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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 1, 1999
EARTHCARE COMPANY
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 000-24685 58-2335973
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
</TABLE>
<TABLE>
<S> <C>
14901 Quorum Drive, Suite 200, Dallas, Texas 75240
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(Address of principal executive offices) (Zip Code)
</TABLE>
(972) 858-6025
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(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On March 1, 1999, EarthCare Company (the "Company") acquired all of the
outstanding capital stock of Reifsneider Transportation Inc. ("Reifsneider"), a
Pennsylvania corporation, in exchange for $10.325 million in cash, common stock,
and seller note payable to the former owner of Reifsneider. This transaction was
consummated pursuant to a Stock Purchase Agreement, dated February 26, 1999.
Reifsneider is a commercial and industrial liquid waste transportation
and disposal services company servicing customers in eastern Pennsylvania,
Delaware, Maryland, New Jersey and New York.
The Company currently intends to operate Reifsneider in substantially
the same manner as it was operated prior to this transaction. The Company funded
the purchase price paid for Reifsneider with borrowings under the Company's
revolving credit facility with Bank of America National Trust and Savings
Association, the issuance of 350,000 EarthCare Company common stock shares and
delivery of a $200,000 note payable to the former owner of Reifsneider. The
purchase price was determined based upon an evaluation of the business of
Reifsneider and the results of negotiations between the parties.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
It is impracticable for the Registrant to provide the required
financial statements for the business acquired at the time this Current Report
on Form 8-K is filed. Such financial statements will be filed as soon as
practicable but not later than 60 days after the date this Current Report on
Form 8-K is required to be filed.
(b) Pro Forma Financial Information.
It is impracticable for the Registrant to provide the required
pro forma financial information for the business acquired at the time this
Current Report on Form 8-K is filed. Such proforma financial information will be
filed as soon as practicable but not later than 60 days after the date this
Current Report on Form 8-K is required to be filed.
(c) Exhibits
2.1 Stock Purchase Agreement, by and between EarthCare Company
and Lester J. Lishon, IV, dated as of February 26, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EARTHCARE COMPANY
(Registrant)
Date: March 9, 1999 By: /s/ James E. Farrell
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James E. Farrell
Vice President and Chief Financial
Officer
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock Purchase Agreement, by and between EarthCare Company
and Lester J. Lishon, IV, dated as of February 26, 1999.
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<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated February 26, 1999, is made and entered into by and between
Lester J. Lishon, IV., an individual residing at 70 Fairfield Lane, Chester,
Springs, PA 19425 (hereinafter sometimes referred to as "Seller"), and EarthCare
Company, a Delaware Corporation (hereinafter referred to as "EarthCare" or
"Buyer").
WITNESSETH:
WHEREAS, the Seller is the owner of one hundred (100) shares of common stock par
value $1.00 per share of Reifsneider Transportation, Inc., a Pennsylvania
corporation, (said corporation is hereinafter sometimes referred to as the
"Company") (said shares of Reifsneider Transportation, Inc. common stock are
hereinafter sometimes collectively referred to as the "RTI Common Stock"); and
WHEREAS, the RTI Common Stock constitutes all of the issued and outstanding
shares of the Company; and
WHEREAS, the parties hereto desire that the Buyer acquire the RTI Common Stock
in exchange for cash and shares of the common stock, $.0001 par value of the
Buyer (said shares of common stock are hereafter sometimes referred to as the
"EarthCare Common Stock")
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration the mutual receipt and sufficiency of which is
hereby acknowledged by the parties hereto, THE PARTIES HERETO AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
A. Upon the basis of the representations and warranties contained herein and
subject to the terms and conditions of this Agreement, at the time of "Closing"
(as hereinafter defined) Seller shall sell, convey, transfer, assign and deliver
to Buyer, and Buyer shall purchase from Seller, all of the RTI Common Stock.
B. At the time of Closing, as the purchase price for the RTI Common Stock, and
in exchange therefor, Buyer shall pay to Seller:
(1) 350,000 shares of EarthCare Common Stock (less the
Holdback Shares as hereinafter defined) duly registered under the Securities Act
of 1933 as amended (the "Act") to the extent necessary to permit disposition of
such shares; provided, however that such shares shall be subject to a lock-up
agreement as set forth on Schedule 1-B(1), attached hereto;
(2) $5,000,000 cash; and
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(3) $200,000 by Buyer's delivery to Seller of a promissory
note (the "Note") in such principal amount in the form attached hereto as
Schedule 1-B(3).
2. CLOSING. Subject to the terms and conditions of this Agreement, the closing
of the purchase and sale of the RTI Common Stock (the "Closing") shall be held
as of March 1, 1999, at the offices of Heller, Kapustin, Gershman & Vogel, 486
Norristown Road, Suite 230, Blue Bell, PA 19422 at such time and on such date
prior to May 7, 1999 as shall be mutually agreed upon by the parties hereto in
writing. (Such time and date is sometimes hereinafter referred to as the
"Closing Date" or "Closing".)
3. PROCEDURE AT THE CLOSING. The parties hereto agree to take the following
steps in the order listed:
A. Seller shall deliver to the Buyer the RTI Common Stock, and such bills of
sale, assignments and other instruments to transfer to the Buyer good and
marketable title to the RTI Common Stock, free and clear of all liens, claims
and encumbrances.
B. In exchange for the RTI Common Stock, Buyer shall deliver to Seller:
(1) 350,000 shares of registered EarthCare Common Stock less
13,500 shares, which shares are hereinafter referred to as the "Holdback
Shares";
(2) $5,000,000 cash or certified check; and
(3) the Note.
C. The parties shall also exchange executed lock-up agreements and other
documents contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. In order to induce the
Buyer to enter into this Agreement and to consummate the transactions
contemplated hereunder, the Seller hereby makes the following representations,
warranties, covenants and agreements:
A. ORGANIZATION AND EXISTENCE. The Company is a corporation duly incorporated
and presently subsisting under the laws of the State of Pennsylvania, and has
all requisite corporate power and authority to carry on its business as now
conducted. The Company is qualified to do business in the States of New Jersey,
Delaware and Maryland which are the only states which by the nature of the
business of the Company and the character of the properties owned or leased by
it requires qualification to do business as a foreign corporation. Seller has
delivered to Buyer a true and correct copy of the Articles of Incorporation
(duly certified by the Secretary of State of Pennsylvania) and By-Laws of the
Company (certified by its Secretary).
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B. SUBSIDIARIES OR OTHER ENTITIES. Company has no investments or ownership
interests in any corporations, partnerships, joint ventures or other business
enterprises.
C. CAPITALIZATION. The Company is authorized to issue 1,000 shares of common
stock, $1.00 par value, of which 100 shares are issued and outstanding at the
time of the execution of this Agreement. All of the issued and outstanding
shares of capital stock of the Company (the "RTI Common Stock") have been duly
issued, are validly outstanding, are fully paid and nonassessable, and are held
of record and beneficially by Seller; there are no outstanding subscriptions,
options, warrants or rights to receive, purchase or subscribe to, or securities
convertible into or exchangeable for, any issued or unissued shares of the
capital stock of the Company. The Company has no liability for dividends
declared but unpaid. Prior to Closing, the Seller shall not, and shall not
permit the Company, to issue or enter into any subscriptions, options,
agreements or other commitments in respect of the issuance, transfer, sale or
encumbrance of any shares of the RTI Common Stock.
D. STOCK OWNERSHIP. Seller has, and at the time of Closing will have, good and
marketable title to the RTI Common Stock, and there are, and at the time of
Closing will be, no impediments to the sale and transfer of the RTI Common Stock
to Buyer. Upon delivery of the RTI Common Stock to Buyer, the RTI Common Stock
(i) shall constitute all of the issued and outstanding shares of capital stock
of the Company, and (ii) shall be free and clear of all security interests,
liens, charges, pledges, mortgages, encumbrances or rights of third parties
whatsoever.
E. FINANCIAL CONDITION. Seller has furnished to Buyer copies of the following
financial statements of the Company, all of which are true and complete in all
material respects and have been prepared in accordance with generally accepted
accounting principles consistently applied (except to the extent otherwise
reported):
1. A Balance sheet ("Balance Sheet") of the Company as of December 31, 1998.
2. Statements of income and retained earnings of the Company for the twelve (12)
months ended December 31, 1998. (Collectively, the Balance Sheet and statements
of income and retained earnings are hereinafter referred to as the "Financial
Statements").
The Financial Statements are complete and correct and in accordance with the
books of account and records of the Company and present fairly the financial
position of the Company's business and the income, stockholders' equity and cash
flow of the Company's business at the dates and for the periods indicated.
3. Subject to Paragraph 10, Seller warrants that current assets of the Company
will be sufficient to pay current liabilities of the Company as of the Closing
Date.
F. ASSETS.
1. The Company has good and marketable title to, and is in possession of, all of
its assets, equipment, vehicles, properties and rights, including all
properties, assets, vehicles
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and equipment listed on Schedule 4-F-1 attached hereto and as shown on the
Balance Sheet, free and clear of all liabilities, mortgages, liens, pledges,
security interests, restrictions, conditional sales agreements, title retention
agreements, charges or encumbrances except as shown on the Balance Sheet. Seller
represents that Schedule 4-F-1 sets forth a list of all material items of
equipment, vehicles, properties, containers, machinery, shop equipment, welders,
grinders, work benches, jacks, stands, parts, office furniture, fixtures,
computer hardware/software and equipment owned by the Company and used in
connection with its business operations as of the date of this Agreement
(hereinafter sometimes referred to as the "Operating Equipment"); such list
identifies the Operating Equipment by size, manufacturer, model number and
serial number, where available. Buyer shall acquire the right to use the name
"Reifsneider Transportation". Seller agrees to cause Reifsneider Motor Freight,
Inc. to change its name to a new name which shall not include the name
"Reifsneider" by January 1, 2000, or if earlier, at such time as Seller sells
the stock or substantially all of the assets of Reifsneider Motor Freight, Inc.
2. Except as set forth on Schedule 4-F-2, all of the Operating Equipment is in
good operating condition (normal wear and tear excepted), has been well
maintained, and is in adequate condition to service the Company's Customer
Accounts (as herein defined) and to conduct the operations of the Company as it
exists on the Closing Date.
3. There has not been any material change in the Operating Equipment, in the
aggregate, since the inspection of such Operating Equipment by Buyer on February
11, 1999, and there shall not be any material change in the Operating Equipment,
in the aggregate, subsequent to a final inspection of the Operating Equipment to
be performed by Buyer and Seller prior to Closing.
4. Schedule 4-F-4 shall identify all assets and property of Reifsneider Motor
Freight, Inc., Mid-Atlantic Tank Trailer Company and the Company which shall be
excluded from this Agreement.
G. LIABILITIES. Except as set forth in Schedule 4-G attached hereto or in the
Financial Statements submitted to Buyer, or in any other Exhibit delivered
pursuant hereto, neither the Company nor its assets or properties are subject to
any liabilities or obligations (accrued, absolute, contingent or otherwise)
except for liabilities incurred in the ordinary course of business after
February 1, 1999, and the Company is not in material default in respect of any
material term or condition of any material indebtedness or liability. The
transactions contemplated by this Agreement do not and will not subject the
Company or the Buyer to any claim or liability for any obligation, debt or
contract other than as specifically disclosed in this Agreement and the
Schedules attached hereto. All required consents of creditors and customers, if
any, have been, or by closing will be, obtained for performance of this
Agreement.
H. CUSTOMER ACCOUNTS, MUNICIPAL CONTRACTS AND RELATED MATTERS.
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1. Customer Accounts are the commercial, industrial, municipal, and residential
accounts of the Company pursuant to which the Company provides waste removal,
collections, incorporation, storage and/or disposal. Said Customer Accounts are
listed on Schedule 4-H-1 attached hereto. (Each of the Customer Accounts listed
in Schedule 4-H-1 shall identify the name and address of each of the Customer
Accounts, and shall reflect as to each the current monthly billing amount,
frequency of service and size and type of container.)
2. Schedule 4-H-2 is a true, accurate and complete listing of all written
service agreements, franchises, licenses or other contracts, if any, to which
the Company is a party and which relate to Customer Accounts. Original copies of
all such contracts shall be delivered by the Seller to the Buyer no later than
the Closing Date, and such copies shall be true, accurate and complete and shall
include all amendments, supplements or other modifications to such contracts.
Except as disclosed in Schedule 4-H-2, to the knowledge of the Seller, neither
the Company nor any other party to any of the Company's municipal contracts or
Customer Accounts is in material default or alleged to be in material default
thereunder and there exists no condition or event which, after notice or the
lapse of time or both, would constitute such a default. The sale, transfer and
assignment of the RTI Common Stock will not result in a breach, violation or
default of any of the Company's municipal contracts or Customer Accounts, and
all of the Company's municipal contracts and Customer Accounts will remain in
full force and effect as if there had been no sale, transfer and assignment
thereof.
3. Except as otherwise disclosed in Schedule 4-H-3, the Seller knows of no oral
or written communication, fact, event or action which exists or has occurred
within 90 days prior to the date of execution of this Agreement, which would
tend to indicate that any current customers of the Company intends to terminate
its business relationship with the Company.
4. Except for deminimis amounts, none of the Customer Accounts, service
agreements, franchises, licenses, or other contracts for collection and
transportation of waste, in any manner involve the collection or transportation
of waste materials classified as special, hazardous, toxic, chemical or
radioactive under the laws of the United States or of any state or other
governmental jurisdiction in which the Company conducts collection and
transportation operations, or under any rules or regulations promulgated by any
administrative agency thereof.
I. MATERIAL CONTRACTS. Attached hereto as Schedule 4-I is a list and brief
description, as of the date of this Agreement, of certain leases, contracts,
commitments, agreements and other documents to which the Company is a party or
by which it is bound and which is related to the operation of its business.
Except for contracts and documents listed in Schedule 4-I, the Company is not a
party to or bound by any written or oral (i) contracts not made in the ordinary
course of business; (ii) employment contracts, other than those terminable at
the will of the Company; (iii) contracts with any labor union or association;
(iv) bonus, pension, profit sharing, retirement, hospitalization, insurance or
other plan providing employee benefits; (v) leases with respect to any property,
real or
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personal, whether as lessor or lessee; (vi) continuing contracts for the future
purchase of materials, supplies or equipment in excess of the requirements of
its business now booked; (vii) contracts or commitment for capital expenditures;
(viii) contracts continuing over a period of more than six (6) months from its
date; or (ix) material contracts necessary to conduct the operations and
business of the Company. A true copy of each contract, commitment and agreement
listed on Schedule 4-I will be furnished to Buyer prior to Closing.
J. EMPLOYEES - LABOR MATTERS. The Company has generally enjoyed a good
employer-employee relationship with its employees. Attached hereto as Schedule
4-J is a complete list of all employees of the Company whose duties are related
to the operation of the business of the Company. Seller warrants there exists no
pending or threatened actions by any employees alleging sex, age, race, or other
discriminatory practices, no current effort to organize these employees into
collective bargaining units, and no collective bargaining agreement is now in
effect. There are no contracts, written or oral, between the Company and any of
its employees, except as specifically disclosed in Schedule 4-J.
K. INSURANCE. The Company maintains in effect insurance covering its assets and
businesses and any liabilities relating thereto in an amount believed adequate
by the Seller, and such insurance coverage shall be maintained by the Company
through the Closing Date. Between the date hereof and the Closing Date, the
Seller shall cause the Company to furnish to the Buyer such information as the
Buyer shall reasonably request regarding the Company's insurance. Except as set
forth in Schedule 4-K attached hereto, there are no pending material property
damage or personal injury claims against the Company or any of its assets.
L. LICENSES AND PERMITS. The Company possesses all licenses and other required
governmental or official approvals, permits or authorizations, if any, the
failure to possess which would have a material adverse effect on the businesses,
financial condition or results of operations of the Company including, without
limitation, all common carrier rights, certificates of public need, waste
material transportation permits, trademarks and trade names necessary to carry
on its business as now being conducted, without known conflict with valid
licenses, permits, trademarks and trade names of others. All such licenses and
permits are in full force and effect, and no violations are or have been
recorded in respect to any thereof, and no proceeding is pending, or to the
knowledge of Seller threatened, to revoke, suspend or otherwise limit such
licenses or permits. All licenses and permits will survive the closing of the
transactions contemplated by this Agreement.
M. TAX MATTERS. The Company has timely filed all federal, state, sales tax,
franchise tax, and other tax returns which are required to be filed by it and
has paid or has made provision for the payment of all taxes which have or may
become due pursuant to said returns. All taxes, including, without limitation,
withholding and social security taxes due with respect to the Company's
employee, federal and state income tax
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liabilities, corporate franchise taxes, sales, use, excise and ad valorem taxes,
due, payable or accrued by the Company on or before the Closing Date have or
will be paid. The Company has filed all reports required to be filed by it with
all such taxing authorities. Seller shall be responsible for any tax liability
attributable to operations of the Company prior to Closing. Buyer and Seller
agree to cause the Company to make the election provided by Section 338(h)(10)
of the Internal Revenue Code of 1986, as amended and Treas. Reg
ss.1.338(h)(10)-1(d)(1) and, in connection therewith, the parties agree that the
allocation of the purchase price set forth on Schedule 4-M shall be used in
connection with the preparation of all tax returns reflecting the sale and
purchase contemplated hereby and the foregoing election.
N. LITIGATION. Except as disclosed in Schedule 4-N attached hereto, the Company
has not received any notices of material default and is not in material default
of (i) any order, writ, injunction or decree of any court, or any federal,
state, municipal or other governmental department, commission, board, bureau or
instrumentality, or (ii) any agreement or obligation to which the Company is a
party or by which the Company is bound or to which the Company or any of the
property of the Company's may be subject. Except as disclosed in Schedule 4-N,
there are no material outstanding claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Seller, threatened against
the Company or which affect the Company or any of its assets or property, at law
or in equity before or by any federal, state, municipal court or other
governmental department, authority, commission, board, bureau, agency or
instrumentality.
O. COMPLIANCE WITH LAWS. Except as otherwise disclosed in Schedule 4-O attached
hereto, the Company is in compliance in all material respects with all federal,
state, and local laws, ordinances, regulations, rules, and orders applicable to
it or to its assets including, without limitation, all laws and regulations
relating to the protection of the environment, the safe conduct of the Company's
business, anti-competitive practices, discrimination, employment, wage and hour
practices and health. The Company has not received notification of any asserted
past or present failure to comply with any of such laws or regulations.
P. ENVIRONMENTAL MATTERS Except as disclosed in Schedule 4-P attached hereto,
there are no claims, actions, suits, proceedings or investigations relating to
any Environmental Law (as hereinafter defined) pending or threatened against or
affecting the Company. Except as set forth on Schedule 4-P attached hereto: (i)
no release of any hazardous substance, medical waste, toxic waste or controlled
substance has occurred or is occurring as a result of the business of the
Company; (ii) no hazardous substance, medical waste, toxic waste or controlled
substance is currently present at, or has been previously generated, stored,
treated or disposed of at any landfill by the Company or through the conduct of
the business of the Company except deminimis amounts mixed with household waste;
(iii) no underground or partially underground storage tank has been or is
currently located at any facility of the Company; (iv) the business, activities
and processes heretofore conducted by the Company comply in all material
respects with all applicable Environmental Laws; (v) no facility of the Company
is listed on any list, registry or other compilation of sites that require, or
potentially require, removal,
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remedial action or any other response under any Environmental Law as the result
of the presence, release or potential release of any hazardous substance,
medical waste, toxic waste, or controlled substance; (vi) neither Seller nor the
Company has received any notice that the Company is liable or responsible, or
potentially liable or responsible, for any costs of any removal, remedial action
or other response under any Environmental Law as the result of the presence,
release or potential release of any hazardous substance, medical waste, toxic
waste, or controlled substance; and (vii) there is no pending litigation or
administrative proceeding (and neither Seller nor the Company knows or has
reason to know of any potential or threatened litigation or administrative
proceeding) in which it is asserted that the Company has violated or is not in
compliance with any material Environmental Law. "Environmental Law" means all
laws, statutes or acts of the United States of America, the State of
Pennsylvania, or any political subdivision thereof, that relate to the condition
of the air, ground or surface water, land or other parts of the environment, to
the release or potential release of any substance or radiation into the air,
ground or surface water, land or other parts of the environment, or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or other handling of substances that might pollute, contaminate or be
hazardous or toxic if present in the air, ground or surface water, land, or
other parts of the environment. The Company has not received any written notice
to the effect that the landfills and other disposal sites to which waste
material transported by the Company has been delivered are not properly licensed
pursuant to applicable Environmental Laws to receive the material disposed of
therein.
Q. NO BROKER'S OR AGENT'S FEES. Except for fees payable to LM Business Services,
whose fees shall be paid by Seller, no agent, broker, finder, representative or
other person or entity acting pursuant to authority of the Seller will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
R. NO MATERIAL OR ADVERSE CHANGE. Except as otherwise disclosed in Schedule 4-R
attached hereto, since December 31, 1998, there has not been: (i) any material
adverse change in the financial condition, assets, liabilities, business or
results of operations of the Company; (ii) to the knowledge of the Seller, any
threatened or prospective event or condition of any character whatsoever which
could materially and adversely affect the business, financial condition or
results of operations of the Company; (iii) any sale or other disposition of any
of the Company's assets other than in the ordinary course of business; or (iv)
any damage, destruction or loss (whether or not insured) materially and
adversely affecting the property, business or prospects of the Company.
S. DUE AUTHORIZATION AND ABSENCE OF BREACH. This Agreement and all other
agreements of the Seller contemplated hereunder constitute valid and binding
obligations of the Seller, enforceable in accordance with their respective
terms. Neither the execution and delivery of this Agreement (or any agreement
contemplated hereunder) nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the Articles of
Incorporation or By-Laws of the Company;
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(ii) conflict with or violate any decree, writ, injunction or order of any court
or administrative or other governmental body which is applicable to, binding
upon or enforceable against the Company or Seller; or (iii) except as set forth
on Schedule 4-S result in any breach of or default (or give rise to any right of
termination, cancellation or acceleration) under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against the Seller or the Company or its assets.
T. AUTHORITY TO CONTRACT. Seller has the full power, right and authority to
enter into and perform this Agreement without the consent of any person, entity
or governmental agency, and the consummation of the transactions contemplated by
this Agreement will not result in the breach or termination of any provision of
or constitute a default under any lease, indenture, mortgage, deed of trust or
other agreement or instrument or any order, decree, statute or restriction to
which Seller or the Company is a party or by which the Company is bound or to
which the outstanding shares of stock of the Company or any of the properties of
the Company is subject.
U. ACCURACY OF THE INFORMATION FURNISHED BY THE SELLER. No representation,
statement or information made or furnished by the Seller to the Buyer, including
those contained in this Agreement and the various exhibits attached hereto and
the other information and statements referred to herein, contains or shall
contain any untrue statement of any material fact.
5. REPRESENTATION AND WARRANTIES OF BUYER. In order to induce the Seller to
enter into this Agreement and to consummate the transactions contemplated
hereunder, the Buyer hereby makes the following representations, warranties,
covenants and agreements:
A. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all the requisite corporate power and authority to carry on its business as now
conducted and to consummate the transactions contemplated by this Agreement.
B. AUTHORITY TO CONTRACT. The execution, delivery and performance of this
Agreement by Buyer has been duly approved by its Board of Directors, and no
further corporate action is necessary on the part of Buyer to consummate the
transactions contemplated by this Agreement, assuming due execution of this
Agreement by the Parties.
C. NO BROKER'S OR AGENT'S FEES. No agent, broker, finder, representative or
other person or entity acting pursuant to the authority of the Buyer will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
D. ACCURACY OF INFORMATION FURNISHED BY BUYER. No representation, statement or
information made or furnished by Buyer to the Seller in this Agreement, or in
connection with the transactions contemplated hereby including, without
limitation
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copies of the Buyer's filings with the Securities and Exchange Commission,
contains, or shall contain any untrue statement of any material fact or omits or
shall omit any material fact necessary to make the information contained herein
true.
E. REGISTRATION. The EarthCare common stock delivered to Seller on the Closing
Date has been duly registered with the Securities and Exchange Commission on
Form S-1 effective December 9th, 1998, and such registration statement is true
and correct in all material respects and does not omit to state any material
information necessary to make such registration statement not misleading.
6. ADDITIONAL AGREEMENT OF THE SELLER.The Seller further agrees with the Buyer
as follows:
A. ACCESS TO OFFICES AND RECORDS. The Seller shall cause the Company to afford
representatives of the Buyer, from and after the date of execution of this
Agreement, full access, during normal business hours and upon reasonable notice,
to all offices, books, properties, contracts, documents and records of the
Company and to furnish to the Buyer or its representatives all additional
information, including financial or operating information with respect to the
business and affairs of the Company that the Buyer or its representatives may
reasonably request. Seller acknowledges that Buyer is a publicly-traded
corporation and that Buyer will be required under the applicable securities laws
to make public disclosure of detailed financial data concerning the Company's
operations. Prior to the Closing Date, Buyer has Seller's permission to disclose
publicly: (i) the amount of the Company's revenues; and (ii) such other
information as shall be included in any press release of Buyer which Seller
approves in advance of being released; such approval shall not be unreasonably
withheld. Provided, however, that any furnishing of such information to the
Buyer and any investigation by the Buyer shall not affect the right of the Buyer
to rely solely upon the representations and warranties made by the Seller in or
pursuant to this Agreement; and provided further, that the Buyer: (i) will hold
in strict confidence all documents and information concerning the Company so
furnished; and (ii) will promptly return all such documents and all copies to
the Company if this Agreement is not closed for any reason.
B. CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the execution and
delivery of this Agreement and until the Closing Date, except as otherwise
provided by the prior written consent or approval of the Buyer:
1. The Seller will cause the Company to conduct its business and operations in
the manner in which the same has heretofore been conducted and Seller will use
his best efforts to cause the Company to: (i) preserve the Company's current
business organization intact; (ii) keep available to the Buyer the services of
the Company's current employees and the Company's agents and distributors; and
(iii) preserve the Company's current relationships with customers, suppliers and
others having business dealing with the Company.
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2. The Seller will cause the Company to maintain all of its properties in
customary repair, order and condition, reasonable wear and use excepted, and
will maintain its existing insurance upon all of its properties and with respect
to the conduct of its business in such amounts and of such kinds comparable to
that in effect on the date of this Agreement.
3. The Seller will take action to insure that the Company will not: (i) pay any
bonus or increase the rate of compensation of any of the Company's employees or
enter into any new employment agreement or amend any existing employment
agreement; (ii) make any general increase in the compensation or rate of
compensation payable or to become payable to the Company's hourly-rated
employees; (iii) sell or transfer any of the Company's assets; (iv) obligate
itself for capital expenditures other than in the ordinary course of business
and not unusual in amount; or (v) incur any material obligations or liabilities,
which are not in the ordinary course of business, or enter into any material
transaction.
4. The Seller shall not, and shall not permit the Company to, issue or enter
into any subscriptions, options, agreements or other commitments in respect of
the issuance, transfer, sale or encumbrance of any shares of the RTI Common
Stock.
C. EXECUTION OF FURTHER DOCUMENTS BY SELLER. From and after the Closing, upon
the reasonable request of the Buyer, the Seller shall execute, acknowledge and
deliver such documents as may be appropriate to carry out the transactions
contemplated by this Agreement.
D. INDEMNIFICATION BY SELLER.
1. The Seller will indemnify and hold the Buyer harmless from and against any
and all damage, loss, cost, deficiency, assessment, liability or other expense
(including reasonable attorney's fees, costs of court and litigation expenses,
if any) suffered, incurred or paid by the Buyer as a result of:
(a) The untruth, inaccuracy, breach or violation of any representation,
warranty, covenant or other obligation of the Seller set forth in or made in
connection with this Agreement;
(b) The assertion against the Buyer or the Company of any material
liability or obligation of the Company or of any claim relating to the operation
of the Company's waste collection and transportation and disposal business,
prior to the Closing Date, whether absolute or contingent, matured or unmatured,
known or unknown as of the Closing Date (including, without limitation, customer
claims or disputes and the claim identified on Schedule 4-N hereto regarding
disposal of sodium phenate waste at the Southwest Delaware County Municipal
Authority's Baldwin Run Wastewater Treatment Plant in Aston, PA); or
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<PAGE> 12
(c) The enforcement of the Buyer's right to indemnification under this
Agreement.
2. The Buyer shall give written notice to the Seller of any claim, action, suit
or proceeding relating to the indemnity herein provided by Seller not later than
ten (10) days after Buyer has received notice thereof. Seller shall have the
right, at his option, to compromise or defend, at his own expense and by his own
counsel (which counsel shall be reasonably satisfactory to Buyer), any such
action, suit or proceeding. Buyer and Seller agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto.
3. The Holdback Shares shall constitute security for Seller's indemnification.
If Buyer makes no claim of breach of any of Seller's representations, warranties
or covenants, or of any deficiency resulting from uncollectible Receivables,
then the Holdback Shares shall be delivered in full to Seller within one hundred
eighty days of the Closing Date.
4. If within such one hundred eighty day period Buyer asserts there has been a
breach of any of Seller's representations, warranties or covenants or asset loss
or damage due to uncollectible Receivable, then Buyer shall notify Seller in
writing within such period setting forth the nature of the breach and/or the
amount of loss, damage, cost or expense, as provided above. A claim or claims by
Buyer against Seller must total at least ten thousand dollars ($10,000.00) in
the aggregate before Seller is liable for indemnification; however, once Buyer's
claim(s) total at least ten thousand dollars ($10,000.00) in the aggregate, then
Seller shall be liable for the full amount of such claim(s) and not just for the
incremental amount above $10,000.00. The balance of the Holdback Shares shall be
delivered to Seller on the date on which any unresolved claim asserted by Buyer
against Seller is finally resolved.
5. Except as herein expressly provided, the remedies provided in paragraph 6.D
hereof shall be cumulative and shall not preclude assertion by the Buyer of any
other rights or the seeking of any other remedies available against the Seller
at law or in equity.
7. ADDITIONAL AGREEMENT OF THE BUYER.
A. EXECUTION OF FURTHER DOCUMENTS BY BUYER. From and after the Closing, upon
reasonable request of Seller, Buyer shall execute, acknowledge and deliver to
Seller all such further documents as may be appropriate to carry out the
transactions contemplated by this Agreement.
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<PAGE> 13
8. INDEMNIFICATION BY BUYER.
1. The Buyer will indemnify and hold the Seller harmless from and against any
and all damages, loss, cost, deficiency assessment, liability or other expense
(including reasonable attorney's fees, costs of court and costs of litigation,
if any) suffered, incurred or paid by the Seller as a result of:
(a) The untruth, inaccuracy, breach or violation of any representation,
warranty, covenant or other obligation of the Buyer set forth in or made in
connection with this Agreement;
(b) The assertion against the Seller of any liability or obligation of
the Buyer or the Company or of any claim relating to the operation of the
Company's waste collection and transportation business subsequent to the Closing
Date (including, without limitation, customer claims or disputes); or
(c) The enforcement of the Seller's right to indemnification under this
Agreement.
2. The Seller shall give written notice to the Buyer of any claim, action, suit
or proceeding relating to the indemnity herein provided by Buyer not later than
ten (10) days after Seller has received notice thereof. Buyer shall have the
right, at its option, to compromise or defend, at its own expense and by its own
counsel (which counsel shall be reasonably satisfactory to Seller), any such
action, suit or proceeding. Seller and Buyer agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto.
3. Except as herein expressly provided, the remedies provided in Paragraph 7.B
hereof shall be cumulative and shall not preclude assertion by the Seller of any
other rights or the seeking of any other remedies available against the Buyer at
law or in equity.
8. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the Buyer to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
A. VALIDITY OF SELLER'S REPRESENTATIONS. All representations and warranties of
the Seller contained in this Agreement or otherwise made in writing pursuant to
this Agreement shall have been true and correct at and as of the date hereof and
they shall be true and correct at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date.
B. PRE-CLOSING OBLIGATIONS. The Seller shall have performed and complied with
all the obligations and conditions required by this Agreement to be performed or
complied with by Seller at or prior to the Closing Date, including the execution
and delivery of all documents and contracts required to be delivered at or
before the Closing Date pursuant to this Agreement.
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<PAGE> 14
C. OPINION OF COUNSEL FOR SELLER. The Buyer shall have received a favorable
opinion from counsel for the Seller dated the date of the Closing, in form
satisfactory to counsel for the Buyer, to the effect that:
1. The Company is a corporation, presently subsisting under the laws of the
Commonwealth of Pennsylvania, and it has the corporate power and authority to
carry on its business as now being conducted and to own or hold under lease, or
otherwise, its assets.
2. This Agreement has been duly executed and delivered by the Seller, and
constitutes a valid, enforceable and binding obligation of the Seller pursuant
to the terms of this Agreement.
3. Except as otherwise disclosed in this Agreement, counsel does not know of any
action, suit, investigation or other legal, administrative or arbitration
proceeding pending against the Seller or the Company, or which questions the
validity or enforceability of this Agreement or of any action taken or to be
taken pursuant to or in connection with this Agreement or any agreement
contemplated herein.
4. To the knowledge of such counsel, no consent, authorization, license,
franchise, permit, approval or order of any court or governmental agency or
body, other than those obtained by Seller and delivered to the Buyer prior to or
on the date of the opinion, is required for the sale of the RTI Common Stock by
the Seller pursuant to this Agreement.
5. The execution and performance of this Agreement by the Seller will not
violate: (i) the Articles of Incorporation or the By-Laws of the Company, or
(ii) any order of any court or other agency of government known to said counsel.
6. The instruments of conveyance and assignments executed by the Seller to the
Buyer pursuant to this Agreement are adequate to convey the ownership to the RTI
Common Stock, free and clear of all liens, claims or encumbrances known to such
counsel after conducting a UCC-1 lien search with the offices of the Secretary
of State for the State of Pennsylvania, and the offices of the Prothonotary for
the County of Chester, in the State of Pennsylvania.
7. To the knowledge of such counsel (after reasonable investigation), Seller
owns all of the issued and outstanding shares of capital stock of the Company.
D. RECEIPT BY THE BUYER OF NECESSARY CONSENTS. All necessary consents or
approvals of third parties to any of the transactions contemplated hereby shall
have been obtained, and satisfactory evidence of such consents or approvals
shall have been delivered to the Buyer at Closing.
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<PAGE> 15
E. RESIGNATION OF OFFICERS AND DIRECTORS. Buyer shall have received such
resignations of officers and directors of the Companies as shall have been
requested by Buyer.
9. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the Seller to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
A. VALIDITY OF BUYER'S REPRESENTATIONS. All representations and warranties of
the Buyer contained in this Agreement or otherwise made in writing pursuant to
this Agreement shall have been true and correct at and as of the date hereof and
they shall be true and correct at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date.
B. PRE-CLOSING OBLIGATIONS. The Buyer shall have performed and complied with all
the obligations and conditions required by this Agreement to be performed or
complied with by Seller at or prior to the Closing Date, including the execution
and delivery of all documents and contracts required to be delivered at or
before the Closing Date pursuant to this Agreement.
C. CORPORATE AUTHORITY OF BUYER. The execution and performance of this Agreement
by the Buyer shall have been duly and legally authorized in accordance with
applicable law, and the Buyer shall have furnished to counsel for the Seller
certified copies of resolutions adopted by the Board of Directors of the Buyer
authorizing and proving the execution and delivery of this Agreement and
performance of the transactions contemplated hereunder.
D. OPINION OF COUNSEL FOR BUYER. The Seller shall have received a favorable
opinion from counsel for the Buyer dated the date of the Closing, in form
satisfactory to counsel for the Seller, to the effect that:
1. The Buyer is a corporation, duly organized and legally existing in good
standing under the laws of the State of Delaware, and it has the corporate power
and authority to carry on its business as now being conducted and to carry out
the transactions and agreements contemplated hereby.
2. All corporate and other proceedings required to be taken by or on the part of
the Buyer in order to authorize it to perform its obligations hereunder have
been duly and properly taken, including any necessary approval or authorization
by the Board of Directors of the Buyer.
3. This Agreement has been duly executed and delivered by the Buyer and
constitutes a valid, enforceable and binding obligation of the Buyer pursuant to
the terms of this Agreement.
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<PAGE> 16
4. Except as otherwise disclosed in this Agreement, said counsel does not know
of any action, suit, investigation or other legal, administrative or arbitration
proceeding which questions the validity or enforceability of this Agreement or
of any action taken or to be taken pursuant to or in connection with this
Agreement or any agreement contemplated herein.
5. The execution and performance of this Agreement by the Buyer will not
violate: (i) the Articles of Incorporation or the By-Laws of the Buyer; or (ii)
any order of any court or other agency of government known to said counsel.
10. ADJUSTMENT TO PURCHASE PRICE.
A. The Company is a party to a Purchase and Sale Agreement dated as of July 15,
1997 (as amended, the "Real Estate Agreement") whereby the Company has agreed to
purchase from Atlantic Refining & Marketing Corp. ("Atlantic") the premises in
Upper Uwchlan Township, Chester County, Pennsylvania where the Company currently
conducts its business for a purchase price of $600,000. Closing under the Real
Estate Agreement had been expected to occur prior to the Closing hereunder. For
various reasons, the closing under the Real Estate Agreement has been delayed
and is not expected to occur until after the Closing, although the effective
date of such closing will be February 26, 1999. Therefore, the Purchase Price
payable hereunder shall be reduced by the amount (the "Real Estate Closing
Amount") necessary to complete the closing under the Real Estate Agreement as
shown on the settlement sheet (the "Settlement Sheet") as shall be accepted by
the parties to that agreement prior to the Closing hereunder. At Closing, the
Real Estate Closing Amount shall be delivered to Commonwealth Land Title
Insurance Company to be held until the recordation of the deed to the above
mentioned premises whereupon it will be disbursed to the persons as shown on the
settlement sheet.
B. The Purchase Price shall be further adjusted as follows:
1. If the Company's current assets as of the Closing Date exceed the Company's
liabilities as of such date, then such excess shall be paid to Seller as an
addition to the Purchase Price.
2. If the Company's liabilities as of the Closing Date exceed the Company's
current assets as of such date, then Seller shall reimburse to Buyer an amount
equal to such deficiency.
C. The adjustment to be made under paragraph B shall be made 120 days after the
Closing Date ("the Adjustment Date"). Current assets and liabilities shall be
determined in accordance with generally accepted accounting principles except
that accounts receivable, including unbilled services rendered to the date of
closing and billed thereafter, will be considered current assets only if
collected prior to the Adjustment Date or are otherwise accepted in writing by
Buyer.
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<PAGE> 17
D. The adjustment for current assets and liabilities shall be made hereunder as
follows:
1. If there is an excess of current assets over liabilities, the excess, to the
extent of cash collected, shall be paid to Seller on the Adjustment Date. To the
extent such excess is in the form of yet uncollected accounts receivable, Buyer
shall cause the Company to continue to collect such outstanding receivables and
Buyer shall pay to Seller, monthly, receivables thereafter collected. Payment on
account of such receivables shall be made by the 10th day of each month for
collections received during the preceding month and shall be accompanied by a
statement of accounts collected.
2. If the liabilities exceed current assets then, at Seller's election, (i)
Seller shall pay to Buyer the amount of such deficiency or (ii) the number of
the Holdback Shares having a value (calculated at the higher of then current
market or $14.25 per share) equal to the deficiency shall be released to Buyer
and, in either such event, Buyer shall pay to Seller on a monthly basis as
described above, an amount equal to the accounts receivable thereafter collected
by the Company.
3. All payment received after Closing in respect of Customer Accounts shall be
applied to the oldest receivables then outstanding. In addition, the Seller
shall cause the Company to collect all accounts receivable in its normal course
provided that the Seller shall not be required to cause the Company to pursue
the collection of accounts receivable for the direct or indirect benefit of
Seller unless Seller shall have agreed to bear the costs thereof.
11. SELLER'S NON-COMPETE AND NON-SOLICITATION AGREEMENT. As inducement to Buyer
to enter into this Agreement and perform its obligations hereunder, and in
consideration of the payments to Seller pursuant to this Agreement, the Seller
agrees that Seller will not, for a period of five (5) years from the Closing
Date, directly or indirectly (whether as owner, partner, shareholder, agent,
employee, independent contractor, consultant or otherwise): (i) engage in the
waste management business, waste collection and transportation business,
landfill business, or any other business which directly or indirectly competes
with business of the Buyer, or with any subsidiary of Buyer, in each case,
within the County of Chester and the County of Montgomery, State of
Pennsylvania; (ii) solicit any party who is or was a customer or supplier of the
Company on the Closing Date or at any time during the 12 month period
immediately prior thereto for services of any type or quality being provided by
the Company; (iii) solicit for employment any person who was or is an employee
of the Company on the Closing Date, or at any time during the 12 month period
immediately prior thereto; or (iv) either directly or indirectly, divulge,
disclose, or communicate to any person, firm or corporation in any manner
whatsoever any confidential information relating to the business of Buyer, or
the Company. The term, "confidential information", as used herein means all
information of a business or technical nature relative to the business of Buyer,
the business of any customers of the Company or any business of any person, firm
or corporation which consults with, or is affiliated with, Buyer or the Company.
The term "confidential information" shall not include information so
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generally known as to be part of the public domain. Provided, however, that
nothing contained herein shall prohibit Seller from conducting the business
currently conducted by Reifsneider Motor Freight, Inc. or Mid Atlantic Tank
Trailer Company in a manner which is not competitive with the business currently
conducted by the Company.
Each of the covenants contained in this Article are separate and independent.
The Seller acknowledges and agrees that Buyer's and Company's remedies at law
may be inadequate in the event of a breach or threatened breach of the covenants
set forth herein, and in such event, Buyer and the Company shall be entitled to
have an injunction issued by any court of competent jurisdiction, enjoining and
restraining each and every party concerned therewith from the creation or
continuation of such breach.
12. OTHER PROVISIONS.
A. EMPLOYMENT AGREEMENTS. At Closing, Buyer will enter into written Employment
Agreements with key employees of Company in a form reasonably satisfactory to
Buyer.
B. INCOMPLETE EXHIBITS. The parties hereto acknowledge and agree (a) that many,
if not all, of the schedules to be attached to this Agreement will not have been
prepared by the time of execution of this Agreement, and (b) that consummation
of the transactions contemplated by this Agreement are subject to the completion
of such exhibits by Seller (to the extent that an exhibit is to be completed by
Seller, such exhibit must be reasonably acceptable to Buyer) or Buyer ( to the
extent that an exhibit is to be completed by Buyer, it must be reasonably
acceptable to Seller) as the case may be, prior to or at the Closing, pursuant
to the terms of this Agreement.
C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations, warranties,
obligations and agreements of the parties contained in this Agreement, or in any
writing delivered pursuant to provisions of this Agreement, shall survive the
Closing for a period of eighteen (18) months with the exception of
representations and warranties concerning Paragraph 4.M. hereof, Tax Matters and
Paragraph 4.P. hereof, Environmental Matters, which will survive for as long as
any claims may be asserted under the applicable periods of limitation for
violations of any tax or environmental law, rule or regulation.
D. WAIVER OR EXTENSION OF CONDITIONS. The Seller or the Buyer may extend the
time for or waive the performance of any of the obligations of the other party,
waive any inaccuracies in the representations or warranties by the other party,
or waive compliance by the other party with any of the covenants or conditions
contained in this Agreement. Any such extension or waiver shall be in writing
and signed by the Seller and the Buyer. Any such extension or waiver shall not
act as a waiver or an extension of any other provisions of this Agreement.
E. NOTICES. Any notice, request or other document shall be in writing and sent
by registered or certified mail, return receipt requested, postage prepaid and
addressed to
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the party to be notified at the following addresses, or such other
address as such party may hereafter designate by written notice to all parties,
which notice shall be effective as of the date of posting:
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<PAGE> 20
(i) If to the Buyer:
EarthCare Company
14901 Quorum Drive
Suite 200
Dallas, TX 75240
Copy to: Robert C. Gist, Esq.
12809 Plum Hollow Drive
Oklahoma City, OK 73142-5148
(ii) If to the Seller
Lester J. Lishon, IV
70 Fairfield Lane
Chester Springs, Pa 19425
Copy to: Warren Vogel, Esquire
Heller, Kapustin, Gershman & Vogel
486 Norristown Road, Suite 230
Blue Bell, Pennsylvania 19422
F. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commowealth of Pennsylvania.
G. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns.
H. HEADINGS. The subject headings of the Sections of this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
I. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
J. ARBITRATION. Any controversy or claim arising out of, in connection with, or
relating to this Agreement or a breach thereof shall be settled by binding
arbitration in Philadelphia, Pennsylvania. The arbitration panel shall be
comprised of three arbitrators. Each party shall appoint one arbitrator for the
panel and the two so appointed shall appoint a third. The panel shall resolve
the dispute within sixty (60) days of the appointment of the panel and shall
notify the parties of its findings in writing. Each party agrees to bear its own
costs of arbitrators and to split equally the cost of the third arbitrator.
K. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the schedules
attached hereto) and the documents delivered pursuant hereto constitute the
entire
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<PAGE> 21
agreement and understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter hereof. This
Agreement may be modified or amended by a written instrument executed by all
parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day of
year first above written.
"Seller"
/s/ Lester J. Lishon, IV
- ----------------------------------
Lester J. Lishon, IV
"Buyer"
EarthCare Company
By: /s/ James Farrell
- ----------------------------------
James Farrell, Vice President
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SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
Designation Descriptions
<S> <C>
1-B(3) $200,000 Note
4-F-1 Operating Equipment
4-F-2 Exceptions to good operating condition of Operating
Equipment
4-F-4 Excluded Assets
4-G Liabilities
4-H-1 Customer List
4-H-2 Service Agreements, franchises and licenses
4-H-3 Notices of termination
4-I Leases, contracts and commitments
4-J List of employees
4-K Liability claims (property damage, injury)
4-M Allocation (sections 338(h)(10) election)
</TABLE>
22
