<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EARTHCARE COMPANY
(Exact Name of Registrant as Specified in its Charter)
----------
DELAWARE 58-2335973
(State or other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
14901 QUORUM DRIVE, SUITE 200
DALLAS, TEXAS 75240
(972) 858-6025
(Address, Including Zip Code and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
PETER H. TREMBATH Copy to:
VICE PRESIDENT AND GENERAL COUNSEL LYNN S. SCOTT, ESQ.
14901 QUORUM DRIVE, SUITE 200 KING & SPALDING
DALLAS, TEXAS 75240 191 PEACHTREE STREET, N.E.
TELEPHONE: (972) 858-6025 ATLANTA, GEORGIA 30303-1763
TELEPHONE: (404) 572-4600
(Name, Address, Including Zip Code, and Telephone Number of Agent for Service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered in this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
PROPOSED PROPOSED
TITLE OF SHARES AMOUNT TO BE MAXIMUM AGGREGATE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
-------------------------------------- ------------------ --------------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 par value 4,985,838 shares $2.5625 $12,776,210 $3,411
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, based
on the average of the high and low prices for the Company's common stock as
reported on the Nasdaq National Market on November 30, 2000, in accordance
with Rule 457(c) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION
PROSPECTUS, DATED DECEMBER 5, 2000
4,985,838 Shares
EARTHCARE COMPANY
Common Stock
----------
This Prospectus relates to the offer and sale from time to time of up to
4,985,838 shares of our common stock, $.0001 par value per share by the
debenture holders named in this prospectus. The 4,985,838 shares of common stock
are, or will be, issued upon conversion of our 10% convertible subordinated
debentures, due October 2006. We are registering the shares to be able to
provide the debenture holders who convert debentures and receive shares of
common stock with freely tradeable securities on conversion, but the
registration of the shares does not necessarily mean that the debentures will be
converted at any particular time or that any or all of the shares will be
offered or sold by the selling shareholders. We will not receive any of the
proceeds from the sale of shares by the selling shareholders.
Our common stock is listed for trading on the Nasdaq National Market System
under the symbol "ECCO." At November 27, 2000, we had 14,575,731 shares of
common stock outstanding. On November 27, 2000, the last reported sale price of
our common stock was $3.00 per share.
A selling shareholder from time to time may offer and sell shares directly
or through agents or broker-dealers on terms to be determined by the selling
shareholder at the time of sale. Each of the selling shareholders reserves the
sole right to accept or reject, in whole or in part, any proposed purchase of
the shares to be made directly or through agents.
Although we will not receive any of the proceeds from the sale of the shares
by the selling shareholders, we have agreed in the debenture agreement relating
to the debentures to bear the expenses of registration of the shares under
Federal and state securities laws. The selling shareholders and any agents or
broker-dealers who participate with the selling shareholders in the distribution
of the shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, and any commissions received by them and any
profit on the resale of the shares may be deemed to be underwriting commissions
or discounts under the Securities Act of 1933.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 8 FOR A DISCUSSION OF THESE RISKS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
About this Prospectus....................................................................................2
Where You Can Find More Information......................................................................2
EarthCare Company........................................................................................4
Risk Factors.............................................................................................8
Use of Proceeds.........................................................................................16
Dilution................................................................................................16
Selling Stockholders....................................................................................16
Plan of Distribution....................................................................................20
Legal Matters...........................................................................................21
Experts.................................................................................................21
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf registration process, the holders of our 10% convertible
subordinated debentures may sell up to an aggregate of 4,985,838 shares of our
common stock in one or more offerings if they convert our 10% convertible
subordinated debentures and receive shares of our common stock. You should read
this prospectus and any applicable prospectus supplement provided to you
together with the additional information described below under the heading
"Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the web site for the Securities and Exchange Commission at
http://www.sec.gov. You may read and copy any document we file with the SEC at
its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549, 7 World Trade Center, Suite 1300, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may
call the SEC at 1-800-732-0330 for further information on the operation of the
public reference facilities. You can also obtain copies of these documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549 or from the offices of the Nasdaq
National Market at 9513 Key West Avenue, Rockville, Maryland 20850.
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with them, which means that we can disclose important
information to you by referring to these publicly filed documents. The
information incorporated by reference is an important part of this prospectus,
and information that we subsequently file with the SEC will automatically update
and supercede information in this prospectus and in our other filings with the
SEC. We incorporate by reference the documents listed below, which we have
already filed with the SEC, and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all the securities offered by this prospectus have been sold:
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Current Report on Form 8-K filed on February 29, 2000;
o Current Report on Form 8-K filed on March 23, 2000;
o Quarterly Report on Form 10-Q for the three months ended March 31,
2000;
o Current Report on Form 8-K filed on May 1, 2000;
2
<PAGE> 4
o Current Report on Form 8-K/A filed on May 12, 1999;
o Current Report on Form 8-K/A filed on November 4, 1999;
o Current Report on Form 8-K/A filed on May 1, 2000;
o Quarterly Report on Form 10-Q for the three months ended June 30,
2000;
o Quarterly Report on Form 10-Q for the three months ended September
30, 2000.
You may request a copy of these filings, other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing, at no cost, by writing or calling us at the following address: 14901
Quorum Drive, Suite 200, Dallas, Texas 75240, Attention: Investor Relations.
We have also filed a registration statement with the SEC relating to
the securities. This prospectus is part of the registration statement. You may
obtain from the SEC a copy of the registration statement and exhibits that we
filed with the SEC when we registered the securities. The registration statement
may contain additional information that may be important to you. You should rely
only on the information contained or incorporated by reference in this
prospectus or any applicable prospectus supplement. We have not authorized
anyone else to provide you with additional or different information. These
securities are only being offered in states where the offer is permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front of this prospectus.
3
<PAGE> 5
EARTHCARE COMPANY
We serve the waste and information needs of a variety of residential,
commercial and industrial customers. We have grown rapidly through acquisitions
and internal growth. We acquired AllenTate Commercial Software in 1999 to
develop internet-based operating systems that enable coordinated, low cost
information management as well as options to share information with customers
and regulators via the Internet. We intend to use information technology and
innovation to differentiate our service offerings and lower our cost of service.
We have established three business units under which we conduct business:
EarthCare(SM), EarthAmerica(TM), and EarthLiquids(SM). A description of each
business unit follows.
EARTHCARE. EarthCare is focused on building a solid waste company that
combines the best practices of the non-hazardous solid wastes (NSW) industry
with technology and innovation to create a national NSW company. Currently, this
business unit is composed of EarthCare Resource Management of Florida, Inc.
("EarthCare Florida") whose operations are largely concentrated in the Tampa
area. EarthCare Florida owns a construction and demolition landfill. We expect
to grow this business unit through acquisition and internal growth both in
Florida and throughout North America. In the future, we expect that customers of
this business unit will benefit from online account management and information
through our CommercialCare.com(SM) internet-based customer portal, a customer
service tool which is being developed. This business unit generally receives
fees to collect, process, treat and dispose of NSW. Collection fees charged to
customers vary by waste stream according to constituents of the waste, expenses
associated with collecting and processing the waste, and competitive factors.
This business unit operates a fleet of approximately 60 vehicles to collect
waste directly from customers and also receives waste from independent
companies.
EARTHAMERICA. EarthAmerica is focused on the rapidly growing market for
septic tank services and restaurant grease trap services. Theses services are
provided within several service programs including SeptiMax(SM),
SeptiMaxPlus(SM), SeptiShield(SM), TrapCare(SM), Trap&LineCare(SM), and
TotalCare(SM). All programs provide for regular, scheduled service with
convenient payment plans. In addition, restaurant customers benefit from online
account management and information through our RestaurantCare.com(SM)
internet-based customer portal. EarthAmerica generally receives fees to collect,
process, treat and dispose of these non-hazardous liquid wastes. Collection fees
charged to customers vary by waste stream according to constituents of the
waste, expenses associated with collecting and processing the waste, and
competitive factors. EarthAmerica operates a fleet of vehicles to collect waste
directly from customers and receives some waste from independent transporters
servicing additional waste generators. In addition, EarthAmerica utilizes
EarthAmerica branded distributors to provide service in some areas. At most
locations, EarthAmerica does not have pretreatment or treatment facilities, the
waste is transported to private pretreatment facilities, or, where permitted by
local regulations, directly to municipal or private wastewater treatment
facilities.
EarthAmerica benefits from federal, state and local regulations covering the
disposal of certain waste streams. Although homeowners, restaurants, food
processing and preparation facilities and industrial operations have produced
such waste for many years, regulations governing the management of non-hazardous
liquid waste (NLW) and the enforcement of such regulations are becoming
increasingly stringent. These requirements have increased the value of
EarthAmerica's services to its customers in recent years. We believe that
EarthAmerica's customers will benefit from EarthAmerica's branded service
programs as federal, state and local regulations governing the disposal of NLW
increase.
EARTHLIQUIDS. EarthLiquids is focused on used oil recovery and oily
wastewater management. Through the acquisition of Magnum Environmental Services,
Inc. and International Petroleum Corporation, EarthLiquids has become the second
largest competitor in the 1.3 billion gallon waste oil recovery industry. Our
fleet of over 100 waste transport trucks collect and transport used oil and oily
wastewaters largely to our own processing facilities. In addition, third party
collection companies deliver their used oil and oily wastewaters to our
facilities for processing. Recovered oil is sold into a variety of applications
that generally displace the need for virgin crude oil.
4
<PAGE> 6
STRATEGY
We are focused on:
o Building dominant, branded, national positions in select lines of
business;
o Using technology and innovation to differentiate us from our
competitors;
o Building a highly qualified company-wide management team;
o Working to protect the environment and ensure compliance with
environmental regulations; and
o Promoting proactive versus reactive services.
o Growth from new programs;
o Partnership and affiliate related growth; and
o Technology and Internet information services.
We believe that by developing and marketing new service programs, we will
increase market share and achieve internal growth. However, these programs,
which began in fiscal year 2000, are in their early implementation stages or are
still being developed and there can be no assurance that we will achieve these
objectives.
During the third quarter of 2000, we decided to focus our management and our
financial resources on the NSW industry. We expect that we will be focusing our
acquisition and our internal growth efforts on the NSW industry. We will
continue actively to manage the internal growth efforts in EarthAmerica and
EarthLiquids, our two divisions in the NLW industry, and at the same time we
intend to explore strategic and financial alternatives for these operations.
Such alternatives include, but are not necessarily limited to, finding
additional sources of debt and/or equity capital to fund the internal growth
needs of the two businesses. In addition, we will be reviewing strategic and
financial alliances for these two businesses. We are shifting our focus to the
NSW industry because we believe that this industry provides a better opportunity
for profitable growth and improvement in shareholder value.
We have NLW operations in Delaware, Florida, Georgia, Louisiana, Maryland,
New Jersey, New York, Pennsylvania and Texas. In addition to serving customers
in these states, we also provide services to customers in Alabama, Connecticut,
Massachusetts, Mississippi, Virginia and West Virginia.
We do not currently provide all of our NLW services from every operating
location. Septic tank, grease trap and bulk transportation services are provided
by operations located near Atlanta and Gainesville, Georgia, several cities in
Florida, Northern New Jersey, Eastern Pennsylvania and on Long Island, New York.
We own wastewater treatment plants that provide treatment and disposal services
for nonhazardous liquid waste customers in Orlando, Florida and Beacon, New
York. Plumbing services are provided from operations in the Atlanta and
Gainesville, Georgia markets and in Orlando and Pompano Beach, Florida.
We have expanded our operations to include the oily wastewater and used oil
recycling business through our acquisition of Magnum Environmental, Inc. in
September 1999 and our acquisition of International Petroleum Corporation in
February 2000. These services are provided by operations based in Wilmington,
Delaware, several cities in Florida and New Orleans, Louisiana. Satellite
collection centers for these operations are also located in Maryland, New
Jersey, and Pennsylvania.
In the future, we may expand the lines of NLW services offered at certain
locations. Locations that have the necessary land, buildings and dispatch,
maintenance, administrative and management services to support additional
service lines will be considered. Management will also study local market
conditions, including competition in the area, before service lines are expanded
in any market. Management believes that there will be opportunities to expand
its services in certain markets in the future, but there can be no assurance
that this will be successfully accomplished.
5
<PAGE> 7
THE NLW AND THE NSW INDUSTRIES
The NLW industry is affected by commercial and residential expansion. We
estimate that the septic tank and grease trap business segments of the U.S.
domestic NLW industry generate approximately $20 billion in revenues annually.
Other service lines, such as bulk transportation and plumbing, generate
significant additional domestic service revenues. There are approximately 25,000
service providers currently in the septic tank and grease trap segments of the
NLW industry and, of these service providers, approximately 75% generate less
than $500,000 of annual revenues. Services in this segment of the NLW industry
have generally been performed on an event driven or emergency basis. In other
business segments such as oily wastewater, bulk transportation and used oil
services, competitors tend to be larger and more regional in terms of their
operations and services generally are scheduled. We believe the NLW industry
will continue to grow based on increased waste from a growing population and
general economic conditions that are driving new building demand and industrial
production and the related need for NLW services.
The NSW industry is a mature, $40 billion industry with approximately 40% of
the industry volume collected by municipal collection and disposal entities. The
rest of the industry is composed of approximately three companies with revenues
greater than $1 billion and hundreds of public and private companies with
revenues below $1 billion. We believe that there may be an opportunity to
develop a new, national NSW company that differentiates itself through the
application of technology and innovation.
RECENT DEVELOPMENTS
In October 2000, we amended our credit agreement with our lenders. As a
result of that amendment, the restrictive financial covenants were amended so
that EarthCare will be subject to a minimum EBITDA (earnings before interest,
taxes, depreciation and amortization) level each quarter. Other restrictive
financial ratio covenants will not apply until September 30, 2001. In addition,
our Chairman agreed to guarantee personally $40 million of our outstanding
revolving line of credit to provide $5 million of collateral on or before
October 31, 2000 and to provide $10 million of collateral on or before November
30, 2000. The amount currently available under the revolving line of credit
until September 30, 2001 will be $55 million. Also, our lenders also approved
our acquisition of EarthCare Florida.
On September 30, 2000, Don Moorehead, our Chairman, acquired 1,000,000
shares of our common stock for $5 million in a private placement transaction of
unregistered shares of our common stock. The cash proceeds from this sale were
used to repay $5 million of our revolving line of credit.
On July 7, 2000, we acquired approximately 44% of the outstanding common
stock of EarthCare Florida by issuing 356,000 shares of our common stock. We
acquired the common stock of EarthCare Florida from all of EarthCare Florida's
minority shareholders except the shares owned by EarthCare Florida's president.
The remaining 520,100 outstanding shares of EarthCare Florida are owned by Solid
Waste Ventures, Inc. (450,100 shares) and James Waters (70,000 shares). We have
agreed to acquire all but 175,220 of the remaining outstanding shares of
EarthCare Florida on a one for one basis using shares of our common stock as
consideration. Solid Waste Ventures will retain a twenty percent minority
interest in EarthCare Florida. EarthCare Florida currently operates with annual
revenues of approximately $20 million. EarthCare Florida provides residential
and commercial collection, hauling and transfer services in the Tampa, Florida
and surrounding counties. In addition, EarthCare Florida owns a construction and
demolition landfill in Hillsborough County, Florida.
As of August 31, 2000, EarthCare Florida employed approximately 125
personnel. Approximately 60 trucks and vehicles are used to service the
collection, hauling, transfer and disposal operations. EarthCare Florida's
construction and demolition landfill is situated on 280 acres in Balm, Florida.
In addition, EarthCare Florida owns two transfer stations in Tampa, Florida and
Clearwater, Florida that handle construction and demolition solid waste.
EarthCare Florida was awarded a franchise by Hillsborough County in Florida to
collect approximately one-third of the residential solid waste and to provide
commercial collection services to any commercial customers in the county.
EarthCare Florida disposes of its collected residential solid waste at a
municipally owned landfill in Hillsborough County.
6
<PAGE> 8
Solid Waste Ventures owns controlling interests in EarthCare Florida and in
a company in Missouri that collects, hauls and disposes of solid waste. Solid
Waste Ventures is a privately held holding company which is 100% owned by an
individual who is not an affiliate of EarthCare Company. Solid Waste Ventures
owns approximately 51% of EarthCare Florida. In addition, Solid Waste Ventures
owns a controlling interest in Cardinal Waste, a NSW company in Missouri that
collects residential and commercial solid waste and operates a landfill. Our
Chairman has provided debt financing of approximately $13.3 million to Solid
Waste Ventures to finance growth and development. Such financing is secured by
all of the assets of Solid Waste Ventures, including its interests in EarthCare
Florida. Approximately $8.5 million of such financing was provided for the
benefit of EarthCare Florida. This subordinated debt owed by EarthCare Florida
to Solid Waste Ventures is intended to be assumed upon the completion of the
EarthCare Florida acquisition.
During the third quarter of 2000, we hired two new executive officers. In
July 2000, we hired William W. Solomon, Jr. as our Vice President and Chief
Financial Officer and in September 2000 we hired Peter Trembath as our Vice
President and General Counsel.
William W. Solomon, Jr., age 44, has served as Vice President and Chief
Financial Officer of EarthCare since July 5, 2000. Mr. Solomon previously served
as Executive Vice President, Chief Financial Officer and Treasurer of Precept
Business Services, Inc., a Nasdaq listed company in Dallas, Texas, from June
1998 to June 2000. Precept Business Services engaged primarily in the
distribution of office products and also provided executive transportation
services. From August 1996 to May 1998, Mr. Solomon served as Vice President and
Corporate Controller of American Pad & Paper Company, a manufacturer of paper
based office products, in Dallas, Texas. From August 1994 to July 1996, Mr.
Solomon served as a Senior Audit Manager for PricewaterhouseCoopers in Dallas,
Texas, and from November 1992 to July 1994, Mr. Solomon served as a Senior Audit
Manager for BDO Seidman in Grand Rapids, Michigan. Mr. Solomon received his B.A.
degree in Business Administration - Accounting from Washington State University
in 1978 and is a certified public accountant.
Peter H. Trembath, age 48, has served as Vice President and General Counsel
of EarthCare since September 11, 2000. Mr. Trembath previously served as Senior
Vice President, General Counsel and Secretary of Precept Business Services, Inc.
from July 12, 1999 through September 8, 2000. From January 1999 through June
1999, Mr. Trembath was engaged in the private practice of law and acted as an
independent consultant. From November 1993 to December 1998, Mr. Trembath served
as Vice President, Secretary and General Counsel of Benson Eyecare Corporation,
a manufacturer, retailer and wholesaler of prescription and non-prescription
eyewear and related products, and then its successor, Lumen Technologies, Inc.
(f/k/a BEC Group, Inc.), which was engaged principally in the manufacture and
sale of specialty lighting products. Both Benson and Lumen were publicly held
corporations listed on the Nasdaq National Market. He also served from March
1997 to December, 1998 as Vice President, Secretary and General Counsel of
Bolle, Inc., a Nasdaq listed company and manufacturer and distributor of
designer sunglasses, sport eyewear and goggles, which was spun off by Lumen
Technologies in March of 1997. Prior to November 1993, Mr. Trembath served for a
number of years as Vice President, Secretary and General Counsel of BMC
Industries, Inc., an NYSE listed corporation engaged in the manufacture and
distribution of ophthalmic lenses and precision etched electronic parts. Mr.
Trembath received his A. B. and M.A. degrees in European history from The
University of Michigan. He received his J.D. degree from The University of
Michigan Law School in 1982.
We are incorporated in Delaware and our principal executive offices are
located at 14901 Quorum Drive, Suite 200, Dallas, Texas 75240. Our telephone
number at such offices is (972) 858-6025.
7
<PAGE> 9
RISK FACTORS
This prospectus contains certain forward-looking statements and
information relating to us that are based on the beliefs of management as well
as assumptions made by and information currently available to management. When
used in this prospectus, the words "anticipate," "believe," "estimate,"
"expect," "intend," "plan," or any similar expressions, as they relate to us or
our management, or the management of any of our businesses, are intended to
identify forward-looking statements. Such statements reflect our current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected, intended or planned. We do not intend to update these forward-looking
statements. The following risk factors set forth some of the factors that could
cause our actual results to differ materially from the expected results
described in our forward-looking statements.
WE MAY HAVE DIFFICULTY EXECUTING OUR GROWTH STRATEGY.
Our growth strategy includes expanding through acquisitions and
generating internal growth. Whether we can execute our growth strategy depends
on several factors, including the availability of capital to support our growth,
the success of existing and emerging competition, the availability of
acquisition candidates, our ability to maintain profit margins in the face of
competitive pressures, our ability to continue to recruit, train and retain
qualified employees and the strength of demand for our services. Our ability to
increase revenues and generate adequate cash flows to support our operations and
internal growth could be adversely affected by these factors.
WE MAY BE UNABLE TO COMPETE EFFECTIVELY WITH GOVERNMENTAL SERVICE PROVIDERS AND
LARGER AND BETTER CAPITALIZED COMPANIES.
The NLW and NSW industries are highly competitive and fragmented and
require substantial labor and capital resources. Some of the markets in which we
compete or will likely compete are served by one or more large national solid or
liquid waste companies, as well as by numerous regional and local solid and
liquid waste companies of varying sizes and resources, some of which have
accumulated substantial goodwill in their markets. We also compete with
counties, municipalities and other waste districts that maintain their own waste
collection and disposal operations. These operators may have financial
advantages over us because of their access to user fees and similar charges, tax
revenues and tax-exempt financing. Some of our competitors are also better
capitalized, have greater name recognition or are able to provide services at a
lower cost than us.
OUR GROWTH AND FUTURE FINANCIAL PERFORMANCE DEPEND SIGNIFICANTLY ON OUR ABILITY
TO INTEGRATE ACQUIRED BUSINESSES INTO OUR ORGANIZATION AND OPERATIONS.
Part of our strategy is to achieve economies of scale and operating
efficiencies by growing through acquisitions. We may not achieve these goals
unless we effectively combine the operations of acquired businesses with our
existing operations. Our senior management team may not be able to integrate our
completed and future acquisitions. Any difficulties we encounter in the
integration process could materially and adversely affect our business and
financial results.
OUR GROWTH MAY BE LIMITED BY THE INABILITY TO MAKE ACQUISITIONS ON ATTRACTIVE
TERMS.
Although we have identified numerous acquisition candidates that we
believe are suitable, we may not be able to acquire them at prices or on terms
and conditions favorable to us. As a result, our growth could be limited.
RAPID GROWTH MAY STRAIN OUR MANAGEMENT, OPERATIONAL, FINANCIAL AND OTHER
RESOURCES.
Since our inception, we have acquired twenty businesses in the NLW and
NSW industries. To maintain and manage our growth, we will need to expand our
management information systems capabilities and our operations and financial
systems and controls. We will also need to attract, train, motivate, retain and
manage senior managers, technical professionals and other employees. Failure to
do any of these things could materially and adversely affect our business and
financial results.
8
<PAGE> 10
WE COMPETE FOR ACQUISITION CANDIDATES WITH OTHER PURCHASERS, SOME OF WHICH HAVE
GREATER FINANCIAL RESOURCES THAN EARTHCARE.
Other companies have adopted or will possibly adopt our strategy of
acquiring and consolidating regional and local businesses. We expect that
increased consolidation in the NLW and NSW industries will increase competitive
pressures. Increased competition for acquisition candidates may make fewer
acquisition opportunities available to us, and may cause us to make acquisitions
on less attractive terms, such as higher purchase prices. Acquisition costs may
increase to levels beyond our financial capability or to levels that would
adversely affect our operating results and financial condition. Our ongoing
ability to make acquisitions will depend in part on the relative attractiveness
of our common stock as consideration for potential acquisition candidates. This
attractiveness may depend largely on the relative market price and capital
appreciation prospects of our common stock compared to the common stock of our
competitors. If the market price of our common stock were to decline materially
over a prolonged period of time, we could find it difficult to make acquisitions
on attractive terms.
TIMING AND STRUCTURE OF ACQUISITIONS MAY CAUSE FLUCTUATIONS IN OUR QUARTERLY
RESULTS.
We are not always able to control the timing of our acquisitions. Obtaining
third party consents and regulatory approvals, competing due diligence on the
acquired businesses, and finalizing transaction terms and documents are not
entirely within our control and may take longer than we anticipate, causing
certain transactions to be delayed. Our inability to complete acquisitions in
the time frames that we expect may adversely affect our business, financial
condition and operating results. In addition, whether we account for an
acquisition using the purchase or the pooling-of-interests method determines how
the acquisition affects our financial results.
WE MAY LOSE CONTRACTS THROUGH COMPETITIVE BIDDING, EARLY TERMINATION OR
GOVERNMENTAL ACTION.
We derive a substantial portion of our NSW revenue at EarthCare Florida
from services provided under an exclusive municipal contract. We also intend to
bid on additional municipal contracts and franchise agreements. Many of these
will be subject to competitive bidding at some time in the future. However, we
may not be the successful bidder. In addition, some of our customers may
terminate their contracts with us before the end of the contract term. If we
were not able to replace revenues from contracts lost through competitive
bidding or early termination or from the renegotiation of existing contracts
with other customers within a reasonable time period, the lost revenues could
materially and adversely affect our business and financial results.
WE MAY NOT HAVE ENOUGH CAPITAL OR BE ABLE TO RAISE ENOUGH ADDITIONAL CAPITAL ON
SATISFACTORY TERMS TO MEET OUR CAPITAL REQUIREMENTS.
Continued growth will require additional capital. We expect to finance
future acquisitions through cash from operations, borrowings under our existing
or future credit facilities, issuing additional equity or debt securities and/or
seller financing. If acquisition candidates are unwilling to accept, or if we
are unwilling to issue shares of our common stock as part of the consideration
for acquisitions or if our common stock does not maintain a sufficient market
value, we may have to use more of our cash or borrowings under our credit
facilities to fund acquisitions. Using cash for acquisitions limits our
financial flexibility and makes us more likely to seek additional capital
through future debt or equity financings. If available cash from operations and
borrowings under the credit facility are not sufficient to fund acquisitions, we
may need additional equity and/or debt financing. If we seek more debt, our
interest expense would increase and we may have to agree to financial covenants
that limit our operations and financial flexibility. If we seek more equity, we
could dilute the ownership interests of our then-existing stockholders. If we
are unable to obtain additional equity and/or debt financing on attractive
terms, our rate of growth through acquisitions could decline. We will also need
to make substantial capital expenditures to develop or acquire new landfills,
transfer stations, vehicles and equipment, other facilities and to maintain such
properties.
WE MAY NOT BE ABLE TO OBTAIN ADEQUATE FINANCING TO EXECUTE OUR INTERNAL GROWTH.
In addition to growing our business by acquiring other NSW companies, we
plan to pursue internal growth in the NLW business by expanding into geographic
territories where we do not currently have any operations. These efforts will
require continued financing from equity and/or debt sources. As we execute our
internal growth
9
<PAGE> 11
strategy, we cannot be assured that our cash flow from operations and our debt
capital will be adequate to finance our growth strategy. To the extent that we
are not able to obtain adequate equity or debt capital, adequate cash flow from
operations or a favorable market price for our common stock, we may not be able
to execute successfully our internal growth strategy.
WE HAVE RECENTLY CHANGED OUR OPERATING STRATEGY FOCUS AND OUR ACQUISITION FOCUS.
During the third quarter of 2000, we changed our operating strategy focus
and our acquisition focus. We intend to focus our management and our financial
resources on the NSW industry, as well as our acquisition and our internal
growth efforts. We will actively continue to manage the internal growth efforts
in EarthAmerica and EarthLiquids, our two divisions in the NLW industry and at
the same time we intend to explore strategic and financial alternatives for our
EarthAmerica and EarthLiquids operations. Such alternatives include, but are not
necessarily limited to, finding additional sources of debt and/or equity capital
to fund the internal growth needs of the two businesses. In addition, we will be
reviewing strategic and financial alliances for these two businesses. We believe
that the NSW industry provides a better opportunity for profitable growth and
improvement in shareholder value. If we are not able to execute successfully our
strategy in the NSW industry, you could suffer a permanent decline in the value
of your common stock.
WE DEPEND SIGNIFICANTLY ON THE SERVICES OF THE MEMBERS OF OUR SENIOR MANAGEMENT
TEAM, AND THE DEPARTURE OF ANY OF THOSE PERSONS MIGHT MATERIALLY AND ADVERSELY
AFFECT OUR BUSINESS AND FINANCIAL RESULTS.
We do not currently maintain any "key man" life insurance on any of our
senior management. Key members of our management team have entered into
employment agreement with us with terms ranging from one to three years. We may
not be able to enforce these agreements. We are dependent on the services of
management and key personnel and we believe that our success will depend upon
the efforts and abilities of management and such key personnel. Furthermore, we
may be dependent on the management and key personnel of companies that we may
acquire in the future. If any of these individuals do not continue in their
positions with us or if we are unable to attract and retain other skilled
employees, our business, financial condition and operating results may be
affected materially. The competition for qualified personnel is intense and we
cannot assure you that we will be able to continue to hire and retain
sufficiently qualified management and key personnel needed to operate our
businesses successfully.
WE HAVE A LIMITED OPERATING HISTORY AND AN ABSENCE OF COMBINED OPERATING
HISTORY.
We were organized in 1997 and began active operations at that time. As a
result, we have very little operating history as an integrated NLW and NSW
business to which investors may look to evaluate our performance. Since we began
operations, we have completed twenty acquisitions. We cannot provide assurance
that we will be able to institute the necessary systems and procedures,
including accounting and financial reporting systems, to manage the entire
combined enterprise on a profitable basis. In addition, we cannot assure that we
will be able effectively to manage the combined entity or to effectively
implement our acquisition program and internal growth strategy.
WE HAVE A HISTORY OF NET LOSSES.
We have experienced operating losses since our inception, and, as of
September 30, 2000, we had an accumulated deficit of $28,466,991. Although we
anticipate that we will be profitable beginning in 2001, we cannot be assured
that we will actually achieve profitability.
WE FACE SIGNIFICANT COMPETITION IN THE MARKETS IN WHICH WE OPERATE.
We compete with a significant number of other NSW and NLW companies. We
compete primarily on the basis of proximity to collection operations, fees
charged and quality of service. We also compete with other landfills and
disposal sites. Future technological changes and innovations may result in a
reduction in the amount of NLW generated or in alternative methods of treatment
and disposal being developed. We also compete with customers who may seek to
enhance and develop their own methods of disposal. We may be at a disadvantage
competing against other companies that are better capitalized, have greater name
recognition, have more background and experience, have greater financial,
technical, marketing and other resources and skills, have better facilities or
are
10
<PAGE> 12
able to provide services or products at a lower cost than us. In the currently
highly fragmented NLW industry, there is a low barrier to entry and we may not
be able to penetrate existing markets. Even if we are successful at penetrating
the markets in which we operate and implementing our new programs, we cannot be
assured that new competitors will not enter the markets. If we are not able to
compete effectively in the markets in which we operate, we could suffer material
and adverse effects on our business and financial results.
WE MAY ENCOUNTER POTENTIAL ENVIRONMENTAL LIABILITY WHICH OUR INSURANCE MAY NOT
COVER.
During the ordinary course of our operations, we have from time to time
received, and expect that we may in the future receive, citations or notices
from governmental authorities that our operations are not in compliance with our
permits or certain applicable regulations, including various transportation,
environmental or land use laws and regulations. We generally seek to work with
the authorities to resolve the issues raised by such citations or notices. There
can be no assurance, however, that we will always be successful in this regard,
and the failure to resolve a significant issue could result in adverse
consequences to us.
While we maintain insurance, such insurance is subject to various deductible
and coverage limits and certain policies exclude coverage for damages resulting
from environmental contamination. There can be no assurance that insurance will
continue to be available to us on commercially reasonable terms, that the
possible types of liabilities that may be incurred by us will be covered by its
insurance, that our insurance carriers will be able to meet their obligations
under their policies or that the dollar amount of such liabilities will not
exceed our policy limits. An uninsured claim, if successful and of significant
magnitude, could have a material adverse effect on our business, results of
operations and financial condition.
WE WILL NEED TO HIRE ADDITIONAL EMPLOYEES AS WE GROW.
When we complete acquisitions of NLW and NSW companies, there may be
opportunities for a reduction of employees as duplicate administrative processes
are eliminated. However, we may need to hire additional employees to implement
our acquisition strategy and our internal growth strategy. In order to continue
to grow effectively and efficiently, we will need to implement and improve our
operational, financial and management information systems and controls and to
train, motivate and manage our employees. We intend to review continually and
upgrade our management information systems and to hire additional management and
other personnel in order to maintain the adequacy of its operational, financial
and management controls. There can be no assurance, however, that we will be
able to meet these objectives.
OUR EXECUTIVE OFFICERS AND DIRECTORS CONTROL APPROXIMATELY 45% OF EARTHCARE.
Our officers and directors currently beneficially own approximately 45% of
our common stock. As a results, this group may be able to control matters
requiring the approval of a majority of the stockholders, such as election of
directors. The voting power of these shareholders under certain circumstances
could have the effect of delaying or preventing a change in control of
EarthCare. Don Moorehead, chairman and chief executive officer of the Company
and Raymond Cash, vice chairman and a director of the Company, together control
over 43% of our common stock. In addition, our officers and directors hold
options to acquire approximately 613,000 shares of common stock, subject to
vesting and other requirements.
THIS OFFERING WILL BENEFIT CERTAIN STOCKHOLDERS.
Two directors, including our chairman, own approximately 43% of our common
stock. We are registering 1,833,516 shares of common stock that may be issued to
them if they convert their 10% subordinated debentures for shares. If they
convert these debentures into shares of common stock, these two directors will
not be subject to the volume limitations of Rule 144 promulgated under the
Securities Act. We cannot be assured that these two directors will not sell
their shares (whether continually held or acquired later upon conversion of
debentures) when they are entitled to do so.
11
<PAGE> 13
VARIOUS EVENTS, INCLUDING SOME BEYOND OUR CONTROL, MAY NEGATIVELY AFFECT THE
VALUE OF OUR STOCK.
The market price of our common stock could be subject to significant
fluctuations in response to various factors and events, including the issuance
of shares in acquisitions, the liquidity of the market for the common stock,
differences between our actual financial or operating results and those expected
by investors and analysts, changes in analysts' recommendations or projections,
new statutes or regulations or changes in interpretations of existing statutes
and regulations affecting our business, changes in general economic conditions
or broad stock market fluctuations.
FAILURE TO COMPLY WITH COVENANTS AND CONDITIONS OF OUR CREDIT FACILITY COULD
ADVERSELY AFFECT OUR BUSINESS.
Our credit facility currently requires us to comply with certain
restrictive financial covenants, including senior debt coverage, total debt
coverage, interest coverage and net worth ratios. For each of the last three
quarters, we have not complied with certain covenants in our credit agreement
and have negotiated amendments to the credit agreement. We cannot be assured
that we will be able to comply with the restrictive financial covenants in
future quarters, nor can we be assured that we will successfully be able to
negotiate amendments to our credit agreement with our lenders. Our failure to
comply with these covenants may result in a default under the credit facility,
which could allow our lending banks to accelerate the date for repayment of debt
incurred under the credit facility and materially and adversely affect our
business and financial results.
EXTENSIVE AND EVOLVING ENVIRONMENTAL LAWS AND REGULATIONS MAY ADVERSELY AFFECT
OUR BUSINESS.
Environmental laws and regulations have been enforced more and more
stringently in recent years because of greater public interest in protecting the
environment. These laws and regulations impose substantial costs on us and
affect our business in many other ways, including as described below. In
addition, federal, state and local governments may change the rights they grant
to and the restrictions they impose on solid and liquid waste services
companies, and some changes could have a material adverse effect on us.
WE MAY BE UNABLE TO OBTAIN AND MAINTAIN LICENSES OR PERMITS AND ZONING,
ENVIRONMENTAL AND/OR OTHER LAND USE APPROVALS THAT WE NEED TO OWN AND OPERATE
OUR LANDFILL AND OUR OPERATING SITES.
These licenses or permits and approvals are difficult and time-consuming to
obtain and renew, and elected officials and citizens' groups frequently oppose
them. Failure to obtain and maintain the permits and approvals we need to own or
operate our landfill and our NLW and NSW operating sites, including increasing
their capacity, could materially and adversely affect our business and financial
condition.
EXTENSIVE REGULATIONS THAT GOVERN THE DESIGN, OPERATION AND CLOSURE OF LANDFILLS
MAY ADVERSELY AFFECT OUR BUSINESS.
These regulations include the Subtitle D Regulations that establish minimum
federal requirements adopted by the U.S. Environmental Protection Agency in
October 1991 under Subtitle D of the Resource Conservation and Recovery Act of
1976. If we fail to comply with these regulations, we could be required to
undertake investigatory or remedial activities, curtail operations or close a
landfill or operating site temporarily or permanently. Future changes to those
regulations may require us to modify, supplement or replace equipment or
facilities at substantial costs. If regulatory agencies fail to enforce these
regulations vigorously or consistently, our competitors whose facilities do not
comply with the Subtitle D Regulations or their state counterparts could obtain
an advantage over us. Our financial obligation arising from any failure to
comply with these regulations could materially and adversely affect our business
and financial results.
WE MAY BE SUBJECT IN THE NORMAL COURSE OF BUSINESS TO JUDICIAL AND
ADMINISTRATIVE PROCEEDINGS INVOLVING FEDERAL, STATE OR LOCAL AGENCIES OR
CITIZENS' GROUPS, WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
Governmental agencies might impose fines or penalties on us. They might
also attempt to revoke or deny renewal of our operating permits, franchises or
licenses for violations or alleged violations of environmental laws or
regulations, or to require us to remediate potential environmental problems
relating to waste that we or our predecessors collected, transported, disposed
of or stored. Individuals or community groups might also bring actions against
us in connection with our operations. Any adverse outcome in these proceedings
could have a material adverse effect on our business and financial results and
create adverse publicity about us.
12
<PAGE> 14
WE MAY INCUR LIABILITIES FOR ENVIRONMENTAL DAMAGE.
We are liable for any environmental damage that our solid and liquid waste
facilities might cause, including damage to neighboring landowners or residents,
particularly as a result of the contamination of soil, groundwater or surface
water, and especially drinking water. We may be liable for damage resulting from
conditions existing before we acquired these facilities. We may also be liable
for any off-site environmental contamination caused by pollutants or hazardous
substances whose transportation, treatment or disposal that we or our
predecessors arranged. Any substantial liability for environmental damage could
materially and adversely affect our business and financial results.
EACH BUSINESS THAT WE ACQUIRE OR HAVE ACQUIRED MAY HAVE LIABILITIES THAT WE FAIL
OR ARE UNABLE TO DISCOVER, POSSIBLY INCLUDING LIABILITIES THAT ARISE FROM PRIOR
OWNERS' FAILURE TO COMPLY WITH ENVIRONMENTAL LAWS.
As a successor owner, we could be legally responsible for these
liabilities. Even if we obtain legally enforceable representations, warranties
and indemnities from the sellers of such businesses, they may not cover the
liabilities fully. Some environmental liabilities, even if we do not expressly
assume them, might be imposed on us under various legal theories. Our insurance
program does not cover liabilities associated with any environmental cleanup or
remediation of our own sites. An uninsured claim against us could materially and
adversely affect our business and financial results if successful.
OUR GROWTH IN THE NSW INDUSTRY MAY BE LIMITED BY OUR INABILITY TO OBTAIN NEW
LANDFILLS AND EXPAND OUR EXISTING LANDFILL.
We currently own and operate one landfill in Florida. Our ability to meet
our growth objectives may depend in part on our ability to acquire, lease and
expand landfills and develop new landfill sites. We may not be able to obtain
new landfill sites or expand the permitted capacity of our landfills when
necessary.
IN SOME AREAS IN WHICH WE MAY OPERATE, SUITABLE LAND FOR NEW SITES OR EXPANSION
OF EXISTING LANDFILL SITES MAY BE UNAVAILABLE.
Operating permits for landfills in Florida and in states in which we plan
to operate must generally be renewed at least every five years. It has become
increasingly difficult and expensive to obtain required permits and approvals to
build, operate and expand solid waste management facilities, including landfills
and transfer stations. The process often takes several years, requires numerous
hearings and compliance with zoning, environmental and other requirements and
permitting and approval are often resisted by citizen, public interest or other
groups. We may not be able to obtain or maintain permits we require to expand,
and such permits may contain burdensome terms and conditions. Even when granted,
final permits to expand are often not approved until the remaining permitted
disposal capacity of a landfill is very low. Local laws and ordinances also may
affect our ability to obtain permits to expand landfills. If we were to exhaust
our permitted capacity at a landfill, our ability to expand internally could be
limited, and we could be required to cap and close that landfill and forced to
dispose of collected waste at more distant landfills or at landfills operated by
our competitors. The resulting increased costs could materially and adversely
affect our business and financial results.
OUR ACCRUALS FOR LANDFILL CLOSURE AND POST-CLOSURE COSTS MAY BE INADEQUATE.
We could be required to pay closure and post-closure costs of landfills and
any disposal facilities that we own or operate. We currently accrue for future
closure and post-closure costs of our owned landfill for a term of 30 years
after final closure of the landfill, based on engineering estimates of
consumption of permitted landfill airspace over the useful life of the landfill.
Our obligations to pay closure or post-closure costs may exceed the amount we
accrued and reserved and other amounts available from funds or reserves
established to pay such costs. This could materially and adversely affect our
business and financial results.
13
<PAGE> 15
WE MAY INCUR ADDITIONAL CHARGES RELATED TO CAPITAL EXPENDITURES.
In accordance with generally accepted accounting principles, we capitalize
some expenditures and advances relating to acquisitions, pending acquisitions
and landfill development projects. We expense indirect acquisition costs such as
executive salaries, general corporate overhead, public affairs and other
corporate services as we incur those costs. We charge against earnings any
unamortized capitalized expenditures and advances, net of any amount that we
estimate we will recover, through sale or otherwise that relate to any operation
that is permanently shut down, any pending acquisition that is not consummated
and any landfill development project that we do not expect to complete.
Therefore, we might incur charges against earnings in future periods that could
materially and adversely affect our business and financial results.
PURCHASERS OF SHARES OF IN THIS OFFERING WILL SUFFER IMMEDIATE DILUTION.
As of September 30, 2000, we had a negative net tangible book value. Net
tangible book value represents the amount of our total tangible assets less
total liabilities. Purchasers of shares of common stock offered by this
prospectus will suffer immediate substantial dilution in the net tangible book
value per share purchased in this offering, while existing shareholders will
experience an increase in net tangible book value of shares they own.
WE HAVE A SUBSTANTIAL NUMBER OF OPTIONS AND WARRANTS OUTSTANDING WHICH WILL
DILUTE YOUR OWNERSHIP.
We have outstanding options to purchase 1,175,529 shares of common stock at
an average price of $9.60 and we have outstanding warrants to purchase
1,439,161 shares of common stock at an average price of $7.07. These outstanding
options and warrants may deter investors from providing future equity or debt
investments for us. These outstanding options and warrants, if exercised, will
also dilute your current ownership. To the extent that such options and warrants
are exercised and sold in the future, the timing of such sale may adversely
affect the prevailing market price for our common stock. The holders of the
outstanding options and warrants may exercise and sell their shares at a time
when we would otherwise be able to obtain additional equity capital on terms
more favorable to us. We have filed a Registration Statement on Form S-8 to
register the shares of common stock issuable upon the exercise of options.
STOCKHOLDERS WILL EXPERIENCE DILUTION WHEN WE ISSUE ADDITIONAL SHARES OF OUR
COMMON STOCK OR OUR PREFERRED STOCK.
Investors will experience dilution when we issue common stock as
consideration for acquisitions and on the exercise of outstanding stock options
and warrants. We currently have 14,575,731 shares of our common stock
outstanding. Our authorized capital is 70,000,000 shares of common stock and
30,000,000 shares of preferred stock. We have registered 5,000,000 shares of
common stock for acquisitions, all of which have been issued. We expect to
register an additional 5,000,000 shares in the near future to complete other
acquisitions. In addition, we are committed to register 599,700 shares of common
stock in connection with a private sale of our common stock in June 2000. We may
make additional primary public or private offerings of our common stock or our
preferred stock in the future. We have 2,614,690 options and warrants
outstanding and have the ability to issue an additional 624,471 options under
our current stock option plan. These future issuances could cause additional
dilution.
PROVISIONS IN OUR CHARTER AND BYLAWS MAY DETER CHANGES IN CONTROL THAT COULD
BENEFIT OUR STOCKHOLDERS.
Certain provisions of Delaware law and certain provisions of our certificate
of incorporation and bylaws could delay or impede the removal of incumbent
directors and could make it more difficult for a third-party to acquire, or
could discourage a third-party from attempting to acquire, control of the
company. Such provisions could limit the price that investors might be willing
to pay in the future for shares of the company's common stock. The certificate
and bylaws impose various procedural and other requirements (including a
staggered board of directors, removal of directors only for cause and the
issuance of preferred stock as described below) that could make it more
difficult for stockholders to effect certain corporate actions. The certificate
gives the company's board of directors the authority to issue up to 30 million
shares of preferred stock and to determine the price, rights, preferences and
restrictions, including the voting rights of such shares, without any further
vote or action by the company's stockholders. The rights of holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock issued in the future. We may issue preferred
stock in the future as part of our efforts to raise equity capital. The
"business combinations" statute under Delaware law may restrict certain business
combinations by interested stockholders. We have entered into employment
agreements with our executive officers that contain
14
<PAGE> 16
change in control provisions. The change in control provisions may hinder,
delay, deter or prevent a tender offer, proxy contest or other attempted
takeover because the covered employees can terminate their employment in such
event and receive payments for 24 months to 60 months after termination pursuant
to their respective agreements.
THIS REGISTRATION OF ADDITIONAL FREELY TRADEABLE SHARES MAY IMPACT THE MARKET
FOR OUR STOCK.
This prospectus relates to the sale of up to 4,985,838 shares of common
stock. We will not receive any proceeds from the sale of the shares and have
prepared this prospectus at our expense. As of September 30, 2000, prior to the
registration of the shares, approximately 14,199,723 shares of common stock or
approximately 97% of the 14,575,731 issued and outstanding shares of common
stock (as of September 30, 2000) were freely tradeable. The sales of significant
blocks of stock, or even the possibility of such sales, could adversely affect
the prevailing market price of and the trading market for the common stock and
reduce the prices available in the market. However, there can be no assurance
that any or all of the shares will be offered for sale by the selling
shareholders after conversion of the debentures for common shares.
15
<PAGE> 17
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling shareholders identified in
this prospectus. We will not receive any proceeds from the sale of the shares
from the selling shareholders. We agreed to pay the expenses of this offering in
connection with the offer and sale of the debentures and anticipate that we will
incur costs of approximately $150,000 in connection with this offering,
including filing fees, transfer agent costs, printing costs, listing fees and
legal and accounting fees.
DILUTION
At September 30, 2000, our tangible book value was approximately
negative $24,741,050, or negative $1.70 per share of common stock. Net tangible
book value per share represents the amount of our total tangible assets reduced
by the amount of our total liabilities, divided by the number of shares of
common stock outstanding. The following table illustrates the per share
dilution:
<TABLE>
<S> <C>
Trading price per share (as of
November 27, 2000) $ 3.00
Net tangible book value per share (1.70)
------
Assumed dilution to new investors $(4.70)
</TABLE>
<TABLE>
<CAPTION>
Shares Consideration
----------- -------------
<S> <C> <C>
Selling shareholders....................... 4,985,838 $ 29,915,000
Shareholders holding unregistered shares... 1,000,000 5,000,000
Freely tradeable shares.................... 13,199,723 54,832,006
----------- -------------
19,185,561 $ 89,747,006
----------- -------------
</TABLE>
We have not assumed any exercise of outstanding stock options or
warrants. As of September 30, 2000, there were stock options outstanding to
purchase a total of 1,175,529 shares of common stock with a weighted average
exercise price of $9.60 per share, of which 281,383 were exercisable, and
warrants outstanding to purchase a total of 1,439,161 shares of common stock
with a weighted average exercise price of $7.07 per share, all of which are
exercisable.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the common stock, on an as converted basis, by each
selling shareholder. Unless otherwise specified, the named beneficial owner has
sole voting and investment power. The following table assumes the following: (i)
the conversion by each of the selling shareholders of the principal amount of
the debentures into shares of common stock and (ii) the sale by each of the
selling shareholders of such shares of common stock upon conversion of the
debentures.
16
<PAGE> 18
<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------------ TO BE SOLD IN ------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------------ ----------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Donald F. Moorehead 4,385,070 21.36% 1,165,417 3,219,653 15.68%
Raymond Cash 5,091,999 21.55% 668.099 4,423,900 21.55%
Founders' Equity Group 904,121 4.40% 8,270 895,851 4.36%
George O. Moorehead 588,578 2.87% 588,578 0 *
Carolyn Moorehead 12,248 * 12,248 0 *
Joe M. Bailey 8,313 * 8,313 0 *
Lorne D. Bain 8,313 * 8,313 0 *
George L. Ball 32,626 * 16,626 16,000 *
Susan Huffard Ball 8,313 * 8,313 0 *
Huffard Family Partnership 8,313 * 8,313 0 *
Bonner Ball 4,157 * 4,157 0 *
Carol C. Barbour Profit 4,157 * 4,157 0 *
Sharing Plan DLJSC-Cust. Pr.
Charles Barrier & Becky 4,157 * 4,157 0 *
Barrier, TEN IN COM
Cimarron River LLC 4,157 * 4,157 0 *
Martin B. Bernstein 16,626 * 16,626 0 *
John C. Brewster and Marianna 8,313 * 8,313 0 *
Brewster JR/TIC
Mark J. Brookner Trustee for 8,313 * 8,313 0 *
Dolores Wilkenfeld Trust
J.P. Bryan 8,313 * 8,313 0 *
Bruce A. Burns & Sheila Burns, 4,157 * 4,157 0 *
Ten In Com
John T. Cater 4,157 * 4,157 0 *
E. Dean Catlett & Jo Ann 8,313 * 8,313 0 *
Catlett Ten In Com
Michael S. Chadwick 8,157 * 4,157 4,000 *
James W. Christmas 8,313 * 8,313 0 *
W. Roger Clements, Special 8,313 * 8,313 0 *
Retirement Account
Elizabeth Kirby Cohn 16,626 * 16,626 0 *
Morton A. Cohn 198,262 * 166,262 32,000 *
Bobby Smith Cohn 16,625 * 16,625 0 *
Anne Lindsay Cohn Holstead 16,626 * 16,626 0 *
Courtney Cohn Hopson Separate 16,626 * 16,626 0 *
Account
SEP FBO Higdon O. Compton 8,313 * 8,313 0 *
DLJSC as Custodian
IRA FBO: Alan Cummings/DLJSC 8,313 * 8,313 0 *
as Custodian
Thomas W. Custer 8,313 * 8,313 0 *
D W Holdings LLC 16,626 * 16,626 0 *
William M. DeArman 16,626 * 16,626 0 *
Continental Marine Service 4,157 * 4,157 0 *
Life Insurance Co. LTD
Louis DelHomme 32,626 * 16,626 16,000 *
Max Dillard 16,626 * 16,626 0 *
John Drury 66,505 * 66,505 0 *
Wayne B. Duddlesten 24,939 * 24,939 0 *
IRA FBO Linda L. Edwards DLJSC 8,313 * 8,313 0 *
as Custodian
J.A. Elkins Jr. 49,879 * 49,879 0 *
Leigh Ellis ad Mimi G. Ellis 4,157 * 4,157 0 *
JTWROS
IRA FBO Ethel Emerson Fisher 4,157 * 4,157 0 *
DLJSC as Custodian
Jonathan G. Epstein & Carol 4,157 * 4,157 0 *
Epstein Ten In Com
Stephen Falk, M.D. and Sheila 8,313 * 8,313 0 *
Falk, T/I/C
Patrice Leigh Ferguson 4,157 * 4,157 0 *
Paul F Ferguson, Jr. 16,626 * 16,626 0 *
IRA FBO Don L. Fitch DLISC as 8,313 * 8,313 0 *
Custodian Rollover
Joseph H. Flom 16,626 * 16,626 0 *
Falcon Investors 24,939 * 24,939 0 *
Alan J. Garber 4,157 * 4,157 0 *
John H. Gray 8,313 * 8,313 0 *
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------------ TO BE SOLD IN ------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------------ ----------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Kelly W. Gruber, Retirement 8,313 * 8,313 0 *
Special Account
Don J. & Rosemary T. Gunther 16,626 * 16,626 0 *
Trustees FBO The 19
Fred Hagans 4,157 * 4,157 0 *
The Johnny Murphy Fund, L.P. 8,313 * 8,313 0 *
Tolar N. Hamblen, III 4,157 * 4,157 0 *
Dick Harmon 4,157 * 4,157 0 *
Sue M. Harris 8,313 * 8,313 0 *
Titus H. Harris, Jr. 8,313 * 8,313 0 *
Steve Harter 16,626 * 16,626 0 *
John V. Hazelton Jr. & Bonnie 4,157 * 4,157 0 *
C. Hazelton, TIC
L. Carl Hebert and Edith C. 16,626 * 16,626 0 *
Hebert TIC
Edward F. Heil 16,626 * 16,626 0 *
Randal A. Hendricks 8,313 * 8,313 0 *
Alan B. Hendricks 8,313 * 8,313 0 *
William K. Herbold and Norma 4,157 * 4,157 0 *
Rae Herbold TIC
Paul P. Huffard, IV 8,313 * 8,313 0 *
Miles A. Hurson 4,157 * 4,157 0 *
Huttner Partnership Ltd 1999 16,626 * 16,626 0 *
John W. Johnson 4,157 * 4,157 0 *
A&G Johnson Family Partnership 8,313 * 8,313 0 *
Walter Johnson 8,313 * 8,313 0 *
Austin Jones & Margaret Jones 4,157 * 4,157 0 *
TIC
Samuel A. Jones 8,157 * 4,157 4,000 *
Wolf Canyon, Ltd. - Special 16,626 * 16,626 0 *
Keenan Limited Partnership 16,626 * 16,626 0 *
IRA FBO Stephen A. Kemble 12,470 * 12,470 0 *
DLJSC as Custodian R
Robert Larry Kinney, IRA 12,313 * 8,313 4,000 *
Frost Family I Ltd., A 16,626 * 16,626 0 *
Partnership
J. Livingston Kosberg 8,313 * 8,313 0 *
Neil Lande c/f Sara Lande 4,157 * 4,157 0 *
Leil Lande c/f Steven Lande 4,157 * 4,157 0 *
Neil Lande c/f Caroline Lande 4,157 * 4,157 0 *
Neil Lande c/f Lynn Lande 4,157 * 4,157 0 *
Neil Lande 8,313 * 8,313 0 *
Robert W. Lary 8,313 * 8,313 0 *
The Lawlor Family, L.L.C. 16,626 * 16,626 0 *
Kenneth L. Lay and Linda P. 33,252 * 33,252 0 *
Lay TEN IN COM
Roger P. Lindstedt 49,879 * 49,879 0 *
Matthew T. MacConnell 4,157 * 4,157 0 *
Larry Martin 33,252 * 33,252 0 *
Ed McAninch 16,626 * 16,626 0 *
Randy J. McClanahan and 16,626 * 16,626 0 *
Jennifer G. McClanahan
Charles Barrier & Dolores 8,313 * 8,313 0 *
McGinnes TTEES Est. L.
Dr. G.Walter McReynolds 4,157 * 4,157 0 *
Peggy Menchaca 4,157 * 4,157 0 *
Jerry M. Mills 33,252 * 33,252 0 *
IRA FBO: Michael W. 12,470 * 12,470 0 *
Mitchell/DLJSC as Custodian
S. Reed Morian 33,252 * 33,252 0 *
Cockspur, Inc. 16,626 * 16,626 0 *
BenT. Morris 32,626 * 16,626 16,000 *
Carloss Morris TTEE FBO: The 8,313 * 8,313 0 *
Carloss & Doris P.
Steven Rance Mulliniks Special 8,313 * 8,313 0 *
Retirement Account
John I. Mundy Separate Property 28,626 * 16,626 12,000 *
Raymond L. Nelson, Jr. 16,626 * 16,626 0 *
John G. Nicklos, Separate property 8,313 * 8,313 0 *
Katherine Halliday O'Neil 8,313 * 8,313 0 *
John M. O'Quinn 83,131 * 83,131 0 *
Courtney M. Platt 4,157 * 4,157 0 *
Donald L. Poarch 8,313 * 8,313 0 *
W. Randall Powell & Nancy 8,313 * 8,313 0 *
Powell Co-TTEEs FBO
SEP FBO David Preisler/DLJSC 8,313 * 8,313 0 *
as Custodian
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
COMMON COMMON STOCK
STOCK BENEFICIALLY BENEFICIALLY
OWNED BEFORE THE COMMON OWNED AFTER
OFFERING(1) STOCK THE OFFERING(3)
------------------------ TO BE SOLD IN ------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT THE OFFERING(2) NUMBER PERCENT
------------------------------ ----------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
David Preisler 8,313 * 8,313 0 *
Leroy E. Quigley 8,313 * 8,313 0 *
Leonard Rauch Special 16,626 * 16,626 0 *
IRA FBO R E Reamer DLJSC as 4,157 * 4,157 0 *
Custodian Rollover
Jeff J. Reardon, Special 4,157 * 4,157 0 *
Retirement Account
Charlotte E. Reeves 4,157 * 4,157 0 *
First Trust Corp. TTEE FBO 4,157 * 4,157 0 *
Mary F. Riley 401 K Plan
Franelle Rogers 4,157 * 4,157 0 *
Rex C. Ross & Adrian T. Ross 8,313 * 8,313 0 *
Ten In Com
Brian Turner Ross 4,157 * 4,157 0 *
Rusty C. Ross 4,157 * 4,157 0 *
Gerald L. Russell and Karen S. 4,157 * 4,157 0 *
Russell T/I/C
Bell Bottom Foundation Co.,
Inc. 8,313 * 8,313 0 *
Nolan Ryan 8,313 * 8,313 0 *
Bret D. Sanders 14,313 * 8,313 6,000 *
Brad D.Sanders 14,313 * 8,313 6,000 *
Laura K. Sanders 14,313 * 8,313 6,000 *
Katherine U. Sanders 1990 107,131 * 83,131 24,000 *
Christine M. Sanders 16,313 * 8,313 8,000 *
Don A. Sanders 1990 172,384 * 116,384 56,000 *
Mrs. Susan Sanders Keller 14,313 * 8,313 6,000 *
Edwin C.Sandhop 8,313 * 8,313 0 *
Butler Co., A Partnership 8,313 * 8,313 0 *
Evans Co., A Partnership 8,313 * 8,313 0 *
Paula L. Santoski 8,313 * 8,313 0 *
Steve Scott 115,131 * 83,131 32,000 *
Janet E. Sikes 8,313 * *
Bruce Slovin 45,252 * 33,252 12,000 *
Sherri Spicer 41,252 * 33,252 8,000 *
Lindsey Spicer #1 Trust, Sheri 16,626 * 16,626 0 *
Spicer Trustee UAD 0
IRA FBO Mary E Stapp DLJSC as 4,157 * 4,157 0 *
Custodian Rollover
Tanglewood Family Limited 4,157 * 4,157 0 *
Partnership
Platinum Business Investment 49,879 * 49,879 0 *
Company, Ltd.
Joseph B. Swinbank 8,313 * 8,313 0 *
Paul Tate and Lara M. Tate TIC 4,157 * 4,157 0 *
Glenn Tatham, Special 8,313 * 8,313 0 *
Christopher & Emily Todd 8,313 * 8,313 0 *
Jack I. Tompkins 8,313 * 8,313 0 *
David Towery 10,157 * 10,157 0 *
1991 Investment Co. 16,626 * 16,626 0 *
J. Richard Walton 4,157 * 4,157 0 *
Walter T. Weathers, Jr. and 8,313 * 8,313 0 *
Allyson N. Weathers TE
Don Weir and Julie Ellen Weir 16,626 * 16,626 0 *
Ten In Com
Lisa Dawn Weir 4,157 * 4,157 0 *
Eric Glenn Weir 4,157 * 4,157 0 *
Patrick H. Weston, DLJSC as 4,157 * 4,157 0 *
Custodian/Rollover AC
J-All Partnership 66,505 * 66,505 0 *
Kim A. Cappel 41,352 * 41,352 0 *
Compass Bank CSDN FBO 165,410 * 165,410 0 *
Renaissance US Growth
Custer Company, Inc. 16,541 * 16,541 0 *
Ivor Flannery 16,541 * 16,541 0 *
Ener Corporation 4,135 * 4,135 0 *
Mark Kane 8,270 * 8,270 0 *
Evan Moorehead 8,270 * 8,270 0 *
George & Nancy Moorehead 26,943 * 26,943 0 *
Charitable Trust
George O. Moorehead 127,020 * 127,020 0 *
Tim Schweizer 82,705 * 82,705 0 *
Triple S.Group 16,541 * 16,541 0 *
Don A. Sanders 1990 40,850 * 40,850 0 *
Katherine U. Sanders 1990 40,850 * 40,850 0 *
</TABLE>
----------
*less than one percent.
19
<PAGE> 21
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time of the
shares of common stock received upon conversion of our 10% subordinated
convertible debentures by the selling shareholders. We are registering the
shares for sale to provide the debenture holders with freely tradeable
securities upon conversion of the debentures, but registration of such shares
does not necessarily mean that any of such debentures will be converted or such
shares will be offered or sold. We will not receive any proceeds from the
offering of the shares by the selling shareholders.
Our common stock may be offered for sale and sold in one or more
transactions, including block transactions, at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at prices determined on a negotiated
or competitive bid basis. Shares of common stock may be sold directly, through
agents designated from time to time, or by such other means as may be specified
in the supplement to this prospectus. Participating agents or broker-dealers in
the distribution of any of the shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended. Any
discount or commission received by any underwriter and any participating agents
or broker-dealers, and any profit on the resale of shares of common stock
purchased by any of them may be deemed to be underwriting discounts or
commissions under the Securities Act of 1933, as amended.
Shares of our common stock may be sold through a broker-dealer acting
as agent or broker or to a broker-dealer acting as principal. In the latter
case, the broker-dealer may then resell such shares of common stock to the
public at varying prices to be determined by the broker-dealer at the time of
resale.
To the extent required, the number of shares of common stock to be
sold, information relating to the underwriters, the purchase price, the public
offering price, if applicable, the name of any underwriter, agent or
broker-dealer, and any applicable commissions, discounts or other items
constituting compensation to such underwriters, agents or broker-dealers with
respect to a particular offering will be set forth in an accompanying supplement
to this prospectus.
If underwriters are used in a sale, shares of common stock will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Shares of common stock may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of shares of common stock will be
named in the supplement to this prospectus relating to that offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
stated on the cover of the prospectus supplement.
Under the securities laws of some states, the shares of common stock
registered by the registration statement may be sold in those states only
through registered or licensed brokers or dealers.
Any person participating in the distribution of common stock registered
under the registration statement that includes this prospectus will be subject
to applicable provisions of the Securities Exchange Act of 1934, as amended, and
the applicable SEC rules and regulations, including, among others, Regulation M,
which may limit the timing of purchases and sales of any of our common stock by
any such person. Furthermore, Regulation M may restrict the ability of any
person engaged in the distribution of our common stock to engage in
market-making activities with respect to our common stock. These restrictions
may affect the marketability of our common stock and the ability of any person
or entity to engage in market-making activities with respect to our common
stock.
Upon sale under the registration statement that includes this
prospectus, the shares of common stock registered by the registration statement
will be freely tradable in the hands of persons other than our affiliates.
20
<PAGE> 22
LEGAL MATTERS
The validity of the issuance of the shares of the common stock offered
by this prospectus will be passed upon for us by King & Spalding.
EXPERTS
The consolidated financial statements of EarthCare Company as of
December 31, 1999 and 1998 and for the years then ended, incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of EarthCare Company
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of EarthCare Company as of
December 31, 1997 and for the year then ended, incorporated by reference in this
Prospectus and elsewhere in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants as indicated in their report
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said report.
The financial statements of Reifsnieder Transportation, Inc. as of
December 31, 1998 and 1997 and for the years then ended, incorporated in this
Prospectus by reference to the Form 8-K/A of EarthCare Company dated May 12,
1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The combined financial statements of Magnum Environmental Services,
Inc. and Related Entities as of December 31, 1998 and 1997 and for the years
then ended, incorporated in this Prospectus by reference to the Form 8-K/A of
EarthCare Company dated November 4, 1999 have been so incorporated in reliance
on the report of Rotenberg & Company LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting. With respect to
the Independent Accountants Report on the unaudited interim financial
information of Magnum Environmental Services, Inc. for the six months period
ended June 30, 1999 and 1998 dated October 5, 1999 which is incorporated herein
by reference, Rotenberg & Company, LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports and incorporated by reference herein, they
did not audit and they did not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the review procedures applied.
Rotenberg & Company, LLP are not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their report on the unaudited interim
financial information because those reports are not "reports" on a "part" of the
registration statement prepared or certified by an account with in the meaning
of Sections 7 and 11 of the Act.
The combined financial statements of International Petroleum
Corporation and Related Entities as of March 31, 1999 and 1998 and for the years
then ended, incorporated in this Prospectus by reference to the Form 8-K/A of
EarthCare Company dated May 1, 2000 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
21
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN THIS PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 3,411
Nasdaq National Market Listing Fee............................... $ 17,500
Printing and engraving expenses.................................. $ 20,000
Accounting fees and expenses..................................... $ 50,000
Legal fees and expenses.......................................... $ 100,000
Miscellaneous expenses........................................... $ 0
Total Expenses................................................... $ 150,000
</TABLE>
All fees other than the SEC registration fee and the Nasdaq National
Market Listing Fee are estimated. All of the expenses of the issuance and
distribution of the common stock being offered will be borne by us.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, our certificate
provides that our directors will not be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for any breach of the director's duty of loyalty to us or our stockholders,
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
o under Section 174 of the Delaware General Corporation Law, relating to
prohibited dividends, distributions and repurchases or redemptions of stock,
or
o for any transaction from which the director derives an improper personal
benefit.
Our certificate of incorporation provides that we shall indemnify our
directors, officers, employees and other agents to the fullest extent provided
by Delaware law. Specifically upon request, we will advance expenses to any
officer or director who was or is a party to, or is threatened to be made a
party to, any threatened, pending or completed action, suit or proceeding,
including civil, criminal, administrative, investigative or otherwise, by reason
of the fact that such person is or was a director or officer of us, or is or was
acting at the request of us as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise. This indemnification will not apply if the
indemnitee is adjudged liable to us, unless and only if the court in which the
action is brought determines the indemnitee is fairly and reasonably entitled to
indemnification by us. We also maintain insurance on the behalf of our directors
and officers against any such liability that may be asserted as a result of the
director's or officer's service in such a capacity.
22
<PAGE> 24
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
4.1 Article IV of the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed
with EarthCare's Registration Statement on Form 10, Registration No. 00024685)
4.2 Article VI of the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed
with EarthCare's Registration Statement on Form 10, Registration No. 00024685)
5.1 Opinion of King & Spalding, counsel to EarthCare, as to legality of the shares being registered.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Rotenberg & Company LLP
23.4 Consent of King & Spalding (included in Exhibit 5.1)
99.1 Form of 10% Convertible Subordinated Debenture Due 2006 (incorporated by reference to Exhibit
4.1 filed with EarthCare's Quarterly Report on Form 10-Q for the three months ended September
30, 1999)
99.2 Second Amendment to the Amended and Restated Credit Agreement, dated as of October 31, 2000
among EarthCare Company, various financial institutions, and Bank of America, N.A., as
administrative agent (incorporated by reference to Exhibit 99.1 filed with EarthCare's Quarterly
Report on Form 10-Q for the three months ended September 30, 2000.)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
II-2
<PAGE> 25
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on December 12, 2000.
EARTHCARE COMPANY
By: /s/ William W. Solomon, Jr.
William W. Solomon, Jr.
Vice President and Chief Financial
Officer (Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald F. Moorehead, Jr., and William W.
Solomon, Jr. his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and any subsequent registration
statements pursuant to Rule 462 of the Securities Act and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorneys-in-fact
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof. Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities on December 12, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ DONALD F. MOOREHEAD, JR. Chairman, Chief Executive December 12, 2000
------------------------------------- Officer (Principal Executive
Donald F. Moorehead, Jr. Officer) and Director
/s/ RAYMOND M. CASH Vice Chairman and Director December 12, 2000
-------------------------------------
Raymond M. Cash
/s/ HARRY HABETS President, Chief Operating December 12, 2000
------------------------------------- Officer and Director
Harry Habets
/s/WILLIAM W. SOLOMON, JR. Vice President and Chief December 12, 2000
------------------------------------- Financial Officer (Principal
William W. Solomon, Jr. Financial Officer)
/s/ WILLIAM M. ADDY Vice President of Marketing, December 12, 2000
------------------------------------- Sales & Corporate Development,
William M. Addy Director
/s/ PHILIP S. SIEGEL Director December 12, 2000
-------------------------------------
Philip S. Siegel
/s/ BRIAN ROSBOROUGH Director December 12, 2000
-------------------------------------
Brian Rosborough
/s/ ELROY G. ROELKE Director December 12, 2000
-------------------------------------
Elroy G. Roelke
</TABLE>
II-4
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Article IV of the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed
with EarthCare's Registration Statement on Form 10, Registration No. 00024685)
4.2 Article VI of the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed
with EarthCare's Registration Statement on Form 10, Registration No. 00024685)
5.1 Opinion of King & Spalding, counsel to EarthCare, as to legality of the shares being registered.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Rotenberg & Company LLP
23.4 Consent of King & Spalding (included in Exhibit 5.1)
99.1 Form of 10% Convertible Subordinated Debenture Due 2006 (incorporated by reference to Exhibit
4.1 filed with EarthCare's Quarterly Report on Form 10-Q for the three months ended September
30, 1999)
99.2 Second Amendment to the Amended and Restated Credit Agreement, dated as of October 31, 2000
among EarthCare Company, various financial institutions, and Bank of America, N.A., as
administrative agent (incorporated by reference to Exhibit 99.1 filed with EarthCare's Quarterly
Report on Form 10-Q for the three months ended September 30, 2000.)
</TABLE>
