Exhibit 10.1
STOCK PURCHASE AGREEMENT
BETWEEN
EASTERN ENVIRONMENTAL SERVICES, INC.
AND
XXXXXXXX XXXXXXX
FOR THE PURCHASE OF
ALL OF THE ISSUED AND OUTSTANDING SHARES OF
XXXXXXX BROTHERS, INC.
AFFORDABLE RECYCLING SYSTEMS, INC.
AND
M-LAND CORP.
TABLE OF CONTENTS
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Page
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RECITALS....................................................................
ARTICLE I - CLOSING.........................................................
ARTICLE II - TITLE INSURANCE................................................
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS.....................
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF EESI.........................
ARTICLE V - ADDITIONAL AGREEMENTS OF SELLERS................................
ARTICLE VI - ADDITIONAL AGREEMENTS OF EESI..................................
ARTICLE VII - CONDITIONS OF EESI............................................
ARTICLE VIII - CONDITIONS OF SELLERS........................................
ARTICLE IX - INDEMNIFICATION................................................
ARTICLE X - OTHER PROVISIONS................................................
SECTION OF DISCLOSURE SCHEDULE
ATTACHED TO THIS AGREEMENT
1.3(a) Escrow Agreement
1.6(b) Opinion of EESI Counsel
1.7(c) Noncompetition Agreement
1.7(e) Opinion of Sellers Counsel
1.7(g) Release
ATTACHED AS PART OF DISCLOSURE BINDER
1.3(a) Company Debt
1.3(b) Capital Structure; Share Allocation
2.2 Permitted Exceptions to Real Property Title
3.1 Subsidiaries
3.3 Contracts, Permits, Mortgages and Material Documents
3.4(b) Rolling Stock
3.4(c) Containers
3.5 Customer Contracts
3.6 Real Property
3.7 Adverse Changes
3.8(a)(iii) Liabilities not in Ordinary Course of Business
3.9 Fiscal Condition of Companies
3.10 Tax Status of Companies
3.11 Insurance Policies, Performance Bonds and Letters of Credit
3.12(a) Contracts with Employees
3.12(b) Employees
3.12(c) Benefit Plans
3.13(a) Violations of federal, state or local laws or regulations
3.13(b) Environmental Violations
3.13(f) List and Synopsis of All Litigation
3.15 Required Consents
3.18 Related Party Transactions
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), is made and entered into on
August 19, 1998, by and between Eastern Environmental Services, Inc., a Delaware
corporation ("EESI"), on the one part, and Xxxxxxxx Xxxxxxx of 00 Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxx ("Seller"), on the other part.
RECITALS
EESI is a waste services company engaged in the collection, transportation
and disposal of residential, commercial and industrial waste in several eastern,
southern, and Midwestern states. Xxxxxxx Brothers, Inc., a New Jersey
corporation ("MarangiCo"), is a waste services company engaged in the collection
and disposal of residential, commercial and industrial waste in the states of
New Jersey and New York, Affordable Recycling Systems, Inc., a New York
corporation ("Affordable"), is a waste services company engaged in the operation
of a waste transfer and recycling station in the state of New York, and M-Land
Corp., a New York corporation ("MLand"), is a company owning real estate used in
connection with the business of MarangiCo and Affordable. (For purposes of this
Agreement (i) MarangiCo, Affordable and MLand are hereinafter collectively
referred to as the "Xxxxxxx Companies", (ii) the issued and outstanding shares
of capital stock of the Xxxxxxx Companies is referred to herein as the "Company
Shares", and (iii) EESI is sometimes hereinafter referred to as "Purchaser".)
Seller owns all of the issued and outstanding shares of the capital stock of the
Xxxxxxx Companies.
In accordance with the provisions of this Agreement, Seller desires to sell
all of the Company Shares to EESI in exchange for common stock of EESI, all on
the terms contained herein. The parties intend that the transactions
contemplated hereby qualify as a reorganization, within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended, and be treated as
a "pooling of interests" for accounting purposes.
Throughout this Agreement various Schedules are referenced as being
attached to this Agreement. Notwithstanding the fact that all Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead appear in a Disclosure Binder prepared by the Seller. The
Disclosure Binder is organized under subheadings which correspond to the various
Schedules described in this Agreement. For purposes of identification, the
Disclosure Binder has been identified by the parties by a written statement
executed by the parties and appearing as the first page of the Disclosure
Binder.
ARTICLE I
CONSIDERATION AND CLOSING
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SECTION 1.1 Incorporation of Recitals. The recitals set forth above are
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incorporated herein by reference and are a part of this Agreement.
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SECTION 1.2 Time and Place for Closing. Closing under this Agreement
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shall take place within fifteen days of the conditions set forth in Article VII
and Article VIII being satisfied or waived, at the offices EESI, 1000 Xxxxxxxx
Place, Suite 400, Mount Laurel, New Jersey, or such other place as the parties
hereto may agree upon in writing. The date of Closing is referred to
hereinafter as the "Closing Date" and the act of closing as "Closing." The
exact Closing Date shall be established by a written notice sent by Purchaser to
Seller.
SECTION 1.3 Agreement to Sell Company Shares; Purchase Price
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(a) At the Closing, Seller agrees to transfer and deliver to Purchaser all
of the Company Shares owned by the Seller, and Purchaser agrees to purchase and
pay for the Company Shares, for a total consideration for such shares (the
"Purchase Price"), subject to adjustment as provided herein, of Twelve Million
Three Hundred Thousand Dollars ($12,300,000) payable as follows: (i) a number of
shares of common stock of EESI ("EESI Stock") having an aggregate value equal to
the Purchase Price, each share being valued at the closing price of the common
stock on the Nasdaq Market on the trading day which is the fifth trading day
prior to the Closing Date ("Per Share Value"), and (ii) Purchaser accepting the
Company Shares with the Xxxxxxx Companies having total liabilities, excluding
accounts payable, as set forth on Schedule 1.3(a) attached ("Company Debt").
The Purchase Price shall be adjusted such that the number of shares of EESI
Stock to be delivered at Closing, valued at the Per Share Value, shall be
adjusted, dollar for dollar, by an amount equal to the principal of and accrued
interest owed on the Company Debt at Closing.
(b) The EESI Stock shall be allocated between MarangiCo, Affordable and
MLand as set forth on Schedule 1.3(b). The Seller shall receive the shares of
EESI Stock as allocated among the Xxxxxxx Companies and in the same proportions
that the Seller owns shares in each of the Xxxxxxx Companies, as set forth on
Schedule 1.3(b).
SECTION 1.4 Closing. Following execution of this Agreement, Purchaser and
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Seller shall be obligated to conclude the transaction strictly in accordance
with its terms within fifteen (15) days after the conditions to Closing set
forth in Article VII and Article VIII have been satisfied or waived, time being
of the essence. If the failure to conclude this transaction is due to the
refusal and failure of Seller to perform his obligations under this Agreement,
Purchaser may seek to enforce this Agreement with an action of specific
performance, in addition to, and not in limitation of, any other rights and
remedies available to the Purchaser under this Agreement, or at law or in
equity, including, without limitation an action to recover its actual damages
resulting from the default of Seller. If the failure to conclude this
transaction is due to the refusal and failure of Purchaser to perform its
obligations under this Agreement, Seller may, in addition to and not in
limitation of any other rights and remedies available to the Seller under this
Agreement, or at law or in equity, bring legal action to recover his actual
damages resulting from the default of Purchaser.
SECTION 1.5 Termination. This Agreement and the transactions contemplated
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hereby may be terminated at any time prior to the Closing Date by written notice
from the party terminating given to the other party, except in the case of (a)
below:
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(a) by mutual written agreement of EESI and Seller;
(b) by EESI within forty-five (45) days of the date of this Agreement, if
EESI is not satisfied, in its sole discretion, with the due diligence it has
conducted on the Xxxxxxx Companies;
(c) by EESI or Seller, in the event the other makes a material
misrepresentation under this Agreement or breaches a material covenant or
agreement under this Agreement; or
(d) by EESI or Seller, if the Closing shall not have occurred by September
30, 1998, or such other date as may be agreed to by the parties hereto in
writing, due to the non-fulfillment of a condition precedent to such party's
obligation to close as set forth at Article VII or VIII hereof, as applicable
(through no fault or breach by the terminating party).
In the event this Agreement is terminated as provided herein, this
Agreement shall become void and be of no further force and effect and no party
hereto shall have any further liability to any other party hereto, except that
Section 1.5, Article IX, Section 10.1, Section 10.2 and Section 10.15 shall
survive and continue in full force and effect, notwithstanding termination. The
termination of this Agreement shall not limit, waive or prejudice the remedies
available to the parties, at law or in equity, for a breach of this Agreement.
SECTION 1.6 Deliveries by EESI. At the Closing, EESI shall deliver or
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cause to be delivered, all duly and properly executed, authorized and issued
(where applicable):
(a) Certificates representing shares of EESI, as provided in Section 1.3
above, to be delivered in payment of the Purchase Price upon delivery of the
Company Shares;
(b) An opinion from counsel for EESI, dated the Closing Date,
substantially in the form attached as Schedule 1.6(b); and
(c) A copy of resolutions of the directors of EESI authorizing the
execution and delivery of this Agreement and each other agreement to be executed
in connection herewith (collectively, the "Collateral Documents") and the
consummation of the transactions contemplated herein and therein.
SECTION 1.7 Deliveries by Seller. At the Closing, Seller shall deliver to
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EESI or cause to be delivered, all duly and properly executed, authorized and
issued (where applicable) the following:
(a) Duly executed certificates in valid form evidencing all of the Company
Shares owned by Seller, duly endorsed in blank or accompanied by duly executed
stock powers attached or otherwise executed in the presence of authorized
representatives of Purchaser;
(b) Except as may be otherwise required by EESI, the written resignations
of all officers and directors of the Xxxxxxx Companies as of the time of
Closing;
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(c) Noncompetition Agreement with the Seller, in the form and content
attached hereto as Schedule 1.7(c) (the "Noncompetition Agreements");
(d) A current certificate of good standing and certified charter documents
for each of the Xxxxxxx Companies from each applicable jurisdiction of
incorporation and admission;
(e) An opinion from counsel for Seller, dated the Closing Date,
substantially in the form attached as Schedule 1.7(e);
(g) A general release from Seller, in form and content satisfactory to
Purchaser, whereby the Seller releases the Xxxxxxx Companies from any and all
claims, causes of action, debts and obligations whatsoever existing on the
Closing Date;
(h) The Certificate described at Section 7.1 executed by the President of
each of the Xxxxxxx Companies; and
(i) The books and records of the Xxxxxxx Companies, including, without
limitation, all original financial and operating records, the corporate minute
books and seals, the corporate stock ledgers, certified copies of the charter
documents and bylaws, and all title documents.
ARTICLE II
TITLE INSURANCE
SECTION 2.1 Owners Title Policy. At Closing, the Xxxxxxx Companies
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shall own, with respect to all real property owned by the Xxxxxxx Companies, an
extended coverage owners policy(ies) of title insurance from a title company
acceptable to Purchaser (the "Title Company"), dated as of the Closing Date, in
an amount equal to the fair market value of such real property. Purchaser and
Seller shall share the premium for such title policy(ies). The title policies
shall include comprehensive, access and contiguity endorsements, including,
without limitation, a non-imputation endorsement, and shall insure title to the
real property to be in fee simple in each company, as applicable, subject only
to the Permitted Exceptions permitted by Section 2.2 hereof (the "Owners
Policy").
SECTION 2.2 Permitted Exceptions. The Owners Policy shall insure each
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company's interest in its real property to be free and clear of all encumbrances
and exceptions whatsoever except those listed on Schedule 2.2 attached hereto.
SECTION 2.3 Survey. The Seller shall furnish Purchaser with a survey
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relating to all of the real property owned by the Xxxxxxx Companies that is
sufficiently current that the Title Company shall not have included a survey
exception in the Owner's Policy. If a new survey is required, Purchaser and
Seller shall share the cost of such survey.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
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With knowledge that EESI is relying upon the representations, warranties
and covenants herein contained, Seller represents and warrants to EESI and make
the following covenants for EESI's benefit. When the phrase "to Seller's
knowledge" or any equivalent phrase is used in this Agreement, the phrase shall
mean the actual knowledge of Seller or the information and/or knowledge Seller,
having been or currently being a director, officer, or employee of any of the
Xxxxxxx Companies would actually possess had Seller acted with due diligence in
the conduct of his duties as an officer, director or employee.
SECTION 3.1 Organization and Standing. The Xxxxxxx Companies are
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corporations duly organized, validly existing and in good standing under the
laws of the state of their incorporation, with full power and authority to own
their properties and conduct their business as now being conducted. Except as
listed in Schedule 3.1, the Xxxxxxx Companies do not own any stock or interest
in any other corporation, partnership, or other business organization. Seller
owns all of the outstanding securities issued by the Xxxxxxx Companies, as set
forth on Schedule 1.3(b).
SECTION 3.2 Securities. The Xxxxxxx Companies have the authorized and
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outstanding securities set forth on Schedule 1.3(b). All outstanding shares of
stock are legally and validly authorized and issued, fully-paid and
nonassessable. There are no outstanding rights of any kind to acquire
additional shares of any class of stock of the Xxxxxxx Companies, except as set
forth on Schedule 1.3(b).
SECTION 3.3 Contracts, Permits and Material Documents. The items listed
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in Schedule 3.3 attached hereto are all of the following ("Material Documents")
with respect to the Xxxxxxx Companies which provide a benefit or imposes a
detriment of a value of $10,000 or more: (i) leases for real and personal
property, (ii) licenses, (iii) franchises, (iv) promissory notes, guarantees,
bonds, mortgages, liens, pledges, and security agreements under which any of the
Xxxxxxx Companies are bound or under which any of the Xxxxxxx Companies are the
beneficiary, (v) collective bargaining agreements, (vi) patents, trademarks,
trade names, copyrights, trade secrets, proprietary rights, symbols, service
marks, and logos, (vii) all permits, licenses, consents and other approvals from
governments, governmental agencies (federal, state and local) and/or third
parties relating to, used in or required for the operation of any of the
business of the Xxxxxxx Companies, (viii) all surety bonds, closure bonds or any
other obligation which the Xxxxxxx Companies have liability for with respect to
their operations and (ix) other contracts, agreements and instruments not listed
on another Schedule attached to this Agreement (such as the customer contracts
listed on Schedule 3.5) which are binding on any of the Xxxxxxx Companies or any
of their property and pursuant to which the Xxxxxxx Companies derive a benefit
or incur a detriment having a value of $10,000 or more. The Material Documents
listed on Schedule 3.3 are organized under separate headings for each of the
Xxxxxxx Companies and under subheadings for each of the different type of
documents listed. Except as set forth on Schedule 3.3, neither the Xxxxxxx
Companies nor any person or party to any of the Material Documents or bound
thereby is in default under any of the Material Documents, and, to the knowledge
of Seller, no act or event has occurred which with notice or lapse of time, or
both,
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would constitute such a default. The Xxxxxxx Companies are not a party to, and
none of the Xxxxxxx Companies' properties are bound by, any agreement or
instrument which is material to the continued conduct of business operations of
the Xxxxxxx Companies, as now being conducted, except as listed in Schedule 3.3.
SECTION 3.4 Personal Property.
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(a) All furniture, office equipment, computer equipment, and radio
equipment, owned by the Xxxxxxx Companies is in reasonably good condition,
normal wear and tear excepted, and is sufficient in type, quantity and quality
to operate the business currently conducted by the Xxxxxxx Companies in an
efficient manner.
(b) Listed on Schedule 3.4(b) is all of the rolling stock, including motor
vehicles, trucks, front and rear end loaders, and compactors and accessories and
attachments used in the business of the Xxxxxxx Companies together with
information as to the make, description of body and chassis, model number,
serial number and year of each such vehicle ("Rolling Stock"). The Rolling
Stock is owned or leased by each of the Xxxxxxx Companies as listed on Schedule
3.4(b). The Rolling Stock is in reasonably good condition, normal wear and tear
excepted, except as disclosed on Schedule 3.4(b). The Xxxxxxx Companies own
and/or lease a sufficient number and type of Rolling Stock to service their
customers in an efficient manner.
(c) Schedule 3.4(c), attached hereto, lists by each of MarangiCo and
Affordable the containers used in the business of each of them which are ten
yards or greater together with information as to container size. All of the
containers owned and used by the Xxxxxxx Companies are in reasonably good
condition, normal wear and tear excepted, except as noted on Schedule 3.4(c).
The Xxxxxxx Companies own and/or lease a sufficient number and type of
containers to service their customers in an efficient manner.
(d) The inventory of parts, tires and accessories and the shop tools owned
by the Xxxxxxx Companies are in reasonably good condition, normal wear and tear
excepted, and are sufficient in type, quantity and quality to operate the
business currently conducted by the Xxxxxxx Companies in an efficient manner.
(e) All recycling equipment and other equipment not listed on one of the
above schedules owned by the Xxxxxxx Companies is in reasonably good condition,
normal wear and tear excepted, and is sufficient in type, quantity and quality
to operate the business currently conducted by the Xxxxxxx Companies in an
efficient manner.
SECTION 3.5 Customers. A list of customers each of the Xxxxxxx Companies
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serves together with information as to the services rendered to each such
customer, frequency of service and rates charged and the contractual rights of
each customer, whether oral or in writing, is listed on Schedule 3.5 attached
hereto. None of the Xxxxxxx Companies and, to Seller's knowledge, no other
person or party to any of the customer contracts is in default under any of the
customer contracts, and no act or event has occurred which with notice or lapse
of time, or both, would constitute such a default.
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The purchase of the Xxxxxxx Companies by EESI will not create a default under
any customer contract.
SECTION 3.6 Title.
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(a) Listed on Schedule 3.6 attached are the addresses and ownership
interest which each of the Xxxxxxx Companies has in any real property,
including, without limitation, fee ownership, lease, license or other form of
interest.
(b) The Xxxxxxx Companies have good and marketable title to, or a valid
leasehold interest in, all of their assets both real property and personal
property, each free and clear of any mortgages, pledges, liens, encumbrances,
charge, claim, security agreement or title retention or other security
arrangement ("Liens"), except the types of liens set forth in subparagraphs (i)
through (iii) below, and the items listed on Schedule 3.6 ("Permitted
Encumbrances"):
(i) Liens imposed by law and incurred in the ordinary course of
business for indebtedness not yet due to carriers, warehousemen, laborers or
materialmen and the like;
(ii) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation; and
(iii) Liens for property taxes, assessments, or governmental charges
not yet subject to penalties for nonpayment.
SECTION 3.7 Financial Statements. Seller has delivered to EESI, or will
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deliver by the Closing Date, true and correct copies of the following financial
statements of the Xxxxxxx Companies (the "Financial Statements"):
(a) Balance sheets of each of the Xxxxxxx Companies as of December 31,
1995, December 31, 1996, and December 31, 1997, and a statement of income, cash
flow and retained earnings for the periods ended December 31, 1995, December 31,
1996, and December 31, 1997, all prepared on an accrual basis. All Financial
Statements have been reviewed but not audited by Xxxxxx X. Xxxxxxx, C.P.A.; and
(b) A balance sheet as of June 30, 1998 ("Most Recent Balance Sheet"), and
a statement of income, cash flow and retained earnings for the period ended June
30, 1998 ("Most Recent Income Statement"), with respect to each of the Xxxxxxx
Companies, prepared on an accrual basis internally. The Most Recent Balance
Sheet and Most Recent Income Statement are hereafter referred to as the "Most
Recent Financial Statements."
The Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis in
accordance with past custom and practice of the Xxxxxxx Companies and the
industry in which they operate. The balance sheets present fairly, in all
material respects, the financial condition of the Xxxxxxx Companies as of the
dates indicated
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thereon and the statements of income present fairly, in all material respects,
on an accrual or cash basis, as the case may be, the results of the operations
of the Xxxxxxx Companies for the periods indicated thereon. Since the date of
the Most Recent Balance Sheet, the Xxxxxxx Companies have not (i) made any
material change in their accounting policies or (ii) effected any prior period
adjustment to, or other restatement of, their financial statements for any
period. The Financial Statements are consistent with the books and records of
the Xxxxxxx Companies (which books and records are correct and complete in all
material respects). Since the date of the Most Recent Financial Statements,
except as set forth on Schedule 3.7, there has not been any material adverse
change in the income, expenses, assets or prospect of any of the Xxxxxxx
Companies.
SECTION 3.8 Liabilities; Accounts Receivable and Working Capital.
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(a) The Xxxxxxx Companies do not have any liabilities, fixed or contingent,
other than:
(i) liabilities fully reflected in the Most Recent Balance Sheet,
except for liabilities not required to be disclosed therein in accordance with
GAAP;
(ii) accounts payable arising since the date of the Most Recent
Balance Sheet arising during the normal course of business consistent with past
custom and practice; and
(iii) liabilities listed on schedule 3.8(a)(iii) attached.
(b) All accounts receivable of the Xxxxxxx Companies are, and all
accounts receivable arising since the date of this Agreement, will be valid and
enforceable accounts receivable, and will be fully collectable in the ordinary
course of business, less an allowance for bad debt set forth on the Most Recent
Balance Statement. All accounts receivable have been generated in the ordinary
course of business of the Xxxxxxx Companies consistent with past practice. To
Seller's knowledge, there are no defenses or set-offs to any of the accounts
receivable.
(c) At Closing, the Xxxxxxx Companies shall have working capital consisting
of current assets in excess of current liabilities (each determined in
accordance with generally accepted accounting principles) in an amount no less
than they have had on an historic basis as reflected on the Financial
Statements. It is acknowledged that current assets shall include cash, cash
equivalents, pre-paid expenses and accounts receivable (less a bad debt
allowance), and current liabilities shall include accounts payable, accrued
expenses, accrued vacation pay, and the current portion of any long-term
liabilities.
SECTION 3.9 Fiscal Condition of the Xxxxxxx Companies. Since the date of
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the Most Recent Balance Sheet, except as set forth in Schedule 3.9, there has
not (except as otherwise specifically permitted by this Agreement or as set
forth in the Schedules to this Agreement) been:
(a) Any material adverse change in the financial condition, business
organization or personnel of the Xxxxxxx Companies or in the relationships of
the Xxxxxxx Companies with suppliers, customers or others;
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(b) Any disposition by any of the Xxxxxxx Companies of any of its capital
stock or any grant of any option or right to acquire any of its capital stock,
or any acquisition or retirement by any of the Xxxxxxx Companies of any of its
capital stock or any declaration or payment of any dividend or other
distribution of its capital stock;
(c) Any sale or other disposition of any asset owned by any of the Xxxxxxx
Companies at the close of business on the date of the Most Recent Balance Sheet,
or acquired by it since that date, other than in the ordinary course of business
consistent with past practice;
(d) Any expenditure or commitment by the Xxxxxxx Companies for the
acquisition of any single asset or any single business, except in the ordinary
course of business consistent with past practices and having an acquisition
price of $10,000 or less;
(e) Any damage, destruction or loss (whether or not insured) adversely
affecting the property, business or prospects of the Xxxxxxx Companies taken as
a whole, except damage, destruction or loss which does not exceed $10,000 in the
aggregate;
(f) Any bonuses or increases in the compensation payable or to become
payable by the Xxxxxxx Companies to any officer or key employee, except in the
ordinary course of business or as required by law or pursuant to a contract
which is listed on a Schedule to this Agreement;
(g) Any loans or advances to or by any of the Xxxxxxx Companies other than
renewals or extensions of existing indebtedness and other than in the ordinary
course of business consistent with past practice; or
(h) Any change in accounting method or practice.
SECTION 3.10 Tax Returns. The Xxxxxxx Companies have filed all federal,
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state and other tax returns for all periods on or before the due date of such
return (as may have been extended by any valid extension of time) and have paid
all taxes due for the periods covered by the said returns. The reserves for all
taxes reflected in the Most Recent Balance Sheet, if any, are adequate to cover
all taxes, interest and penalties in connection therewith that may be assessed
with respect to the property and business operations for the period(s) ending on
the Closing Date and for all prior periods. The Xxxxxxx Companies have filed,
and will file (if due), in a timely manner all requisite federal, state, local
and other tax returns due for all fiscal periods ended on or before the date
hereof, and as of the Closing shall have or will in a timely manner file all
such returns due for all periods ended on or before the Closing Date.
SECTION 3.11 Policies of Insurance. All insurance policies, performance
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bonds, and letters of credit insuring the Xxxxxxx Companies or which the Xxxxxxx
Companies have had issued and which have not expired are listed on Schedule 3.11
attached hereto. Schedule 3.11 includes the names and addresses of the insurers
and sureties, policy and bond numbers, types of coverage or bond, time periods
or projects covered and the names and addresses of all known banks,
beneficiaries, agents or agencies with respect to each listed insurance policy,
performance bond and
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letter of credit. All current insurance policies, performance bonds and letters
of credits of the Xxxxxxx Companies are in force and effect and the premiums
thereon are not delinquent. Except as set forth in Schedule 3.11, the Xxxxxxx
Companies have not received any notification from any insurance carrier denying
or disputing any claim made by any of the Xxxxxxx Companies or denying or
disputing any coverage for any such claim or denying or disputing the amount of
any claim. The Xxxxxxx Companies have no claim against any of their insurance
carriers under any of policies insuring them pending or anticipated and there
has been no occurrence of any kind which would give rise to any such claim.
SECTION 3.12 Employees, Pensions, and ERISA.
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(a) The Xxxxxxx Companies do not have any contract of employment with any
officer, director or employee, except as listed on Schedule 3.12(a).
(b) Except as set forth on Schedule 3.12(b), no employee of the Xxxxxxx
Companies is represented by any union. A list of the name, address and social
security number and current rate of compensation of each of the Xxxxxxx
Companies' employees and capacity in which each person is employed is set forth
on Schedule 3.12(b). There is no pending or threatened dispute between any of
the Xxxxxxx Companies and any of its employees which might materially and
adversely affect the continuance of the business operations of the Xxxxxxx
Companies.
(c) Attached hereto and made a part hereof and marked Schedule 3.12(c) is
a list of all employee benefit plans, funds or programs (within the meaning of
the Code or the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) which are currently maintained and/or were established or sponsored
by any of the Xxxxxxx Companies (whether or not they are now terminated) or to
which any of the Xxxxxxx Companies currently contributes, or has an obligation
to contribute in the future, including, without limitation, employment
agreements and any other agreements containing "golden parachute" provisions
("Plans"), whether or not the Plans are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable law, (ii) written or
oral, (iii) funded or unfunded, or (iv) generally available to all employees of
the Xxxxxxx Companies.
(d) The Seller has delivered to EESI (i) true and complete copies of all
Plan documents and other instruments relating thereto, (ii) true and complete
copies of the most recent financial statements with respect to the Plans, (iii)
true and complete copies of all annual reports for any Plan prepared within the
past 5 years, and (iv) all material filings submitted to and any correspondence
received from any government agency relating to any Plan within the past 5
years.
(e) Each Plan which is intended to be qualified under Section 401(a) and
exempt from tax under Section 501(a) of the Code has been determined by the IRS
to be so qualified and such determination remains in effect and has not been
revoked. Copies of the relevant determination letters are attached to each such
plan. Except as set forth in the Disclosure Schedule, nothing has occurred
since the date of any such determination which may adversely affect such
qualification or exemption, or result in the imposition of excise taxes or tax
on unrelated business income under the
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Code or ERISA. No Plan is funded through a trust intended to be exempt from tax
under Section 501(c) of the Code.
(f) No reportable event (as defined in Section 4043 of ERISA or the
regulations thereunder) for which the reporting requirements have not been fully
waived, or accumulated funding deficiency whether or not waived (as defined in
Section 302 of ERISA), or liability to the Pension Benefit Guaranty Corporation
("PBGC") under Section 4062 of ERISA, nor any prohibited transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code), has occurred or exists
with respect to any Plan. All Plans are in substantial compliance with all
material applicable provisions of ERISA and the regulations issued thereunder,
as well as with all other material law applicable to such Plans, and, in all
material respects, have been administered, operated and managed in substantial
accordance with the governing documents of the Plan and the requirements of
ERISA.
(g) There is no matter, action, audit, suit or claim pending or, to the
best knowledge of Seller, threatened relating to any Plan, fiduciary of any Plan
or assets of any Plan, before any court, tribunal or government agency.
(h) Each most recent Plan audit report, actuarial report and annual
report, certified by the Plan's actuaries and auditors, as the case may be,
fairly presents the actuarial status and the financial condition of the Plan as
at the date thereof and the results of operations of the Plan for the plan year
reflected therein and, subject to changes in amounts attributable to investment
performance and normal employee turnover, there has been no adverse change in
the condition of the Plan since the date of the most recent Form 5500, audited
annual financial statement or actuarial valuation report.
(i) The transaction contemplated herein will not accelerate any liability
under the Plans because of an acceleration of any rights or benefits to which
any employee may be entitled thereunder.
SECTION 3.13 Legality of Operation. In regard to the Xxxxxxx Companies:
---------------------
(a) Except as disclosed in Schedule 3.13(a) to this Agreement, and except
as to Environmental Laws, as hereinafter defined in Section 3.13(b) below, the
Xxxxxxx Companies are in material compliance with all federal, state and local
laws, rules and regulations including, without limitation, the following laws:
land use or zoning laws; payroll, employment, labor, or safety laws; or federal,
state or local "anti-trust" or "unfair competition" or "racketeering" laws such
as but not limited to the Xxxxxxx Act, Xxxxxxx Act, Xxxxxxxx Xxxxxx Act, Federal
Trade Commission Act, or Racketeer Influenced and Corrupt Organization Act
("Law"). Except as disclosed in Schedule 3.13(a), the Xxxxxxx Companies are in
compliance with all permits, franchises, licenses, and orders that have been
issued with respect to the Laws and are or may be applicable to any of their
property and operations, including, without limitation, any order, decree or
directive of any court or federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality wherever
located, federal, state and local permits, orders, franchises and consents.
Except as set forth on Schedule 3.13(a), with respect to any Law there are no
claims, actions, suits, investigations or proceedings pending, or threatened
against or affecting any of the Xxxxxxx
11
Companies, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, wherever located, which would result in any adverse change in
the financial condition or business of the Xxxxxxx Companies or which would
invalidate this Agreement or any action taken in connection with this Agreement.
Except as disclosed in Schedule 3.13(a), the Xxxxxxx Companies have received no
notification of any past or present failure by any of the Xxxxxxx Companies to
comply with any Law applicable to it or its assets.
(b) Except as disclosed in Schedule 3.13(b) to this Agreement, the Xxxxxxx
Companies are in compliance with all federal, state and local laws, rules and
regulations relating to environmental issues of any kind and/or the receipt,
transport or disposal of any hazardous or non-hazardous waste materials from any
source ("Environmental Law"). Except as disclosed in Schedule 3.13(b), with
respect to any Environmental Law, the Xxxxxxx Companies are in compliance with
all permits, licenses, and orders related thereto or issued thereunder, as are
or may be applicable to the property and operations of the Xxxxxxx Companies,
including, without limitation, any order, decree or directive of any court or
federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality wherever located. Except as set forth on
Schedule 3.13(b), there are no Environmental Law related claims, actions, suits
or proceedings pending or threatened against or affecting the Xxxxxxx Companies,
at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
wherever located, which would result in an adverse change in the financial
condition or business of the Xxxxxxx Companies or which would invalidate this
Agreement or any action taken in connection with this Agreement. Except as set
forth on Schedule 3.13(b), the Xxxxxxx Companies have not transported, stored,
treated or disposed of, nor to Seller's knowledge have the Xxxxxxx Companies
allowed any third persons, on their behalf, to transport, store, treat or
dispose of waste to or at (i) any location other than a site lawfully permitted
to receive such waste for such purpose or, (ii) any location currently
designated for remedial action pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or any similar federal or
state statute; nor have the Xxxxxxx Companies performed, arranged for or allowed
by any method or procedure such transportation or disposal in contravention of
state or federal laws and regulations or in any other manner which may result in
any liability for contamination of the environment; and the Xxxxxxx Companies
have not disposed of, nor have the Xxxxxxx Companies knowingly allowed third
parties to dispose of waste upon property owned or leased by the Xxxxxxx
Companies other than as permitted by, and in conformity with, applicable
Environmental Law. Except as disclosed in Schedule 3.13(b), the Xxxxxxx
Companies have not received any notification of any past or present failure by
the Xxxxxxx Companies to comply with any Environmental Law applicable to their
operations or their assets. Without limiting the generality of the foregoing,
except as set forth in Schedule 3.13(b), the Xxxxxxx Companies have not received
any notification (including requests for information directed to the Xxxxxxx
Companies or an owner thereof) from any governmental agency asserting that any
of the Xxxxxxx Companies is or may be a "potentially responsible person" for a
remedial action at a waste storage, treatment or disposal facility, pursuant to
the provisions of CERCLA, or any similar federal or state statute assigning
responsibility for the costs of investigating or remediating releases of
contaminants into the environment. The Xxxxxxx Companies have not
12
received any hazardous waste as defined in the Resource Conservation and
Recovery Act, 42 USCA Section 6901 et seq., or in any similar federal or state
-- ---
statute.
(c) Except for the businesses which the Xxxxxxx Companies currently
conduct, the Xxxxxxx Companies have never owned, operated, had an interest in,
engaged in and/or leased a waste transfer, recycling, treatment, storage,
landfill or other disposal facility. The Xxxxxxx Companies have obtained and
maintained, when required to do so under applicable Environmental Laws,
manifests signed by the applicable waste generators demonstrating the nature of
all waste deposited and or transported by the Xxxxxxx Companies. To Seller's
knowledge, no employee, contractor or agent of the Xxxxxxx Companies has, in the
course and scope of employment with the Xxxxxxx Companies, been harmed by
exposure to hazardous materials, as defined under the Environmental Laws. No
liens with respect to environmental liability have been imposed against the
Xxxxxxx Companies under CERCLA, any comparable state statute or any other
applicable Environmental Law, and Seller has no knowledge that any facts or
circumstances exist which would give rise to the same.
(d) Schedules 3.13(a) and 3.13(b) list all remedied violations of Laws and
Environmental Laws which existed since January 1, 1996 to the date hereof and
all outstanding unremedied notices of violations issued to the Xxxxxxx Companies
by any federal, state or local regulatory agency.
(e) To Seller's knowledge, no employee, officer, director, or shareholder
of the Xxxxxxx Companies is under investigation by the Attorney General of any
state, by the District Attorney of any county of any state, or by any United
States Attorney or any other governmental investigative agency for the violation
of any Laws, including, without limitation, the violation of any anti-trust,
racketeering, or unfair competition Laws.
(f) All pending or threatened litigation and administrative or judicial
proceedings involving the Xxxxxxx Companies, or their assets or liabilities, are
set forth on Schedule 3.13(f) attached, together with a description of each such
proceeding.
SECTION 3.14 Corrupt Practices. The Xxxxxxx Companies have not made,
-----------------
offered or agreed to offer anything of value to any employees of any customers
of the Xxxxxxx Companies (except in conformity with Law) for the purpose of
attracting business to any of the Xxxxxxx Companies or any foreign or domestic
governmental official, political party or candidate for government office or any
of their respective employees or representatives, nor have the Xxxxxxx Companies
otherwise taken any action which would cause them to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended.
SECTION 3.15 Legal Compliance. Seller has the right, power, legal
----------------
capacity and authority to enter into, and perform his obligations under this
Agreement, and, except as set forth in Schedule 3.15, no approvals or consents
of any other persons, business or governmental unit are necessary to be obtained
by Seller or the Xxxxxxx Companies in connection with the transactions, filings
with or notices to, contemplated by this Agreement. Except as disclosed in
Schedule 3.15 to this
13
Agreement, the execution and performance of this Agreement will not result in a
breach of or constitute a default or result in the loss of any right or benefit
under:
(a) Any charter, by-law, agreement or other document to which the Xxxxxxx
Companies are a party or by which the Xxxxxxx Companies or any of their
properties are bound, including, without limitation, any agreement by or between
any shareholder of any of the Xxxxxxx Company; or
(b) Any decree, order or rule of any court or governmental authority which
is binding on any of the Xxxxxxx Companies or on any property of the Xxxxxxx
Companies; or
(c) Any permit, certificate or license issued by any governmental
authority under which any of the Xxxxxxx Companies operate or pursuant to which
any of the property of the Xxxxxxx Companies is bound; or
(d) Any agreement by which the Xxxxxxx Companies are bound, including,
without limitation, bank loan documents, agreements with customers or suppliers
and leases for equipment.
SECTION 3.16 Transaction Intermediaries. Except as disclosed in Schedule
--------------------------
3.16, no agent, broker, financial advisor or other person acting pursuant to the
express authority of any of the Xxxxxxx Companies is entitled to any commission
or finder's fee in connection with the transactions contemplated by this
Agreement.
SECTION 3.17 Intellectual Property. To Seller's knowledge, the Xxxxxxx
---------------------
Companies have not infringed, and are not now infringing, on any trade name,
trademark, service xxxx or copyright belonging to any person, firm or
corporation ("Intellectual Property") and no one has or is infringing any
Intellectual Property right of the Xxxxxxx Companies. The Xxxxxxx Companies own
or have legally licensed all computer software used in connection with their
business and have not infringed, and are not now infringing, on the rights of
any third parties by their use of computer software.
SECTION 3.18 Competition. Except as set forth on Schedule 3.18, no
-----------
salaried officer, nor any spouse or child of any of them, has any direct or
indirect interest in any competitor of the Xxxxxxx Companies within the
geographical area in which the Xxxxxxx Companies currently conduct business, or
an interest in any supplier or customer of the Xxxxxxx Companies or in any
person from whom or to whom the Xxxxxxx Companies lease any real or personal
property, or in any other person with whom the Xxxxxxx Companies are doing
business.
SECTION 3.19 Disclosure. The representations and warranties of Seller
----------
contained in this Agreement, or in any Schedule or other document delivered by
Seller pursuant hereto, do not contain any untrue statement of a material fact,
or omit any statement of a material fact necessary to make the statements
contained not misleading. If, prior to Closing, Seller becomes aware of any
inaccuracy or misrepresentation or omission in any of the Schedules, he shall
immediately advise EESI in writing of the inaccuracy, misrepresentation or
omission.
14
SECTION 3.20 Pooling Requirements. The Seller does not own any waste
--------------------
collection, transfer, recycling or disposal businesses other than the Xxxxxxx
Companies. For the 24 month period ending on the date of this Agreement, there
has been no change of ownership of the Company Shares. There will be no change
in the ownership of the Company Shares from the date of this Agreement to the
Closing Date. During the most recent 24 calendar months prior to the date of
this Agreement, the Xxxxxxx Companies have not paid any dividends or
distributions to their shareholder other than dividends and distributions
consistent in amount and kind to the dividends and distributions paid by the
Xxxxxxx Companies during the three year period immediately preceding the 24
month period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EESI
--------------------------------------
With knowledge that Seller is relying upon the representations, warranties
and covenants contained herein, EESI represents and warrants to Seller and makes
the following covenants for Seller's benefit.
SECTION 4.1 Organization and Existence. EESI is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted. EESI has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement.
SECTION 4.2 Authority Relative to this Agreement. The execution, delivery
------------------------------------
and performance of this Agreement by EESI has been duly authorized and approved
by the Board of Directors of EESI. No further corporate action is necessary on
the part of EESI to consummate this Agreement in accordance with its terms.
EESI has full authority to enter into and perform its obligations under this
Agreement, and neither the execution, delivery nor performance by EESI of this
Agreement will (i) result in a violation or breach of any term or provision nor
constitute a default under the certificate of incorporation or bylaws of EESI or
under any contract or agreement to which EESI is a party or by which it is
bound, or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body, or (ii) result in a violation or
breach of any term or provision, or constitute a default or accelerate the
performance required, under any indenture, mortgage, deed of trust or other
contract or agreement to which EESI is a party or by which it or its properties
is bound.
SECTION 4.3 Commission Filings. EESI has delivered to Seller copies of all
------------------
filings made by EESI on Forms 8-K, 10-K, 10-Q and Proxy Statements filed with
the Securities and Exchange Commission ("SEC") for its fiscal year ended June
30, 1997 (the "Public Reports"), and copies of any such filings since such date
through March 31, 1998.
SECTION 4.4 Issued Common Stock. The EESI Stock to be delivered pursuant
-------------------
to this Agreement has been duly authorized, and is validly issued, fully paid
and nonassessable.
15
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES AND SELLER
-----------------------------------------------
Buyer and Seller covenant and agree with each other, as applicable, as
follows:
SECTION 5.1 Plan of Reorganization. This Agreement contemplates the
----------------------
acquisition of all the outstanding stock of the Xxxxxxx Companies solely in
exchange for voting stock of EESI in a transaction intended to qualify as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, and shall
constitute a "plan of reorganization" within the meaning of the Code. The
parties hereto agree to take no action inconsistent with the treatment of such
exchange as a reorganization under Code Section 368(a)(1)(A) and to comply with
all IRS filing and other requirements for such exchange. EESI and Seller agree
that a material factor in their execution of this Agreement is that the
transactions contemplated by this Agreement shall constitute a "plan of
reorganization" within the meaning of the Code. If for any reason a provision
in this Agreement would prevent the transaction from qualifying as a
reorganization within the meaning of the Code, the parties agree to negotiate in
good faith to modify the Agreement so the transaction can qualify as a
reorganization, as long as the economics of the transaction are not changed.
SECTION 5.2 Pooling Restrictions. EESI and Seller have agreed that a
--------------------
material factor in their execution of this Agreement is that the transactions
contemplated by this Agreement be treated as a "pooling of interests" for
accounting purposes. If for any reason a provision in this Agreement would
prevent the transaction being accounted for as a "pooling of interests", the
parties agree to negotiate in good faith to modify the Agreement so the
transaction can be accounted for as a "pooling of interests". Notwithstanding
any other provision of this Agreement, prior to the publication and
dissemination by EESI of consolidated financial results which include results of
combined operations of the Xxxxxxx Companies and EESI for at least 30 days on a
consolidated basis following the Closing Date, Seller shall not sell or
otherwise transfer or dispose of, or in any way reduce his risk relative to, any
shares of the EESI Stock received by Seller (including by way of example and not
limitation, engaging in put, call, short-sale, straddle or similar market
transactions). EESI agrees that such consolidated financial results shall be
published and disseminated no later than 120 days after the Closing Date. The
Securities Exchange Commission ("SEC") has issued Accounting Series Release Nos.
130 and 135, as amended (collectively, the "ASRs"), setting forth certain
restrictions applicable to the availability of "pooling-of-interests" accounting
treatment in transactions of the type contemplated by this Agreement. Seller
therefore covenants and agrees with EESI to hold the EESI Stock and to comply
with the ASRs until the requirements of the ASRs have been met. In addition,
the certificates evidencing the EESI Stock to be received by Seller will bear a
legend substantially in the form set forth below:
"The shares represented by this certificate may not be sold,
transferred or assigned, and Eastern Environmental Services,
Inc., shall not be required to give effect to any attempted
sale, transfer or assignment prior to the publication and
dissemination of financial statements by Eastern Environmental
Services, Inc., which include the results of at least 30 days
of combined operations of Eastern Environmental Services, Inc.,
and the companies acquired by Eastern Environmental Services,
Inc., for which
16
these shares have been issued. Upon the written request of
the holder hereof directed to Eastern Environmental Services,
Inc., the issuer agrees to remove this restrictive legend (and
any stop order places with the transfer agents) when the
requirements of Accounting Series Releases Nos. 130 and 135, as
amended, of the Securities Exchange Commission have been met."
SECTION 5.3 Access to Records. Seller will give to EESI and its
----------- -----------------
representatives, including but not limited to its counsel, financial advisers
and accountants, from the date hereof until the Closing Date, full access during
normal business hours, upon reasonable notice, to all of the properties, books,
contracts, documents and records of the Xxxxxxx Companies, and will make
available to EESI and its representatives all additional financial statements of
and all information with respect to the business and affairs of the Xxxxxxx
Companies that EESI and its representatives may reasonably request.
SECTION 5.4 Continuation of Business. Seller will operate the businesses
------------------------
of the Xxxxxxx Companies until the Closing Date in the ordinary course of
business, consistent with past practice, so as to preserve its business
organizations intact, to assure, to the extent possible, the availability to
EESI of the present key employees of the Xxxxxxx Companies and to preserve for
EESI the relationships of the Xxxxxxx Companies with suppliers, customers, and
others.
SECTION 5.5 Continuation of Insurance. Seller will keep in existence all
-------------------------
policies of insurance insuring the Xxxxxxx Companies against liability and
property damage, fire and other casualty through the Closing Date, consistent
with the policies currently in effect.
SECTION 5.6 Standstill Agreement. Until the Closing Date, unless this
--------------------
Agreement is earlier terminated pursuant to the provisions hereof, Seller will
not, directly or indirectly, solicit offers for the shares or the assets of the
Xxxxxxx Companies or for a merger or consolidation involving any of the Xxxxxxx
Companies, or respond to inquiries from, share information with, negotiate with
or in any way facilitate inquiries or offers from, third parties who express or
who have heretofore expressed an interest in acquiring any or all of the Xxxxxxx
Companies by merger, consolidation or other combination or acquiring any of the
Xxxxxxx Companies' assets.
SECTION 5.7 Consents. Seller and EESI shall cooperate with each other and
--------
use their best efforts to obtain all approvals, authorizations and consents
required to be obtained to consummate the transaction set forth in this
Agreement, including, without limitation, (i) any required approval of the
shareholders of EESI of the transactions contemplated by this Agreement, and
(ii) the approval of every regulatory agency of federal, state, or local
government that may be required in the opinion of either EESI or Seller.
SECTION 5.8 Audited Financial Statements. Seller agrees to have prepared
----------------------------
audited balance sheets for the Xxxxxxx Companies as of December 31, 1995,
December 31, 1996, and December 31, 1997, and statements of income, cash flow
and retained earnings for the Xxxxxxx Companies for the twelve-month periods
ended December 31, 1995, December 31, 1996, and December 31, 1997 ("Historical
Financial Statements"), as rapidly as possible, but no later than the Closing
Date. Seller
17
shall prepare a compiled stub balance sheets and statements of
income, cash flow and retained earnings for the period commencing January 1,
1998 and ending on the last day of the last calendar quarter ending prior to
Closing ("Interim Financial Statements"). The Interim Financial Statements are
to be delivered no later than the Closing Date. The Historical Financial
Statements and the Interim Financial Statements shall be prepared by Ernst &
Young at EESI's cost. Seller shall cause the Xxxxxxx Companies' usual
accountants to cooperate with Ernst & Young. EESI shall pay for the cost of the
Xxxxxxx Companies' usual accountants.
SECTION 5.9 Employment Agreement. The parties agree to use their best
--------------------
efforts after the date of this Agreement to negotiate the terms of an employment
agreement to be offered to Seller at Closing, upon terms mutually satisfactory
to the parties, including a base salary of $125,000.
ARTICLE VI
ADDITIONAL AGREEMENTS OF THE PARTIES
------------------------------------
The parties hereto covenant and agree with the other, as applicable, as
follows:
SECTION 6.1 Payment of Expenses. EESI will pay all expenses incurred by
-------------------
EESI in connection with the negotiation, execution and performance of this
Agreement. Seller will pay all legal and accounting expenses incurred by Seller
and the Xxxxxxx Companies in connection with the negotiation, execution and
performance of this Agreement and the Collateral Documents.
SECTION 6.2 Registration Rights.
-------------------
(a) The EESI Stock delivered at Closing will be registered under the
Securities Act of 1933 ("Act") for sale to the public in brokered transactions,
pursuant to a "shelf registration" on Form S-4 or other appropriate form, if
Form S-4 is not available under Rule 415 of the Act. At Eastern's request, the
Seller shall provide Eastern with any information required for the completion of
the registration statement or any supplements thereto. Eastern shall keep such
registration statement current and effective, until such time as the shares may
be sold by the Seller at any time without restriction or pursuant to the
provisions of Rule 144 or until such earlier date as all of the shares
registered pursuant to such registration statement shall have been sold or
otherwise transferred to a third party. It is understood that EESI shall also
prepare and file with the Securities and Exchange Commission such amendments and
supplements to such registration statement (and the prospectus used in
connection therewith) as may be necessary to update and keep such registration
statement current and effective for such period and to comply with the
provisions of the Act with respect to the sale of all securities covered by such
registration statement. Notwithstanding the above, EESI's obligation to keep
the registration continuously effective shall be suspended during any period
that there exists material, non-public information relating to EESI.
(b) With respect to the registration of the EESI Stock, it is understood
that EESI will, as expeditiously as possible: (i) furnish to the Seller such
number of prospectuses, including copies of preliminary prospectuses, prepared
in conformity with the requirements of the Act, and such other documents as the
Seller may reasonably request in order to facilitate the public sale or other
18
disposition of the securities to be sold by the Seller; and (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.
(c) Upon any registration under the Act of any of the EESI Stock, it is
understood that EESI shall indemnify Seller in accordance with the provisions of
Article IX from and against any and all losses, claims, damages and liabilities
(collectively a "Security Liability") to which Seller may become subject under
the Act, any state securities or "blue sky" law, any other statute or at common
law, insofar as such Security Liability (or action in respect thereof) arises
out of or is based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
securities were registered, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto or any filing or other
application under the Act or applicable federal or state securities law or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein (i.e., in any registration statement, prospectus, application or
filing, or necessary in order to make the statements therein not misleading or
(iii) any violation or alleged violation by EESI to which Seller may become
subject under the Act, or other Federal or state laws or regulations, at common
law or otherwise. Notwithstanding the above, it is understood that 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 information
furnished to EESI by Seller which is intended for such use; and provided
further, that EESI shall not be required to indemnify Seller against any
Security Liability which arises out of the failure of Seller to deliver a
prospectus.
(d) It is understood that all expenses incurred in effecting the
registrations provided for in this Section 6.2 shall be paid by EESI including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for EESI, underwriting expenses (other than
commissions or discounts which shall be shared by the parties registering shares
of EESI's common stock 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.
ARTICLE VII
CONDITIONS OF EESI
------------------
The obligations of EESI to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following items which are conditions to the Closing:
SECTION 7.1 Compliance by Seller. Seller and the Xxxxxxx Companies shall
--------------------
have performed and complied with all material obligations and conditions
required by this Agreement to be performed or complied with by Seller and the
Xxxxxxx Companies at or prior to the Closing Date. All representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, with the same force and
effect as though made
19
at and as of the Closing Date, except for changes expressly permitted by this
Agreement, and EESI shall have received a Certificate duly executed by the
President of each Xxxxxxx Company representing and warranting the foregoing.
SECTION 7.2 Litigation Affecting This Transaction. There shall be no
-------------------------------------
actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transaction contemplated by this Agreement or which
might affect the right of EESI to own, operate in its entirety or control the
Xxxxxxx Companies or the business the Xxxxxxx Companies operate, which, as a
result of the transaction contemplated by this Agreement, might affect such
right as to EESI or any affiliate thereof subsequent to the Closing Date and
which, in the sole judgment of the Board of Directors of EESI, made in good
faith and based upon advice of its counsel, makes it inadvisable to proceed with
the transaction contemplated by this Agreement.
SECTION 7.3 Fiscal Condition of Business. There shall have been no
----------------------------
material adverse change in the results of operations, financial condition,
business or prospect of the Xxxxxxx Companies, and the Xxxxxxx Companies shall
have not suffered any material loss or damage or any of its properties or
assets, whether or not covered by insurance, since the date of the Most Recent
Balance Sheet.
SECTION 7.4 Opinion of Counsel. Seller shall have delivered to EESI an
------------------
opinion of counsel, dated the Closing Date, in the form annexed hereto as
Schedule 1.7(f).
SECTION 7.5 Noncompetition Agreements. The Seller shall have executed and
-------------------------
delivered to EESI the Noncompetition Agreements.
SECTION 7.6 Release. Seller shall have executed and delivered to EESI the
-------
Releases described at Section 1.7(g).
SECTION 7.7 Consents. All approvals, authorizations and consents required
--------
to be obtained shall have been obtained, including, without limitation, (i) the
consent of the relevant state Departments of Environmental Protection to the
change in control of the Xxxxxxx Companies, (ii) the approval of every
regulatory agency of federal, state, or local government that may be required in
the opinion of either EESI or Seller. EESI shall have been furnished with
appropriate evidence, reasonably satisfactory to EESI and its counsel, of the
granting of such approvals, authorizations and consents.
SECTION 7.8 Pooling Determination. Purchaser shall have received
---------------------
notification from its regular accountants that the transaction contemplated
herein may be treated for accounting purposes as a "pooling of interests."
ARTICLE VIII
CONDITIONS OF SELLER
--------------------
The obligations of Seller to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
20
SECTION 8.1 Compliance by EESI. EESI shall have performed and complied
------------------
with all material obligations and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date. All
representations and warranties of EESI contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing Date, except for
changes expressly permitted by this Agreement.
SECTION 8.2 Material Adverse Change. There shall not have been, and on
-----------------------
the Closing Date shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in, any material adverse
change in the condition (financial or otherwise), assets, real property,
personal property, results of operations, business or prospects of EESI and its
subsidiaries taken as a whole.
SECTION 8.3 Opinion of Counsel. EESI shall have delivered to Seller the
------------------
opinion of counsel to EESI, dated the Closing Date, in the form annexed hereto
as Schedule 1.6(b).
ARTICLE IX
INDEMNIFICATION
---------------
SECTION 9.1 Indemnification by Seller. Seller agrees that he will
-------------------------
indemnify, defend, protect and hold harmless EESI and its officers,
shareholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parents, agents, employees, legal representatives, successors and assigns from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, penalties, costs and expenses whatsoever (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) whether equitable or legal, matured or contingent, known or
unknown to such Seller, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, whether arising out of occurrences prior to, at, or after the
date of this Agreement, from: (a) any breach of, misrepresentation in, untruth
in or inaccuracy in the representations and warranties by the Seller, set forth
in this Agreement or in the Schedules attached to this Agreement or in the
Collateral Documents; (b) nonfulfillment or nonperformance of any agreement,
covenant or condition on the part of a Seller made in this Agreement and to be
performed by Seller before or after the Closing Date; (c) violation of the
requirements of any governmental authority relating to the reporting and payment
(to the extent payment exceeds the amount reserved for in the Most Recent
Financial Statement) of federal, state, local or other income, sales, use,
franchise, excise or property tax liabilities of the Xxxxxxx Companies arising
or accrued prior to the Closing Date; (d) any violation of any federal, state or
local "anti-trust" or "racketeering" or "unfair competition law", including,
without limitation, the Xxxxxxx Act, Xxxxxxx Act, Xxxxxxxx Xxxxxx Act, Federal
Trade Commission Act, or Racketeer Influenced and Corrupt Organization Act; and
(e) any claim by a third party that, if true, would mean that a condition for
indemnification set forth in subsections (a), (b), (c) or (d) of this Section
9.1 of this Agreement has occurred.
SECTION 9.2 Indemnification by EESI. EESI agrees that it will indemnify,
-----------------------
defend, protect and hold harmless Seller and his agents, employees, heirs, legal
representatives, successors and assigns, as applicable, from and against all
claims, damages, actions, suits, proceedings, demands,
21
assessments, adjustments, penalties, costs and expenses whatsoever (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by it, as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties of EESI set forth in this Agreement or in the Schedule attached to
this Agreement or in the Collateral Documents; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of EESI made
in this Agreement and to be performed by EESI before or after the Closing Date;
(c) any claim by a third party that, if true, would mean that a condition for
indemnification set forth in subsections (a), (b), or (c) of this Section 9.2
has occurred.
SECTION 9.3 Procedure for Indemnification with Respect to Third Party
---------------------------------------------------------
Claims.
------
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") that may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article IX, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party is thereby prejudiced. Such notice shall state the amount of the claim
and the relevant details thereof.
(b) Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice satisfactory to
the Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within ten days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Party pursuant to the provisions of Article IX, as applicable,
from and against the entirety of any adverse consequences (which will include,
without limitation, all losses, claims, liens, and attorneys' fees and related
expenses) the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves only
monetary damages and does not seek an injunction or equitable relief, (iv)
settlement of, or adverse judgment with respect to the Third Party Claim is not,
in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.3(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in (but not control) the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the
22
prior written consent of the Indemnifying Party (which will not be unreasonably
withheld), and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (which will not be
unreasonably withheld). In the case of (c)(ii) or (c)(iii) above, any such
consent to judgment or settlement shall include, as an unconditional term
thereof, the release of the Indemnifying Party from all liability in connection
therewith.
(d) If any condition set forth in Section 9.3(b) above is or becomes
unsatisfied, (i) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim and any matter it may deem appropriate and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith, (ii) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the cost of defending against the Third
Party Claim (including attorneys' fees and expenses), and (iii) the Indemnifying
Party will remain responsible for any adverse consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this Article
IX.
SECTION 9.4 Procedure for Non-Third Party Claims. If EESI or the Seller
------------------------------------
wishes to make a claim for indemnity under Section 9.1 or Section 9.2, as
applicable, and the claim does not arise out of a third party notification which
makes the provisions of Section 9.3 applicable, the party desiring
indemnification ("Indemnified Party") shall deliver to the party from which
indemnification is sought ("Indemnifying Party") a written demand for
indemnification ("Indemnification Demand"). The Indemnification Demand shall
state: (a) the amount of losses, damages or expenses to which the Indemnified
Party has incurred or has suffered or is expected to incur or suffer to which
the Indemnified Party is entitled to indemnification pursuant to Section 9.1 or
Section 9.2, as applicable; (b) the nature of the event or occurrence which
entitles the Indemnified Party to receive payment under Section 9.1 or Section
9.2, as applicable. If the Indemnifying Party wishes to object to an
Indemnification Demand, the Indemnifying Party must send written notice to the
Indemnified Party stating the objections and the grounds for the objections
("Indemnification Objection"). If no Indemnification Objection is sent within
thirty (30) days after the Indemnification Demand is sent, the Indemnifying
Party shall be deemed to have acknowledged the correctness of the claim or
claims specified in the Indemnification Demand and shall pay the full amount
claimed in the Indemnification Demand within forty-five (45) days of the day the
Indemnification Demand is dated. If for any reason the Indemnifying Party does
not pay the amounts claimed in the Indemnification Demand, within thirty days of
the Indemnification Demand's date, the Indemnified Party may institute legal
proceedings to enforce payment of the indemnification claim contained in the
Indemnification Demand and any other claim for indemnification that the
Indemnified Party may have.
SECTION 9.5 Survival of Claim. All of the respective representations,
-----------------
warranties and obligations of the parties to this Agreement shall survive
consummation of the transactions contemplated by this Agreement as follows: (i)
all representations and warranties pertaining to federal, state and local taxes,
including, without limitation, the representations and warranties set forth in
Section 3.10 shall survive until the expiration of the applicable statute of
limitations on any claim which can be brought against the Xxxxxxx Companies by
tax authorities or governmental agencies or governmental units and (ii) all
representations and warranties other than set forth in (i)
23
above shall survive until two years from the Closing Date. Notwithstanding the
prior sentence which provides that the representations and warranties expire
after certain stated periods of time, if within the stated period of time, a
notice of a claim for indemnification or Indemnification Demand is given, or a
suit or action based upon representation or warranty is commenced, the
Indemnified Party shall not be precluded from pursuing such claim or action, or
from recovering from the Indemnifying Party (whether through the courts or
otherwise) on the claim or action, by reason of the expiration of the
representation or warranty.
SECTION 9.6 Prompt Payment. In the event that any party is required to
--------------
make any payment under this Article IX, such party shall promptly pay the
Indemnifying Party the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity obligation owed under
this Article IX, the Indemnifying Party shall, nevertheless, pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
portion in dispute shall be paid upon a final and non-appealable resolution of
such dispute. Upon the payment in full of any claim, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person
with respect to the subject matter of such claim.
SECTION 9.7 Indemnification Threshold. No Indemnification Demand shall be
-------------------------
made under this Article IX until such time that the party making an
Indemnification Demand believes, in good faith, that it has a claim or claims
for indemnity totaling One Hundred Thousand Dollars ($100,000) or more, singly
or in the aggregate, and no Indemnifying Party shall have any liability to an
Indemnified Party until the damages to the Indemnified Party exceed a cumulative
aggregate total of $100,000. Once cumulative aggregate damages exceed $100,000,
the Indemnifying Party shall be liable for all damages to the Indemnified Party,
including the first $100,000 of damages.
SECTION 9.8 Limitation of Liability. Notwithstanding anything else
-----------------------
contained herein to the contrary, the obligations of the Seller pursuant to the
indemnification contained in Section 9.1 shall be limited to the aggregate of
the value of the EESI Stock delivered to Seller at Closing, valued at the Per
Share Value.
ARTICLE X
OTHER PROVISIONS
----------------
SECTION 10.1 Nondisclosure by Seller. Seller recognizes and acknowledges
-----------------------
that he has in the past, currently has, and in the future will have certain
confidential information of EESI such as lists of customers, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of EESI. Seller agrees that for a period of ten (10) years from the
Closing Date he 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 EESI, unless (i) such
information becomes known to the public generally through no fault of any
Seller, (ii) a Seller is compelled to disclose such information by a
governmental entity or pursuant to a court proceeding, or (iii) the Closing does
not take place. In the event of a breach or threatened breach by any Seller of
the provisions of this Section, EESI shall be entitled to an injunction
restraining such Seller from disclosing, in whole or in part, such confidential
information. Nothing herein shall
24
be construed as prohibiting EESI from pursuing any other available remedy for
such breach or threatened breach, including, without limitation, the recovery of
damages.
SECTION 10.2 Nondisclosure by EESI. EESI recognizes and acknowledges that
---------------------
it has in the past, currently has, and prior to the Closing Date, will have
access to certain confidential information of the Xxxxxxx Companies, such as
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Xxxxxxx Companies. EESI agrees that
it will not utilize such information in the business or operation of EESI or any
of its affiliates or disclose such confidential information to any person, firm,
corporation, association, or other entity for any purpose or reason whatsoever,
unless (i) such information becomes known to the public generally through no
fault of EESI or any of its affiliates, (ii) EESI is compelled to disclose such
information by a governmental entity or pursuant to a court proceeding, or (iii)
Closing takes place. In the event of a breach or threatened breach by EESI of
the provisions of this Section, Seller shall be entitled to an injunction
restraining EESI from utilizing or disclosing, in whole or in part, such
confidential information. Nothing contained herein 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.
SECTION 10.3 Assignment; Binding Effect; Amendment. This Agreement and
-------------------------------------
the rights of the parties hereunder may not be assigned (except after Closing by
operation of law by the merger of EESI) and shall be binding upon and shall
inure to the benefit of the parties hereto, and the successors of EESI. This
Agreement, upon execution and delivery, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms and may
be modified or amended only by a written instrument executed by all parties
hereto.
SECTION 10.4 Entire Agreement. This Agreement, is the final, complete and
----------------
exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as the Agreement. The Agreement supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior to contemporaneous
discussions, correspondence, or oral or written agreements of any kind. The
parties to this Agreement have relied on their own advisors for all legal,
accounting, tax or other advice whatsoever with respect to the Agreement and the
transactions contemplated hereby.
SECTION 10.5 Counterparts. This Agreement may be executed simultaneously
------------
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 10.6 Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, by overnight courier
or by delivering the same in person to such party.
(a) If to EESI, addressed to it at:
25
President
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxx & Associates, P.C.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Att.: Xxxxxx X. Xxxxxx
(b) If to Seller, addressed to:
Xxxxxxxx Xxxxxxx
00 Xxxxx Xxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxx, Esq.
Jeffer, Xxxxxxxxx & Xxxxx
0000 Xxxxx 000 Xxxxx
Xxxxxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three business days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received, if earlier. Any
party may change the address for notice by notifying the other parties of such
change in accordance with this Section 10.6.
SECTION 10.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
SECTION 10.8 No Waiver. No delay of or omission in the exercise of any
---------
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach of default occurring before or after that waiver.
SECTION 10.9 Time of the Essence. Time is of the essence of this
-------------------
Agreement.
26
SECTION 10.10 Captions. The headings of this Agreement are inserted for
--------
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
SECTION 10.11 Severability. In case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 10.12 Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"Including" means included, without limitation.
SECTION 10.13 Extension or Waiver of Performance. Either Seller or EESI
-----------------------------------
may extend the time for or waive the performance of any of the obligations of
the other, waive any inaccuracies in the representations or warranties by the
other, or waive compliance by the other with any of the covenants or conditions
contained in this Agreement, provided that any such extension shall be in
writing and signed by Seller and EESI and provided that any such waiver shall be
in writing and signed by the party affected thereby.
SECTION 10.14 Liabilities of Third Parties. Nothing in this Agreement,
----------------------------
whether expressed or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the parties to it
and their respective officers, shareholders, directors, affiliates,
subsidiaries, parents, agents, employees, legal representatives, successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provisions give any third person any rights of subrogation or action
over or against any party to this Agreement.
SECTION 10.15 Publicity. Prior to Closing, except as may be required by
---------
law, no party to this Agreement shall issue any press release or otherwise make
any statement with respect to the transactions contemplated by this Agreement
without the prior written consent of the other party, which shall not be
unreasonably withheld.
SECTION 10.16 Arbitration.
-----------
(a) Each and every controversy or claim arising out of or relating to
this Agreement shall be settled by arbitration in Philadelphia, Pennsylvania, in
accordance with the commercial rules (the "Rules") of the American Arbitration
Association then obtaining, and judgment upon the award rendered in such
arbitration shall be final and binding upon the parties and may be confirmed in
any
27
court having jurisdiction thereof. Notwithstanding the foregoing, this
Agreement to arbitrate shall not bar any party from seeking temporary or
provisional remedies in any Court having jurisdiction. 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 take, 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 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 Seller and Purchaser 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"). Seller
and Purchaser, 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.
[Remainder of Page Intentionally Blank.]
28
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
BY: /S/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
Executive Vice President
WITNESS: SELLER:
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxxx Xxxxxxx
--------------------------- ---------------------------------
Name: Xxxxxxx Xxxxxxx Xxxxxxxx Xxxxxxx
:\xxxxxxx.002
29
