material representation or warranty given by Buyer in this Agreement.
SECTION 11.3. COMPLETION OF DUE DILIGENCE. Buyer, by notice in the manner
------------ ---------------------------
provided below, on or before April 15, 1997, may terminate this Agreement if
Buyer's due diligence on the purchase of the Assets of Seller or the Companion
Transactions is not satisfactory to Buyer, in Buyer's sole discretion.
ARTICLE XII.
------------
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
-----------------------------------------
SECTION 12.1. NONDISCLOSURE BY SELLER. Seller, and Shareholders
------------ -----------------------
recognize and acknowledge that they had in the past, currently have, and in the
future will have certain confidential information of the Business, and Assets
such as lists of customers, operational policies, and pricing and cost policies
that are valuable, special and unique assets of Buyer and/or the Business.
Seller, and Shareholder agree that 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
Buyer, unless (i) such information becomes known to the public generally through
no fault of Seller, or Shareholders or (ii) the Seller is compelled to disclose
such information by a governmental entity or pursuant to a court proceeding. In
the event of a breach or threatened breach by Seller, or Shareholders of the
provisions of this Section, Buyer shall be entitled to an injunction restraining
Seller, or Shareholders from disclosing, in whole or in part, such confidential
information. Nothing in this Article shall be construed as prohibiting Buyer
from pursuing any other available remedy for such breach or threatened breach,
including, without limitation, the recovery of damages.
SECTION 12.2. NONDISCLOSURE BY BUYER. Buyer 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 Seller, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Seller and the Business. Buyer agrees
that it will not disclose (or use) 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 Buyer (ii) Buyer is compelled to disclose such information
by a governmental entity or pursuant to a court proceeding. In the event of a
breach or threatened breach by Buyer of the provisions of this Section, Seller
shall be entitled to an
30
injunction restraining Buyer from disclosing, in whole or in part, such
confidential information. Nothing contained in this Article shall be construed
as prohibiting Seller from pursuing any other available remedy for such breach
or threatened breach, including, without limitation, the recovery of damages.
The provisions of this Section 12.2 expire upon the Closing of the purchase
under this Agreement by Buyer.
ARTICLE XIII.
-------------
GENERAL
-------
SECTION 13.1. ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and
------------ -------------------------------------
the rights of the parties hereunder may not be assigned (except by operation of
law) and shall be binding upon and shall inure to the benefit of the parties
hereto, the successors of Buyer, EESI, Seller, and the respective heirs and
legal representative of the Shareholders. 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 13.2. 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 the Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as this Agreement. This 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 hereto represent and warrant to each other that they 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 13.3. 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 13.4. EXPENSES OF TRANSACTION. Whether or not the transactions
------------ -----------------------
contemplated in this Agreement shall be consummated: (a) Buyer and EESI will pay
the fees, expenses and disbursements of Buyer and EESI and its agents,
representatives, accountants and counsel incurred in connection with the subject
matter of this Agreement and any amendments hereto and all other costs and
expenses incurred in the performance and compliance with all conditions to be
performed by Buyer or EESI under this Agreement; and (b) Seller will pay
personally the fees, expenses and disbursements of Seller, and Shareholders and
their respective agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments hereto
and all other costs and expenses incurred in the performance and compliance with
all conditions to be performed by Seller, and Shareholders under this Agreement.
All such fees, expenses and disbursements of Seller, and Shareholder shall
31
be paid by Seller prior to the Closing so that the Assets will not be charged
with or diminished by any such fee, cost or expense.
SECTION 13.5. NOTICES. All notices or other communications required or
------------ -------
permitted under this Agreement 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 Buyer or EESI, addressed:
President, Xxxxx Xxxxxxx, Xx.
Eastern Environmental Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxx & Assoc., P.C.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Xxxxxx Xxxxxxx, Esq.
Xxxxxxx Xxxxxx
0 Xxxxxxx Xxxxx
Xxxxx, XX 00000
(b) If to Seller or Shareholders, addressed:
Xxxxxx Xxxxxxxxxx, President
Environmental Waste Systems, Inc.
0000 Xxxxxxxxxx Xxxx
Xx. Xxxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxx, Esquire
00 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxx Xxxx 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
32
received, if earlier. Any party may change the address for notice by notifying
the other parties of such change in accordance with this Section 13.5.
SECTION 13.6. GOVERNING LAW. This Agreement shall be governed by and
------------ -------------
construed in accordance with the internal laws of the State of Florida, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Florida.
SECTION 13.7. 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 13.8. TIME OF THE ESSENCE. Time is of the essence of this
------------ -------------------
Agreement.
SECTION 13.9. 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 13.10. 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 13.11. 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 deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means included, without limitation. The parties intend that each
----------
representation, warranty and covenant contained in this Agreement shall have
independent significance.
SECTION 13.12. NO SHOP AGREEMENT. Unless and until this Agreement is
------------- -----------------
terminated pursuant to Article XI without the Closing having taken place,
Seller, and Shareholders will not directly or indirectly solicit offers for the
shares or the assets of Seller or for a merger or consolidation involving
Seller, 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
33
heretofore expressed an interest in acquiring Seller by merger, consolidation or
other combination or acquiring any of Seller's assets; nor will the Shareholders
permit Seller to do any of the foregoing.
SECTION 13.13. SURVIVAL. The representations, warranties, covenants, and
------------- --------
terms of this Agreement shall survive Closing.
SECTION 13.14. INCORPORATION OF SCHEDULES. All Schedules and exhibits
------------- --------------------------
attached to this Agreement are hereby incorporated by reference as fully as if
set forth in the body of the Agreement.
SECTION 13.15. ARBITRATION.
------------- -----------
(a) Each and every controversy or claim arising out of or relating to
this Agreement shall be settled by arbitration in accordance with the commercial
rules (the "Rules") of the American Arbitration Association then obtaining in
-----
Ft. Lauderdale, Florida (or the nearest city thereto with an American
Arbitration Association office), and judgment upon the award rendered in such
arbitration shall be final and binding upon the parties and may be confirmed in
any court having jurisdiction thereof. Notwithstanding the foregoing, this
Agreement to arbitrate shall not bar any party form seeking temporary or
provisional remedies in any Court having jurisdiction if such party can
establish irreparable harm. Notice of the demand for arbitration shall be filed
in writing with the other party to this Agreement, which such demand shall set
forth in the same degree of particularity as required for complaints under the
Federal Rules of Civil Procedure the claims to be submitted to arbitration.
Additionally, the demand for arbitration shall be stated with reasonable
particularity with respect to such demand with documents attached as
appropriate. In no event shall the demand for arbitration be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statutes of
limitations.
(b) The arbitrators shall have the authority and jurisdiction to
determine their own jurisdiction and enter any preliminary awards that would aid
and assist the conduct of the arbitration or preserve the parties' rights with
respect to the arbitration as the arbitrators shall deem appropriate in their
discretion. The award of the arbitrators shall be in writing and it shall
specify in detail the issues submitted to arbitration and the award of the
arbitrators with respect to each of the issues so submitted.
(c) Within sixty (60) days after the commencement of any arbitration
proceeding under this Agreement, each party shall file with the arbitrators its
contemplated discovery plan outlining the desired documents to be produced, the
depositions to be taken, if ordered by the arbitrators in accordance with the
Rules, and any other discovery action sought in the arbitration proceeding.
After a preliminary hearing, the arbitrators shall fix the scope and content of
each party's discovery plan as the arbitrators deem appropriate. The
arbitrators shall have the authority to
34
modify, amend or change the discovery plans of the parties upon application by
either party, if good cause appears for doing so.
(d) The award pursuant to such arbitration will be final, binding and
conclusive.
(e) Counsel to the Purchasers and the Sellers in connection with the
negotiation of and consummation of the transactions under this Agreement shall
be entitled to represent their respective party in any and all proceedings under
this Section or in any other proceeding (collectively, "Proceedings"). The
-----------
Purchasers and the Sellers, respectively, waive the right and agree they shall
not seek to disqualify any such counsel in any such Proceedings for any reason,
including but not limited to the fact that such counsel or any member thereof
may be a witness in any such Proceedings or possess or have learned of
information of a confidential or financial nature of the party whose interests
are adverse to the party represented by such counsel in any such Proceedings.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Witnesses EASTERN ENVIRONMENTAL SERVICES, INC.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------------ -------------------------------------
Xxxx X. Xxxxxxxx , Vice President
/s/ Xxx Xxxxx
------------------------------
EASTERN ENVIRONMENTAL SERVICES OF INC.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
----------------------------- -------------------------------------
Xxxx X. Xxxxxxxx, Vice President
/s/ Xxx Xxxxx
-----------------------------
ENVIRONMENTAL WASTE SERVICES, INC.
______________________________ By: /s/ Xxxxxx Xxxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxxx, President
/s/ Xxxxxx X. Xxxx
------------------------------
SHAREHOLDERS OF
EASTERN WASTE SERVICES, INC.
______________________________ /s/ Xxxxxx Xxxxxxxxxx
-----------------------------------------
XXXXXX XXXXXXXXXX
/s/ Xxxxxxx X. Xxxx
------------------------------
______________________________ /s/ Xxxx Xxxxxxxxxx
-----------------------------------------
XXXX XXXXXXXXXX
/s/ Xxxxxxx X. Xxxx
------------------------------
36
