EXHIBIT 10.4
AMENDMENT NO. 1 TO
STOCK AND PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Amendment No. 1, dated as of September 28, 1998, amends the terms
and conditions of that certain Stock and Partnership Purchase Agreement between
Eastern Environmental Services, Inc. and the shareholders and partners of
Empire Wrecking Corp., Northeast Hauling Company, Inc., Hillside Maintenance
Corporation, Xxxxxxx and Companies Environmental Recovery, Inc. and 0000
Xxxxxxxx Xxxxxx Associates (a partnership), dated as of August 6, 1998 (the
"Stock Purchase Agreement" a copy of which is attached hereto), as set forth
herein:
RECITALS
WHEREAS, the Stock Purchase Agreement, together with all schedules and
exhibits thereto, was executed by Eastern Environmental Services, Inc.
("Eastern"), and Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx and Xxxx
Xxxxxxx (collectively, the "Sellers"); and
WHEREAS, Eastern and the Sellers have agreed that certain terms of the
Stock Purchase Agreement shall be modified as set forth herein, and that the
Stock Purchase Agreement, as amended, shall remain in full force and effect;
NOW, THEREFORE in consideration of the mutual promises, terms and
conditions set forth herein and other good and valuable consideration, received
to the full satisfaction of each of them, the parties hereto covenant and agree
as follows:
1. Amendments. The terms and conditions of the Stock Purchase
----------
Agreement are hereby amended as follows:
(a) All references in the Stock Purchase Agreement to Xxxxxxx and
Companies Environmental Recovery, Inc., or the defined terms "PI" and "PCI" are
hereby deleted.
(b) Section 1.2 of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.2:
"Section 1.2 Time and Place for Closing. Closing
--------------------------
under this Agreement shall take place within five
(5) business days after all conditions precedent
including those set forth in Section 7.7 and Section
8.5 (regarding governmental approvals and consents)
have been satisfied (provided that all Schedules and
all financial information required to be delivered
by Sellers to Eastern have been delivered by that
date), and simultaneously with the Closing on that
certain Stock Purchase Agreement of even date
herewith between Eastern as the Purchaser and
Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx,
and Xxxxxx Xxxxx Xxxxxxx as the
Sellers, (the "Stock Purchase Agreement") time being
of the essence, at the office of Eastern
Environmental Services, Inc., 0000 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxx Xxxxxx, Xxx Xxxxxx 00000, or such
other time and place as the parties hereto may agree
upon. The parties expect to close by October 31,
1998. The date that Closing occurs is referred to
hereinafter as the "Closing Date" and the act of
closing as "Closing." The exact Closing Date shall
be established by a written notice sent by Eastern
to Sellers."
(c) Section 1.3(a) of the Stock Purchase Agreement is deleted in
its entirety and replaced by the following new Section 1.3(a):
"Section 1.3 Agreement to Sell Stock of Companies;
------------------------------------
Consideration. (a) At the Closing, each of the
-------------
Sellers agrees to transfer and deliver to Eastern
all of the Company Shares and Partnership Interests
owned by such Seller, as applicable, and Eastern
shall deliver to Sellers shares of the common stock
of Eastern having a value of $13,750,000 (the "EESI
Stock"), subject to adjustment as provided herein in
this Section 1.3, each share being valued at $30.50
("Per Share Value"). The value of the aggregate
number of shares of EESI Stock to be delivered to
Sellers shall be reduced, dollar for dollar, by the
amount of liabilities of the Companies as of the
Closing Date ("Company Debt"); except that if the
Company Debt is increased after the date hereof to
buy new equipment to service new customers, and
Eastern approves in writing the acquisition of such
new equipment, the increase in liabilities to
finance that new equipment will not be included in
Company Debt for the purposes of computing the
amount of EESI Stock to be delivered to Sellers. The
Company Debt as of the date of this Agreement is
listed by creditor on Schedule 1.3(a) attached
hereto. Immediately prior to the Closing, the
Sellers shall update Schedule 1.3(a). In the Event
that Eastern and Ocho Acquisition Corporation, a
Delaware corporation, have consummated their
contemplated merger (the "Merger") prior to the
Closing, Eastern shall be permitted to assign its
rights and obligations hereunder to its ultimate
parent corporation, Waste Management, Inc., a
Delaware corporation ("WMI"), and then WMI may
tender its freely tradeable registered stock in an
amount equal to the number of shares that would have
been issued pursuant to the Merger with respect to
the number of Eastern shares that would have been
tendered by Eastern hereunder, provided, that to the
extent required by the Merger, cash may be tendered
for fractional shares."
(d) Schedule 1.3(b) is deleted in its entirety and replaced by the
new Schedule 1.3(b) attached hereto.
-2-
(e) Section 1.3(c) is added to the Stock Purchase Agreement and reads
as follows:
"Provided that the Companies have accrued at
least $1,000,000 of liability during the six
month period ending December 31, 1997 for
fines and costs to the New Jersey Department
of Environmental Protection, then all
obligations of the Companies which were
accrued for, payable to the State of New
Jersey, Department of Environmental
Protection, pursuant to the Administrative
Consent Order signed on behalf of the New
Jersey Department of Environmental Protection
on September 15, 1998 shall be deemed a
Company Debt to be taken into account under
Section 1.3(a) as a negative adjustment to the
consideration. Eastern will then take all
action necessary or appropriate to cause the
Companies to pay such obligation."
(f) Section 1.3(d) is added to the Stock Purchase Agreement and reads
as follows:
"Inter-company Debts. Attached hereto as
-------------------
Schedule 1.3(d) is a list of all inter-company
liabilities, together with a copy of the
applicable interest bearing demand notes and
applicable personal guarantees of the Sellers
other than Xxxx Xxxxxxx. Each demand note is a
bona fide obligation of the obligor, is in
full force and effect, and has a fair market
value equal to the balance due thereon. Within
two (2) days after the Closing Date, Eastern
shall take all action necessary or appropriate
to cause the inter-company liabilities to be
satisfied in full. At such time as the inter-
company liabilities are satisfied, the
applicable demand note will be marked paid,
and Eastern shall deliver to each Seller a
copy of his personal guarantee marked
satisfied. In addition, if Eastern fails to
cause the inter-company debt to be satisfied
in full, Eastern will indemnify the Sellers on
their personal guarantees."
(g) Section 1.5(b) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.5(b):
-3-
"(b) Intentionally Left Blank."
(h) Section 1.5(d) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 1.5(d):
"(d) by Eastern or Sellers, if the Closing shall not
have occurred by November 30, 1998, or such other date
as may be agreed to by the parties hereto in writing,
due to the non-fulfillment of a condition precedent to
such party's obligation to close as set forth at
Articles VII or VIII hereof, as applicable (through no
fault or breach by the terminating party). However, if
the only conditions to Closing which have not been
satisfied are the conditions set forth in Sections 7.7
and 8.5 (relating to government approvals and consents),
the date of November 30, 1998, shall be extended by up
to six (6) months, at the option of Eastern or Sellers,
to be exercised through written notice to Sellers or
Eastern, as applicable."
(i) The last two sentences of Section 1.5 of the Stock Purchase
Agreement are deleted in their entirety and replaced by the following two
sentences:
"In the event this Agreement is terminated pursuant to
clauses (a) or (d) of this Section 1.5, this Agreement
shall become void and be of no further force and effect
and no party hereto shall have any further liability to
any other party hereto, except that Sections 1.5,
Article IX, Section 10.1, Section 10.2 and Section 10.16
shall survive and continue in full force and effect,
notwithstanding termination. If this Agreement is
terminated, all due diligence and other documentation
delivered to Eastern by the Companies and Sellers shall
be returned to the Sellers."
(j) Schedule 1.7(h) is deleted in its entirety and replaced by the new
Schedule 1.7(h) attached hereto.
(k) Section 3.8(c) of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 3.8(c):
"(c) At Closing, the Companies on a consolidated basis
shall have working capital consisting of current assets
(each determined in accordance with GAAP) in an amount
no less than the amount they have had on an historic
basis as reflected on the Financial Statements, but not
less than zero. It is acknowledged that current assets
shall include cash, cash equivalents, pre-paid expenses
and accounts receivable, and current liabilities shall
include accounts payable, accrued expenses (including
the current portion of the
-4-
Companies' payroll and sales tax liability), and accrued
vacation pay."
(l) "Section 3.8(d) is added to the Stock Purchase Agreement and reads
as follows:
"Eastern acknowledges that EW is liable to
Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx pursuant
to an agreement made July 1, 1996, by and
between each of Xxxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx requiring the payment of $62,500
($31,250 up front and $31,250 over six months)
upon an ownership change. In addition, Eastern
acknowledges that NHL is liable to Xxxx
Xxxxxxx pursuant to an agreement made December
1, 1997 by and between NHL and Xxxx Xxxxxxx
requiring the payment of $100,000 in a lump
sum to Xxxx Xxxxxxx upon an ownership change.
Notwithstanding Section 1.3(a) above, the
amounts payable by EW to Xxxxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx and the amount payable by NHL
to Xxxx Xxxxxxx referred to above shall not be
included in Company Debt described in Section
1.3 and therefore will not require a negative
adjustment to the consideration due the
Sellers. Subject to the terms of said
agreements and the absence of any violation of
any other agreements with EW or NHL or
Eastern, promptly following the Closing,
Eastern shall take all action necessary or
appropriate to cause EW to timely pay said
sums to Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx
as and when due and to cause NHL to timely pay
said sums to Xxxx Xxxxxxx as and when due."
(m) Section 4.6 is added to the Stock Purchase Agreement and reads as
follows:
"Section 4.6 Due Diligence. Eastern acknowledges that
-------------------------
Section 1.5(b) of the Stock Purchase Agreement has been
deleted and, therefore, Eastern no longer has the right to
terminate in its sole discretion if it is not satisfied with
its due diligence."
(n) Section 9.5 of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 9.5:
"Section 9.5 Survival of Claim. All of the respective
-----------------
representations, warranties and obligations of the parties to this
Agreement shall survive consummation of the transactions
-5-
contemplated by this Agreement as follows: (i) all
representations and warranties pertaining to federal,
state and local taxes, including, without limitation,
the representations and warranties set forth in Section
3.10 shall survive until the expiration of the
applicable statute of limitations on any claim which can
be brought against the Companies by tax authorities or
governmental agencies or governmental units and (ii) all
representations and warranties other than set forth in
(i) above shall survive until twelve (12) months from
the Closing Date. Notwithstanding the prior sentence
which provides that the representations and warranties
expire after certain stated periods of time, if within
the stated period of time, a notice of a claim for
indemnification or Indemnification Demand is given, or a
suit or action based upon a representation or warranty
is commenced, the Indemnified Party shall not be
precluded from pursuing such claim or action, or from
recovering from the Indemnifying Party (whether through
the courts or otherwise) on the claim or action, by
reason of the expiration of the representation or
warranty."
(o) Section 9.6 of the Stock Purchase Agreement is deleted in its
entirety and replaced by the following new Section 9.6:
"Section 9.6 Indemnification Threshold. No
-------------------------
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 Sixty-Seven
Thousand Seven Hundred and Fifty Dollars ($67,750) 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 $67,750. Once cumulative
aggregate damages exceed $67,750, the Indemnifying Party
shall be liable for all damages to the Indemnified
Party, including the first $67,750 of damages.
Notwithstanding anything else contained herein to the
contrary, the obligations of the Sellers pursuant to the
indemnification contained in Section 9.1 shall be
limited to seventy-five percent (75%) of the Closing
Date Value of the EESI Stock (as defined below)
delivered in consideration for the purchase of Xxxxxxxx
Xxxxxxx Disposal, Inc., Xxxx X. Xxxxxxx & Sons
Sanitation Services, Inc., Tri-State Recycling & Fibers,
Inc., Empire Wrecking Corp., Interstate Recycling Corp.,
Northeast Hauling Company, Inc., Hillside Maintenance
Corporation and 0000 Xxxxxxxx Xxxxxx Associates (a
partnership). For purposes of this Article IX, the term
"Closing Date Value of the EESI Stock" shall mean the
value of the number of shares of EESI Stock delivered
multiplied by the closing price of Eastern's common
stock on the NASDAQ Stock Market on the Closing Date."
-6-
2. Full Force and Effect. Except as specifically amended herein, all
---------------------
provisions of the Stock Purchase Agreement shall remain in full force and
effect.
3. Governing Law. This Amendment shall be governed by and construed in
-------------
accordance with the internal laws of the State of New Jersey, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New Jersey or any other jurisdiction) that would cause the applications of
the laws of any jurisdiction other than the State of New Jersey.
4. Counterparts. This Amendment may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. This Amendment may be
executed by facsimile signatures.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
BY: /s/ XXXXXX X. XXXXXX
------------------------
TITLE: EXECUTIVE VICE PRESIDENT
SELLERS:
/s/ XXXXXXXX XXXXXXX /s/ XXXXXXX XXXXXXX
---------------------- --------------------
XXXXXXXX XXXXXXX XXXXXXX XXXXXXX
/s/ XXXXXXXX XXXXXXX /s/ XXXX XXXXXXX
---------------------- --------------------
XXXXXXXX XXXXXXX XXXX XXXXXXX
-7-
