SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number 0-9278
GeoWaste Incorporated
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2751684
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Suite 700, 100 West Bay Street,
Jacksonville, Florida 32202
(Address of principal executive
offices)
Registrant's telephone number, including area code: (904) 353-5033
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 Par Value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K. |_|
The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $72,359,241 at March 20, 1998. Exclusion of
shares held by any person should not be construed to indicate that such person
possesses the power, direct or indirect, to direct or cause the direction of
management policies of the registrant, or that such person is controlled by or
under common control with the registrant.
At March 20, 1998, the registrant had issued and outstanding an
aggregate of 21,286,549 shares of its common stock.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
GeoWaste Incorporated (the "Company" or "GeoWaste") is a holding
company which was incorporated in the State of Delaware under the name Utah
Shale Land & Minerals Corporation in 1971. The Company, through its
subsidiaries, is in the business of owning, operating and acquiring
non-hazardous, solid waste collection, transportation and transfer companies and
disposal facilities.
GeoWaste's solid waste services operations consist of a solid waste
collection and disposal company located in Valdosta, Georgia, a solid waste
collection, transfer, materials recovery facility and portable toilet company
based in Ocala, Florida, a solid waste collection business in Cordele, Georgia,
a solid waste collection and street sweeping business in Jacksonville, Florida
and, as of February 1, 1998, a solid waste transfer and transportation services
under a contract with USA Waste Services, Inc. ("USA Waste") in the Bronx, New
York. Solid waste management and related services accounted for 100% of the
Company's total consolidated revenue in 1997. No customer accounted for more
than 10% of GeoWaste's revenue in 1997. Fees paid to GeoWaste by its solid waste
collection customers (including charges paid by such customers for disposal)
accounted for approximately 61% of GeoWaste's revenue during 1997. Transfer and
disposal services provided to municipalities, counties and other waste
management companies accounted for approximately 22% of such revenue and related
sanitation services accounted for approximately 17%.
On January 10, 1997, GeoWaste of GA, Inc. ("GEOW/GA"), a subsidiary of
the Company, acquired the assets used in the solid waste business of
Air-Sweep-A-Lot, Inc. ("ASAL"), a solid waste and sweeping company based in
Valdosta, Georgia. On November 7, 1997, GEOW/GA purchased the assets used in the
solid waste business of T.F. Mitchell & Sons, Inc. d/b/a Mitchell Refuse
("Mitchell"), a solid waste company based in Cordele, Georgia.
The operations of the Company include the operations of its seven
wholly-owned subsidiaries. Four of these subsidiaries conduct the Company's
operations in Georgia and Florida, one subsidiary conducts the Company's
business in New York City, and the remaining subsidiaries are inactive. The
Company does not have any subsidiaries which are not wholly-owned and the
Company is not involved in any joint ventures or partnerships.
Unless the context indicates to the contrary, all statistical and
financial information under Item 1 of this report is given for the year ended
December 31, 1997.
COLLECTION
Through its subsidiaries, GEOW/GA, GeoWaste of Florida, Inc.
("GEOW/FL") and Spectrum Group d/b/a United Sanitation ("United Sanitation"),
the Company provides solid waste collection services to residential, commercial
and industrial customers in South Georgia and Northern Florida.
Commercial and industrial collection services are generally performed
under one to three-year service agreements and fees are determined by such
considerations as market factors, collection frequency, type of equipment
furnished, the type and volume or weight of the waste collected, the distance to
the disposal facility and cost of disposal.
Most of the Company's residential solid waste collection services are
performed under contracts with municipalities giving the Company exclusive
rights to service all or a portion of the homes in their respective
jurisdictions. Such contracts or franchises usually range in duration from one
to five years. The fees received by GeoWaste are based primarily on market
factors, frequency and type of service, the distance to the disposal facility
and cost of disposal. Residential collection fees are paid by the residential
customers receiving the service.
TRANSFER
The Company, through United Sanitation, operates a solid waste
transfer facility in Ocala, Florida. The facility holds a permit from the
Florida Department of Environmental Protection to accept, process and transfer
up to 600 tons per day of solid waste and under its zoning approval from Marion
County, Florida, may accept solid waste generated from the Florida Counties of
Marion, Lake, Flagler, Levy, Alachua, Sumter, Volusia and Citrus.
As of February 1, 1998, the Company, through its wholly-owned
subsidiary, GeoWaste Transfer, Inc., provides solid waste transfer and
transportation services to various transfer stations and to a rail loading
facility owned by USA Waste. The Company's five year contract with USA Waste
requires GeoWaste to provide the personnel and equipment necessary to transport
solid waste that has been loaded into rail containers to USA Waste's rail
loading facility in the Bronx, New York or to USA Waste's landfill located in
Pennsylvania.
RECYCLING
United Sanitation operates a materials recovery facility in Ocala,
Florida which accepts, processes, and sells corrugated cardboard ("OCC"),
newsprint ("ONP"), office paper ("OFP"), ferrous and non-ferrous metals. These
recyclable materials are brought to the facility either by recycling collection
vehicles operated by United Sanitation or under contractual arrangements with
third parties. After delivery, all non-recyclable material is removed and the
remaining recyclables are baled and stored until shipped to end users which are
under long term agreements with the Company.
STREET SWEEPING
The Company, through its wholly owned subsidiary GEOW/FL, provides
street sweeping services in Jacksonville, Florida. Substantially all of the
street sweeping activities are performed under contracts with city, county or
State public works or transportation departments. The Company expects to
discontinue its street sweeping operations as of April 15, 1998.
DISPOSAL
GEOW/GA operates one solid waste disposal facility, the Pecan Row
Landfill, in Valdosta, Lowndes County, Georgia. The landfill commenced operation
on November 5, 1991. The landfill was constructed and is operated pursuant to a
solid waste handling permit issued by the Georgia Environmental Protection
Division. The permit authorizes the disposal of nonhazardous solid waste on the
site and has no termination date, places no restriction on daily volumes, nor
restricts the geographical origin of the waste which may be disposed of at the
landfill.
In February 1998, the Company received a modification to the permit of
Pecan Row Landfill which, by increasing the footprint of the landfill to 58
acres, increased the available airspace to 5,421,640 cubic yards of capacity,
resulting in, as of February 1, 1998, over 3,870,000 tons of remaining airspace
for the disposal of solid waste. Based upon 1997 tonnages and compaction ratios,
the Company believes remaining life of the Pecan Row Landfill will be 17 years.
On March 25, 1996, GeoWaste, through its wholly-owned subsidiary, Low
Brook Development, Inc. ("Low Brook"), entered into an option to purchase 420
acres of land near GEOW/GA's Pecan Row Landfill. The initial option term expired
on March 24, 1998 and pursuant to the terms of the option, was extended for one
additional term to March 24, 2000. On March 11, 1997, Low Brook received
confirmation from the local zoning authority for Lowndes County, Georgia, that
the development of the 420 acres as municipal solid waste landfill is a
permitted use and conforms to local zoning ordinances. In April 1997, the
Company filed for site suitability approval from the Georgia Department of
Natural Resources, Environmental Protection Division ("GA/EPD"). In March 1998,
the Company received comments from GA/EPD regarding its site suitability
application. The Company is presently addressing GA/EPD's comments. Low Brook is
currently reviewing the costs and timing associated with the permitting of this
property, which, if obtained, would yield over 20 million tons of capacity for
the disposal of solid waste.
Suitable sanitary landfill facilities have become increasingly
difficult to obtain because of land scarcity, local resident opposition and
expanding governmental regulation. As GeoWaste's Pecan Row Landfill or future
facilities become filled, the solid waste disposal operations of the Company are
and will continue to be materially dependent on its ability to purchase, lease
or obtain operating rights for additional sites and obtain the necessary permits
from regulatory authorities to operate them. There can be no assurance that
permit modifications to the Pecan Row Landfill or new permits for additional
sites, including the property under option by Low Brook, can be obtained.
PERMITTING AND CONSTRUCTION PROCESS
When appropriate, the Company pursues obtaining permits for expansion
and/or modification of the Pecan Row Landfill. Permit expansions and
modifications generally take the form of vertical expansions of existing
disposal capacity, lateral expansions of permitted disposal acreage or
modifications of operating restrictions to allow increased disposal volume or
additional waste streams.
Although the permitting process varies from state to state, the
following summary (which is based on Georgia law) sets forth the typical steps
in the permitting process.
LOCAL APPROVAL. In most instances, some form of local zoning or
planning approval, commonly referred to as siting approval, is required to
permit a site and may be required to expand or modify a landfill. This process
usually requires complying with city or county zoning regulations through a
separate application process to a zoning or planning board. An applicant
generally files various reports or drawings which describe the project and
public hearings are held. In most instances, significant, organized community
opposition will be present and many local zoning authorities will consider
community opposition in deciding whether to grant zoning approval. Following
hearings, a decision is made. Generally, both the applicant and any opposition
have the right to appeal such decision. Although not always required, the local
zoning approval process is usually completed prior to applying for a state
permit.
STATE APPROVAL. Upon receipt of local approval, an applicant must then
submit detailed construction and operating plans for state approval. Most states
require an applicant to evidence that a new, modified or expanded facility will
meet or exceed state regulations regarding disposal facility siting and design
specifications. States generally consider the technical merits of an
application, particularly such matters as geology, hydrogeology, ecology,
archaeology, soil characteristics, surface drainage, the presence of, or
location relative to, airports, wetlands and local water supply systems and the
adequacy of local road systems.
Engineering consultants design the project to meet state regulations
and standards. This design is reviewed by state officials, comments are issued
and, possibly after negotiations between the applicant and the state officials,
revisions are made by the applicant. Once the design is approved, public notice
is given and a hearing held. Depending on the issues presented at the hearing,
an applicant may wait nine months or more before receiving a decision. Both the
applicant and any opposition generally have the right to appeal the decision.
REGULATION
The Company and the waste services industry in general are subject to
extensive, expansive and evolving regulation by federal, state and local
authorities. In particular, the regulatory process requires firms in the
industry to obtain and retain numerous governmental permits to conduct various
aspects of their operations, any of which may be subject to revocation,
modification or denial. The continually shifting policies and attitudes of the
regulatory agencies relating to the industry may impact the Company's ability to
obtain applicable permits from governmental authorities on a timely basis and to
retain such permits. The Company is not in a position to assess the extent of
any such impact, but it could be significant.
State and local governments have also from time to time proposed or
adopted other types of laws, regulations or initiatives with respect to the
environmental services industry. Included among these are laws, regulations and
initiatives to ban or restrict the interstate or inter-county shipment of
wastes, impose higher taxes on out-of-state waste shipments than in-state
shipments and regulate disposal facilities as public utilities.
The Company makes a continuing effort to anticipate regulatory,
political and legal developments that might affect operations, but cannot
predict the extent to which any legislation or regulation that may be enacted or
enforced in the future may affect its operations.
Operating permits are generally required at the state and local level
for landfills and collection vehicles. Operating permits need to be renewed
periodically and may be subject to revocation, modification, denial or
non-renewal for various reasons, including failure of the Company to satisfy
regulatory concerns. In the solid waste collection phase, regulation takes such
forms as permitting of transfer stations, licensing of collection vehicles,
truck safety requirements, vehicular weight limitations and, in certain
localities, limitations on rates, area and time and frequency of collection. In
the solid waste disposal phase, regulation covers various matters, including
methane gas emission, liquid runoff and rodent, pest, litter and traffic
control. Zoning and land use requirements and limitations are encountered in the
solid waste collection and disposal phases of the Company's business. In
addition, the Company's operations may be subject to water pollution laws and
regulations; air and noise pollution laws and regulations; and safety standards
under the Occupational Safety and Health Act ("OSHA"). Governmental authorities
have the power to enforce compliance with these various laws and regulations and
violators are subject to injunctions, fines and revocation of permits. Private
individuals may also have the right to sue to enforce compliance.
Regulatory or technological developments relating to the environment
may require GeoWaste (as well as others in the solid waste management business)
to modify, supplement or replace equipment and facilities at costs which may be
substantial. Because GeoWaste is engaged in a business intrinsically connected
with the protection of the environment and the potential discharge of materials
into the environment, a material portion of the Company's capital expenditures
are, directly or indirectly, related to such items. The Company does not expect
such expenditures, which are incurred in the ordinary course of business, to
have a materially adverse impact on its earnings or competitive position in the
foreseeable future because GeoWaste's business is based upon compliance with
environmental laws and regulations and its services are priced accordingly.
Although the Company intends to conduct its operations in compliance
with applicable laws and regulations, the Company believes that heightened
political and citizen sensitivity causes companies in the solid waste management
industry to be faced, in the normal course of operating their businesses, with
the possibility of expending funds for fines, penalties and expenses incurred as
a result of changes to environmental compliance regulations. While the Company
has expended no such funds to date, the possibility remains that technological,
regulatory or enforcement developments, the results of environmental studies or
other factors could materially alter this expectation at any time. In any event,
such matters could have a material impact on earnings for a particular fiscal
quarter.
The Company believes that it is in compliance with all environmental
regulations promulgated by federal, state and local governments. The Company
monitors and regularly updates the permits required to conduct the Company's
operations. The Company's solid waste disposal facility undergoes periodic
inspections by state officials to ensure its compliance with environmental
regulations. The Company has met all requirements during each such inspection.
RESOURCE CONSERVATION AND RECOVERY ACT ("RCRA"). RCRA regulates the
generation, treatment, storage, handling, transportation and disposal of
hazardous and solid waste and requires states to develop programs to ensure the
safe disposal of solid waste in sanitary landfills. RCRA divides solid waste
into two groups, hazardous and nonhazardous. Wastes are generally classified as
hazardous wastes if they: (i) either (a) are specifically included on a list of
hazardous wastes or (b) exhibit certain characteristics; and (ii) are not
specifically designated as nonhazardous. Wastes classified as hazardous under
RCRA are subject to much stricter regulation than wastes classified as
nonhazardous. Among the wastes that are specifically designated as nonhazardous
waste are household waste and various types of special waste. These wastes,
which will be accepted at the Company's landfills, may contain incidental
hazardous substances.
On October 9, 1991, the United States Environmental Protection Agency
(the "EPA") promulgated new regulations pursuant to Subtitle D of RCRA. These
new regulations include location standards, facility design standards, operating
criteria, closure and post-closure requirements, financial assurance standards
and groundwater monitoring requirements as well as corrective action standards,
all of which have not previously been uniformly applied at landfills within the
fifty states. In addition, the new regulations require new landfills which
received municipal solid waste for disposal after April 9, 1994 to have one or
more liners (typically high-density polyethylene liners) to keep leachate out of
groundwater and have extensive systems to collect leachate for handling and
treatment. In addition, after October 9, 1996 groundwater wells must also be
installed at virtually all landfills to monitor groundwater quality and the
leachate collection system operation. The regulations also require (where
threshold test levels are met) that methane gas generated at landfills be
controlled in a manner that will protect human health and the environment.
Because some states have already adopted regulations at least as stringent as
the new federal regulations, the new Subtitle D regulations will cause greater
changes in the landfill regulation of certain states than of others.
The Company's Pecan Row Landfill was designed and constructed in
accordance with the requirements of Subtitle D.
THE FEDERAL WATER POLLUTION CONTROL ACT (THE "CLEAN WATER ACT"). The
Clean Water Act established rules regulating the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into waters of the
United States. For any discharge, the Clean Water Act would require the Company
to apply for and obtain a discharge permit, conduct sampling and monitoring and,
under certain circumstances, reduce the quantity of pollutants in those
discharges. Also, virtually all landfills are required to comply with the new
federal storm water regulations, which are designed to prevent possibly
contaminated storm water from flowing into surface waters.
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT
("CERCLA"). CERCLA addresses problems created by the release of any hazardous
substance into the environment. CERCLA's primary mechanism for remedying such
problems is to impose strict joint and several liability for cleanup of
facilities among all past and current owners and operators of the site as well
as the generators and the transporters who arranged for disposal and
transportation of hazardous substances. The costs of CERCLA cleanup can be very
substantial. Liability under CERCLA does not depend upon the existence or
disposal of "hazardous waste" but can also be founded upon the existence of even
very small amounts of the more than 1,000 "hazardous substances" listed by the
EPA.
THE CLEAN AIR ACT, AS AMENDED (THE "CLEAN AIR ACT"). The Clean Air Act
provides for federal, state and local regulation of the emission of air
pollutants and is applicable to landfills. The EPA has proposed new source
performance standards regulating overall air emissions from solid waste
landfills. The EPA may also issue regulations controlling the emissions of
particular air pollutants from solid waste landfills. Moreover, landfills
located in areas with air pollution problems may be subject to even more
extensive air pollution controls.
STATE AND LOCAL REGULATIONS. The States of Georgia, Florida and New
York as well as those states in which the Company may operate in the future,
have laws and regulations governing the generation, handling, transfer,
transportation and disposal of solid waste, water and air pollution and, in most
cases, the design, operation, maintenance, closure and post-closure maintenance
of landfills.
Public opposition to the siting and operation of landfills has led
many states, including Georgia, to enact legislation at the state and/or local
level which attempts to prohibit or restrict the movement of solid
waste. Decisions by the United States Supreme Court recognize that the Commerce
Clause of the United States Constitution imposes substantial limits upon the
ability of state and local governments to restrict the movement of solid waste
across state lines. Since 1986, many different forms of legislation have been
introduced in the United States Congress which attempts to restrict interstate
and intrastate waste transportation. The Company, like all other companies in
the solid waste industry, faces uncertainty regarding the circumstances under
which it will be able to accept out-of-state waste for disposal at its facility.
A significant portion of the solid waste volume disposed of at the Company's
Pecan Row Landfill is generated from outside the State of Georgia.
COMPETITION
GeoWaste encounters competition, primarily in the pricing and
rendering of services, from various sources in all phases of its operations. In
solid waste collection operations, competition is encountered, for the most
part, from national, regional and local collection companies, some of which have
substantially greater financial, marketing and other resources than the Company.
Additionally, solid waste collection competition is encountered from
municipalities and counties which, through use of tax revenues, may be able to
provide services at lower direct charges to the customer than those charged by
private sector companies. In the solid waste disposal operations, competition is
encountered primarily from municipalities, counties, local governmental
agencies, and other national or regional waste management companies, some of
which have substantially greater financial, marketing and other resources than
the Company. In the street sweeping business, competition is encountered
primarily from municipalities and local or regional street sweeping companies.
The Company's solid waste collection operation in Valdosta, Georgia competes
with approximately eight private firms and thirteen municipalities, while the
solid waste collection operation in Ocala, Florida competes with approximately
twelve private firms and three municipalities. The Company believes that it is
one of the largest service providers in these geographic areas. The
sweeping/collection operation in Jacksonville, Florida competes with
approximately eighteen private firms and four municipalities. The Company has a
relatively small market share in this geographic area.
INSURANCE
The Company currently maintains liability insurance coverage for
occurrences under various environmental impairment, primary casualty and excess
liability insurance policies.
The Company has secured Environmental Impairment Liability Insurance
in amounts believed to be sufficient to offset an unforeseen occurrences. The
Company currently maintains $1,000,000 of loss coverage. However, in the event
an environmental impairment exceeds the loss coverage, the Company's financial
condition could be adversely affected.
Operating expenses include the estimated costs of closure and
post-closure care for the Pecan Row Landfill. Such costs are based upon actual
landfill capacity utilized in each operating period.
From time to time, the Company may be required to post performance
bonds, financial assurances or bank letters of credit issued by surety companies
which act as a financial guarantee of the Company's performance.
EMPLOYEES
At December 31, 1997, GeoWaste and its subsidiaries employed a total
of 155 persons in its operations. None of GeoWaste's employees are represented
by labor unions under collective bargaining agreements. The Company believes it
maintains good employee relations.
ITEM 2. PROPERTIES
The Company's principal real estate interest is its Pecan Row Landfill
in Valdosta, Georgia.
The Company leases 2,000 square feet of executive office space at
Suite 700, 100 West Bay Street, Jacksonville, Florida. The Company is also party
to a lease for approximately 155,000 square feet of land and buildings in Ocala,
Florida which is used for the operations of United Sanitation and various short
term leases for smaller parcels of property in Bronx, New York and Cordele,
Georgia which are used for the parking of solid waste management trucks,
tractors, trailers and other equipment.
The principal fixed assets of the Company consist of land which is
owned, land improvements and heavy equipment at the Pecan Row Landfill, the
collection and transportation company in Valdosta, Georgia, and the collection
and street sweeping company in Jacksonville, Florida. The heavy equipment, which
is owned or leased, includes collection vehicles, refuse compactors, bulldozers,
scrapers, backhoes, loaders, transfer trailers, and miscellaneous other
equipment used in transfer and disposal operations.
As of December 31, 1997, aggregate annual rental payments on real
estate leased by the Company and its subsidiaries was $247,000.
ITEM 3. LEGAL PROCEEDINGS
On March 21, 1996, the Company acquired all of the capital stock of
NFS, a street sweeping and roll-off collection company based in Jacksonville,
Florida. In December 1996, the Company discovered that NFS, under its former
owners, had been improperly disposing street sweepings in unpermitted locations.
Accordingly, on December 31, 1996, the Company filed suit in the United States
District Court for the Middle District of Florida, Jacksonville Division (the
"Court"), against the former shareholders of NFS (the "Former Shareholders")
seeking recission, abrogation and annulment of the transaction and damages. At
the time of the filing the suit, the Company was not aware of the full extent of
the improper actions taken at NFS.
On October 9, 1997, the Company settled its suit against the Former
Shareholders which settlement included, on October 14, 1997, the Court entering
a judgment declaring the acquisition of NFS to be completely abrogated and
annulled, including the merger of NFS and a subsidiary of the Company and the
transfer of capital stock of NFS to the Company. As a result of the foregoing,
the Company received a $50,000 cash payment, retained the assets of NFS and
canceled outstanding warrants to purchase shares of the Company's common stock
at an exercise price of $1.25 which were issued to the Former Shareholders in
connection with the nullified transaction.
The business in which the Company is engaged is intrinsically
connected with the protection of the environment and the potential discharge of
materials into the environment. In the ordinary course of conducting its
business activities, the Company may become involved in judicial and
administrative proceedings involving governmental authorities at the federal,
state and local level including, in certain instances, proceedings instituted by
citizens or local governmental authorities seeking to overturn governmental
action where governmental officials or agencies are named as defendants together
with the Company or one or more of its subsidiaries, or both.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded over-the-counter on The Nasdaq
Small-Cap Market under the symbol "GEOW". The following table set forth for the
periods indicated the high and low bid prices on The Nasdaq Small-Cap Market.
Low Bid High Bid
1997 PRICES PRICES
------ ------
First Quarter $2.13 $4.63
Second Quarter 1.75 3.31
Third Quarter 1.50 2.19
Fourth Quarter 1.06 2.03
1996
First Quarter $1.00 $1.75
Second Quarter 1.56 4.69
Third Quarter 2.62 4.50
Fourth Quarter 1.75 3.37
As of March 20, 1998, there were 4,707 stockholders of record of the
Company's Common Stock.
The Company did not pay any dividends in 1997, 1996 or 1995, nor does
the Company expect to pay any dividends in the foreseeable future.
Pursuant to the terms of the Credit Facility (as defined herein), the
Company is prohibited from paying dividends in cash on its Common Stock. Under
the Credit Facility the Company and its subsidiaries may pay dividends solely in
shares of Common Stock, except that subsidiaries of the Company may pay cash
dividends to the Company.
Due in part to the high level of public awareness of the business in
which the Company is engaged, regulatory enforcement proceedings or other
potentially unfavorable developments involving the Company's operations or
facilities, including those in the ordinary course of business, may be expected
to engender publicity which could from time to time have an adverse impact upon
the market price for the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA OF THE REGISTRANT
SELECTED FINANCIAL DATA OF THE REGISTRANT
The following selected consolidated financial data are derived from
the Company's audited consolidated financial statements and should be read in
conjunction with the consolidated financial statements and the notes thereto
included at Item 8 herein.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
(in thousands, except per share amounts)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Total revenue.................................... $19,397 $13,703 $ 8,933 $ 6,967 $ 4,806
------- ------- ------- ------- -------
Net (loss) income................................ (424) 1,708 1,462 1,189 (218)
==== ===== ===== ===== ====
Basic earnings (loss) per common share........... $ (.02) $ .09 $ .08 $ .06 $ (.01)
========= =========== ========= ========= ========
Weighted average number of common
shares outstanding............................... 21,247 19,659 18,663 20,988 22,560
December 31,
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
(in thousands)
BALANCE SHEET DATA:
Cash............................................. $ 739 $ 3,058 $ 3,985 $ 1,633 $ 1,209
Working capital (deficit)........................ (212) (3,023) 3,708 1,150 1,126
Total assets..................................... 32,109 30,618 15,637 14,528 11,293
Long-term debt................................... 11,870 5,776 6,785 6,538 5,800
Shareholders' equity............................. 15,905 15,983 7,386 5,848 4,667
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
1997 COMPARED WITH 1996
Net revenues for the year ended December 31, 1997 consisted of
collection revenues of $12,257,000, disposal revenues of $3,172,000, transfer
station revenues of $1,090,000, recycling revenues of $1,660,000, and sweeping
revenues of $1,218,000. Collection revenues increased 103%, disposal revenues
decreased 33%, transfer revenues increased 18% and sweeping revenues decreased
15%, in each case, as compared to 1996. Prior to the acquisition of United
Sanitation in August 1996, the Company was not engaged in the recycling
business. Of the increase in collection revenues, 68% is attributable to the
operations of Standard Disposal Services of Florida, Inc. ("Standard") and
United Sanitation, which were acquired in 1996, 21% is attributable to the
operations of ASAL and Mitchell, which were acquired in 1997, and the remainder
is attributable primarily to new collection contracts. All of the increase in
transfer revenue is attributable to the operations of Standard and United
Sanitation The reduction in sweeping revenues was primarily due to the sale by
the Company, on June 10, 1997, of its lawn care and certain of its sweeping
contracts in Florida to Sweeping Corp. of America. Lower disposal revenues
reflect decreased volumes at the Pecan Row Landfill combined with more
competitive pricing. Daily tonnage at the landfill decreased 6% to 817 tons per
day (TPD). However, lower pricing for special waste customers accounted for 23%
of the total 33% decrease. All intercompany activity has been eliminated.
Operating expenses related to collection, disposal, transfer,
recycling and sweeping activities for 1997 consisted of collection expenses of
$7,356,000, disposal expenses of $2,991,000, transfer station expenses of
$535,000, recycling expenses of $1,341,000 and sweeping expenses of $1,313,000.
Collection expenses increased 128%, disposal expenses decreased 3%, transfer
expenses increased 27%, recycling expenses increased 147% and sweeping expenses
increased 17%, in each case, as compared to 1996. Of the increase in collection
expenses, 43% was attributable to the operations of Standard and United
Sanitation and 27% was attributable to the operations of ASAL and Mitchell. The
decrease in disposal expenses resulted from decreased volumes. The increase in
both the transfer and recycling expenses is attributable to the full year effect
of the operations of Standard and United Sanitation.
Unusual charges for the year ended December 31, 1997 relate to
litigation and certain other developments related to North Florida Sweeping,
Inc. ("NFS") occurring in the first quarter of 1997. During this period, the
Company concluded a full review of the operating practices of NFS and determined
that NFS (i) had not fully complied with the performance specifications of its
highway and street sweeping contracts, (ii) had improperly disposed of street
sweepings in violation of applicable requirements, and (iii) was obligated to
continue to perform services under the terms of its highway and street sweeping
contracts until their expirations. In response to these findings, in the first
quarter of 1997 the Company implemented certain remedial actions with respect to
the operations of NFS, including additional, and in some instances multiple,
resweeps to meet performance standards set out in NFS' contracts, and
rectification of the waste disposal practices of NFS. As a result of such
remedial actions, the Company (i) estimated and accrued losses on the sweeping
contracts, (ii) concluded that goodwill associated with the NFS acquisition was
not recoverable and (iii) that NFS' land and building were not recoverable above
their appraised value. Additionally, during the first quarter of 1997, the
Company and the City of St. Augustine, Florida mutually agreed to terminate
their existing transfer, transportation and disposal agreement and, accordingly,
the Company wrote off certain design and permitting costs which had been
previously deferred. As a result of the foregoing, the Company recorded
$1,083,000 of unusual charges for 1997 which consisted of $282,000 of legal and
consulting fees relating to NFS, $68,000 of additional sweeping costs incurred
and paid in the first quarter of 1997, $96,000 of accrued losses on sweeping
contracts, $436,000 of write-off of NFS' goodwill, $110,000 of write-down of
land and building and $91,000 of write-off of transfer station development
costs.
Selling, general and administration expenses for collection, disposal,
transfer, recycling and sweeping activities (excluding corporate administrative
expenses) for 1997, were $1,816,000, $272,000, $45,000, $147,000 and $371,000,
respectively. Corporate administrative expenses were $1,302,000 for the year
ended December 31, 1997. Selling, general and administrative expenses increased
117% for collection operations, decreased 26% for disposal operations, increased
96% for transfer operations, increased 188% for recycling and increased 40% for
sweeping, in each case, as compared to 1996. Selling, general and administrative
expenses increased principally due to the full year effect of the acquisitions
of Standard and United Sanitation.
There was a net loss of $424,000 for the year ended December 31, 1997
compared with net income of $1,708,000 in 1996. This decrease principally
reflects the unusual charges described above and losses incurred with respect to
the Company's Florida operations, including United Sanitation and NFS.
1996 COMPARED WITH 1995
Net revenues for the year ended December 31, 1996 consisted of
collection revenues of $6,049,000, disposal revenues of $4,762,000, transfer
station revenues of $924,000, recycling revenues of $529,000 and sweeping
revenues of $1,438,000. Collection revenues increased 120%, disposal revenues
decreased 12%, and transfer revenues increased 14%. There were no related
recycling or sweeping revenues in 1995. Of the 120% increase in collection
revenues, 82% was attributable to the operations of NFS, United Sanitation and
Standard Disposal Services of Florida, Inc. which were acquired during 1996. Of
the 14% increase in transfer station revenues, 9% was associated with the newly
acquired companies. Lower disposal revenues reflect the decreased volumes at the
Pecan Row Landfill combined with more competitive pricing. Daily tonnage at the
landfill decreased 2% to 868 TPD. However, lower pricing for special waste
customers accounted for 9% of the total 12% decrease. All intercompany activity
has been eliminated.
Operating expenses related to the collection, disposal, transfer,
recycling and sweeping activities for 1996, consisted of collection expenses of
$3,231,000, disposal expenses of $2,913,000, transfer station expenses of
$421,000, recycling expenses of $542,000, and sweeping expenses of $1,122,000.
Collection expenses increased 166% over 1995, disposal expenses decreased 20%,
and transfer expenses increased 26%. There were no related recycling or sweeping
expenses in 1995. Of the 166% increase in collection expenses, 137% was
attributable to the acquisitions in 1996. Of the 26% increase in transfer
station expenses, 21% was associated with the acquired companies. The decrease
in disposal expenses resulted from a combination of decreased volumes and a
reduction in cell related amortization rates due to the Company's obtaining a
permit modification in the first quarter of 1996 to vertically expand the
landfill. Cell related amortization rates refer to the total amortization
associated with costs used in constructing solid waste landfill areas. The rates
are calculated on a per ton basis and are determined by estimating the total
costs associated with the construction of the landfill and relating such costs
to the total airspace available at the site. Current waste compaction factors
and up-to-date cost information is utilized to ensure rates are constantly
evaluated and adjusted.
Selling, general and administrative expenses for collection, disposal,
transfer, recycling and sweeping activities (excluding corporate administrative
expenses) for 1996, were $839,000, $369,000, $23,000, $51,000 and $265,000,
respectively. Corporate administrative expenses were $1,078,000 for the year
ended December 31, 1996. Selling, general and administrative expenses for
collection operations increased 211%, for disposal operations increased 17% and
for transfer station operations increased 360%, in each case over such expenses
for 1995. There were no related selling, general and administrative expenses for
sweeping or recycling operations in 1995. Of the 211% increase in selling,
general and administrative expenses for collection operations, 159% was
attributable to acquisitions in 1996. Increases in selling, general and
administrative expenses for transfer station operations were also associated
with acquisitions in 1996.
Net income for the year ended December 31, 1996 was $1,708,000
compared to $1,462,000 in 1995. This improvement was principally due to the sale
of the Uintah Basin Limited Partnership land in the fourth quarter of 1996. The
gain on the sale of the Uintah Basin Limited Partnership land amounted to
$433,000. There was limited activity associated with this partnership. The
partnership employed one person and generated minimal amounts of income and
expenses. The Company's share of net losses with respect to this partnership was
$6,000, $16,000 and $8,000 for 1995, 1994 and 1993, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in a service industry and has neither significant
inventory nor seasonal variations in receivables. At December 31, 1997, the
Company had negative working capital of $212,000 as compared with negative
working capital of $3,023,000 at December 31, 1996. The increase in working
capital is primarily as a result of the retirement of the Debentures (as defined
herein) with borrowings under the Credit Facility.
Historically, the Company has relied primarily on the private
placement of debt and equity securities, bank borrowings and cash generated from
operating activities in order to provide it with the cash required for capital
expenditures, acquisitions and operating activities.
The Company's operating performance was sufficient to support
corporate overhead and other expenses during 1997. Management believes that
current working capital and internally generated funds will be sufficient to
meet the Company's working capital requirements for fiscal year 1998.
The Company expects to make capital expenditures on an ongoing basis
for improvements to, and expansion of, its landfill and for equipment purchases.
The Company estimates that the capital expenditures required for its existing
operations will amount to approximately $3,200,000, of which approximately
$1,700,000 will be used to construct a new cell at the Pecan Row Landfill. The
Company expects that it will fund such estimated capital expenditures from
existing cash, cash generated from operations, equipment lease financing, and
other financing.
The Company's 8.5% convertible subordinated debentures (the
"Debentures"), which were convertible into shares of common stock at $1.40 per
share, matured in March 1997, at which time the Company and the holder of the
Debentures mutually agreed to extend the due date of the Debentures to September
1997. In March 1997, the holder of the Debentures also converted $280,000 of the
Debentures into 200,000 shares of common stock. In October 1997, the Company
repaid the remaining $3,604,265 of principal and accrued interest on the
Debentures from borrowings under the Credit Facility.
On October 9, 1997, the Company entered into a $5 million revolving
credit facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and
borrowed $4.8 million under the Credit Facility to repay the principal and
accrued interest on the Debentures and to finance the cash portion of the
purchase price for Mitchell. Borrowings under the Credit Facility may be used
for working capital, refinancing of outstanding debt, capital expenditures and
other general corporate purposes. Interest on borrowings under the Credit
Facility is payable at a rate ,of one-quarter of one percent plus the higher of
(i) the Bank's base rate or (ii) one percent above the overnight federal funds
effective rate, as published by the Board of Governors of the Federal Reserve
System, as in effect from to time. The interest rate at December 31, 1997 was
8.75%. Borrowings under the Credit Facility mature on October 9, 2000 and are
collateralized by the stock of the Company's subsidiaries. Under the terms of
the Credit Facility, the Company must maintain certain financial covenants on a
quarterly basis of which the most significant is the interest coverage ratio.
The financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter.
On January 10, 1997, GEOW/GA purchased the solid waste assets of ASAL.
The total purchase price of approximately $1,028,000 consisted of cash in the
amount of $200,000, acquisition costs of $19,000, assumption of debt in the
amount of $487,000 and the issuance of an 8% promissory note with a principal
amount of $322,000 to the sellers of ASAL. On November 7, 1997, GEOW/GA
purchased the solid waste assets of Mitchell. The total purchase price of
$1,519,000 consisted of cash in the amount of $1,000,000, which was paid from
borrowings under the Credit Facility, a payable of $306,000 due in February
1998, acquisition costs of $19,000, and assumption of $194,000 in debt.
The Company's business strategy includes the acquisition of or
combination with other solid waste management companies. Such acquisitions may
be accomplished through borrowings under the Credit Facility, the issuance of
shares of the Company's common stock, cash on hand, or may require cash in
excess of the Company's current cash available or available borrowings under the
Credit Facility. Although GeoWaste's operating results and financial performance
are expected to provide access to any additional financing which may be
necessary to acquire such businesses, there can be no assurance that such
additional financing can be obtained on terms acceptable to the Company.
In March 1998, the Company retained an investment banking firm to
assist in evaluating a broad range of strategic alternatives available to the
Company in order to maximize shareholder value. These alternatives could include
a business combination, strategic alliance or merger with a third party. There
can be no assurance that the Company will consummate any of these strategic
alternatives.
The development and permitting of new disposal facilities requires
significant capital expenditures over an extended period. Any growth of the
Company through the permitting of new disposal facilities or the lateral
expansion of its existing disposal facility would require substantial capital
expenditures. The Company intends to pursue the further expansion of the Pecan
Row Landfill. See Note 2 of the Notes to the Consolidated Financial Statements
for a discussion of closure and post-closure reserves.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, computer systems and/or software used by
many companies may need to be upgraded to comply with such "Year 2000"
requirements. The Company is currently in the process of evaluating its
information technology infrastructure for Year 2000 compliance. The Company does
not expect that the cost to modify its information technology infrastructure to
be Year 2000 compliant will be material to its financial condition or results of
operations. The Company does not anticipate any material disruption in its
operations as a result of any failure by the Company to be in compliance. The
Company's Year 2000 issues relate not only to its own systems but also to those
of its customers and suppliers. The Company does not currently have any
information concerning Year 2000 compliance status of its customers and
suppliers. In the event that any of the Company's significant customers or
suppliers does not successfully and timely achieve Year 2000 compliance, the
Company's business or operations could be adversely affected.
RECENT ACCOUNTING DEVELOPMENTS
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income," and Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information." Both
statements are effective for fiscal years beginning December 15, 1997. The
Company has not yet determined the effect, if any, of these statements on its
financial statements.
INFLATION
The Company does not consider inflation to have a material impact on
its results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by Part II,
Item 8, are included in Part IV, as indexed at Item 14(a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and position held by each
director and each executive officer of the Company as of December 31, 1997.
NAME AGE POSITION WITH THE COMPANY
Amy C. MacF. Burbott 47 President, Chief Executive Officer
and Director
Raymond F. Chase 42 Vice President, Chief Financial Officer,
Treasurer and Secretary
John A. Paglia 36 Vice President
Michael D. Paglia 35 Vice President and Director
Harve A. Ferrill 65 Chairman of the Board
Steven M. Engel 45 Director
Walter H. Barandiaran 45 Director
AMY C. MACF. BURBOTT has served as President and Chief Executive
Officer of GeoWaste since May 1996 and has served as Director since July 1991
(including having served as Chairman of the Board from February 1995 to May
1996). Ms. Burbott also served as President and Chief Executive Officer of the
Company from July 1991 until February 1995. From January 1991 to July 1991, Ms.
Burbott was engaged in the development of various solid waste projects through a
corporation she controlled. Prior to January 1991, Ms. Burbott served as Eastern
Region Vice President and General Counsel of Waste Management, Inc., a national
waste services company.
RAYMOND F. CHASE joined the Company as Controller and Treasurer in
July 1991. He was named a Vice President of the Company in April 1994 and was
named Secretary and Chief Financial Officer on February 1, 1995. From January
1990 through June 1991 he served as the Controller of a national solid waste
equipment leasing company, Olympic Compactor Rentals. From 1987 to 1990 he was
the Controller for Waste Management of North America, Inc.'s collection and
transportation subsidiary based in Southeastern Massachusetts.
JOHN A. PAGLIA joined the Company as a Vice President in August 1996
upon the Company's acquisition of United Sanitation. From July 1993 to August
1996, Mr. Paglia had served as an officer and owner of United Sanitation. From
1989 to July 1993, he was a general manager for Commercial Metals Company. Mr.
Paglia is the brother of Michael D. Paglia.
MICHAEL D. PAGLIA joined the Company as a Vice President and Director
in August 1996 upon the Company's acquisition of United Sanitation. From July
1993 to August 1996, Mr. Paglia had served as an officer and owner of United
Sanitation. From 1989 to July 1993, he was the general manager for the Northern
Florida operations of Commercial Metals Company. Mr. Paglia is the brother of
John A. Paglia.
HARVE A. FERRILL has served as Chairman of the Board of the Company
from August 1991 until February 1, 1995, and from May 1997 to the present. Mr.
Ferrill has served as a director of the Company and its predecessor, Utah Shale
Land & Minerals Corporation, since 1980. Since November 1992, Mr. Ferrill has
served as Chairman and Chief Executive Officer of Advance Ross Corporation, a
value-added tax refund service, and as its President from November 1990 through
June 1993. Mr. Ferrill also serves as a director of Gaylord Container
Corporation, a paper and container manufacturer, since 1992. Mr. Ferrill has
been President of Ferrill-Plauche Co., Inc., a private investment company, since
1982.
STEVEN M. ENGEL was elected to the Company's Board of Directors in
October 1992. Since April 1996, Mr. Engel has served as the President of Engel
Brothers Media, Inc., a television production company. From 1991 to April 1996,
Mr. Engel served as President of Hambro Resource Development, Incorporated, an
investment banking firm. From 1989 to 1991, Mr. Engel served as the President of
John Hancock Resource Development and was a Managing Director in the Corporate
Finance Department and Municipal Finance Department at Drexel Burnham Lambert,
an investment banking firm, founded in 1987.
WALTER H. BARANDIARAN was elected to the Company's Board of Directors
in April 1997. Mr. Barandiaran is a general partner and co-founder of The
Argentum Group, a New-York based private investment firm founded in 1987. Mr.
Barandiaran also is a director of Conner Industries, Inc. and Lanxide Precision,
Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file initial reports of
ownership and reports of change in ownership with the Securities and Exchange
Commission ("SEC"). Executive officers, directors and greater than 10%
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. During 1997, John A. Paglia, an
officer of the Company, failed to file with the SEC one required report on Form
4 relating to a total of six transactions. Except as described in the preceding
sentence, to the Company's knowledge, based solely on review of copies of such
reports furnished to the Company, all of these filing requirements were
satisfied.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth the aggregate remuneration paid or
accrued during the years 1997, 1996 and 1995 for the chief executive officer and
other executive officers of the Company whose total annual salary and bonus
exceeded $100,000 for the year ended December 31, 1997 (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
LONG TERM
COMPENSATION
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
<S> <C> <C> <C> <C>
Amy C. MacF. Burbott 1997 $175,000 $ -- --
President and Chief 1996 $105,833 $ 40,083(1) 400,000
Executive Officer 1995 $ 10,833 $121,129(1) --
Michael D. Paglia (2) 1997 $102,117 $ -- --
Vice President 1996 $ 51,425 $ -- 4,984
1995 $ -- $ -- --
John A. Paglia (2) 1997 $102,320 $ -- --
Vice President 1996 $ 51,315 $ -- 4,984
1995 $ -- $ -- --
(1) Consulting payments made to Ms. Burbott when she was not employed by the
Company.
(2) Former owner of United Sanitation which was purchased by the Company on
August 12, 1996.
</TABLE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has furnished the following report on executive
compensation:
The Company's fundamental philosophy for compensating executive
officers is to offer competitive compensation opportunities which are based on
each individual executive officer's contribution and personal performance. This
philosophy is designed to attract, retain, motivate and reward key executive
officers in the Company's highly competitive industry.
The compensation of the Company's executive officers is reviewed and
approved by the Board of Directors which utilizes compensation analyses for
similar type and size companies based on information contained in public
documents to ensure that the compensation is both reasonable and competitive,
and also is directly linked to the Company's financial performance and
stockholder interest.
There are three elements in the Company's executive compensation
program, as determined by individual and corporate performance.
- Base salary compensation is determined by the potential impact of the
individual on the Company's performance, the skill and experience
required by the job, and the performance and potential of the
incumbent in the job.
- Annual incentive compensation is discretionary and based on overall
performance of the Company and its pre-tax earnings.
- Long term incentive compensation consists of eligibility under the
Company's 1996 Stock Option Plan (the "1996 Plan"). Stock option
grants are awarded based on individual performance and the Company's
performance.
The Board of Directors does not allocate a fixed percentage of
compensation to each of these three elements, nor does the Board of Directors
use any specific qualitative or quantitative measures or factors in assessing
individual performance.
Ms. Burbott's and Messrs. Paglia's compensation for 1997 was based on
the same performance and other criteria as summarized in the preceding
paragraphs relative to all executive officers. Ms. Burbott also maintains a
significant long-term stock ownership position in the Company's Common Stock.
This ownership position creates a strong linkage between the Company's
management and its stockholders' interests.
THE BOARD OF DIRECTORS
Harve A. Ferrill
Amy C. MacF. Burbott
Walter H. Barandiaran
Steven M. Engel
Michael D. Paglia
COMPENSATION OF DIRECTORS
Directors of the Company are not paid for their services as such but
are reimbursed reasonable expenses incurred for Company business or attendance
at Board of Directors meetings. Directors are also eligible to receive grants
under the 1996 Plan. In July 1997, Messrs. Ferrill, Barandiaran and Engel were
each granted 35,000 stock options under the 1996 Plan at an exercise price of
$1.81 per share (the price for the Company's Common Stock on the date of grant).
AGREEMENTS RELATING TO EMPLOYMENT
Amy C. MacF. Burbott, the Company's President and Chief Executive
Officer, has a severance agreement which provides that her employment may be
terminated with or without cause, but if her employment is terminated without
cause, she is to receive severance payments equal to six months of her
current annual salary. In the event Ms. Burbott is terminated she is also
entitled to a payment equal to the product of (i) $.50 and (ii) the number of
shares of Common Stock of the Company purchased by her prior to June 28, 2001
pursuant to options on 400,000 shares of Common Stock granted to her on June 28,
1991. The agreement also specifies the continuation of certain health and
insurance benefits during the period severance payments are being made.
Raymond F. Chase, a Vice President of the Company, has a severance
agreement which provides that his employment may be terminated with or without
cause, but if his employment is terminated without cause following a change of
control of the Company, he is to receive severance payments equal to one-third
of the greater of $82,000 or his annual base salary at the time of termination.
In connection with the acquisition of United Sanitation in August
1996, Michael D. Paglia and John A. Paglia, Vice Presidents of the Company,
entered into four-year employment agreements. The agreements provide that their
employment may be terminated with or without cause, but if employment is
terminated without cause the Company will pay the lesser of (i) $150,300 or (ii)
48 minus the number of months worked prior to termination times $8,350.
OPTIONS GRANTED
No stock options were granted to the Named Executive Officers during
the fiscal year ended December 31, 1997. In July 1997, the Board of Directors
reduced the exercise price with respect to 100,000 options granted to Ms.
Burbott in 1996, which options vest on April 23, 1999, from $3.50 per share to
$2.75 per share.
The table below sets forth information for the Named Executive
Officers concerning option exercises during 1997 and outstanding options at
December 31, 1997.
AGGREGATE OPTION EXERCISES DURING 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-The-Money Options
On Options At End Of 1997 (#) At End Of 1997($)
Exercise Value Exercisable/ Exercisable/
NAME (#) Realized ($) Unexercisable Unexercisable (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Amy C. MacF. Burbott
<S> <C> <C> <C> <C>
Chief Executive 600,000 $225,000 (2)
Officer and President -0- $ -0- 200,000 -0-
Michael D. Paglia 1,246 -0-
Vice President -0- -0- 3,738 -0-
John A. Paglia 1,246 -0-
Vice President -0- -0- 3,738 -0-
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------
(1) Calculated using $1.0625 per share, the last sale price of the Company's
Common Stock on December 31, 1997.
(2) Includes 400,000 shares at an exercise price of $.50 per share for which
the Company must reimburse the exercise price.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During its most recent fiscal year, the Company did not have a formal
Compensation Committee. However, Amy C. MacF. Burbott and Michael D. Paglia
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation relating to executives of the Company other than
Ms. Burbott and Mr. Paglia.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 20, 1998, (i) by
each person who is known by the Company to own beneficially more than five
percent of the Common Stock, (ii) by each of the Company's current directors,
(iii) by each of the Named Executive Officers and (iv) by all current directors
and executive officers as a group.
- -------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED(1)
NAME NUMBER PERCENTAGE
Amy C. MacF. Burbott 700,000(2) 3.2%
Michael D. Paglia 1,001,246(3) 4.7%
John A. Paglia 256,246(4) 1.2%
Harve A. Ferrill 1,207,856(5) 5.6%
Steven M. Engel 51,000(6) *
Walter H. Barandiaran 111,400(6) *
Allen Holding Inc.
711 Fifth Avenue
New York, New York 10022 6,260,000(7) 27.5%
Emvest & Co.
c/o Morrissey & Hawkins
One International Place
Boston, Massachusetts 02110 2,000,000 9.4%
Kennedy Capital Management
10829 Olive Blvd.
St. Louis, Missouri 63141 1,488,500(8) 6.8%
All directors and executive
officers as group (7 persons) 3,454,642(9) 15.5%
- -----------------------------------------------------------------------------
- --------------------------------
* Less than 1%
(1) In computing the number of shares of Common Stock beneficially owned by a
person, shares of Common Stock subject to options and warrants held by that
person that are currently exercisable or that become exercisable within 60
days of March 20, 1998 are deemed outstanding. For purposes of computing
the percentage of outstanding shares of Common Stock beneficially owned by
such person, such shares of stock subject to options and/or warrants that
are currently exercisable or that become exercisable within 60 days are
deemed to be outstanding for such person but are not deemed to be
outstanding for purposes of computing the ownership percentage of any other
person.
(2) All such shares are subject to options that are currently exercisable or
become exercisable within 60 days.
(3) Includes 1,246 shares subject to options that are currently exercisable.
(4) Includes 1,246 shares subject to options that are currently exercisable.
(5) Includes 111,000 shares subject to options that are currently exercisable
and 26,080 shares beneficially owned by Mr. Ferrill, 18,000 of which he has
sole voting and investment power and 8,000 shares of which he shares voting
and investment power. Also includes 1,070,776 shares held by Advance Ross
Corporation (of which Mr. Ferrill is Chief Executive Officer), for which
Mr. Ferrill disclaims any beneficial ownership.
(6) Includes 11,000 shares subject to options that are currently exercisable.
(7) Includes 3,573,200 shares held by Allen Value Partners L.P., 760,000 shares
held by Allen & Company Incorporated ("Allen & Co.") and 426,800 shares
issued to Allen Value Limited Incorporated. Allen Holding Inc. may be
deemed to beneficially own the shares of Common Stock held by Allen Value
Partners L.P. and Allen Value Limited Incorporated. However, Allen Holding
Inc. disclaims beneficial ownership except to the extent represented by
Allen Holding Inc.'s equity interest and profit participation in such
entities. Also includes warrants held by Allen & Co. to purchase 1,500,000
shares (the "Allen & Co. Warrants") that are currently exercisable. The
amount in the table excludes 709,425 shares and warrants to purchase
500,000 shares (together with the Allen & Co. Warrants, the "Allen
Warrants") held by officers and directors of Allen & Co. for which Allen &
Co. disclaims beneficial ownership.
(8) According to a Statement on Schedule 13G filed with the SEC on February 10,
1998, Kennedy Capital Management holds sole dispositive power over these
shares, and holds sole voting power over 890,000 of these shares.
(9) Includes 957,816 shares subject to options that are currently exercisable
or become exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through its wholly owned subsidiary United Sanitation,
leases approximately 155,000 square feet of land and buildings in Ocala, Florida
which is used for the operations of United Sanitation's collection, transfer,
recycling and portable toilet business. The property is leased from a real
estate company which is controlled by Michael D. Paglia, a Vice President and
Director of the Company, and John A. Paglia, a Vice President of the Company.
The lease has a term of 20 years expiring in August 2016, grants the Company an
option to purchase the property at any time after the fifth year of the lease at
fair market value and has annual rent of $210,000, with yearly increases related
to increases in the Florida Consumer Price Index. The Company believes the lease
to be reasonable, fair and on terms and conditions typical for commercial leases
in the Ocala, Florida area.
In November 1997, the Company and Allen & Co. agreed to settle claims
relating to the Company's previous engagement of Allen & Co. for investment
banking and financial advisory services. Under the terms of the settlement,
Allen & Co. agreed to waive any claims against the Company and the parties
mutually agreed to modify the terms of the Allen Warrants. The exercise period
for the Allen Warrants was extended for an additional year to February 2, 1999
and the exercise price was increased from $.55 per share to $.61 per share.
<PAGE>
PART IV
ITEM 14. FINANCIAL STATEMENT, EXHIBITS AND REPORTS ON FORM 8-K
(a) Financial Statements
(i) Report of Independent Accountants.
(ii) Consolidated Balance Sheets as of December 31, 1997 and 1996.
(iii) Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995.
(iv) Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995.
(v) Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995.
(vi) Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
None.
(c) Exhibits. Each Exhibit is listed according to the number assigned to it in
the Exhibit Table of Item 601 of Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION
2.1 Asset Purchase Agreement dated January 10, 1997 by and among GeoWaste
of GA, Inc., Air-Sweep-A-Lot, Inc., Todd Griffin and Tim Griffin.
2.2 Asset Purchase Agreement dated November 7, 1997 by and among GeoWaste
of GA, Inc., T.F. Mitchell & Sons, Inc. and Stephen F. Mitchell.
3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and
restated (Incorporated by reference from Exhibit A to the Proxy filed
November 25, 1991 (File No. 0-9278)).
3.2 Bylaws of GeoWaste Incorporated, as amended.
3.3 Amendment to Amended and Restated Certificate of Incorporation of
GeoWaste Incorporated (Incorporated by reference from Exhibit 3.4 to
the Annual Report on Form 10-K for the year ended December 31, 1992
(File No. 0-9278)).
4.1 Registration Rights Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated and each of the entities listed on Exhibit A
thereto (Incorporated by reference from Exhibit 4(D) to the Current
Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.2 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton,
Brian Russell, James R. Jones, Paul Thomas Cohen, William vanden
Heuvel, Balis & Zorn, Inc. and IBJ Schroder Bank & Trust Company
(Incorporated by reference from Exhibit 4(B) to the Current Report on
Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.3 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening
and IBJ Schroder Bank & Trust Company (Incorporated by reference from
Exhibit 4(C) to the Current Report on Form 8-K filed August 19, 1991
(File No. 0-9278)).
4.4 Equivest First Convertible Debt Exchange Agreement, dated August 2,
1991, by and between GeoWaste Incorporated the parties listed on
Schedule A thereto (Incorporated by reference from Exhibit 2(B) to the
Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.5 Equivest Second Convertible Debt Exchange Agreement, dated August 2,
1991, by and between GeoWaste Incorporated the parties listed on
Schedule A thereto (Incorporated by reference from Exhibit 2(C) to the
Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.6 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Advance Ross Corporation, Allen & Company Incorporated,
Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening,
their persons or entities listed on Schedule A thereto and the persons
or entities listed on Schedule B thereto (Incorporated by reference
from Exhibit 4(A) to the Current Report on Form 8-K filed August 19,
1991 (File No. 0-9278)).
4.7 Voting Agreement, dated March 5,1992, by and between GeoWaste
Incorporated, the Delaware State Employees' Retirement Fund and the
Trust for Defined Benefit Plan of ICI American Holdings Inc.,
Frederick J. Iseman, Gian Caterine, Amy C. MacF. Burbott, Harve
Ferrill, James Swistock, Advance Ross Corporation and Allen & Company
Incorporated (Incorporated by reference from Exhibit 4.4 to the
Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)).
4.8 Voting Agreement dated as of August 12, 1996, among John A. Paglia,
Michael D. Paglia, Advance Ross Corporation, Allen & Company
Incorporated, Allen Value Partners L.P. and Allen Value Limited
Incorporated (Incorporated by reference from Exhibit 4.11 to the
Current Report on Form 8-K filed August 27, 1997 (File No. 0-9278)).
10.1 Revolving Credit Agreement dated October 9, 1997 by and among GeoWaste
Incorporated and its subsidiaries listed therein and BankBoston, N.A.
10.2 1996 Stock Option Plan of the Company dated November 18, 1996.
10.3 Warrant Purchase Agreement by and between GeoWaste Incorporated and
Allen & Company Incorporated (Incorporated by reference from Exhibit
10.1 to the Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 0-9278)).
10.4 Amendment to Warrant Purchase Agreement, dated as of November 21,
1997, by and between GeoWaste Incorporated and Allen & Company
Incorporated.
10.5 Severance Agreement, dated as of December 21, 1995, by and between
GeoWaste Incorporated and Raymond F. Chase (Incorporated by reference
from Exhibit 10.6 to the Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 0-9278)).
10.6 Letter Agreement, dated as of April 23, 1996, by and between GeoWaste
Incorporated and Amy C. MacF. Burbott. (Incorporated by reference from
Exhibit 10.9 to the Annual Report on Form 10-K for the year ended
December 31, 1996 (File No. 0-9278)).
10.7 Employment Agreement, dated as of August 12, 1996, by and between
GeoWaste Incorporated and John A. Paglia. (Incorporated by reference
from Exhibit 10.10 to the Annual Report on Form 10-K for the year
ended December 31, 1996 (File No. 0-9278)).
10.8 Employment Agreement, dated as of August 12, 1996, by and between
GeoWaste Incorporated and Michael D. Paglia. (Incorporated by
reference from Exhibit 10.11 to the Annual Report on Form 10-K for
the year ended December 31, 1996 (File No. 0-9278)).
21 Subsidiaries of the Registrant.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Restated Financial Data Schedule for the year ended December 31, 1996.
27.3 Restated Financial Data Schedule for the year ended December 31, 1995.
27.4 Restated Financial Data Schedule for the three months ended March 30,
1997.
27.5 Restated Financial Data Schedule for the six months ended June 30,
1997.
27.6 Restated Financial Data Schedule for the nine months ended September
30, 1997.
27.7 Restated Financial Data Schedule for the three months ended March 30,
1996.
27.8 Restated Financial Data Schedule for the six months ended June 30,
1996.
27.9 Restated Financial Data Schedule for the nine months ended September
30, 1996.
(d) Financial Statement Schedules
DESCRIPTION
Schedule II. Valuation and Qualifying Accounts
All other schedules have been omitted since the information is not
applicable, is not required or is included in the Consolidated Financial
Statements listed under section (a) of this Item 14.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of GeoWaste Incorporated:
We have audited the consolidated financial statements and the
financial statement schedule of GeoWaste Incorporated and Subsidiaries listed in
Item 14(a) and 14(d) of this Form 10-K. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule 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 consolidated financial position of
GeoWaste Incorporated and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Jacksonville, Florida
March 24, 1998
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
1997 1996
---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 738,790 $ 3,058,067
Accounts receivable, net of allowance of $269,000 in 1997
and $174,000 in 1996 2,449,994 2,214,061
Income tax receivable 416,196 -
Prepaid expenses 376,154 343,461
Deferred tax asset 140,000 221,000
----------------- -----------------
Total current assets 4,121,134 5,836,589
----------------- -----------------
Property and equipment:
Land, primarily disposal site 13,125,733 11,078,454
Buildings and improvements 605,441 433,025
Vehicles and equipment 11,910,630 8,830,438
Construction in progress 2,382,807 2,127,429
----------------- -----------------
28,024,611 22,469,346
Less - accumulated depreciation 11,535,911 8,613,446
----------------- -----------------
Net property and equipment 16,488,700 13,855,900
----------------- -----------------
Other assets:
Cost in excess of net assets of acquired
businesses and other intangibles, net of
accumulated amortization of $680,000 in
1997 and $322,000 in 1996 11,195,943 10,598,463
Investments 236,328 318,000
Other 66,794 9,139
---------- -----------
Total other assets 11,499,065 10,925,602
----------------- -----------------
Total assets $ 32,108,899 $ 30,618,091
================= =================
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
Current liabilities:
<S> <C> <C>
Current maturities of long-term debt $ 1,341,439 $ 4,672,950
Current portion of accrued royalties 231,139 245,530
Accounts payable 1,029,944 1,573,707
Accounts payable to related party 306,037 400,000
Accrued payroll 134,457 198,619
Accrued fees 290,979 145,008
Accrued income taxes - 700,000
Accrued other 246,249 46,929
Deferred revenue 753,248 876,624
----------------- ----------------
Total current liabilities 4,333,492 8,859,367
Long-term debt, less current maturities 8,531,395 2,522,311
Accrued royalties, less current portion 499,783 716,531
Closure and post closure obligations 2,047,815 1,787,136
Deferred tax liability 791,000 750,000
----------------- ---------------
Total liabilities 16,203,485 14,635,345
------------------ ----------------
Commitments and contingencies (Notes 9 and 16)
Stockholders' equity:
Preferred stock, authorized 5,000,000 shares,
$.01 par value; none issued or outstanding - -
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and outstanding 21,286,549 and
21,028,634 shares in 1997 and 1996, respectively 2,128,655 2,102,863
Additional paid-in capital 13,231,202 12,910,437
Retained earnings 545,557 969,446
----------------- ----------------
Total stockholders' equity 15,905,414 15,982,746
----------------- ----------------
Total liabilities and stockholders' equity $ 32,108,899 $ 30,618,091
================= ================
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- ----
<S> <C> <C> <C>
Net revenues $ 19,396,772 $ 13,702,708 $ 8,932,528
Costs and expenses:
Operating 13,535,937 8,228,849 5,207,250
Unusual charges 1,083,000 - -
Selling, general and administrative 3,953,545 2,618,571 1,459,197
Amortization of intangibles 358,159 144,868 71,180
-------------- --------------- --------------
Income from operations 466,131 2,710,420 2,194,901
Other income (expense):
Other income, primarily interest 10,185 200,461 175,655
Interest expense (577,998) (443,912) (368,338)
Gain (loss) on sale of assets (79,207) 432,623 7,092
Gain on sale of investments - 82,913 -
-------------- --------------- --------------
Income (loss) before income taxes (180,889) 2,982,505 2,009,310
Income tax provision 243,000 1,275,000 547,000
-------------- --------------- -------------
Net (loss) income $ (423,889) $ 1,707,505 $ 1,462,310
=============== =============== ==============
Basic (losses) earnings per common share $ (.02) $ .09 $ .08
========== ======== ============
Diluted (losses) earnings per common share $ (.02) $ .08 $ .07
========== ======= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
COMMON STOCK NET UNREALIZED RETAINED EARNINGS TOTAL
NUMBER OF $.01 PAR ADDITIONAL GAINS (LOSSES) (DEFICIT) STOCKHOLDERS'
SHARES VALUE PAID IN CAPITAL ON INVESTMENTS EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 18,662,605 $ 1,866,260 $ 6,191,110 $ (8,179) $ (2,200,369) $ 5,848,822
Change in net unrealized gains - - - 75,225 - 75,225
Net income - - - - 1,462,310 1,462,310
------------ ------------- ------------ -------------- ------------ ------------
Balance at December 31, 1995 18,662,605 1,866,260 6,191,110 67,046 (738,059) 7,386,357
Issuance of stock for acquisitions 2,233,946 223,395 6,306,605 - - 6,530,000
Stock options exercised, including
tax benefit of $114,134 132,083 13,208 172,722 - - 185,930
Extension of warrants - - 240,000 - - 240,000
Change in unrealized gains - - - (67,046) - (67,046)
Net income - - - - 1,707,505 1,707,505
------------ ------------- ------------ -------------- ------------ ------------
Balance at December 31, 1996 21,028,634 2,102,863 12,910,437 - 969,446 15,982,746
Conversion of 8.5% Convertible
Debentures 200,000 20,000 260,000 - - 280,000
Stock options exercised, including
tax benefit of $33,000 57,915 5,792 60,765 - - 66,557
Net loss - - - - (423,889) (423,889)
------------ ------------- ------------ -------------- ------------ ------------
Balance at December 31, 1997 21,286,549 $ 2,128,655 $ 13,231,202 $ - $ 545,557 $ 15,905,414
=========== ============= ============ ============== ============== =============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Income (loss) $ (423,889) $ 1,707,505 $ 1,462,310
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 3,698,558 2,555,863 2,505,103
Deferred income taxes 168,000 36,000 323,000
Non cash interest expense - - 80,823
Goodwill write-off 436,000 - -
Impairment of property 202,121 - -
Provision for closure and post closure costs 260,679 275,489 620,472
Provision for doubtful accounts 298,699 163,129 28,400
Gain on sale of investments - (82,913) -
Amortization of discount (18,600) (18,000) -
(Gain) loss on sale of assets 79,207 (432,623) (7,092)
Changes in assets and liabilities:
Accounts receivable (534,632) (686,534) 112,861
Income tax (1,083,196) 550,682 59,318
Prepaid expenses (32,693) (93,437) (62,238)
Other assets - 54,919 -
Accounts payable and accrued liabilities (720,288) 417,859 (95,029)
Deferred revenue (123,376) 192,090 (123,012)
-------------- -------------- -------------
Net cash provided by operating activities 2,206,590 4,640,029 4,904,916
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of limited partnership - 656,920 -
Proceeds from sale of investments 100,272 701,402 -
Cash paid for business acquisitions (1,379,224) (2,420,228) -
Purchases of property and equipment (3,972,117) (3,613,967) (1,820,033)
Proceeds from the sale of equipment 379,248 57,000 19,670
Purchase of investments - - (313,445)
Proceeds from sale of business 204,761 - -
------------- -------------- --------------
Net cash used in investing activities (4,667,060) (4,618,873) (2,113,808)
------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 33,557 71,795 -
Proceeds from debt issuance 5,187,000 - -
Payment of debt, capital lease obligations,
and accrued royalties (5,079,364) (1,020,343) (439,047)
-------------- --------------- --------------
Net cash provided by (used in) financing activities 141,193 (948,548) (439,047)
----------- --------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,319,277) (927,392) 2,352,061
Cash and cash equivalents, beginning of year 3,058,067 3,985,459 1,633,398
------------ -------------- ------------------
Cash and cash equivalents, end of year $ 738,790 $ 3,058,067 $ 3,985,459
============= ============== ==================
Note: See Note 15 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
GeoWaste Incorporated (the "Company") is in the business of owning,
operating and acquiring non-hazardous, solid waste collection, transportation
and transfer companies and disposal facilities. The Company operates a landfill
in southern Georgia, collection companies in southern Georgia and northern
Florida, a transfer station in northern Florida and a sweeping company in
northern Florida. The Company also sells recyclable paper and rents and services
portable toilets. The Company's customers include governments, commercial
entities and residences located in the southeastern United States.
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 recorded as income in the period in which the related service
is rendered. Disposal and transfer revenues are recognized with the performance
of the service. Sales of recyclable paper are recognized upon delivery of the
product. No customer accounted for more than 10% of the Company's revenue in
1997. One customer accounted for approximately 14% and 21% of the Company's
revenue in 1996 and 1995, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. Uintah Basin Limited
Partnership, a former majority-owned subsidiary, was sold during 1996 and the
Company recognized a gain of $432,623.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of money market funds primarily invested in
short-term debt securities and other highly liquid investments with maturities
of three months or less from the date they were purchased. These securities are
stated at cost which approximates market value.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives, ranging
from 5 to 10 years for buildings and improvements and 2 to 8 years for vehicles
and equipment, using the straight-line method.
The disposal site is carried at cost. To the extent cost exceeds
estimated net realizable value upon closure of the disposal site, such excess is
amortized over the estimated life of the disposal site based on the ratio of
tons of solid waste placed in the landfill over the estimated total capacity of
the disposal site. Disposal site improvements are capitalized and charged to
operations based on the estimated remaining capacity of the site; operating
costs are expensed as incurred. Statement of Financial Accounting Standards No.
121 is applied to the Company's sole solid waste disposal facility by
considering historical, current and forecasted operating results. Due to the
relationship of the landfill's operating costs to current and forecasted
landfill revenues and the resulting operating margins, the Company has not
experienced a situation where the landfill costs are not recoverable.
Depreciation expense for property and equipment was approximately
$3,345,000, $2,411,000, and $2,418,000, for the years ended December 31, 1997,
1996, and 1995, respectively.
CAPITALIZED INTEREST
Interest is capitalized on construction of Company's landfill during
the periods of construction. For the year ended December 31, 1997, total
interest costs capitalized was $93,000. No interest was capitalized in 1996 or
1995 due to immateriality.
COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES AND OTHER INTANGIBLES
The cost in excess of net assets of acquired businesses is being
amortized on a straight-line basis over forty years. The carrying value of
intangible assets is periodically reviewed for impairment by the Company based
on the expected future undiscounted cash flows of the related business unit.
(See Notes 11 and 17.) Other intangibles include non-compete agreements and
customer lists and are being amortized on a straight line basis over five years.
INVESTMENTS
The Company accounts for investments in accordance with Statement of
Financial Accounting Standards No. 115 "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). Investments are classified as
available-for-sale or held-to-maturity as applicable. Available-for-sale
securities are recorded at fair value and held-to-maturity investments are
recorded at amortized cost. Amortized cost is adjusted for amortization of
discount to maturity. Such amortization is included in other income. Realized
gains and losses are included in other income and are determined on the specific
identification basis.
INCOME TAXES
Deferred income tax liabilities and assets are determined using
currently enacted tax rates applicable to the period in which deferred tax
liability or assets are expected to be settled or realized. The deferred tax
liability or asset is determined based on the difference between the financial
statement and tax bases of assets and liabilities. The tax benefits recognized
must be reduced by a valuation allowance to the extent it is more likely than
not the benefits may not be realized.
EARNINGS (LOSSES) PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
128). SFAS 128 is effective for financial statements issued for periods ending
after December 15, 1997. All earnings (losses) per share and related weighted
average shares outstanding have been restated.
Basic earnings (losses) per common share are computed by dividing net
income (losses) by the weighted average number of common shares outstanding for
the period. Diluted earnings (losses) per common share reflect the maximum
dilution that would have resulted from the exercise of common stock equivalents
which consists of stock options and warrants (see Note 8) and convertible
debentures (see Note 5). Diluted earnings (losses) per common share are computed
by dividing net income (losses), after adding back the after-tax interest on the
convertible debentures, by the weighted average number of common shares and all
dilutive securities. Diluted earnings (losses) per common share does not
consider the conversion of any common stock equivalents that would have an
antidilutive effect on diluted earnings (losses) per share.
USE OF 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 (such as
allowance for doubtful accounts, depreciation lives, costs in excess of net
assets of acquired businesses, and closure and post closure reserves) and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from those estimates.
LONG-LIVED ASSETS
In 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." SFAS 121 requires that long-lived
assets and certain identifiable intangibles to be held and used or disposed of
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS 121 also requires losses to be accrued, if any, on long-lived
assets to be disposed. See Notes 11 and 17 for impairment losses recognized in
1997. There were no impairment losses recognized in 1996.
ENVIRONMENTAL COSTS
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably estimable.
Accruals for estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study. Such accruals are adjusted as further information develops or
circumstances change. No accruals were necessary for the years ended December
31, 1997, 1996 or 1995.
RECLASSIFICATION
Certain items in prior years' financial statements have been
reclassified to conform with the current year presentation.
2. CLOSURE AND POST-CLOSURE RESERVES
The Company will have material financial obligations with respect to
the closure and post closure of its landfill. Disposal site closure and
post-closure costs, which includes final capping of the site, site inspections,
ground-water monitoring, leachate management, methane gas control and recovery,
and operation and maintenance costs to be incurred during the thirty year
post-closure period, are accrued and charged to expense over the estimated
useful life of the landfill. Requirements for closure and post-closure are
established by Subtitle D of the EPA.
While the precise amount of these future obligations cannot be
determined, it is estimated that the total cost for final closure and
post-closure will approximate $3,600,000 when the landfill reaches its capacity.
These amounts are based on estimates obtained from an independent engineering
firm. Amounts accrued for closure and post-closure costs are $2,047,815 and
$1,787,136 as of December 31, 1997 and 1996, respectively, and are accrued based
on capacity used. The liability is not present valued, however the Company uses
a 3% inflation factor when estimating the ultimate costs of closure and post
closure costs. Actual, ultimate costs could materially differ from these
estimates.
In February 1996 and February 1998 the Company was granted
modifications to its permit for the Company's landfill by the Georgia
Environmental Protection Division which increased the total capacity of the
landfill by approximately 1,500,000 and 1,100,000 tons of solid waste,
respectively. As a result of the modification to the Company's permit in 1998,
the Company received new estimates of the final closure and post closure costs.
It is estimated that total costs will approximate $8,700,000. As a result of the
1996 capacity increase, the estimated amortization rate of the disposal site and
the estimated accrual rate of closure and post closure reserves have been
adjusted. The 1996 net income and earnings per share were $430,000 and $0.02
higher as a result of this change in estimate. The pro forma effect of the 1998
modification and new cost estimates on 1997 net loss and losses per share is an
additional loss of $36,000 and no change in the losses per share.
3. ACQUISITIONS
During 1997 and 1996, the Company acquired the entities described
below, which were accounted for by the purchase method of accounting.
(a) In January 1997, the Company acquired the waste related assets of
Air Sweep-A-Lot, Inc. ("ASAL") a solid waste collection and sweeping company
located in Valdosta, Georgia. The total purchase price of approximately
$1,028,000 consisted of cash in the amount of $200,000, acquisition costs of
$19,000, assumption of debt in the amount of $487,000 and the issuance of an 8%
promissory note with a principal amount of $322,000 to the sellers of ASAL. The
value of the non-competition agreement assigned to this transaction was $85,000
and is being amortized over 5 years. The excess of the purchase price over the
net assets acquired of approximately $367,000 is being amortized over forty
years. The operations of ASAL are not material to the Company's consolidated
operations.
(b) In November 1997, the Company purchased the assets of T.F.
Mitchell & Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"), located in Cordele,
Georgia. The total purchase price of $1,519,000 consisted of cash in the amount
of $1,000,000, a payable of $306,000 due in February 1998, acquisition costs of
$19,000, and assumption of $194,000 in debt. The payable was paid in February
1998 and is classified as accounts payable to a related party in the
accompanying balance sheet. A value of $150,000 was assigned to Mitchell's
customer lists and $100,000 to the non-competition agreement associated with
this transaction. The value of both the customer lists and the non-competition
agreement are being amortized over five years. The excess of the purchase price
over the assets acquired of approximately $672,000 is being amortized over forty
years. The operations of Mitchell are not material to the Company's consolidated
operations.
(c) In March 1996, the Company acquired all of the outstanding shares
of North Florida Sweeping, Inc. ("NFS"), a street sweeping and solid waste
rolloff collection company located in Jacksonville, Florida. The consideration
given of $1,732,000 consisted of $280,000 of common stock (233,946 shares of the
Company's stock valued at $1.197 per share), cash of $350,000, assumption of NFS
liabilities in the amount of $862,000 and 75,000 common stock warrants that are
exercisable at $1.25 per share. The Company also extended the exercise date for
2,000,000 warrants issued pursuant to a certain warrant agreement with a related
party, to February 2, 1998 as consideration for investment advisory services
provided to the Company in connection with the purchase of NFS. The Company
assigned a value of $240,000 to this modification in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting For Stock Based
Compensation" (SFAS 123). The excess of the purchase price over the fair value
of the assets acquired was approximately $597,000 and has been recorded as
goodwill, which is being amortized on a straight-line basis over forty years.
(See Note 11 for recission of purchase.)
(d) In August 1996, the Company acquired all of the outstanding shares
of Spectrum Group, Inc. (d/b/a United Sanitation), a collection recycling and
transfer company located in Ocala, Florida. The purchase price of $11,592,000
was comprised of 2,000,000 shares of common stock valued at $3.125 per share,
cash of $954,000, acquisition costs of $680,000 and assumption of liabilities of
$3,708,000. The excess of the purchase price over the fair value of assets
acquired was approximately $8,217,000 and has been recorded as goodwill, which
is being amortized on a straight-line basis over forty years.
(e) In August 1996, the Company acquired certain equipment and
accounts receivable of Standard Disposal Service of Florida, Inc., a collection
company located in Marion County, Florida, for $1,296,000. The purchase price
consisted of $720,000 cash and assumption of $576,000 of debt. The excess of the
purchase price over the fair value of assets acquired was $732,000, which is
being amortized over forty years.
The Company also had other acquisitions during 1996 which were not
significant.
The purchase prices of all of the Company's acquisitions have been
allocated to the assets purchased and the liabilities assumed based upon the
fair values on the dates of acquisition, as follows:
1997 1996
---- ----
Current assets $ - $ 910,000
Property and equipment 1,172,000 4,143,000
Other assets - 8,000
Goodwill and intangibles 1,374,000 9,676,000
Current liabilities - (1,217,000)
Long-term liabilities (681,000) (3,930,000)
----------------- -----------------
$ 1,865,000 $ 9,590,000
================ ================
The operating results of these business acquisitions have been
included in the consolidated statements of operations from the dates of
acquisition.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and the acquired businesses as
if the acquisitions had occurred at the beginning of the year preceding the
year of acquisition.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $ 20,652,433 $ 20,386,000 $ 16,272,000
Net income (loss) (293,000) 1,745,000 1,388,000
Earnings (losses) per common share $ (0.01) $ .09 $ .07
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional depreciation
expense as a result of a step-up in the basis of fixed assets, additional
amortization expense for goodwill, decrease in disposal charges for disposing
waste at the Company's landfill and increase in officers' salaries of the
acquired business that have become employees of the Company. These unaudited pro
forma results are not necessarily indicative of what the actual consolidated
results of operations might have been if the acquisitions had been effective at
the beginning of the year preceding the year of acquisition.
4. SALE OF ASSETS
In June 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate sale price was $210,000 and resulted in a gain of
approximately $120,000 which is included in gain on sale of assets in the
accompanying consolidated statements of operations.
5. LONG-TERM DEBT
Long-term debt at December 31, 1997 and 1996 consists of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Note payable to bank under $5 million revolving credit
facility, due October 2000 $ 4,800,000 $ -
8.5% convertible subordinated debentures, due 1997 - 3,884,265
Notes payable to banks at fixed interest rates ranging from 8.5% to
10.5% and variable interest rates ranging from prime to prime plus
2.09% (weighted average interest rate of 9.1% as of December 31, 1997)
through 2010 collateralized by vehicle, equipment and other
assets 1,600,719 1,248,838
Uncollateralized notes payable to individuals at fixed interest rates
ranging from 8% to 9% (weighted
average interest rate of 8.5%) through 2005 1,417,169 1,209,394
Notes payable to finance institutions at fixed interest rates ranging
from 8% to 13.4% and variable interest rates ranging from prime plus
1.5% to prime plus 2% (weighted average interest rate of 9.4%) through
2003, collateralized by equipment 1,593,130 671,801
Capitalized lease obligations at fixed interest rates ranging from 8%
to 10.5% (weighted average interest rate of 8.5%) through 2001,
collateralized by equipment
and vehicles 410,875 102,735
Other notes payable 50,941 78,228
-------------- ---------------
9,872,834 7,195,261
Less current portion (1,341,439) (4,672,950)
--------------- ----------------
$ 8,531,395 $ 2,522,311
============== ===============
</TABLE>
Aggregate maturities of long-term debt including capital leases at
December 31, 1997 were as follows:
YEAR ENDING
DECEMBER 31
1998 $ 1,341,439
1999 1,037,141
2000 5,672,078
2001 569,728
2002 411,192
Thereafter 841,256
--------------
$ 9,872,834
==============
The Company's 8.5% convertible subordinated debentures (the
"Debentures"), which were convertible into shares of common stock at $1.40 per
share, matured in March 1997, at which time the Company and the holder of the
Debentures mutually agreed to extend the due date of the Debentures to September
1997. In March 1997, the holder of the Debentures also converted $280,000 of the
Debentures into 200,000 shares of common stock. In October 1997, the Company
repaid the remaining $3,604,265 of principal and accrued interest on the
Debentures from borrowings under the revolving credit facility discussed below.
On October 9, 1997, the Company entered into a $5 million revolving
credit facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and
borrowed $4.8 million under the Credit Facility to repay the principal and
accrued interest on the Debentures and to finance the cash portion of the
purchase price for Mitchell. Borrowings under the Credit Facility may be used
for working capital, refinancing of outstanding debt, capital expenditures and
other general corporate purposes. Interest on borrowings under the Credit
Facility is payable at a rate of one-quarter of one percent plus the higher of
(i) the Bank's base rate or (ii) one percent above the overnight federal funds
effective rate, as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time. The interest rate at December 31, 1997
was 8.75%. Borrowings under the Credit Facility mature on October 9, 2000 and
are collateralized by the stock of the Company's subsidiaries. Under the terms
of the Credit Facility, the Company is prohibited from paying cash dividends on
its Common Stock and the Company must maintain certain financial covenants on a
quarterly basis of which the most significant is the interest coverage ratio.
The financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter.
6. ACCRUED ROYALTIES
Royalty obligations, payable to the former stockholder of an acquired
company, amounted to $730,922 and $962,061 at December 31, 1997 and 1996,
respectively. The Company has estimated $231,139 and $245,530 will be paid in
1998 and 1997 respectively, and accordingly has classified these amounts as a
current liability. The Company pays the former stockholder $1 per ton of waste
disposed in the Company's landfill.
7. EARNINGS (LOSSES) PER SHARE
The following is the reconciliation of the numerator and denominator
of the basic and diluted earnings (losses) per share for the years ended
December 31, 1997, 1996 and 1995:
<PAGE>
<TABLE>
<CAPTION>
Income Shares Per-Share
1997 (NUMERATOR) (DENOMINATOR) AMOUNTS
---- ----------- ------------- -------
BASIC LOSSES PER SHARE
Losses available to
<S> <C> <C> <C>
common stockholders $ (423,889) 21,246,779 $(0.02)
============= ========== ======
EFFECT OF DILUTIVE SECURITIES - - -
DILUTED LOSSES PER SHARE
Losses available to common stockholders
and assumed conversions $ (423,889) 21,246,779 $(0.02)
============== ========== =======
</TABLE>
Options and warrants to purchase 3,318,054 shares of common stock at
prices ranging from $.50 to $3.50 were outstanding during 1997 but were not
included in the computation of diluted losses per share. The Company also had
convertible subordinated debentures outstanding of $3,604,265 for the first
three quarters of 1997 which was convertible into shares of common stock at
$1.40 per share. All of the above securities were not included in diluted losses
per share due to cumulative losses by the Company in 1997.
<TABLE>
<CAPTION>
Income Shares Per-Share
1996 (NUMERATOR) (DENOMINATOR) AMOUNTS
---- ----------- ------------- -------
BASIC EARNINGS PER SHARE
Income available to
<S> <C> <C> <C>
common stockholders $ 1,707,505 19,659,044 $ 0.09
=============== ========== =========
EFFECT OF DILUTIVE SECURITIES
Options and warrants - 2,180,439
8.5% Convertible subordinated debentures 214,606 2,774,475
------------ -----------
DILUTED EARNINGS PER SHARE
Income available to common stockholders
and assumed conversions $ 1,922,111 24,613,958 $ 0.08
=============== =============== =========
</TABLE>
Option to purchase 200,000 shares of common stock at prices ranging
from $2.75 to $3.50 were outstanding during the last three quarters of 1996 but
were not included in the computation of diluted earnings per share since the
exercise price was greater than the average stock price during 1996.
<TABLE>
<CAPTION>
Income Shares Per-Share
1995 (NUMERATOR) (DENOMINATOR) AMOUNTS
---- ----------- ------------- -------
BASIC EARNINGS PER SHARE
Income available to
<S> <C> <C> <C>
common stockholders $ 1,462,310 18,662,505 $ 0.08
=============== ========== =========
EFFECT OF DILUTIVE SECURITIES
Options and warrants - 1,130,882
DILUTED EARNINGS PER SHARE
Income available to common stockholders
and assumed conversions $ 1,462,310 19,793,387 $ 0.07
=============== =============== =========
</TABLE>
<PAGE>
Options to purchase 61,500 shares of common stock at a price of $1.19
were outstanding during the last quarter of 1995 but were not included in the
computation of diluted earnings per share since the exercise price was greater
than the average stock price during 1995. The Company also had convertible
subordinated debentures outstanding of $3,884,265 during 1995 which is
convertible into shares of common stock of the Company at $1.40 per share. These
securities were not included in diluted earnings per share as they were
considered antidilutive.
8. MANAGEMENT OPTIONS AND COMMON STOCK WARRANTS
In 1991, the Company granted to certain key management options to
acquire an aggregate of 1,854,945 shares of common stock at a purchase prices
ranging from $.50 to $1.37 per share. The Company has also adopted two Stock
Option Plans, which provided for the granting of a total of 1,803,000 shares to
key employees. All options must be exercised on or prior to the tenth
anniversary of the grant. The options vest to key management and employees over
a three year period based upon length of service with the Company.
A summary of the status of the Company's options outstanding as of
December 31, 1997, 1996 and 1995 and changes during the periods ended on those
dates are presented below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------- ------------------------- -----------------------
Weighted- Weighted- Weighted-
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
(IN 000) PRICE (IN 000) PRICE (IN 000) PRICE
-------- ------- -------- ------- -------- ------
Outstanding at
<S> <C> <C> <C> <C> <C> <C>
beginning of period 1,171 $ 1.32 1,597 $0.53 1,535 $0.50
Granted 325 1.81 465 2.51 62 1.19
Exercised 58 .58 132 0.54 - -
Cancelled 120 1.58 759 0.50 - -
-------- --------- ---------
Outstanding at
end of period 1,318 $ 1.38 1,171 $ 1.32 1,597 $ 0.53
======= ====== ======== ======== ====== =======
Options exercisable
at end of period 916 $ 0.97 789 $ 0.73 753 $ 0.52
======== ====== ======== ======= ========= =======
</TABLE>
The following table summarizes information about fixed stock options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Weighted- Weighted Weighted
Remaining Average Average
Range of Shares Contractual Exercise Shares Exercise
EXERCISE PRICE (IN 000) LIFE PRICE (IN 000) PRICE
-------------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
$.50 605 3.5 years $ 0.50 605 $ 0.50
$1.19 to 1.75 39 8.0 years 1.30 36 1.27
$1.81 to $2.13 474 9.0 years 1.92 275 1.96
$2.75 200 8.5 years 2.75 - -
------ --------- ------- ----- -------
Total 1,318 6.5 years $ 1.38 916 $ 0.97
===== ========= ======= ==== ========
</TABLE>
<PAGE>
The Company applies APB Opinion 25 and related interpretations in
accounting for the stock option plans. Accordingly, no compensation cost has
been recognized for the two stock option plans. Had compensation cost been
determined based on the estimated fair value at the grant dates for awards under
those plans since January 1, 1995, consistent with the method of SFAS 123, the
Company's net income (loss) and earnings (losses) per share for the years ended
December 31, 1997, 1996 and 1995 would have been the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
Net income (loss):
<S> <C> <C> <C>
As reported $ (423,889) $ 1,707,505 $ 1,462,310
Pro forma $ (457,372) $ 1,465,472 $ 1,449,431
Earnings (losses) per share:
As reported $ (.02) $ .09 $ .08
Pro forma $ (.02) $ .07 $ .08
</TABLE>
For purposes of computing the pro forma amounts above, the
Black-Scholes option-pricing model was used with the following assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Estimated lives of plan options 4-7 years 2-5 years 3 years
Risk-free interest rates 5.87% - 5.99% 6.0% 5.38%
Expected volatility 76% 80% 80%
Dividend yield None None None
</TABLE>
The weighted-average estimated fair value of options granted during
1997, 1996 and 1995 was $1.17, $1.12 and $0.65, respectively.
There are options 400,000 granted to an executive pursuant to which
the Company will pay he execise price of $200,000 to the executive in the event
options are exercised.
In addition, the Company has issued warrants to acquire up to
2,000,000 shares of the Company's common stock at $.55 per share through
February 1998 to a related party for investment advisory services rendered to
the Company. In November 1997, the Company extended these warrants to February
1999 at an exercise price of $0.61 per share. No expense was recognized as a
result of this extension. These warrants are subject to anti-dilution rights and
are adjustable for stock splits, stock dividends and similar events.
<PAGE>
9. LEASES
The Company leases its office facilities and certain equipment under
various operating lease agreements some of which contain renewal options. Future
minimum commitments at December 31, 1997 under various noncancelable operating
leases are as follows:
YEAR ENDING
DECEMBER 31
1998 $ 574,197
1999 485,010
2000 444,062
2001 429,945
2002 267,308
Thereafter 2,850,323
--------------
Total minimum lease payments $ 5,050,845
==============
Rental expense for all operating leases amounted to $663,427, $452,881
and $243,359 for the years ended December 31, 1997, 1996 and 1995, respectively.
10. INVESTMENTS
The Company holds a surety bond for the closure/post closure care
costs which required a collateral deposit of $200,000 and $300,000 as of
December 31, 1997 and 1996, respectively.
Investments at December 31, 1997 and 1996 consists of the following:
<TABLE>
<CAPTION>
1997 1996
------------------------- --------------------------
AMORTIZED AMORTIZED
COST FAIR VALUE COST FAIR VALUE
Available-for-sale investments
<S> <C> <C> <C> <C>
U.S. Government securities $ 236,328 $ 236,328 $ - $-
========== ============ ============== ======
Held-to-maturity investments
U.S. Government securities $ - $ - $ 318,000 $271,560
====== ========= ========== ========
</TABLE>
The U.S. Government securities held at December 31, 1997 and 1996
mature in 2016. These investments were classified as held to maturity at
December 31, 1996. However, during 1997 the Company received a refund from the
surety company reducing the amount of collateral deposit required. As a result,
the remaining investments were transferred to available for sale during 1997.
The amortized cost of the investments sold and transferred was $100,272 and
$236,328, respectively. Proceeds from the sale of investments was $100,272.
Gross realized gains from the sale of securities classified as
available for sale for the years ended December 31, 1996, and 1995 were $82,913
and $12,149, respectively. Gross realized gains for the year ended December 31,
1997 were immaterial.
11. UNUSUAL CHARGES
In March 1996 the Company acquired all of the capital stock of NFS, a
street sweeping and roll-off collection company based in Jacksonville, Florida.
On December 31, 1996, the Company filed suit in the United States District Court
for the Middle District of Florida, Jacksonville Division (the "Court"), against
the former shareholders of NFS seeking recission, abrogation and annulment of
the transaction and damages.
During the second quarter of 1997 the Company conducted a review of
certain operating practices of NFS and determined that NFS: (i) had not fully
complied with the performance specifications of its highway and street sweeping
contracts; (ii) had not fully conformed with all applicable requirements in its
disposal of street sweepings; and (iii) is required to continue to perform under
the terms of the highway and street sweeping contracts until their expirations.
In response to these findings the Company implemented certain remedial actions
with respect to the operations of NFS, including additional, and in some
instances multiple, re-sweeps in order to meet the performance standards of the
contracts and rectification of NFS's waste disposal practices.
As a result of the remedial actions taken with respect to the
operations of NFS the Company: (a) estimated and accrued the losses on the
sweeping contracts; and (b) in accordance with Statement of Financial Accounting
Standard No. 121 - "Accounting for The Impairment of Long-Lived Assets And For
Long-Lived Assets To Be Disposed Of", concluded that the goodwill associated
with the NFS acquisition is not recoverable. Accordingly, the Company took a
charge of $436,000 to earnings.
Additionally, during the first quarter of 1997, the Company and the
City of St. Augustine, Florida mutually agreed to terminate the existing
transfer, transportation and disposal agreement. In connection with such
termination the Company has agreed to transport and dispose of the solid waste
generated from the City of St. Augustine through October 31, 1997. The Company
is no longer required, however, to construct a permanent transfer station and
accordingly, wrote-off certain design and permitting costs which had been
previously deferred.
All of the above asset write-offs and expenses have been classified as
"Unusual Charges" in the 1997 Consolidated Statement of Operations, and are
summarized as follows:
Additional sweeping costs paid $ 68,000
Legal and consulting expenses 282,000
Accrued Loss on sweeping contracts 96,000
Write-off of NFS goodwill 436,000
Write-down of NFS real estate 110,000
Write-off of transfer station development costs 91,000
--------------
Total $ 1,083,000
==========
The Company settled the suit with the former shareholders of NFS on
October 9, 1997. Pursuant to the settlement, on October 14, 1997 the Court
entered a judgment declaring the acquisition of NFS "to be completely abrogated
and annulled, so as to never have had any force and effect whatsoever,"
including the merger of NFS and a subsidiary of the Company and the transfer of
the capital stock of NFS to the Company. As part of the settlement, the Company
received a $50,000 cash payment, retained the assets of NFS and canceled
warrants to purchase 75,000 shares of the Company's common stock at an exercise
price of $1.25 which were issued to the NFS shareholders in connection with the
nullified transaction.
12. INCOME TAXES
The provision (benefit) for income taxes for 1997, 1996, and 1995
consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
Current:
<S> <C> <C> <C>
Federal $ (100,000) $ 972,000 $ 130,000
State 175,000 267,000 94,000
-------------- -------------- ---------------
75,000 1,239,000 224,000
-------------- -------------- ---------------
Deferred:
Federal 150,000 32,000 293,000
State 18,000 4,000 30,000
-------------- -------------- ---------------
168,000 36,000 323,000
-------------- -------------- ---------------
Income tax provision $ 243,000 $ 1,275,000 $ 547,000
============== ============== ===============
</TABLE>
The difference between the actual income tax provision and the tax
provision computed by applying the statutory federal income tax rate to income
before taxes is attributable to the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------- ------------------------- ------------------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
Tax computed using federal
<S> <C> <C> <C> <C> <C> <C>
statutory rate $ (62,000) (34) $1,015,000 34 $ 703,000 35
Utilization of operating
loss carryforward - - - - (195,000) (10)
State income taxes, net of
federal income tax effect 21,000 12 128,000 4 80,000 4
Other 61,000 33 132,000 5 (41,000) (2)
Goodwill write off 223,000 123 - - - -
------------ --------- ------------ -------- ---------- -----------
$ 243,000 134 $ 1,275,000 43 $ 547,000 27
============ ========= ============ ======== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
The components of deferred tax assets and liabilities, as of December
31, 1997 and 1996, were as follows:
1997 1996
---- ----
Current deferred tax assets:
<S> <C> <C>
Reserve for bad debts $ 102,000 $ 64,000
Deferred revenue - 157,000
Other 38,000 -
-------------- ---------------
Total current deferred tax assets 140,000 221,000
============== ===============
Long-term net deferred tax (liabilities) assets:
Depreciation (980,000) (912,000)
Amortization of intangible assets (382,000) (283,000)
State net operating loss carryforward 176,000 84,000
Closure reserves 395,000 361,000
-------------- ---------------
Total long-term net deferred tax liabilities $ (791,000) $ (750,000)
================ =================
</TABLE>
The Company has recorded a current deferred tax asset of $140,000 for
which realization is dependent on generating sufficient taxable income. Although
realization is not assured, management believes it is more likely than not that
all of the deferred tax asset will be realized.
<PAGE>
13. FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash, investments and accounts receivable. The
Company places its cash investments with what management believes to be
high-credit-quality financial institutions and currently invests primarily in
U.S. Treasury mutual funds. Accounts receivable represents amounts from
commercial and residential customers in southern Georgia and northern Florida.
At December 31, 1997, in management's opinion, the Company had no
significant concentration of credit risk.
Fair values of financial instruments is as follows at December 31,
1997 and 1996:
<TABLE>
<CAPTION>
CARRYING VALUE FAIR VALUE
------------------------------- --------------------------
1997 1996 1997 1996
-------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 738,790 $ 3,058,067 $ 738,790 $3,058,067
Convertible debentures $ - $ 3,884,265 $ - $5,910,000
Other long-term debt $ 9,461,959 $ 3,208,261 $ 9,674,000 $2,469,000
Accrued royalties $ 730,922 $ 962,061 $ 592,000 $ 771,000
</TABLE>
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:
CASH AND CASH EQUIVALENTS. The carrying amount approximates fair value
because of the short maturity of those instruments.
CONVERTIBLE DEBENTURES. The fair value is estimated based on the
market value of the stock if converted. If the stock price is less than the
conversion price, then the fair value of the instrument is estimated as the
present value of the debt instrument.
OTHER LONG-TERM DEBT. The fair value is estimated as the net present
value of the future cash flows over the term of the loans.
ACCRUED ROYALTIES. The fair value is estimated at the net present
value of expected royalty payments.
14. RELATED PARTY TRANSACTIONS
During 1996, the Company became party to an operating lease of office
and warehouse space with a company controlled by a director and an officer of
the Company. The non-cancelable lease expires in 2016 and is adjusted for
inflation on an annual basis. Management believes the rent paid for the office
and warehouse space reasonably approximates fair market cost. The Company
incurred rent expense of approximately $189,000 and $86,000 under this lease
during 1997 and 1996, respectively.
15. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash paid for interest $ 589,000 $ 434,000 $ 202,000
Cash paid for taxes 1,113,000 557,000 62,000
Significant non-cash transactions:
- Stock issued for acquired companies - 6,530,000 -
- Debt assumed from acquired companies 1,002,715 3,504,686 -
- Payable to related party for acquisition 306,037 - -
- Extension of warrants to related party - 240,000 -
- Deferred taxes established on acquired companies 466,000 -
- Purchase of equipment financed by capital lease 374,000 - 104,000
- Purchase of vehicles and equipment financed by
notes payable 1,263,000 265,000 -
- Capital expenditures included in year-end accounts
payable but not yet paid 171,000 285,000 -
- Conversion of convertible subordinated debentures 280,000 - -
- Accrued debt issue cost 50,000 - -
</TABLE>
16. COMMITMENTS
The Company has entered into employment agreements with certain of its
executive officers. The agreements contain non-compete clauses ranging from one
to five years after termination of the executive's employment. In consideration
for these clauses, the Company has agreed to pay severance pay based on various
formulas and for certain individuals, to pay premiums for the continuation of
health insurance coverage for four months following termination.
17. SUBSEQUENT EVENTS
During the last quarter of 1997, the Company entered into negotiations
to sell its street sweeping and certain of its rolloff collection assets. During
March 1998 an agreement was finalized with an aggregate sales price of
approximately $709,000 resulting in a loss of approximately $100,000.
Accordingly, in accordance with SFAS 121, "Accounting for the Impairment of
Long- Lived Assets and for Long-Lived Assets to be Disposed Of" the Company has
accrued $100,000 to write down the assets to be disposed of to fair value at
December 31, 1997.
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
1997
<S> <C> <C> <C> <C>
Net revenues $ 4,877,556 $ 4,844,636 $ 4,914,420 $ 4,760,160
Income (loss) from operations (375,742) 164,015 581,626 96,232
Net (loss) income (507,517) 45,346 214,854 (176,572)
Net (loss) income per share $ (0.02) $ 0.00 $ 0.01 $ (0.01)
1996
Net revenues $ 2,256,873 $ 2,981,818 $ 3,776,099 $ 4,687,918
Income from operations 754,725 842,390 771,021 342,284
Net income 427,041 573,284 477,063 230,117
Net income per share $ 0.02 $ 0.03 $ 0.03 $ 0.01
</TABLE>
19. NEW PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income," and Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information." Both
statements are effective for fiscal years beginning
<PAGE>
December 15, 1997. The Company has not yet determined the effect, if any, of
these statements on its financial statements.
<PAGE>
<TABLE>
<CAPTION>
GEOWASTE INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Additions
Balance at Charged To
Beginning of Costs and Deductions Other Balance At
DESCRIPTION YEAR EXPENSES (1) (2) END OF YEAR
----------- ---- -------- ----- ----- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for doubtful
accounts deducted from
asset account $174,000 $299,000 $(204,000) $ 0 $269,000
======== ========= ========== =========== =========
Year ended December 31, 1996:
Allowance for doubtful
accounts deducted from
asset account (3) $17,897 $163,129 $(31,026) $24,000 $174,000
======= ========== ========== =========== ==========
Year ended December 31, 1995:
Allowance for doubtful
accounts deducted from
asset account $16,356 $28,400 $(26,859) $ 0 $17,897
======= ========== ========== ============= ==========
- ---------------------
(1) Uncollectible accounts written off, net of recoveries.
(2) Acquired from United Sanitation in acquisition.
(3) The year ended December 31, 1996 information has been restated to reflect
actual additions charged to cost and expenses.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf of the undersigned, thereunto duly authorized in Jacksonville,
Florida on the 30th day of March, 1998.
GEOWASTE INCORPORATED
By: /S/AMY C. MACF. BURBOTT
Amy C. MacF. Burbott
President and Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/S/ AMY C. MACF. BURBOTT President, Chief Executive March 30, 1998
- ------------------------ Officer & Director
Amy C. MacF. Burbott (Principal Executive Officer)
/S/ HARVE A. FERRILL Chairman of the Board March 30, 1998
- ------------------------
Harve A. Ferrill
/S/ RAYMOND F. CHASE Vice President, Chief March 30, 1998
- ------------------------- Financial Officer,
Raymond F. Chase Treasurer & Secretary
(Principal Accounting and
Financial Officer)
/S/ STEVEN M. ENGEL Director March 30, 1998
- -------------------------
Steven M. Engel
/S/ MICHAEL D. PAGLIA Vice President & Director March 30, 1998
- -------------------------
Michael D. Paglia
/S/ WALTER H. BARANDIARAN Director March 30, 1998
- --------------------------
Walter H. Barandiaran
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Asset Purchase Agreement dated January 10, 1997 by and among GeoWaste
of GA, Inc., Air-Sweep-A-Lot, Inc., Todd Griffin and Tim Griffin.
2.2 Asset Purchase Agreement dated November 7, 1997 by and among GeoWaste
of GA, Inc., T.F. Mitchell & Sons, Inc. and Stephen F. Mitchell.
3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and
restated (Incorporated by reference from Exhibit A to the Proxy filed
November 25, 1991 (File No. 0-9278)).
3.2 Bylaws of GeoWaste Incorporated, as amended.
3.3 Amendment to Amended and Restated Certificate of Incorporation of
GeoWaste Incorporated (Incorporated by reference from Exhibit 3.4 to
the Annual Report on Form 10-K for the year ended December 31, 1992
(File No. 0-9278)).
4.1 Registration Rights Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated and each of the entities listed on Exhibit A
thereto (Incorporated by reference from Exhibit 4(D) to the Current
Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.2 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton,
Brian Russell, James R. Jones, Paul Thomas Cohen, William vanden
Heuvel, Balis & Zorn, Inc. and IBJ Schroder Bank & Trust Company
(Incorporated by reference from Exhibit 4(B) to the Current Report on
Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.3 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening
and IBJ Schroder Bank & Trust Company (Incorporated by reference from
Exhibit 4(C) to the Current Report on Form 8-K filed August 19, 1991
(File No. 0-9278)).
4.4 Equivest First Convertible Debt Exchange Agreement, dated August 2,
1991, by and between GeoWaste Incorporated the parties listed on
Schedule A thereto (Incorporated by reference from Exhibit 2(B) to the
Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.5 Equivest Second Convertible Debt Exchange Agreement, dated August 2,
1991, by and between GeoWaste Incorporated the parties listed on
Schedule A thereto (Incorporated by reference from Exhibit 2(C) to the
Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.6 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Advance Ross Corporation, Allen & Company Incorporated,
Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening,
their persons or entities listed on Schedule A thereto and the persons
or entities listed on Schedule B thereto (Incorporated by reference
from Exhibit 4(A) to the Current Report on Form 8-K filed August 19,
1991 (File No. 0-9278)).
4.7 Voting Agreement, dated March 5,1992, by and between GeoWaste
Incorporated, the Delaware State Employees' Retirement Fund and the
Trust for Defined Benefit Plan of ICI American Holdings Inc.,
Frederick J. Iseman, Gian Caterine, Amy C. MacF. Burbott, Harve
Ferrill, James Swistock, Advance Ross Corporation and Allen & Company
Incorporated (Incorporated by reference from Exhibit 4.4 to the
Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)).
4.8 Voting Agreement dated as of August 12, 1996, among John A. Paglia,
Michael D. Paglia, Advance Ross Corporation, Allen & Company
Incorporated, Allen Value Partners L.P. and Allen Value Limited
Incorporated (Incorporated by reference from Exhibit 4.11 to the
Current Report on Form 8-K filed August 27, 1996 (File No. 0-9278)).
10.1 Revolving Credit Agreement, dated as of October 9, 1997, by and among
GeoWaste Incorporated and its subsidiaries listed therein and
BankBoston, N.A.
10.2 1996 Stock Option Plan of the Company dated November 18, 1996.
10.3 Warrant Purchase Agreement by and between GeoWaste Incorporated and
Allen & Company Incorporated (Incorporated by reference from Exhibit
10.1 to the Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 0-9278)).
10.4 Amendment to Warrant Purchase Agreement, dated as of November 21,
1997, by and between Geowaste Incorporated and Allen & Company
Incorporated.
10.5 Severance Agreement, dated as of December 21, 1995, by and between
GeoWaste Incorporated and Raymond F. Chase (Incorporated by reference
from Exhibit 10.6 to the Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 0-9278)).
10.6 Amendment to Warrant Purchase Agreement by and between GeoWaste
Incorporated and Allen & Company Incorporated, dated November 21,
1997.
10.7 Letter Agreement, dated as of April 23, 1996, by and between GeoWaste
Incorporated and Amy C. MacF. Burbott. (Incorporated by reference from
Exhibit 10.9 to the Annual Report on Form 10-K for the year ended
December 31, 1996 (File No. 0-9278)).
10.8 Employment Agreement, dated as of August 12, 1996, by and between
GeoWaste Incorporated and John A. Paglia. (Incorporated by reference
from Exhibit 10.10 to the Annual Report on Form 10-K for the year
ended December 31, 1996 (File No. 0-9278)).
10.9 Employment Agreement, dated as of August 12, 1996, by and between
GeoWaste Incorporated and Michael D. Paglia. (Incorporated by
reference from Exhibit 10.11 to the Annual Report on Form 10-K for the
year ended December 31, 1996 (File No. 0-9278)).
21 Subsidiaries of the Registrant.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Restated Financial Data Schedule for the year ended December 31, 1996.
27.3 Restated Financial Data Schedule for the year ended December 31, 1995.
27.4 Restated Financial Data Schedule for the three months ended March 30,
1997.
27.5 Restated Financial Data Schedule for the six months ended June 30,
1997.
27.6 Restated Financial Data Schedule for the nine months ended September
30, 1997.
27.7 Restated Financial Data Schedule for the three months ended March 30,
1996.
27.8 Restated Financial Data Schedule for the six months ended June 30,
1996.
27.9 Restated Financial Data Schedule for the nine months ended September
30, 1996.
Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
GEOWASTE OF GA, INC.,
AIR-SWEEP-A-LOT, INC.,
TODD GRIFFIN
and
TIM GRIFFIN
Dated January 10, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS................................................1
SECTION 1.2 OTHER DEFINED TERMS..........................................4
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
SECTION 2.1 PURCHASE AND SALE OF ASSETS..................................5
SECTION 2.2 CONSENTS.....................................................5
SECTION 2.3 AMOUNT OF PURCHASE PRICE.....................................5
SECTION 2.4 PAYMENT OF PURCHASE PRICE....................................5
SECTION 2.5 ASSUMPTION OF LIABILITIES....................................6
SECTION 2.6 CLOSING......................................................6
SECTION 2.7 BULK SALES LAW COMPLIANCE....................................7
SECTION 2.8 ALLOCATION OF PURCHASE PRICE.................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER..............7
SECTION 3.2 CERTIFICATE OF INCORPORATION; BY-LAWS; MINUTE BOOKS..........7
SECTION 3.3 OWNERSHIP....................................................8
SECTION 3.4 SUBSIDIARIES AND INVESTMENTS.................................8
SECTION 3.5 AUTHORIZATION OF TRANSACTION.................................8
SECTION 3.6 NONCONTRAVENTION.............................................8
SECTION 3.7 FINANCIAL STATEMENTS.........................................9
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.........................9
SECTION 3.9 UNDISCLOSED LIABILITIES.....................................10
SECTION 3.10 TAXES.......................................................11
SECTION 3.11 BROKERS' FEES...............................................11
SECTION 3.12 LITIGATION..................................................11
SECTION 3.13 LICENSES....................................................11
SECTION 3.14 TITLE TO ASSETS.............................................11
SECTION 3.15 SUFFICIENCY OF ASSETS.......................................12
SECTION 3.16 CONTRACTS AND COMMITMENTS...................................12
SECTION 3.17 LABOR MATTERS...............................................13
SECTION 3.18 PROPRIETARY RIGHTS..........................................14
SECTION 3.19 EMPLOYEE BENEFITS...........................................14
SECTION 3.20 TRANSACTIONS WITH CERTAIN PERSONS...........................14
SECTION 3.21 ENVIRONMENTAL MATTERS.......................................15
SECTION 3.22 OSHA COMPLIANCE.............................................15
SECTION 3.23 CUSTOMERS AND SUPPLIERS.....................................16
SECTION 3.24 BOOKS AND RECORDS...........................................16
SECTION 3.25 DISCLOSURE; ACCURACY OF DOCUMENTS AND INFORMATION...........16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.............17
SECTION 4.2 AUTHORIZATION OF TRANSACTION................................17
SECTION 4.3 NONCONTRAVENTION............................................17
SECTION 4.4 BROKERS' FEES...............................................18
ARTICLE V
COVENANTS
SECTION 5.1 NOTICES AND CONSENTS........................................18
SECTION 5.2 FURTHER ASSURANCES..........................................18
SECTION 5.3 ENCUMBRANCES................................................18
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
SECTION 6.1 AGREEMENTS AND COVENANTS....................................19
SECTION 6.2 REPRESENTATIONS AND WARRANTIES..............................19
SECTION 6.3 CERTIFICATE.................................................19
SECTION 6.4 DELIVERIES..................................................19
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 7.1 AGREEMENTS AND COVENANTS....................................19
SECTION 7.2 REPRESENTATIONS AND WARRANTIES..............................19
SECTION 7.3 CONSENTS....................................................20
SECTION 7.4 NO ACTION...................................................20
SECTION 7.5 CERTIFICATE.................................................20
SECTION 7.6 OPINION OF COUNSEL..........................................20
SECTION 7.7 MATERIAL ADVERSE CHANGES....................................20
SECTION 7.8 ANNUALIZED GROSS REVENUE.....................................20
SECTION 7.9 DELIVERIES...................................................20
ARTICLE VIII
DELIVERIES OF BUYER ON THE CLOSING DATE
SECTION 8.1 PURCHASE PRICE...............................................21
SECTION8.2 CERTIFICATE...................................................21
SECTION8.3 SECRETARY'S CERTIFICATE.......................................21
ARTICLE IX
DELIVERIES OF SELLER ON THE CLOSING DATE
SECTION 9.1 TITLE TO ACQUIRED ASSETS.....................................21
SECTION 9.2 OPINION OF COUNSEL...........................................21
SECTION 9.3 CERTIFICATE..................................................21
SECTION 9.4 CONSENTS.....................................................21
SECTION 9.5 GOOD STANDING CERTIFICATES...................................22
SECTION 9.6 SECRETARY'S CERTIFICATE......................................22
SECTION 9.7 POSSESSION OF ACQUIRED ASSETS................................22
SECTION 9.8 OTHER DELIVERIES.............................................22
ARTICLE X
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
SECTION 10.1 BOOKS AND RECORDS..........................................22
SECTION 10.2 SURVIVAL OF REPRESENTATIONS, ETC...........................22
SECTION 10.3 INDEMNIFICATION............................................23
SECTION 10.4 NON-COMPETITION............................................24
SECTION 10.5 DISMISSAL OF GEOWASTE ACTION...............................26
SECTION 10.6 PAYMENT DEFAULT............................................26
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 ASSIGNMENT.................................................26
SECTION 11.2 NOTICES; TRANSFER OF FUNDS.................................26
SECTION 11.3 GOVERNING LAW..............................................27
SECTION 11.4 ENTIRE AGREEMENT; MODIFICATIONS AND WAIVERS................27
SECTION 11.5 COUNTERPARTS/TELECOPIES....................................28
SECTION 11.6 EXPENSES...................................................28
SECTION 11.7 TAXES......................................................28
SECTION 11.8 INVALIDITY.................................................28
SECTION 11.9 TITLES.....................................................28
SECTION 11.10 PUBLICITY.................................................28
SECTION 11.11 CONFIDENTIAL INFORMATION...................................29
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT entered into on January 10, 1997 (this
"Agreement"), by and among GeoWaste of GA, Inc., a Georgia corporation
("Buyer"), Air- Sweep-A-Lot, Inc., a Georgia corporation ("Seller"), and Todd
Griffin and Tim Griffin, the sole stockholders of Seller (individually, a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, subject to the terms and conditions set forth herein, Buyer
desires to purchase from Seller and Seller desires to sell to Buyer, the assets
of or used in the solid waste business of Seller and activities related thereto
as conducted by Seller as of the date hereof, together with all assets and
properties related thereto, operating as a going concern (the "Business").
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:
"Acquired Assets" shall mean all assets, properties, rights and
business of Seller set forth on Schedule 1.1(a) to this Agreement.
"Action" shall mean any claim, action, suit, proceeding or
investigation, whether at law or in equity or before any court, arbitrator,
arbitration panel or Governmental Entity.
"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.
"Assumed Liabilities" shall mean the liabilities of Seller listed on
Schedule 1.1(b).
"Books and Records" shall mean all records pertaining to the assets,
properties, business, operations, accounts, financial condition, contractors,
suppliers or customers of Seller with respect to the Business, regardless of
whether such books and records are maintained for Tax or financial reporting
purposes.
"Buyer Material Adverse Effect" shall mean a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of Buyer and its subsidiaries, taken as a whole.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601, ET SEQ.
"Contract" shall mean any of the agreements, contracts, indentures,
leases, commitments, plans, arrangements, sales orders and purchase orders of
every kind, whether written or oral, described on Schedule 3.16 and any
agreements, contracts, indentures, leases, commitments, plans, arrangements,
sales orders and purchase orders of every kind, whether written or oral, of
Seller not required to be described on Schedule 3.16 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.
"Encumbrance" shall mean any lien, pledge, claim, option, charge,
security interest, 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.
"Excluded Assets" shall mean all assets, properties, rights and
business of Seller other than those assets, properties, rights and business of
Seller set forth on Schedule 1.1(a) to this Agreement.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied.
"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 (i) any substance designated pursuant
to Section 1321(b)(2)(A) of Title 33 of the United States Code, (ii) any
element, compound, mixture, solution or substance designated pursuant to Section
9602 of Title 42 of the United States Code, (iii) any hazardous waste having the
characteristics identified under or listed pursuant to section 3001 of the Solid
Waste Disposal Act, (iv) any toxic pollutant listed under Section 1317(a) of
Title 33 of the United States Code, (v) any hazardous air pollutant listed under
Section 112 of the Clean Air Act, (vi) 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 (vii) petroleum and petroleum
products.
"Historical Financial Statements" shall mean the balance sheet of
Seller as of December 31, 1993, 1994 and 1995 and the related statements of
income, retained earnings and cash flows of Seller for the years ended on such
dates, together in each case with the related notes thereon, which financial
statements have been compiled by William A. Culbreth, CPA, and the Unaudited
Financial Statements, collectively.
"IRS" shall mean the United States Internal Revenue Service.
"Liabilities" shall mean debts, liabilities, obligations, duties and
responsibilities of any kind and description, whether absolute or contingent,
monetary or non-monetary, direct or indirect, known or unknown or matured or
unmatured, or of any other nature.
"Licenses" shall mean all licenses, permits, certificates and other
governmental authorizations necessary to carry on the Business as presently
conducted or to be conducted, including, without limitation, environmental
permits and authorizations or any other approval from any Governmental Entity
required for the Business; each License is identified on Schedule 3.13.
"Person" shall mean an individual, firm, trust, association,
corporation, partnership, limited liability company, Governmental Entity or
other entity.
"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.
"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 Seller or any predecessor entity to such person.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Seller 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 Seller.
"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.
"Territory" shall mean the Counties of Lowndes, Brooks, Thomas,
Lanier, Cook, Berrien, Colquitt, Atkison and Echols in the State of Georgia and
the Counties of Hamilton, Madison and Jefferson in the State of Florida.
"Unaudited Financial Statements" shall mean the unaudited balance
sheet of Seller at September 30, 1996 and the related unaudited statements of
income, retained earnings and cash flows of Seller for the nine months ended
September 30, 1996, together with the related notes thereon, which financial
statements have been compiled by William A. Culbreth, CPA, 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
Closing 2.6
Closing Date 2.6
ERISA 3.19
GeoWaste Action 10.5
Noncompetition Period 8.4(a)
Note 2.4(b)
Personnel 3.8(b)(i)
Plan 3.19
Purchase Price 2.3
Seller Actions 3.12
Tax Returns 3.10
Unless the context otherwise requires words in the singular include
the plural and words in the plural include the singular.
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.1 PURCHASE AND SALE OF ASSETS. Based upon and subject to the
terms, agreements, warranties, representations and conditions of this Agreement,
Seller hereby agrees to sell, convey, transfer, assign and deliver to Buyer on
the Closing Date and Buyer hereby agrees to buy and accept on the Closing Date,
the Acquired Assets.
Section 2.2 CONSENTS. To the extent that the assignment of or the
agreement to assign any Contract to Buyer hereunder would constitute a breach of
that Contract unless the consent or waiver of another party thereto has been
obtained, this Agreement shall not constitute any such assignment or agreement
to assign unless and until such consent or waiver is obtained. Seller agrees to
use its commercially reasonable efforts to obtain prior to the Closing Date all
such consents and waivers. If any such consent or waiver is not obtained before
the Closing Date and the Closing is nevertheless consummated, Seller agrees to
continue to use its commercially reasonable efforts to obtain all such consents
as have not been obtained prior to such date and further agrees to cooperate
with Buyer after such date in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for Buyer, on
terms no less favorable than Seller is entitled to, the benefits under the
applicable Contracts, including, without limitation, enforcement, at the cost
and for the benefit of Buyer, of any and all rights of Seller against any other
party thereto arising out of the breach or cancellation thereof by such party or
otherwise.
Section 2.3 AMOUNT OF PURCHASE PRICE. The total consideration (the
"Purchase Price") to be paid to Seller by Buyer in exchange for the transfer of
the Acquired Assets and the assumption of the Assumed Liabilities shall be
$1,008,968.00.
Section 2.4 PAYMENT OF PURCHASE PRICE. On the Closing Date, Buyer
shall pay the Purchase Price as follows:
(a) $200,000.00 of the Purchase Price by the delivery by Buyer to
Seller of a certified check or wire transfer in such amount;
(b) delivery by Buyer to Seller of a five year promissory note (the
"Note") in the principal amount of $321,823.00 bearing interest at a rate of
8.0% per annum substantially in the form of Exhibit B annexed hereto, payable
semi-annually beginning on the first anniversary of the Closing Date; and
(c) assumption of the Assumed Liabilities, as provided in Section 2.5
below.
Section 2.5 ASSUMPTION OF LIABILITIES. As additional consideration
hereunder, from and after the Closing Date Buyer shall assume and discharge the
Assumed Liabilities. Except as provided in the preceding sentence, and
notwithstanding anything else to the contrary contained herein, Buyer is not
assuming and shall not be liable for any Liabilities of Seller, including,
without limitation, any Liabilities (i) under Contracts which shall not have
been assigned to Buyer pursuant to this Agreement; (ii) for indebtedness for
borrowed money; (iii) by reason of or arising out of any default or breach by
Seller of any Contract, for any penalty against Seller under any Contract, or
relating to or arising out of any event which with the passage of time or after
giving of notice, or both, would constitute or give rise to such a breach,
default or penalty, whether or not such Contract is being assigned to and
assumed by Buyer pursuant to this Agreement; (iv) the existence of which would
conflict with or constitute a breach of any representation, warranty or
agreement of Seller contained herein; (v) relating to or in any way arising out
of the Excluded Assets; (vi) for Seller's expenses referred to in Section 11.6
hereof; (vii) to any stockholder or Affiliate of Seller or to any present or
former employee, officer or director of Seller, including, without limitation,
any bonuses, any termination or severance pay related to the transfer of
employees to Buyer in connection with the transactions contemplated hereby, and
any post retirement medical benefits or other compensation or benefits; (viii)
relating to the execution, delivery and consummation of this Agreement and the
transactions contemplated hereby, including, without limitation, any and all
Taxes incurred as a result of the sale contemplated by this Agreement; (ix) for
any Taxes accrued or incurred prior to the Closing Date or relating to any
period (or portion of a period) prior thereto; (x) relating to or arising out of
any environmental matter, including, without limitation, any violation of any
Environmental Law or any other law relating to health and safety of the public
or the employees of Seller; (xi) relating to, or arising out of, products
manufactured or services rendered by Seller, or the conduct or operation of the
business of Seller, prior to the Closing Date; and (xii) of Seller arising under
or pursuant to this Agreement; and provided further, that Buyer shall have the
right not to assume any Contract if any party to such Contract is in breach
thereof or default thereunder as of the Closing Date or there has occurred any
event which with the passage of time or after giving of notice, or both, would
become such a breach or default. Buyer shall not assume or be bound by any
Liabilities of Seller, except as expressly assumed by it pursuant to this
Agreement. Seller hereby agrees to indemnify and hold Buyer harmless from and
against any and all Liabilities of Seller not agreed to be assumed by Buyer
pursuant to this Agreement. Nothing contained in this Section 2.5 shall relieve
or release Seller from any obligations under covenants, warranties or agreements
contained in this Agreement.
Section 2.6 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Gary L. Moser,
Esq., on January 10, 1997, or at such other time and place as Buyer and Seller
shall mutually agree (the date on which the Closing occurs being the "Closing
Date").
Section 2.7 BULK SALES LAW COMPLIANCE. Seller agrees to bear any loss,
liability, obligation or cost suffered by the Business or Buyer by reason of any
noncompliance with any provision of any bulk sales law of any State which may
require bulk sales law compliance on account of the provisions herein and the
transactions contemplated hereby and to indemnify and hold Buyer harmless from
and against claims suffered or incurred by the Business or Buyer by reason of or
arising out of (a) the failure of Seller to pay or discharge the same when done
or (b) such noncompliance with any applicable bulk sales law.
Section 2.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated to the Acquired Assets in accordance with Schedule 2.8. Each party
hereto agrees to reflect the Acquired Assets upon its books for tax reporting
purposes in accordance with such schedule and to file all tax returns in
accordance with and based upon such schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER
Seller represents and warrants to Buyer as follows:
Section 3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Seller 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 Seller Material Adverse Effect. Seller 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.
Section 3.2 CERTIFICATE OF INCORPORATION; BY-LAWS; MINUTE BOOKS.
Seller has heretofore delivered to Buyer true, accurate and complete copies of
its Certificate of Incorporation and By-Laws, as amended to and including the
date hereof. The minute books, stock books and stock transfer records of Seller,
true, accurate and complete copies of which have been made available to Buyer,
contain true, accurate and complete minutes and records of all issuances and
transfers of capital stock of Seller and of all minutes and records of all
meetings, proceedings and other actions of the stockholders, Board of Directors
and/or committees of the Board of Directors of Seller from the date of
incorporation of Seller to and including the date hereof and all such meetings,
proceedings and actions have been duly, legally and properly held or taken.
Section 3.3 OWNERSHIP. All of the issued and outstanding shares of
capital stock of Seller are owned by the Stockholders. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that could
require Seller to issue, sell, or otherwise cause to become outstanding any of
its capital stock except as set forth on Schedule 3.3. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to Seller's capital stock. There are no voting trusts or
other agreements or understandings to which Seller is a party with respect to
the voting of its capital stock.
Section 3.4 SUBSIDIARIES AND INVESTMENTS. Seller has no direct or
indirect subsidiaries and has not made any advances to or investments in, and
does not own any securities of or other interests in, any firm, corporation,
association, business organization, enterprise or entity.
Section 3.5 AUTHORIZATION OF TRANSACTION. Seller 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 Seller, enforceable against it 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 3.6 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 Seller is
subject or any provision of the charter or by-laws of Seller 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 Seller 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 Seller Material Adverse
Effect and except as set forth on Schedule 3.6. Other than as provided on
Schedule 3.6, 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 Seller 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 3.7 FINANCIAL STATEMENTS. Seller has heretofore delivered to
Buyer the Historical Financial Statements. The Historical Financial Statements
in each case are true and complete with respect to each item therein and have
been prepared in accordance with GAAP and fairly present the assets, liabilities
and financial condition, results of operations and cash flows of Seller
indicated thereby as of each date and for the periods covered thereby.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 3.8, since the date of the Unaudited Financial Statements there has
not been any:
(a) change in Seller'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) sale, assignment or transfer of any of the assets of Seller used
in connection with the Business, which is material singly or in the aggregate,
other than in the ordinary course of business, or discontinuance of any service
provided by the Business;
(c) cancellation of any indebtedness or waiver of any rights of
substantial value to Seller, whether or not in the ordinary course of business,
with respect to the Business;
(d) amendment, cancellation or termination of any Contract, license or
other instrument required to be set forth on Schedules 3.13 or 3.16;
(e) 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 $5,000 or more;
(f) failure to pay any obligation of Seller, except where such failure
would not have a Seller Material Adverse Effect;
(g) failure to operate the Business in the ordinary course;
(h) change in accounting methods or practices by Seller affecting its
assets, liabilities or business (whether for accounting or tax purposes);
(i) revaluation by Seller of any of its assets used in connection with
the Business, including without limitation, writing off notes or accounts
receivable, other than in the ordinary course of business consistent with past
practices;
(j) damage, destruction or loss (whether or not covered by insurance)
affecting the Acquired Assets;
(k) mortgage, pledge, grant or creation of any Encumbrance on any
Acquired Asset;
(l) material change in the collection, payment or credit experience,
accounting practices, procedures or methods of Seller with respect to the
Business or in the cash management practices of Seller in the operation of the
Business;
(m) indebtedness incurred by Seller for borrowed money or any
commitment to borrow money entered into by Seller in connection with the
Business, or any loans made or agreed to be made by Seller in connection with
the Business;
(n) there has been no material changes in the amount or scope of
coverage of insurance now carried by Seller in connection with the Business;
(o) liabilities incurred or assumed by Seller in connection with the
Business 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, except as set forth on Schedule 3.8;
(p) payment, discharge or satisfaction of any liabilities with respect
to the Business 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;
(q) agreement or commitment by Seller to do any of the foregoing; or
(r) 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, affect the
Acquired Assets or materially and adversely affect in the future, the condition
(financial or otherwise), assets, liabilities, working capital, reserves,
earnings, business or prospects of Seller (including, without limitation,
Seller's relationships with its customers).
Section 3.9 UNDISCLOSED LIABILITIES. Except as set forth on Schedule
3.9, Seller 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 3.10 TAXES. Except as set forth on Schedule 3.10, Seller 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 Seller Material Adverse Effect
("Tax Returns"). Except as set forth on Schedule 3.10, all Tax Returns were
correct and complete in all material respects. Except as set forth on Schedule
3.10, Seller has paid in full all Taxes (whether or not shown on a Tax Return)
required to be paid by Seller before such payment became delinquent and no
deficiency has been proposed, asserted or assessed. All Taxes which Seller 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 Schedule 3.10, no examination or audit of any
Tax Returns by any Governmental Entity is currently in progress or contemplated.
Seller is not a party to any tax sharing or allocation agreement and, except as
set forth on Schedule 3.10, has no actual or potential liability for any Tax
obligation of any other taxpayer.
Section 3.11 BROKERS' FEES. Except as set forth on Schedule 3.11,
Seller 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 3.12 LITIGATION. Except as set forth on Schedule 3.12, there
are no Actions involving material claims by or against Seller, either pending or
threatened, at law or in equity or before any court, arbitrator, arbitration
panel or Governmental Entity (collectively, "Seller Actions"). Seller is not 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
Seller or the business, activities, properties or assets of Seller. There is not
a reasonable likelihood of an adverse determination of any pending Seller
Actions which would, individually or in the aggregate, have a Seller Material
Adverse Effect (other than the GeoWaste Action).
Section 3.13 LICENSES. Except as set forth on Schedule 3.13, since the
date of the Unaudited Financial Statements, Seller 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 Entities that are material to the conduct of the 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 as presently
conducted or to be conducted to be revoked, withdrawn, canceled, suspended or
not renewed. Seller is conducting its business in compliance with all laws,
rules and regulations applicable thereto, the violation of which would have a
Seller Material Adverse Effect.
Section 3.14 TITLE TO ASSETS. Seller is the owner of, has good and
marketable 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 or useful in the operation of the Business. Except as set forth on
Schedule 3.14, all the Acquired Assets 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. Seller has
performed all the obligations required to be performed by it with respect to all
assets leased which are used or useful in the operation of the business by it
through the date hereof, except where the failure to perform would not have a
Seller Material Adverse Effect. Seller enjoys peaceful and undisturbed
possession of all of its facilities which are used or useful in the operation of
the Business. None of such improvements, equipment and other assets is subject
to any commitment or other arrangement for their sale or use by any stockholder
of Seller or any of their Affiliates or third parties. The assets reflected on
the Unaudited Financial Statements or acquired after the date of the Unaudited
Financial Statements are valued on Seller's books at or below Seller actual cost
less an adequate and proper depreciation charge. Seller has not depreciated any
of its assets in a manner inconsistent with applicable IRS guidelines, if any.
Except as set forth on Schedule 3.14, the assets owned or leased by Seller
include the Acquired Assets.
Section 3.15 SUFFICIENCY OF ASSETS. All of Seller's tangible property
used in the Business is in good operating condition and repair (except for
normal wear and tear). Except as set forth on Schedule 3.15, the Acquired Assets
are sufficient for the operation of the Business as heretofore conducted and are
in conformity in all respects with all applicable laws, ordinances, orders,
regulations and other requirements (including applicable environmental, motor
vehicle safety or standards, occupational safety and health laws and
regulations) relating thereto currently in effect.
Section 3.16 CONTRACTS AND COMMITMENTS. Schedule 3.16 sets forth all
Contracts presently in effect to which Seller is a party in connection with the
Business, 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 Seller with respect to the Business of more than $5,000 (and not more
than $10,000 in the aggregate) and not cancelable (without liability) on not
more than 30 days' notice;
(b) lease of personal property with respect to the Business involving
any annual expense in excess of $5,000 and not cancelable without liability
within 30 days (Schedule 3.16 indicates with respect to each such lease listed
thereon a general description of the leased items, term, annual rent and renewal
options);
(c) material governmental or regulatory licenses or permits required
to conduct the Business as presently conducted;
(d) contracts or agreements containing covenants limiting the freedom
of Seller to engage in any line of business or compete with any person;
(e) employment contracts, including without limitation, contracts to
employ executive officers and other contracts with officers or directors of
Seller;
(f) contracts with customers and suppliers of Seller with respect to
the Business with a gross value to Seller in excess of $2,000 per year (Schedule
3.16 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);
(g) contracts and commitments not otherwise described in this Section
3.16 or listed on Schedule 3.16 (including purchase orders, franchise agreements
and undertakings or commitments to any Governmental Entity) relating to the
Business or otherwise affecting the Business 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; and
(h) Seller is not 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)-(g) above, where such breach or
violation or default would have a Seller Material Adverse Effect. Each Contract
or other instrument, obligation, evidence of indebtedness or commitment
described in paragraphs (a)-(g) above is a valid agreement, arrangement or
commitment of Seller, and is, to the best knowledge of Seller, 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 3.17 LABOR MATTERS. Seller is not a party to any collective
bargaining agreement with respect to its employees with any labor organization,
group or association. Seller 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. Seller is (i) 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 Seller conducts business and (ii) is not engaged
in any unfair labor practice except where such failure of compliance or practice
would not have a Seller Material Adverse Effect. There is no unfair labor
practice charge or complaint against Seller pending before the National Labor
Relations Board or any other Governmental Entity arising out of such entity's
activities, and Seller has no knowledge of any facts or information which would
give rise thereto; there is no labor strike or labor disturbance pending against
Seller nor is any grievance currently being asserted; and Seller has not
experienced a work stoppage or other labor difficulty.
Section 3.18 PROPRIETARY RIGHTS. Seller has no Proprietary Rights used
in connection with the Business other than the trade names and customer lists
listed on Schedule 3.18. Except as set forth on Schedule 3.18, (i) Seller 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) Seller 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 Seller that are presently outstanding alleging that Seller'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 Seller and there is no basis for any such claim; (v)
Seller 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; and (vi) no officer, director, employee or
Affiliate of Seller owns or has any interest in any Proprietary Rights or any
trade secret, invention or process, if any, used by Seller in connection with
the Business.
Section 3.19 EMPLOYEE BENEFITS. Except for those plans set forth on
Schedule 3.19 hereto (the "Plans"), Seller does not maintain or contribute to
any "employee benefit plan", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any stock
purchase plan, stock option plan, fringe benefit plan, bonus plan or any other
deferred compensation agreement, plan or funding arrangement, whether or not
such plan has been terminated and whether or not such plan is of a legally
binding nature or in the form of an informal understanding. With respect to the
Plans, the applicable requirements of ERISA and the Code (including, without
limitation, the group health plan continuation coverage requirements of Section
4980B of the Code and Part 6 of Title I of ERISA) have been fulfilled in all
material respects and no event has occurred nor does any condition exist which
could result in a direct or indirect liability to Buyer. Neither Seller nor any
member of a "controlled group" (as defined in Section 4971(e)(2)(B) of the Code)
of which Seller is a member, has ever maintained or contributed to any plan (i)
subject to Section 412 of the code and Section 302 or Title IV of ERISA
(including, without limitation, any "multiemployer plan" as defined in Section
3(37) of ERISA) or (ii) which provids post-employment health or welfare benefits
(other than benefits required to be provided pursuant to Section 4980B of the
Code and Part 6 of Title I of ERISA).
Section 3.20 TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed on
Schedule 3.20, Seller 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 Seller; nor are there any transactions of a continuing
nature between Seller and any of its officers, directors or Affiliates (other
than by or through the regular employment thereof by Seller) not subject to
cancellation which will continue beyond the Closing Date, including, without
limitation, use of Seller's assets for personal benefit with or without adequate
compensation.
Section 3.21 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.21, Seller 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 Schedule 3.21, there are no facts or
circumstances which could form the basis for the assertion of any claim against
Seller 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) Seller has not entered into and is not currently bound by any
consent decree or order under, and is not subject to any judgment, decree or
judicial or administrative order relating to compliance with, or the clean up of
Hazardous Substances under, any applicable Environmental Laws. Except as set
forth on Schedule 3.21, Seller has not been alleged to be in violation of, or
subject to any administrative or judicial proceeding pursuant to, applicable
Environmental Laws, either now or at any time since Seller's incorporation.
(d) Seller is not 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 Seller or its
Representatives or arising out of the ownership, use, control or operation by
Seller 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 Seller) at which a Release of a Hazardous Substance has
occurred.
(e) Seller has heretofore provided Buyer with true, correct and
complete copies of, or access to all files of Seller relating to environmental
matters.
Section 3.22 OSHA COMPLIANCE. Seller has made available to Buyer all
reports and filings made or filed by Seller pursuant to the Occupational Safety
and Health Act and related to the Business. Except as set forth on Schedule
3.22, Seller 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 3.23 CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule
3.23, since the date of the Unaudited Financial Statements, there has been no
material adverse change in the business relationship of Seller with any customer
or supplier of the Business. Except as set forth on Schedule 3.23, Seller has
not received any written or oral notice from any existing customer of the
Business 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 Seller or (iii) requests that Seller grant price
concessions, rebates or reductions on products or services provided by Seller.
Section 3.24 BOOKS AND RECORDS. Except as set forth on Schedule 3.24,
Seller'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 Seller in all respects. None of the records,
systems, controls, data or information of Seller 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 Seller or
accountants retained by Seller. Except as set forth on Schedule 3.24, Seller's
Books and Records fairly and accurately reflect the transactions and
dispositions of assets of Seller, and Seller'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 Schedule 3.24, Seller 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 3.25 DISCLOSURE; ACCURACY OF DOCUMENTS AND INFORMATION. Seller
does not know of any facts or circumstances not disclosed to Buyer which
indicate that the Acquired Assets or the future operations, profits or business
of the Business may be adversely affected or which otherwise should be disclosed
to Buyer in order to make any of the representations or warranties made herein
on the part of the Seller not misleading. No representation or warranty by
Seller contained in this Agreement, and no statement contained in any Schedule,
Exhibit, certificate or other instrument furnished to Buyer under or in
connection with this Agreement, contains any untrue statement of any material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Buyer is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Buyer 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 Buyer
Material Adverse Effect. Buyer 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 4.2 AUTHORIZATION OF TRANSACTION. Buyer 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 Buyer, enforceable against it 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 4.3 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 Buyer is
subject or any provision of the Certificate of Incorporation or By-laws of Buyer
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 Buyer 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 Buyer Material Adverse
Effect and except as disclosed on Schedule 4.3. Other than as provided on
Schedule 4.3, Buyer 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 4.4 BROKERS' FEES. Except as set forth on Schedule 4.4, Buyer
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.
ARTICLE V
COVENANTS
Seller, on the one hand, and Buyer, on the other hand, covenant with
each other as follows:
Section 5.1 NOTICES AND CONSENTS. As soon as practicable, Seller and
Buyer 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 5.2 FURTHER ASSURANCES. Both before and after the Closing
Date, Seller and Buyer 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.
Section 5.3 ENCUMBRANCES. Buyer shall maintain the Acquired Assets
free and clear of all Encumbrances except for Encumbrances existing as of the
Closing Date.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
Section 6.1 AGREEMENTS AND COVENANTS. On or before the Closing Date,
Buyer shall have complied with and duly performed all agreements and conditions
on its part to be complied with and performed pursuant to or in connection with
this Agreement on or before the Closing Date.
Section 6.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Buyer contained in this Agreement shall be true and correct at and
as of the Closing Date.
Section 6.3 CERTIFICATE. Seller shall have received a certificate
dated the Closing Date and executed by Buyer to the effect that the conditions
expressed in Sections 6.1 and 6.2 have been fulfilled.
Section 6.4 DELIVERIES. Seller shall have received the deliveries to
be made by Buyer pursuant to Article VIII.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions:
Section 7.1 AGREEMENTS AND COVENANTS. On or before the Closing Date,
Seller shall have complied with and duly performed all agreements and conditions
on its part to be complied with and performed pursuant to or in connection with
this Agreement on or before the Closing Date.
Section 7.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller contained in this Agreement shall be true and correct at
and as of the Closing Date.
Section 7.3 CONSENTS. All consents, approvals and waivers from
Governmental Entities and other parties necessary to consummate the transactions
contemplated hereby or to permit Buyer to own and operate the Business 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 Buyer's obligation to
close if the lack of such consent or consents shall not have a Seller Material
Adverse Effect. After the Closing, Seller will continue to use its best efforts
to obtain any such consents or approvals.
Section 7.4 NO ACTION. Other than the GeoWaste Action, no Action 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 Buyer to own and operate the
Business after the Closing or materially damage Buyer or Seller if the
transactions contemplated hereunder are consummated.
Section 7.5 CERTIFICATE. Buyer shall have received a certificate dated
the Closing Date and executed by Buyer to the effect that the conditions
expressed in Sections 7.1, 7.2 and 7.4 have been fulfilled.
Section 7.6 OPINION OF COUNSEL. Gary L. Moser, Esq. shall have
delivered to Buyer an opinion, dated as of the Closing Date, to the effect and
substantially in the form of Exhibit C hereto.
Section 7.7 MATERIAL ADVERSE CHANGES. Except as set forth on Schedule
7.7 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 Seller. For the purposes of this Section 7.7, a "material adverse
change" shall include, without limitation, any development or discovery of any
contingent or other liability not on Schedule 7.7, which might materially
adversely affect the business, assets, liabilities or operations of Seller.
Section 7.8 ANNUALIZED GROSS REVENUE. Annualized gross revenue of
Seller at Closing shall be not less than $1,000,000 as determined by Buyer in
its reasonable judgment.
Section 7.9 DELIVERIES. Buyer shall have received the deliveries to be
made by Seller pursuant to Article IX.
ARTICLE VIII
DELIVERIES OF BUYER ON THE CLOSING DATE
Buyer agrees on the Closing Date to deliver to Seller the following:
Section 8.1 PURCHASE PRICE . The Purchase Price to be delivered
pursuant to Section 2.3 hereof.
Section 8.2 CERTIFICATE. The certificate of Buyer referred to in
Section 6.3 hereof.
Section 8.3 SECRETARY'S CERTIFICATE. A certificate of the Secretary or
an Assistant Secretary of Buyer setting forth a copy of the resolutions adopted
by the Board of Directors of Buyer authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
ARTICLE IX
DELIVERIES OF SELLER ON THE CLOSING DATE
Seller agrees on the Closing Date to deliver to Buyer the following:
Section 9.1 TITLE TO ACQUIRED ASSETS . All conveyances, covenants,
warranties, assignments, bills of sale, confirmations, powers of attorney,
approvals, consents and any and all further instruments as may be necessary,
expedient or proper in order to complete any and all conveyances, transfers and
assignments provided for herein and to convey to Buyer such title to the
Acquired Assets as Seller is obligated hereunder to convey.
Section 9.2 OPINION OF COUNSEL. The opinion of counsel for Seller
described in Section 7.6 hereof.
Section 9.3 CERTIFICATE. The certificate of Seller referred to in
Section 7.5 hereof.
Section 9.4 CONSENTS. The consents referred to in Section 7.3 hereof.
Section 9.5 GOOD STANDING CERTIFICATES. Good standing and tax
certificates (or analogous documents), dated no more than ten days prior to the
Closing Date, from the appropriate authorities in Seller's jurisdiction of
incorporation and in each jurisdiction in which Seller is qualified to do
business in connection with the Business, showing Seller to be in good standing
and to have paid all Taxes due in the applicable jurisdiction.
Section 9.6 SECRETARY'S CERTIFICATE. A certificate of the Secretary or
an Assistant Secretary of Seller setting forth a copy of the resolutions adopted
by the Board of Directors of Seller authorizing and approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
Section 9.7 POSSESSION OF ACQUIRED ASSETS. Possession of the Acquired
Assets, including all books, records, Contracts and other documents relating to
the Acquired Assets.
Section 9.8. OTHER DELIVERIES. Such other documents or instruments as
Buyer or its counsel may reasonably request, including, but not limited to,
noncompetition agreements from the principal stockholders of Seller.
ARTICLE X
ACTIONS BY SELLER AND BUYER
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.
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. All statements contained on any 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.
Section 10.3 INDEMNIFICATION.
(a) Each of Seller and the Stockholders, jointly and severally, agrees
to indemnify, save and hold harmless Buyer, 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 Seller in
or pursuant to this Agreement; (ii) any failure by Seller to perform any of its
agreements or covenants under this Agreement or under any of the documents or
instruments delivered by Seller pursuant to this Agreement; (iii) any Action
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 and (iv) all Taxes
imposed on Seller relating to taxable periods ending on or prior to the Closing
Date or periods to and including the Closing Date to the extent attributable to
the income, assets or operations of Seller prior to the Closing Date. Seller and
each Stockholder acknowledge that Buyer has entered into this Agreement in
reliance upon, among other things, the indemnification provisions contained in
this Section 10.3(a), and Seller and each Stockholder agree that such provisions
constitute reasonable and necessary protection for Buyer 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 Buyer, its stockholders, its Representatives or its
Affiliates in the absence of third party claims.
(b) Buyer shall indemnify and save and hold harmless Seller, its
stockholders, its Affiliates and its 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 Buyer in or pursuant to this Agreement; (ii) any failure by Buyer to
perform any of its agreements and covenants under this Agreement or under any of
the documents or instruments delivered by Buyer pursuant to this Agreement;
(iii) any Action 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(b); and (iv) all Taxes imposed on Seller relating to taxable periods ending
after the Closing Date.
(c) 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(d) and 10.3(e), 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(d) and 10.3(e), 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.
(d) In the event that any lawsuit, action or other proceeding, is
filed against an party 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 indemnifying party, on
the other hand, then notwithstanding the provisions of Section 10.3(c), (i) the
indemnifying party 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 indemnifying party 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.
(e) Pursuant to the provisions of this Section 10.3, each of Buyer, on
the one hand, and Seller, 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.
(f) No Representative of Buyer shall be personally liable for any
Damages under the provisions contained in this Section 10.3.
Section 10.4 NON-COMPETITION.
(a) Seller and each Stockholder agrees that, for a period of five
years after the Closing Date (the "Noncompetition Period"), none of Seller, any
Affiliate of Seller or either Stockholder will, directly or indirectly, in the
Territory, (i) engage in any business the same as or similar to, or engage in
competition with, the Business, (ii) render services to or have any interest, as
a shareholder, owner, agent, consultant, lender or guarantor or any other
interest, in any other Person (other than Seller) engaged in the manufacture or
sale of products, or the rendering of services, which are currently being
manufactured or sold or rendered by the Business, or similar products or
services, or (iii) engage in competition with, or manufacture or sell, such
products or services as are referred to in clause (ii) of this Section 10.4(a).
(b) For purposes of this Section 10.4, ownership of 1% or less of any
class of outstanding securities of a company the securities of which are listed
on a national securities exchange shall not be deemed to constitute ownership or
participation in the ownership of the business of such company.
(c) None of Seller, any Affiliate of Seller or either Stockholder, for
a period of five years from and after the Closing Date, shall, directly or
indirectly, (i) hire, offer to hire, entice away, retain, employ or solicit or
attempt to solicit (either for itself or as agent for another) for employment or
induce, persuade or encourage any person to leave Buyer's employ who, prior to
the Closing Date was, or during such five year period will be, employed or
retained by Buyer as a consultant, agent, employee or otherwise or (ii) divert
or attempt to divert from Buyer any business whatsoever by influencing or
attempting to influence any customer, supplier, licensee, licensor, franchisee
or other business relation of Buyer.
(d) Seller and each Stockholder acknowledge and agree that any breach
of this Section 10.4 is likely to result in irreparable injury to Buyer, that
monetary damages will be an inadequate remedy of such breach and that,
accordingly, in addition to any other remedy that Buyer may have, Buyer shall be
entitled to enforce the specific performance of this Section 10.4 and to seek
both permanent and temporary relief in the event of any breach hereof. In
addition, in the event of an alleged breach or violation by Seller or either
Stockholder of this Section 10.4, the Noncompetition Period shall be tolled
until such breach or violation has been duly cured.
(e) The parties acknowledge that the time, scope, geographic area and
other provisions of this Section 10.4 have been specifically negotiated by
sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the transactions contemplated by this
Agreement. If any portion of this Section 10.4 shall be determined to be invalid
and unenforceable as written, each such portion shall be enforced to the extent
reasonable under the circumstances and such determination shall not affect the
validity or enforceability of the balance hereof, and such balance shall remain
in full force and effect. It is understood that Seller and the Stockholders are
entering into this non-competition agreement in order to induce Buyer to enter
into this Agreement.
(f) The parties acknowledge that the Business is currently conducted
throughout the Territory. In view of the statements made in the preceding
sentence, the parties agree that the Territory is reasonable in scope.
Section 10.5 DISMISSAL OF GEOWASTE ACTION. Buyer shall use reasonable
efforts to have the action entitled CITY OF NASHVILLE, GEORGIA AND GEOWASTE OF
GA, INC. V. AIR-SWEEP-A- LOT, INC., Docket No. 96-CV540 (the "GeoWaste Action")
dismissed by the Superior Court of Lowndes, Georgia with prejudice within two
weeks of the Closing Date.
Section 10.6 PAYMENT DEFAULT. Buyer agrees that in the event of a
failure by Buyer to make an uncontested payment under the Note, Buyer shall
provide Seller with information as to the location of the Acquired Assets and
shall reasonably assist in the orderly transfer of the Acquired Assets to
Seller.
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 Seller or either Stockholder, addressed to:
Air-Sweep-A-Lot, Inc.
7976 Webb Road N
Hahira, Georgia 31632
Attention: Tim Griffin
Facsimile: (912) 794-9312
With a copy to:
Gary L. Moser, Esq.
1706 North Patterson Street
P.O. Box 1451
Valdosta, Georgia 31603-1451
Facsimile: (912) 244-9788
If to Buyer, addressed to:
GeoWaste of GA, Inc.
c/o 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 Georgia (without reference to the choice of law provisions of
Georgia law) except with respect to matters of law concerning the internal
corporate or partnership affairs of Buyer and as to those matters the law of the
jurisdiction under which Buyer 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.
Section 11.7 TAXES. Any Taxes in the nature of a sales or transfer tax
payable on the sale or transfer of all or any portion of the Acquired Assets or
the consummation of any other transaction contemplated hereby shall be paid by
Seller.
Section 11.8 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 11.9 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 11.10 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 11.11 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 Buyer shall thereafter have no obligation to keep
confidential any information which has been furnished to Buyer concerning
Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
AIR-SWEEP-A-LOT, INC.
By: /s/ TODD GRIFFIN
Name: Todd Griffin
Title: President
/s/ TODD GRIFFIN
Todd Griffin
/s/ TIM GRIFFIN
Tim Griffin
GEOWASTE OF GA, INC.
By: /s/ RAYMOND F. CHASE
Name: Raymond F. Chase
Title: Vice President
Exhibit 2.2
ASSET PURCHASE AGREEMENT
by and among
GEOWASTE OF GA, INC.,
T. F. MITCHELL & SONS, INC.
and
STEPHEN F. MITCHELL
Dated November 7, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms............................................1
Section 1.2. Other Defined Terms......................................5
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.1. Purchase and Sale of Assets..............................6
Section 2.2. Consents.................................................6
Section 2.3. Amount of Purchase Price.................................6
Section 2.4. Payment of Purchase Price................................6
Section 2.5. Assumption of Liabilities................................7
Section 2.6. Closing..................................................7
Section 2.7. Bulk Sales Law Compliance................................8
Section 2.8. Allocation of Purchase Price.............................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE STOCKHOLDER
Section 3.1. Organization, Qualification and Corporate Power..........8
Section 3.2. Certificate of Incorporation; By-Laws; Minute Books......8
Section 3.3. Ownership................................................9
Section 3.4. Subsidiaries and Investments.............................9
Section 3.5. Authorization of Transaction.............................9
Section 3.6. Noncontravention.........................................9
Section 3.7. Financial Statements....................................10
Section 3.8. Absence of Certain Changes or Events....................10
Section 3.9. Undisclosed Liabilities.................................12
Section 3.10. Taxes...................................................13
Section 3.11. Brokers' Fees...........................................13
Section 3.12. Litigation..............................................13
Section 3.13. Licenses................................................13
Section 3.14. Title to Assets.........................................14
Section 3.15. Sufficiency of Assets...................................14
Section 3.16. Contracts and Commitments...............................14
Section 3.17. Labor Matters...........................................16
Section 3.18. Proprietary Rights......................................16
Section 3.19. Employee Benefits.......................................17
Section 3.20. Transactions with Certain Persons.......................17
Section 3.21. Environmental Matters...................................18
Section 3.22. OSHA Compliance.........................................18
Section 3.23. Customers and Suppliers.................................19
Section 3.24. Insurance...............................................19
Section 3.25. Accounts Receivable.....................................19
Section 3.26. Inventories.............................................20
Section 3.27. Books and Records.......................................20
Section 3.28. Disclosure; Accuracy of Documents and Information........20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1. Organization, Qualification and Corporate Power.........21
Section 4.2. Authorization of Transaction............................21
Section 4.3. Noncontravention........................................21
Section 4.4. Brokers' Fees...........................................22
ARTICLE V
COVENANTS
Section 5.1. Notices and Consents....................................22
Section 5.2. Further Assurances......................................22
Section 5.3. Encumbrances............................................22
Section 5.4. Lease...................................................22
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
Section 6.1. Agreements and Covenants.................................23
Section 6.2. Representations and Warranties...........................23
Section 6.3. Certificate..............................................23
Section 6.4. Deliveries...............................................23
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
Section 7.1. Agreements and Covenants................................24
Section 7.2. Representations and Warranties..........................24
Section 7.3. Consents................................................24
Section 7.4. No Action...............................................24
Section 7.5. Certificate.............................................24
Section 7.6. Employment Agreement....................................24
Section 7.7. Lease...................................................25
Section 7.8. Opinion of Counsel......................................25
Section 7.9. Material Adverse Changes................................25
Section 7.10. Annualized Gross Revenue................................25
Section 7.11. Deliveries..............................................25
ARTICLE VIII
DELIVERIES OF BUYER ON THE CLOSING DATE
Section 8.1. Purchase Price...........................................25
Section 8.2. Certificate..............................................25
Section 8.3. Secretary's Certificate..................................25
ARTICLE IX
DELIVERIES OF SELLER ON THE CLOSING DATE
Section 9.1. Title to Acquired Assets.................................26
Section 9.2. Opinion of Counsel.......................................26
Section 9.3. Certificate..............................................26
Section 9.4. Consents.................................................26
Section 9.5. Good Standing Certificates...............................26
Section 9.6. Secretary's Certificate..................................26
Section 9.7. Possession of Acquired Assets............................26
Section 9.8. Other Deliveries.........................................26
ARTICLE X
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
Section 10.1. Books and Records......................................27
Section 10.2. Survival of Representations, etc.......................27
Section 10.3. Indemnification........................................27
Section 10.4. Non-Competition........................................30
ARTICLE XI
MISCELLANEOUS
Section 11.1. Assignment.............................................31
Section 11.2. Notices; Transfer of Funds.............................31
Section 11.3. Governing Law..........................................32
Section 11.4. Entire Agreement; Modifications and Waivers............33
Section 11.5. Counterparts/Telecopies................................33
Section 11.6. Expenses...............................................33
Section 11.7. Taxes..................................................33
Section 11.8. Invalidity.............................................33
Section 11.9. Titles.................................................33
Section 11.10. Publicity..............................................33
Section 11.11. Confidential Information...............................34
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT entered into on November 7, 1997 (this
"Agreement"), by and among GeoWaste of GA, Inc., a Georgia corporation
("Buyer"), T. F. Mitchell & Sons, Inc., a Georgia corporation ("Seller"), and
Stephen F. Mitchell, the sole stockholder of Seller (the "Stockholder").
WHEREAS, subject to the terms and conditions set forth herein, Buyer
desires to purchase from Seller and Seller desires to sell to Buyer, the assets
of or used in the solid waste business of Seller and activities related thereto
as conducted by Seller as of the date hereof, together with all assets and
properties related thereto, operating as a going concern (the "Business").
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:
"Acquired Assets" shall mean all assets, properties, rights and
business of Seller set forth on Schedule 1.1(a) to this Agreement.
"Action" shall mean any claim, action, suit, proceeding or
investigation, whether at law or in equity or before any court, arbitrator,
arbitration panel or Governmental Entity.
"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.
"Assumed Liabilities" shall mean the liabilities of Seller listed on
Schedule 1.1(b).
"Books and Records" shall mean all records pertaining to the assets,
properties, business, operations, accounts, financial condition, contractors,
suppliers or customers of Seller with respect to the Business, regardless of
whether such books and records are maintained for Tax or financial reporting
purposes.
"Buyer Material Adverse Effect" shall mean a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of Buyer and its subsidiaries, taken as a whole.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601, et seq.
"Contract" shall mean any of the agreements, contracts, indentures,
leases, commitments, plans, arrangements, sales orders and purchase orders of
every kind, whether written or oral, described on Schedule 3.16 and any
agreements, contracts, indentures, leases, commitments, plans, arrangements,
sales orders and purchase orders of every kind, whether written or oral, of
Seller not required to be described on Schedule 3.16 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 and losses from suspensions of operations), liabilities,
damages, lawsuits, deficiencies, claims, Taxes and expenses (whether or not
arising out of third-party claims or governmental examinations, inspections or
audits), including, without limitation, interest, penalties, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing.
"Encumbrance" shall mean any lien, pledge, claim, option, charge,
security interest, encumbrance or other right of any third party.
"Environmental Laws" shall mean all local, state or federal laws and
regulations relating to the protection of the environment, pollution control and
Releases of Hazardous Substances as of the date hereof.
"Excluded Assets" shall mean all assets, properties, rights and
business of Seller other than those assets, properties, rights and business of
Seller set forth on Schedule 1.1(a) to this Agreement.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied.
"Governmental Entity" shall mean any government, governmental,
regulatory or self-regulatory entity, department, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.
"Hazardous Substance" shall mean (i) any substance designated pursuant
to Section 1321(b)(2)(A) of Title 33 of the United States Code, (ii) any
element, compound, mixture, solution or substance designated pursuant to Section
9602 of Title 42 of the United States Code, (iii) any hazardous waste having the
characteristics identified under or listed pursuant to Section 3001 of the Solid
Waste Disposal Act, (iv) any toxic pollutant listed under Section 1317(a) of
Title 33 of the United States Code, (v) any hazardous air pollutant listed under
Section 112 of the Clean Air Act, (vi) 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 (vii) petroleum and petroleum
products.
"Historical Financial Statements" shall mean the balance sheet of
Seller as of December 31, 1994, 1995 and 1996 and the related statements of
income, retained earnings and cash flows of Seller for the years ended on such
dates, together in each case with the related notes thereon, which financial
statements have been compiled by Dan R. Spires, Jr., CPA, and the Unaudited
Financial Statements, collectively.
"IRS" shall mean the United States Internal Revenue Service.
"Liabilities" shall mean debts, liabilities, obligations, duties and
responsibilities of any kind and description, whether absolute or contingent,
monetary or non-monetary, direct or indirect, known or unknown or matured or
unmatured, or of any other nature, other than Assumed Liabilities.
"Licenses" shall mean all licenses, permits, certificates and other
governmental authorizations necessary to carry on the Business as presently
conducted or to be conducted, including, without limitation, environmental
permits and authorizations or any other approval from any Governmental Entity
required for the Business; each License is identified on Schedule 3.13.
"Person" shall mean an individual, firm, trust, association,
corporation, partnership, limited liability company, Governmental Entity or
other entity.
"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.
"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 Seller or any predecessor entity to such person.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Seller 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 Seller.
"Tax" or "Taxes" means (i) all forms of taxation, charges, levies or
other assessments, whether direct or indirect and whether levied by reference to
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding (whether with
respect to receipts or payments), payroll, privilege, employment, including
benefits or cost of benefits provided or deemed by applicable law to be provided
to employees, excise, severance, capital gains, transfer gains, stamp,
occupation, premium or similar tax measured by insurance premiums, real and
personal property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
and any interest or any penalty, addition to tax or additional amount, imposed
by any Taxing Authority, (ii) liability, whether to a Taxing Authority or
pursuant to an agreement with or legal obligation to any person or entity, for
the payment of any amounts of the type described in clause (i) of this
definition as a result of being a member of an affiliated, consolidated,
combined or unitary group for any taxable period and (iii) liability for the
payment of any amounts of the type described in clause (i) or (ii) of this
definition as a result of an express or implied obligation to indemnify any
other Person.
"Taxing Authority" means a Governmental Entity responsible for the
imposition of Taxes.
"Territory" shall mean the one hundred radius of Cordele, Georgia.
"Unaudited Financial Statements" shall mean the unaudited balance
sheet of Seller at September 30, 1997 and the related unaudited statements of
income, retained earnings and cash flows of Seller for the nine months ended
September 30, 1997, together with the related notes thereon, which financial
statements have been compiled by Dan R. Spires, Jr., CPA.
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
Closing 2.6
Closing Date 2.6
ERISA 3.19
Lease 5.4
Noncompetition Period 10.4(a)
Personnel 3.8(b)(i)
Plan 3.19
Premises 5.4
Purchase Price 2.3
Seller Actions 3.12
Tax Returns 3.10
Unless the context otherwise requires words in the singular include
the plural and words in the plural include the singular.
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.1. Purchase and Sale of Assets. Based upon and subject to
the terms, agreements, warranties, representations and conditions of this
Agreement, Seller hereby agrees to sell, convey, transfer, assign and deliver to
Buyer on the Closing Date and Buyer hereby agrees to buy and accept on the
Closing Date, the Acquired Assets.
Section 2.2. Consents. To the extent that the assignment of or the
agreement to assign any Contract to Buyer hereunder would constitute a breach of
that Contract unless the consent or waiver of another party thereto has been
obtained, this Agreement shall not constitute any such assignment or agreement
to assign unless and until such consent or waiver is obtained. Seller agrees to
use its commercially reasonable efforts to obtain prior to the Closing Date all
such consents and waivers. If any such consent or waiver is not obtained before
the Closing Date and the Closing is nevertheless consummated, Seller agrees to
continue to use its commercially reasonable efforts to obtain all such consents
as have not been obtained prior to such date and further agrees to cooperate
with Buyer after such date in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for Buyer, on
terms no less favorable than Seller is entitled to, the benefits under the
applicable Contracts, including, without limitation, enforcement, at the cost
and for the benefit of Buyer, of any and all rights of Seller against any other
party thereto arising out of the breach or cancellation thereof by such party or
otherwise.
Section 2.3. Amount of Purchase Price. The total consideration (the
"Purchase Price") to be paid to Seller by Buyer in exchange for the transfer of
the Acquired Assets and the assumption of the Assumed Liabilities shall be
$1,500,000.00.
Section 2.4. Payment of Purchase Price. On the Closing Date, Buyer
shall pay the Purchase Price as follows:
(a) $1,000,000 of the Purchase Price by the delivery by Buyer to
Seller of a certified check or wire transfer in such amount;
(b) assumption of the Assumed Liabilities, as provided in Section 2.5
below;
(c) the balance to paid by certified check or wire transfer on or
before January 31, 1998.
Section 2.5. Assumption of Liabilities. As additional consideration
hereunder, from and after the Closing Date Buyer shall assume and discharge the
Assumed Liabilities. Except as provided in the preceding sentence, and
notwithstanding anything else to the contrary contained herein, Buyer is not
assuming and shall not be liable for any Liabilities of Seller, including,
without limitation, any Liabilities: (i) under Contracts which shall not have
been assigned to Buyer pursuant to this Agreement; (ii) for indebtedness for
borrowed money; (iii) by reason of or arising out of any default or breach by
Seller of any Contract, for any penalty against Seller under any Contract, or
relating to or arising out of any event which with the passage of time or after
giving of notice, or both, would constitute or give rise to such a breach,
default or penalty, whether or not such Contract is being assigned to and
assumed by Buyer pursuant to this Agreement; (iv) the existence of which would
conflict with or constitute a breach of any representation, warranty or
agreement of Seller contained herein; (v) relating to or in any way arising out
of the Excluded Assets; (vi) for Seller's expenses referred to in Section 11.6
hereof; (vii) to any stockholder or Affiliate of Seller or to any present or
former employee, officer or director of Seller, including, without limitation,
any bonuses, any termination or severance pay related to the transfer of
employees to Buyer in connection with the transactions contemplated hereby, and
any post retirement medical benefits or other compensation or benefits; (viii)
relating to the execution, delivery and consummation of this Agreement and the
transactions contemplated hereby, including, without limitation, any and all
Taxes incurred as a result of the sale contemplated by this Agreement; (ix) for
any Taxes accrued or incurred prior to the Closing Date or relating to any
period (or portion of a period) prior thereto; (x) relating to or arising out of
any environmental matter, including, without limitation, any violation of any
Environmental Law or any other law relating to health and safety of the public
or the employees of Seller; (xi) relating to, or arising out of, products
manufactured or services rendered by Seller, or the conduct or operation of the
business of Seller, prior to the Closing Date; and (xii) of Seller arising under
or pursuant to this Agreement; and provided further, that Buyer shall have the
right not to assume any Contract if any party to such Contract is in breach
thereof or default thereunder as of the Closing Date or there has occurred any
event which with the passage of time or after giving of notice, or both, would
become such a breach or default. Buyer shall not assume or be bound by any
Liabilities of Seller, except as expressly assumed by it pursuant to this
Agreement. Nothing contained in this Section 2.5 shall relieve or release Seller
from any obligations under covenants, warranties or agreements contained in this
Agreement.
Section 2.6. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Wright &
Hyman, P.C., 110 East 13th Avenue, Cordele, Georgia, on November 7, 1997, or at
such other time and place as Buyer and Seller shall mutually agree (the date on
which the Closing occurs being the "Closing Date").
Section 2.7. Bulk Sales Law Compliance. Seller agrees to bear any
loss, liability, obligation or cost suffered by the Business or Buyer by reason
of any noncompliance with any provision of any bulk sales law of any State which
may require bulk sales law compliance on account of the provisions herein and
the transactions contemplated hereby and to indemnify and hold Buyer harmless
from and against claims suffered or incurred by the Business or Buyer by reason
of or arising out of (a) the failure of Seller to pay or discharge the same when
done or (b) such noncompliance with any applicable bulk sales law.
Section 2.8. Allocation of Purchase Price. The Purchase Price shall be
allocated to the Acquired Assets in accordance with Schedule 2.8. Each party
hereto agrees to reflect the Acquired Assets upon its books for tax reporting
purposes in accordance with such schedule and to file all tax returns in
accordance with and based upon such schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE STOCKHOLDER
Seller and the Stockholder severally represent and warrant to Buyer as
follows:
Section 3.1. Organization, Qualification and Corporate Power. Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Seller 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, individually or in the aggregate, have a Seller
Material Adverse Effect. Seller 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.
Section 3.2. Certificate of Incorporation; By-Laws; Minute Books.
Seller has heretofore delivered to Buyer true, accurate and complete copies of
its certificate of incorporation and by-laws, as amended to and including the
date hereof. The minute books, stock books and stock transfer records of Seller,
true, accurate and complete copies of which have been made available to Buyer,
contain true, accurate and complete minutes and records of all issuances and
transfers of capital stock of Seller and of all minutes and records of all
meetings, proceedings and other actions of the stockholders, Board of Directors
and/or committees of the Board of Directors of Seller from the date of
incorporation of Seller to and including the date hereof and all such meetings,
proceedings and actions have been duly, legally and properly held or taken.
Section 3.3. Ownership. All of the issued and outstanding shares of
capital stock of Seller are owned by the Stockholder. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that could
require Seller to issue, sell, or otherwise cause to become outstanding any of
its capital stock except as set forth on Schedule 3.3. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to Seller's capital stock. There are no voting trusts or
other agreements or understandings to which Seller is a party with respect to
the voting of its capital stock.
Section 3.4. Subsidiaries and Investments. Seller has no direct or
indirect subsidiaries and has not made any advances to or investments in, and
does not own any securities of or other interests in, any firm, corporation,
association, business organization, enterprise or entity.
Section 3.5. Authorization of Transaction. Seller has full power and
authority (including full corporate power and authority), and the Stockholder
has full legal right, 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 Seller and the Stockholder, 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 3.6. 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 provision of
the certificate of incorporation or by-laws of Seller, (ii) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Entity or court to
which Seller or the Stockholder is subject or (iii) 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 Seller 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, in the case of (ii) and (iii) above, where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not, individually or in the
aggregate, have a Seller Material Adverse Effect. Other than as provided on
Schedule 3.6, 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 Seller or the
Stockholder 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 3.7. Financial Statements. Seller has heretofore delivered to
Buyer the Historical Financial Statements. The Historical Financial Statements
in each case are true and complete with respect to each item therein and have
been prepared in accordance with GAAP and fairly present the assets, liabilities
and financial condition, results of operations and cash flows of Seller
indicated thereby as of each date and for the periods covered thereby.
Section 3.8. Absence of Certain Changes or Events. Except as set forth
on Schedule 3.8, since the date of the Unaudited Financial Statements there has
not been any:
(a) change in Seller'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
Seller to any of its officers, employees, consultants or sales representatives
whose total compensation for services rendered to Seller 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 Seller for any Personnel
except pursuant to the existing plans and arrangements described on Schedule
3.19 or (iv) new employment agreement to which Seller is a party;
(c) addition to or modification of the employee benefit plans,
arrangements or practices described on Schedule 3.19 affecting Personnel other
than (i) contributions made in accordance with the normal practices of Seller 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 Seller used
in connection with the Business, which is material singly or in the aggregate,
other than in the ordinary course of business, or discontinuance of any service
provided by the Business;
(e) cancellation of any indebtedness or waiver of any rights of
substantial value to Seller, whether or not in the ordinary course of business,
with respect to the Business;
(f) amendment, cancellation or termination of any Contract, License or
other instrument required to be set forth on Schedules 3.13 or 3.16;
(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 $5,000 or more;
(h) failure to pay any obligation of Seller, except where such failure
would not have a Seller Material Adverse Effect;
(i) failure to operate the Business in the ordinary course;
(j) change in accounting methods or practices by Seller affecting its
assets, liabilities or business (whether for accounting or tax purposes);
(k) revaluation by Seller of any of its assets used in connection with
the Business, 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)
affecting the Acquired Assets;
(m) mortgage, pledge, grant or creation of any Encumbrance on any
Acquired Asset;
(n) material change in the collection, payment or credit experience,
accounting practices, procedures or methods of Seller with respect to the
Business or in the cash management practices of Seller in the operation of the
Business;
(o) indebtedness incurred by Seller for borrowed money or any
commitment to borrow money entered into by Seller in connection with the
Business, or any loans made or agreed to be made by Seller in connection with
the Business;
(p) there has been no material changes in the amount or scope of
coverage of insurance now carried by Seller in connection with the Business;
(q) liabilities incurred or assumed by Seller in connection with the
Business 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, except as set forth on Schedule 3.8;
(r) payment, discharge or satisfaction of any liabilities with respect
to the Business 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 Seller of any liabilities to the Stockholder or any
Affiliate of the Stockholder;
(t) agreement or commitment by Seller 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, affect the
Acquired Assets or materially and adversely affect in the future, the condition
(financial or otherwise), assets, liabilities, working capital, reserves,
earnings, business or prospects of Seller (including, without limitation,
Seller's relationships with its customers).
Section 3.9. Undisclosed Liabilities. Except as set forth on Schedule
3.9, Seller 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)
since the date of the Unaudited Financial Statements.
Section 3.10. Taxes. Except as set forth on Schedule 3.10, Seller 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 Seller Material Adverse Effect
("Tax Returns"). Except as set forth on Schedule 3.10, all Tax Returns were
correct and complete in all material respects. Except as set forth on Schedule
3.10, Seller has paid in full all Taxes (whether or not shown on a Tax Return)
required to be paid by Seller before such payment became delinquent and no
deficiency has been proposed, asserted or assessed. All Taxes which Seller 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 Schedule 3.10, no examination or audit of any
Tax Returns by any Governmental Entity is currently in progress or contemplated.
Seller is not a party to any tax sharing or allocation agreement and, except as
set forth on Schedule 3.10, has no actual or potential liability for any Tax
obligation of any other taxpayer.
Section 3.11. Brokers' Fees. Except as set forth on Schedule 3.11,
neither Seller nor the Stockholder has 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 3.12. Litigation. Except as set forth on Schedule 3.12, there
are no Actions involving material claims by or against Seller or the
Stockholder, either pending or threatened, at law or in equity or before any
court, arbitrator, arbitration panel or Governmental Entity (collectively,
"Seller Actions"). Neither Seller nor the 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 Seller or the business,
activities, properties or assets of Seller or the Stockholder. There is not a
reasonable likelihood of an adverse determination of any pending Seller Actions
which would, individually or in the aggregate, have a Seller Material Adverse
Effect.
Section 3.13. Licenses. Except as set forth on Schedule 3.13, since
the date of the Unaudited Financial Statements, Seller 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 Entities that are material to the conduct of the 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 as presently
conducted or to be conducted to be revoked, withdrawn, canceled, suspended or
not renewed. Seller is conducting its business in compliance with all laws,
rules and regulations applicable thereto, the violation of which would,
individually or in the aggregate, have a Seller Material Adverse Effect.
Section 3.14. Title to Assets. Seller is the owner of, has good and
marketable 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 or useful in the operation of the Business. Except as set forth on
Schedule 3.14, all the Acquired Assets 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. Seller has
performed all the obligations required to be performed by it with respect to all
assets leased which are used or useful in the operation of the business by it
through the date hereof, except where the failure to perform would not,
individually or in the aggregate, have a Seller Material Adverse Effect. Seller
enjoys peaceful and undisturbed possession of all of its facilities which are
used or useful in the operation of the Business. None of such improvements,
equipment and other assets is subject to any commitment or other arrangement for
their sale or use by any stockholder of Seller or any of their Affiliates or
third parties. The assets reflected on the Unaudited Financial Statements or
acquired after the date of the Unaudited Financial Statements are valued on
Seller's books at or below Seller actual cost less an adequate and proper
depreciation charge. Seller has not depreciated any of its assets in a manner
inconsistent with applicable IRS guidelines, if any. Except as set forth on
Schedule 3.14, the assets owned or leased by Seller include the Acquired Assets.
Section 3.15. Sufficiency of Assets. All of Seller's tangible property
used in the Business is in good operating condition and repair (except for
normal wear and tear). Except as set forth on Schedule 3.15, the Acquired Assets
are sufficient for the operation of the Business as heretofore conducted and are
in conformity in all respects with all applicable laws, ordinances, orders,
regulations and other requirements (including applicable environmental, motor
vehicle safety or standards, occupational safety and health laws and
regulations) relating thereto currently in effect.
Section 3.16. Contracts and Commitments. Schedule 3.16 sets forth all
Contracts presently in effect to which Seller is a party in connection with the
Business, 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 Seller with respect to the Business of more than $5,000 (and not more
than $10,000 in the aggregate) and not cancelable (without liability) on not
more than 30 days' notice;
(b) lease of personal property with respect to the Business involving
any annual expense in excess of $5,000 and not cancelable without liability
within 30 days (Schedule 3.16 indicates with respect to each such lease listed
thereon a general description of the leased items, term, annual rent and renewal
options);
(c) material governmental or regulatory licenses or permits required
to conduct the Business as presently conducted;
(d) contracts or agreements containing covenants limiting the freedom
of Seller to engage in any line of business or compete with any person;
(e) employment contracts, including without limitation, contracts to
employ executive officers and other contracts with officers or directors of
Seller;
(f) contracts with customers and suppliers of Seller with respect to
the Business with a gross value to Seller in excess of $2,000 per year (Schedule
3.16 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
(g) contracts and commitments not otherwise described in this Section
3.16 or listed on Schedule 3.16 (including purchase orders, franchise agreements
and undertakings or commitments to any Governmental Entity) relating to the
Business or otherwise affecting the Business 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.
Seller is not (and, to the best knowledge of the 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)-(g) above, where such breach or violation or default
would, individually or in the aggregate, have a Seller Material Adverse Effect.
Each Contract or other instrument, obligation, evidence of indebtedness or
commitment described in paragraphs (a)-(g) above is a legal, valid and binding
agreement, arrangement or commitment of Seller enforceable against Seller in
accordance with its respective terms, and is, to the best knowledge of Seller
and the Stockholder, a legal, valid and binding agreement, arrangement or
commitment of each other party thereto enforceable against such other parties,
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 3.17. Labor Matters. Seller is not a party to any collective
bargaining agreement with respect to its employees with any labor organization,
group or association. Seller 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. Seller is (i) 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 Seller conducts business and (ii) is not engaged
in any unfair labor practice except where such failure of compliance or practice
would not, individually or in the aggregate, have a Seller Material Adverse
Effect. There is no unfair labor practice charge or complaint against Seller
pending before the National Labor Relations Board or any other Governmental
Entity arising out of such entity's activities, and Seller has no knowledge of
any facts or information which would give rise thereto; there is no labor strike
or labor disturbance pending against Seller nor is any grievance currently being
asserted; and Seller has not experienced a work stoppage or other labor
difficulty.
Section 3.18. Proprietary Rights. Seller has no Proprietary Rights
used in connection with the Business other than the trade names and customer
lists listed on Schedule 3.18. Except as set forth on Schedule 3.18, (i) Seller
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) Seller 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 Seller that are presently outstanding alleging that Seller'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 Seller and there is no basis for any such claim; (v)
Seller 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; and (vi) no officer, director, employee or
Affiliate of Seller owns or has any interest in any Proprietary Rights or any
trade secret, invention or process, if any, used by Seller in connection with
the Business.
Section 3.19. Employee Benefits. Except for those plans set forth on
Schedule 3.19 hereto (the "Plans"), Seller does not maintain or contribute to
any "employee benefit plan", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any stock
purchase plan, stock option plan, fringe benefit plan, bonus plan or any other
deferred compensation agreement, plan or funding arrangement, whether or not
such plan has been terminated and whether or not such plan is of a legally
binding nature or in the form of an informal understanding. With respect to the
Plans, the applicable requirements of ERISA and the Code (including, without
limitation, the group health plan continuation coverage requirements of Section
4980B of the Code and Part 6 of Title I of ERISA) have been fulfilled in all
material respects and no event has occurred nor does any condition exist which
could result in a direct or indirect liability to Buyer. Neither Seller nor any
member of a "controlled group" (as defined in Section 4971(e)(2)(B) of the Code)
of which Seller is a member, has ever maintained or contributed to any plan (i)
subject to Section 412 of the code and Section 302 or Title IV of ERISA
(including, without limitation, any "multiemployer plan" as defined in Section
3(37) of ERISA) or (ii) which provides post-employment health or welfare
benefits (other than benefits required to be provided pursuant to Section 4980B
of the Code and Part 6 of Title I of ERISA).
Section 3.20. Transactions with Certain Persons. Except as disclosed
on Schedule 3.20, Seller 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 Seller; nor are there any transactions of a continuing
nature between Seller and any of its officers, directors or Affiliates (other
than by or through the regular employment thereof by Seller) not subject to
cancellation which will continue beyond the Closing Date, including, without
limitation, use of Seller's assets for personal benefit with or without adequate
compensation.
Section 3.21. Environmental Matters.
(a) Except as set forth on Schedule 3.21, Seller 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 Schedule 3.21, there are no facts or
circumstances which could form the basis for the assertion of any claim against
Seller 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) Seller has not entered into and is not currently bound by any
consent decree or order under, and is not subject to any judgment, decree or
judicial or administrative order relating to compliance with, or the clean up of
Hazardous Substances under, any applicable Environmental Laws. Except as set
forth on Schedule 3.21, Seller has not been alleged to be in violation of, or
subject to any administrative or judicial proceeding pursuant to, applicable
Environmental Laws, either now or at any time since Seller's incorporation.
(d) Seller is not 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 Seller or its
Representatives or arising out of the ownership, use, control or operation by
Seller 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 Seller) at which a Release of a Hazardous Substance has
occurred.
(e) Seller has heretofore provided Buyer with true, correct and
complete copies of, or access to all files of Seller relating to environmental
matters.
Section 3.22. OSHA Compliance. Seller has made available to Buyer
true, correct and complete copies of all reports and filings made or filed by
Seller pursuant to the Occupational Safety and Health Act and related to the
Business. Except as set forth on Schedule 3.22, Seller 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 3.23. Customers and Suppliers. Except as set forth on Schedule
3.23, since the date of the Unaudited Financial Statements, there has been no
material adverse change in the business relationship of Seller with any customer
or supplier of the Business. Except as set forth on Schedule 3.23, Seller has
not received any written or oral notice from any existing customer of the
Business that such customer (i) intends to file a petition for relief under any
provision of Title 11 of the United States 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 Seller or
(iii) requests that Seller grant price concessions, rebates or reductions on
products or services provided by Seller.
Section 3.24. Insurance. Schedule 3.24 contains a complete and
accurate list, and true, correct 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 Seller 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 Seller is a
party. Seller is not in default with respect to payment or any other matter
under any of such policies or binders; Seller 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
Seller 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
Schedule 3.24. 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 Seller through
the Closing Date. All claims, if any, relating to the business of Seller made
against Seller 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 3.25. Accounts Receivable. Except as set forth on Schedule
3.25, the accounts receivable reflected in the Unaudited Financial Statements,
and all accounts receivable of Seller 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 of Seller 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 3.26. Inventories Except as set forth on Schedule 3.26, the
inventories of Seller'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 3.27. Books and Records. Except as set forth on Schedule 3.27,
Seller'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 Seller in all respects. None of the records,
systems, controls, data or information of Seller 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 Seller or
accountants retained by Seller. Except as set forth on Schedule 3.27, Seller's
Books and Records fairly and accurately reflect the transactions and
dispositions of assets of Seller, and Seller'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 Schedule 3.27, Seller 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 3.28. Disclosure; Accuracy of Documents and Information.
Neither Seller nor the Stockholder knows of any facts or circumstances not
disclosed to Buyer which indicate that the Acquired Assets or the future
operations, profits or business of the Business may be adversely affected or
which otherwise should be disclosed to Buyer in order to make any of the
representations or warranties made herein on the part of the Seller not
misleading. No representation or warranty by Seller or the Stockholder contained
in this Agreement, and no statement contained in any schedule, exhibit,
certificate or other instrument furnished to Buyer under or in connection with
this Agreement, contains any untrue statement of any material fact, or omits to
state any material fact necessary in order to make the statements contained
herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and the Stockholder as follows:
Section 4.1. Organization, Qualification and Corporate Power. Buyer is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia. Buyer 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 failure to be so qualified would not, individually
or in the aggregate, have a Buyer Material Adverse Effect. Buyer 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.
Section 4.2. Authorization of Transaction. Buyer 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 Buyer, enforceable against it 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 4.3. 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 provision of
the certificate of incorporation or by-laws of Buyer, (ii) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Entity or court to
which Buyer is subject or (iii) 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
Buyer 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,
in the case of (ii) and (iii) above, where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, or failure to
give notice would not have a Buyer Material Adverse Effect and except as
disclosed on Schedule 4.3. Other than as provided on Schedule 4.3, Buyer 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 hereto to consummate the transactions contemplated by this Agreement and
the related agreements.
Section 4.4. Brokers' Fees. Except as set forth on Schedule 4.4, Buyer
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.
ARTICLE V
COVENANTS
Seller, on the one hand, and Buyer, on the other hand, covenant with
each other as follows:
Section 5.1. Notices and Consents. As soon as practicable, Seller and
Buyer 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 5.2. Further Assurances. Both before and after the Closing
Date, Seller and Buyer 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.
Section 5.3. Encumbrances. Buyer shall maintain the Acquired Assets
free and clear of all Encumbrances except for Encumbrances existing as of the
Closing Date.
Section 5.4. Lease. At or prior to the Closing, Seller shall enter
into a lease with Buyer (the "Lease") for the property and buildings located at
1107 7th Street, South, Cordele, Georgia (the "Premises"), which Lease shall be
in substantially the form of Exhibit A attached hereto. The Lease shall provide
for, without limitations, the following: (i) an initial term of five years with
an option to extend for an additional term of ten years; (ii) an annual rent of
$11,600 per year; (iii) representations by Seller 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; (iv) representations by Seller that all permits
and approvals necessary for the uses in (iii) above have been obtained; and (v)
representations by Seller that it has completed certain requested improvements
to the Premises including the installation of a truck washing bay, enclosure of
the fuel tank and the paving of the truck parking areas.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:
Section 6.1. Agreements and Covenants. On or before the Closing Date,
Buyer shall have complied with and duly performed all agreements and conditions
on its part to be complied with and performed pursuant to or in connection with
this Agreement on or before the Closing Date.
Section 6.2. Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and correct at and
as of the Closing Date.
Section 6.3. Certificate. Seller shall have received a certificate
dated the Closing Date and executed by Buyer to the effect that the conditions
expressed in Sections 6.1 and 6.2 have been fulfilled.
Section 6.4. Deliveries. Seller shall have received the deliveries to
be made by Buyer pursuant to Article VIII.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions:
Section 7.1. Agreements and Covenants. On or before the Closing Date,
Seller shall have complied with and duly performed all agreements and conditions
on its part to be complied with and performed pursuant to or in connection with
this Agreement on or before the Closing Date.
Section 7.2. Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and correct at
and as of the Closing Date.
Section 7.3. Consents. All consents, approvals and waivers from
Governmental Entities and other parties necessary to consummate the transactions
contemplated hereby or to permit Buyer to own and operate the Business 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 Buyer's obligation to
close if the lack of such consent or consents shall not have a Seller Material
Adverse Effect. After the Closing, Seller will continue to use its best efforts
to obtain any such consents or approvals.
Section 7.4. No Action. No Action 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 Buyer to own and operate the Business after the Closing
or materially damage Buyer or Seller if the transactions contemplated hereunder
are consummated.
Section 7.5. Certificate. Buyer shall have received a certificate
dated the Closing Date and executed by Buyer to the effect that the conditions
expressed in Sections 7.1, 7.2 and 7.4 have been fulfilled.
Section 7.6. Employment Agreement. The Stockholder shall have entered
into a two-year employment agreement with Buyer providing for an annual salary
of $50,000 in the form of the agreement annexed hereto as Exhibit B.
Section 7.7. Lease. Seller shall have entered into the Lease.
Section 7.8. Opinion of Counsel. Wright & Hyman, P.C. shall have
delivered to Buyer an opinion, dated as of the Closing Date, to the effect and
substantially in the form of Exhibit C hereto.
Section 7.9. Material Adverse Changes. There shall not have been any
material adverse change in the condition (financial or otherwise), assets,
liabilities, business or prospects of Seller. For the purposes of this Section
7.9, a "material adverse change" shall include, without limitation, any
development or discovery of any contingent or other liability not on Schedule
7.9, which might materially adversely affect the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Seller.
Section 7.10. Annualized Pre-Tax Income. Annualized pre-tax income of
Seller at Closing shall be not less than $195,000 as determined by Buyer in its
reasonable judgment.
Section 7.11. Deliveries. Buyer shall have received the deliveries to
be made by Seller pursuant to Article IX.
ARTICLE VIII
DELIVERIES OF BUYER ON THE CLOSING DATE
Buyer agrees on the Closing Date to deliver to Seller the following:
Section 8.1. Purchase Price . The Purchase Price to be delivered
pursuant to Section 2.3 hereof.
Section 8.2. Certificate. The certificate of Buyer referred to in
Section 6.3 hereof.
Section 8.3. Secretary's Certificate. A certificate of the Secretary
or an Assistant Secretary of Buyer setting forth a copy of the resolutions
adopted by the Board of Directors of Buyer authorizing and approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE IX
DELIVERIES OF SELLER ON THE CLOSING DATE
Seller agrees on the Closing Date to deliver to Buyer the following:
Section 9.1. Title to Acquired Assets . All conveyances, covenants,
warranties, assignments, bills of sale, confirmations, powers of attorney,
approvals, consents and any and all further instruments as may be necessary,
expedient or proper in order to complete any and all conveyances, transfers and
assignments provided for herein and to convey to Buyer such title to the
Acquired Assets as Seller is obligated hereunder to convey.
Section 9.2. Opinion of Counsel. The opinion of counsel for Seller
described in Section 7.8 hereof.
Section 9.3. Certificate. The certificate of Seller referred to in
Section 7.5 hereof.
Section 9.4. Consents. The consents referred to in Section 7.3 hereof.
Section 9.5. Good Standing Certificates. Good standing certificates
(or analogous documents), dated no more than ten days prior to the Closing Date,
from the appropriate authorities in the State of Georgia and in each
jurisdiction in which Seller is qualified to do business in connection with the
Business, showing Seller to be in good standing in the applicable jurisdiction.
Section 9.6. Secretary's Certificate. A certificate of the Secretary
or an Assistant Secretary of Seller setting forth a copy of the resolutions
adopted by the Board of Directors of Seller authorizing and approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
Section 9.7. Possession of Acquired Assets. Possession of the Acquired
Assets, including all Books and Records, Contracts and other documents relating
to the Acquired Assets.
Section 9.8. Other Deliveries. Such other documents or instruments as
Buyer or its counsel may reasonably request.
ARTICLE X
ACTIONS BY SELLER AND BUYER
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.
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. All statements contained on any 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.
Section 10.3. Indemnification.
(a) Seller and the Stockholder, jointly and severally, agrees to
indemnify, save and hold harmless Buyer, 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 Seller or the
Stockholder in or pursuant to this Agreement; (ii) any failure by Seller to
perform any of its agreements or covenants under this Agreement or under any of
the documents or instruments delivered by Seller pursuant to this Agreement;
(iii) any Action 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; (iv)
any and all Liabilities of Seller not agreed to be assumed by Buyer pursuant to
this Agreement; and (v) all Taxes imposed on Seller relating to taxable periods
ending on or prior to the Closing Date or periods to and including the Closing
Date to the extent attributable to the income, assets or operations of Seller
prior to the Closing Date. Seller and the Stockholder acknowledge that Buyer has
entered into this Agreement in reliance upon, among other things, the
indemnification provisions contained in this Section 10.3(a), and Seller and the
Stockholder agree that such provisions constitute reasonable and necessary
protection for Buyer 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 Buyer,
its stockholders, its Representatives or its Affiliates in the absence of third
party claims.
(b) Buyer shall indemnify and save and hold harmless Seller, the
Stockholder, Seller's Affiliates and 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 Buyer in or pursuant to this Agreement; (ii) any failure by Buyer to
perform any of its agreements and covenants under this Agreement or under any of
the documents or instruments delivered by Buyer pursuant to this Agreement;
(iii) any Action 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(b); and (iv) all Taxes imposed on Seller relating to taxable periods ending
after the Closing Date to the extent attributable to the income, assets or
operations of the Business after the Closing Date.
(c) 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(d) and 10.3(e), 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(d) and 10.3(e), 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.
(d) In the event that any lawsuit, action or other proceeding, is
filed against an party 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 indemnifying party, on
the other hand, then notwithstanding the provisions of Section 10.3(c), (i) the
indemnifying party 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 indemnifying party 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.
(e) Pursuant to the provisions of this Section 10.3, each of Buyer, on
the one hand, and Seller, 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.
(f) No Representative of Buyer shall be personally liable for any
Damages under the provisions contained in this Section 10.3.
Section 10.4. Non-Competition.
(a) Seller and the Stockholder agree that, for a period of five years
after the Closing Date (the "Noncompetition Period"), none of Seller, any
Affiliate of Seller or the Stockholder will, directly or indirectly, in the
Territory, (i) engage in any business the same as or similar to, or engage in
competition with, the Business, (ii) render services to or have any interest, as
a shareholder, owner, agent, consultant, lender or guarantor or any other
interest, in any other Person (other than Seller) engaged in the manufacture or
sale of products, or the rendering of services, which are currently being
manufactured or sold or rendered by the Business, or similar products or
services, or (iii) engage in competition with, or manufacture or sell, such
products or services as are referred to in clause (ii) of this Section 10.4(a).
(b) For purposes of this Section 10.4, ownership of 1% or less of any
class of outstanding securities of a company the securities of which are listed
on a national securities exchange shall not be deemed to constitute ownership or
participation in the ownership of the business of such company.
(c) None of Seller, the Stockholder, any Affiliate of Seller or the
Stockholder, for a period of five years from and after the Closing Date, shall,
directly or indirectly, (i) hire, offer to hire, entice away, retain, employ or
solicit or attempt to solicit (either for itself or as agent for another) for
employment or induce, persuade or encourage any person to leave Buyer's employ
who, prior to the Closing Date was, or during such five year period will be,
employed or retained by Buyer as a consultant, agent, employee or otherwise or
(ii) divert or attempt to divert from Buyer any business whatsoever by
influencing or attempting to influence any customer, supplier, licensee,
licensor, franchisee or other business relation of Buyer.
(d) Seller and the Stockholder acknowledge and agree that any breach
of this Section 10.4 is likely to result in irreparable injury to Buyer, that
monetary damages will be an inadequate remedy of such breach and that,
accordingly, in addition to any other remedy that Buyer may have, Buyer shall be
entitled to enforce the specific performance of this Section 10.4 and to seek
both permanent and temporary relief in the event of any breach hereof. In
addition, in the event of an alleged breach or violation by Seller or the
Stockholder of this Section 10.4, the Noncompetition Period shall be tolled
until such breach or violation has been duly cured.
(e) The parties acknowledge that the time, scope, geographic area and
other provisions of this Section 10.4 have been specifically negotiated by
sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the transactions contemplated by this
Agreement. If any portion of this Section 10.4 shall be determined to be invalid
and unenforceable as written, each such portion shall be enforced to the extent
reasonable under the circumstances and such determination shall not affect the
validity or enforceability of the balance hereof, and such balance shall remain
in full force and effect. It is understood that Seller and the Stockholder are
entering into this non-competition agreement in order to induce Buyer to enter
into this Agreement.
(f) The parties acknowledge that the Business is currently conducted
throughout the Territory. In view of the statements made in the preceding
sentence, the parties agree that the Territory is reasonable in scope.
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 Seller or the Stockholder, addressed to:
T. F. Mitchell & Sons, Inc.
1107 7th Street, South
Cordele, Georgia 31015
Attention: Stephen F. Mitchell
With a copy to:
Wright & Hyman, P.C.
110 East 13th Avenue
Cordele, Georgia 31015
Attention: Thomas Hyman, Esq.
Facsimile: (912) 276-1704
If to Buyer, addressed to:
GeoWaste of GA, Inc.
c/o GeoWaste Incorporated
Suite 700
100 West Bay Street
Jacksonville, Florida 32202
Attention: Amy C. MacF. Burbott
Facsimile: (904) 353-2661
With a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
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 Georgia (without reference to the choice of law provisions of
Georgia law) except with respect to matters of law concerning the internal
corporate or partnership affairs of Buyer and as to those matters the law of the
jurisdiction under which Buyer 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.
Section 11.7. Taxes. Any Taxes in the nature of a sales or transfer
tax payable on the sale or transfer of all or any portion of the Acquired Assets
or the consummation of any other transaction contemplated hereby shall be paid
by Seller.
Section 11.8. 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 11.9. 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 11.10. 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 11.11. 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 Buyer shall thereafter have no obligation to keep
confidential any information which has been furnished to Buyer concerning
Seller.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
T. F. MITCHELL & SONS, INC.
By: /s/ T.F. MITCHELL, SR.
Name: T. F. Mitchell, Sr.
Title: President
/s/ STEPHEN F. MITCHELL
Stephen F. Mitchell
GEOWASTE OF GA, INC.
By: /s/ MARK MORRISEY
Name: Mark Morrisey
Title: Vice President
EXHIBIT 3.2
BYLAWS 0F
GEOWASTE INCORPORATED
ARTICLE 1
STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting, shall be held at such place, either within or
without the State of Delaware, on such date and at such time as the Board of
Directors may specify by resolution prior to any special meeting of stockholders
held within the year that such meeting shall be in lieu of the annual meeting.
SECTION 2. SPECIAL MEETING. Special meetings of the stockholders may be called
at any time for any purpose or purposes by a majority of the Board of Directors,
the President, or stockholders owning not less than 0% of all the shares
entitled to vote in the election of directors. Special meetings shall be held at
such place, either within or without the State of Delaware, as is stated in the
call and notice thereof.
SECTION 3. NOTICE OF MEETINGS. Unless otherwise provided by law, whenever
stockholders are required or permitted to take any action at a meeting, written
notice of the meeting stating the place, date and hour of the meeting, and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) nor more than sixty (60) days
prior to such meeting to each stockholder entitled to vote at the meeting. If
mailed, such notice shall be deemed to be given when deposited in the mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation. Whenever notice is required to be
given to any stockholder, a written waiver thereof, signed by the stockholder
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance at a meeting shall constitute a waiver
of notice of such meeting, except when the stockholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business transacted at, nor the purpose of, any regular or
special meeting need be stated in the written waiver of notice of such meeting.
Notice of any meeting may be given by the President, the Secretary or the person
or persons calling such meeting. No notice need be given of the time and place
of reconvening of any adjourned meeting if the time and place to which the
meeting is adjourned are announced at the adjourned meeting.
SECTION 4. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the Corporation, or to vote in person or by proxy at any meeting of
the stockholders.
SECTION 5. QUORUM; REQUIRED STOCKHOLDER VOTE. Except as otherwise provided by
the Certificate of Incorporation, each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of stock
held by such stockholder that has voting power upon the matter in question. A
quorum for the transaction of business at any annual or special meeting of
stockholders shall exist when the holders of a majority of the outstanding
shares entitled to vote are represented either in person or by proxy at such
meeting. If a quorum is present, in all matters other than the election of
directors, the affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless a greater vote is required by law,
by the Certificate of Incorporation or by these Bylaws. If a quorum is present,
directors shall be elected by the affirmative vote of a plurality of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. When a quorum is once present to organize a meeting,
the stockholders present may continue to do business at the meeting or at any
adjournment thereof notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Shares of its own stock belonging to the Corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
SECTION 6. PROXIES. A stockholder may vote either in person or by a proxy which
such stockholder has duly executed in writing. No proxy shall be valid after
three years from the date of its execution unless a longer period is expressly
provided in the proxy. A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the Corporation.
SECTION 7. ORGANIZATION. Meetings of stockholders shall be presided over by the
Chairman of the Board, if any, or in his absence by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons, by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
SECTION 8. ACTION OF STOCKHOLDERS WITHOUT MEETING. Unless otherwise provided by
the Certificate of Incorporation, any action required to be, or which may be,
taken at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if written consent, setting
forth the action so taken, shall be signed and dated by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing. Such
consent shall have the same force and effect as an affirmative vote of the
stockholders and shall be filed with the minutes of the proceedings of the
stockholders.
SECTION 9. RECORD DATE. In order that the Corporation may determine stockholders
entitled to notice of, or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for any other lawful
purpose, the Board of Directors of the Corporation may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date: (a) in
the case of the determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting; (b) in the case of the
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors; and (c) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (x) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (y) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (z) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 10. STOCKHOLDER BUSINESS. At any meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
Meeting. To be properly brought before a meeting, business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before the meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive officers of the Corporation, not less than sixty (60)
days nor more than ninety (90) days prior to the meeting; provided, however,
that in the event that less than sixty (60) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which such notice o the
date of the meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
Corporation's books, or the stockholder proposing such business, (c) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, and (d) any material interest of the Stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any meeting except in accordance with the procedures set forth in
this Section 10. The Chairman of the meeting shall, if the facts warrant,
determine that business was not properly brought before the meeting in
accordance with the provisions of this Section 10, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 11. NOTICE OF STOCKHOLDER NOMINEES. Only persons who are nominated in
accordance with the procedures set forth in this Section 11 shall be eligible
for election as Directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the Corporation
entitled to vote for the election of Directors at the meeting who complies with
the notice procedures set forth in this Section 11. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation not less than sixty (60) days
nor more than ninety (90) days prior to the meeting; provided, however, that in
the event that less than sixty (60) day's notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder must be so received no later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Such stockholder notice shall set
forth: (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a Director, (I) the name, age, business address and
residence address of such person, (ii) the principal occupation or employment of
such person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including,
without limitation, a copy of such person's written consent to being named in
any applicable proxy statement as a nominee and to serving as a Director if
elected); and (b) as to the stockholder, the name and address as it appears on
the Corporation's books of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a Director of the Corporation unless nominated in accordance with
the procedures set forth in this Section 11. The Chairman of the meeting shall,
if the facts warrant, determine that a nomination was not made in accordance
with the procedure prescribed by this Section 11, and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded. Nothing in this Section 11 shall be construed to affect the
requirements for proxy statements of the Corporation under Regulation 14A of the
Securities Exchange Act of 1934.
ARTICLE 2
DIRECTORS
SECTION 1. POWER OF DIRECTORS. The business of the Corporation shall be managed
by or under the direction of its Board of Directors which may exercise all the
powers of the Corporation, subject to any restrictions imposed by law, by the
Certificate of Incorporation or by these Bylaws.
SECTION 2. COMPOSITION OF THE BOARD. The number of directors constituting the
entire Board of Directors shall be not less than four (4) nor more than eleven
(11), and the exact number shall be fixed from time to time by the Board of
Directors. No decrease in the number of directors shall shorten the term of any
director at the time in office. Directors need not be residents of the State of
Delaware or stockholders of the Corporation.
SECTION 3. ELECTION OF DIRECTORS BY HOLDERS OF PREFERRED STOCK. The Board of
Directors of the Corporation may grant to the holders of any preferred stock
issued by the Corporation the right, voting as class or otherwise, to elect one
or more members of the Board of Directors. Any directors elected by the holders
of any preferred stock issued by the Corporation shall hold office until the
next annual meeting of the stockholders or until their rights to hold such
office terminate pursuant to the provisions of such preferred stock, whichever
is earlier. If entitled to elect one or more directors pursuant to the
provisions of any preferred stock, the holders of such preferred stock shall be
entitled to elect such directors regardless of the provisions of Section 2 of
this Article 2.
SECTION 4. MEETINGS OF THE BOARD; NOTICE OF MEETINGS; WAIVER OF NOTICE. Regular
meetings of the Board of Directors may be held at such places within or without
the State of Delaware and at such times as the Board of Directors may from time
to time determine, and if so determined, notices thereof need not be given.
Special meetings of the Board of Directors may be held at such places within or
without the State of Delaware and may be called by the President or two or more
directors. Written notice of the time and place of such special meetings shall
be given to each director by the persons calling such meeting by first class or
registered mail at least four (4) days before the meeting or by telephone,
facsimile or in person at least two (2) days before the meeting. Whenever notice
is required to be given to any director, a written waiver thereof, signed by
such director, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance at a meeting shall constitute a waiver of any
required notice of such meeting, except when the director attends such meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be stated in the notice or waiver of
notice of such meeting.
SECTION 5. QUORUM; VOTE REQUIREMENT. A majority of the total number of directors
shall constitute a quorum for the transaction of business at any meeting. When a
quorum is present, the vote of a majority of the directors present shall be the
act of the Board of Directors, unless a greater vote is required by law, by the
Certificate of Incorporation or by these Bylaws.
SECTION 6. ORGANIZATION. Meetings of Board of Directors shall be presided over
by the Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the Chairman of the meeting may
appoint any person to act as secretary of the meeting.
SECTION 7. ACTION OF BOARD WITHOUT MEETING. Any action required or permitted to
be taken at a meeting of the Board of Directors or any committee thereof may be
taken without a meeting if written consent, setting forth the action so taken,
is signed by all the directors or committee members and filed with the minutes
of proceedings of the Board of Directors or committee. Such consent shall have
the same force and effect as a unanimous affirmative vote of the Board of
Directors or committee, as the case may be.
SECTION 8. RESIGNATIONS: REMOVAL; VACANCIES. Any director may resign at any time
upon written notice to the Corporation. The entire Board of Directors or any
individual director may be removed with or without cause at a stockholders'
meeting called for that purpose by the affirmative vote of the holders of no
less than the number of shares entitled to elect such director or directors. Any
newly created directorship or any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors,
although such a majority is less than a quorum of the Board of Directors, or by
a plurality of the votes cast at a meeting of the stockholders. A director
elected to fill a vacancy shall serve for the unexpired term of his predecessor
in office or until the next election of directors by the stockholders and the
election and qualification of his successor.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless the Certificate of
Incorporation otherwise provides, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board or any such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
Meeting can hear each other, and participation in a Meeting pursuant to this
Section 9 shall constitute presence in person at such a meeting.
SECTION 10. COMMITTEES. The Board of Directors, by resolution passed by a
majority of all the directors, may designate one or more committees, each
committee to consist of one or more of the directors. The Board may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of the committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the power and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided that no committee shall have the power or
authority of the Board of Directors in reference to (a) amending the Certificate
of Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Section 151(a) of the Delaware General
Corporation Law fix the designations and any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), (b) adopting an agreement
of merger or consolidation under Section 251 or 252 of the Delaware General
Corporation Law, (c) recommending to the stockholders the sale, lease or
exchange of all or substantially all of the property and assets of the
Corporation, (d) recommending to the stockholders a dissolution of the
Corporation or a revocation thereof, or (e) amending the Bylaws of the
Corporation. In addition, unless the resolution of the Board of Directors or the
Certificate of Incorporation expressly so provides, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the Delaware General Corporation Law. Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules, each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to this Article 2.
ARTICLE 3
OFFICERS
SECTION 1. EXECUTIVE STRUCTURE OF THE CORPORATION. The officers of the
Corporation shall be elected by the Board of Directors and shall consist of a
Chairman of the Board of Directors, a President and a Secretary and such other
officers or assistant officers, including one or more Vice Presidents,
Treasurer, Assistant Secretaries or Assistant Treasurers, or any other officer
that the Board of Directors may establish, as may be elected by the Board of
Directors. Each officer shall hold office for the term for which such officer
has been elected or until such officer's successor is elected and qualified, or
until such officer's earlier resignation, removal from office, or death. Any two
or more offices may be held by the same person.
SECTION 2. DUTIES AND RESPONSIBILITIES. Each officer, employee and agent of the
Corporation shall have such other duties and authority as may be conferred upon
such officer, employee or agent by the Board of Directors or delegated to such
officer, employee or agent by the President.
SECTION 3. RESIGNATIONS; REMOVAL VACANCIES. Any officer may resign at any time
upon written notice to the Corporation. The Board of Directors may remove any
officer with or without cause at any time, but such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation. Any vacancy occurring in any office of the Corporation by reason of
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term by the Board of Directors at any regular or special meeting.
SECTION 4. COMPENSATION. The salaries of the officers shall be fixed from time
to time by the Board of Directors or by any officer designated by the Board. No
officer shall be prevented from receiving such salary by reason of the fact that
such officer is also a director of the Corporation.
ARTICLE 4
STOCK
SECTION 1. STOCK CERTIFICATES. The shares of stock of the corporation shall be
represented by certificates, provided that the Board of Directors may by
resolution provide that some or all of any or all classes or series of stock
shall be uncertificated shares. Certificates shall be in such form as may be
approved by the Board of Directors, which certificates shall be issued to
stockholders of the Corporation in numerical order from the stock book of the
Corporation, and each of which shall bear the name of the stockholder, the
number of shares represented, and the date of issue, and which shall be signed
by the President or a Vice President and the Secretary or an Assistant Secretary
of the Corporation or any other officer authorized to sign by the Board of
Directors, and which shall be sealed with the seal of the Corporation. Any or
all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue. Within a reasonable time after
the issuance or transfer of uncertificated stock, the Corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to Section 151, 156,
202(a) or 218(a) of the Delaware General Corporation Law or a statement that the
Corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights.
SECTION 2. TRANSFER OF STOCK. Shares of stock of the Corporation shall be
transferred only on the books of the Corporation upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the stockholder of record or such stockholders duly authorized
attorney-in-fact and with all taxes on the transfer having been paid. The
Corporation may refuse any requested transfer until furnished evidence
satisfactory to it that such transfer is proper. Upon surrender of a certificate
for transfer of stock, such certificate shall at once be conspicuously marked on
its face "Canceled" and filed with the permanent stock records of the
Corporation. Upon receipt of proper transfer instructions from the registered
owner of uncertificated shares such uncertificated shares shall be canceled and
issuance of new equivalent uncertificated shares or certificated shares shall be
made to the person entitled thereto and the transaction shall be recorded upon
the books of the Corporation. The Board of Directors may make such additional
rules concerning the issuance, transfer and registration of stock.
SECTION 3. LOST, STOLEN, DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES. The Corporation may issue a new certificate of stock or
uncertificated shares in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.
SECTION 4. REGISTERED STOCKHOLDERS. The Corporation may deem and treat the
holder of record of any stock as the absolute owner for all purposes and shall
not be required to take any notice of any right or claim of right of any other
person.
ARTICLE 5
DEPOSITORIES, SIGNATURES AND SEAL
SECTION 1. DEPOSITORIES. All funds of the Corporation shall be deposited in the
name of the Corporation in such bank, banks, or other financial institutions as
the Board of Directors may from time to time designate and shall be drawn out on
checks, drafts or other orders signed on behalf of the Corporation by such
person or persons as the Board of Directors may from time to time designate.
SECTION 2. CONTRACTS AND DEEDS. All contracts, deeds and other instruments shall
be signed on behalf of the Corporation by the President, any vice President or
by such other officer, officers, agent or agents as the Board of Directors may
provide from time to time by resolution.
SECTION 3. SEAL. The Board of Directors shall provide for a suitable seal, which
seal shall be in the charge of the Secretary.
ARTICLE 6
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law, any person who was
or is made a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "Proceeding"), by reason of the
fact that he is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, or other enterprise against all expense, liability and loss (including
attorneys' fees, judgments, fines, and amounts to be paid in settlement)
actually and reasonably incurred by such person in connection therewith.
SECTION 2. PREPAYMENT OF EXPENSES. The Corporation may pay the expenses incurred
in defending any proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, that payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of the proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advance if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article 6 or
otherwise.
SECTION 3. PAYMENT OF INDEMNIFICATION. If a claim for indemnification or payment
of expenses under this Article VI is not paid in full by the Corporation within
90 days after a written claim therefor has been received by the Corporation, the
claimant my at any time thereafter file suit against the Corporation to recover
the unpaid amount of the claim and, if successful in whole or in part, shall be
entitled to be paid also the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
SECTION 4. INDEMNIFICATION NOT EXCLUSIVE. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article VI shall not be exclusive of any other
right which any person may have or hereafter acquire under any stature,
provision of the Certificate of Incorporation, these Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 5. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director or officer of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
SECTION 6. OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director of
another corporation, partnership, joint venture, trust, enterprise or non-profit
entity shall be reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust, enterprise or
nonprofit enterprise.
SECTION 7. AMENDMENT OR REPEAL. Any repeal or modification of the foregoing
provisions of this Article 6 shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE 7
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended or repealed by an affirmative vote of the
Board of Directors; PROVIDED, HOWEVER, that Bylaws of the Corporation which are
adopted by the affirmative vote of the stockholders may be subsequently altered,
amended or repealed only by the vote of holders of shares representing not less
than a majority of the voting power entitled to vote generally for the election
of directors or such other percentage of the voting power as may be stipulated
by the stockholders at the time of the initial adoption of such Bylaws.
Exhibit 10.1
REVOLVING CREDIT AGREEMENT
by and among
GEOWASTE INCORPORATED
(the "Parent")
and its Subsidiaries
listed on Schedule 1 hereto
(collectively the "Borrowers")
and
BANKBOSTON, N.A.
(the "Lender")
October 9, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ss.1. DEFINITIONS AND RULES OF INTERPRETATION. .........................1
ss.1.1. Definitions. ..........................................1
ss.1.2. Rules of Interpretation. ..............................7
ss.2. THE REVOLVING CREDIT FACILITY. ...................................8
ss.2.1. Commitment to Lend. ...................................8
ss.2.2. The Note. .............................................8
ss.2.3. Requests for Loans. ...................................9
ss.2.4. Funds for Loans. ......................................9
ss.2.5. Interest. .............................................9
ss.2.6. Maturity of the Loans and Reimbursement Obligations. ..9
ss.2.7. Early Termination Fee. ................................9
ss.2.8. Mandatory Repayments of the Loans. ....................9
ss.2.9. Optional Prepayments or Repayments of Loans. .........10
ss.3. LETTERS OF CREDIT. ..............................................10
ss.3.1. Letter of Credit Commitment. .........................10
ss.3.2. Reimbursement Obligation of the Borrowers. ...........10
ss.3.3. Letter of Credit Payments. ...........................11
ss.3.4. Obligations Absolute. ................................11
ss.3.5. Reliance by Lender. ..................................11
ss.4 FEES, PAYMENTS, AND COMPUTATIONS; JOINT AND SEVERAL LIABILITY. .11
ss.4.1. Fees. ................................................11
ss.4.2. Payments. ............................................12
ss.4.3. Computations. ........................................12
ss.4.4. Capital Adequacy. ....................................12
ss.4.5. Interest on Overdue Amounts. .........................13
ss.4.6. Interest Limitation. .................................13
ss.4.7. Additional Costs, Etc. ...............................13
ss.4.8. Certificate. .........................................14
ss.4.9. Concerning Joint and Several Liability of
the Borrowers. .....................................14
ss.4.10. New Borrowers. .......................................15
ss.5 REPRESENTATIONS AND WARRANTIES. .................................16
ss.5.1. Corporate Authority. .................................16
ss.5.2. Governmental Approvals. ..............................16
ss.5.3. Title to Properties; Leases. .........................16
ss.5.4. Financial Statements; Solvency. ......................17
ss.5.5. No Material Changes, Etc. ............................17
ss.5.6. Permits, Franchises, Patents, Copyrights, Etc. .......17
ss.5.7. Litigation. ..........................................17
ss.5.8. No Materially Adverse Contracts, Etc. ................17
ss.5.9. Compliance With Other Instruments, Laws, Etc. ........18
ss.5.10. Tax Status. ..........................................18
ss.5.11. No Event of Default. .................................18
ss.5.12. Holding Company and Investment Company Acts. .........18
ss.5.13. Absence of Financing Statements, Etc. ................18
ss.5.14. Employee Benefit Plans. ..............................18
ss.5.15. Use of Proceeds. .....................................19
ss.5.16. Environmental Compliance. ............................20
ss.5.17. Perfection of Security Interests. ....................21
ss.5.18. Certain Transactions. ................................21
ss.5.19. Subsidiaries. ........................................21
ss.5.20. True Copies of Charter and Other Documents. ..........21
ss.5.21. Disclosure. ..........................................21
ss.5.22. Permits and Governmental Authority. ..................22
ss.5.23. Environmental Reports. ...............................22
ss.6 AFFIRMATIVE COVENANTS OF THE BORROWERS. .........................22
ss.6.1. Punctual Payment. ....................................22
ss.6.2. Maintenance of Office. ...............................22
ss.6.3. Records and Accounts. ................................22
ss.6.4. Financial Statements, Certificates and Information. ..22
ss.6.5. Corporate Existence and Conduct of Business. .........23
ss.6.6. Maintenance of Properties. ...........................24
ss.6.7. Insurance. ...........................................24
ss.6.8. Taxes. ...............................................24
ss.6.9. Inspection of Properties, Books, and Contracts. ......24
ss.6.10. Compliance with Laws, Contracts, Licenses and
Permits; Maintenance of Material Licenses and Permits.25
ss.6.11. Environmental Indemnification. .......................25
ss.6.12. Further Assurances. ..................................25
ss.6.13. Notice of Potential Claims or Litigation. ............25
ss.6.14. Notice of Certain Events. ............................26
ss.6.15. Response Actions. ....................................26
ss.6.16. Environmental Assessments. ...........................26
ss.6.17. Notice of Default. ...................................27
ss.6.18. Closure and Post Closure Liabilities. ................27
ss.6.19. Subsidiaries. ........................................27
ss.6.20. New Subsidiaries. ....................................27
ss.7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. ....................27
ss.7.1. Restrictions on Indebtedness. ........................27
ss.7.2. Restrictions on Liens. ...............................28
ss.7.3. Restrictions on Investments. .........................29
ss.7.4. Mergers, Consolidations, Sales, Acquisitions. ........30
ss.7.5. Sale and Leaseback. ..................................30
ss.7.6. Restricted Distributions and Redemptions. ............30
ss.7.7. Employee Benefit Plans. ..............................31
ss.7.8. Capital Expenditures. ................................31
ss.7.9. Negative Pledges. ....................................31
ss.8. FINANCIAL COVENANTS OF THE BORROWERS. ...........................31
ss.8.1. Interest Coverage Ratio. .............................32
ss.8.2. Balance Sheet Leverage Ratio. ........................32
ss.8.3. Profitable Operations. ...............................32
ss.8.4. Cash Flow Leverage Ratio. ............................32
ss.9. CLOSING CONDITIONS. .............................................32
ss.9.1. Corporate Action. ....................................32
ss.9.2. Loan Documents, Etc. .................................32
ss.9.3. Certified Copies of Charter Documents. ...............32
ss.9.4. Incumbency Certificate. ..............................32
ss.9.5. Validity of Liens. ...................................33
ss.9.6. UCC Search Results. ..................................33
ss.9.7. Certificates of Insurance. ...........................33
ss.9.8. Opinions of Counsel. .................................33
ss.9.9. Audited Financial Statements; Financial Projections. .33
ss.9.10. Environmental Reports and Certificate Regarding
Permits. ...........................................33
ss.9.11. Initial Compliance Certificate. ......................33
ss.10. CONDITIONS TO ALL LOANS. ........................................33
ss.10.1. Representations True; No Event of Default. ...........33
ss.10.2. Performance; No Event of Default. ....................34
ss.10.3. No Legal Impediment. .................................34
ss.10.4. Governmental Regulation. ............................34
ss.10.5. Proceedings and Documents. ..........................34
ss.11. COLLATERAL SECURITY. ............................................34
ss.12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT. ....34
ss.12.1. Events of Default and Acceleration. .................34
ss.12.2. Termination of Commitment. ..........................37
ss.12.3. Remedies. ...........................................37
ss.13. SETOFF. .........................................................37
ss.14. EXPENSES. .......................................................37
ss.15. INDEMNIFICATION. ................................................38
ss.16. SURVIVAL OF COVENANTS, ETC. .....................................38
ss.17. PARTIES IN INTEREST. ............................................38
ss.18. NOTICES, ETC. ...................................................38
ss.19. MISCELLANEOUS. ..................................................39
ss.20. ENTIRE AGREEMENT, ETC. ..........................................39
ss.21. WAIVER OF JURY TRIAL. ...........................................39
ss.22. GOVERNING LAW. ..................................................40
ss.23. SEVERABILITY. ...................................................40
<PAGE>
TABLE OF CONTENTS
PAGE
SCHEDULES & EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Revolving Credit Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Chief Operating Officer's Certificate
Exhibit E Borrowers' Standard Due Diligence Practices
Schedule 1 Subsidiaries of the Parent
Schedule 5.7 Litigation
Schedule 5.16 Environmental Compliance
Schedule 5.18 Certain Transactions
Schedule 5.22 Pending Permits
Schedule 6.7 Insurance Coverage
Schedule 6.10 Negative Pledges
Schedule 7.1(c) Indebtedness with Respect to Guaranties, Etc.
Schedule 7.1(d) Landfill Closure Bonds
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 9th day of October,
1997 by and among GEOWASTE INCORPORATED, a Delaware corporation (the "Parent"),
its Subsidiaries listed on SCHEDULE 1 hereto (the Parent and such Subsidiaries
herein collectively referred to as the "Borrowers" and, individually, as a
"Borrower"), each of which Borrowers (unless otherwise listed on SCHEDULE 1
hereto) having its principal place of business at Suite 700, 100 West Bay
Street, Jacksonville, Florida 32202 and BANKBOSTON, N.A., a national banking
association having its principal place of business at 100 Federal Street,
Boston, Massachusetts 02110 (the "Lender").
ss.1. DEFINITIONS AND RULES OF INTERPRETATION.
SS. 1.1 DEFINITIONS. The following terms shall have the meaningS set
forth in this ss.1 or elsewhere in the provisions of this Agreement referred to
below:
ACCOUNTANTS. See ss.5.4(a).
AGREEMENT. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto, as amended and in effect from time to time.
APPLICABLE LAWS. See ss.6.10.
BALANCE SHEET DATE. June 30, 1997.
BASE RATE. The higher of (a) the annual rate of interest announced
from time to time by the Lender at its head office in Boston, Massachusetts, as
its "base rate" (it being understood that such rate is a reference rate and not
necessarily the lowest rate of interest charged by the Lender), or (b) one
percent (1%) above the overnight federal funds effective rate, as published by
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
BASE RATE LOANS. Loans bearing interest calculated by reference to the
Base Rate.
BORROWERS. See Preamble.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill); PROVIDED THAT Capital Assets shall not
include (a) any item customarily charged directly to expense or depreciated over
a useful life of twelve (12) months or less in accordance with generally
accepted accounting principles, or (b) any item obtained through an acquisition
permitted by ss.7.4 hereof.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by the
Borrowers in connection with the purchase or lease of Capital Assets that would
be required to be capitalized and shown on the balance sheet of such Person in
accordance with GAAP.
CAPITALIZED LEASES. Leases, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
CERTIFIED OR CERTIFIED. With respect to the financial statements of
any Person, such statements as audited by a firm of independent auditors, whose
report expresses the opinion, without qualification, that such financial
statements present fairly the financial position of such Person.
CFO. See ss.6.4(b).
CLOSING DATE. The date on which the conditions precedent set forth in
ss.9 are satisfied.
CODE. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
COLLATERAL. All of the property, rights and interests of the Borrowers
that are or are intended to be subject to the security interests and mortgages
created by the Security Documents.
COMMITMENT FEE. See ss.4.1(a).
COMPLIANCE CERTIFICATE. See ss.6.4(c).
CONSOLIDATED or CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrowers
consolidated in accordance with GAAP.
CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES OR EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrowers determined in
accordance with GAAP, PLUS (a) interest expense, and (b) income tax expense, to
the extent that each of the same has been deducted in calculating Consolidated
Net Income (or Deficit).
CONSOLIDATED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION OR EBITDA. For any twelve month period, the Consolidated Net Income
(or Deficit) of the Borrowers determined in accordance with GAAP excluding
pooling charges, PROVIDED THAT, with respect to any Subsidiary acquired within
the past twelve months or to be acquired, the calculation of Consolidated Net
Income (or Deficit) for the period prior to such Subsidiary's acquisition may
include reference to such Subsidiary's historical financial statements as if
such Subsidiary had been owned for those twelve months (PROVIDED THAT such
statements have been audited and approved by the Lender and the Lender has
received appropriate documentation thereof) and in the case of acquisitions
occurring after June 30, 1997, may be further adjusted to add back non-recurring
private company expenses which are discontinued upon such acquisitions to the
extent such adjustments are approved by the Lender, PLUS (a) interest expense,
(b) income taxes, (c) depreciation and landfill depletion expense, and (d)
amortization expense, to the extent that each of the same has been deducted in
calculating such adjusted Consolidated Net Income (or Deficit), as certified by
the CFO in the Compliance Certificate delivered to the Lender pursuant to ss.6.4
hereof.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Borrowers after deduction of all expenses, taxes, and other
proper charges, determined in accordance with GAAP, after eliminating therefrom
all extraordinary nonrecurring items of income or loss.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrowers determined on a
consolidated basis in accordance with GAAP.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest expense required to be paid or accrued by the Borrowers
during such period on all Indebtedness of the Borrowers outstanding during all
or any part of such period, including capitalized interest expense for such
period.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrowers
determined on a consolidated basis in accordance with GAAP.
CONSULTING ENGINEER. An environmental consulting firm acceptable to
the Lender.
DEFAULT. See ss.12.
DISPOSAL. See "Release".
DISTRIBUTION. The declaration or payment of any dividend or
distribution on or in respect of any shares of any class of capital stock, any
partnership interests or any membership interests of any Person, other than
dividends or other distributions payable solely in shares of common stock,
partnership interests or membership units of such Person, as the case may be;
the purchase, redemption, or other retirement of any shares of any class of
capital stock, partnership interests or membership units of such Person,
directly or indirectly through a Subsidiary or otherwise; the return of equity
capital by any Person to its shareholders, partners or members as such; or any
other distribution on or in respect of any shares of any class of capital stock,
partnership interest or membership unit of such Person.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made.
EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.
EBITDA. See definition of Consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by any Borrower, other than a
Guaranteed Pension Plan or a Multiemployer Plan.
ENVIRONMENTAL LAWS. See ss.5.16(a).
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of ss.4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has not
been waived.
EVENT OF DEFAULT. See ss.12.
FUNDED DEBT. Indebtedness of the Borrowers for borrowed money, PLUS
(i) Indebtedness in respect of Capitalized Leases, (ii) Indebtedness in respect
of letters of credit, and (iii) guarantees of all such Indebtedness listed
above. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. (i) When used in ss.8,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrowers reflected in their financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the Borrowers adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by any Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
HAZARDOUS SUBSTANCES. See ss.5.16(b).
INDEBTEDNESS. Collectively, without duplication, whether classified as
Indebtedness, an Investment or otherwise on the obligor's balance sheet, (a) all
indebtedness for borrowed money or credit obtained or other similar monetary
obligations, direct or indirect, (b) all obligations for the deferred purchase
price of property or services or for future payment to the seller of property or
services (other than trade payables not overdue by more than ninety (90) days
incurred in the ordinary course of business), (c) all obligations evidenced by
notes, bonds, debentures or other similar debt instruments, (d) all obligations
created or arising under any conditional sale or other title retention agreement
with respect to property acquired (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations, liabilities and
indebtedness under Capitalized Leases, (f) all obligations, contingent or
otherwise, under acceptance, letter of credit or similar facilities, (g) all
agreements for indemnification or agreements to guarantee others against losses
of any kind, (h) all liabilities or obligations in respect of judgments or
awards against such Person, (i) all obligations, liabilities or indebtedness
(contingent or otherwise) under landfill closure and post- closure bonds, (j)
all Indebtedness of others referred to in clauses (a) through (i) above which is
guaranteed, or in effect guaranteed, directly or indirectly in any manner,
including through an agreement (A) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (B) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling any Person to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss, (C)
to supply funds to or in any other manner invest in any Person (including any
agreement to pay for property or services irrespective of whether such property
is received or such services are rendered) or (D) otherwise to assure any Person
against loss, and (k) all Indebtedness referred to in clauses (a) through (j)
above secured or supported by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured or supported by) any
lien or encumbrance on (or other right of recourse to or against) property
(including, without limitation, accounts and contract rights), even though the
owner of the property has not assumed or become liable, contractually or
otherwise, for the payment of such Indebtedness.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person, or pre-payments for the use of
landfill air space in excess of usual and customary industry practice. In
determining the aggregate amount of Investments outstanding at any particular
time: (a) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and still
outstanding; (b) there shall be included as an Investment all interest accrued
with respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such Investment
any amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (d)
there shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise, except
that accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LENDER'S HEAD OFFICE. The Lender's head office at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location as the Lender may
designate from time to time.
LETTERS OF CREDIT. Standby Letters of Credit issued or to be issued by
the Lender under ss.3 hereof for the account of the Borrowers.
LETTER OF CREDIT APPLICATIONS. Letter of Credit Applications in such
form as may be agreed upon by the Borrowers and the Lender from time to time
which are entered into pursuant to ss.3 hereof as such Letter of Credit
Applications are amended, varied or supplemented from time to time.
LETTER OF CREDIT FEE. See ss.4.1(b).
LOAN DOCUMENTS. This Agreement, the Note, the Letter of Credit
Applications, the Letters of Credit, and the Security Documents, each as
amended, modified, or supplemented and in effect from time to time.
LOAN AND LETTER OF CREDIT REQUEST. See ss.2.3.
LOANS. Loans made by the Lender to the Borrowers pursuant to ss.2.1
hereof.
MATERIAL ACQUISITION. Acquisition for which the sum of the value of
the Stock given by the Borrowers in consideration for the acquisition plus the
cash paid and Indebtedness assumed or incurred (excluding landfill closure and
post-closure bonds) is $2,000,000 or more.
MATURITY DATE. October 9, 2000.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
NOTE. See ss.2.2.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers to the Lender, individually or collectively, existing on the date of
this Agreement or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Agreement or any of the other Loan Documents or
in respect of any of the Loans made or Reimbursement Obligations incurred or the
Letters of Credit, the Note or any other instrument at any time evidencing any
thereof.
OVERNIGHT FEDERAL FUNDS EFFECTIVE RATE. The overnight federal funds
effective rate as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. See ss.7.2.
PERSON. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any government
or any governmental agency or political subdivision thereof.
PLEDGE AGREEMENT. The Stock Pledge Agreement, dated as of the date
hereof, between the Borrowers and the Lender pledging all of the stock of the
Subsidiaries of the Parent to the Lender, as such agreement may be further
amended, modified, or supplemented from time to time.
REAL PROPERTY. All real property owned or leased by the Borrowers.
REIMBURSEMENT OBLIGATION. The Borrowers' obligation to reimburse the
Lender on account of any drawing under any Letter of Credit as provided in
ss.3.2.
RELEASE. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss.ss.9601 ET SEQ. ("CERCLA") and the term "DISPOSAL" (or "DISPOSED") shall have
the meaning specified in the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss.6901 ET SEQ. ("RCRA") and regulations promulgated thereunder;
provided, that in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply as of
the effective date of such amendment and provided further, to the extent that
the laws of a state wherein the property lies establishes a meaning for
"Release" or "Disposal" which is broader than specified in either CERCLA or
RCRA, such broader meaning shall apply.
SECURITY AGREEMENT. The Security Agreement, dated as of the date
hereof, between the Borrowers and the Lender, as such agreement may be further
amended, modified, or supplemented from time to time, in form and substance
acceptable to the Lender.
SECURITY DOCUMENTS. The Security Agreement, the Pledge Agreement and
any additional documents evidencing or perfecting the Lender's lien on the
shares of the Subsidiaries of the Parent, including Uniform Commercial Code
financing statements, each as amended and in effect from time to time.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority of the
outstanding capital stock or other interest entitled to vote generally.
TOTAL COMMITMENT. See ss.2.1.
ss.1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms capitalized but not otherwise defined herein have
the meanings assigned to them by Generally Accepted Accounting Principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by Generally Accepted
Accounting Principles, which terms are defined in the Uniform Commercial Code as
in effect in the Commonwealth of Massachusetts, have the meanings assigned to
them therein.
(h) Reference to a particular "ss." refers to that section of this
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
ss. 2. THE REVOLVING CREDIT FACILITY.
ss. 2.1. COMMITMENT TO LEND. Subject to the terms and conditions set
forth in this Agreement, the Lender agrees to lend to the Borrowers and the
Borrowers may borrow, repay, and reborrow from time to time between the Closing
Date and the Maturity Date, upon notice by the Borrowers to the Lender given in
accordance with ss.2.3, such sums as are requested by the Borrowers PROVIDED
THAT the sum of the outstanding principal amount of the Loans (giving effect to
the requested Loan) plus the Maximum Drawing Amount shall not exceed a maximum
aggregate amount outstanding of $5,000,000 (the "Total Commitment"). Each
request for a Loan or Letter of Credit hereunder shall constitute a
representation and warranty by the Borrowers that the conditions set forth in
ss.9 and ss.10, as the case may be, have been satisfied on the date of such
request. Any unpaid Reimbursement Obligation with respect to any Letter of
Credit shall be a Base Rate Loan hereunder.
ss. 2.2 THE NOTE. The Revolving Credit Loans shall be evidenced by a
promissory note of the Borrowers in substantially the form of EXHIBIT A hereto
(the "Note"), dated as of the Closing Date and completed with appropriate
insertions. The Note shall be payable to the order of the Lender in an amount
equal to the Total Commitment, and representing the obligation of the Borrowers
to pay the Lender such principal amount or, if less, the outstanding principal
amount of all Loans made by the Lender, plus interest accrued thereon, as set
forth below. The Borrowers irrevocably authorize the Lender to make or cause to
be made, in connection with a Drawdown Date of any Loan or at the time of
receipt of any payment of principal on the Note, an appropriate notation on the
Lender's records reflecting the making of the Loan or the receipt of such
payment (as the case may be) and may, prior to any transfer of the Note, endorse
on the reverse side thereof the outstanding principal amount of Loans evidenced
thereby. The outstanding amount of the Loans set forth on the Lender's record
shall, absent manifest error, be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Lender, but the failure to record, or any error
in so recording, any such amount shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under the Note to make payments of
principal of or interest on the Note when due.
ss. 2.3 REQUESTS FOR LOANS. The Parent as agent for the Borrowers
shall give to the Lender written notice in the form of EXHIBIT B hereto (or
telephonic notice confirmed in writing or a telecopy in the form of EXHIBIT B
hereto) of each Loan requested hereunder (a "Loan and Letter of Credit Request")
not later than 11:00 a.m. (Boston time) one Business Day prior to the Drawdown
Date of any Base Rate Loan. Each Loan requested shall be in a minimum amount of
$100,000. Each such request shall specify the principal amount of the Loan
requested and shall reflect the Maximum Drawing Amount of all Letters of Credit
outstanding. Requests for Loans made hereunder shall be irrevocable and binding
on the Borrowers, and shall obligate the Borrowers to accept the Loan requested
from the Lender on the proposed Drawdown Date. Each of the representations and
warranties made by or on behalf of the Borrowers to the Lender in this Agreement
or any other Loan Document shall be true and correct in all material respects
when made and shall, for all purposes of this Agreement, be deemed to be
repeated on and as of the date of the submission of a Loan and Letter of Credit
Request and on and as of the Drawdown Date of such Loan or the date of issuance
of such Letter of Credit (except to the extent (i) of changes resulting from
transactions contemplated or permitted by this Agreement and the other Loan
Documents, (ii) of changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse to the business, assets or
financial condition of any Borrower or the Borrowers taken as a whole, (iii) of
changes disclosed to the Lender in writing and accepted by the Lender, or (iv)
that such representations and warranties expressly relate only to an earlier
date).
ss. 2.4 FUNDS FOR LOANS. Upon receipt of the documents required by
ss.9 or ss.10, as the case may be, and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Lender will make available to
the Borrowers on the proposed Drawdown Date of any Loan, at the Lender's Head
Office, in immediately available funds, the amount of the requested Loan.
ss. 2.5. INTEREST. The outstanding principal amount of the Loans shall
bear interest at the rate per annum equal to the Base Rate PLUS one-quarter
percent (1/4%). Interest shall be payable (a) quarterly in arrears on the last
Business Day of each fiscal quarter for the fiscal quarter ending on such date,
and (b) on the Maturity Date for all Loans.
ss. 2.6. MATURITY OF THE LOANS AND REIMBURSEMENT OBLIGATIONS. The
Loans and all unpaid Reimbursement Obligations shall be due and payable on the
Maturity Date. Each of the Borrowers promises to pay on the Maturity Date all
Loans and all unpaid Reimbursement Obligations outstanding on such date,
together with any and all accrued and unpaid interest thereon and any fees and
other amounts owing hereunder.
ss. 2.7. EARLY TERMINATION FEE. In the event the Borrowers terminate
or refinance this facility prior to the Maturity Date, other than pursuant to a
refinancing provided by the Lender, the Borrowers shall pay a $50,000 early
termination fee to the Lender.
ss. 2.8. MANDATORY REPAYMENTS OF THE LOANS. If at any time the
outstanding amount of the Loans PLUS the Maximum Drawing Amount of all
outstanding Letters of Credit exceeds the Total Commitment, then the Borrowers
shall immediately pay the amount of such excess to the Lender (a) for
application to the Loans, or (b) if no Loans shall be outstanding, to be held by
the Lender as collateral security for the Reimbursement Obligations PROVIDED,
HOWEVER, that if the amount of cash collateral held by the Lender pursuant to
this ss.2.8(b) exceeds the Maximum Drawing Amount, the Lender shall return such
excess to the Borrowers.
ss. 2.9. OPTIONAL PREPAYMENTS OR REPAYMENTS OF LOANS. Subject to the
terms and conditions of ss.2.7, the Borrowers shall have the right, at their
election, to repay or prepay the outstanding amount of the Loans, as a whole or
in part, at any time without penalty or premium. The Borrowers shall give the
Lender, no later than 12:00 noon (Boston time) three (3) Business Days prior to
such proposed prepayment or repayment, written notice (or telephonic notice
confirmed in writing or by telecopy) of any proposed prepayment or repayment
pursuant to this ss.2.9, specifying the proposed date of prepayment or repayment
of Loans and the principal amount to be paid (in integral multiples of $100,000,
or, if less, the balance of the Loans).
ss. 3. LETTERS OF CREDIT.
ss. 3.1. LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions hereof and the execution and receipt of a Loan and Letter of Credit
Request reflecting the Maximum Drawing Amount of all Letters of Credit
(including the requested Letter of Credit) and a Letter of Credit Application,
the Lender, in reliance upon the representations and warranties of the Borrowers
contained herein, agrees to issue standby letters of credit, in such form as may
be requested from time to time by the Parent as agent for the Borrowers and
agreed to by the Lender; PROVIDED, HOWEVER, THAT, after giving effect to such
request, the aggregate Maximum Drawing Amount of all letters of credit issued at
any time under this ss.3.1 (the "Letters of Credit") shall not exceed
$1,000,000, and no Letter of Credit shall have an expiration date later than the
earlier of (i) one year after the date of issuance of the Letter of Credit, or
(ii) thirty (30) days prior to the Maturity Date.
ss. 3.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce
the Lender to issue, extend and renew each Letter of Credit, the Borrowers
hereby agree to reimburse or pay to the Lender with respect to each Letter of
Credit issued, extended or renewed by the Lender hereunder as follows:
(a) on each date that any draft presented under any Letter of Credit
is honored by the Lender or the Lender otherwise makes payment with respect
thereto, (i) the amount paid by the Lender under or with respect to such Letter
of Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Lender in connection with any payment made
by the Lender under, or with respect to, such Letter of Credit; and
(b) upon the Maturity Date or the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in accordance with ss.12, an
amount equal to the then Maximum Drawing Amount of all Letters of Credit, which
amount shall be held by the Lender as cash collateral for all Reimbursement
Obligations.
Each such payment shall be made to the Lender at the Lender's Head
Office in immediately available funds. Interest on any and all amounts remaining
unpaid by the Borrowers under this ss.3.2 at any time from the date such amounts
become due and payable (whether as stated in this ss.3.2, by acceleration or
otherwise) until payment in full (whether before or after judgment) shall be
payable to the Lender on demand at the rate specified in ss.4.5 for overdue
amounts.
ss. 3.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Lender
shall notify the Borrowers of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. The responsibility of the Lender to the Borrowers
shall be only to determine that the documents (including each draft) delivered
under each Letter of Credit in connection with such presentment shall be in
conformity with such Letter of Credit.
ss. 3.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this
ss.3 shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Lender or any beneficiary
of a Letter of Credit. The Borrowers further agree with the Lender that the
Lender shall not be responsible for, and the Borrowers' Reimbursement
Obligations under ss.3.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrowers, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrowers against the beneficiary of any Letter of Credit or
any such transferee. The Lender shall not be liable, if done in good faith and
with due care and in conformity with such laws, regulations, usage of trade or
commercial or banking customs as may be applicable, for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrowers agree that any action taken or omitted by the Lender under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrowers and shall not result in
any liability on the part of the Lender to the Borrowers.
ss. 3.5 RELIANCE BY LENDER. To the extent not inconsistent with
ss.3.4, the Lender shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Lender.
ss. 4. FEES, PAYMENTS, AND COMPUTATIONS; JOINT AND SEVERAL LIABILITY.
ss. 4.1 FEES.
(a) COMMITMENT FEE. The Borrowers agree to pay to the Lender a
commitment fee (the "Commitment Fee") at the rate of one-half percent (1/2%) per
annum on the unused portion of the Total Commitment during each calendar quarter
or portion thereof from the Closing Date to the Maturity Date (or to the date of
termination in full of the Total Commitment, if earlier). This Commitment Fee
shall be payable quarterly in arrears on the last day of each fiscal quarter for
the fiscal quarter then ended commencing on the last day of the calendar month
in which the conditions set forth in ss.9 hereof are first satisfied, with a
final payment on the Maturity Date.
(b) LETTER OF CREDIT FEE. The Borrowers shall pay a fee (the "Letter
of Credit Fee") to the Lender equal to one and one-half percent (1 1/2%) per
annum on the average Maximum Drawing Amount of Letters of Credit outstanding
during each fiscal quarter, payable quarterly in arrears on the last day of each
fiscal quarter for the fiscal quarter then ended. The Borrowers shall also pay
the customary issuance and administrative fees of the Lender with respect to the
Letters of Credit, including, without limitation, fees for modifying such
Letters of Credit.
ss. 4.2 PAYMENTS.
(a) All payments of principal, interest, Reimbursement Obligations,
fees and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Lender, for the account of the Lender, received
at the Lender's Head Office in immediately available funds by 12:00 noon (Boston
time) on any due date.
(b) All payments by the Borrowers hereunder and under any of the other
Loan Documents shall be made without setoff or counterclaim and free and clear
of and without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrowers with respect to any amount payable by
them hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Lender, for the Lender's account, on the date on which such amount is due
and payable hereunder or under such other Loan Document, such additional amount
in Dollars as shall be necessary to enable the Lender to receive the same net
amount which the Lender would have received on such due date had no such
obligation been imposed upon the Borrowers. The Borrowers will deliver promptly
to the Lender certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
ss. 4.3. COMPUTATIONS. All computations of interest on the Loans and
of Letter of Credit Fees or other fees shall be based on a 365- or 366-day year,
and shall be paid for the actual number of days elapsed. Whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
Business Day, and interest shall accrue during such extension.
ss. 4.4 CAPITAL ADEQUACY. If any present or future law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental authority
with appropriate jurisdiction affects the amount of capital required or expected
to be maintained by the Lender or any corporation controlling the Lender and the
Lender determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of the Lender's Loans or Letters of
Credit, or commitment with respect thereto, then the Lender may notify the
Borrowers of such fact. To the extent that the costs of such increased capital
requirements are not reflected in the Base Rate (if relating to Base Rate
Loans), the Borrowers and the Lender shall thereafter attempt to negotiate in
good faith, within thirty (30) days of the day on which the Borrowers receive
such notice, an adjustment payable hereunder that will adequately compensate the
Lender in light of these circumstances. If the Borrowers and the Lender are
unable to agree to such adjustment within thirty (30) days of the date on which
the Borrowers receive such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such increased capital
requirement), the fees payable hereunder shall increase by an amount that will,
in the Lender's reasonable determination, provide adequate compensation. The
Lender shall allocate such cost increases among its customers in good faith and
on an equitable basis.
ss. 4.5 INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall bear
interest compounded monthly and be payable on demand at a rate per annum equal
to the Base Rate plus two and one-quarter percentage points (2.25%) until such
overdue amount shall be paid in full (after as well as before judgment).
ss. 4.6. INTEREST LIMITATION. Notwithstanding any other term of this
Agreement or any Note or any other document referred to herein or therein, the
maximum amount of interest which may be charged to or collected from any Person
liable hereunder or under the Note by the Lender shall be absolutely limited to,
and shall in no event exceed, the maximum amount of interest which could
lawfully be charged or collected under applicable law (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of the United
States of America, as amended, 12 U.S.C. Section 85, as amended), so that the
maximum of all amounts constituting interest under applicable law, howsoever
computed, shall never exceed as to any Person liable therefor such lawful
maximum, and any term of this Agreement, the Note, the Letter of Credit
Applications, or any other document referred to herein or therein which could be
construed as providing for interest in excess of such lawful maximum shall be
and hereby is made expressly subject to and modified by the provisions of this
paragraph.
ss. 4.7 ADDITIONAL COSTS, ETC. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to the Lender by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall impose on the
Lender any tax (other than taxes imposed by any jurisdiction in which the
Lender's head office is located and based upon or measured by the income or
profits of the Lender), levy, impost, duty, charge fees, deduction or
withholdings of any nature or requirements with respect to this Agreement, the
other Loan Documents, the Loans, the Total Commitment, the Letters of Credit or
any class of loans or commitments or letters of credit of which any of the
Loans, the Total Commitment or the Letters of Credit forms a part, and the
result of any of the foregoing is:
(i) to increase the cost to the Lender of making, funding,
issuing, renewing, extending or maintaining the Loans, the Total
Commitment, or the Letters of Credit; or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of the Total Commitment,
the Loans, drawings under the Letters of Credit, or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Lender
from the Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by the Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to the Lender such additional amounts as will be sufficient to
compensate the Lender for such additional cost, reduction, payment or foregone
interest or other sum (after the Lender shall have allocated the same fairly and
equitably among all customers of any class generally affected thereby).
ss. 4.8. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to ss.4.7 and a reasonable explanation of such amounts
which are due, submitted by the Lender to the Borrowers, shall be conclusive,
absent manifest error, that such amounts are due and owing.
ss. 4.9. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each of the Borrowers and in consideration
of the undertakings of each other Borrower to accept joint and several liability
for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this ss.4.9), it being the intention
of the parties hereto that all the Obligations shall be the joint and several
Obligations of each of the Borrowers without preferences or distinction among
them.
(c) If and to the extent that any of the Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each of the Borrowers under the provisions of
this ss.4.9 constitute full recourse Obligations of each of the Borrowers
enforceable against each such corporation to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstance whatsoever except as subject to ss.5.1(c).
(e) Except as otherwise expressly provided in this Agreement, each of
the Borrowers hereby waives notice of acceptance of its joint and several
liability, notice of any Loans made under this Agreement, notice of any action
at any time taken or omitted by the Lender under or in respect of any of the
Obligations, and, generally, to the extent permitted by applicable law, all
demands, notices and other formalities of every kind in connection with this
Agreement. Each of the Borrowers hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
the Lender at any time or times in respect of any default by any of the
Borrowers in the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by the
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or the addition, substitution or release, in
whole or in part, of any of the Borrowers. Without limiting the generality of
the foregoing, each of the Borrowers assents to any other action or delay in
acting or failure to act on the part of the Lender with respect to the failure
by any of the Borrowers to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this ss.4.9,
afford grounds for terminating, discharging or relieving any of the Borrowers,
in whole or in part, from any of its Obligations under this ss.4.9, it being the
intention of each of the Borrowers that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such Borrowers under this
ss.4.9 shall not be discharged except by performance and then only to the extent
of such performance. The Obligations of each of the Borrowers under this ss.4.9
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, re-construction or similar proceeding
with respect to any of the Borrowers or the Lender. The joint and several
liability of the Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any of
the Borrowers or the Lender.
(f) The provisions of this ss.4.9 are made for the benefit of the
Lender and its successors and assigns, and may be enforced in good faith by it
from time to time against any or all of the Borrowers as often as occasion
therefor may arise and without requirement on the part of the Lender first to
marshal any of its claims or to exercise any of its rights against any other
Borrower or to exhaust any remedies available to it against any other Borrower
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
ss.4.9 shall remain in effect until all of the Obligations shall have been paid
in full or otherwise fully satisfied. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy
or reorganization of any of the Borrowers, or otherwise, the provisions of this
ss.4.9 will forthwith be reinstated in effect, as though such payment had not
been made.
ss. 4.10. NEW BORROWERS. Any newly-created or acquired Subsidiaries
shall become Borrowers hereunder by signing the Note (or, at the option of the
Lender, allonges to the Note), entering into an amendment to this Agreement and
the Security Documents with the other parties hereto providing that such
Subsidiary shall become a Borrower hereunder, and providing such other
documentation as the Lender may reasonably request including, without
limitation, documentation with respect to conditions noted in ss.9 hereof. In
such event, the Lender is hereby authorized by the parties to amend SCHEDULE 1
hereto to include each such Subsidiary as a Borrower hereunder.
<PAGE>
ss. 5. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and
severally represent and warrant to the Lender as follows:
ss. 5.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. Each of the Borrowers (i) is a
corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (iii) is in good
standing as a foreign corporation and is duly authorized to do
business in each jurisdiction in which its property or business as
presently conducted or contemplated makes such qualification
necessary, except where a failure to be so qualified would not have a
material adverse effect on the business, assets or financial condition
of the Borrowers considered as a whole.
(b) AUTHORIZATION. The execution, delivery and performance of the
Loan Documents and the transactions contemplated hereby and thereby
(i) are within the corporate authority of each of the Borrowers, (ii)
have been duly authorized by all necessary corporate proceedings,
(iii) do not conflict with or result in any material breach or
contravention of any provision of law, statute, rule or regulation to
which any of the Borrowers is subject or any judgment, order, writ,
injunction, license or permit applicable to any of the Borrowers so as
to materially adversely affect the assets, business or any activity of
the Borrowers, and (iv) do not conflict with any provision of the
corporate charter or bylaws of the Borrowers or any agreement or other
instrument binding upon the Borrowers.
(c) ENFORCEABILITY. The execution, delivery and performance of
the Loan Documents will result in valid and legally binding
obligations of the Borrowers enforceable against each in accordance
with the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive
relief or other equitable remedy is subject to the discretion of the
court before which any proceeding therefor may be brought.
ss. 5.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance by the Borrowers of the Loan Documents and the transactions
contemplated hereby and thereby do not require any approval or consent of, or
filing with, any governmental agency or authority other than those already
obtained.
ss. 5.3. TITLE TO PROPERTIES; LEASES. The Borrowers own all of the
assets reflected in the consolidated or combined balance sheets as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no mortgages, capitalized leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
ss. 5.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There has been furnished to the Lender (i) the consolidated
balance sheet of the Borrowers dated the Balance Sheet Date and
consolidated statements of operations for the fiscal year then ended,
certified by Coopers & Lybrand or such other independent accounting
firm acceptable to the Lender (the "Accountants"), and (ii) a
consolidated and consolidating balance sheet and related consolidated
and consolidating statement of operations of the Borrowers dated the
Balance Sheet Date for the fiscal quarter then ended. Said balance
sheets and statements of operations have been prepared in accordance
with GAAP, fairly present in all material respects the financial
condition of the Borrowers on a consolidated basis, as at the close of
business on the date thereof and the results of operations for the
period then ended. There are no contingent liabilities of the
Borrowers as of such date involving amounts of $100,000 or more in the
aggregate known to the officers of the Borrowers which have not been
disclosed in said balance sheets and the related notes thereto, as the
case may be.
(b) The Borrowers (both before and after giving effect to the
transactions contemplated by this Agreement) are solvent (I.E., they
have assets having a fair value in excess of the amount required to
pay their probable liabilities on their existing debts as they become
absolute and matured) and have, and expect to have, the ability to pay
their debts from time to time incurred in connection therewith as such
debts mature.
ss. 5.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, there
have occurred no material adverse changes in the financial condition or business
of the Borrowers as shown on or reflected in the consolidated balance sheet of
such corporations as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended other than changes in the ordinary course
of business which have not had any material adverse effect either individually
or in the aggregate on the business or financial condition of any Borrower.
Since the Balance Sheet Date, there has not been any Distribution.
ss. 5.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the
Borrowers possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
ss. 5.7. LITIGATION. To the knowledge of the Borrowers, except as
shown on SCHEDULE 5.7 hereto, there are no actions, suits, proceedings or
investigations of any kind pending or threatened against any Borrower before any
court, tribunal or administrative agency or board which, if adversely
determined, might, either in any case or in the aggregate, materially adversely
affect the properties, assets, financial condition or business of the Borrowers
considered as a whole, or materially impair the right of the Borrowers to carry
on business substantially as now conducted, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet or which question the
validity of any of the Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
ss. 5.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Borrowers' officers has or is expected in the future to have a materially
adverse effect on the business, assets or financial condition of the Borrowers
considered as a whole. None of the Borrowers is a party to any contract or
agreement which in the judgment of the Borrowers' officers has or is expected to
have any materially adverse effect on the business of the Borrowers considered
as a whole, except as otherwise reflected in adequate reserves.
ss. 5.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Borrowers is violating any provision of its charter documents or by-laws or any
agreement or instrument by which any of them may be subject or by which any of
them or any of their properties may be bound or any decree, order, judgment, or
any statute, license, rule or regulation, in a manner which could result in the
imposition of substantial penalties or materially and adversely affect the
financial condition, properties or business of the Borrowers considered as a
whole.
ss. 5.10. TAX STATUS. The Borrowers have made or filed all federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them are subject (unless and only to the extent
that any Borrower has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes); and have paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith; and have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in an aggregate amount of $100,000 or more claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Borrowers know of
no basis for any such claim.
ss. 5.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
ss. 5.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the
Borrowers is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is any of them a "registered
investment company", or an "affiliated company" or a "principal underwriter" of
a "registered investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
ss. 5.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as contemplated
by ss.7.2 of this Agreement, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, which
purports to cover, affect or give notice of any present or possible future lien
on, or security interest in, any assets or property of any of the Borrowers or
rights thereunder.
ss. 5.14 EMPLOYEE BENEFIT PLANS.
(a) IN GENERAL. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as required by
ss.412 of ERISA. The Borrowers have heretofore delivered to the Lender
the most recently completed annual report, Form 5500, with all
required attachments, and actuarial statement required to be submitted
under ss.103(d) of ERISA, with respect to each Guaranteed Pension
Plan.
(b) TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan
which is an employee welfare benefit plan within the meaning of
ss.3(1) or ss.3(2)(B) of ERISA, provides benefit coverage subsequent
to termination of employment except as required by Title I, Part 6 of
ERISA or applicable state insurance laws. Any Borrower may terminate
each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion
of such Borrower without liability to any Person other than for claims
arising prior to termination.
(c) GUARANTEED PENSION PLANS. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
or lien provisions of ss.302(f) of ERISA, or otherwise, has been
timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to
any Guaranteed Pension Plan, and neither any of the Borrowers nor any
ERISA Affiliate is obligated to or has posted security in connection
with an amendment of a Guaranteed Pension Plan pursuant to ss.307 of
ERISA or ss.401(a)(29) of the Code. No liability to the PBGC (other
than required insurance premiums, all of which have been paid) has
been incurred by any Borrower or any ERISA Affiliate with respect to
any Guaranteed Pension Plan and there has not been any ERISA
Reportable Event, or any other event or condition which presents a
material risk of termination of any Guaranteed Pension Plan by the
PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed
for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of ss.4001 of ERISA did
not exceed the aggregate value of the assets of all such Guaranteed
Pension Plans, disregarding for this purpose the benefit liabilities
and assets of any Guaranteed Pension Plan with assets in excess of
benefit liabilities.
(d) MULTIEMPLOYER PLANS. None of the Borrowers nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan under ss.4201 of ERISA
or as a result of a sale of assets described in ss.4204 of ERISA. None
of the Borrowers nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or is insolvent under and
within the meaning of ss.4241 or ss.4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
ss.4041A of ERISA
ss. 5.15. USE OF PROCEEDS. The proceeds of the Loans shall be used for
corporate purposes, including to refinance certain existing Indebtedness of the
Borrowers, for working capital purposes, for Capital Expenditures, for Letters
of Credit, and for additional acquisitions permitted by ss.7.4 hereof or
otherwise approved in writing by the Lender. No proceeds of the Loans shall be
used in any way that will violate Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
ss. 5.16 ENVIRONMENTAL COMPLIANCE. The Borrowers have taken all
reasonable and prudent steps to investigate the past and present condition and
usage of the Real Properties and the operations conducted thereon and, based
upon such diligent investigation, have determined that, except as shown on
SCHEDULE 5.16:
(a) None of the Borrowers, nor any operator of their properties,
is in violation, or alleged violation, of any judgment, decree, order,
law, permit, license, rule or regulation pertaining to environmental
matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any other federal, state or
local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (the "Environmental Laws"), which
violation would have a material adverse effect on the business, assets
or financial condition of the Borrowers considered as a whole.
(b) None of the Borrowers has received notice from any third
party including, without limitation, any federal, state or local
governmental authority, (i) that any one of them has been identified
by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any hazardous waste, as defined by 42 U.S.C. ss.6903(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any
pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) and any
toxic substance, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or
disposed of has been found at any site at which a federal, state or
local agency or other third party has conducted or has ordered that
any Borrower conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is
or shall be a named party to any claim, action, cause of action,
complaint, legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Substances.
(c) (i) To the best of Borrower's knowledge, no portion of the
Real Property has been used for the handling, processing, storage or
disposal of Hazardous Substances except in material compliance with
applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
such properties; (ii) in the course of any activities conducted by the
Borrowers, or operators of the Real Property, no Hazardous Substances
have been generated or are being used on such properties except in
material compliance with applicable Environmental Laws; (iii) there
have been no unpermitted Releases or threatened Releases of Hazardous
Substances on, upon, into or from the Real Property, which Releases
would have a material adverse effect on the value of such properties;
(iv) to the best of the Borrowers' knowledge, there have been no
Releases on, upon, from or into any real property in the vicinity of
the Real Property which, through soil or groundwater contamination,
may have come to be located on, and which would have a material
adverse effect on the value of, such properties; and (v) in addition,
any Hazardous Substances that have been generated on the Real Property
have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only
by treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters and
facilities, to the best of the Borrowers' knowledge, have been and are
operating in material compliance with such permits and applicable
Environmental Laws.
(d) none of the Real Property is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions
set forth herein and contemplated hereby.
ss. 5.17. PERFECTION OF SECURITY INTERESTS. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary under applicable law, or reasonably
requested by the Lender, to establish and perfect the Lender's security
interests in the Collateral as described in the Security Documents. The
Collateral and the Lender's rights with respect to the Collateral are not
subject to any setoff, claims, withholdings or other defenses, except for
Permitted Liens. The Borrowers are the owners of the Collateral free from any
lien, security interest, encumbrance and any other claim or demand, except for
Permitted Liens.
ss. 5.18. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 5.18
and except for arm's length transactions pursuant to which the Borrowers make
payments in the ordinary course of business upon terms no less favorable than
the Borrowers could obtain from third parties, none of the officers, directors,
or employees of the Borrowers are presently a party to any transaction with the
Borrowers (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrowers, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
ss. 5.19. SUBSIDIARIES. SCHEDULE 1 sets forth a complete and accurate
list of the Subsidiaries, including the name of each Subsidiary and its
jurisdiction of incorporation, together with the number of authorized and
outstanding shares of each Subsidiary. Each Subsidiary is directly or indirectly
wholly owned by the Parent. The Parent has good and marketable title to all of
the shares it purports to own of the stock of each Subsidiary, free and clear in
each case of any lien. All such shares have been duly issued and are fully paid
and non-assessable.
ss. 5.20. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. The Borrowers
have furnished the Lender copies, in each case true and complete as of the
Closing Date, of (a) all charter and other incorporation documents (together
with any amendments thereto) and (b) by-laws (together with any amendments
thereto).
ss. 5.21. DISCLOSURE. No representation or warranty made by the
Borrowers in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Lender by or on behalf of or
at the request of the Borrowers in connection with any of the transactions
contemplated by the Loan Documents contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances in which they are
made.
ss. 5.22. PERMITS AND GOVERNMENTAL AUTHORITY. Except as disclosed in
SCHEDULE 5.22 hereto, all permits (other than those the absence of which would
not have a material adverse effect on the business, operations or financial
condition of any Borrower) required for the construction and operation of all
landfills currently owned or operated by the Borrowers have been obtained and
remain in full force and effect and are not subject to any appeals or further
proceedings or to any unsatisfied conditions that may allow material
modification or revocation. None of the Borrowers, nor, to the knowledge of the
Borrowers, the holder of such permits is in violation of any such permits,
except for any violation which would not have a material adverse effect on the
business, operations or financial condition of the Borrowers considered as a
whole.
ss. 5.23. ENVIRONMENTAL REPORTS. The Borrowers have delivered to the
Lender copies of all environmental reports in their possession (or in the
possession of their Lenders, consultants, or professional advisors) relating to
the Real Property.
ss. 6. AFFIRMATIVE COVENANTS OF THE BORROWERS. The Borrowers jointly
and severally covenant and agree that, so long as any Loan, the Note, or any
Letter of Credit is outstanding or the Lender has any obligation to make Loans
or to issue, extend, or renew any Letters of Credit hereunder:
ss. 6.1. PUNCTUAL PAYMENT. The Borrowers will duly and punctually pay
or cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, fees and other amounts provided for in this Agreement and the other
Loan Documents, all in accordance with the terms of this Agreement and such
other Loan Documents.
ss. 6.2. MAINTENANCE OF OFFICE. The Borrowers will maintain their
chief executive offices at Jacksonville, Florida, or at such other place in the
United States of America as the Borrowers shall designate upon 30 days prior
written notice to the Lender.
ss. 6.3. RECORDS AND ACCOUNTS. Each of the Borrowers will keep true
and accurate records and books of account in which full, true and correct
entries will be made in accordance with GAAP and with the requirements of all
regulatory authorities and maintain adequate accounts and reserves for all taxes
(including income taxes), depreciation, depletion, obsolescence and amortization
of its properties, all other contingencies, and all other proper reserves.
ss. 6.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrowers will deliver to the Lender:
(a) as soon as practicable, but, in any event not later than 95
days after the end of each fiscal year of the Borrowers, the
consolidated and consolidating balance sheets of Borrowers as at the
end of such year, statements of cash flows, and the related
consolidated and consolidating statements of operations, each setting
forth in comparative form the figures for the previous fiscal year,
all such consolidated and consolidating financial statements to be in
reasonable detail, prepared, in accordance with GAAP and, with respect
to the consolidated financial statements, certified by the
Accountants. In addition, simultaneously therewith, the Borrowers
shall use their best efforts to provide the Lender with a written
statement from such Accountants to the effect that the Borrowers are
in compliance with the covenants set forth in ss.8 hereof, and that,
in making the examination necessary to said certification, nothing has
come to the attention of such Accountants that would indicate that any
Default or Event of Default exists, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or Event of
Default; PROVIDED THAT such Accountants shall not be liable to the
Lender for failure to obtain knowledge of any Default or Event of
Default;
(b) as soon as practicable, but in any event not later than 45
days after the end of each fiscal quarter of the Borrowers commencing
with the fiscal quarter ending September 30, 1997, copies of the
consolidated and consolidating balance sheets and statement of
operations of the Borrowers as at the end of such quarter, subject to
year end adjustments, and the related statement of cash flows, all in
reasonable detail and prepared in accordance with GAAP with a
certification by the principal financial or accounting officer of the
Borrowers (the "CFO") that the consolidated financial statements are
prepared in accordance with GAAP and fairly present the consolidated
financial condition of the Borrowers as at the close of business on
the date thereof and the results of operations for the period then
ended, subject to year-end adjustments in accordance with GAAP;
(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, (i) a statement in the form of
EXHIBIT C hereto (the "Compliance Certificate") certified by the CFO
that the Borrowers are in compliance with the covenants contained in
ss.ss.6, 7 and 8 hereof as of the end of the applicable period setting
forth in reasonable detail computations evidencing compliance with
ss.ss.7.1, 7.3, 7.8, and 8 hereof, PROVIDED THAT if the Borrowers
shall at the time of issuance of such certificate or at any other time
obtain knowledge of any Default or Event of Default, the Borrowers
shall include in such certificate or otherwise deliver forthwith to
the Lender a certificate specifying the nature and period of existence
thereof and what action the Borrowers propose to take with respect
thereto, and (ii) a certificate in the form of EXHIBIT D hereto with
respect to the operating permits of the Borrowers;
(d) contemporaneously with, or promptly following, the filing or
mailing thereof, copies of all material of a financial nature filed
with the Securities and Exchange Commission or sent to the
stockholders of the Parent; and
(e) from time to time such other financial data and other
information (including accountants' management letters) as the Lender
may reasonably request.
The Borrowers hereby authorize the Lender to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law.
ss. 6.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. Except where the
failure of a Borrower to remain so qualified would not materially adversely
impair the financial condition of such Borrower, each Borrower will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence, corporate rights and franchises; effect and maintain
its foreign qualifications, licensing, domestication or authorization except as
terminated by its Board of Directors in the exercise of its reasonable judgment;
use its best efforts to comply with all applicable laws; and shall not become
obligated under any contract or binding arrangement which, at the time it was
entered into would materially adversely impair the financial condition of such
Borrower. Each Borrower will continue to engage primarily in the businesses now
conducted by it and in related businesses.
ss. 6.6. MAINTENANCE OF PROPERTIES. The Borrowers will cause all
material properties used or useful in the conduct of their businesses to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrowers may be necessary so that the businesses carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED, HOWEVER, THAT nothing in this section shall prevent any Borrower from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the judgment of such Borrower, desirable in the conduct of
its or their business and which does not in the aggregate materially adversely
affect the business of the Borrowers considered as a whole.
ss. 6.7. INSURANCE. The Borrowers will maintain with financially sound
and reputable insurance companies, funds or underwriters' insurance of the
kinds, covering the risks (other than risks arising out of or in any way
connected with personal liability of any officers and directors thereof, which
risks may, but shall not be required by the Lender to be, covered by insurance
maintained by the Borrowers) and in the relative proportionate amounts usually
carried by reasonable and prudent companies conducting businesses similar to
that of the Borrowers (including but not limited to business interruption and,
to the extent such insurance becomes commercially available at reasonable cost,
environmental impairment insurance), but in no event less than the amounts and
coverages set forth in SCHEDULE 6.7 hereto. In addition, the Borrowers will
furnish from time to time, upon the Lender's request, a summary of the insurance
coverage of each of the Borrowers, which summary shall be in form and substance
satisfactory to the Lender and, if requested by the Lender, will furnish to the
Lender copies of the applicable policies.
ss. 6.8. TAXES. The Borrowers will each duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue, all
taxes, assessments and other governmental charges (other than taxes, assessments
and other governmental charges imposed by foreign jurisdictions which in the
aggregate are not material to the business or assets of any Borrower on an
individual basis or of the Borrowers on a consolidated basis) imposed upon it
and its real properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies, which if unpaid might by law become a lien or charge upon any of its
property; PROVIDED, HOWEVER, THAT any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if such Borrower shall
have set aside on its books adequate reserves with respect thereto; and
PROVIDED, FURTHER, THAT such Borrower will pay all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.
ss. 6.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS. The Borrowers
shall permit the Lender or any of its designated representatives, upon
reasonable notice, to visit and inspect any of the properties of the Borrowers,
to examine the books of account of the Borrowers (including the making of
periodic accounts receivable reviews), or contracts (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
the Borrowers with, and to be advised as to the same by, their officers, all at
such times and intervals as the Lender may reasonably request.
ss. 6.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. Each Borrower will (i) comply with
the provisions of its charter documents and by-laws and all agreements and
instruments by which it or any of its properties may be bound; (ii) comply with
all applicable laws and regulations (including Environmental Laws), decrees,
orders, judgments, licenses and permits, including, without limitation, all
environmental permits ("Applicable Laws"), except where noncompliance with such
Applicable Laws would not have a material adverse effect singly or in the
aggregate on the financial condition, properties or businesses of the Borrowers
considered as a whole; (iii) comply, except as set forth in SCHEDULE 6.10, in
all material respects with all agreements and instruments by which it or any of
its properties may be bound; (iv) maintain all material operating permits for
all landfills now owned or hereafter acquired; and (v) dispose of hazardous
waste only at licensed disposal facilities operating, to the best of such
Borrower's knowledge after reasonable inquiry, in compliance with Environmental
Laws. If at any time while the Note, or any Loan or Letter of Credit is
outstanding or the Lender has any obligation to make Loans or issue Letters of
Credit hereunder, any authorization, consent, approval, permit or license from
any officer, agency or instrumentality of any government shall become necessary
or required in order that any Borrower may fulfill any of its obligations
hereunder, such Borrower will immediately take or cause to be taken all
reasonable steps within the power of such Borrower to obtain such authorization,
consent, approval, permit or license and furnish the Lender with evidence
thereof.
ss. 6.11. ENVIRONMENTAL INDEMNIFICATION. The Borrowers covenant and
agree that they will indemnify and hold the Lender harmless from and against any
and all claims, expense, damage, loss or liability incurred by the Lender
(including all reasonable costs of legal representation incurred by the Lender)
relating to (a) any Release or threatened Release of Hazardous Substances on the
Real Property; (b) any violation of any Environmental Laws with respect to
conditions at the Real Property or the operations conducted thereon; or (c) the
investigation or remediation of offsite locations at which the Borrowers, or
their predecessors are alleged to have directly or indirectly Disposed of
Hazardous Substances. It is expressly acknowledged by the Borrowers that this
covenant of indemnification shall survive any foreclosure or any modification,
release or discharge of any or all of the Security Documents or the payment of
the Loans and shall inure to the benefit of the Lender and its successors and
assigns.
ss. 6.12. FURTHER ASSURANCES. The Borrowers will cooperate with the
Lender and execute such further instruments and documents as the Lender shall
reasonably request to carry out to the Lender's satisfaction the transactions
contemplated by this Agreement.
ss. 6.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrowers
shall deliver to the Lender, within 30 days of receipt thereof, written notice
of the initiation of any action, claim, complaint, or any other notice of
dispute or potential litigation (including without limitation any alleged
violation of any Environmental Law), wherein the potential liability is in
excess of $100,000, together with a copy of each such notice received by any
Borrower.
ss. 6.14 NOTICE OF CERTAIN EVENTS.
(a) The Borrowers will provide the Lender with written notice
as to any cancellation or material change in any insurance of any of
the Borrowers within ten (10) Business Days after such Borrower's
receipt of any notice (whether formal or informal) of such cancellation
or change by any of its insurers.
(b) The Borrowers will promptly notify the Lender in writing
of any of the following events:
(i) upon any Borrower obtaining knowledge of any
violation of any Environmental Law regarding the Real Property
or any Borrower's operations which violation, together with
all such other violations, could result in a fine or penalty
of $100,000 or more or which would reasonably be expected to
require expenditures of $100,000 or more to remedy; (ii) upon
any Borrower's obtaining knowledge of any potential or known
Release, or threat of Release, of any Hazardous Substance at,
from, or into the Real Property which it reports in writing or
is required to report in writing to any governmental authority
and which is material in amount or nature or which could
materially affect the value of the Real Property; (iii) upon
any Borrower's receipt of any notice of violation of any
Environmental Laws or of any Release or threatened Release of
Hazardous Substances, including a notice or claim of liability
or potential responsibility from any third party (including
without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry,
proceeding, demand, investigation or other action with regard
to (A) any Borrower's, or any Person's operation of the Real
Property, (B) contamination on, from or into the Real
Property, or (C) investigation or remediation of offsite
locations at which any Borrower, or any of their predecessors
are alleged to have directly or indirectly Disposed of
Hazardous Substances; (iv) upon any Borrower's obtaining
knowledge that any expense or loss has been incurred by such
governmental authority in connection with the assessment,
containment, removal or remediation of any Hazardous
Substances with respect to which any Borrower may be liable or
for which a lien may be imposed on the Real Property; (v) any
setoff, claims (including, with respect to the Real Estate,
environmental claims), withholdings or other defenses to which
any of the Collateral, or the Lender's rights with respect to
the Collateral, are subject; or (vi) any labor dispute or
union contract dispute involving any of the Borrowers.
ss. 6.15. RESPONSE ACTIONS. The Borrowers covenant and agree that if
any Release or Disposal of Hazardous Substances shall occur or shall have
occurred on the Real Property, the Borrowers will cause the prompt containment
and removal of such Hazardous Substances and remediation of the Real Property as
necessary to comply with all Environmental Laws or to preserve the value of the
Real Property.
ss. 6.16. ENVIRONMENTAL ASSESSMENTS. If the Lender in itS good faith
judgment, after discussion with the Borrowers, has reason to believe that the
environmental condition of the Real Property has deteriorated, after reasonable
notice by the Lender, whether or not an Event of Default shall have occurred,
the Lender may, from time to time, for the purpose of assessing and ensuring the
value of the Real Property, obtain one or more environmental assessments or
audits of the Real Property prepared by a hydrogeologist, an independent
engineer or other qualified consultant or expert approved by the Lender to
evaluate or confirm (i) whether Hazardous Substances are present in the soil or
water at the Real Property in material amounts and (ii) whether the use and
operation of the Real Property is in material compliance with all Environmental
Laws. Environmental assessments may include without limitation detailed visual
inspections of the Real Property including, without limitation, any and all
storage areas, storage tanks, drains, dry wells and leaching areas, and the
taking of soil samples, surface water samples and ground water samples, as well
as such other investigations or analyses as the Lender deems appropriate. All
such environmental assessments shall be at the sole cost and expense of the
Borrower.
ss. 6.17 NOTICE OF DEFAULT. The Borrowers will promptly notify the
Lender in writing of the occurrence of any Default or Event of Default, of which
the Borrowers have or should have knowledge. If any Person shall give any notice
or take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or any other note,
evidence of indebtedness, indenture or other obligation evidencing indebtedness
in excess of $100,000 as to which any Borrower is a party or obligor, whether as
principal or surety, the Borrowers shall forthwith give written notice thereof
to the Lender, describing the notice of action and the nature of the claimed
default.
SS.6.18 CLOSURE AND POST CLOSURE LIABILITIES. The Borrowers shall at
all times adequately accrue, in accordance with GAAP, and fund, as required by
applicable Environmental Laws, all closure and post closure liabilities with
respect to the operations of the Borrowers.
SS.6.19 SUBSIDIARIES. The Parent shall at all times directly or
indirectly through a Subsidiary own all of the shares of the capital stock of
each other Borrower, and such shares shall be pledged to the Lender.
ss.6.20 NEW SUBSIDIARIES. Any Borrower shall, prior to any acquisition
or creation of a new Subsidiary, give notice to the Lender and pledge to the
Lender the capital stock of such new Subsidiary pursuant to the Stock Pledge
Agreement to which such Borrower shall become party to, and such new Subsidiary,
as a Borrower under the Credit Agreement, shall grant to the Lender a perfected
first priority security interest in all of its personal property assets pursuant
to the Security Agreement to which it shall become party to.
ss. 7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. The Borrowers
agree that, so long as any Loan, the Note, or any Letter of Credit is
outstanding or the Lender has any obligation to make Loans or to issue, extend
or renew any Letters of Credit hereunder:
ss. 7.1. RESTRICTIONS ON INDEBTEDNESS. None of the Borrowers nor any
of their Subsidiaries shall become or be a guarantor or surety of, or otherwise
create, incur, assume, or be or remain liable, contingently or otherwise, with
respect to any Indebtedness, or become or be responsible in any manner (whether
by agreement to purchase any obligations, stock, assets, goods or services, or
to supply or advance any funds, assets, goods or services or otherwise) with
respect to any undertaking or Indebtedness of any other Person, or incur any
Indebtedness other than:
(a) Indebtedness to the Lender arising under this
Agreement or the Loan Documents;
(b) Indebtedness of the Borrowers in respect of judgments or
awards which have been in force for less than the applicable period for
taking an appeal so long as execution is not levied thereunder or in
respect of which any Borrower shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review and in respect of which the Borrowers have maintained adequate
reserves;
(c) Indebtedness of any Borrower with respect to guaranty,
suretyship or indemnification obligations in connection with such
Borrower's performance of services for its respective customers in the
ordinary course of its business, such Indebtedness to be listed on
SCHEDULE 7.1(C) hereto;
(d) Indebtedness of the Borrowers incurred with respect to
landfill closure bonds, such bonds to be listed on SCHEDULE 7.1(D)
hereto, not to exceed an aggregate amount of $5,000,000 outstanding at
any time.
(e) Other Indebtedness of the Borrowers not to exceed an
aggregate amount of $5,000,000 at any one time; and
ss. 7.2. RESTRICTIONS ON LIENS. None of the Borrowers nor any of their
Subsidiaries will create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any property or assets of any character,
whether now owned or hereafter acquired, or upon the income or profits
therefrom; or transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more than
thirty (30) days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles or chattel paper, with or without recourse, EXCEPT
as follows (the "Permitted Liens"):
(a) Liens securing Indebtedness permitted by ss.7.1(e)
incurred in connection with the lease or acquisition of property or
fixed assets useful or intended to be used in carrying on the business
of the Borrowers, provided that such Liens shall encumber only the
property or assets so acquired and shall not exceed the fair market
value thereof.
(b) Liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of
obligations not overdue;
(c) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) Liens in respect of judgments or awards, the Indebtedness
with respect to which is permitted by ss.7.1(b);
(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days
from the date of creation thereof in respect of obligations not
overdue;
(f) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which any Borrower is a party, and
other minor liens or encumbrances none of which in the opinion of the
respective Borrower interferes materially with the use of the property
affected in the ordinary conduct of the business of such Borrower,
which defects do not individually or in the aggregate have a material
adverse effect on the business of such Borrower individually or of the
Borrowers on a consolidated basis;
(f) Liens granted pursuant to the Security Documents.
ss. 7.3. RESTRICTIONS ON INVESTMENTS. Except to the extent provided in
ss.7.4, none of the Borrowers nor any of their Subsidiaries shall make or permit
to exist or to remain outstanding any other Investment other than the following
Investments made or to be made by the Borrowers:
(a) Investments in obligations of the United States of America
and agencies thereof and obligations guaranteed by the United States of
America that are due and payable within one year from the date of
acquisition and prior to the Maturity Date;
(b) certificates of deposit, time deposits or repurchase
agreements which are fully insured or are issued by commercial banks
organized under the laws of the United States of America or any state
thereof and having a combined capital, surplus, and undivided profits
of not less than $100,000,000;
(c) commercial paper, maturing not more than nine months from
the date of issue, PROVIDED THAT, at the time of purchase, such
commercial paper is not rated lower than "P-1" by Moody's Investors
Service, Inc., or "A-1" by Standard & Poor's Corporation;
(d) Investments associated with insurance policies or surety
bonds required or allowed by state law to be posted as financial
assurance for landfill closure and post-closure liabilities;
(e) Investments by the Parent in any other Borrower and
Investments permitted by ss.7.4; PROVIDED THAT before and after giving
effect to any permitted Investment made after the date hereof, no
Default or Event of Default shall exist or would occur as a result of
making such Investment.
ss. 7.4. MERGERS, CONSOLIDATIONS, SALES, ACQUISITIONS. None of the
Borrowers shall be a party to any merger, consolidation or exchange of stock, or
purchase or otherwise acquire all or substantially all of the assets or stock
of, or any partnership or joint venture interest in, any other Person except as
otherwise provided in ss.7.3 or this ss.7.4, or sell, transfer, convey or lease
any stock or assets or group of assets (except sales of equipment in the
ordinary course of business and sales of assets totaling an aggregate from the
date hereof through the Maturity Date of no more than 5% of the Consolidated
Total Assets of the Borrowers) or sell or assign, with or without recourse, any
receivables. A Borrower may purchase or otherwise acquire all or substantially
all of the assets or stock of any class of any Person PROVIDED THAT (a) no Event
of Default has occurred and is continuing and the proposed transaction will not
otherwise create an Event of Default hereunder; (b) the business to be acquired
predominantly involves non-hazardous solid waste disposal, collection, hauling,
recycling or transfer; (c) the business to be acquired operates in the United
States of America; (d) in the case of an asset acquisition, all of the assets to
be acquired shall be owned by an existing or newly created Subsidiary of the
Parent, 100% of the stock of which has been or will be pledged to the Lender and
which is a Borrower or will become a Borrower pursuant to ss.4.10 or, in the
case of a stock acquisition or an acquisition by merger, the acquired company
shall become or shall be merged with a wholly-owned Subsidiary of the Parent
that is a Borrower; (e) the aggregate cash consideration to be paid by the
Borrowers in connection with any such acquisition (including the aggregate
amount of all Indebtedness assumed but excluding landfill closure and
post-closure bonds) shall not exceed $5,000,000 without the consent of the
Lender; (f) each acquisition of a landfill shall be preceded by the standard due
diligence practices of the Borrowers as set forth on EXHIBIT E hereto, such due
diligence to include a review by a consulting engineer reasonably acceptable to
the Lender; (g) the board of directors and (if required by applicable law) the
shareholders, or the equivalent thereof, of the business to be acquired has
approved such acquisition; and (h) in the case of a Material Acquisition, the
Lender shall have been provided with (i) a Compliance Certificate demonstrating
that the Borrowers are in current compliance with and, giving effect to the
proposed acquisition (including any borrowings made or to be made in connection
therewith), will continue to be in compliance with, all of the covenants in ss.8
hereof, (ii) a copy of the purchase agreement, together with audited (if
available, or otherwise unaudited) financial statements for any business to be
acquired for the preceding two (2) fiscal years, and (iii) a summary of the
results of the Borrower's due diligence investigations.
ss. 7.5. SALE AND LEASEBACK. None of the Borrowers shall enter into
any arrangement, directly or indirectly, whereby any Borrower shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other property which such Borrower intends to use for
substantially the same purpose as the property being sold or transferred,
without the prior written consent of the Lender.
SS. 7.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. None of the
Borrowers may make Distributions except as set forth in this ss.7.6. Each
Borrower may make distributions payable solely in common stock of such Borrower.
Borrowers other than the Parent may declare or pay Distributions other than
Distributions payable solely in common stock of such Borrowers to the Parent. In
addition, the Borrowers (other than the Parent) shall not redeem, convert,
retire or otherwise acquire shares of any class of capital stock of such
Borrowers. The Borrowers shall not effect or permit any change in or amendment
to any document or instrument pertaining to the terms of the Borrowers' capital
stock.
SS. 7.7. EMPLOYEE BENEFIT PLANS. None of the Borrowers nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for any Borrower; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of any Borrower pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (within the meaning of ss.4001 of ERISA)
of all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities.
The Borrowers will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service, furnish to the Lender a copy of the most
recent actuarial statement required to be submitted under ss.103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish to
the Lender any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068
of ERISA, or in respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219,
4242, or 4245 of ERISA.
ss. 7.8. CAPITAL EXPENDITURES. The Borrowers shall not make or commit
to make Capital Expenditures (excluding landfill closure and post-closure
expenditures) in excess of one and one-half (1.5) times the depreciation and
landfill amortization expense of the Borrowers for any fiscal year.
ss.7.9 NEGATIVE PLEDGES. No Borrower will pledge any of its assets to
any Person other than to the Lender, nor will any Borrower grant any negative
pledges on their assets to any Person, nor will any Subsidiary enter any
agreement that would in anyway restrict Distribution to the Parent, other than
expressly permitted hereunder.
ss. 8. FINANCIAL COVENANTS OF THE BORROWERS. The Borrowers agree that,
so long as any Loan or any Note or any Letter of Credit is outstanding or the
Lender has any obligation to make Loans or the Lender has any obligation to
issue, extend or renew any Letters of Credit hereunder:
ss. 8.1. INTEREST COVERAGE RATIO. As at the end of any fiscal quarter
commencing with the fiscal quarter ending September 30, 1997, the ratio of (a)
EBIT to (b) Consolidated Total Interest Expense shall not be less than the
stated ratio for the respective periods set forth below:
PERIOD RATIO
09/30/97 through 09/30/98] 2.25:1
Thereafter 2.50:1
ss. 8.2. BALANCE SHEET LEVERAGE RATIO. The ratio of (a) Funded Debt to
(b) the sum of (i) the excess of Consolidated Total Assets over Consolidated
Total Liabilities plus (ii) Funded Debt shall not exceed 0.55:1 at any time.
ss. 8.3. PROFITABLE OPERATIONS. The Borrowers will not permit
Consolidated Net Income to be less than $0 for any fiscal quarter.
ss. 8.4. CASH FLOW LEVERAGE RATIO. At the time of the making of any
Material Acquisition and at the end of any fiscal quarter commencing September
30, 1997, the ratio of (a) Funded Debt to (b) EBITDA for the prior four (4)
consecutive fiscal quarters ending on such date shall not exceed 2.50:1.
ss. 9. CLOSING CONDITIONS.
The obligations of the Lender to make the Loans and to issue Letters
of Credit on and after the Closing Date and otherwise be bound by the terms of
this Agreement shall be subject to the satisfaction of each of the following
conditions precedent:
ss. 9.1. CORPORATE ACTION. All corporate action necessary for the
valid execution, delivery and performance by each Borrower of the Loan Documents
shall have been duly and effectively taken, and evidence thereof satisfactory to
the Lender shall have been provided to the Lender.
ss. 9.2. LOAN DOCUMENTS, ETC. Each of the Loan Documents shall have
been duly and properly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect and in form and substance
satisfactory to the Lender.
ss. 9.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. For each Borrower the
Lender shall have received from the Borrowers a copy, certified by a duly
authorized officer of such Borrower to be true and complete on the Closing Date,
of each of (a) its charter or other incorporation documents (including
certificates of merger and name changes) as in effect on such date of
certification, and (b) its by-laws as in effect on such date.
ss. 9.4. INCUMBENCY CERTIFICATE. The Lender shall have received an
incumbency certificate, dated as of the Closing Date, signed by duly authorized
officers giving the name and bearing a specimen signature of each individual who
shall be authorized: (a) to sign the Loan Documents on behalf of the Borrowers;
(b) to make Loan and Letter of Credit Requests; and (c) to give notices and to
take other action on the Borrowers' behalf under the Loan Documents.
ss. 9.5. VALIDITY OF LIENS. The Security Documents shall be effective
to create in favor of the Lender a legal, valid and enforceable first security
interest in and lien upon the Collateral, subject only to Permitted Liens. All
filings, recordings, deliveries of instruments and other actions necessary or
desirable in the opinion of the Lender to protect and preserve such security
interests shall have been duly effected. The Lender shall have received evidence
thereof in form and substance satisfactory to the Lender.
ss. 9.6. UCC SEARCH RESULTS. The Lender shall have received the
results of UCC searches with respect to the assets of all of the Borrowers
indicating no liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Lender.
ss. 9.7. CERTIFICATES OF INSURANCE. The Lender shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, or within 15 days prior thereto, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise describing the
insurance obtained in accordance with the provisions hereof.
ss. 9.8. OPINIONS OF COUNSEL. The Lender shall have received from
outside counsel to the Borrowers, an opinion addressed to the Lender, dated the
date of the closing, in form and substance satisfactory to the Lender regarding
(i) enforceability and corporate matters; and (ii) such other matters as the
Lender may reasonably request.
ss. 9.9. AUDITED FINANCIAL STATEMENTS; FINANCIAL PROJECTIONS. The
Lender shall have received the audited financial statements of the Borrowers for
the fiscal year ended December 31, 1996, and the financial projections of the
Borrowers, in form and substance satisfactory to the Lender.
ss. 9.10. ENVIRONMENTAL REPORTS AND CERTIFICATE REGARDING Permits. The
Lender shall have received the environmental reports referred to in ss.5.23 and
a certificate in the form of EXHIBIT D hereto regarding operating permits of the
Borrowers.
ss. 9.11. INITIAL COMPLIANCE CERTIFICATE. The Lender shall have
received a proforma Compliance Certificate in the form of EXHIBIT C hereto
regarding compliance with the covenants set forth in ss.8.2 and ss.8.4 hereof as
of September 30, 1997.
ss. 10. CONDITIONS TO ALL LOANS.
The obligations of the Lender to make any Loan (including without
limitation the obligation to issue any Letter of Credit) on and subsequent to
the Closing Date is subject to the following conditions precedent:
ss. 10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this Agreement or
in any document or instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made and shall also
be true at and as of the time of the making of the Loan with the same effect as
if made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement, changes disclosed to
the Lender in writing and accepted by the Lender, and changes occurring in the
ordinary course of business which singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
ss. 10.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrowers shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by them prior to or at the time of the making of any
Loan or the issuance, extension, or renewal of any Letter of Credit, and at the
time of the making of any Loan or the issuance, extension, or renewal of any
Letter of Credit, there shall exist no Event of Default or condition which would
result in an Event of Default upon consummation of such Loan (including without
limitation any amounts to be drawn under a Letter of Credit). Each request by
the Borrowers for a Loan (including without limitation each request for issuance
of a Letter of Credit) subsequent to the first Loan shall constitute
certification by the Borrowers that the conditions specified in ss.ss.10.1 and
10.2 will be duly satisfied on the date of such Loan or Letter of Credit
issuance.
ss. 10.3. NO LEGAL IMPEDIMENT. No change shall have occurred in any
law or regulations thereunder or interpretations thereof which in the reasonable
opinion of the Lender would make it illegal for the Lender to make Loans or to
issue, extend, or renew Letters of Credit hereunder.
ss. 10.4. GOVERNMENTAL REGULATION. The Lender shall have received such
statements in substance and form reasonably satisfactory to the Lender as it
shall require for the purpose of compliance with any applicable regulations of
the Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
ss. 10.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall have been delivered to the Lender as of the date hereof in
substance and in form satisfactory to the Lender, including without limitation a
Loan and Letter of Credit Request in the form attached hereto as EXHIBIT B, and
the Lender shall have received all information and such counterpart originals or
certified or other copies of such documents as the Lender may reasonably
request.
ss. 11. COLLATERAL SECURITY. The Obligations shall be secured by a
perfected security interest (having, with respect to each category of
Collateral, the respective rights and priorities set forth in the Security
Documents) in all of the shares of the Subsidiaries of the Parent, whether now
owned or hereafter acquired, pursuant to the terms of the Security Documents to
which the Borrowers are parties.
ss. 12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
ss. 12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the followinG
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice and/or lapse of time, "Defaults")
shall occur:
(a) if the Borrowers shall fail to pay any principal of the
Loans when the same shall become due and payable, whether at the
Maturity Date or any accelerated date of maturity or at any other date
fixed for payment;
(b) if the Borrowers shall fail to pay any Reimbursement
Obligation, interest, fees or other amounts owing hereunder within five
(5) Business Days after the same shall become due and payable whether
at the Maturity Date or any accelerated date of maturity or at any
other date fixed for payment;
(c) if the Borrowers shall fail to comply with the covenants
contained in ss.ss.6.1, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.13, 6.14, 6.17,
6.19, 7 or 8 hereof;
(d) if the Borrowers shall fail to perform any term, covenant
or agreement contained herein or in any of the other Loan Documents
(other than those specified in subsections (a), (b), and (c) above)
within thirty (30) days after written notice of such failure has been
given to the Borrowers by the Lender;
(e) if any representation or warranty contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when made or repeated;
(f) if any Borrower shall fail to pay at maturity, or within
any applicable period of grace, any and all obligations for borrowed
money or any guaranty with respect thereto in an aggregate amount
greater than $100,000, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money in an aggregate amount greater
than $100,000 for such period of time as would, or would have permitted
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate
the maturity thereof; or
(g) if any Borrower makes an assignment for the benefit of
creditors, or admits in writing its inability to pay or generally fails
to pay its debts as they mature or become due, or petitions or applies
for the appointment of a trustee or other custodian, liquidator or
receiver of any Borrower or of any substantial part of the assets of
any Borrower or commences any case or other proceeding relating to any
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or takes any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application is filed or any such case or other proceeding
is commenced against any Borrower and or any Borrower indicates its
approval thereof, consent thereto or acquiescence therein;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower bankrupt
or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
any Borrower in an involuntary case under federal bankruptcy laws as
now or hereafter constituted, and such decree or order remains in
effect for more than sixty (60) days, whether or not consecutive;
(i) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty (30) days, whether or not
consecutive, any final judgment against any Borrower which, with other
outstanding final judgments, against the Borrowers exceeds in the
aggregate $100,000 after taking into account any undisputed insurance
coverage;
(j) any Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $100,000; any Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $100,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided the Lender determines in its
reasonable discretion that such event (A) could be expected to result
in liability of such Borrower to the PBGC or the Plan in an aggregate
amount exceeding $100,000 and (B) could constitute grounds for the
termination of such Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan or for the imposition of a lien in favor of the Guaranteed
Pension Plan; (ii) the appointment by a United States District Court of
a trustee to administer such Plan; or (iii) the institution by the PBGC
of proceedings to terminate such Plan;
(l) unless the Lender approves, any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 20% or more of the outstanding shares of
common stock of any Borrower; or, during any period of twelve
consecutive calendar months, individuals who were directors of any
Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of such Borrower; or
(m) if any of the Loan Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Lender, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrowers or any of
their respective stockholders, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make
a determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof,
then, and in any such event, so long as the same may be continuing, the Lender
may, by notice in writing to the Borrowers, declare all amounts owing with
respect to this Agreement, the Note and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrowers; PROVIDED
THAT in the event of any Event of Default specified in ss.12.1(g) or 12.1(h),
all such amounts shall become immediately due and payable automatically and
without any requirement of notice from the Lender. Upon demand by the Lender
after the occurrence of any Event of Default, the Borrowers shall immediately
provide to the Lender cash in an amount equal to the aggregate Maximum Drawing
Amount of all Letters of Credit outstanding, to be held by the Lender as
collateral security for the Obligations.
ss. 12.2. TERMINATION OF COMMITMENT. If any Event of Default shall
occur, or if on any Drawdown Date the conditions precedent to the making of the
Loans to be made on such Drawdown Date or the issuance of any Letters of Credit
to be issued on such date are not satisfied (except as a consequence of a
default on the part of the Lender), the Lender may by notice to the Borrowers,
terminate the unused portion of the Total Commitment hereunder, and upon such
Notice being given, such unused portion of the Total Commitment hereunder shall
terminate immediately and the Lender shall be relieved of all further
obligations to make Loans to or issue Letters of Credit for the account of the
Borrowers hereunder PROVIDED THAT if an Event of Default specified in ss.12.1(g)
or 12.1(h) shall have occurred, such unused portion of the Total Commitment
shall terminate immediately and the Lender shall be relieved of all further
obligations to make Loans to or issue Letters of Credit for the account of the
Borrowers without the requirement of notice from the Lender. No termination of
any portion of the Total Commitment hereunder shall relieve the Borrowers of any
of their existing Obligations to the Lender hereunder or elsewhere.
ss. 12.3. REMEDIES. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Lender shall have
accelerated the maturity of the Loans pursuant to ss.12.1, the Lender, if owed
any amount with respect to the Loans or the Reimbursement Obligations, may
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Loan Documents
or any instrument pursuant to which the Obligations to the Lender are evidenced,
including, without limitation, as permitted by applicable law the obtaining of
the EX PARTE appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
legal or equitable right of the Lender. No remedy herein conferred upon the
Lender or the holder of the Note or purchaser of any Letter of Credit is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
ss. 13. SETOFF. Regardless of the adequacy of any collateral, during
the continuance of an Event of Default, any deposits or other sums credited by
or due from the Lender to the Borrowers and any securities or other property of
the Borrowers in the possession of the Lender may be applied to or set off
against the payment of the Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrowers to the Lender. The Lender agrees that if
an amount to be set off is to be applied to Indebtedness of the Borrowers, other
than Indebtedness evidenced by the Note held by the Lender or constituting
Reimbursement Obligations owed to the Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by the Note
held by the Lender or constituting Reimbursement Obligations owed to the Lender.
ss. 14. EXPENSES. Whether or not the transactions contemplated herein
shall be consummated, the Borrowers hereby promise to reimburse Lender for all
reasonable out-of-pocket fees and disbursements (including all reasonable
attorneys' fees, collateral evaluation costs and Consulting Engineer's fees),
incurred or expended in connection with the preparation, filing or recording, or
interpretation of this Agreement, the other Loan Documents, or any amendment,
modification, approval, consent or waiver hereof or thereof. The Borrowers
further agree to reimburse the Lender for all such fees and disbursements
expended in connection with the enforcement of any Obligations or the
satisfaction of any indebtedness of the Borrowers hereunder or under any of the
other Loan Documents, or in connection with any litigation, proceeding or
dispute hereunder in any way related to the credit hereunder, including, without
limitation, the so-called "workout" thereof after the occurrence of a Default or
Event of Default. The Borrowers will pay any taxes (including any interest and
penalties in respect thereof) other than the Lender's federal and state income
taxes, payable on or with respect to the transactions contemplated by this
Agreement (the Borrowers hereby agreeing to indemnify the Lender with respect
thereto).
ss. 15. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless the Lender, as well as the Lender's shareholders, directors, agents,
officers, subsidiaries and affiliates, from and against all damages, losses,
settlement payments, obligations, liabilities, claims, suits, penalties,
assessments, citations, directives, demands, judgments, actions or causes of
action, whether statutorily created or under the common law, and reasonable
costs and expenses incurred, suffered, sustained or required to be paid by an
indemnified party by reason of or resulting from the transactions contemplated
hereby, except any of the foregoing which result from the gross negligence or
willful misconduct of the indemnified party. In any investigation, proceeding or
litigation, or the preparation therefor, the Lender shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrowers agree
to pay promptly the reasonable fees and expenses of such counsel. In the event
of the commencement of any such proceeding or litigation, the Borrowers shall be
entitled to participate in such proceeding or litigation with counsel of their
choice at their expense, PROVIDED THAT such counsel shall be reasonably
satisfactory to the Lender. The covenants of this ss.15 shall survive payment or
satisfaction of payment of amounts owing with respect to the Note or any other
Loan Document.
ss.16. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein, all
covenants, agreements, representations and warranties made herein, in the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrowers pursuant hereto shall be deemed to have been relied upon by the
Lender, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Lender of the Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement, any Letter of Credit or the Note remains outstanding and unpaid or
the Lender has any obligation to make any Loans or to issue any Letters of
Credit hereunder. All statements contained in any certificate or other paper
delivered by or on behalf of the Borrowers pursuant hereto or in connection with
the transactions contemplated hereby shall constitute representations and
warranties by the Borrowers hereunder.
ss.17. PARTIES IN INTEREST. All the terms of this Agreement and the
other Loan Documents shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto and
thereto; PROVIDED THAT no Borrower shall assign or transfer its rights hereunder
without the prior written consent of the Lender.
ss.18. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be given
pursuant to this Agreement or the other Loan Documents shall be in writing and
shall be delivered in hand, mailed by United States first-class mail, postage
prepaid, or sent by telecopier and confirmed by letter, addressed as follows:
(a) if to the Borrowers, at Suite 700, 100 West Bay Street,
Jacksonville, Florida 32202, USA, Attention: Amy C.
MacF. Burbott, President;
(b) if to the Lender, at 100 Federal Street, Boston,
Massachusetts 02110, USA, Attention: Lindsay W. McSweeney, Vice
President, telecopy number 617-434-2160;
or such other address for notice as shall have last been furnished in writing to
the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt thereof
by such officer, (b) if sent by registered or certified first-class mail,
postage prepaid, five Business Days after the posting thereof, and (c) if sent
by telecopier, at the time of the dispatch thereof, if in normal business hours
in the place of receipt, or otherwise at the opening of business on the
following Business Day.
ss. 19. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the lender would
otherwise have. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof. This Agreement and any
amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one instrument. In proving
this Agreement it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
ss. 20. ENTIRE AGREEMENT, ETC. The Loan Documents and any otheR
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or omission on the part of the Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrowers shall entitle the
Borrowers to other or further notice or demand in similar or other
circumstances.
ss. 21. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE BORROWERS (A) CERTIFY THAT NO REPRESENTATIVE, LENDER OR ATTORNEY OF
THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B)
ACKNOWLEDGE THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BECAUSE OF, AMONG OTHER THINGS,
THE BORROWERS' WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
ss. 22. GOVERNING LAW. THIS AGREEMENT AND, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS
CONSENT TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE
COMMONWEALTH OF MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS
OF THE LENDER UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
ss. 23. SEVERABILITY. The provisions of this Agreement are severable
and if any one clause or provision hereof shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
under seal as of the date first set forth above.
THE BORROWERS:
GEOWASTE INCORPORATED
By: /s/ Amy C. MacF. Burbott
Title: President and Chief Executive
Officer
GEOWASTE ACQUISITION CORP.
By: /s/ Amy C. MacF. Burbott
Title:
GEOWASTE OF FL, INC.
By: /s/ Amy C. MacF. Burbott
Title:
GEOWASTE OF GA, INC.
By: /s/ Amy C. MacF. Burbott
Title:
LOW BROOK DEVELOPMENT, INC.
By: /s/ Amy C. MacF. Burbott
Title:
NORTH FLORIDA SWEEPING, INC.
By: /s/ Amy C. MacF. Burbott
Title:
SPECTRUM GROUP, INC.
By: /s/ Amy C. MacF. Burbott
Title:
THE LENDER:
BANKBOSTON, N.A.,
By: /s/ Lindsay McSweeney
Title: Vice President
Exhibit 10.2
GEOWASTE INCORPORATED
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
Section 1. PURPOSE .......................................................3
Section 2. DEFINITIONS ...................................................3
2.1. Board .........................................................3
2.2. Change in Control .............................................3
2.3. Code ..........................................................4
2.4. Committee .....................................................4
2.5. Director ......................................................4
2.6. Fair Market Value .............................................4
2.7. ISO ...........................................................4
2.8. Key Employee ..................................................4
2.9. 1933 Act .....................................................5
2.10. Non-ISO ......................................................5
2.11. Option .......................................................5
2.12. Option Certificate ...........................................5
2.13. Option Holder ................................................5
2.14. Option Price .................................................5
2.15. Parent Corporation ...........................................5
2.16. Plan .........................................................5
2.17. Rule 16b-3 ...................................................5
2.18. Stock ........................................................5
2.19. Subsidiary ...................................................5
2.20. Ten Percent Shareholder ......................................5
Section 3. SHARES SUBJECT TO OPTIONS .....................................6
Section 4. EFFECTIVE DATE ................................................6
Section 5. COMMITTEE .....................................................7
Section 6. ELIGIBILITY ...................................................7
Section 7. GRANT OF OPTIONS ..............................................7
7.1. Committee Action ..............................................7
7.2. $100,000 Limit ................................................8
Section 8. OPTION PRICE ..................................................9
Section 9. EXERCISE PERIOD ..............................................10
Section 10. NONTRANSFERABILITY ...........................................10
Section 11. SECURITIES REGISTRATION AND RESTRICTIONS .....................11
Section 12. LIFE OF PLAN .................................................12
Section 13. ADJUSTMENT ...................................................12
Section 14. SALE OR MERGER OF GEOWASTE; CHANGE IN CONTROL ................13
14.1. Sale or Merger ..............................................13
14.2. Change in Control ...........................................13
Section 15. AMENDMENT OR TERMINATION .....................................14
Section 16. MISCELLANEOUS ................................................15
16.1. No Shareholder Rights .......................................15
16.2. No Contract of Employment ....................................15
16.3. Withholding ..................................................15
16.4. Construction .................................................16
16.5. Loans ........................................................16
<PAGE>
SECTION 1.
PURPOSE
The purpose of this Plan is to promote the interests of GeoWaste and
its related companies by granting Options to purchase Stock to Key Employees and
Directors in order (1) to attract and retain Key Employees and Directors, (2) to
provide an additional incentive to each Key Employee and Director to work to
increase the value of Stock and (3) to provide each Key Employee and Director
with a stake in the future of GeoWaste which corresponds to the stake of each of
GeoWaste's shareholders.
SECTION 2.
DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1. Board -- means the Board of Directors of GeoWaste.
2.2. Change in Control -- means (a) the acquisition of the power to
direct, or to cause the direction, of the management and policies of GeoWaste by
a person (not previously possessing such power), acting alone or in conjunction
with others, whether through the ownership of Stock, by contract or otherwise,
or (b) the acquisition, directly or indirectly, of the power to vote 20% or more
of the outstanding Stock by a person or persons (other than a person possessing
such power on the date t Plan becomes effective or GeoWaste or an employee
benefit plan established and maintained by GeoWaste). For purposes of this
definition, (i) the term "person" means a natural person, corporation,
partnership, joint venture, trust, government or instrumentality of a government
and (ii) customary agreements with or between underwriters and selling group
members with respect to a bona fide public offering of Stock shall be
disregarded.
2.3. Code -- means the Internal Revenue Code of 1986, as amended.
2.4. Committee -- means a committee which shall have at least 2
members, each of whom shall be appointed by and shall serve at the pleasure of
the Board and shall come within the definition of a "Non-Employee Director"
under Rule 16b-3 and an "outside director" under Section 162(m) of the Code.
2.5. Director -- means a member of GeoWaste's Board.
2.6. Fair Market Value -- means (a) if the Stock is listed on a
national securities exchange or quoted in an automated interdealer quotation
system, the last sales price or, if unavailable, the average of the closing bid
and asked prices per share of the Stock on such date (or, if there was no
trading or quotation in the Stock on such date, on the next preceding date on
which there was trading or quotation) as provided by one of such organizations;
or (b) if the Stock is not listed on a national securities exchange or quoted in
an automated interdealer quotation system, as determined by the Board in good
faith in its sole discretion.
2.7. ISO -- means an option granted under this Plan to purchase Stock
which is intended to satisfy the requirements of Section 422 of the Code.
2.8. Key Employee -- means an employee of GeoWaste or any Subsidiary
of GeoWaste who, in the judgment of the Committee acting in its absolute
discretion, is key to the success of GeoWaste, or a Subsidiary of GeoWaste.
2.9. 1933 Act -- means the Securities Act of 1933, as amended.
2.10. Non-ISO -- means an option granted under this Plan to purchase
stock which is intended to fail to satisfy the requirements of Section 422 of
the Code.
2.11. Option -- means an ISO or a Non-ISO.
2.12. Option Certificate -- means the written agreement or instrument
which sets forth the terms of an Option granted to a Key Employee or Director
under this Plan.
2.13. Option Holder -- means a Director or Key Employee who has been
granted an Option under this Plan.
2.14. Option Price -- means the price to purchase one share of Stock
upon the exercise of an Option granted under this Plan.
2.15. Parent Corporation -- means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) of GeoWaste.
2.16. Plan -- means this GeoWaste Incorporated 1996 Stock Option Plan
effective as of November 18, 1996 and as amended from time to time thereafter.
2.17. Rule 16b-3 -- means the exemption under Rule 16b-3 to Section
16b of the Securities Exchange Act of 1934, as amended, or any successor to such
rule.
2.18. Stock -- means the $0.10 par value Common Stock of GeoWaste.
2.19. Subsidiary -- means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) of GeoWaste.
2.20. Ten Percent Shareholder -- means a person who owns (after taking
into account the attribution rules of Section 424(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of stock of
either GeoWaste, a Subsidiary or a Parent Corporation.
SECTION 3.
SHARES SUBJECT TO OPTIONS
There shall be 1,000,000 shares of Stock reserved for use under this
Plan. Such shares of Stock shall be reserved to the extent that GeoWaste deems
appropriate from authorized but unissued shares of Stock and from shares of
Stock which have been reacquired by GeoWaste. Any shares of Stock subject to an
Option which remain unissued after the cancellation or expiration of such Option
thereafter shall again become available for use under this Plan, but any shares
of Stock used to exercise an Option under Section 7 or to satisfy a withholding
obligation under Section 16.3 shall not again be available for use under this
Plan.
SECTION 4.
EFFECTIVE DATE
The effective date of this Plan shall be November 18, 1996, provided
GeoWaste's shareholders (acting at a duly called meeting of such shareholders)
approve this Plan within twelve (12) months after the date the Board adopts this
Plan and such approval satisfies the requirements for shareholder approval under
Section 422 of the Code and any other applicable law. Any Option granted before
such shareholder approval automatically shall be granted subject to such
approval.
SECTION 5.
COMMITTEE
This Plan shall be administered by the Committee. The Committee acting
in its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and to take such other action in the administration
and operation of this Plan as the Committee deems equitable under the
circumstances, which action shall be binding on GeoWaste, on each affected Key
Employee and Director and on each other person directly or indirectly affected
by such action.
SECTION 6.
ELIGIBILITY
Only Key Employees and Directors shall be eligible for the grant of
Options under this Plan.
SECTION 7.
GRANT OF OPTIONS
7.1. Committee Action. The Committee acting in its absolute discretion
shall grant Options to Key Employees and Directors under this Plan from time to
time to purchase shares of Stock and, further, shall have the right to grant new
Options in exchange for the cancellation of outstanding Options which have a
higher or lower Option Price; provided, however, no ISO shall be granted to a
Director or Key Employee unless he or she is employed by GeoWaste or a
Subsidiary and no Option shall be granted in any calendar year to any Key
Employee for more than 250,000 shares of Stock. Each grant of an Option shall be
evidenced by an Option Certificate, and each Option Certificate shall
(a) specify whether the Option is an ISO or Non-ISO, and
(b) incorporate such other terms and conditions as the Committee
acting in its absolute discretion deems consistent with the terms of this Plan,
including (without limitation) a limitation on the number of shares subject to
the Option which first become exercisable during any particular period. If the
Committee grants an ISO and a Non-ISO to a Key Employee on the same date, the
right of the Key Employee to exercise the ISO shall not be conditioned on his or
her failure to exercise the Non-ISO.
7.2. $100,000 Limit. The aggregate Fair Market Value of the shares of
Stock subject to ISOs granted to a Key Employee and other incentive stock
options (which satisfy the requirements under Section 422 of the Code) granted
to such Key Employee under any other stock option plan adopted by GeoWaste, a
Subsidiary or a Parent Corporation which first become exercisable in any
calendar year shall not exceed $100,000. Such Fair Market Value figure shall be
determined by the Committee on the date the ISO or other incentive stock option
is granted. The Committee shall interpret and administer the limitation set
forth in this Section 7.2 in accordance with ? 422(d) of the Code, and the
Committee shall treat this Section 7.2 as in effect only for those periods for
which Section 422(d) of the Code is in effect.
SECTION 8.
OPTION PRICE
The Option Price for each share of Stock subject to an ISO shall be no
less than the Fair Market Value of a share of Stock on the date the ISO is
granted or, if the ISO is granted to a Key Employee who is a Ten Percent
Shareholder, the Option Price for each share of Stock subject to such ISO shall
be no less than 110% of the Fair Market Value of a share of Stock on the date
the ISO is granted. On the other hand, the Option Price for a Non-ISO may be
less than the Fair Market Value of a sh of Stock on the date the Non-ISO is
granted but shall under no circumstances be less than adequate consideration (as
determined by the Board) for such a share. The Option Price shall be payable in
full upon the exercise of any Option, and an Option Certificate at the
discretion of the Committee may provide for the payment of the Option Price
either in cash or in Stock or in any combination of cash and such Stock. If an
Option Certificate allows the payment of the Option Price in whole or in part in
Stock, such payment shall be made in Stock acceptable to the Committee. The
Committee may also (in its discretion) allow an Option Holder or Director to pay
such Option Price (in whole or in part) by electing that GeoWaste withhold
shares of Stock (that otherwise would be transferred to such Option Holder as a
result of the exercise of such Option) to the extent that he or she elects to
pay such Option Price through such withheld shares of Stock. Any payment made in
Stock shall be treated as equal to the Fair Market Value of such Stock on the
date the properly endorsed certificate for such Stock is delivered to the
Committee or the date the Stock is treated by the Committee as withheld from the
exercise of the Option.
SECTION 9.
EXERCISE PERIOD
Each Option granted under this Plan shall be exercisable in whole or
in part at such time or times as set forth in the related Option Certificate,
but no Option Certificate shall make an Option exercisable on or after the
earliest of the (1) the date which is the fifth anniversary of the date the
Option is granted, if the Option is an ISO and the Option Holder is a Ten
Percent Shareholder on the date the Option is granted, or (2) the date which is
the tenth anniversary of the date such Option is granted, if such Option is
granted to a Option Holder who is not a Ten Percent Shareholder on the date the
Option is granted. An Option Certificate may provide for the exercise of an
Option after the employment of an Option Holder has terminated for any reason
whatsoever, including death or disability.
SECTION 10.
NONTRANSFERABILITY
An Option granted under this Plan shall not be transferable by an
Option Holder other than by will or by the laws of descent and distribution, and
such Option shall be exercisable during an Option Holder's lifetime only by the
Option Holder. The person or persons to whom an Option is transferred by will or
by the laws of descent and distribution thereafter shall be treated as the
Option Holder.
SECTION 11.
SECURITIES REGISTRATION AND RESTRICTIONS
Each Option Certificate shall provide that, upon the receipt of shares
of Stock as a result of the exercise of an Option, the Option Holder shall, if
so requested by GeoWaste, agree to hold such shares of Stock for investment and
not with a view of resale or distribution to the public and, if so requested by
GeoWaste, shall deliver to GeoWaste a written statement satisfactory to GeoWaste
to that effect. Each Option Certificate also shall provide that, if so requested
by GeoWaste, the Optio Holder shall make a written representation to GeoWaste
that he or she will not sell or offer for sale any of such Stock unless a
registration statement shall be in effect with respect to such Stock under the
1933 Act and any applicable state securities law or he or she shall have
furnished to GeoWaste an opinion in form and substance satisfactory to GeoWaste
of legal counsel satisfactory to GeoWaste that such registration is not
required. Certificates representing the Stock transferred upon the exercise or
surrender of an Option may at the discretion of GeoWaste bear a legend to the
effect that such Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be sold or offered
for sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in form
and substance satisfactory to GeoWaste of legal counsel satisfactory to GeoWaste
that such registration is not required.
SECTION 12.
LIFE OF PLAN
No Option shall be granted under this Plan on or after the earlier of
(a) the tenth anniversary of the effective date of this Plan, in which event
this Plan shall continue in effect thereafter until all outstanding Options have
been surrendered or exercised in full or no longer are exercisable, or (b) the
date on which all of the Stock reserved under Section 3 of this Plan has (as a
result of the exercise of Options) been issued or no longer is available for use
under this Plan, in which event this Plan also shall terminate on such date.
SECTION 13.
ADJUSTMENT
The number of shares of Stock reserved under Section 3 of this Plan
and the number of shares of Stock subject to Options granted under this Plan and
the Option Price of such Options shall be adjusted by the Committee in an
equitable manner to reflect any change in the capitalization of GeoWaste,
including, but not limited to, such changes as stock dividends or stock splits.
Furthermore, the Committee shall have the right to adjust (in a manner which
satisfies the requirements of Section 424(a) of the Code) the number of shares
of Stock reserved under Section 3 of this Plan and the number of shares subject
to Options and the Option Price of such Options in the event of any corporate
transaction described in Section 424(a) of the Code which provides for the
substitution or assumption of such Options. If any adjustment under this Section
13 would create a fractional share of Stock or a right to acquire a fractional
share of Stock, such fractional share shall be disregarded and the number of
shares of Stock reserved under this Plan and the number subject to any Options
granted under this Plan shall be the next lower number of shares of Stock,
rounding all fractions downward. An adjustment made under this Section 13 by the
Committee shall be conclusive and binding on all affected persons and, further,
shall not constitute an increase in "the number of shares reserved under Section
3" within the meaning of Section 15(a) of this Plan.
SECTION 14.
SALE OR MERGER OF GEOWASTE; CHANGE IN CONTROL
14.1. Sale or Merger. If GeoWaste agrees to sell all or substantially
all of its assets for cash or property or for a combination of cash and property
or agrees to any merger, consolidation, reorganization, division or other
corporate transaction in which Stock is converted into another security or into
the right to receive securities or property and such agreement does not provide
for the assumption or substitution of the Options granted under this Plan, each
then unexercised Option at t direction and discretion of the Committee (a) may
be cancelled unilaterally by the Committee as of the date before the effective
date of such transaction in exchange the number of whole shares of Stock (and
cash in lieu of fractional shares), if any, equal to the difference between the
Option Price for the unexercised shares and Fair Market Value of such shares or
(b) may be cancelled if the Option Price equals or exceeds the Fair Market Value
of a share of Stock on such date.
14.2. Change in Control. If a Change in Control of GeoWaste occurs,
then all Options that are outstanding and unexercised as of the date of such
Change in Control shall be fully vested as of such date.
SECTION 15.
AMENDMENT OR TERMINATION
This Plan may be amended by the Committee from time to time to the
extent that the Committee deems necessary or appropriate; provided, however, no
such amendment shall be made absent the proper approval of the shareholders of
GeoWaste (a) to increase the number of shares reserved under Section 3, (b) to
extend the maximum life of the Plan under Section 12 or the maximum exercise
period under Section 9, (c) to decrease the minimum option price under Section 8
or (d) to change the class of employees eligible for Options under Section 6.
The Committee also may suspend the granting of Options under this Plan at any
time and may terminate this Plan at any time; provided, however, the Committee
shall not have the right unilaterally to modify, amend or cancel any Option or
granted before such suspension or termination unless (1) the Option Holder
consents in writing to such modification, amendment or cancellation or (2) there
is a dissolution or liquidation of GeoWaste or a transaction described in
Section 13 or Section 14 of this Plan.
SECTION 16.
MISCELLANEOUS
16.1. No Shareholder Rights. No Option Holder shall have any rights as
a shareholder of GeoWaste as a result of the grant of an Option to him or to her
under this Plan or his or her exercise or surrender of such Option pending the
actual delivery of Stock subject to such Option to such Option Holder.
16.2. No Contract of Employment. The grant of an Option to a Key
Employee or Director under this Plan shall not constitute a contract of
employment and if the Option Holder is an Employee, shall not confer on such
Option Holder any rights upon his or her termination of employment with GeoWaste
in addition to those rights, if any, expressly set forth in the Option
Certificate which evidences his or her Option.
16.3. Withholding. Each Option grant shall be made subject to the
condition that the Option Holder consents to whatever action the Committee
directs to satisfy the federal and state tax withholding requirements, if any,
which the Committee in its discretion deems applicable to the exercise of any
Option granted to him or her. The Committee also shall have the right to provide
in an Option Certificate that an Option Holder may elect to satisfy federal and
state tax withholding requirements through a reduction in the number of shares
of Stock actually transferred to him or to her under this Plan.
16.4. Construction. This Plan shall be construed under the laws of the
State of Delaware.
16.5. Loans. If approved by the Committee, GeoWaste may lend money or
guarantee loans by third parties to any Option Holder to finance the exercise of
any Option granted under this Plan.
IN WITNESS WHEREOF, GeoWaste Incorporated has caused its duly
authorized officer to execute this Plan this 18th day of November, 1996 to
evidence its adoption of this Plan.
GEOWASTE INCORPORATED
Exhibit 10.4
November 21, 1997
Mr. Richard Fields
Managing Director
Allen & Company Incorporated
711 Fifth Avenue
New York, NY 10022
Dear Richard:
I appreciate your kindness in confirming the agreement by Allen & Company
Incorporated ("Allen") regarding the termination of investment banking,
investment advisory and/or other financial services performed or to be performed
by Allen for GeoWaste Incorporated ("Company" or "GeoWaste") pursuant to that
certain letter dated March 12, 1997 (the "Letter") by course of dealing or
otherwise (the "Services") and the settlement of any and all claims or
obligations between Allen and the Company regarding the Services.
In consideration of the mutual promises contained herein and the Company's
agreement, effective as of November 4, 1997, to modify and amend the warrant
certificate dated as of August 2, 1991, as amended May 8, 1996 ("Warrant
Certificate"), pursuant to which Allen is entitled to purchase, at any time and
from time to time prior to the Expiration Date (as defined in the Warrant
Certificate), up to an aggregate of 2,000,000 fully paid non-assessable shares
of the Company's common stock, $ .10 par value, at a purchase price of $ .55 per
share ("Warrants"), subject to adjustment as provided in Section 6 of the
Warrant Certificate, Allen and GeoWaste agree as follows:
1. WARRANT CERTIFICATE. Sections 1 and 2.2 of the Warrant Certificate
shall be amended and replaced in their entirety, as follows:
"1. WARRANT; PURCHASE PRICE Each Warrant shall entitle the Holder to
purchase one share of Common Stock of the Company (individually, a "Share";
severally, the "Shares"). The purchase price payable upon exercise of each
Warrant (the "Purchase Price") shall be $ .61 per share, subject to adjustment
as adjustment as hereinafter provided. The number of shares purchasable upon
exercise of each Warrant and the Purchase Price of each Warrant are subject to
adjustment as provided in Article 6."
"2.2. The term "Expiration Date" shall mean 5:00 p.m., New York City
time on February 2, 1999, or if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. New York
Time the next following date which in the State of New York is not a holiday or
a day on which banks are authorized to close."
2. TERMINATION OF SERVICES. Allen has not and shall not provide the
Services to GeoWaste or on GeoWaste's behalf and the Letter is void and of no
force or effect.
3. RELEASE. Allen and each and every past and present subsidiary,
affiliate, shareholder, officer, director, managing director, agent, servant,
employee, representative and attorney hereby jointly and severally release,
acquit and forever discharge GeoWaste and each and every past and present
subsidiary, affiliate, shareholder, officer, director, agent, servant, employee,
representative and attorney from any and all claims, causes of action, suit,
debts, liens, obligations, liabilities, demands, losses, costs and expenses of
any kind, character or nature whatsoever, known or unknown, fixed or contingent,
which Allen may have or claim to have now or which may hereafter arise out of or
connected with the Services, existing or occurring prior to the date of this
letter, including without limitation, any claims liabilities or obligations
arising with respect to the Services evidenced by the Letter. The provisions of
this paragraph shall be binding upon Allen and shall inure to the benefit of
GeoWaste and its successors and assigns. Notwithstanding anything to the
contrary contained in this letter, this paragraph does not release any person
from any claim resulting solely from conduct occurring after the date of this
letter.
If this letter accurately reflects our understanding and agreement,
kindly confirm and acknowledge the same by having an authorized signature from
Allen & Company Incorporated affixed in the space provided below. Please retain
a fully executed copy for your files and return the original to me.
Sincerely,
GEOWASTE INCORPORATED
/S/ AMY C. MACF. BURBOTT
Amy C. MacF. Burbott
President and Chief Executive Officer
<PAGE>
Confirmed and Acknowledged
as of November 4, 1997
ALLEN & COMPANY INCORPORATED
/S/ RICHARD M. FIELDS
Richard M. Fields
Managing Director
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
GeoWaste Acquisition Corp. (Delaware)
GeoWaste of Florida, Inc. (Delaware)
GeoWaste of GA, Inc. (Georgia)
GeoWaste Transfer, Inc. (Delaware)
Low Brook Development, Inc. (Delaware)
North Florida Sweeping, Inc. (Delaware)
Spectrum Group, Inc. (Florida)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GEOWASTE INCORPORATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES DECEMBER 31, 1997 CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 738,790
<SECURITIES> 0
<RECEIVABLES> 2,449,994
<ALLOWANCES> 269,000
<INVENTORY> 0
<CURRENT-ASSETS> 4,121,134
<PP&E> 28,024,611
<DEPRECIATION> 11,535,911
<TOTAL-ASSETS> 32,108,899
<CURRENT-LIABILITIES> 4,333,492
<BONDS> 0
0
0
<COMMON> 2,128,655
<OTHER-SE> 13,776,759
<TOTAL-LIABILITY-AND-EQUITY> 32,108,899
<SALES> 19,396,772
<TOTAL-REVENUES> 19,396,772
<CGS> 13,535,937
<TOTAL-COSTS> 14,618,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 577,998
<INCOME-PRETAX> (180,889)
<INCOME-TAX> 243,000
<INCOME-CONTINUING> (423,889)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (423,889)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES DECEMBER 31, 1996 CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,058,067
<SECURITIES> 0
<RECEIVABLES> 2,214,061
<ALLOWANCES> 174,000
<INVENTORY> 0
<CURRENT-ASSETS> 5,836,589
<PP&E> 22,469,346
<DEPRECIATION> 8,613,446
<TOTAL-ASSETS> 30,618,091
<CURRENT-LIABILITIES> 8,859,367
<BONDS> 0
0
0
<COMMON> 2,102,863
<OTHER-SE> 13,879,883
<TOTAL-LIABILITY-AND-EQUITY> 30,618,091
<SALES> 13,702,708
<TOTAL-REVENUES> 13,702,708
<CGS> 8,228,849
<TOTAL-COSTS> 8,228,849
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 443,912
<INCOME-PRETAX> 2,982,505
<INCOME-TAX> 1,275,000
<INCOME-CONTINUING> 1,707,505
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,707,505
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.08
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES DECEMBER 31, 1995 CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 3,985,459
<SECURITIES> 0
<RECEIVABLES> 871,968
<ALLOWANCES> 17,897
<INVENTORY> 0
<CURRENT-ASSETS> 5,173,559
<PP&E> 14,593,638
<DEPRECIATION> 6,224,889
<TOTAL-ASSETS> 15,637,316
<CURRENT-LIABILITIES> 1,466,194
<BONDS> 0
0
0
<COMMON> 1,866,260
<OTHER-SE> 5,520,097
<TOTAL-LIABILITY-AND-EQUITY> 15,637,316
<SALES> 8,932,528
<TOTAL-REVENUES> 8,932,528
<CGS> 5,207,250
<TOTAL-COSTS> 5,207,250
<OTHER-EXPENSES> 0
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GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES MARCH 31, 1997 CONSOLIDATED FINANCIAL
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0
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GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES JUNE 30, 1997 CONSOLIDATED FINANCIAL
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0
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GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES SEPTEMBER 30, 1997 CONSOLIDATED FINANCIAL
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0
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<LEGEND>
GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES MARCH 31, 1996 CONSOLIDATED FINANCIAL
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1,889,655
0
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<LEGEND>
GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
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0
0
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<LEGEND>
GEOWASTE INCORPORATED RESTATED FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEOWASTE
INCORPORATED AND ITS SUBSIDIARIES SEPTEMBER 30, 1996 CONSOLIDATED FINANCIAL
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