SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) AUGUST 12, 1996
GEOWASTE INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 0-9278 36-2751684
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
SUITE 208, 24 CATHEDRAL PLACE, ST. AUGUSTINE, FL 32084
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (904) 824-0201
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Agreement and Plan of Merger dated August 12, 1996,
among GeoWaste Incorporated (the "Registrant" or the "Company"), Spectrum
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the
Registrant ("GeoSub"), Spectrum Group, Inc., d/b/a United Sanitation, Ocala
Chemical, Mills Disposal, a Florida corporation ("Spectrum") and John Paglia and
Michael Paglia, the sole stockholders of Spectrum, the Registrant consummated
the merger of GeoSub with and into Spectrum (the "Merger"), as a result of which
Spectrum became a wholly-owned subsidiary of the Registrant. The Merger became
effective upon the filing on August 12, 1996 (the "Effective Date") of (a) the
Certificate of Merger with the Secretary of State of the State of Delaware and
(b) the Articles of Merger and Plan of Merger with the Secretary of State of the
State of Florida.
On the Effective Date, each outstanding share of Spectrum's common
stock, par value $1.00 per share ("Spectrum Common Stock"), was converted by
virtue of the Merger into the right to the receive, and became exchangeable for,
26,666 and 2/3 shares of the Registrant's common stock, par value $.10 per share
("GeoWaste Common Stock"), and $11,492.15 in cash (collectively, the "Merger
Consideration"), or 2,000,000 shares of GeoWaste Common Stock and $859,915 in
cash in the aggregate for all outstanding shares of Spectrum Common Stock on the
Effective Date. The cash portion of the Merger Consideration was provided from
the Registrant's working capital.
The Merger Consideration was determined by arm's-length negotiations
amongst the parties. Prior to the Effective Date, no relationship existed
between Spectrum or its affiliates and the Registrant and its affiliates, any
director or officer of the Registrant or any associate of any such director or
officer.
The assets acquired by the Registrant in the Merger constituted all of
the assets of Spectrum used in conducting its business of owning and operating
non-hazardous, solid waste collection, transportation, recycling and transfer
facilities and related solid waste management operations. The Registrant intends
to continue such use.
On August 13, 1996, the Registrant also issued the news release set
forth as Exhibit 20.1 hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The following are the audited financial statements for Spectrum for the
years ended December 31, 1995 and 1994 and the period from June 27, 1993
(inception) to December 31, 1993, together with the manually executed
accountant's report relating thereto, and the unaudited financial statements for
Spectrum for the six month period ended June 30, 1996.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of Spectrum Group, Inc. (d/b/a
United Sanitation, Ocala Chemical, Mills Disposal)
We have audited the accompanying balance sheets of Spectrum Group, Inc. (d/b/a
United Sanitation, Ocala Chemical, Mills Disposal) ("the Company") as of
December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years ended December 31, 1995 and
1994, and for the period from June 27, 1993 (inception) to December 31, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1995 and 1994, and the results of its operations and its cash flows for the
years ended December 31, 1995 and 1994, and for the period from June 27, 1993 to
December 31, 1993, in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Jacksonville, Florida
August 9, 1996
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
BALANCE SHEETS
as of December 31, 1994 and 1995
<TABLE>
<CAPTION>
ASSETS 1994 1995
------------- -----------
<S> <C> <C>
Current assets:
Accounts receivable, net of allowance of $15,000 and $24,000 for 1994
and 1995, respectively $ 375,874 $ 576,249
Inventory 131,708
------------- -------------
Total current assets 375,874 707,957
------------- -------------
Machinery and equipment 1,441,758 2,565,939
Less accumulated depreciation (216,018) (610,303)
-------------- ------------
Net machinery and equipment 1,225,740 1,955,636
-------------- ------------
Other assets:
Intangible assets, net 72,250 744,555
Other 300 5,984
-------------- -------------
72,550 750,539
-------------- -------------
Total assets $1,674,164 $ 3,414,132
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 4,148 $ 15,418
Current portion of long-term debt 239,593 634,333
Loan payable to stockholders 146,989 92,089
Accounts payable 188,103 443,309
Accrued liabilities 49,079 75,103
Deferred revenue 72,995 322,151
-------------- ---------------
Total current liabilities 700,907 1,582,403
Long-term debt less current maturities 798,031 1,724,255
-------------- ---------------
1,498,938 3,306,658
------------- ---------------
Commitments
Stockholders' equity:
Common stock, $1 par value, 100 shares authorized;
75 shares issued and outstanding 75 75
Additional paid in capital 925 925
Retained earnings 174,226 106,474
------------- -------------
Total stockholders' equity 175,226 107,474
------------- -------------
Total liabilities and stockholders' equity $1,674,164 $ 3,414,132
============ =============
See accompanying notes.
</TABLE>
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL) STATEMENTS OF
OPERATIONS for the period from June 27, 1993 (inception) to December 31, 1993
and for the years ended December 31, 1994 and 1995
<TABLE>
<CAPTION>
June 27, 1993
(inception) to
December 31, 1993 1994 1995
----------------- --------- --------
<S> <C> <C> <C>
Net revenues $ 363,846 $ 1,888,319 $ 4,347,156
Cost and expenses:
Operating 127,182 654,443 1,868,698
Selling, general and administration 211,705 1,015,783 2,380,000
------------------- -------------- -------------
Income from operations 24,959 218,093 98,458
Other income (expense):
Interest expense (2,816) (66,010) (171,162)
Other income - - 4,952
------------------ ---------------- -------------
Net income (loss) $ 22,143 $ 152,083 $ (67,752)
================== ================= =============
See accompanying notes.
</TABLE>
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL) STATEMENTS OF
STOCKHOLDERS' EQUITY for the period from June 27, 1993 (inception) to December
31, 1993 and for the years ended December 31, 1994 and 1995
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid In Capital Earnings Total
-------------- ----------------- ------------ ---------
<S> <C> <C> <C> <C>
Balance June 27, 1993 $ 75 $ 925 $ - $ 1,000
Net income - - 22,143 22,143
------------- ---------------- ------------- ---------
Balance December 31, 1993 75 925 22,143 23,143
Net income - - 152,083 152,083
-------------- ---------------- ------------- ---------
Balance December 31, 1994 75 925 174,226 175,226
Net loss - - (67,752) (67,752)
-------------- ---------------- -------------- ----------
Balance December 31, 1995 $ 75 $ 925 $ 106,474 $ 107,474
============== =============== ============== ==========
See accompanying notes.
</TABLE>
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL) STATEMENTS OF CASH
FLOWS for the period from June 27, 1993 (inception) to December 31, 1993 and for
the years ended December 31, 1994 and 1995
<TABLE>
<CAPTION>
June 27,1993
(inception)
to December 31,
1993 1994 1995
--------------- -------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 22,143 $ 152,083 $ (67,752)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 41,163 182,605 431,381
Provision for bad debts - 15,000 9,000
Changes in assets and liabilities:
Accounts receivable (73,214) (317,660) (209,375)
Inventory - - (131,708)
Other assets (1,250) 950 (5,684)
Accounts payable 40,781 147,322 255,206
Accrued liabilities 6,363 42,716 26,024
Deferred revenue 15,919 57,076 249,156
------------ ------------- ------------
Net cash provided by operating activities 51,905 280,092 556,248
------------ ------------- ------------
Cash flows from investing activities:
Purchase of machinery and equipment (420,167) (866,591) (799,498)
Acquisition of business - (235,000) (180,323)
------------ -------------- ------------
Net cash used in investing activities (420,167) (1,101,591) (979,821)
------------ -------------- ------------
Cash flows from financing activities:
Proceeds from notes payable 166,630 987,962 846,191
Payment on notes payable (5,755) (111,231) (378,988)
Proceeds from loan payable to stockholders 267,666 30,041 43,491
Payment on loan payable to stockholders (32,024) (117,676) (98,391)
Change in cash overdraft - 4,148 11,270
------------ ------------- ------------
Net cash provided by financing activities 396,517 793,244 423,573
------------ ------------- ------------
Increase (decrease) in cash 28,255 (28,255) -
Cash, beginning of period - 28,255 -
------------ -------------- -----------
Cash, end of period $ 28,255 $ - $ -
============ ============== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,816 $ 61,776 $140,641
============ =============== ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
During 1995, the Company financed a business acquisition through a
$720,000 note and through the assumption of $32,724 in liabilities.
The Company also purchased equipment for $84,930 financed through notes
and purchased equipment for $16,430 financed by a capital lease.
See accompanying notes.
</TABLE>
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS:
Spectrum Group, Inc., d/b/a United Sanitation, Ocala Chemical, Mills Disposal,
(the "Company") is in the business of operating solid waste collection systems,
sales of recyclable products (mostly paper), and the rental and service of
portable toilets. The Company was incorporated in 1978 but did not commence
current operations until June 27, 1993. In 1996, the Company began operating a
solid waste transfer station in Ocala, Florida. The Company's principal
customers are commercial and residential and are located in central Florida.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION - Collection revenues are recognized as services are
performed. Certain commercial and residential customers are billed in advance,
and these revenues are deferred until the period in which the related service is
rendered. Sales of recyclable products are recognized upon delivery of the
product.
INVENTORY - Inventories consist principally of recyclable paper products and are
valued at the lower of average cost or market.
MACHINERY AND EQUIPMENT - Machinery and equipment are stated at cost. Major
additions and improvements are capitalized. Maintenance and repairs are charged
to operating expenses. As machinery and equipment is retired or disposed of, the
cost of the asset and the related accumulated depreciation is written off and a
gain or loss is recognized. Depreciation is computed on the straight line method
over the assets' estimated useful lives and are summarized as follows:
Furniture............... 7 years
Fixtures................ 5 years
Automobiles and trucks.. 5 years
Containers.............. 5 years
Computers............... 3 years
Depreciation expense was $41,163, $174,855 and $394,285 for 1993, 1994 and 1995,
respectively.
INTANGIBLE ASSETS - The cost in excess of net assets of an acquired business is
being amortized over 15 years using the straight line method. Other intangible
assets, which include customer lists and covenants not to compete, are being
amortized using the straight-line method over their estimated useful lives,
which range from three to ten years. Intangible assets are evaluated for
impairment based on historical and estimated future profitability of the
businesses to which they relate. Adjustments to carrying values are made if
required.
Amortization expense was $7,750 and $37,096 for 1994 and 1995, respectively.
There was no amortization expense in 1993.
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INCOME TAXES - The stockholders have elected to be taxed individually on the
income of the Company as provided under Subchapter S of the Internal Revenue
Code. Accordingly, no provision has been made for income taxes in the
accompanying financial statements.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
3. INTANGIBLE ASSETS, NET:
<TABLE>
<CAPTION>
Intangible assets are summarized as follows as of December 31, 1994 and 1995:
1994 1995
------------- ----------
<S> <C> <C>
Cost in excess of net assets of acquired business $ - $ 609,401
Covenants not to compete 5,000 105,000
Customer lists 75,000 75,000
------------- ----------
80,000 789,401
Less accumulated amortization (7,750) (44,846)
------------- -----------
$ 72,250 $ 744,555
============= ===========
</TABLE>
4. LONG-TERM DEBT:
<TABLE>
<CAPTION>
Long-term debt at December 31, 1994 and 1995 consists of the following:
1994 1995
-------------- -----------
<S> <C> <C>
Note payable to individual, due in monthly
installments of $9,121 through 2005,
interest at 9%. $ - $ 683,891
Capital lease obligation, due in monthly
installments of $557 through
1998, interest imputed at 13%. - 13,325
Notes payable to bank, due in varying monthly
installments of $393 to $2,550, through 1998,
interest ranging between a fixed rate of 7.5%
to a variable rate of 1.5% above the prime rate
(8.5% at December 31,1995). 227,212 187,238
Notes payable to finance institution, due in
varying monthly installments of $1,589 to
$3,672, through 2000, interest ranging
between an imputed fixed rate of 9.7% to a
variable rate of 2.0% above the prime rate
(8.5% at December 31, 1995). 400,845 477,359
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. LONG-TERM DEBT, CONTINUED: 1994 1995
-------- --------
Notes payable to bank, due in varying monthly
installments of $420 to $4,902, through 2000,
interest ranging between a fixed rate of 8.75%
to 9%. 232,925 354,532
Notes payable to bank, due in 1996, interest at a
variable rate of .5% above the prime rate (8.5%
at December 31, 1995). - 98,725
Notes payable to third party, due in varying monthly
installments of $530 to $1,455, through 2000,
interest at 10%. - 74,404
Notes payable to bank, due in varying monthly
installments of $343 to $4,740, through 2000,
interest ranging between a fixed
rate of 8% to 10%. 176,642 445,665
Note payable to bank, due in monthly installments
of $270, through 1998, interest at a fixed
rate of 8.5%. - 6,606
Note payable to finance institution, due in monthly
installments of $1,296, through 1997,
interest at a fixed rate of 10%. - 16,843
------------ ------------
1,037,624 2,358,588
Less current portion 239,593 634,333
------------- ------------
$ 798,031 $ 1,724,255
============= ============
</TABLE>
Aggregate maturities of notes payable are as follows:
1996 $ 634,333
1997 450,975
1998 448,312
1999 246,668
2000 141,493
Thereafter 436,807
------------
$ 2,358,588
=============
Substantially all of the Company's assets are pledged as collateral under notes
payable.
The Company's two stockholders and their spouses have personally guaranteed
repayment of substantially all of the above notes payable.
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. OPERATING LEASES:
Operating lease agreements, other than for the facilities which are through a
related party (see Note 7), are primarily for automobiles. Minimum payments for
operating leases having an initial or remaining noncancelable term in excess of
one year are as follows:
1996 $ 21,012
1997 12,528
6. FINANCIAL INSTRUMENTS:
Financial instruments which potentially subject the Company to concentrations of
credit risk are accounts receivable. Accounts receivable represents amounts from
commercial and residential customers in central Florida. During 1995, the
Company had sales of approximately $1,743,000 to a single customer for the sale
of recyclable paper. This customer is contractually obligated, through April
2000, to purchase all recyclable paper produced by the Company and the Company
is contractually obligated to sell all recyclable paper produced to this
customer.
Management believes that the book value of the Company's long-term debt
approximates fair value.
7. RELATED PARTY:
The Company primarily leases all of its operating facilities from an entity
wholly owned by the Company's stockholders. Lease expense for these facilities
was approximately $1,000, $76,000, and $57,000 for the years ending 1993, 1994,
and 1995, respectively. The lease agreement calls for lease payments of $195,000
for the year ended 1996 and $264,000 per year for the years ended 1997 through
2000.
In 1993, the Company obtained a loan from the stockholders for $267,666. The
loan has no fixed repayment date and does not bear interest.
8. ACQUISITION:
On July 31, 1995, the Company acquired all of the outstanding stock of Kingsway
Sanitation, Inc., d/b/a Mills Disposal, ("Kingsway"), a garbage hauling and
recycling business in central Florida for $180,000 in cash and $720,000 in notes
payable.
The acquisition was accounted for by the purchase method of accounting. The fair
value of the tangible assets acquired was $223,323 and liabilities assumed
totaled $32,724. The excess of the purchase price over the fair value of the net
tangible assets acquired was allocated $100,000 to a non-compete agreement and
$609,401 to goodwill and is being amortized on the straight-line basis over 10
and 15 years, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
8. ACQUISITION, CONTINUED:
The pro forma results of operations listed below reflect accounting adjustments
assuming the acquisition of Kingsway occurred at the beginning of fiscal 1994.
<TABLE>
<CAPTION>
1994 1995
----------- --------------
<S> <C> <C>
Revenue $ 2,926,737 $ 4,952,900
Gross profit 1,756,121 2,783,101
Income from operations 163,953 66,876
Net income (loss) 12,314 (141,527)
</TABLE>
These pro forma amounts are not necessarily indicative of what actually would
have occurred if the acquisition had been in effect for the entire period
presented. In addition, they are not intended to be a projection of future
results and do not reflect any synergies that might be achieved from combined
operations.
In 1994, the Company acquired, for $235,000, the assets of Ocala Chemical
Portables, Inc. Ocala Chemical Portables, Inc. is in the business of renting and
servicing portable toilets. The Company allocated $155,000 to machinery and
equipment and $80,000 to intangible assets.
9. SUBSEQUENT EVENT:
On June 24, 1996, the Company entered into a nonbinding letter of intent to
merge with GeoWaste Incorporated. The surviving corporation under the terms of
the letter of intent would be GeoWaste Incorporated. The closing of the
transaction is conditioned upon several factors as outlined in the letter of
intent.
Subsequent to year-end, the Company incurred additional debt of approximately
$233,000 collateralized by equipment. The debt agreements call for monthly
payments ranging from $397 to $2,391 with interest rates ranging from 9% to 10%.
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
BALANCE SHEET
as of December 31, 1995 and June 30, 1996
ASSETS December 31, June 30, 1996
1995 (Unaudited)
---------------- ----------------
<S> <C> <C>
Current assets:
Accounts receivable, net of allowance of
$24,000 in 1995 and 1996 $ 576,249 $ 724,792
Inventory 131,708 57,190
------------------ ---------------
Total current assets 707,957 781,982
------------------ ---------------
Machinery and equipment 2,565,939 2,858,889
Less accumulated depreciation (610,303) (896,590)
------------------ ---------------
Net machinery and equipment 1,955,636 1,962,299
------------------ ---------------
Other assets:
Intangible assets, net 744,555 713,552
Other 5,984 7,405
------------------ --------------
750,539 720,957
------------------ --------------
Total assets $ 3,414,132 $3,465,238
================== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 15,418 $ 23,704
Current portion of long-term debt 634,333 463,434
Loan payable to stockholders 92,089 53,480
Accounts payable 443,309 493,764
Accrued liabilities 75,103 151,244
Deferred revenue 322,151 310,221
------------------ ---------------
Total current liabilities 1,582,403 1,495,847
Long-term debt less current maturities 1,724,255 1,865,677
------------------ ---------------
3,306,658 3,361,524
------------------ ---------------
Stockholders' equity:
Common stock, $1 par value, 100 shares
authorized; 75 shares issued and
outstanding 75 75
Additional paid in capital 925 925
Retained earnings 106,474 102,714
------------------- ---------------
Total stockholders' equity 107,474 103,714
------------------- ---------------
Total liabilites and stockholders' equity $ 3,414,132 $ 3,465,238
=================== ===============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
STATEMENTS OF OPERATIONS
for the six months ended June 30, 1995 and 1996
(Unaudited)
For the Six Months
Ended June 30,
-----------------------------
1995 1996
------------- -------------
<S> <C> <C>
Net revenues $ 2,147,038 $ 2,819,490
Cost and expenses:
Operating 986,204 1,151,121
Selling, general and administration 1,026,327 1,591,896
-------------- -------------
Income from operations 134,507 76,473
Other income (expense):
Interest expense (43,339) (80,233)
Other 6,780 -
-------------- -------------
Net income (loss) $ 97,948 $ (3,760)
============== =============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1995 and 1996
(Unaudited)
For the Six Months
Ended June 30,
-----------------------------
1995 1996
------------- ------------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 97,948 $ (3,760)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 184,804 317,290
Provision for bad debts 9,000 -
Changes in assets and liabilities:
Accounts receivable 57,956 (148,543)
Inventory (25,558) 74,518
Other assets (2,985) (1,421)
Accounts payable 125,895 50,455
Accrued liabilities (3,711) 76,141
Deferred revenue (11,254) (11,930)
-------------- --------------
Net cash provided by operating activities 432,095 352,750
-------------- --------------
Cash flows from investing activities:
Purchase of machinery and equipment (685,632) (292,950)
-------------- --------------
Net cash used in investing activities (685,632) (292,950)
-------------- --------------
Cash flows from financing activities:
Proceeds from notes payable 510,866 232,985
Payment on notes payable (155,896) (262,462)
Proceeds from loan payable to stockholders 6,000 -
Payment on loan payable to stockholders (52,700) (38,609)
Change in cash overdraft (4,148) 8,286
-------------- ---------------
Net cash provided by (used in) financing activities 304,122 (59,800)
-------------- ---------------
Increase in cash 50,585 -
Cash, beginning of period - -
-------------- ---------------
Cash, end of period $ 50,585 $ -
============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 47,573 $ 80,233
============== ================
</TABLE>
See accompanying notes.
<PAGE>
SPECTRUM GROUP, INC.
(D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL)
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
INTERIM FINANCIAL INFORMATION - The unaudited financial statements reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the financial position, results of operations and cash flows for the periods
presented. The results of operations for the interim periods are not necessarily
indicative of the results for a full year. Certain information and disclosures
as of June 30, 1996 and for the six months ended June 30, 1996 and 1995 normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the rules and regulations of
the Securities and Exchange Commission.
Additional financial information regarding the Company is contained in the
Company's audited financial statements as of December 31, 1995, contained
herein.
2. ACQUISITION:
On August 12, 1996, the Company was purchased by GeoWaste Incorporated.
<PAGE>
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated balance sheet as of June 30,
1996 has been prepared to reflect the financial position of the Company as if
the Merger had occurred on June 30, 1996. The following unaudited pro forma
consolidated statements of income for the year ended December 31, 1995 and the
six months ended June 30, 1996 have been prepared to reflect the operations of
the Company as if the Merger had occurred on January 1, 1995.
The Merger was treated as a purchase for financial reporting purposes. The
Company acquired Spectrum for 2,000,000 shares of GeoWaste Common Stock valued
at $6,250,000 and approximately $954,000 in cash (which includes $94,085 for
repayment of a loan to the stockholders of Spectrum).
The unaudited pro forma consolidated financial statements are derived, in
part, from the historical financial statements of the Company and Spectrum and
should be read in conjunction with those financial statements and the notes
thereto. The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results that would have occurred if the Merger had
occurred on the dates indicated or the expected financial position or results of
operations in the future.
The Merger will be accounted for as a purchase. Under purchase accounting,
the total purchase cost and fair value of liabilities assumed will be allocated
to the tangible and intangible assets of Spectrum based upon their respective
fair values as of August 12, 1996 based on valuations and other studies which
are not yet available. A preliminary allocation of the purchase cost has been
made to major categories of assets and liabilities in the accompanying pro forma
consolidated financial information based on estimates. The actual allocation of
purchase cost and the resulting effect on income from operations may differ
significantly from the pro forma amounts included herein.
<PAGE>
<TABLE>
<CAPTION>
GEOWASTE INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
as of June 30, 1996
(unaudited)
Historical
----------------------------------
GeoWaste Spectrum Pro Forma
ASSETS Incorporated Group, Inc. Adjustments Pro Forma
------------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,622,288 $ (23,704) $(954,000)(a) $ 3,644,584
Accounts receivable, net 1,187,348 724,792 - 1,912,140
Prepaid expenses 150,697 - - 150,697
Inventory - 57,190 - 57,190
Deferred tax asset 6,000 - 220,000(b) 226,000
------------------- ---------------- ----------------- -------------
Total current assets 5,966,333 758,278 (734,000) 5,990,611
------------------- ---------------- ----------------- -------------
Property and equipment, net 17,054,509 2,858,889 (896,590)(c) 19,016,808
Less: accumulated depreciation (7,235,801) (896,590) 896,590 (c) (7,235,801)
------------------- ----------------- ---------------- -------------
Net property and equipment 9,818,708 1,962,299 - 11,781,007
------------------- ----------------- ---------------- -------------
Other assets:
Intangible assets, net 1,331,481 713,552 (713,552)(a) 9,847,839
8,516,358 (a)
Funds held in escrow 300,000 - - 300,000
Other 41,915 7,405 - 49,320
-------------------- ---------------- ------------------ -----------
Total other assets 1,673,396 720,957 7,802,806 10,197,159
-------------------- ---------------- ------------------ ------------
Total assets $ 17,458,437 $ 3,441,534 $7,068,806 $27,968,777
==================== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations $ 130,276 $ 463,434 $ - $ 593,710
Accounts payable 120,724 493,764 - 614,488
Accrued payroll 79,846 2,301 - 82,147
Accrued expenses 207,026 - 830,000(a) 1,037,026
Accrued taxes 215,500 - - 215,500
Accrued other 158,318 148,943 - 307,261
Deferred revenue 373,497 310,221 - 683,718
Loan payable to stockholders - 53,480 (53,480)(a) -
-------------------- ----------------- ----------------- -------------
Total current liabilities 1,285,187 1,472,143 776,520 3,533,850
Long-term obligations, less current maturities 4,481,205 1,865,677 - 6,346,882
Accrued royalties 1,092,989 - - 1,092,989
Closure obligations 1,643,820 - - 1,643,820
Deferred tax liability 194,000 - 146,000(b) 340,000
Minority interest 61,600 - - 61,600
--------------------- ---------------- ----------------- -------------
Total liabilities 8,758,801 3,337,820 922,520 13,019,141
--------------------- ---------------- ----------------- -------------
Stockholders' equity:
Preferred stock - - - -
Common stock 1,889,655 75 (75)(a) 2,089,655
200,000 (a)
Additional paid-in capital 6,547,715 925 (925)(a) 12,597,715
6,050,000 (a)
Accumulated earnings 262,266 102,714 (102,714)(a) 262,266
--------------------- --------------- ------------------ --------------
Total stockholders' equity 8,699,636 103,714 6,146,286 14,949,636
--------------------- --------------- ------------------ --------------
Total liabilities and stockholders' equity $ 17,458,437 $3,441,534 $7,068,806 $ 27,968,777
===================== =============== ================== ==============
See accompanying notes.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
BASIS OF RECORDING THE TRANSACTIONS:
The accompanying pro forma consolidated balance sheet as of June 30, 1996
was prepared to reflect the financial position of the Company as if the Merger
had occurred on June 30, 1996. The Merger has been accounted for using the
purchase method of accounting. The Company's historical balance sheet as of June
30, 1996 includes the assets and liabilities of all acquisitions completed prior
to such date.
BALANCE SHEET ADJUSTMENTS:
(a)The estimated purchase cost and preliminary adjustments to historical book
value are as follows:
Purchase cost:
2,000,000 shares of GeoWaste Incorporated common stock,
valued at $3.125 per share $ 6,250,000
Cash 954,000
-------------
Total paid to seller 7,204,000
Transaction fees and other costs 830,000
-------------
Total purchase cost 8,034,000
-------------
Book value of net assets acquired:
Actual net assets at June 30, 1996 103,714
Cancellation of loan payable to stockholder 53,480
Deferred income tax, net 74,000(b)
Elimination of Spectrum historical intangible assets, net (713,552)
---------------
Adjusted book value of net liabilities acquired (482,358)
---------------
Excess of purchase cost over net liabilities acquired $ 8,516,358
===============
(b)Reflects the recording of estimated opening net deferred taxes assets
for Spectrum.
(c)Based on preliminary studies, it appears that the market value of
property and equipment approximates its historical net book value, thus
accumulated depreciation and the related assets have been adjusted in the pro
forma balance sheet.
<PAGE>
<TABLE>
<CAPTION>
GEOWASTE INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
for the year ended December 31, 1995
(unaudited)
Historical
-----------------------------------------
GeoWaste Spectrum Pro Forma
Incorporated Group, Inc. Adjustments Pro Forma
--------------- ------------------ -------------- -------------
<S> <C> <C> <C> <C>
Net revenues $ 8,932,528 $ 4,347,156 $ - $ 13,279,684
Cost of expenses:
Operating 5,207,250 1,868,698 (64,000)(a) 6,701,148
(310,800)(b)
Selling, general and administrative 1,530,377 2,380,000 182,000 (c) 4,268,377
213,000 (d)
(37,000)(e)
----------------- ------------------- -------------- -------------
Income from operations 2,194,901 98,458 16,800 2,310,159
Other income (expense):
Other income, primarily interest 182,747 4,952 (70,000)(f) 117,699
Interest expense (368,338) (171,162) - (539,500)
----------------- -------------------- -------------- -------------
Income (loss) from operations
before income taxes 2,009,310 (67,752) (53,200) 1,888,358
Income tax provision 547,000 - 10,000(g) 557,000
------------------ --------------------- --------------- -------------
Net income (loss) $ 1,462,310 $ (67,752) $(63,200) $1,331,358
================== ===================== =============== ==============
Earnings per common and common
equivalent share $ 0.07 $ 0.06
================== ==============
Weighted average shares of common
stock outstanding 19,526,415 21,526,415
================== ===============
OTHER DATA:
EBITDA (h) $ 5,503,223 $ 534,791 $6,219,614
================== ==================== ================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GEOWASTE INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
for the six months ended June 30, 1996
(unaudited)
Historical
------------------------------------------
GeoWaste Spectrum Pro Forma
Incorporated Group, Inc. Adjustments Pro Forma
---------------------- ---------------- -------------- ------------
<S> <C> <C> <C> <C>
Net revenues $ 5,238,691 $ 2,819,490 $ - $ 8,058,181
Cost of expenses:
Operating 2,677,776 1,151,121 (32,000)(a) 3,496,897
(300,000)(b)
Selling, general and administrative 963,800 1,591,896 91,000 (c) 2,722,196
106,500 (d)
(31,000)(e)
--------------------- ----------------- --------------- ------------
Income from operations 1,597,115 76,473 165,500 1,839,088
Other income (expense):
Other income, primarily interest 183,445 - (35,000)(f) 148,445
Interest expense (198,443) (80,233) - (278,676)
---------------------- ------------------ -------------- ------------
Income (loss) from operations before
income taxes 1,582,117 (3,760) 130,500 1,708,857
Income tax provision 581,792 - 96,000(g) 677,792
---------------------- ------------------ --------------- ------------
Net income (loss) $ 1,000,325 $ (3,760) $ 34,500 $1,031,065
====================== ================== =============== ============
Earnings per common and common
equivalent share $ 0.05 $ 0.05
====================== ============
Weighted average shares of common
stock outstanding 19,725,484 21,725,484
====================== =============
OTHER DATA:
EBITDA (h) $ 2,958,288 $ 388,948 $3,633,863
====================== ================= ==============
See accompanying notes.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
BASIS OF RECORDING THE TRANSACTIONS:
The accompanying pro forma consolidated income statements for the year
ended December 31, 1995 and the six months ended June 30, 1996 have been
prepared to reflect the operations of the Company as if the Merger had occurred
on January 1, 1995.
STATEMENTS OF INCOME ADJUSTMENTS:
(a)This adjustment reflects the incremental decrease in lease expense for
leasing the warehouse and transfer station. The new lease is a 20 year lease
with rentals of $204,000 per year plus sales tax, adjusted annually by the
CPI-W.
(b) This adjustment represents a decrease in disposal charges as Spectrum
will now dispose garbage at the Company's landfill.
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Estimated Spectrum disposal costs at non Company landfills $ 462,000 $ 480,000
Transportation costs to Company landfill (92,400) (110,000)
Increased amortization of landfill related costs (58,800) (70,000)
------------ -----------
$ 310,800 $ 300,000
============ ===========
</TABLE>
(c)This adjustment reflects the incremental increase in salary expense for
the officers of Spectrum that became officers of the Company pursuant to
negotiated employment agreements.
(d)This adjustment reflects the increase in amortization expense related to the
goodwill recorded (approximately $8,520,000) under the purchase method of
accounting which is being amortized over 40 years.
(e)This adjustment eliminates amortization of Spectrum historical
intangible assets.
(f)This adjustment reflects a decrease in interest income from paying $954,000
in cash and $830,000 in transaction fees and expenses to consummate the purchase
of Spectrum assuming a 4% effective interest rate.
(g)The tax effect of the pro forma adjustments to earnings before taxes is
based on estimated applicable effective tax rates of 27% for the year ended
December 31, 1995 and 38% for the six months ended June 30, 1996. The pro forma
adjustments assume that no valuation allowance would be required under SFAS 109,
"Accounting for Income Taxes."
(h)EBITDA is defined as net income before interest expense, income taxes,
depreciation and amortization of intangibles and of landfill related costs
deducted in determining net income. The Company believes that EBITDA provides
useful information regarding the Company's debt service ability, but should not
be considered in isolation or as a substitute for the consolidated statement of
income or cash flow data prepared in accordance with generally accepted
accounting principles.
<PAGE>
(c) Exhibits.
2.2 Agreement and Plan of Merger dated August 12, 1996,
among the Registrant, Spectrum Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of
the Registrant, Spectrum Group, Inc., d/b/a United
Sanitation, Ocala Chemical, Mills Disposal, a Florida
corporation, and John Paglia and Michael Paglia.
4.11 Voting Agreement dated as of August 12, 1996,
among John Paglia, Michael Paglia, Advance Ross
Corporation, Allen & Company Incorporated, Allen
Value Partners L.P. and Allen Value Limited
Incorporated.
20.1 News Release dated August 13, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEOWASTE INCORPORATED
By: /S/ AMY C. MACF. BURBOTT
Amy C. MacF. Burbott,
Chief Executive Officer
Dated: August 26, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
2.2 Agreement and Plan of Merger dated August 12, 1996,
among the Registrant, Spectrum Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of
the Registrant, Spectrum Group, Inc., d/b/a United
Sanitation, Ocala Chemical, Mills Disposal, a Florida
corporation, and John Paglia and Michael Paglia.
4.11 Voting Agreement dated as of August 12, 1996,
among John Paglia, Michael Paglia, Advance Ross
Corporation, Allen & Company Incorporated, Allen
Value Partners L.P. and Allen Value Limited
Incorporated.
20.1 News Release dated August 13, 1996.
Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
by and among
GEOWASTE INCORPORATED,
SPECTRUM GROUP, INC.,
D/B/A UNITED SANITATION, OCALA CHEMICAL, MILLS DISPOSAL,
SPECTRUM ACQUISITION CORP.,
JOHN PAGLIA
and
MICHAEL PAGLIA
Dated August 12, 1996
<PAGE>
ARTICLE I
DEFINITIONS................... 1
Section 1.1 Defined Terms..................................... 1
ARTICLE II
THE MERGER.................... 5
Section 2.1 The Merger....................................... 5
Section 2.2 Effective Time of the Merger..................... 6
ARTICLE III
THE SURVIVING CORPORATION...... 6
Section 3.1 Certificate of Incorporation..................... 6
Section 3.2 By-laws.......................................... 6
Section 3.3 Directors........................................ 6
Section 3.4 Officers......................................... 7
Section 3.5 Further Action................................... 7
ARTICLE IV
CONVERSION OF SHARES.......... 7
Section 4.1 Conversion of GeoSub and Company Shares
in Merger........................................ 7
Section 4.2 Surrender of Company Common Stock................ 8
Section 4.4 Closing.......................................... 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDERS......... 9
Section 5.1 Organization, Qualification and
Corporate Power................................... 9
Section 5.2 Capitalization.................................... 9
Section 5.3 Subsidiaries...................................... 10
Section 5.4 Authorization of Transaction...................... 10
Section 5.5 Noncontravention.................................. 10
Section 5.6 Financial Statements.............................. 10
Section 5.7 Absence of Certain Changes or Events.............. 11
Section 5.8 Undisclosed Liabilities........................... 13
Section 5.9 Taxes............................................. 13
Section 5.10 Brokers' Fees..................................... 14
Section 5.11 No Competing Interest............................. 14
Section 5.12 Litigation........................................ 14
Section 5.13 Licenses.......................................... 14
Section 5.14 Disclosure........................................ 14
Section 5.15 Title to Assets................................... 15
Section 5.16 Condition of Tangible Assets...................... 15
Section 5.17 Contracts and Commitments......................... 15
Section 5.18 Labor Matters..................................... 17
Section 5.19 Proprietary Rights................................ 17
Section 5.20 Employee Benefit Plans............................ 18
Section 5.21 Transactions with Certain Persons................. 22
Section 5.22 Insurance......................................... 22
Section 5.23 Environmental Matters............................. 22
Section 5.24 OSHA Compliance................................... 23
Section 5.25 Accounts Receivable............................... 24
Section 5.26 Inventories....................................... 24
Section 5.27 Customers and Suppliers........................... 24
Section 5.28 Books and Records................................. 24
Section 5.29 Bank Accounts; Powers of Attorney................. 25
Section 5.30 Investment Representations........................ 25
Section 5.31 Accuracy of Documents and Information............. 26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GEOWASTE AND GEOSUB.....26
Section 6.1 Organization, Qualification and
Corporate Power....................................26
Section 6.2 Capitalization.....................................26
Section 6.3 Authorization of Transaction.......................27
Section 6.4 Noncontravention...................................27
Section 6.5 Filings with the Commission........................27
Section 6.6 Financial Statements...............................28
Section 6.7 Brokers' Fees......................................28
Section 6.8 Litigation.........................................28
Section 6.9 Disclosure.........................................28
Section 6.10 Nasdaq Listing.....................................29
Section 6.11 Environmental Matters..............................29
Section 6.12 Customers and Suppliers............................30
Section 6.13 Investment Representations.........................30
Section 6.14 Accuracy of Documents and Information..............30
ARTICLE VII
COVENANTS.....................30
Section 7.1 Notices and Consents...............................31
Section 7.2 Registration Statement.............................31
Section 7.3 Compliance with the Securities Act.................32
Section 7.4 Share Legend.......................................32
Section 7.5 Non-competition Agreement..........................32
Section 7.6 New Lease. ........................................32
Section 7.7 Appointment to Board of Directors..................33
Section 7.8 Reorganization Treatment...........................33
Section 7.9 Release of Guarantees..............................33
Section 7.10 Payment of Company Debt............................33
ARTICLE VIII
CONDITIONS TO COMPANY'S AND STOCKHOLDERS' OBLIGATIONS
Section 8.1 Representations, Warranties and Covenants......... 34
Section 8.2 No Governmental Proceedings or Litigation..........34
Section 8.3 Corporate Documents............................... 34
Section 8.4 Certificates...................................... 34
Section 8.5 Opinion of Counsel................................ 34
Section 8.6 Employment Agreements............................. 35
Section 8.7 Delivery of Consents.............................. 35
Section 8.8 No Material Adverse Change........................ 35
Section 8.9 Guaranty of Lease................................. 35
Section 8.10 Voting Agreement.................................. 35
Section 8.11 Good Standing Certificates........................ 35
ARTICLE IX
CONDITIONS TO GEOWASTE'S OBLIGATIONS...........35
Section 9.1 Representations, Warranties and Covenants..........36
Section 9.2 Consents...........................................36
Section 9.3 No Governmental Proceedings or Litigation..........36
Section 9.4 Opinions of Counsel................................36
Section 9.5 Material Adverse Changes...........................37
Section 9.6 Corporate Documents................................37
Section 9.7 Certificates.......................................37
Section 9.8 Non-Competition Agreement..........................37
Section 9.9 Voting Agreement...................................37
Section 9.10 New Lease ........................................37
Section 9.11 Affiliate Agreements...............................37
Section 9.12 Resignations.......................................37
Section 9.13 Good Standing Certificates.........................38
Section 9.14 Annualized Gross Revenue...........................38
ARTICLE X
ACTIONS BY COMPANY AND GEOWASTE AFTER THE CLOSING...38
Section 10.1 Books and Records..................................38
Section 10.2 Survival of Representations, etc...................38
Section 10.3 Indemnification....................................39
Section 10.4 Further Assurances.................................42
ARTICLE XI
MISCELLANEOUS...................42
Section 11.1 Assignment ........................................42
Section 11.2 Notices; Transfer of Funds.........................42
Section 11.3 Governing Law......................................43
Section 11.4 Entire Agreement; Modifications and Waivers........44
Section 11.5 Counterparts/Telecopies............................44
Section 11.6 Expenses ........................................44
Section 11.7 Invalidity ........................................44
Section 11.8 Titles ........................................44
Section 11.9 Publicity ........................................44
Section 11.10 Confidential Information...........................45
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT entered into on August 12, 1996 (this "Agreement"), among
GeoWaste Incorporated, a Delaware corporation ("GeoWaste"), Spectrum Group,
Inc., d/b/a United Sanitation, Ocala Chemical, Mills Disposal, a Florida
corporation (the "Company"), Spectrum Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of GeoWaste ("GeoSub"), and John Paglia and
Michael Paglia, the sole stockholders of the Company (individually, a
"Stockholder" and, collectively, the "Stockholders").
This Agreement contemplates a tax-free merger of GeoSub (the "Merger") with
and into the Company in a reorganization pursuant to Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Stockholders will
receive capital stock of GeoWaste in exchange for their capital stock of the
Company.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that, either directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Person specified. As used herein, the term "control" shall mean the power
through the ownership of voting securities, contract or otherwise to direct the
affairs of another Person.
"Audited Balance Sheet" shall mean the audited balance sheet of the Company
as of the Audited Balance Sheet Date, together with the notes thereon and the
related unqualified report of Coopers & Lybrand LLP.
"Audited Balance Sheet Date" shall mean December 31, 1995.
"Audited Financial Statements" shall mean the Audited Balance Sheet and the
audited statements of income, retained earnings and cash flows of the Company
for the year ended December 31, 1995, together in each case with the related
notes thereon and the related unqualified report of Coopers & Lybrand LLP.
"Books and Records" shall mean all records pertaining to the assets,
properties, business, operations, accounts, financial condition, contractors,
suppliers or customers of the Company, regardless of whether such books and
records are maintained for Tax or financial reporting purposes.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. ss. 9601, ET SEQ.
"Commission" shall mean the Securities and Exchange Commission.
"Company Common Stock" shall mean the Company's common stock, par value
$1.00 per share.
"Company Material Adverse Effect" shall mean a material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company.
"Contract" shall mean any of the agreements, contracts leases or
commitments described on the Disclosure Schedule and any agreements, contracts,
leases or commitments of the Company not required to be described on the
Disclosure Schedule solely because of the size or duration limitations on
contracts required to be scheduled by this Agreement.
"Damages" shall mean costs, losses (including, without limitation,
diminution in value), liabilities, damages, lawsuits, deficiencies, claims,
Taxes and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, reasonable attorneys' fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing.
"Disclosure Schedule" shall mean a schedule executed and delivered by (i)
the Company to GeoWaste concurrently herewith which sets forth the exceptions to
the representations and warranties contained in Article V hereof and certain
other information called for by Article V hereof and other provisions of this
Agreement and (ii) GeoWaste to the Company concurrently herewith which sets
forth the exceptions to the representations and warranties contained in Article
VI hereof and certain other information called for by Article VI hereof and
other provisions of this Agreement.
"Encumbrance" shall mean any lien, pledge, claim, option, charge, easement,
security interest, right-of-way, encumbrance or other right of any third party.
"Environmental Laws" shall mean all local, state, federal and foreign laws
and regulations relating to the protection of the environment, pollution control
and Releases of Hazardous Substances as of the date hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"GeoWaste Common Stock" shall mean GeoWaste's common stock, par value $.10
per share.
"GeoWaste Material Adverse Effect" shall mean a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of GeoWaste and its Subsidiaries, taken as a whole.
"Governmental Entity" shall mean any government, governmental entity,
department, commission, board, agency or instrumentality, whether federal, state
or local, and whether domestic or foreign.
"Hazardous Substance" shall mean (A) any substance designated pursuant to
section 1321(b)(2)(A) of Title 33 of the United States Code, (B) any element,
compound, mixture, solution or substance designated pursuant to section 9602 of
Title 42 of the United States Code, (C) any hazardous waste having the
characteristics identified under or listed pursuant to section 3001 of the Solid
Waste Disposal Act, (D) any toxic pollutant listed under section 1317(a) of
Title 33 of the United States Code, (E) any hazardous air pollutant listed under
section 112 of the Clean Air Act, (F) any imminently hazardous chemical
substance or mixture with respect to which the Administrator of the United
States Environmental Protection Agency has taken action pursuant to section 2606
of Title 15 of the United States Code and (G) petroleum and petroleum products.
"IRS" shall mean the United States Internal Revenue Service.
"Licenses" shall mean all licenses, permits, certificates and other
governmental authorizations necessary to carry on the business of the Company as
presently conducted, including, without limitation, environmental permits and
authorizations, zoning approvals or any other approval from any Governmental
Entity required for the Company's business; each License is identified on the
Disclosure Schedule.
"Nasdaq Small-Cap Market" shall mean The Nasdaq Stock Market's Small-Cap
Market.
"Paglia & Associates" shall mean a general partnership which owns the real
property upon which the Company's business is operated, and which is owned
equally by the Stockholders.
"Person" shall mean an individual, firm, trust, association, corporation,
partnership, limited liability company, Governmental Entity or other entity.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles containing any hazardous substance or pollutant or
contaminant) into, upon or under the air, soil, surface water, groundwater, at
any location, including any real property owned, leased, controlled or used by
the Company or any predecessor entity to such person.
"Representative" shall mean any officer, director, principal, attorney,
agent, employee or other representative.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tax" or "Taxes" shall mean all taxes, charges, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
and personal property, sales, use, transfer, capital gains, transfer gains,
license, payroll, privilege, and franchise taxes, imposed by any Governmental
Entity and shall include any interest, penalties or additions to tax
attributable to any of the foregoing.
"Unaudited Financial Statements" shall mean the unaudited balance sheet of
the Company at June 30, 1996 and the unaudited statements of operations of the
Company for the six months ended June 30, 1996, together with the related notes
thereon, which financial statements have been compiled by Price & Stirrup,
Certified Public Accountants and are attached as Exhibit A hereto.
Section 1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
TERM SECTION
Affiliate Agreements 7.3
Benefit Arrangement 5.20(a)(1)
Benefit Plans 5.20(a)(2)
Closing 4.3
Closing Date 4.3
Company Actions 5.12
Effective Time 2.2
Exchange Ratio 4.1(a)(i)
ERISA 5.20(a)(3)
ERISA Affiliate 5.20(a)(4)
ERISA Pension Plan 5.20(a)(5)
ERISA Welfare Plan 5.20(a)(6)
GeoWaste Action 6.8
Lease 7.7
New Lease 7.7
Merger Filing 2.2
Multiemployer Plan 5.10(a)(7)
Personnel 5.7(b)(i)
Premises 7.7
Proprietary Rights 5.19
Public Reports 6.5
Registration Statement 7.2
Surviving Corporation 2.1
Tax Returns 5.9
Unless the context otherwise requires words in the singular include the
plural and words in the plural include the singular.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as hereinafter defined) GeoSub shall be
merged with and into the Company in accordance with the provisions of (i)
Florida Business Corporation Act ss. 607.1101 and (ii) Delaware General
Corporation Law ss.252, and with the effect provided in Florida Business
Corporation Act ss. 607.1101, and the separate existence of GeoSub shall
thereupon cease. The Company shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the "Surviving Corporation") and shall
continue to be governed under the laws of the State of Florida and the name of
the Surviving Corporation shall remain "Spectrum Group, Inc." Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time of
the Merger (a) the Surviving Corporation shall possess all assets and property
of every description, and every interest therein, wherever located, and the
rights, privileges, immunities, powers, franchises and authority, of a public as
well as of a private nature, of the Company and GeoSub, (b) all obligations
belonging to or due each of the Company and GeoSub shall be vested in, and
become the obligations of, the Surviving Corporation without further act or
deed, (c) title to any real estate or any interest therein vested in the Company
or GeoSub shall not revert or in any way be impaired by reason of the Merger,
(d) all rights of creditors and all liens upon any property of the Company or
GeoSub shall be preserved unimpaired, and (e) the Surviving Corporation shall be
liable for all of the obligations of the Company and GeoSub as may be prosecuted
to judgment with right of appeal, as if the Merger had not taken place.
Section 2.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
at such time (the "Effective Time") as the Certificate of Merger, in the form
set forth in Exhibit B hereto, is filed with the Secretary of State of the State
of Delaware and the Articles of Merger and Plan of Merger in the forms set forth
in Exhibit C hereto are filed with the Secretary of State of the State of
Florida (the "Merger Filing") or such later date and time as may be specified in
the Articles of Merger, such filings shall be made simultaneously with or as
soon as practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 4.3.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of the Surviving Corporation as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time, until duly amended in accordance with the terms
thereof and applicable law.
Section 3.2 BY-LAWS. The By-laws of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation after the Effective Time, and thereafter may be amended in
accordance with their terms and as provided in the Certificate of Incorporation
of the Surviving Corporation and applicable law.
Section 3.3 DIRECTORS. The directors of the Surviving Corporation at the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and applicable
law.
Section 3.4 OFFICERS. The officers of the Surviving Corporation at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws.
Section 3.5 FURTHER ACTION. If at any time after the Effective Time,
GeoWaste shall consider that any further deeds, assignments, conveyances,
agreements, documents, instruments or assurances in law or any other things are
necessary or desirable to vest, perfect, confirm or record in the Surviving
Corporation the title to any property, rights, privileges, powers and franchises
of the Company to be acquired by the Surviving Corporation by reason of, or as a
result of, the Merger, or otherwise to carry out the provisions of this
Agreement, the Board of Directors and officers of the Company last in office
shall, to the extent then permitted so to do by applicable law, execute and
deliver upon GeoWaste's reasonable request, any and all deeds, assignments,
conveyances, agreements, documents, instruments or assurances in law, and do all
other things necessary or proper to vest, perfect, confirm or record title to
such property, rights, privileges, powers and franchises in the Surviving
Corporation, and otherwise carry out provisions of this Agreement.
ARTICLE IV
CONVERSION OF SHARES
Section 4.1 CONVERSION OF GEOSUB AND COMPANY SHARES IN MERGER. (a) At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company:
(i) Each share of common stock of GeoSub issued and
outstanding on the Effective Date shall be converted, without any
further action, into and be one share of Company Common Stock.
(ii) Each share of Company Common Stock issued and outstanding
at the Effective Time, subject to the terms and conditions of this
Agreement, shall be converted, without any further action, into the
right to receive, and become exchangeable for, 26,666 and 2/3 shares
(the "Exchange Ratio") of fully paid and non-assessable GeoWaste Common
Stock and $11,465.53.
(iii) Any option, warrant or right to purchase capital stock
of the Company outstanding on the date hereof shall be canceled prior
to the Effective Time in accordance with the terms thereof.
(b) The Company shall take such actions as are necessary to ensure that
from and after the Effective Time none of the Company, the Surviving Corporation
or any of its subsidiaries is or will be bound by any options, warrants, rights
granted or agreements entered into by the Company or any of its former
subsidiaries prior to the Effective Time which would entitle any person, other
than GeoWaste or its subsidiaries to beneficially own, or receive any payments
in respect of, any capital stock of the Company or the Surviving Corporation.
(c) If, prior to the Effective Time, GeoWaste should split or combine the
GeoWaste Common Stock, or pay a stock dividend or other stock distribution in
GeoWaste Common Stock, or otherwise change the GeoWaste Common Stock into any
other securities, then the Exchange Ratio will be appropriately adjusted to
reflect such split, combination, stock dividend or other distribution or change.
(d) If, prior to the Effective Time, the Company or GeoWaste should
establish a record date for the payment of any cash dividend with respect to
shares of their respective common stock, then the Exchange Ratio will be
appropriately adjusted so as to reflect the per share amount of such dividend.
Section 4.2 SURRENDER OF COMPANY COMMON STOCK. As promptly as practicable
after the Effective Date, each Stockholder shall surrender the certificates
which represented their interest in the Company prior to the Effective Date, and
shall be entitled upon such surrender to receive in exchange therefor
certificates representing the number of shares of GeoWaste Common Stock into
which the Company Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted as set forth in Section
4.1 hereof. Until so surrendered and exchanged, each certificate theretofore
representing outstanding Company Common Stock shall be deemed for all purposes
(corporate or otherwise) to represent solely the right to receive GeoWaste
Common Stock as herein provided and shall not be considered to represent shares
of capital stock of the Surviving Corporation.
Section 4.3 NO MODIFICATION OF GEOWASTE SECURITIES. Each share of GeoWaste
Common Stock issued and outstanding at the Effective Time shall remain issued
and outstanding thereupon and shall not be converted or the terms thereof
modified in the Merger.
Section 4.4 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Fowler, White,
Gillen, Boggs, Villareal and Banker, P.A., 501 East Kennedy Boulevard, Tampa,
Florida 33602, on August 12, 1996, or at such other time and place as GeoWaste,
GeoSub, the Stockholders and the Company shall mutually agree (the date on which
the Closing occurs being the "Closing Date").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDERS
The Company and each of the Stockholders severally represents and warrants
to GeoWaste that the statements contained in this Article V are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Article
V.
Section 5.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction in
which the character of the property owned or leased by it and the nature of the
business conducted by it require such qualification, except where the failure to
be so qualified would not have a Company Material Adverse Effect. The Company
has full corporate power and authority to carry on its business in which it is
engaged and to own and use the properties and assets owned and used by it. True,
accurate and complete copies of the charter and by-laws of the Company, in each
case as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to GeoWaste.
Section 5.2 CAPITALIZATION. The entire capitalization of the Company
consists of 100 shares of Company Common Stock, 75 of which are issued and
outstanding.
All of the issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock except as set
forth on the Disclosure Schedule. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Company's capital stock. There are no voting trusts or other agreements
or understandings to which the Company is a party with respect to the voting of
its capital stock.
Section 5.3 SUBSIDIARIES. The Company has no subsidiaries.
Section 5.4 AUTHORIZATION OF TRANSACTION. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and the related agreements to which it is a party and to perform
its obligations hereunder and thereunder. This Agreement constitutes the legal,
valid and binding obligation of the Company and the Stockholders, enforceable
against each of them in accordance with its terms, except insofar as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and except as to the availability of equitable remedies.
Section 5.5 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement or the related agreements, nor the consummation of the transactions
contemplated hereby and thereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Entity or court to which the Company is subject
or any provision of the charter or by-laws of the Company or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument
or other arrangement to which the Company is a party or by which it is bound to
which any of its assets is subject (or result in the imposition of any
Encumbrance upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, or
failure to give notice would not have a Company Material Adverse Effect and
except as set forth on the Disclosure Schedule. Other than in connection with
the provisions of the Florida Business Corporation Act or as provided on the
Disclosure Schedule, no consent, approval, authorization, license, order or
permit of, or declaration, filing or registration with, any Governmental Entity,
or any other person or entity, is required to be made or obtained by the Company
or the Stockholders in connection with the execution, delivery and performance
of this Agreement or any of the related agreements and the consummation of the
transactions contemplated hereby and thereby.
Section 5.6 FINANCIAL STATEMENTS. The Company has heretofore delivered to
GeoWaste the Audited Financial Statements and the Unaudited Financial
Statements. The Audited Financial Statements have been audited by Coopers &
Lybrand, LLP. Except as set forth in the Disclosure Schedule, the Unaudited
Financial Statements have been prepared in accordance with GAAP and fairly
present the assets, liabilities and financial condition, results of operations
and cash flows of the Company indicated thereby as of each date and for the
periods covered thereby.
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
the Disclosure Schedule, since the date of the Unaudited Financial Statements
there has not been any:
(a) change in the Company's condition (financial or otherwise), assets,
liabilities, working capital, reserves, earnings, business or prospects, except
for changes in the ordinary course of business which changes have not,
individually or in the aggregate, been materially adverse;
(b) (i) increase in the compensation payable or to become payable by the
Company to any of its officers, employees, consultants or sales representatives
whose total compensation for services rendered to the Company is currently at an
annual rate of $25,000 or more (collectively, "Personnel"), (ii) bonus,
incentive compensation, service award or other like benefit granted, made or
accrued, contingently or otherwise, for or to the credit of any of the
Personnel, (iii) employee welfare, pension, retirement, profit-sharing or
similar payment or arrangement made or agreed to by the Company for any
Personnel except pursuant to the existing plans and arrangements described on
the Disclosure Schedule or (iv) new employment agreement to which the Company is
a party;
(c) addition to or modification of the employee benefit plans, arrangements
or practices described on the Disclosure Schedule affecting Personnel other than
(i) contributions made in accordance with the normal practices of the Company or
(ii) the extension of coverage to other Personnel who became eligible after the
date of the Unaudited Financial Statements;
(d) sale, assignment or transfer of any of the assets of the Company, which
is material singly or in the aggregate, other than in the ordinary course of
business, or discontinuance of any service provided by the Company;
(e) cancellation of any indebtedness or waiver of any rights of substantial
value to the Company, whether or not in the ordinary course of business;
(f) amendment, cancellation or termination of any Contract, license or
other instrument required to be set forth on the Disclosure Schedule;
(g) capital expenditure or the execution of any lease or any incurring of
liability therefor, involving payments, in the aggregate, or at an annualized
rate, of $25,000 or more;
(h) failure to pay any obligation of the Company, except where such failure
would not have a Company Material Adverse Effect;
(i) failure to operate the business of the Company in the ordinary course;
(j) change in accounting methods or practices by the Company affecting its
assets, liabilities or business (whether for accounting or tax purposes);
(k) revaluation by the Company of any of its assets, including without
limitation, writing off notes or accounts receivable, other than in the ordinary
course of business consistent with past practices;
(l) damage, destruction or loss (whether or not covered by insurance)
materially and adversely affecting the properties, assets, business or prospects
of the Company;
(m) mortgage, pledge, grant or creation of any Encumbrance on any assets or
properties of the Company which is material singly or in the aggregate;
(n) declaration, setting aside or payment of dividends or distributions in
respect of any capital stock of the Company or any redemption, purchase or other
acquisition of any of the Company's equity securities;
(o) issuance by the Company of, or commitment of the Company to issue, any
shares of stock or other equity securities or obligations or securities
convertible into or exchangeable for shares of stock or other equity securities;
(p) indebtedness incurred by the Company for borrowed money or any
commitment to borrow money entered into by the Company, or any loans made or
agreed to be made by the Company;
(q) liabilities incurred or assumed by the Company involving $5,000 or more
except in the ordinary course of business and consistent with past practice, or
any increase or change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves;
(r) payment, discharge or satisfaction of any liabilities in excess of
$5,000, other than the payment, discharge or satisfaction in the ordinary course
of business and consistent with past practice of liabilities that are reflected
or reserved against in the Unaudited Financial Statements or incurred in the
ordinary course of business and consistent with past practice since the date of
the Unaudited Financial Statements;
(s) incurrence by the Company of any liabilities to either Stockholder or
any Affiliate of either Stockholder;
(t) agreement or commitment by the Company to do any of the foregoing; or
(u) other event or condition of any character (other than acts of God or
general economic or political conditions) which in any one case or in the
aggregate has materially and adversely affected, or any event or condition
(other than acts of God or general economic or political conditions) which it is
reasonable to expect will, in any one case or in the aggregate, materially and
adversely affect in the future, the condition (financial or otherwise), assets,
liabilities, working capital, reserves, earnings, business or prospects of the
Company (including, without limitation, the Company's relationships with its
customers).
Section 5.8 UNDISCLOSED LIABILITIES. Except as set forth on the Disclosure
Schedule, the Company has no material liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any material liability for taxes, except for (i) liabilities set
forth in the Unaudited Financial Statements and (ii) liabilities which have
arisen in the ordinary course of business (none of which results from, arises
out of, relates to, is in the nature of, or was caused by breach of any material
contract, breach of warranty, tort, infringement, or material violation of law).
Section 5.9 TAXES. Except as set forth on the Disclosure Schedule, the
Company has filed, within the time and in the manner required by law, all
returns, declarations, information, returns and statements required to be filed
with any federal, state or local authority except for such state and local tax
returns, of which the failure to file would not have a Company Material Adverse
Effect ("Tax Returns"). Except as set forth on the Disclosure Schedule, all Tax
Returns were correct and complete in all material respects. Except as set forth
on the Disclosure Schedule, the Company has paid in full all Taxes (whether or
not shown on a Tax Return) required to be paid by the Company before such
payment became delinquent and no deficiency has been proposed, asserted or
assessed. All Taxes which the Company has been required to collect or withhold
have been duly collected or withheld and, to the extent required, have been duly
and timely paid to the proper taxing authority. Except as set forth on the
Disclosure Schedule, no examination or audit of any Tax Returns by any
Governmental Entity is currently in progress or contemplated. The Company is not
a party to any tax sharing or allocation agreement and, except as set forth on
the Disclosure Schedule, has no actual or potential liability for any Tax
obligation of any other taxpayer.
Section 5.10 BROKERS' FEES. Except as set forth on the Disclosure Schedule,
the Company has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement.
Section 5.11 NO COMPETING INTEREST. Except as set forth on the Disclosure
Schedule, neither Stockholder nor any of their Affiliates has any direct or
indirect interest (excluding the holding of not more than 1% of the securities
of any corporation listed on the New York or American Stock Exchanges or whose
securities are quoted on the Nasdaq National Market) in, or is a director,
officer or employee of, any creditor, competitor, agent, supplier, lessor,
lessee or customer of the Company.
Section 5.12 LITIGATION. Except as set forth on the Disclosure Schedule,
there are no actions, suits or proceedings involving material claims by or
against the Company, either pending or threatened, at law or in equity or before
any Governmental Entity (collectively, "Company Actions"). Neither the Company
nor any Stockholder is in default with respect to any judgment, order, writ,
injunction or decree of any court or Governmental Entity, and there are no
unsatisfied judgments against the Company or either Stockholder or the business,
activities, properties or assets of the Company or either Stockholder. There is
not a reasonable likelihood of an adverse determination of any pending Company
Actions which would, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 5.13 LICENSES. Except as set forth on the Disclosure Schedule,
since the date of the Unaudited Financial Statements, the Company has, and is
operating in compliance in all material respects with the terms, provisions and
conditions of, all of its Licenses, which Licenses constitute all necessary
Licenses from governmental authorities that are material to the conduct of its
business. There is no proceeding pending or threatened (or any basis therefor)
which may cause any such License that is material to the conduct of the business
of the Company as presently conducted or to be conducted to be revoked,
withdrawn, canceled, suspended or not renewed. The Company is conducting its
business in compliance with all laws, rules and regulations applicable thereto,
the violation of which would have a Company Material Adverse Effect.
Section 5.14 DISCLOSURE. None of the information that the Company has
supplied or will supply to GeoWaste in writing specifically for use in the
Registration Statement will contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they have been or will be
made, not misleading.
Section 5.15 TITLE TO ASSETS. The Company has good title to, valid
leasehold interests in, or possessory rights to, all assets and properties
purported to be owned, operated, leased or occupied by it, or used in the
operation of its business. Except as set forth on the Disclosure Schedule, all
assets and properties purported to be owned by the Company are owned free and
clear of all Encumbrances, except for minor Encumbrances which in the aggregate
are not substantial in amount, do not detract from the value of the property or
assets subject thereto or interfere with the present or anticipated use thereof
and have not arisen other than in the ordinary course of business. The Company
has performed all the obligations required to be performed by it with respect to
all assets leased by it through the date hereof, except where the failure to
perform would not have a Company Material Adverse Effect. The Company enjoys
peaceful and undisturbed possession of all of its facilities. None of such
improvements, equipment and other assets is subject to any commitment or other
arrangement for their sale or use by any Affiliate of any Stockholder or third
parties. The assets reflected on the Unaudited Financial Statements or acquired
after the date of the Unaudited Financial Statements are valued on the Company's
books at or below the Company actual cost less an adequate and proper
depreciation charge. The Company has not depreciated any of its assets in a
manner inconsistent with applicable IRS guidelines, if any. Except as set forth
on the Disclosure Schedule, the assets owned or leased by the Company include
all assets that are used in the conduct of its business.
Section 5.16 CONDITION OF TANGIBLE ASSETS. The facilities and the fixtures
and equipment of the Company are in good operating condition and repair (except
for normal wear and tear), are, except as set forth on the Disclosure Schedule,
in the reasonable opinion of the Stockholders, sufficient for the operation of
the business of the Company as presently conducted and are in conformity in all
respects with all applicable laws, ordinances, orders, regulations and other
requirements (including applicable zoning, environmental, motor vehicle safety
or standards, occupational safety and health laws and regulations) relating
thereto currently in effect.
Section 5.17 CONTRACTS AND COMMITMENTS. The Disclosure Schedule sets forth
all material Contracts presently in effect to which the Company is a party,
including, without limitation, any written or oral:
(a) commitment, contract, note, loan, evidence of indebtedness, purchase
order or letter of credit involving any obligation or liability on the part of
the Company of more than $10,000 (and not more than $50,000 in the aggregate)
and not cancelable (without liability) on not more than 30 days' notice;
(b) lease of real property (the Disclosure Schedule indicates with respect
to each lease listed thereon the term, annual rent, renewal options and number
of square feet leased);
(c) lease of personal property involving any annual expense in excess of
$5,000 and not cancelable without liability within 30 days (the Disclosure
Schedule indicates with respect to each such lease listed thereon a general
description of the leased items, term, annual rent and renewal options);
(d) material governmental or regulatory licenses or permits required to
conduct the business of the Company as presently conducted;
(e) contracts or agreements containing covenants limiting the freedom of
the Company to engage in any line of business or compete with any person;
(f) employment contracts, including without limitation, contracts to employ
executive officers and other contracts with officers or directors of the
Company;
(g) contracts with customers and suppliers of the Company with a gross
value to the Company in excess of $2,000 per year (the Disclosure Schedule sets
forth all such contracts with customers and suppliers currently in effect and
for each such contract includes a notation as to whether (i) such customer or
supplier has renewed such contract for the period following the period covered
thereby and (ii) such contract permits such customer or supplier to terminate
such contract on 60 days' notice or less); and
(h) contracts and commitments not otherwise described in this Section 5.17
or listed on the Disclosure Schedule (including purchase orders, franchise
agreements and undertakings or commitments to any Governmental Entity) relating
to the business of the Company or otherwise affecting the business of the
Company under contracts not in the ordinary course of business; it being
understood that with respect to each category listed above for which a dollar
amount threshold has been established, any item within such category with a
value less than the dollar amount specified shall be deemed immaterial.
The Company is not (and, to the best knowledge of each Stockholder, no
other party is) in breach or violation of, or default under, any of the
Contracts or other instruments, obligations, evidences of indebtedness or
commitments described in paragraphs (a)-(h) above, where such breach or
violation or default would have a Company Material Adverse Effect. Each Contract
or other instrument, obligation, evidence of indebtedness or commitment
described in paragraphs (a)-(h) above is a valid agreement, arrangement or
commitment of the Company, and is, to the best knowledge of the Company and each
Stockholder, a valid agreement, arrangement or commitment of each other party
thereto, except insofar as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally and except as to the availability of
equitable remedies.
Section 5.18 LABOR MATTERS. The Company is not a party to any collective
bargaining agreement with respect to its employees with any labor organization,
group or association. The Company has not experienced any attempt by organized
labor or its representatives to make it conform to demands of organized labor
relating to its employees or to enter into a binding agreement with organized
labor that would cover the employees. The Company is (x) in compliance with all
applicable laws, regulations and administrative orders, including, without
limitation, laws relating to employment of labor of any country, state, or
municipality, or any subdivision thereof, in which the Company conducts business
and (y) is not engaged in any unfair labor practice except where such failure of
compliance or practice would not have a Company Material Adverse Effect. There
is no unfair labor practice charge or complaint against the Company pending
before the National Labor Relations Board or any other Governmental Entity
arising out of such entity's activities, and the Company has no knowledge of any
facts or information which would give rise thereto; there is no labor strike or
labor disturbance pending against the Company nor is any grievance currently
being asserted; and the Company has not experienced a work stoppage or other
labor difficulty.
Section 5.19 PROPRIETARY RIGHTS. The term "Proprietary Rights" shall mean
(i) registrations of trademarks and other marks, service marks, trade names or
other trade rights, (ii) pending applications for any such registrations, (iii)
rights in or to patents and copyrights and pending applications therefor, and
(iv) rights to other trademarks, service marks and other marks, trade names and
other trade rights and all other trade secrets, designs, plans, specifications,
technology, know-how, methods, designs, concepts and other proprietary rights,
whether or not registered. The Company has no Proprietary Rights other than the
trade names listed on the Disclosure Schedule. Except as set forth on the
Disclosure Schedule (i) the Company has no licenses granted by or to it or any
other agreements to which it is a party relating, in whole or in part, to any
Proprietary Rights; (ii) the Company does not employ any Proprietary Rights
which infringe or otherwise violate the rights of any third party; (iii) there
are no proceedings instituted against or notices received by the Company that
are presently outstanding alleging that the Company's use of any Proprietary
Rights infringes or otherwise violates any rights of a third party; (iv) no
claim has been asserted or threatened by any person with respect to the
ownership, validity, license or use of, or any infringement resulting from, any
Proprietary Rights or the production, provision or sale of any services or
products by the Company and there is no basis for any such claim; (v) the
Company has the right to produce, provide and sell the services and products
produced, provided and sold by it and to conduct its business as heretofore
conducted, and the consummation of the transactions contemplated hereby will not
alter or impair any such rights; (vii) no trademark, service mark or trade name
used by the Company infringes any trademark, service mark or trade name of any
other person or entity in the United States of America; and (viii) no officer,
director or employee of the Company owns or has any interest in any Proprietary
Rights or any trade secret, invention or process, if any, used by the Company in
connection with its business.
Section 5.20 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this Section 5.20 shall
have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
(1) "Benefit Arrangement" shall mean any employment or consulting policy
practice or plan providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, severance, retirement benefits, life,
health, disability or accident benefits (including, without limitation, any
"voluntary employees' beneficiary association" as defined in Section 501(c)(9)
of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (A) is not an ERISA Welfare Plan,
ERISA Pension Plan or Multiemployer Plan, (B) is maintained, contributed to or
required to be contributed to, as the case may be, by the Company or an ERISA
Affiliate and (C) covers or covered any individual who is currently, or was
previously, retained or employed by the Company or any ERISA Affiliate.
(2) "Benefit Plans" shall mean all Benefit Arrangements, Multiemployer
Plans, ERISA Pension Plans and ERISA Welfare Plans.
(3) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(4) "ERISA Affiliate" shall mean any entity (whether or not incorporated)
which is (or at any relevant time was), together with the Company, treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.
(5) "ERISA Pension Plan" shall mean any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to (directly or indirectly), or maintained, administered,
contributed to or was required to contribute to (directly or indirectly), and
(B) which covers or covered any individual who is currently, or was previously,
retained or employed by the Company or any ERISA Affiliate.
(6) "ERISA Welfare Plan" shall mean any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, (A) which the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to (directly
or indirectly), or maintained, administered, contributed to or was required to
contribute to (directly or indirectly), and (B) which covers or covered any
individual who is currently, or was previously, retained or employed by the
Company or any ERISA Affiliate.
(7) "Multiemployer Plan" shall mean any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA, (A) which the Company or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to (directly
or indirectly), or after September 25, 1980, maintained, administered,
contributed to or was required to contribute to (directly or indirectly), and
(B) which covers or covered any individual who is currently, or was previously,
retained or employed by the Company or any ERISA Affiliate.
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. The Disclosure Schedule contains a complete list of Benefit Plans
and complete copies of each of the following documents have been delivered by
the Company to GeoWaste: (i) each Benefit Plan document (and, if applicable,
related trust agreements) and all amendments thereto, all written
interpretations thereof and written descriptions thereof which have been
distributed to employees of the Company or any ERISA Affiliate, a complete
description of any Benefit Plan which is not in writing, and all annuity
contracts or other funding instruments; (ii) the most recent determination
letter issued by the IRS, with respect to each ERISA Pension Plan; (iii) Annual
Reports on Form 5500 Series required to be filed with any governmental agency
for each Benefit Plan and tax returns for each trust related thereto for the
three most recent plan years; (iv) all actuarial reports prepared for the three
most recent plan years for each ERISA Pension Plan; and (v) any material
correspondence or notifications received from any governmental agency during the
three most recent plan years relating to Benefit Plans. The following
information has been supplied or made available by the Company to GeoWaste: the
age, compensation, service and related data as of the last day of the last plan
year for employees and former employees of the Company.
(c) COMPLIANCE. Except as set forth on the Disclosure Statement, each ERISA
Pension Plan, ERISA Welfare Plan, Benefit Arrangement, related trust agreement,
annuity contract and other funding instrument complies in all material respects,
and has been maintained in material compliance, with its terms and, both as to
form and operation, with all applicable requirements, including all reporting
and disclosure requirements, prescribed by any and all statutes, orders, rules
and regulations, including, but not limited to, ERISA and the Code.
(d) MULTIEMPLOYER PLANS. Neither the Company nor any ERISA Affiliate has,
at any time, directly or indirectly contributed to or had an obligation to
contribute to a Multiemployer Plan.
(e) ERISA WELFARE PLANS.
(i) No condition exists which would prevent the Company from
amending or terminating any ERISA Welfare Plan.
(ii) Neither the Company nor any ERISA Affiliate nor any
Welfare Plan has any present or future obligation to make any payment
to or under any ERISA Welfare Plan which provides benefits to retirees.
(iii) Each ERISA Welfare Plan which is a "group health plan,"
as defined in Section 607(1) of ERISA, has been operated in compliance
with provisions of Part 6 of Title I of ERISA and Sections 162(k) and
4980B of the Code at all times.
(iv) There are no contributions or benefit claims with respect
to any ERISA Welfare Plan which are or will be 30 days past due.
(f) ERISA PENSION PLANS.
(i) No ERISA Pension Plan is subject to the minimum funding
requirements of ERISA, Title IV of ERISA or Section 412 of the Code.
Neither the Company nor any ERISA Affiliate has any liability for
unpaid contributions with respect to any Pension Plan.
(ii) Each ERISA Pension Plan and each related trust agreement,
annuity contract or other funding instrument is qualified and
tax-exempt under the provisions of Sections 401(a) (or 403(a), as
appropriate) and 501(a) of the Code and has been so qualified during
the period from its adoption to the date hereof.
(g) UNRELATED BUSINESS TAXABLE INCOME. No Employee Plan (or trust or other
funding vehicle pursuant thereto) is subject to any Tax under Section 511 of the
Code.
(h) DEDUCTIBILITY OF PAYMENTS. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company that,
individually or collectively, provides for the payment by the Company of any
amount (i) that is not deductible under Section 162(a)(1) or 404 of the Code or
(ii) that is an "excess parachute payment" pursuant to Section 280G of the Code.
(i) FIDUCIARY DUTIES AND PROHIBITED TRANSACTIONS. Neither the Company nor
any plan fiduciary of any ERISA Welfare Plan or ERISA Pension Plan has engaged
in any transaction in violation of Sections 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code.
(j) LITIGATION. There are no pending or threatened claims, actions or
lawsuits (other than claims for benefits in the normal course), asserted or
instituted against (i) any ERISA Welfare Plan or its assets, (ii) any ERISA
Pension Plan or its assets, (iii) any fiduciary with respect to any ERISA
Pension Plan or ERISA Welfare Plan or (iv) the Company or any ERISA Affiliate
with respect to any Benefit Plan.
(k) NO AMENDMENTS. Neither the Company nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional Benefit
Plans or to amend or modify any existing Benefit Plan.
(l) NO OTHER LIABILITY. No event has occurred in connection with which the
Company or any ERISA Affiliate or any Benefit Plan, directly or indirectly,
could be subject to any material liability (i) under any statute, regulation or
governmental order relating to any Benefit Plans, or (ii) pursuant to any
obligation of the Company to indemnify any person against liability incurred
under any such statute, regulation or order as they relate to the Benefit Plans.
(m) Commencing on the Closing Date, GeoWaste shall be responsible for any
notices required to be given to employees and former employees of the Company
under Section 4980 of the Code ("COBRA") and shall be responsible for providing
COBRA Health Care Continuation Coverage to all employees and former employees of
the Company.
Section 5.21 TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed on the
Disclosure Schedule, the Company is not indebted for money borrowed, either
directly or indirectly, from any of its officers, directors or any Affiliate, in
any amount whatsoever; nor are any of its officers, directors, or Affiliates
indebted for money borrowed from the Company; nor are there any transactions of
a continuing nature between the Company and any of its officers, directors or
Affiliates (other than by or through the regular employment thereof by the
Company) not subject to cancellation which will continue beyond the Effective
Time, including, without limitation, use of the Company's assets for personal
benefit with or without adequate compensation.
Section 5.22 INSURANCE. The Disclosure Schedule contains a complete and
accurate list, and true and complete copies, of all policies or binders of fire,
liability, title, workers' compensation, life and other forms of insurance
(showing as to each policy or binder the carrier, policy number, coverage
limits, expiration dates, annual premiums and a general description of the type
of coverage provided) maintained by the Company on its business, property or
Personnel. All of such policies are sufficient for compliance in all material
respects with all requirements of law and of all Contracts to which the Company
is a party. The Company is not in default with respect to payment or any other
matter under any of such policies or binders; the Company has not has failed to
give any notice or to present any claim under any such policy or binder in a due
and timely fashion. There are no facts relating to the conduct of the business
of the Company upon which an insurer might be justified in reducing coverage or
increasing premiums on existing policies or binders. There are no outstanding
unpaid claims under any such policies or binders, except as set forth on the
Disclosure Schedule. In the reasonable opinion of the Stockholders, such
policies and binders provide sufficient coverage for the risks insured against.
All such policies and binders are in full force and effect on the date hereof,
and all such policies or binders (or comparable replacements thereof) shall be
kept in full force and effect by the Company through the Closing Date. All
claims, if any, relating to the business of the Company made against the Company
which are covered by insurance are being defended, settled or paid by the
insurers, subject, however, to the insurers' standard reservation of rights,
none of which has been affirmatively asserted.
Section 5.23 ENVIRONMENTAL MATTERS. (a) Except as set forth on the
Disclosure Schedule, the Company possesses and is in compliance in all material
respects, with all permits, licenses and governmental authorizations and has
filed all notices that are required for the conduct of its business as conducted
on the date hereof under all Environmental Laws, and Company is in compliance in
all material respects with all other applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables of all Environmental Laws which are contained in any code, plan,
order, decree, judgment, notice, permit or demand letter issued, entered,
promulgated or approved thereunder.
(b) Except as set forth on the Disclosure Schedule, to the knowledge of the
Stockholders, there are no facts or circumstances which could form the basis for
the assertion of any claim against the Company or Paglia & Associates under any
Environmental Law including, without limitation, CERCLA or any similar state or
local statute or ordinance with respect to any on-site or off-site location.
(c) Since August 25, 1978 or the date of the formation of Paglia &
Associates, whichever is earlier, neither the Company nor Paglia & Associates
has entered into or is currently bound by any consent decree or order under, or
is subject to any judgment, decree or judicial or administrative order relating
to compliance with, or the clean up of Hazardous Substances under, any
applicable Environment Laws. Except as set forth on the Disclosure Schedule, to
the knowledge of the Stockholders, neither the Company nor Paglia & Associates
has been alleged to be in violation of, or has been subject to any
administrative or judicial proceeding pursuant to, applicable Environmental
Laws, either now or at any time since the Company's incorporation or the
formation of Paglia & Associates, as the case may be.
(d) Neither the Company nor Paglia & Associates is subject to any material
claim, obligation, liability, loss, damage or expense of whatever kind or
nature, contingent or otherwise, incurred or imposed pursuant to or based upon
any provision of any Environmental Law and arising out of any act or omission of
the Company or its Representatives or Paglia & Associates or its Representatives
or arising out of the ownership, use, control or operation by Company or Paglia
& Associates of any plant, facility, site, area of property (including, without
limitation, any plant, facility, site, area or property currently or previously
owned or leased by Company including the premises at 5111 South Pine Avenue in
Ocala, Florida) at which a Release of a Hazardous Substance has occurred.
(e) Both the Company and Paglia & Associates have heretofore provided
GeoWaste with true, correct and complete copies of, or access to all files of
Company and, with respect to Paglia & Associates, all files pertaining to that
certain property at 5111 South Pine Street, Ocala Florida, in each case relating
to environmental matters.
Section 5.24 OSHA COMPLIANCE. The Company has made available to GeoWaste
all reports and filings made or filed by the Company pursuant to the
Occupational Safety and Health Act and related to the Company since August 25,
1978. Except as set forth on the Disclosure Schedule, since August 25, 1978, the
Company has not violated in any material respect or failed to comply in any
material respect with, or been subject of any written allegation by the
Occupational Safety and Health Administration or violated or failed to comply
with the Occupational Safety and Health Act or rules or regulations promulgated
pursuant thereto.
Section 5.25 ACCOUNTS RECEIVABLE. Except as set forth on the Disclosure
Schedule, the accounts receivable reflected in the Unaudited Financial
Statements, and all accounts receivable arising since the date of the Unaudited
Financial Statements, represent bona fide claims against debtors for sales,
services performed or other charges arising on or before the date thereof, and
all the services performed which gave rise to such accounts were delivered or
performed in accordance with the applicable orders, Contracts or customer
requirements. The accounts receivable reflected in the Unaudited Financial
Statements, and all accounts receivable arising since the date of the Unaudited
Financial Statements, are subject to no defenses, counterclaims or rights of
setoff.
Section 5.26 INVENTORIES. Except as set forth on the Disclosure Schedule,
the inventories of the Company's business at the date of the Unaudited Financial
Statements (and items of inventory acquired or manufactured subsequent to the
date of the Unaudited Financial Statements) consist only of items properly
treated as inventory in accordance with GAAP.
Section 5.27 CUSTOMERS AND SUPPLIERS. Except as set forth on the Disclosure
Schedule, since the date of the Unaudited Financial Statements, there has been
no material adverse change in the business relationship of the Company with any
customer or supplier named on the Disclosure Schedule. Except as set forth on
the Disclosure Schedule, the Company has not received any written or oral notice
from any existing customer that such customer (i) intends to file a petition for
relief under any provision of title 11 of the United States Code (the United
States Bankruptcy Code) or any similar federal or state law for the relief of
debtors or make an assignment for the benefit of its creditors, (ii) intends to
terminate its business relationship with the Company or (iii) requests that the
Company grant price concessions, rebates or reductions on products or services
provided by the Company.
Section 5.28 BOOKS AND RECORDS. Except as set forth on the Disclosure
Schedule, the Company's Books and Records have been fully, properly and
accurately maintained in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein, and
they accurately present the financial position of the Company in all respects.
None of the records, systems, controls, data or information of the Company are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of the Company or accountants retained by the Company. Except as set forth on
the Disclosure Schedule, the Company's Books and Records fairly and accurately
reflect the transactions and dispositions of assets of the Company, and the
Company's system of internal accounting controls is sufficient to assure that:
(i) transactions are executed in accordance with management's authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with the management's
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed on the Disclosure Schedule, the
Company is not obligated, whether by operation of law or pursuant to any
contract, to segregate any funds for security and similar deposits received from
its lessees and borrowers.
Section 5.29 BANK ACCOUNTS; POWERS OF ATTORNEY. Set forth on the Disclosure
Statement is a list of each bank in which the Company maintains an account or
safe deposit box, the corresponding number of each such account or safe deposit
box and the names of all persons holding check-signing or withdrawal powers or
other authority with respect thereto. Also set forth on the Disclosure Schedule
are the names of any persons holding powers of attorney from the Company and a
summary statement of the terms thereof.
Section 5.30 INVESTMENT REPRESENTATIONS. Each Stockholder is acquiring the
shares of GeoWaste Common Stock for its own account, for investment and not with
a view to the sale or distribution thereof or with any present intention of
selling or distributing any thereof, except in conformity with
the Securities Act. Each Stockholder understands and acknowledges that the
shares of GeoWaste Common Stock are not registered under the Securities Act and
will not be transferable except (i) pursuant to an effective registration
statement under the Securities Act, (ii) pursuant to Rule 144 or any successor
rule under the Securities Act, (iii) pursuant to a no-action letter issued by
the Commission to the effect that a proposed transfer of the Shares may be made
without registration under the Securities Act or (iv) upon GeoWaste's receipt of
an opinion of counsel knowledgeable in securities law matters and reasonably
acceptable to GeoWaste, to the effect that the proposed transfer is exempt from
registration or qualification under the Securities Act and relevant state
securities laws.
Section 5.31 ACCURACY OF DOCUMENTS AND INFORMATION. No representations or
warranties made by the Company or any Stockholder in this Agreement or the
Disclosure Schedule contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements or facts contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GEOWASTE AND GEOSUB
GeoWaste and GeoSub (jointly and not severally) represent and warrant to
the Company that the statements contained in this Article VI are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date. The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
VI.
Section 6.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Each of
GeoWaste and its subsidiaries, including GeoSub, is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of GeoWaste and its subsidiaries,
including GeoSub, is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the lack of such qualification would not have a GeoWaste Material Adverse
Effect. Each of GeoWaste and its subsidiaries, including GeoSub, has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
Section 6.2 CAPITALIZATION. The entire capitalization of GeoWaste consists
of (i) 50,000,000 shares of GeoWaste Common Stock, 18,896,551 of which are
issued and outstanding; none of which are held in treasury and (ii) 5,000,000
shares of preferred stock, $.01 par value per share, none of which are issued or
outstanding. The entire capitalization of GeoSub consists of 100 shares of
common stock, par value $0.01, all of which are issued and outstanding.
All of the issued and outstanding shares of capital stock of each of
GeoWaste and GeoSub have been duly authorized and validly issued and are fully
paid and nonassessable. All of the shares of GeoWaste Common Stock to be issued
in the Merger have been duly authorized and, upon consummation of the Merger,
will be validly issued, fully paid, and nonassessable. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that could
require GeoWaste to issue, sell, or otherwise cause to become outstanding any of
its capital stock except as set forth on the Disclosure Schedule. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to GeoWaste's capital stock.
Section 6.3 AUTHORIZATION OF TRANSACTION. Each of GeoWaste and GeoSub has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and the related agreements to which it is a
party and to perform its obligations hereunder and thereunder. This Agreement
constitutes the legal, valid and binding obligation of each of GeoWaste and
GeoSub, enforceable against each of them in accordance with its terms, except
insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and except as to the availability of equitable
remedies.
Section 6.4 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement or the related agreements, nor the consummation of the transactions
contemplated hereby and thereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Entity or court to which GeoWaste or any of its
Subsidiaries is subject or any provision of the Certificate of Incorporation or
By-laws of GeoWaste or any of its Subsidiaries, or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any Person the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument or other
arrangement to which GeoWaste or any of its Subsidiaries is a party or by which
it is bound to which any of its assets is subject (or result in the imposition
of any Encumbrance upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a GeoWaste Material
Adverse Effect and except as disclosed on the Disclosure Schedule. Other than in
connection with the provisions of the Delaware General Corporation Law or as
provided on the Disclosure Schedule, GeoWaste does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any Governmental Entity in order for the Parties to consummate the transactions
contemplated by this Agreement and the related agreements.
Section 6.5 FILINGS WITH THE COMMISSION. Except as disclosed on the
Disclosure Schedule, GeoWaste has timely made all filings with the Commission
that it has been required to file under the Exchange Act (collectively, the
"Public Reports"). Except as set forth on the Disclosure Schedule, as of the
respective dates they were filed with the Commission, each of the Public Reports
complied in all material respects with the rules and regulations of the
Commission under the Exchange Act. Except as set forth on the Disclosure
Schedule, none of the Public Reports, as of the respective dates they were
filed, contained any untrue statement of a material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. A list of the Public Reports is attached hereto
as Exhibit D. GeoWaste has delivered or made available to the Company a correct
and complete copy of each Report on Form 10-K and Report on Form 10-Q filed with
the Commission since June 30, 1993 (together with all exhibits and schedules
thereto and as amended through the date hereof).
Section 6.6 FINANCIAL STATEMENTS. The financial statements included in or
incorporated by reference into the Public Reports (including the related notes
and schedules), have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and fairly present the
financial condition of GeoWaste and its Subsidiaries as of the indicated dates
and the results of operations of GeoWaste and its Subsidiaries for the indicated
period, are correct and complete in all material respects, and are consistent
with the books and records of GeoWaste and its Subsidiaries; PROVIDED, HOWEVER,
that the unaudited interim statements are subject to normal year-end
adjustments.
Section 6.7 BROKERS' FEES. Except as set forth on the Disclosure Schedule,
GeoWaste does not have any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
Section 6.8 LITIGATION. Except as set forth on the Disclosure Schedule,
there are no actions, suits or proceedings involving claims by or against
GeoWaste, either pending or threatened, at law or in equity or before any
Governmental Entity (collectively, "GeoWaste Actions"). Neither GeoWaste nor any
of its subsidiaries, including GeoSub, is in default with respect to any
judgment, order, writ, injunction or decree of any court or Governmental Entity,
and there are no unsatisfied judgments against GeoWaste or any of its
subsidiaries, including GeoSub, or the business, activities, properties or
assets of GeoWaste or any of its subsidiaries, including GeoSub. There is not a
reasonable likelihood of an adverse determination of any pending GeoWaste
Actions which would, individually or in the aggregate, have a GeoWaste Material
Adverse Effect.
Section 6.9 DISCLOSURE. The Registration Statement will comply in all
material respects with the Securities Act. The Registration Statement will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading; PROVIDED, HOWEVER,
that GeoWaste makes no representation or warranty with respect to any
information that the Company or the Stockholders have supplied or will supply in
writing specifically for use in the Registration Statement.
Section 6.10 NASDAQ LISTING. The GeoWaste Common Stock is, and as of the
Effective Time will be, listed on the Nasdaq Small-Cap Market.
Section 6.11 ENVIRONMENTAL MATTERS. (a) Except as set forth on the
Disclosure Schedule, GeoWaste and its subsidiaries possess and are in compliance
in all material respects with all permits, licenses and governmental
authorizations and have filed all notices that are required for the conduct of
its business under all Environmental Laws, and GeoWaste and its subsidiaries are
in compliance in all material respects with all other applicable limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables of all Environmental Laws which are contained in any
code, plan, order, decree, judgment, notice, permit or demand letter issued,
entered, promulgated or approved thereunder.
(b) To the knowledge of GeoWaste, there are no facts or circumstances which
could form the basis for the assertion of any claim against GeoWaste or its
subsidiaries under any Environmental Law including, without limitation, CERCLA
or any similar state or local statute or ordinance with respect to any on-site
or off-site location.
(c) Since the date of incorporation of GeoWaste, neither GeoWaste nor any
of its subsidiaries has entered into, and none are currently bound by, any
consent decree or order under, and none are subject to any judgment, decree or
judicial or administrative order relating to compliance with, or the clean up of
Hazardous Substances under, any applicable Environment Laws. Neither GeoWaste
nor any of its subsidiaries has been alleged to be in violation of, nor has
GeoWaste or any of its subsidiaries been subject to any administrative or
judicial proceeding pursuant to, applicable Environmental Laws, either now or at
any time since GeoWaste's or its subsidiaries' incorporation.
(d) To the knowledge of GeoWaste, neither GeoWaste nor any of its
subsidiaries is subject to any material claim, obligation, liability, loss,
damage or expense of whatever kind or nature, contingent or otherwise, incurred
or imposed pursuant to or based upon any provision of any Environmental Law and
arising out of any act or omission of GeoWaste or its subsidiaries or their
respective Representatives or arising out of the ownership, use, control or
operation by GeoWaste or any of its subsidiaries of any plant, facility, site,
area of property at which a Release of a Hazardous Substance has occurred.
Section 6.12 CUSTOMERS AND SUPPLIERS. Since June 30, 1996, there has been
no material adverse change in the business relationship of GeoWaste or any of
its subsidiaries with any material customer or supplier. Neither GeoWaste nor
any of its subsidiaries has received any written or oral notice from any
existing customer that such customer (i) intends to file a petition for relief
under any provision of title 11 of the United States Code (the United States
Bankruptcy Code) or any similar federal or state law for the relief of debtors
or make an assignment for the benefit of its creditors, (ii) intends to
terminate its business relationship with GeoWaste or one of its subsidiaries or
(iii) requests that GeoWaste or one of its subsidiaries grant price concessions,
rebates or reductions on products or services provided by GeoWaste or any of its
subsidiaries.
Section 6.13 INVESTMENT REPRESENTATIONS. GeoWaste is acquiring the shares
of Company Common Stock for its own account, for investment and not with a view
to the sale or distribution thereof or with any present intention of selling or
distributing any thereof, except in conformity with the Securities Act. GeoWaste
understands and acknowledges that the shares of Company Common Stock are not
registered under the Securities Act and will not be transferable except (i)
pursuant to an effective registration statement under the Securities Act, (ii)
pursuant to Rule 144 or any successor rule under the Securities Act, (iii)
pursuant to a no-action letter issued by the Commission to the effect that a
proposed transfer of the Shares may be made without registration under the
Securities Act or (iv) upon the Stockholders' receipt of an opinion of counsel
knowledgeable in securities law matters and reasonably acceptable to the
Stockholders to the effect that the proposed transfer is exempt from
registration or qualification under the Securities Act and relevant state
securities laws.
Section 6.14 ACCURACY OF DOCUMENTS AND INFORMATION. No representations or
warranties made by GeoWaste in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
or facts contained herein or therein not misleading.
ARTICLE VII
COVENANTS
The Company and the Stockholders (jointly and severally), on the one hand,
and GeoWaste, on the other hand, covenant with each other as follows:
Section 7.1 NOTICES AND CONSENTS. As soon as practicable, the Company and
GeoWaste will commence all reasonable action required hereunder to obtain all
applicable Licenses, permits, other governmental authorizations, consents,
approvals and agreements of, and to give all notices and make all filings with,
any third parties as may be necessary in connection with this Agreement and to
consummate the transactions contemplated hereby. In addition, subject to the
terms and conditions herein provided, each of the parties hereto covenants and
agrees to use its commercially reasonable efforts to take or cause to be taken
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated hereby.
Section 7.2 REGISTRATION STATEMENT. (a) GeoWaste shall prepare and file
with the Commission, as soon as reasonably practicable but in no event more than
60 days after the Closing Date, a Registration Statement of GeoWaste on Form S-3
(or such other form as may be appropriate) under the Securities Act with respect
to the GeoWaste Common Stock to be issued in connection with the Merger (the
"Registration Statement"), and GeoWaste shall use all reasonable efforts to have
such Registration Statement declared effective by the Commission. In addition to
the registration of the GeoWaste Common Stock under the Securities Act, GeoWaste
shall use its reasonable best efforts to cause the GeoWaste Common Stock so
registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Stockholders may reasonably request;
provided, however, that GeoWaste shall not by reason of this Section 7.2 be
required to qualify to do business in any state in which it is not otherwise
required to qualify to do business or to file a general consent to service of
process.
(b) The parties hereto shall cooperate in preparing the Registration
Statement and making any filings required to be made pursuant to this Section
7.2.
(c) The parties hereto shall furnish to each other, and each other's
counsel, all such information as may be reasonably required and requested in
connection with the preparation of the Registration Statement and the filing of
the Registration Statement with the Commission.
(d) Each party hereto shall promptly notify the other parties if at any
time it becomes aware that (i) the Registration Statement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading or (ii)
any event has occurred which requires an amendment to the Registration
Statement, in which case such amendment shall be promptly prepared and filed
with the Commission.
(e) GeoWaste shall use its commercially reasonable efforts to ensure that
the Registration Statement remains effective throughout the period commencing on
the date it is declared effective by the Commission and ending on the earlier of
(i) two years from the Closing Date or (ii) the date on which the last security
registered thereunder is sold.
Section 7.3 COMPLIANCE WITH THE SECURITIES ACT. Each Stockholder shall
deliver to GeoWaste on or prior to the Effective Time a written agreement (an
"Affiliate Agreement") to the effect that such person will not offer to sell,
sell or otherwise dispose of any shares of Common Stock issued in the Merger,
except, in each case, pursuant to an effective registration statement or in
compliance with Rule 144, as amended from time to time, or in a transaction
which, in the opinion of legal counsel satisfactory to GeoWaste, is exempt from
the registration requirements of the Securities Act.
Section 7.4 SHARE LEGEND. All shares of GeoWaste Common Stock to be issued
to the Stockholders pursuant to this Agreement shall be subject to the
provisions of this Agreement and the certificates representing such shares shall
bear the following legend:
"The shares of the Corporation represented by this certificate
have not been registered under the Securities Act of 1933, as
amended (the 'Act'), and may not be distributed or transferred
except (A) pursuant to an effective registration statement
under the Act with respect to the shares offered thereby,
which registration statement is current, or (B) pursuant to an
opinion of counsel for or reasonably acceptable to the
Corporation, or other evidence satisfactory to the
Corporation, to the effect that such registration is not
required with respect to the proposed distribution or
transfer."
Section 7.5 NON-COMPETITION AGREEMENT. Prior to the Effective Time,
GeoWaste shall enter into a Non-Competition Agreement substantially in the form
of Exhibit E hereto with Christopher Carrizzo, pursuant to which he shall agree,
for a period of five years, to, directly or indirectly, refrain from engaging in
activities that compete with the business of GeoWaste in the Territory (as
defined therein).
Section 7.6 NEW LEASE. At or prior to the Closing, the Company shall,
without any cost to GeoWaste, enter into a lease dated as of August 12, 1996,
between the Company and Paglia & Associates for a 40 acre parcel located on Pine
Street in Ocala, Marion County, Florida (the "Premises"), which New Lease shall
be in substantially the form of Exhibit F attached hereto (the "New Lease"). The
New Lease shall provide for, without limitations, the following provisions and
representations: (i) an initial term of twenty years, with an option to extend
for an additional term of ten years; (ii) an option to purchase the Premises at
any time after the second anniversary of the lease for fair market value as
established by MAI appraisals; (iii) an initial annual rent of $204,000 per year
and increasing on each anniversary by 100% of the increase of the CPI-W for
Florida; (iv) representations by the lessor as to the existence of all necessary
zoning approvals for use of the Premises for solid waste transfer, recycling,
storage and maintenance of solid waste collection vehicles and equipment and
rail transport; and (v) representations by the lessor that all permits and
approvals necessary for the uses in (iv) above have been obtained.
Section 7.7 APPOINTMENT TO BOARD OF DIRECTORS. GeoWaste shall use its best
efforts to cause the appointment and/or election of Michael Paglia to the Board
of Directors of GeoWaste as soon as practicable, but in no event later than
September 30, 1996.
Section 7.8 REORGANIZATION TREATMENT. The parties hereto will take no
action after the Effective Time which would cause the Merger to fail to be
characterized as a tax-free reorganization under Section 368 of the Code.
Section 7.9 RELEASE OF GUARANTEES. GeoWaste shall use its best efforts to
cause each of the Stockholders to be released from any personal guaranty of the
liabilities or obligations of the Company within 120 days (or, with respect to
the guaranty of the Company's note to Mr. Tony Carrione, 180 days) of the
Closing Date, which best efforts shall include satisfying any obligation or
liability in full so long as no payment of a premium or penalty is necessary.
GeoWaste will indemnify the Stockholders from any and all liabilities or
obligations so guaranteed during and after such 120 day and 180 day periods.
Section 7.10 PAYMENT OF COMPANY DEBT. Upon consummation of the Merger,
GeoWaste shall cause the Company to pay $94,085 to the Stockholders as full and
complete satisfaction of the Company's outstanding debt to the Stockholders.
ARTICLE VIII
CONDITIONS TO COMPANY'S AND STOCKHOLDERS' OBLIGATIONS
The obligations of the Company and the Stockholders to consummate the
transactions provided for hereby are subject, in the discretion of the Company
and the Stockholders, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions:
Section 8.1 REPRESENTATIONS, WARRANTIES AND Covenants. All representations
and warranties of GeoWaste contained in this Agreement shall be true and correct
in all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) at and as of
the Closing Date (and such representations and warranties shall be deemed to be
repeated by GeoWaste at and as of the Closing Date), except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof,
GeoWaste shall have performed and complied with in all material respects all
agreements and covenants required hereby to be performed or complied with by it
prior to or at the Closing and the Company shall have received a certificate of
an officer of GeoWaste to that effect.
Section 8.2 NO GOVERNMENTAL PROCEEDINGS OR Litigation. No Action by any
Governmental Entity shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected materially to damage GeoWaste or the Company if the
transactions contemplated hereunder are consummated.
Section 8.3 CORPORATE DOCUMENTS. The Company shall have received from
GeoWaste resolutions adopted by the board of directors of GeoWaste approving
this Agreement and GeoWaste's obligations hereunder, certified by GeoWaste's
corporate secretary or assistant secretary.
Section 8.4 CERTIFICATES. GeoWaste shall have furnished the Company with
such certificates of GeoWaste's officers and others to evidence compliance with
the conditions set forth in this Article VIII as may be reasonably requested by
the Company.
Section 8.5 OPINION OF COUNSEL. GeoWaste shall have delivered to the
Stockholders an opinion of Stroock & Stroock & Lavan, dated as of the Closing
Date, to the effect and substantially in the form of Exhibit G hereto. The
Stockholders shall have received an opinion from Stroock & Stroock & Lavan to
the effect that the Merger will qualify as a reorganization under Section 368 of
the Code and that no income or gain will be recognized by the Company, the
Stockholders or GeoWaste as a result of the Merger except to the extent of
non-stock consideration received.
Section 8.6 EMPLOYMENT AGREEMENTS. Each of the Stockholders shall have
entered into an employment agreement with GeoWaste in the form of the agreements
annexed hereto as Exhibit H.
Section 8.7 DELIVERY OF CONSENTS. Each of the Company and the Stockholders
shall have received all consents required to be delivered hereby to it or them
at the Closing.
Section 8.8 NO MATERIAL ADVERSE CHANGE. Since the date of the most recent
Public Report of GeoWaste filed with the Commission, there shall not have
occurred any event which has had or with the passage of time will have a
GeoWaste Material Adverse Effect.
Section 8.9 GUARANTY OF LEASE. At the Closing, GeoWaste shall have
delivered to Paglia & Associates a guaranty of the Company's obligations under
the New Lease, such guaranty to be substantially in the form as included in the
New Lease attached hereto as Exhibit F.
Section 8.10 VOTING AGREEMENT. Each of John Paglia, Michael Paglia, Advance
Ross Corporation and Allen & Company shall have entered into a voting agreement,
substantially in the form of Exhibit I hereto, which shall provide, among other
things, that for as long as any of the parties thereto beneficially owns or is
entitled to vote ten percent or more of the issued and outstanding shares of
GeoWaste, each shall agree to vote for the election to the Board of Directors of
GeoWaste of the designee of the other parties to the agreement.
Section 8.11 GOOD STANDING CERTIFICATES. The Stockholders shall have
received from each state authority in which GeoWaste is incorporated or doing
business good standing certificates dated not more than ten days prior to the
Effective Date as to the due incorporation, legal existence and/or qualification
as a foreign corporation of GeoWaste in such state.
ARTICLE IX
CONDITIONS TO GEOWASTE'S OBLIGATIONS
The obligations of GeoWaste to consummate the transactions provided for
hereby are subject, in the discretion of GeoWaste, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
Section 9.1 REPRESENTATIONS, WARRANTIES AND Covenants. All representations
and warranties of the Company and the Stockholders contained in or made pursuant
to this Agreement shall be true and correct in all material respects (except
that where any statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be true and correct in all
respects giving effect to such standard) at and as of the Closing Date (and such
representations and warranties shall be deemed to be repeated by the Company and
the Stockholders at and as of the Closing Date), except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof, the
Company and the Stockholders shall have performed and complied with in all
material respects all agreements and covenants required hereby to be performed
or complied with by them prior to or at the Closing and GeoWaste shall have
received a certificate of the President and Chief Executive Officer of the
Company to that effect.
Section 9.2 CONSENTS. All consents, approvals and waivers from Governmental
Entities and other parties necessary to consummate the Merger as contemplated
hereby or to permit GeoWaste to own and operate the Company after the Closing
Date shall have been obtained. Notwithstanding the foregoing, receipt of the
consent of any third party shall not be a condition to GeoWaste's obligation to
close if the lack of such consent or consents shall not have a Company Material
Adverse Effect. After the Closing, the Company and the Stockholders will
continue to use their best efforts to obtain any such consents or approvals.
Section 9.3 NO GOVERNMENTAL PROCEEDINGS OR Litigation. No Action by any
Governmental Entity shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected materially to affect the right or ability of GeoWaste to
own the Company Common Stock after the Closing or materially to damage GeoWaste
or the Company if the transactions contemplated hereunder are consummated.
Section 9.4 OPINIONS OF COUNSEL. Stroock & Stroock & Lavan shall have
delivered to GeoWaste an opinion, dated as of the Closing Date, to the effect
and substantially in the form of Exhibit G hereto. GeoWaste shall have received
an opinion from its counsel to the effect that the Merger will qualify as a
reorganization under Section 368 of the Code and that no income or gain will be
recognized by the Company, the Stockholders or GeoWaste as a result of the
Merger except to the extent of non-stock consideration received.
Section 9.5 MATERIAL ADVERSE CHANGES. Except as set forth on the Disclosure
Schedule or as expressly permitted in this Agreement, since the date of the
Unaudited Financial Statements, there shall not have been any material adverse
change in the condition (financial or otherwise), assets, liabilities, business
or prospects of the Company. For the purposes of this Section 9.5, a "material
adverse change" shall include, without limitation, any development or discovery
of any contingent or other liability not on the Disclosure Schedule, which might
materially adversely affect the business, assets, liabilities or operations of
the Company.
Section 9.6 CORPORATE DOCUMENTS. GeoWaste shall have received from the
Company resolutions adopted by the board of directors of the Company approving
this Agreement, the transactions contemplated hereby and the Company's
obligations hereunder, certified by the corporate secretary or assistant
secretary of the Company.
Section 9.7 CERTIFICATES. The Company shall have furnished GeoWaste with
such certificates of the Company's officers and others to evidence compliance
with the conditions set forth in this Article IX as may be reasonably requested
by GeoWaste.
Section 9.8 NON-COMPETITION AGREEMENT. Christopher Carrizzo shall have
executed and delivered a Non-Competition Agreement to GeoWaste.
Section 9.9 VOTING AGREEMENT. Each of John Paglia, Michael Paglia, Advance
Ross Corporation and Allen & Company shall have entered into a voting agreement,
substantially in the form of Exhibit H hereto, which shall provide, among other
things, that for as long as any of the parties thereto beneficially owns or is
entitled to vote ten percent or more of the issued and outstanding shares of
GeoWaste, each shall agree to vote for the election to the Board of Directors of
GeoWaste of the designee of the other parties to the agreement.
Section 9.10 NEW LEASE. Each of the Company and Paglia & Associates shall
have entered into the New Lease.
Section 9.11 AFFILIATE AGREEMENTS. The Affiliate Agreements required to be
delivered to GeoWaste pursuant to Section 7.3 hereof shall have been furnished
as required by such section.
Section 9.12 RESIGNATIONS. If so requested, GeoWaste shall have received
written resignations of all of the officers and directors of the Company,
effective as of the Effective Date, with respect to all offices and
directorships in the Company held by such individuals.
Section 9.13 GOOD STANDING CERTIFICATES. GeoWaste shall have received from
each state authority in which the Company is incorporated or doing business,
good standing certificates dated not more than ten days prior to the Effective
Date as to the due incorporation, legal existence and/or qualification as a
foreign corporation of the Company in such state.
Section 9.14 ANNUALIZED GROSS REVENUE. Annualized gross revenue of the
Company at Closing shall be not less than $5,000,000 as determined by GeoWaste
in its reasonable judgment.
ARTICLE X
ACTIONS BY COMPANY AND GEOWASTE
AFTER THE CLOSING
Section 10.1 BOOKS AND RECORDS. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date which are
necessary or useful in connection with any Tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
The party requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and Records,
information or employees. The Company may require certain financial information
relating to GeoWaste for periods prior to the Closing Date for the purpose of
filing federal, state, local and foreign Tax Returns and other governmental
reports, and GeoWaste agrees to furnish such information to the Company at the
Company's written request and at the Company's expense.
Section 10.2 SURVIVAL OF REPRESENTATIONS, ETC. All representations and
warranties contained herein or in any certification or instrument delivered
pursuant to this Agreement or pursuant to any agreement or transaction
contemplated hereby shall survive the execution and delivery hereof and thereof,
the consummation of the transactions contemplated hereby and any investigation
or audit made by any party hereto until two years after the Closing Date, except
with respect to representations and warranties relating to Environmental Laws,
which shall survive for a period of five years after the Closing Date. All
statements contained on the Disclosure Schedule or in any certificate delivered
at the Closing pursuant to the transactions contemplated hereby shall be deemed
to be representations and warranties of the applicable party hereto contained
herein. Indemnification pursuant to Section 10.3 for breach or violation of
representations and warranties shall be limited to claims made by GeoWaste
against the Stockholders or by the Stockholders against GeoWaste, as the case
may be, within the applicable period of survival referred to in this Section
10.2.
Section 10.3 INDEMNIFICATION.
(a) The Stockholders, jointly and severally, agree to indemnify, save and
hold harmless GeoWaste, its stockholders, its Representatives and its Affiliates
from and against any and all Damages incurred in connection with or arising out
of or resulting from (i) any breach of any covenant or warranty, or the
inaccuracy of any representation, made by the Company or either Stockholder in
or pursuant to this Agreement; (ii) any failure by the Company or either
Stockholder to perform any of its respective agreements or covenants under this
Agreement or under any of the documents or instruments delivered by the Company
or either Stockholder pursuant to this Agreement; or (iii) any suit, action or
other proceeding brought by any Governmental Entity or other person arising out
of, or in any way related to, any of the matters referred to this sentence. The
Company and each Stockholder acknowledge that GeoWaste has entered into this
Agreement in reliance upon, among other things, the indemnification provisions
contained in this Section 10.3(a), and the Company and each Stockholder agree
that such provisions constitute reasonable and necessary protection for GeoWaste
in the context of the transactions provided for herein. The term "Damages" as
used in this Section 10.3(a) is not limited to matters asserted by third parties
but includes Damages incurred or sustained by GeoWaste, its stockholders, its
Representatives or its Affiliates in the absence of third party claims;
provided, however, that in no event shall the Stockholders be liable for
aggregate Damages in excess of $6,000,000. No indemnification shall be payable
by the Stockholders unless and until the total of all claims for indemnification
shall exceed $75,000 in the aggregate, at which time the Stockholders shall
indemnify the indemnified parties for all Damages suffered as provided herein.
(b) In addition to the indemnifications provided for in Section 10.3(a)
above for any breach of the covenants or warranties, or the inaccuracy of any
representation, made by the Company in Section 5.9 hereof, the Stockholders
shall be jointly and severally responsible for, and shall indemnify GeoWaste
against, all Taxes imposed on the Company relating to taxable periods ending on
or prior to the Closing Date or periods prior to and including the Closing Date
to the extent attributable to the income, assets or operations of the Company
prior to the Closing Date, to the extent such Taxes were not reserved for on the
Unaudited Financial Statements; PROVIDED, HOWEVER, the Stockholders shall be
jointly and severally responsible for, and shall indemnify GeoWaste against, any
Damages GeoWaste or the Company may suffer or incur in connection with or
arising out of or resulting from any liability of GeoWaste or the Company for
any Taxes imposed on or payable by the Stockholders.
(c) GeoWaste shall indemnify and save and hold harmless the Stockholders,
their Affiliates and their respective Representatives from and against any and
all Damages incurred in connection with or arising out of or resulting from (i)
any breach of any covenant or warranty, or the inaccuracy of any representation,
made by GeoWaste in or pursuant to this Agreement; (ii) any failure by GeoWaste
to perform any of its agreements and covenants under this Agreement or under any
of the documents or instruments delivered by GeoWaste pursuant to this
Agreement; (iii) any suit, action or other proceeding brought by any
Governmental Entity or other person arising out of, or in any way related to,
any of the matters referred to in this Section 10.3(c); and (iv) all Taxes
imposed on the Company relating to taxable periods ending after the Closing
Date.
(d) If a claim for Damages is to be made by a party entitled to
indemnification hereunder against the indemnifying party, the party entitled to
such indemnification shall give written notice to the indemnifying party as soon
as practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.3. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within 15 days after the
service of the citation or summons); PROVIDED, that the failure of any
indemnified party to give timely notice shall not affect rights to
indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then, subject to Section
10.3(e) and 10.3(f), the indemnifying party shall be entitled, if it so elects,
to take control of the defense and investigation of such lawsuit or action and
to employ and engage attorneys of its own choice to handle and defend the same,
at the indemnifying party's cost, risk and expense provided that the
indemnifying party and its counsel shall proceed with diligence and in good
faith with respect thereto. Subject to Section 10.3(e) and 10.3(f), the
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; PROVIDED, HOWEVER, that
the indemnified party may, at its own cost, participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom. No
indemnifying party shall be permitted to settle any such lawsuit or action
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld.
(e) In the event that any lawsuit, action or other proceeding, is filed
against the Company or GeoWaste with respect to which such party is entitled to
indemnification under this Section 10.3, if the indemnified party, based upon
the written opinion of counsel, determines that a conflict of interest exists
between the indemnified party, on the one hand, and the Stockholders, on the
other hand, then notwithstanding the provisions of Section 10.3(d), (i) the
Stockholders shall not be entitled to elect to take control of the defense and
investigation of such lawsuit, action or proceeding unless the indemnified party
so requests, and (ii) the Stockholders shall remain obligated to indemnify the
indemnified party in respect of such lawsuit, action or proceeding as provided
in Section 10.3(a); PROVIDED, HOWEVER, that the indemnifying party may, at its
own cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. No indemnified party shall be permitted
to settle any such lawsuit or action without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
(f) In the event that any lawsuit, action or other proceeding, is filed
against either Shareholder with respect to which such party is entitled to
indemnification under this Section 10.3, if the indemnified party, based upon
the written opinion of counsel, determines that a conflict of interest exists
between the indemnified party, on the one hand, and GeoWaste, on the other hand,
then notwithstanding the provisions of Section 10.3(d), (i) GeoWaste shall not
be entitled to elect to take control of the defense and investigation of such
lawsuit, action or proceeding unless the indemnified party so requests, and (ii)
GeoWaste shall remain obligated to indemnify the indemnified party in respect of
such lawsuit, action or proceeding as provided in Section 10.3(c); PROVIDED,
HOWEVER, that the indemnifying party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. No indemnified party shall be permitted to settle any such
lawsuit or action without the prior written consent of the indemnifying party,
which consent shall not be unreasonably withheld.
(g) Pursuant to the provisions of this Section 10.3, each of GeoWaste, on
the one hand, and the Stockholders, on the other hand, shall indemnify, hold
harmless and defend the other party from the payment of any and all broker's and
finder's expenses, commissions, fees or other forms of compensation which may be
due or payable from or by the indemnifying party, or may have been earned by any
third party acting on behalf of the indemnifying party in connection with the
negotiation and execution hereof and the consummation of the transactions
contemplated hereby.
(h) No Representative of GeoWaste shall be personally liable for any
Damages under the provisions contained in this Section 10.3.
Section 10.4 FURTHER ASSURANCES. Both before and after the Closing Date,
the Company and GeoWaste will cooperate in good faith with each other and will
take all appropriate action and execute any documents, instruments or
conveyances of any kind which may be reasonably necessary or advisable to carry
out any of the transactions contemplated hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.1 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. No other person shall have
any right, benefit or obligation hereunder.
Section 11.2 NOTICES; TRANSFER OF FUNDS. Unless otherwise provided herein,
any notice, request, instruction or other document or communication to be given
hereunder by any party to any other party shall be in writing and shall be
deemed to have been given (a) if mailed, at the time when mailed in any general
or branch office of the United States Postal Service, enclosed in a registered
or certified postage-paid envelope, (b) if sent by facsimile transmission, when
so sent and receipt acknowledged by an appropriate telephone or facsimile
receipt or (c) if sent by other means, when actually received by the party to
which such notice has been directed, in each case at the respective addresses or
numbers set forth below or such other address or number as such party may have
fixed by notice:
If to either Stockholder, addressed to:
John Paglia
Michael Paglia
5111 South Pine Avenue
Ocala, Florida 34480
Facsimile: (352) 351-8812
With a copy to:
Hicks & MacQuarrie
Suite 201
2303 SE 17th Street
Ocala, Florida 34471
Attention: Daniel Hicks, Esq.
Facsimile: (352) 351-2284
and
Fowler, White, Gillen, Boggs, Villareal and
Banker P.A.
501 East Kennedy Boulevard
Suite 1700
Tampa, Florida 33601
Attention: R. Alan Higbee, Esq.
Facsimile: (813) 229-8313
If to GeoWaste, addressed to:
GeoWaste Incorporated
24 Cathedral Place
Suite 208
St. Augustine, Florida 32084
Attention: Amy C. MacF. Burbott
Facsimile: (904) 825-0013
With a copy to:
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2696
Attention: Mark A. Rosenbaum, Esq.
Facsimile: (212) 806-6006
Section 11.3 GOVERNING LAW. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Florida (without reference to the choice of law provisions of Florida
law) except with respect to matters of law concerning the internal corporate or
partnership affairs of GeoWaste and as to those matters the law of the
jurisdiction under which GeoWaste derives its powers shall govern.
Section 11.4 ENTIRE AGREEMENT; MODIFICATIONS AND WAIVERS. This Agreement,
together with all exhibits and schedules hereto, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided. No delay by any party hereto in exercising its
rights hereunder shall constitute a waiver thereof. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
Section 11.5 COUNTERPARTS/TELECOPIES. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile and
telecopy versions of signed documents shall be deemed to be original documents
for purpose of the Closing.
Section 11.6 EXPENSES. Except as otherwise specified herein, each party
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect. Notwithstanding the foregoing, GeoWaste
shall pay the reasonable legal fees and expenses of counsel to the Stockholders
and the Company up to an aggregate of $67,000.
Section 11.7 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement, or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
Section 11.8 TITLES. The titles, captions or headings of the Articles and
Sections herein are for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
Section 11.9 PUBLICITY. No party shall issue any press release or make any
public statement regarding the transactions contemplated hereby, without the
prior approval of the other parties, except that if, after discussion between
the parties or their counsel, in the opinion of any party's counsel, such party
is required under any applicable law or regulation to make a public statement or
announcement, such party shall be permitted to issue the legally required
statement or announcement.
Section 11.10 CONFIDENTIAL INFORMATION. In connection with the negotiation
of this Agreement and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it has had and will have
access to confidential information relating to the other party. Each party shall
treat such information as confidential, preserve the confidentiality thereof and
not duplicate or use such information, except that the foregoing shall not apply
to any information (i) which is requested pursuant to a court order or judicial
proceeding or is provided in connection with any accounting dispute resolution
hereunder, (ii) which is or becomes known generally within the relevant industry
(except as a result of a breach hereof by the party hereto intending to disclose
such information), (iii) which a party determines, based on advice of counsel,
should be disclosed pursuant to applicable federal or state laws or regulations,
including securities laws and related disclosure requirements, or (iv) disclosed
to advisors, consultants and Affiliates in connection with the transactions
contemplated hereby. If there is a Closing under this Agreement, then GeoWaste
shall thereafter have no obligation to keep confidential any information which
has been furnished to GeoWaste concerning the Company.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SPECTRUM GROUP, INC.
By:/S/JOHN PAGLIA
Name: John Paglia
Title: President
/S/JOHN PAGLIA
John Paglia
/S/MICHAEL PAGLIA
Michael Paglia
GEOWASTE INCORPORATED
By:/S/AMY C. MACF. BURBOTT
Name: Amy C. MacF. Burbott
Title: Chief Executive Officer
SPECTRUM ACQUISITION CORP.
By:/S/AMY C. MACF. BURBOTT
Name: Amy C. MacF. Burbott
Title: President
Exhibit 4.11
VOTING AGREEMENT
VOTING AGREEMENT dated as of August 12, 1996 (this "Agreement"), among John
Paglia and Michael Paglia (each, a "New Stockholder" and collectively, the "New
Stockholders"); Advance Ross Corporation, Allen & Company Incorporated, Allen
Value Partners L.P. and Allen Value Limited Incorporated (each, an "Existing
Stockholder," collectively, the "Existing Stockholders" and together with the
New Stockholders, the "Stockholders").
W I T N E S S E T H :
WHEREAS, in connection with the Agreement and Plan of Merger dated as of
the date hereof (the "Merger Agreement") by and among GeoWaste Incorporated, a
Delaware corporation (the "Company"), Spectrum Group, Inc., d/b/a United
Sanitation, Ocala Chemical, Mills Disposal, and the New Stockholders, the New
Stockholders are to be issued by the Company certain shares of the Company's
common stock, $.10 par value per share (the "Common Stock"). The New
Stockholders are entering into this Agreement as an inducement to the Company to
enter into the Merger Agreement. The execution and delivery of this Agreement by
the parties hereto is a condition precedent to the Company's obligation to
consummate the transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. OWNERSHIP OF SHARES OF COMMON STOCK. It is acknowledged that the
Existing Stockholders are presently, and that the New Stockholders upon
consummation of the transactions contemplated by the Merger Agreement will be,
the holders of the numbers of shares of Common Stock set forth opposite their
respective names, as follows:
NAME NUMBER OF SHARES
Advance Ross Corporation 1,070,776
Allen & Company Incorporated 1,510,000(1)
Allen Value Partners L.P. 3,573,200
Allen Value Limited Incorporated 426,800
John Paglia 1,000,000
Michael Paglia 1,000,000
(1) A portion of these shares are owned by officers and/or directors of
Allen & Company Incorporated, which shares should not be subject to
this Agreement.
Any additional shares of Common Stock a Stockholder may obtain at a later
date shall be governed by this Agreement.
2. ELECTION OF DIRECTORS. Each Stockholder hereby covenants and agrees that
for so long as such Stockholder continues to own or is entitled to vote ten
percent (10%) or more of the issued and outstanding shares of Common Stock of
the Company and one or more of said Stockholders or their nominee is subject to
election as a director of the Company, the Stockholders shall use their best
efforts to cause such Stockholder(s) or nominee to be nominated for election to
the Board of Directors of the Company at the time and in the manner proper for
such nomination, whereupon all the Stockholders agree to cast all of the votes
they are entitled to cast in such election (whether at the next annual meeting
or a special meeting of the stockholders or by written consent in lieu of a
meeting or otherwise) for the election of such Stockholder(s) or nominee to the
Board of Directors of the Company, provided that for purposes of this paragraph
2 and paragraph 3, the New Stockholders shall count as one Stockholder.
3. TERMINATION. This Agreement shall terminate automatically as to any
Stockholder at such time as such Stockholder owns or is entitled to vote less
than ten percent (10%) of the outstanding shares of Common Stock of the Company.
4. REMEDIES. The parties hereto agree and acknowledge that money damages
may not be an adequate remedy for breach of the provisions of this Agreement and
that any party hereto shall be entitled, in its sole discretion, to apply to any
court of competent jurisdiction for specific performance or injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement,
in addition to its remedies at law.
5. NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document or communication to be given hereunder by any
party to any other party shall be in writing and shall be deemed to have been
given (a) if mailed, at the time when mailed in any general or branch office of
the United States Postal Service, enclosed in a registered or certified
postage-paid envelope, (b) if sent by facsimile transmission, when so sent and
receipt acknowledged by an appropriate telephone or facsimile receipt or (c) if
sent by other means, when actually received by the party to which such notice
has been directed, in each case at the respective addresses or numbers set forth
below or such other address or number as such party may have fixed by notice:
If to Advance Ross Corporation, addressed to:
Advance Ross Corporation
Suite 9700
233 South Wacker Drive
Chicago, Illinois 60606-6502
Attention: Harve A. Ferrill
Facsimile: (312) 382-1109
If to Allen & Company Incorporated, addressed to:
Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Attention: Richard Fields
Facsimile: (212) 339-2369
If to John Paglia, addressed to:
John Paglia
2272 Laurel Run Drive
Ocala, Florida 34471
Facsimile: (352) 351-8812
If to Michael Paglia, addressed to:
Michael Paglia
1122 SE 24th Terrace
Ocala, Florida 34470
Facsimile: (352) 351-8882
6. MODIFICATION, AMENDMENT AND WAIVER. No modification, amendment or waiver
of any provision of this Agreement shall be effective unless in writing
consented to by the party or parties against whom such enforcement may be
sought, and only to the extent therein set forth. The failure of any party at
any time to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the rights of the
party thereafter to enforce the provisions of this Agreement in accordance with
its terms.
7. COMPLETE AGREEMENT. This document embodies the complete agreement and
understanding between and among the parties hereto with respect to the subject
matter hereof, and supersedes and preempts any prior understandings, agreement
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof.
8. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the
benefit of and be enforceable by the parties and their respective permitted
successors and assigns.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be an original and all of which taken together
will constitute one and the same Agreement.
10. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware, without
giving effect to principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ADVANCE ROSS CORPORATION
By:/S/HARVE A. FERRILL
Name: Harve A. Ferrill
Title: President
ALLEN & COMPANY INCORPORATED
By:/S/RICHARD L. FIELDS
Name: Richard L. Fields
Title: Managing Director
/s/JOHN PAGLIA
John Paglia
/S/MICHAEL PAGLIA
Michael Paglia
ALLEN VALUE PARTNERS L.P.
By: Allen Philton L.P., its General Partner
By: Allen Value Inc., its General Partner
By: /S/ PHILIP SCATURRO
Name: Philip Scaturro
Title:President
ALLEN VALUE LIMITED INCORPORATED
By:/S/ PHILIP SCATURRO
Name: Philip Scaturro
Exhibit 20.1
GeoWaste Incorporated
24 Cathedral Place, Suite 208
St. Augustine, FL 32084
(904) 824-0201
Fax: (904)825-0013
Contact: Raymond F. Chase
FOR IMMEDIATE RELEASE
GEOWASTE COMPLETES MERGER OF
NORTH FLORIDA SOLID WASTE COMPANY
August 13, 1996...GeoWaste Incorporated (NASDAQ:GEOW) today announced that
it completed the merger of Spectrum Group, Inc. a solid waste collection,
transfer and recycling company located in Ocala, Florida. Spectrum does business
under the name of United Sanitation in a five county area around Ocala and is a
wholly owned subsidiary of GeoWaste.
The consideration paid in the transaction consisted of 2 million shares of
GeoWaste common stock and approximately $1 million in cash. GeoWaste also
assumed approximately $2.4 million of debt. The owners of United Sanitation,
John A. Paglia and Michael D. Paglia have been appointed as officers of
GeoWaste. Michael D. Paglia has also been elected to the GeoWaste Board of
Directors.
United Sanitation's collection and recycling operations were commenced in
the middle of 1993 and have grown to approximately $4.3 million in revenues in
1995. In July of 1996, United Sanitation completed permitting and opened a solid
waste transfer station in Ocala, Florida which will permit the transfer of
United's and third party waste streams to more cost effective disposal options
outside the Ocala area. It is anticipated that this waste will be transported to
GeoWaste's Pecan Row Landfill in Valdosta, Georgia. Based upon the continued
growth in collection and recycling operations and the anticipated volume of the
transfer station, it is expected that the United Sanitation merger will add at
least $9 million in revenues to GeoWaste in 1997 and will be accretive to future
earnings per share.
Amy C. MacF. Burbott, the Chief Executive Officer of GeoWaste, commented:
"We are very excited about the impact of this merger with United
Sanitation. The transaction will greatly strengthen our presence and
operations in our current market area. It is expected to bring a
significant amount of additional solid waste to our Valdosta landfill, as
well as serve as the nucleus for further expansion in collection and
transportation in this Northern Florida market. We also enthusiastically
welcome the addition of John and Michael Paglia to our management team and
expect them to play a significant role in helping grow the Company in the
future."
GeoWaste currently owns and operates a Subtitle D disposal facility and
collection company in Valdosta, Georgia, a solid waste collection and street
sweeping company in Jacksonville, Florida, and operates a solid waste transfer
station in St. Augustine, Florida.
Statements regarding future revenues and earnings are not guarantees of future
performance. Actual results may differ materially from those projected in this
announcement.
