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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 27, 1996
EASTERN ENVIRONMENTAL SERVICES, INC.
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(Exact name of issuer as specified in charter)
Delaware 0-16102 59-2840783
(State or Other Jurisdiction Commission (I.R.S. Employer
or Incorporation or file number Identification
Organization) Number)
1000 Crawford Place, Mt. Laurel, New Jersey 08054
(Address of principal executive offices)
(609) 235-6009
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
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On September 27, 1996, the Registrant consummated the acquisition of Super
Kwik, Inc., a New Jersey Corporation ("Super Kwik") and Waste Maintenance
Services, Inc., a New Jersey Corporation ("Maintenance") pursuant to the terms
of an Agreement of Merger dated July 29, 1996, among the Registrant, Super Kwik,
Maintenance, and Willard and Glen Miller (the "Shareholders"). The description
of the acquisition transaction set forth herein is qualified in its entirety by
reference to the Merger Agreement which is filed herewith as an exhibit.
Pursuant to the Agreement of Merger, Super Kwik and Maintenance were merged
into NHD, Inc., a wholly owned subsidiary of the Registrant, resulting in the
Shareholders receiving 2,307,692 shares of the Registrant's common stock in
exchange for all issued and outstanding shares of Super Kwik and Maintenance.
The 2,307,692 shares of the Registrant's common stock were valued at $6.50 per
share (the closing price of the Registrant's common stock on the business day
five (5) days prior to the closing date), representing aggregate consideration
of $15,000,000. No cash was paid to the Shareholders for the acquisition of the
shares of Super Kwik and Maintenance. The acquisition is to be accounted for
using the "pooling of interest" method of accounting. The Registrant has agreed
to register the stock under the Securities Act of 1933 within ninety (90) days
of the date of closing pursuant to the terms of the Registration Rights
Agreement dated September 27, 1996, which is filed herewith as an exhibit.
At the date of closing the Agreement of Merger, approximately $5,000,000 of
indebtedness of Super Kwik and Maintenance was outstanding.
The merger includes all the assets and liabilities relating to the
operation of Super Kwik and Maintenance. The acquired assets were used by the
Shareholders in the waste collection and disposal business. The Registrant
intends to continue to use the acquired assets for this purpose. The
Shareholders, Willard and Glen Miller, were hired by the Registrant as President
and Vice-President respectively, to oversee the Super Kwik and Maintenance
Operations.
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Item 7. Combined Financial Statements, Pro Forma
Financial Information, and Exhibits
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(a) Combined financial statements of businesses acquired.
It is impracticable to provide the required financial statements of Super
Kwik, Inc. and Waste Maintenance Services, Inc. at the time of the filing
of this report. The required financial statements of Super Kwik, Inc. and
Waste Maintenance Services, Inc. will be filed within sixty (60) days.
(b) Pro forma financial information.
It is impracticable to provide the required pro forma financial information
of Eastern Environmental Services, Inc. at the time of the filing of this
report. The pro forma information will be filed within sixty (60) days.
(c) Exhibits.
. 10.1 Agreement of Merger dated July 29, 1996, between Eastern
Environmental Services, Inc. and Super Kwik, Inc., Waste Maintenance
Services, Inc., Willard Miller and Glen Miller.
. 10.2 Registration Rights Agreement dated September 27, 1996 between
Eastern Environmental Services, Inc. and Willard Miller. (Pursuant to
Instruction 2 to Item 601 of Regulation S-K, the Registrations Rights
Agreement, which is substantially identical in all material respects
except as to the Party thereto, between the Registrant and Glen
Miller is not being filed.)
Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
EASTERN ENVIRONMENTAL SERVICES, INC.
Date: October 11, 1996 By: /s/ Louis D. Paolino, Jr.
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Louis D. Paolino, Jr.
President
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EXHIBIT INDEX
Exhibit
No. Description
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10.1 Agreement of Merger dated July 29, 1996, between Eastern
Environmental Services, Inc. and Super Kwik, Inc., Waste
Maintenance Services, Inc., Willard Miller and Glen Miller.
10.2 Registration Rights Agreement, dated September 27, 1996 between
Eastern Environmental Services, Inc. and Willard Miller. (Pursuant to
Instruction 2 to Item 601 of Regulation S-K, the Registration Rights
Agreement, which is substantially identical in all material respects
except as to the party thereto, between the Registrant and Glen
Miller is not being filed.)
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AGREEMENT OF MERGER
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THIS AGREEMENT OF MERGER (hereinafter sometimes referred to as the
("Agreement"), is made and entered into this 29th day of July, 1996, by
and between Eastern Environmental Services, Inc., a Delaware Corporation
(hereinafter sometimes referred to as "Eastern Environmental"), Super Kwik,
Inc., a New Jersey Corporation (hereinafter sometimes referred to as "Super
Kwik"), Waste Maintenance Services, Inc., a New Jersey Corporation (hereinafter
sometimes referred to as "Maintenance"), Willard and Glen Miller (the
"Shareholders").
W I T N E S S T H:
WHEREAS, at the date hereof, Willard Miller is the owner of 100 shares of
common stock, no par value of Super Kwik, representing all of the issued and
outstanding shares of the capital stock of Super Kwik;
WHEREAS, at the date hereof, Glen Miller is the owner of 100 shares of
common stock, no par value of Maintenance, representing all of the issued and
outstanding shares of Maintenance;
WHEREAS, at closing NHD, Inc. ("NHD") a Pennsylvania corporation which is a
subsidiary of Eastern Environmental will cause Eastern Environmental to issue
2,307,692 shares of the common stock of Eastern Environmental (hereinafter
sometimes referred to as the "Eastern Environmental Common Stock"); representing
27% of all of the issued and outstanding capital stock of Eastern Environmental.
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WHEREAS, the Boards of Directors of NHD, Eastern Environmental Super Kwik
and Maintenance, respectively, deem it advisable and in the best interests of
such corporations and their Shareholders that Super Kwik and Maintenance be
merged into NHD, pursuant to the laws of Pennsylvania and New Jersey, all on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants,
agreements and obligations set forth in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of such consideration is
hereby acknowledged by each of the Parties, THE PARTIES HERETO HEREBY MUTUALLY
AGREE AS FOLLOWS:
1. Merger. At "Closing" (hereinafter defined), pursuant to the provisions
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of New Jersey General Corporation Law and Pennsylvania General Corporation Law,
effective as of 12:01 a.m. on the "Closing Date" (hereinafter defined),
Shareholders shall cause Super Kwik and Maintenance to be merged with NHD,
resulting in Shareholders receiving at Closing an aggregate of [Two Million
Three Hundred Seven Thousand Six Hundred Ninety-Two (2,307,692) shares] of the
Eastern Environmental Common Stock in exchange for all of the issued and
outstanding shares of Super Kwik and Maintenance Common Stock held by
Shareholders, all in accordance with the Joint Agreement and Plan of Merger
attached hereto as Exhibit "1". The Eastern Environmental Common Stock shall be
allocated among the Shareholders of Super Kwik and Maintenance in accordance
with Exhibit 2.
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The parties hereto agree that the number of Eastern Environmental Common Stock
shares to be transferred to the Shareholders in exchange for all the said shares
of Super Kwik and Maintenance as contemplated herein was determined based on an
agreed upon total purchase price of $15,000,000 ("Share Purchase Price") and a
per share price equal to the closing price of Eastern Environmental Common Stock
on the business day five days prior to the Closing Date but not greater than
$6.50 per share.
a. In addition, NHD and Eastern Environmental will assume the liabilities
of Super Kwik and Maintenance in existence at Closing. If the liabilities of
Super Kwik and Maintenance in existence at Closing do not equal $5,000,000, plus
(ii) all debt incurred to fund capital expenditures made by Super Kwik and
Maintenance after June 24, 1996 in the ordinary course of business ("Post June
24 Liabilities"), the Share Purchase Price shall be adjusted as set forth in
this Paragraph. The Share Purchase Price shall be reduced by the amount, if
any, that the liabilities of Super Kwik and Maintenance at Closing, less the
Post June 24 Liabilities are in excess of $5,000,000. The Share Purchase
Price shall be increased by the amount, if any, that the liabilities of Super
Kwik and Maintenance at Closing, less the Post June 24 Liabilities are less then
$5,000,000. Any increase or decrease in the Share Purchase Price will reduce or
increase the amount of shares of Eastern Environmental Stock to be tendered to
the Shareholders based on the per share price which is used to calculate the
amount of stock to be delivered.
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b. The Parties agree that the merger will be accounted for as a pooling of
interest. All parties consider the "pooling of interest" accounting treatment to
be a critical part of this contemplated transaction and should any provision
hereof disqualify such treatment, the parties agree to negotiate in good faith
toward an alternative arrangement which complies with the pooling rules.
2. Closing. The consummation of the transactions provided for in this Agreement
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(the "Closing") shall take place at the law offices of Swain, Dennen, Keszler,
Bauman & Westreich, Brinley Plaza-Building 2, 3100 Highway 138, Wall, New
Jersey, or at such other location as the Parties may mutually agree upon such
time or date as the Parties may agree; but not later than ten (10) days after
approval by the New Jersey Department of Environmental Protection. If the New
Jersey Department of Environmental Protection does not approve of the
acquisition of the assets of Super Kwik and Maintenance by NHD within 150 days
of the execution of this Agreement, either Eastern Environmental or Super Kwik
may terminate this Agreement by sending written notice to the other parties.
3. Representations and Warranties of Shareholders. The representations and
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warranties hereunder as to financial statements (D below) and taxes (G below)
are made by Willard Miller and Glen Miller to Eastern Environmental and NHD and
are intended to be absolute and not qualified as to best of knowledge. As to all
other representations and warranties with respect to Super Kwik, Willard Miller
represents to the best of his knowledge, and with respect to Maintenance, Glen
Miller represents to the best of his knowledge that:
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A. Organization and Existence. Super Kwik and Maintenance are corporations duly
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organized, validly existing and in good standing under the laws of the State of
New Jersey, and which has all requisite corporate power and authority to carry
on its business as now conducted. Super Kwik and Maintenance no not conduct any
material amount of business outside the state of New Jersey and the character of
the properties owned or leased by either of them requires qualification to do
business as a foreign corporation in any jurisdiction or, if such qualification
is required, the failure to qualify would not have a material adverse effect on
the business or financial condition of either company. Shareholders have
delivered to NHD and Eastern Environmental a true and correct copy of each of
the Articles of Incorporation (duly certified by the Secretary of State of New
Jersey) and By-Laws (certified by the Secretary of Super Kwik and Maintenance)
of Super Kwik and Maintenance.
B. Capitalization. The authorized capital stock of Super Kwik consists of 1000
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shares of common stock, no par value of which 100 shares are issued and
outstanding. All such issued and outstanding shares are validly issued, fully
paid, nonassessable, and are held of record and beneficially by Shareholders.
Super Kwik does not have any outstanding subscriptions, options or other
agreements or commitments obligating it to issue shares of its capital stock.
Super Kwik has no subsidiaries and owns no stock in other corporation(s). The
authorized capital stock of Maintenance consists of 1000 shares of common stock,
no par value of which 100 shares are issued and outstanding. All such issued and
outstanding shares are validly issued, fully paid, nonassessable, and are held
of record and beneficially by Shareholders. Maintenance does not have any
outstanding subscriptions, options or other agreements or
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commitments obligating it to issue shares of its capital stock. Maintenance has
no subsidiaries and owns no stock in other corporation(s).
C. Shareholders' Ownership. All of the outstanding shares of capital stock of
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Super Kwik and Maintenance are validly issued, fully paid, nonassessable, and
are owned of record and beneficially by Shareholders, free and clear of any
security interests, liens, pledges, charges, mortgages, encumbrances or rights
of third parties except such right, if any, as United Jersey Bank may have in
the event Super Kwik or Maintenance default on loans they owe to United Jersey
Bank. The merger of Super Kwik and Maintenance into NHD will not create an
event of default on any loan of Super Kwik and Maintenance owed to United Jersey
Bank. There are no existing options, calls or commitments relating to any
issued, or authorized but unissued, capital stock of Super Kwik or Maintenance.
D. Shareholders have delivered to Eastern Environmental the following combined
Financial Statements relating to the financial condition and results of
operation of Super Kwik and Maintenance prior to the Closing: Balance Sheet
dated December 31, 1995, and Profit and Loss Statement reflecting the results of
operations of Super Kwik and Maintenance (combined) for the twelve (12) months
then ended. Such Financial Statements are and will be, as the case may be,
complete and correct and in accordance with the books of account and records of
Super Kwik and Maintenance and present fairly the financial position of Super
Kwik and Maintenance and the income, stockholders' equity and cash flow of Super
Kwik and Maintenance's business at the dates and for the periods indicated, in
accordance with
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generally accepted accounting principles consistently applied, and do or
will not omit to state any information necessary to make such Financial
Statements not misleading. Eastern Environmental will (and does hereby)
indemnify and hold Shareholders harmless from and against all liabilities
assumed by Eastern hereunder and disclosed on the aforesaid financial statement.
E. Title to Properties, Etc. Super Kwik and Maintenance have good and marketable
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title to, and each is in possession of, all properties, assets and equipment of
Super Kwik and Maintenance as shown on the Balance Sheets dated as of the end of
the calendar month next preceding closing, including all of the machinery,
vehicles and equipment described on Exhibit "A" attached hereto and hereby
incorporated herein by reference as if fully set forth herein, free of liens,
including any conditional sale or other title retention agreement, except as is
specifically noted on Exhibit "A".
All of the major items of the machinery, vehicles and equipment described on
Exhibit "A" used in the present operations of Super Kwik and Maintenance are in
good operating condition and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted.
F. Since June 24, 1996, Super Kwik, Maintenance and Shareholders have fully
complied with the undertakings and prohibitions stated in Paragraphs 2 and 7 of
the Letter of Intent dated June 24, 1996; and, neither Super Kwik nor
Maintenance has experienced any material
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adverse change in its financial condition, business or properties since
the date of the latest financial information provided to Buyer prior to the
Closing.
G. Tax Matters. All taxes, including, without limitation, withholding and social
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security taxes due with respect to Super Kwik and Maintenance's employees,
federal and state income tax liabilities, corporate franchise taxes, sales, use,
excise and ad valorem taxes, due and payable by Super Kwik and Maintenance on or
before the Closing Date have or will be paid. Super Kwik and Maintenance have
filed all reports required to be filed by each of them with all such taxing
authorities.
H. Material Contracts. Attached hereto as Exhibit "B" and hereby incorporated
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herein by reference as if fully set forth herein is a list and brief description
as of the date of this Agreement of certain leases, contracts, commitments,
agreements and other documents to which either Super Kwik or Maintenance is a
party or by which either is bound and which is related to the operation of its
business, and which requires the payment of money or performance of services in
excess of $100,000. Neither Super Kwik nor Maintenance is a party to or bound by
any written or oral (i) contracts not made in the ordinary course of business;
(ii) employment contracts, other than those terminable at the will of Super Kwik
and Maintenance; (iii) contracts with any labor union or association; (iv)
bonus, pension, profit sharing, retirement hospitalization, insurance or other
plan providing employee benefits, except as listed in Exhibit B; (v) lease with
respect to any property, real or personal, whether as lessor or lessee, except
as listed in Exhibit B or involving the payment of less than
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$100,000 over the term of the lease; (vi) continuing contract for
the future purchase of materials, supplies or equipment, except as listed in
Exhibit B or involving the payment of less than $100,000 over the term of the
contract; (vii) contract or commitment for capital expenditures, except as
listed in Exhibit B or involving the payment of less than $100,000;
(viii) contract continuing over a period of more than six (6) months from its
date, except as listed in Exhibit B or involving the payment of less than
$100,000; or, (ix) material contract necessary to conduct the operations and
business of Super Kwik or Maintenance, except as listed in Exhibit B or
involving the payment of less than $100,000. A true copy of each contract,
commitment and agreement listed in Exhibit "B" has been furnished to NHD and
Eastern Environmental.
I. Insurance. Attached hereto as Exhibit "C" and hereby incorporated herein by
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reference as if fully set forth herein is a list of all policies of insurance
held by Super Kwik and Maintenance relating to the operation of either; copies
of such policies have been furnished to NHD, and Eastern Environmental. Such
policies (as renewed) are, and at all times through the closing date, will be in
full force and effect.
J. Licenses, Permits, Etc. All permits, licenses, consents or other approvals or
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authorizations necessary to conduct the operations of and carry on the business
of either Super Kwik or Maintenance in the manner in which either such business
is currently being conducted, are currently in effect, except New Jersey
Department of Environmental Protection whose consent is required prior to
Closing, are not adversely affected by the transactions
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contemplated hereby and, to the best of the Shareholders knowledge, no
violations exist in any such permits, licenses or approvals.
K. Litigation. Except for any items disclosed on Exhibit "D" attached hereto
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hereby incorporated herein as if fully set forth herein, there are no material
claims, actions, suits, proceedings or investigations pending or threatened
against or affecting either Super Kwik or Maintenance or any of either of its
assets or properties, at law or in equity, or before or by any court or federal,
state, municipal or other governmental authority.
L. Employees - Labor Matters. Attached hereto as Exhibit "E" and hereby
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incorporated herein by reference as if fully set forth herein is a complete list
of all employees of Super Kwik and Maintenance whose duties are related to the
operation of the business of Super Kwik and Maintenance. Willard Miller with
respect to Super Kwik and Glen Miller with respect to Maintenance represent that
there is no pending or threatened action by any employee alleging sex, race or
other discriminatory practice (except that there is a pending EEOC religious
discrimination charge and unemployment claim filed by former employee Harriet
Foster) and that to the individual knowledge of Willard Miller, with respect to
Super Kwik, and that to the individual knowledge of Glen Miller, with respect to
Maintenance, no current effort to organize those employees into collective
bargaining units is now underway and no collective bargaining agreement is now
in effect. There are no contracts, written or oral, between super Kwik and
Maintenance and any of its employees, except as specifically disclosed in
Exhibit E. No representation or warranty is made concerning employee rights
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based on any handbook, manual, or policy of Super Kwik and/or Maintenance.
M. Brokers. Neither Super Kwik, Maintenance nor Shareholders are a party to or
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in any way obligated under any contract or other agreement for the payment of
any brokers' or finders' fees in connection with the origin, negotiation,
execution or performance of this Agreement.
N. Environmental Matters. With respect to Super Kwik, Willard Miller represents
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to the best of his knowledge and with respect to Maintenance, Glen Miller
represents to the best of his knowledge that, except as set forth in Exhibit
"D", the operations of Super Kwik and Maintenance have not resulted in any
claims, actions, suits, proceedings or investigations relating to any applicable
Environmental Law pending or threatened against or affecting Super Kwik and
Maintenance. Except as set forth on Exhibit "F", and to the best of
Shareholders' knowledge, (i) no Release of any Hazardous Waste has occurred or
is occurring as a result of the business of Super Kwik and Maintenance, (ii) no
substantial amounts of Hazardous Waste is currently present at, or has been
previously generated, stores, treated or disposed of at any Landfill by Super
Kwik and Maintenance or through the conduct of the business of Super Kwik and
Maintenance, except possibly de minimis amounts mixed with household (solid)
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waste, (iii) no underground or partially underground storage tank has been or is
currently located at any facility of Super Kwik and Maintenance, (iv) the
business, activities and processes heretofore conducted by Super Kwik and
Maintenance comply in all material respects with all applicable Environmental
Laws, (v) no facility of Super Kwik and Maintenance is listed on any list,
registry or other compilation of sites that require or
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potentially require removal, remedial action or any other response under any
applicable Environmental Law as the result of the presence, Release or potential
Release of any Hazardous Waste, (vi) neither Shareholders nor Super Kwik and
Maintenance has received any notice that Super Kwik or Maintenance is liable or
responsible, or potentially liable or responsible, for any costs of any removal,
remedial action or other response under any applicable Environmental Law as the
result of the presence, Release or potential Release of any Hazardous Waste,
and, (vii) there is no pending litigation or administrative proceeding in which
it is asserted that Super Kwik or Maintenance has violated or is not in
compliance with any applicable Environmental Law. "Environmental Law" means all
laws, statues or acts of the United States of America, any state jurisdiction,
or any political subdivision thereof, that relate to the condition of the air,
ground or surface water, land or other parts of the environment, to the release
or ground or surface land or other parts of the environment, or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or other handling of substances that might pollute, contaminate or be
hazardous or toxic if present in the air, ground or surface, land, or other
parts of the environment. "Release" and Hazardous Waste" shall have the meanings
given to such terms in all applicable Environmental Laws. Attached hereto as
Exhibit F-1 is a complete list of landfills or other disposal sites utilized by
Super Kwik or Maintenance in the last 5 years to the best of Willard Miller's
knowledge on behalf of Super Kwik and Glen Miller's knowledge on behalf of
Maintenance. No material (except for possibly de minimis amounts mixed with
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household solid waste) has been delivered to such disposal sites which was not
authorized to be received at such site or which violated applicable disposal
agreements.
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O. Authority of Shareholders. Shareholders, Super Kwik and Maintenance have full
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authority to enter into and perform their respective obligations under this
Agreement, and neither the execution, delivery nor performance by Shareholders
or Super Kwik and Maintenance of this Agreement of Merger will (i) result in a
violation or breach of any term or provision nor constitute a default under any
contract or agreement to which Shareholders or Super Kwik and Maintenance is a
party or by which either of them is bound, or violate any order, writ,
injunction or decree of any court, administrative agency or governmental body,
or (ii) result in a violation or breach of any term or provision, or constitute
a default or accelerate the performance required, under any indenture, mortgage,
deed of trust or other contract or agreement to which Shareholders or Super Kwik
or Maintenance are a party or by which any of them or their respective
properties is bound.
P. Absence of Undisclosed Liabilities. Except as set forth in the Financial
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Statements and/or Exhibit G attached hereto, and to the best of Shareholders'
knowledge, this Agreement or any Schedule attached to this Agreement or
delivered pursuant hereto, neither Super Kwik and Maintenance nor its assets or
properties are subject to, any liabilities or obligations (accrued, absolute,
contingent or otherwise) and neither Super Kwik nor Maintenance is in material
default in respect of any material term or condition of any material
indebtedness or liability. The transactions contemplated by this Agreement do
not and will not subject Super Kwik and Maintenance, Eastern Environmental or
NHD to any claim or liability for any obligations, debt or contract other than
specifically stated in this Agreement.
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Q. Title to Shares. On the Closing Date, Shareholders, Super Kwik and
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Maintenance will have the full right, power and authority to merge with NHD
pursuant to the terms of this Agreement.
R. Accredited Investor. Willard Miller, and Glen Miller are "accredited
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investors", as defined in Regulation D, as promulgated pursuant to the
Securities Act of 1933.
S. Available Information. Shareholders have had the opportunity to ask questions
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of and receive answers from Eastern Environmental concerning the Eastern
Environmental Common Stock and to obtain any additional information which
Eastern Environmental possesses or can acquire without unreasonable error of
expertise that is necessary to verify the accuracy of the information furnished
to Shareholders concerning the financial condition or Eastern Environmental.
T. Acquisition for Investment. The Eastern Environmental Common Stock to be
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received by Shareholders pursuant to this Agreement will be acquired for the
Shareholders' own account for investment. The shares issued to Shareholders at
the Closing Date will bear Eastern Environmental's standard restrictive transfer
and stop-order legends reflecting the status of the Eastern Environmental
shares. The Eastern Environmental Common Stock will have the registration rights
as set forth in the Registration Rights Agreement in the form attached hereto as
Exhibit H.
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4. Representations and Warranties of Eastern Environmental. Eastern
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Environmental and NHD, jointly and severally, represent and warrant to Willard
Miller and Glen Miller that:
A. Organization and Existence. Eastern Environmental and NHD are corporations
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duly organized, validly existing an din good standing under the laws of their
respective states of incorporation (Delaware and Pennsylvania, respectively (
and have all requisite corporate power and authority to carry on its business as
now conducted and to consummate the transactions contemplated by this Agreement.
Eastern Environmental and NHD have all requisite corporate power and authority
to carry on business as now conducted. Eastern Environmental and NHD do not
conduct any material amount of business outside the states in which they are
qualified to do business within and the character of the properties owned or
leased by neither of them requires qualification to do business as a foreign
corporation in any jurisdiction within which it is not so qualified or, if not
qualified,, the failure to qualify would not have a material adverse effect on
the business or financial condition of either company. Eastern Environmental and
NHD have delivered to Shareholders a true and correct copy of each of the
Articles of Incorporation (duly certified by the Secretary of State of Delaware
and Pennsylvania) and By-Laws (certified by the Secretary of Eastern
Environmental and NHD) of Eastern Environmental and NHD.
B. Authority Relative to this Agreement. The execution, delivery and performance
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of this Agreement by Eastern Environmental and NHD, have been duly authorized
and approved by the respective Boards of Directors of Eastern Environmental and
NHD, and no further
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corporate action is necessary on the part of Eastern Environmental and NHD to
consummate this Agreement in accordance with its terms, assuming due execution
by the Parties. Eastern Environmental and NHD have full authority to enter into
and perform their respective obligations under this Agreement, and neither the
execution, delivery nor performance by Eastern Environmental and NHD of this
Agreement of Merger will (i) result in a violation or breach of any term or
provision nor constitute a default under any contract or agreement to which
Eastern Environmental and NHD is a party or by which either of them is bound, or
violate any order, writ, injunction or decree of any court, administrative
agency or governmental body, or (ii) result in a violation or breach of any term
or provision, or constitute a default or accelerate the performance required,
under any indenture, mortgage, deed of trust or other contract or agreement to
which Eastern Environmental and NHD are a party or by which any of them or their
respective properties is bound.
C. Brokers. Neither Eastern Environmental nor NHD is a party to or is in any way
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obligated under any contract or other agreement, and there are no outstanding
claims against either of them, for the payment of any brokers' or finders' fees
in connection with the origin, negotiation, execution or performance of this
Agreement.
D. Commission Filings. Eastern Environmental has delivered to Shareholders
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current (for the quarter ending March 31, 1996 and historical filings made by
Eastern Environmental on Forms 10-K and 10-Q timely filed with the Securities
and Exchange Commission. Such filings
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accurately and completely described, in all material respects, Eastern
Environmental's financial status, business operations and prospects as of the
date of such filings and do not omit any material fact(s) necessary to make the
information contained in the filings not misleading. All of such information
provided to Shareholders is correct, complete and does not omit any material
information that a prudent investor should know.
E. Certificate of Public Convenience. NHD has been approved by the New Jersey
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Department of Environmental Protection pursuant to N.J.S.A 13:1E-126 et. seq. as
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a solid waste transporter and is the holder of a Certificate of Public
Convenience and Necessity in accordance with N.J.S.A. 48:13A-1 et seq,
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5. Eastern Environmental Common Stock; Registration and Related Matters.
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A. Prohibited Sales. Shareholders shall not sell, transfer or otherwise dispose
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of the shares of Eastern Environmental Common Stock received by then pursuant to
this Agreement, until after consolidated Financial Statements of Eastern
Environmental and Super Kwik and Maintenance covering a period of thirty (30)
days of post-Closing operation have been either (i) filed with the Securities
and Exchange Commission (the "Commission") in a Report on Forms 8-K, 10-Q or
10-K, (ii) sent to the stockholders of Eastern Environmental, (iii) including by
Eastern Environmental in a quarterly earnings report, or (iv) publicly issued
by Eastern Environmental in a report which includes the combined sales and net
income of Eastern Environmental and Super Kwik and Maintenance, whichever is
first to occur.
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B. Restrictions on Transfer of Shares. Shareholders understand and agree that
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the following restrictions and limitations are applicable to Shareholders'
purchase and resale or other transfer of the Eastern Environmental Common Stock
pursuant to the Securities Act of 1933.
(i) Shareholders agree that the Eastern Environmental Common Stock shall
not be sold or otherwise transferred unless the Eastern Environmental
Common Stock is registered under the Act and state securities laws or is
exempt therefrom.
(ii) A legend substantially in the following form will be placed on the
certificates evidencing the Eastern Environmental Common Stock to be issued
to Shareholders:
The securities represented by this certification have not been
registered under the Securities Act of 1933 or any state securities
act. The shares have been acquired for investment and may not be
sold, transferred, pledged, or hypothecated unless (i) they shall
have been registered under the Securities Act of 1933 and any
applicable states securities act, or (ii) the corporation shall have
been furnished with an opinion of counsel, satisfactory to counsel
for Eastern Environmental Services, Inc., that registration is not
required under any such acts; and
(iii) Subject to the foregoing provisions of this Paragraph, stop transfer
instructions will be imposed with respect to the Eastern Environmental
Common Stock issued to Shareholders pursuant to this Agreement so as to
restrict resale or other transfer thereof.
C. Rule 144. Eastern Environmental shall timely file the reports required to be
--------
filed by it under the Act and the Exchange Act, including but not limited to,
the reports under Sections 13 and 15 (d) of the Exchange Act referred to in
Subparagraph (c)(1) of Rule 144 adopted by the Commission thereunder the Act and
the rules and regulations adopted by the Commission
18
<PAGE>
thereunder to enable Shareholders to sell their Eastern Environmental Common
Stock without registration under the Act within the limitation of the exemptions
provided by Rule 144 under the Act.
D. Registration of Eastern Environmental Common Stock. Eastern Environmental
--------------------------------------------------
agrees to file a registration statement with the Securities and Exchange
Commission as soon as practicable after the Closing Date to register the Eastern
Environmental Common Stock and will use its best efforts to cause the
Registration Statement to become effective to allow the resale of the Eastern
Environmental Common Stock subject to any restrictions imposed by the pooling of
interests. The form of such Registration Agreement is attached hereto as Exhibit
F.
6. Conditions to Obligations of Eastern Environmental. The obligations of
--------------------------------------------------
Eastern Environmental and NHD under this Agreement shall, at the option of
Eastern Environmental, be subject to the following conditions:
A. Representations and Warranties True and Closing. All representatives and
-----------------------------------------------
warrants of Super Kwik and Maintenance and Shareholders shall be true and
correct in all material respects at the date hereof and the Closing Date.
B. Approval By Counsel. All actions, proceedings, instruments and documents
-------------------
required to carry out the transactions contemplated by this Agreement or
incidental thereto and all other
19
<PAGE>
related legal matters shall have been approved by counsel for Eastern
Environmental.
C. No Damage or Destruction: No Material Adverse Change. Prior to the Closing,
----------------------------------------------------
there shall not have occurred any casualty to any facility, property or
equipment owned or used by Super Kwik or Maintenance in connection with its
business which was not insured and is material to the business. None of the
litigation listed in Exhibit D, will in Eastern Environmental's reasonable
opinion have a material adverse impact on the assets or business of Super Kwik,
Maintenance or NHD.
D. Opinion of Counsel. Eastern Environmental shall have received a favorable
------------------
opinion from David Patterson, counsel for Super Kwik, Maintenance and
Shareholders, dated the date of Closing, in form satisfactory to General Counsel
for Eastern Environmental and General Counsel for NHD, to the effect that:
(i) Super Kwik and Maintenance are corporations, duly organized and
legally existing in good standing under the laws of the State of New
Jersey, and it has the corporate power and authority to carry on its
business as now being conducted and to own, or hold under lease, its
assets.
(ii) This Agreement has been duly executed and delivered by Super Kwik
and Maintenance and Shareholders and constitutes a valid, enforceable
and binding obligation of each of them pursuant to the terms of this
Agreement.
20
<PAGE>
(iii) Except as otherwise disclosed in this Agreement or of the
Exhibits attached hereto, said counsel does not know of any action,
suit, investigation, or other legal, administrative or arbitration
proceeding is pending against Super Kwik and Maintenance or
Shareholders which questions the validity or enforceability of this
Agreement or of any action taken or to be taken pursuant to or in
connection with this Agreement or any agreement contemplated herein.
(iv) The merger has been accomplished in accordance with the laws of
the State of New Jersey. The machinery and equipment described on
Exhibit "A: are free and clear of all liens, claims or encumbrances
whatsoever of record, except for liens in favor of Eastern
Environmental or NHD, or as described on Exhibit A.
(v) To the knowledge of such counsel, no consent, authorization,
license, franchise, permit, approval, or order of any court or
governmental agency or body is required for Merger and other
transactions contemplated by this Agreement except New Jersey
Department of Environmental Protection approval.
(vi) The execution and performance of this Agreement by Super Kwik and
Maintenance and Shareholders will not to the best of knowledge of
counsel violate: (i) the Articles of Incorporations or the By-Laws of
either Super Kwik
21
<PAGE>
and Maintenance, (ii) any order of any court or other agency of
government known to said counsel, or (iii) any contract or other
agreement to which Super Kwik and Maintenance or Shareholders are a
party.
E. Resignations. Eastern Environmental shall receive such resignations of the
------------
officers and directors of Super Kwik and Maintenance as shall have been
requested by Eastern Environmental, in writing.
F. Consents. Definitive consents and approvals of the New Jersey Department of
---------
Environmental Protection shall have been obtained. The parties will file joint
applications to Department of Environmental Protection for this purpose.
G. Release. The release by Glen Miller and Willard Miller of any and all claims
-------
they may have against Super Kwik and Maintenance.
7. Conditions to Obligations of Super Kwik and Maintenance and Shareholders. The
-------------------------------------------------------------------------
obligations of Super Kwik and Maintenance and Shareholders under this Agreement
shall, at the option of Super Kwik and Maintenance and Shareholders, be subject
to the following conditions:
A. Validity of Representations. All representations and warranties of Eastern
---------------------------
Environmental or NHD contained in this Agreement or otherwise made in writing
pursuant to this
22
<PAGE>
Agreement shall have been true and correct in all material respects at and as of
the Closing Date with the same force and effect as though made at and as of the
Closing Date.
B. Corporate Authority. The execution and performances of this Agreement by
-------------------
Eastern Environmental and NHD shall have been duly and legally authorized in
accordance with applicable law, and counsel for Super Kwik and Maintenance and
Shareholders shall be furnished certified copies of resolutions adopted by the
Boards of Directors and Shareholders (if necessary) of Eastern Environmental and
NHD, respectively, authorizing and approving the execution and delivery of this
Agreement and performance of the transactions contemplated hereunder.
C. Approval by Counsel. All actions, proceedings, instruments and documents
-------------------
required to carry out the transactions contemplated by this Agreement or
incidental thereto and all other related legal matters shall have been approved
by counsel for Super Kwik and Maintenance.
D. No Damage or Destruction: No Material Adverse Change. Prior to the Closing,
----------------------------------------------------
there shall not have occurred any casualty to any facility, property or
equipment owned or used by Eastern Environmental or NHD in connection with its
business which was not insured and is material to the business.
E. Opinion of Counsel. Super Kwik, Maintenance and the Shareholders shall have
------------------
received a favorable opinion from counsel for Eastern Environmental and NHD,
Robert M. Kramer,
23
<PAGE>
Esq., dated the date of Closing, in form satisfactory to counsel for Super Kwik
and Maintenance and Shareholders to the effect that:
(i) Eastern Environmental and NHD are corporations, duly organized and
legally existing in good standing under the laws of their respective
states of incorporation, and have the corporate power and authority to
carry on its business as now being conducted and to carry out the
transactions and agreements contemplated hereby.
(ii) All corporate and other proceeding required to be taken by or on
the part of Eastern Environmental and NHD in order to authorize it to
perform its obligations hereunder have been duly and properly taken,
including any necessary approval or authorization by the Board of
Directors of said corporations.
(iii) This Agreement has been duly executed and delivered by Eastern
Environmental and NHD and constitutes a valid, enforceable terms of
this Agreement.
(iv) Such counsel does not know of any action, suit, investigation, or
other legal, administrative or arbitration proceeding which questions
the validity or enforceability of this Agreement or of any action taken
24
<PAGE>
or to be taken pursuant to or in connection with the Agreement or any
agreement contemplated herein.
(v) The execution and performance of this Agreement by Eastern
Environmental and NHD will not, to the best knowledge of counsel,
violate: (a) the Articles of Incorporation and /or the By-Laws of
Eastern Environment and/or NHD, (b) any Order of any Court or other
Agency of government known to said counsel, and/or NHD is a party.
(vi) NHD has been approved by the New Jersey Department of
Environmental Protection pursuant to N.J.S.A. 13:1E-126 et. seq. as a
solid waste transporter and is the holder of a Certificate of Public
Convenience and Necessity in accordance with N.J.S.A. 48:13A-1 et seq.
F. Consents. Definitive consents and approvals of the New Jersey Department of
--------
Environmental Protection shall have been obtained.
8. Indemnification by Eastern Environmental and NHD.
------------------------------------------------
A. Eastern Environmental and NHD will defend, indemnify and hold harmless
Willard Miller and Glen Miller harmless from and against any and all damages,
loss, cost, deficiency,
25
<PAGE>
assessment, liability, or other expense (including reasonable attorney fees, if
any) suffered, incurred, or paid by Willard and/or Glen Miller as a result of:
(i) The untruth, inaccuracy, breach of violation, of any
representation, warranty, covenant or other obligation of the Eastern
Environmental and NHD set forth in or made in connection with this
Agreement.
(ii) The assertion against Willard and/or Glen Miller of any liability
or obligation of Eastern Environmental or NHD subsequent to the Closing
Date (including, without limitation, customer claims or disputes).
(iii) The enforcement of Willard Miller's and/or Glen Miller's right to
indemnification under this Agreement.
(iv) The assertion against Shareholders of any liability related to the
environmental matters is set forth on Exhibits "D", "F" and "F-1".
B. The Shareholders shall give written notice to the Indemnitor of any claim,
action, suit or proceeding relating to the indemnity not later than ten (10)
days after Shareholders, or either of them, has received notice thereof.
Indemnitor shall have the right, at their option, to compromise or defend, at
its own expense and by its own counsel (which counsel shall be reasonably
satisfactory to Shareholders), any such action, suit, or proceeding.
Shareholders
26
<PAGE>
and Indemnitor agree to cooperate in any such defense or settlement and to give
each other full access to all information relevant thereto.
C. The remedies provided in this action shall be cumulative and shall not
preclude assertion of any either rights or the seeking of any other remedies
available against Indemnitor at law in equity.
D. Eastern Environmental unconditionally guarantees the performance and payment
of each and every covenant and obligation imposed on NHD by this Agreement.
9. Indemnification by Shareholders.
-------------------------------
A. Shareholders will indemnify and hold Eastern Environmental and NHD
("Indemnitee") harmless from and against any and all damages, loss, cost,
deficiency, assessment, liability or other expense (including reasonable
attorney's fees, if any) suffered, incurred or paid by the Indemnitee as a
result of:
(i) The breach of violation of any representative, warranty, covenant
or other obligations of Shareholders set forth in connection with this
Agreement.
(ii) The assertion against the Indemnitee of any claim, liability, or
obligation of Super Kwik and Maintenance or Shareholders, of whatsoever
kind or character, or of any claim relating to the operation
27
<PAGE>
of the solid waste collection and transportation business of Super Kwik
and Maintenance, whether absolute or continent, matured or unmatured,
known or unknown, (including without limitation, customer claims or
disputes) which claims, liability or obligation shall have occurred,
incurred or arose out of the activities of Super Kwik and Maintenance
or Shareholders prior to the Closing Date of this Agreement; excluding
the Environmental matters set forth on Exhibits "D", "F" and "F-1"
which claim, liability or obligation, if any, shall be assumed by
Eastern Environmental.
(iii) The enforcement of the Indemnitee' rights to indemnification
under this Agreement.
B. Indemnitee shall give written notice to Shareholders of any claim, action,
suit, or proceeding relating to the indemnity herein provided Shareholders no
later that ten (10) days after Notice thereof, Shareholders shall have the
right, at their option, to compromise or defend, at their own expense and by
their own counsel (which counsel shall be reasonably satisfactory to
Indemnitee), any such action, suit, or proceeding. Indemnitee and Shareholders
agree to cooperate in any such defense or settlement and to give each other full
access to all information relevant thereto.
28
<PAGE>
C. The remedies provided in this section shall be cumulative and shall not
preclude assertion by the Indemnitee of any other rights or the seeking of any
other remedies available against Shareholders at law or in equity.
10. As inducement to Eastern Environmental and NHD to enter into the Agreement
and perform their obligations hereunder, and in consideration of the payments to
Shareholders pursuant to this Agreement, the Shareholders agree that
Shareholders will not, for a period of three (3) years from the Closing Date or
for a period of 1 Year from the date of Shareholder's termination of employment
-
with Eastern Environmental, whichever date is later, directly or indirectly
(whether as owner, partner, shareholder, agent, employee, independent
contractor, consultant, or otherwise): (1) engage in the waste management
business, solid waste collection and transportation business, landfill business,
or any other business which directly or indirectly competes with business of the
Eastern Environmental, or with any subsidiary of Eastern Environmental, or NHD
within, in each case, within the Counties of Atlantic, Burlington, Cumberland,
Camden, Cape May, Ocean, Salem, Gloucester, State of New Jersey; provided,
however, that the foregoing restrictions shall be inapplicable to any county if
Eastern Environmental and NHD cease engaging business in that county,
(ii) solicit any party who is or was a customer or supplier of Super Kwik and
Maintenance, Eastern Environmental or NHD on the Closing Date or for services of
any type or quality being provided by Super Kwik and Maintenance, Eastern
Environmental or NHD, (iii) solicit for employment any person who was or is an
employee of the Super Kwik and Maintenance, Eastern Environmental or NHD on the
Closing Date, or (iv) either directly or
29
<PAGE>
indirectly, divulge, disclose, or communicate to any person, firm or corporation
in any manner whatsoever any confidential information relating to the business
of Eastern Environmental, NHD or Super Kwik and Maintenance. The term,
"confidential information", as used herein means all information of a business
or technical mature relative to the business of Eastern Environmental, NHD, or
super Kwik and Maintenance, the business of any customers of Eastern
Environmental, NHD or Super Kwik and Maintenance. Said term "confidential
information" shall not include information so generally known as to be part of
the public domain or information known by Willard Miller and Glen Miller prior
to Closing Date.
Each of the covenants contained in Article is separate and independent. The
Shareholders agree that Eastern Environmental and NHD remedies at law may be
inadequate in the event of a breach or threatened breach of the covenants set
forth herein, and in such event, Eastern Environmental and NHD shall be entitled
to have an injunction issued by any court of competent jurisdiction, enjoining
and restraining each and every party concerned therewith from the creation or
continuation of such breach.
The Shareholders agree to indemnify and hold Eastern Environmental and NHD
harmless from any and all loss, costs, or other liability incurred or
threatened, of whatsoever kind or character, including reasonable attorney's
fees, costs of court and costs of litigation, incurred in connection with a
violation of threatened violation by Shareholders of the terms and conditions of
this paragraph.
30
<PAGE>
11. At Closing, Eastern Environmental will enter into mutually agreeable written
Employment Agreements with Willard Miller, Glen Miller Geraldine Miller, Jeffrey
Miller and Richard Goetz.
12. Survival of Representations and Warranties. With the exceptions as
------------------------------------------
hereinafter set forth, the representations, warranties, obligations and
agreements of the Parties contained in this Agreement of Merger, or in any
writing delivered pursuant to provisions of this Agreement, shall survive the
Closing Date for a period of two years. The representations and warranties
hereunder shall not be affected or diminished by any investigation at any time
by or on behalf of the Party for whose benefit such representations and
warranties were made. All statements contained herein or in any Schedule,
Certificate, Exhibit, List or other document delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be a
representation and warranty of the Party delivering such document.
Representations, warranties, obligations and agreements of the Parties regarding
tax and environmental matters shall survive the Closing Date until the
expiration of the applicable statute of limitations pertaining to such tax and
environmental matters. The terms in the Agreement and representations from the
Eastern Environmental and NHD regarding the value of the consideration to
Shareholders and tradability of stock shall survive without time limitation.
13. Post Closing Matters. NHD shall change its corporate name to Super Kwik,
--------------------
Inc. as soon as possible after closing of the merger.
31
<PAGE>
14. Miscellaneous.
-------------
A. Expenses of Transaction. Shareholders, Eastern Environmental and NHD shall
-----------------------
each be responsible for fees and expenses of his or her respective counsel,
accountants and other representatives in connection with the transactions
contemplated hereby.
B. Notices. Notices required under this Agreement should be sent to: If to
-------
Shareholders:
Willard Miller
230 Orono Place
Sommerdale, N.J. 08083
Glen Miller
429 Ocean Avenue
Ocean City, N.J. 08226
Copy to: David C. Patterson
191 White Horse Pike
Berlin, N.J. 08009
If to Eastern Environmental, NHD, to:
Louis D. Paolino, Jr.
1000 Crawford Place
Mt. Laurel, New Jersey
Copy to:
32
<PAGE>
Robert M. Kramer
Robert M. Kramer & Associates
1150 First Ave., Suite 900
King of Prussia, PA 19406
C. Assignment. This Agreement may not be assigned by any party hereto without
----------
the express written consent of the parties hereto.
D. Successors Bound. This agreement shall be binding upon and inure to the
----------------
benefit of the Parties and their respective successors and assigns.
E. Section and paragraph Headings. The section and paragraph headings in this
------------------------------
Agreement are for reference purposes only and shall not affect in any way the
meaning of interpretation of such sections, paragraphs or this Agreement.
F. Amendment. This Agreement may be amended only by an instrument in writing
---------
executed by the Parties.
G. Counterparts. This Agreement may be executed in multiple counterparts, each
------------
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
H. Governing Law. This Agreement shall be constructed in accordance with, and
-------------
governed by the laws of the State of New Jersey.
33
<PAGE>
I. Negotiated Transaction. The provisions of this Agreement were negotiated by
----------------------
the Parties, and this Agreement shall be deemed to have been drafted by all
Parties.
J. No Third Party Beneficiaries. This Agreement is being executed by the Parties
----------------------------
for the benefit of the Parties and their successors and permitted assigns, and
not for the benefit of any creditor, shareholder or other person or entity
without the express prior written consent of each of the Parties.
K. Publicity. Prior to Closing, except as may be required by law, no Party shall
---------
issue any press release or otherwise make any statement with respect to the
transactions contemplated by this Agreement without the prior consent of the
Other Party, which shall not be unreasonably withheld.
L. Confidentiality. Each Party acknowledges and agrees that any information or
---------------
data acquired from the Party, not otherwise properly in the public domain, was
received in confidence. Each Party hereto agrees that, prior to the Closing
Date, and after the Closing Date, they shall not divulge, communicate or
disclose, except as may be required by law or for the performance of the
Agreement, or use to the detriment of either Party, including business secrets
of either Party and any technical or business materials that are treated by
either Party as confidential or proprietary. If the Agreement is terminated for
any reason, each Party will return all papers, documents, financial statements
and other confidential information furnished by, or on behalf of, each other
Party (including all copies, notes, and
34
<PAGE>
records thereof).
M. All schedules shall be provided and attached hereto at Closing or to update
same. Each Party shall have the right to update or make any disclosure to the
other Party at any time prior to Closing, or to amend their respective
representations or warranties, or to provide additional Schedules or Exhibits,
as may be required to cure the inaccuracy, falsity, incorrectness or
incompleteness of any earlier Schedule, Exhibit, disclosure, representation or
warranty. If a Party amends a material representation or warranty or provides a
material Schedule or Exhibit at Closing, the other Party shall have the option,
exercisable upon notice, to elect not to close the transactions contemplated by
this Agreement. A disclosure in any Schedule shall be and be deemed a disclosure
in all applicable Schedules.
IN WITNESS WHEREOF, this Agreement of Merger has been duly executed by the
Parties as of the date first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
By: /s/ Louis D. Paolino, Jr.
-------------------------------
Louis D. Paolino, Jr.,President
35
<PAGE>
NHD, INC.
By:/s/Louis D. Paulino, Jr.
-------------------------------
Louis D. Paolino, Jr.,President
SUPER KWIK, INC.
By:/s/Willlard Miller
-------------------------------
President
WASTE MAINTENANCE SERVICES INC.
By:/s/Glen Miller
-------------------------------
President
SHAREHOLDERS
/s/Willard Miller
----------------------------------
Willard Miller
36
<PAGE>
/s/ Glen Miller
----------------------------------
Glen Miller
37
<PAGE>
SCHEDULE OF EXHIBITS
--------------------
<TABLE>
<S> <C>
EXHIBIT "1" Joint Agreement and Plan Merger
EXHIBIT "2" Allocation of Shares
EXHIBIT "A" Machinery, Vehicles and Equipment
EXHIBIT "B" Material Contracts
EXHIBIT "C" Insurance
EXHIBIT "D" Schedule of Litigation
EXHIBIT "E" List of Employees
EXHIBIT "F" Environmental Disclosures
EXHIBIT "F-1" List of Landfills
EXHIBIT "G" Undisclosed Liabilities
EXHIBIT "H" Registration Rights Agreement
</TABLE>
38
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT, dated September 27, 1996, between Eastern
Environmental Services, Inc., a Delaware corporation (the "Company") and Willard
Miller, ("Stockholder").
W I T N E S S E T H:
-------------------
WHEREAS, in accordance with that certain Agreement of Merger dated July 24,
1996, by and among the Company, Stockholder and certain other parties, including
the Constituent Corporations to the merger, Stockholder has received 1,279,781
shares of Company Common Stock;
WHEREAS, as a material inducement for Stockholder to enter into the
Agreement of Merger, and as a material term thereof, the Company has agreed to
enter into this Registration Rights Agreement, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Certain Defined Terms. For purposes of this Registration Rights
---------------------
Agreement, the following terms shall have the following respective meanings:
(a) Applicable Law: The Securities Act, the Exchange Act (to the
--------------
extent applicable to offers or sales of securities) and any applicable state
securities law and the rules and regulations thereunder.
(b) Common Stock: Stock of the Company of the class or classes having
------------
general voting power under ordinary circumstances to elect at least a majority
of the Board of
1
<PAGE>
Directors of the Company (irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
(c) Demand Registration: Any registration, qualification,
-------------------
notification or exemption of Registrable Securities effectuated by the Company
pursuant to Section 2(a) hereof.
(d) Exchange Act: The Securities Exchange Act of 1934, as now or
------------
hereafter amended, and the rules and regulations thereunder which shall be in
effect at the time.
(e) Holder: Any holder of Registrable Securities.
------
(f) Nasdaq: The Nasdaq Stock Market.
------
(g) Registrable Securities: (i) All shares of Common Stock owned by
----------------------
Stockholder on the date hereof which, as of the date of determination, are not
covered by an effective registration statement under the Securities Act,
(ii) all shares of Common Stock owned by Stockholder pursuant to the exercise of
a Warrant for 246,168 share of Common Stock issued to Stockholder even date
hereof and (iii) any securities issued or issuable with respect to any such
shares (A) by way of stock dividend or stock split or (B) in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification
2
<PAGE>
of them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
(h) Securities Act: The Securities Act of 1933, as now or hereafter
--------------
amended, and the rules and regulations thereunder which shall be in effect at
the time.
(i) SEC: The United States Securities and Exchange Commission.
---
2. Registration Rights.
-------------------
(a) Demand Registration and Notice: As soon as reasonably practicable
------------------------------
following the latter of (i) 90 days after the date of closing of the Agreement
of Merger or (ii) the receipt by Company of audited financial statements of the
Constituent Corporations, the Company shall prepare and file with the Commission
a continuous or "shelf" registration statement under Rule 415 under the
Securities Act on Form S-3 to register the resale or other disposition of the
Registrable Securities by all Holders under the Securities Act to the extent
reasonably necessary to permit such resale or other disposition by such Holders,
promptly upon the effectiveness of such registration ("Demand Registration") in
the manner set forth in Sections 3 and 4 hereof. The Company shall actively
pursue the processing of such registration statement through the Commission's
Division of Corporation Finance, and the Company shall use its best efforts to
have the registration statement declared effective by the Company as soon as
practicable. The Holders shall be required to advise the Company of their
intended methods of disposition of the Registrable Securities to be included in
such registration statement. The Company will maintain the effectiveness of
such registration statement and, if necessary, amend the registration statement
and supplement the prospectus included therein for a period of no less than four
(4) years from the effective date of such registration statement, or such sooner
time as counsel for the Company shall
3
<PAGE>
render his written unqualified legal opinion that each Holder of Registrable
Securities registered in such registration statement is legally permitted to
sell all such Registrable Securities held by such Holder without volume
restrictions under Rule 144 promulgated under the Securities Act.
If Stockholder intends to distribute his Registrable Securities covered by
the Demand Registration by means of any underwriting, he shall so advise the
Company. The right of any Holder to participate in the Demand Registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested (unless otherwise mutually agreed by the parties hereto), to
the extent provided herein.
(b) Expenses. The Company will pay all expenses (including without
--------
limitation registration fees, qualification fees, Company legal expenses,
printing expenses and the costs of special audits or "cold comfort" letters, but
not including underwriting discounts and commissions or fees of counsel or any
consultants to the Holders of Registrable Securities being registered, which
shall be borne by such Holders) in connection with any registrations,
qualifications, notifications or exemptions pursuant to Section 2(a) above. In
the case of a Demand Registration pursuant to Section 2(a) hereof, the Company
will also pay the reasonable fees (up to $5,000) and disbursements of one
special counsel representing all of the Holders for whom Registrable Securities
are included in such registration.
(c) Indemnification. In connection with any registration,
---------------
qualification, notification, or exemption of Registrable Securities under
Section 2(a) hereof, the Company hereby agrees to indemnify the Holders of such
Registrable Securities, and each underwriter thereof, including each person, if
any, who controls such Holder within the meaning of Section 15 of the
4
<PAGE>
Securities Act, against all losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement of a material fact contained in any
registration statement or prospectus or notification or offering circular (and
as amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus or caused by any omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or alleged untrue statement or omission based upon information furnished in
writing to the Company by such Holder or, as the case may be, any such
underwriter expressly for use therein, and the Company, the underwriter for the
Company and each person who controls the Company within the meaning of Section
15 of the Securities Act shall be indemnified by each Holder of such Registrable
Securities for all such losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement or any omission or alleged omission, based
upon information furnished in writing to the Company by such Holder for any such
use.
3. Registration Procedures and Covenants. In the case of the Demand
-------------------------------------
Registration, the Company shall, by written notice to each Holder of Registrable
Securities included in such Demand Registration, keep such Holder advised as to
the initiation, progress and effective date of such Demand Registration, and, at
the expense of the Company, the Company will:
(a) before filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to the Holders of Registrable
Securities covered by such registration statement and the underwriter or
underwriters, if any, copies of all such documents proposed to be filed,
including without limitation documents incorporated by reference in the
prospectus and,
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if requested by such Holders of Registrable Securities, the exhibits
incorporated by reference, and such Holders shall have the opportunity to object
to any information pertaining solely to such Holders that is contained therein
and the Company will make the corrections reasonable requested by an underwriter
or such Holders with respect to such information prior to filing any
registration statement or amendment thereto or any prospectus or any supplement
thereto;
(b) Stockholder recognizes that the occurrence of certain corporate
developments, including significant acquisitions, may result in the failure of
the registration statement in which Registrable Securities are registered to
contain all information required in accordance with Applicable Law until an
amendment or supplement is filed and made available to the Holders of all such
Registrable Securities. Stockholder recognizes that in such event, sales under
the registration statement will be suspended until the Company files the
amendments or supplements required by the next sentence. The Company agrees, as
promptly as reasonably practicable, to prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for the period required pursuant to the terms hereof and
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the Holder
thereof set forth in such registration statement;
(c) furnish to each Holder of Registrable Securities covered by such
registration statement such number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including without limitation each preliminary
prospectus) and such other documents as such Holder may reasonably request in
order
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to facilitate the disposition of the Registrable Securities owned by such
Holder;
(d) unless the Registrable Securities are exempt from the blue sky
laws of any jurisdiction, including by reason of being designated for trading in
the Nasdaq National Market, the Company agrees to use its best efforts to
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as any Holder of Registrable Securities
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder (provided that the Company will not be required to: (1) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d) thereof; (ii) subject itself to taxation in
any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction);
(e) cause to be filed any and all notifications to any governmental
authority under any federal or state securities law to be sent and any and all
listings with any securities exchange or Nasdaq to be obtained, as may be
reasonably necessary or advisable to enable Holders to consummate the
disposition of their Registrable Securities pursuant to the registration;
(f) notify each Holder of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act of he occurrence of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading, and promptly prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an untrue statement of a material fact or omit
to state any fact necessary to make
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the statements therein not misleading;
(g) in the case of an underwritten offering, cause to be delivered to
the Holders of such Registrable Securities and the underwriters, if any,
opinions of counsel to the Company in customary form, covering such matters as
are customarily covered by opinions for an underwritten public offering as the
underwriters may request and addressed to the underwriters and the Holders;
(h) make available for inspection by any Holder of such Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any Holder or underwriter, relevant financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such Holder, underwriter, attorney,
accountant or agent in connection with such registration statement;
(i) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(j) cause to be delivered, immediately prior to the effectiveness of
the registration statement (and, in the case of an underwritten offering, at the
time of delivery of any Registrable Securities sold pursuant thereto), letters
from the Company's independent certified public accountants addressed to each
selling Holder and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent certified public accountants
delivered in connection with primary or secondary
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underwritten public offerings, as the case may be;
(k) make generally available to the Holders of such Registrable
Securities a consolidated earnings statement (which need not be audited) for the
twelve (12) months beginning after the effective date of a registration
statement as soon as reasonably practicable after the end of such period, which
earnings statement shall satisfy Section 11(a) of the Securities Act and Rule
158 thereunder; and
(l) promptly notify each Holder of such Registrable Securities and
the underwriter or underwriters, if any: (i) when the registration statement,
any pre-effective amendment, the prospectus or any prospectus supplement or
post-effective amendment to the registration statement has been filed and, with
respect to the registration statement or any post-effective amendment, when the
same has become effective; (ii) of any written request by the SEC for amendments
or supplements to the registration statement or prospectus; (iii) of the
notification to the Company by the SEC of its initiation of any proceeding with
respect to the issuance by the SEC of, or the issuance by the SEC of, any stop
order suspending the effectiveness of the registration statement; and (iv) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Securities for sale under the Applicable
Law.
5. Nominees for Beneficial Owners. In the event that any Registrable
------------------------------
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the Holder of such
Registrable Securities for purposes of any request or other action by any Holder
or Holders of registrable Securities pursuant to this Registration Rights
Agreement or any determination of any number or percentage of shares of
Registrable Securities contemplated by this Agreement.
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6. Successors, Assigns and Transferees. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. In addition, and
whether or not any express assignment shall have been made, the provisions of
this Registration Rights Agreement which are for the benefit of the parties
hereto other than the Company shall also be for the benefit of and enforceable
by any subsequent Holder of any Registrable Securities, subject to the
provisions and obligations hereof.
7. Entire Agreement and Modifications. This Registration Rights
----------------------------------
Agreement constitutes the entire understanding between the parties and
supersedes all other agreements, whether written or oral, with respect to the
transactions contemplated by this Registration Rights Agreement. This
Registration Rights Agreement may not be amended or modified by either party
unless such amendment or modification is memorialized in a writing signed by
each of the parties hereto. Any such amendment or modification of this
Registration Rights Agreement shall be binding upon and inure to the benefit of
all Holders of Registrable Securities.
8. Waiver. Any waiver by either party of any breach of any term or
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condition in this Registration Rights Agreement shall not operate as a waiver of
any other breach of such term or condition or of any other term or condition,
nor shall any failure to enforce any provision hereof operate as a waiver of
such provision or of any other provision hereof or constitute or be deemed a
waiver or release of any other rights, in law or in equity.
9. Governing Law. All issues concerning this Registration Rights
-------------
Agreement will be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without giving effect to any choice of law or
conflict of law provision or rule (whether of the Commonwealth of Pennsylvania
or any other jurisdiction) that would cause the law of any other
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jurisdiction to be applied to this Registration Rights Agreement. The parties
hereto agree that any action to enforce this Registration Rights Agreement may
be properly brought in any court within the Commonwealth of Pennsylvania or in
the United States District court for the Eastern District of Pennsylvania, and
the parties hereto agree that the courts of the Commonwealth of Pennsylvania and
the United States District Court for the Eastern District of Pennsylvania shall
have jurisdiction with respect to the subject matter hereof and the person of
the parties hereto.
10. Severability. Whenever possible, each provision of this Registration
------------
Rights Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Registration Rights Agreement
is held to be invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or the effectiveness or validity of any provision in any other jurisdiction, and
this Registration Rights Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
11. Further Assurances. From time to time after the execution of this
------------------
Registration Rights Agreement, each of the parties hereto hereby agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper and advisable under applicable
laws, rules and regulations to consummate and make effective the transactions
contemplated by this Registration Rights Agreement, including using its best
efforts to obtain all necessary waivers, consents and approvals. In case at any
time after the execution of this Registration Rights Agreement further action is
necessary or desirable to carry out the purposes of this Registration Rights
Agreement, the proper officers and directors of each of the parties shall take
all such necessary action.
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12. Notices. All notices and other communications which are required or
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may be given under this Registration Rights Agreement shall be in writing and
shall be deemed to have been given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid:
To Company: Eastern Environmental Services, Inc.
1000 Crawford Place
Mt. Laurel, NJ 08054
Attn: Louis D. Paolino, President
with a copy to: Robert M. Kramer, Esq.
Robert M. Kramer & Associates
1150 First Avenue, Suite 900
King of Prussia, PA 19406
To Stockholder: Willard Miller
230 Orono Place
Sommerdale, NJ 08083
or to such other place as either party shall have specified by notice in writing
to the other.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Registration Rights Agreement to be executed on its behalf as of the
date first written above.
EASTERN ENVIRONMENTAL
SERVICES, INC.
By: /s/ Louis D. Paolino, Jr.
---------------------------------
Louis D. Paolino, Jr., President
STOCKHOLDER WILLARD MILLER
/s/ Willard Miller
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