<PAGE>
As filed with the Securities and Exchange Commission on August 20, 1997
Registration No. 333-32361
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________
AMENDMENT NO 1.
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
EASTERN ENVIRONMENTAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
_______________
Delaware 59-2840783
(State of Incorporation) (I.R.S. Employer Identification Number)
1000 Crawford Place, Suite 101 Louis D. Paolino, Jr.
Mt. Laurel, New Jersey 08054 Chairman and Chief Executive Officer
(609) 235-6009 1000 Crawford Place, Suite 101
Mt. Laurel, New Jersey 08054
(609) 235-6009
(Address, Including Zip Code, and (Name, Address, Including Zip Code,
Telephone Number, Including Area Code, and Telephone Number, Including Area
of Registrant's Principal Executive Code, of Agent for Service)
Offices)
_______________________
Copy to:
H. John Michel, Jr., Esquire
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(215) 988-2700
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions and other factors.
If the only securities being registered on 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 to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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, 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>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Shares to be Offering Price Aggregate Registration
to be Registered Registered/(2)/ Per Share/(1)/ Offering Price/(1)/ Fee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 5,305,033/(3)/ $19.625 $104,111,273 $31,549/(3)/
====================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(c).
(2) Includes 382,214 shares issuable upon exercise of common stock purchase
warrants.
(3) The Registrant previously filed a Registration Statement with respect to
199,232 shares for which a registration fee of $1,078 was paid. Such shares
have not been included for purposes of calculating the fee for this amended
Registration Statement.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the 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 said Section 8(a),
may determine.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
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. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 20, 1997
PROSPECTUS
----------
5,504,265 Shares
EASTERN ENVIRONMENTAL SERVICES, INC.
Common Stock
This Prospectus relates to 5,122,051 shares (the "Shares") of Common Stock,
par value $.01 per share (the "Common Stock"), of Eastern Environmental
Services, Inc. (the "Company") currently outstanding (the "Outstanding Shares")
and 382,214 shares of Common Stock issuable upon exercise of common stock
purchase warrants of the Company (the "Warrant Shares") (the Outstanding Shares
and the Warrant Shares are collectively referred to herein as the "Shares"). The
Shares are being offered for sale pursuant to this Prospectus (the "Offering"),
from time to time, by or for the account of the stockholders named herein (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any of the proceeds of this Offering. See "Use of Proceeds."
The Selling Stockholders, either directly, through agents designated or to be
designated from time to time by them, or through underwriters or dealers, may
sell the Shares from time to time on terms to be determined by the Selling
Stockholders at the time of sale. The Selling Stockholders may also seek, to the
extent permitted by applicable laws, to sell the Shares in transactions under
Rule 144 of the Securities Act of 1933, as amended (the "Securities Act").
All expenses of the Offering, other than commissions or discounts of broker-
dealers, will be borne by the Company. It is estimated that such expenses to be
borne by the Company will approximate $50,000.
The Selling Stockholders and any broker-dealers, agents, underwriters or
dealers that participate with the Selling Stockholders in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Common Stock is currently traded on the Nasdaq National Market under the
symbol "EESI." The closing sale price of the Common Stock on the Nasdaq National
Market on August 19, 1997 was $19.50 per share.
----------------------
These securities involve a high degree of risk. See "Risk Factors" beginning on
page 4 of this Prospectus for information that should be considered by
prospective purchasers.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is __________, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied
at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices at Seven World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material also can be obtained from the Public
Reference Section of the Commission, at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants, like the Company, that file
electronically with the Commission. The Company's Common Stock is quoted on
the Nasdaq National Market, and reports and other information concerning
the Company may be inspected at the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006-1500.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with any amendments thereto, the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the
Registration Statement and exhibits thereto. Statements contained in this
Prospectus or in any document incorporated by reference in this Prospectus
as to the contents of any contract or other document referred to herein or
therein are not necessarily complete, and in each instance where such
contract or document has been filed as an exhibit to the Registration
Statement, or other document incorporated by reference, reference is made
to the copy of such contract or other document, each such statement being
qualified in all respects by such reference.
-2-
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with
the Commission and are hereby incorporated by reference in this Prospectus
as of their respective dates:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (filed September 27, 1996) (as amended on Form 10-
K/A filed October 28, 1996), excluding the financial statements and
the notes thereto and the information contained under Management's
Discussion and Analysis of Financial Condition and Results of
Operations which have been superseded by the financial statements and
the notes thereto and the information contained under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations'" included in the Registration Statement on Form S-3 (File
No. 333-27245) filed with the Commission on July 28, 1997;
(ii) the Company's Current Reports on Form 8-K dated June 21,
1996, July 2, 1996 (as amended on Forms 8-K/A filed September 16,
1996, May 13, 1997, June 6, 1997, and July 10, 1997), September 27,
1996 (as amended on Forms 8-K/A filed December 9, 1996, June 6, 1997,
and July 10, 1997), December 10, 1996 (as amended on Forms 8-K/A filed
February 11, 1997, June 6, 1997, and July 10, 1997), January 31, 1997
(as amended on Form 8-K/A filed April 15, 1997 and July 10, 1997),
March 31, 1997 (as amended on Form 8-K/A filed May 15, 1997 and July
10, 1997), May 8, 1997, and May 12, 1997 (as amended on Forms 8-K/A
filed July 11, 1997 and July 25, 1997);
(iii) the Company's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1996 (filed November 13, 1996), December
31, 1996 (filed February 14, 1997), and March 31, 1997 (filed May 15,
1997, as amended on Form 10-Q/A filed May 16, 1997); (the financial
statements and the notes thereto contained in the Reports on Form 10-Q
for the quarters ended September 30, 1996 and December 31, 1996 are
deemed to be outdated as they are not on a basis consistent with the
Consolidated Financial Statements and the notes thereto at and for the
period ended March 31, 1997 included in the Registration Statement on
Form S-3 (File No. 333-27245) filed with the Commission on July 28,
1997; as they do not reflect pooling of interests accounting for
certain acquisitions that occurred subsequent to the financial
statement date)
(iv) the description of the Common Stock contained in the
Registration Statement on Form 8-A (File No. 0-16102), including all
amendments and reports filed for the purpose of updating such
description prior to the termination of the Offering; and
(v) the Company's financial statements at and for the nine-months
ended March 31, 1997 and for each of the three years in the period
ended June 30, 1996 included in Amendment No. 3 to the Registration
Statement on Form S-3 (File No. 333-27245) filed with the Commission
on July 28, 1997.
Additionally, all documents and reports filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to termination of
the Offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such
documents or reports. Any statement or information contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement or information so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request, a copy of
any or all of the documents that have been incorporated by reference in
this Prospectus, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the documents
that this Prospectus incorporates. Requests for such copies should be
directed to: Investor Relations, Eastern Environmental Services, Inc., 1000
Crawford Place, Mt. Laurel, New Jersey 08054, (609) 235-6009.
-3-
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock being offered by this
Prospectus involves a high degree of risk. In addition, this Prospectus
contains forward-looking statements that involve risks and uncertainties.
Discussions containing such forward-looking statements may be found under
"Risk Factors," as well as in this Prospectus generally. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those
set forth in the following risk factors and elsewhere in this Prospectus.
Accordingly, prospective investors should consider carefully the following
risk factors, in addition to the other information concerning the Company
and its business contained in this Prospectus and in those documents
incorporated by reference in this Prospectus, before purchasing the shares
of Common Stock offered hereby.
History of Losses; Working Capital Deficits; Continuing Charges
The Company has recorded net losses to common stockholders of
approximately $55,000, $4.4 million (including $2.8 million in unusual
items principally related to the Company's June 1996 change of control),
and $205,000 (including $4.2 million of merger costs and related tax
provisions incurred as a result of acquisitions) during the fiscal years
ended June 30, 1995 and 1996 and during the nine months ended March 31,
1997, respectively, and had working capital deficits at June 30, 1996 and
March 31, 1997 of approximately $1.9 million and $700,000, respectively. In
connection with the financing of its acquisitions and business growth, the
Company has incurred, and anticipates that it will continue to incur,
significant debt and interest charges under its revolving credit facility.
In addition, the Company will continue to recognize a significant amount of
goodwill amortization charges in connection with its acquisitions of
collection and transportation businesses and transfer stations that are
accounted for under the "purchase" method of accounting. Such goodwill is
amortized over a period of 40 years depending on the business acquired,
resulting in an annual non-cash charge to earnings during that period. As
the Company continues to pursue its acquisition program, its financial
position and results of operations may fluctuate significantly from period
to period.
Limited Operating History in Regard to Significant Assets
In June 1996, control of the Company was acquired by a group of
investors, and the Company appointed a new Board of Directors, hired a new
management team, and implemented an aggressive acquisition program. Since
July 1996, the Company has acquired 18 solid waste management businesses.
Of these acquisitions, the nine completed by March 31, 1997 collectively
contributed approximately $47.3 million or 90.3% of the Company's revenues
for the nine months ended March 31, 1997 and approximately $69.8 million or
78.1% of the Company's assets at March 31, 1997. Because of the Company's
relatively limited operating history with respect to these businesses, no
assurances can be given that the Company will be able to replicate or
improve upon their historical financial performance.
Ability to Manage Growth
The Company's strategy of growing primarily through acquisitions has
placed, and is expected to continue to place, significant burdens on the
Company's management and on its operational and other resources. The
Company will need to attract, train, motivate, retain, and supervise its
senior managers, technical professionals and other employees. Any failure
to expand its management information system capabilities, to implement and
improve its operational and financial systems and controls or to recruit
appropriate additional personnel in an efficient manner and at a pace
consistent with the Company's business growth could have a material adverse
effect on the Company's business and results of operations.
Dependence on Acquisitions for Growth
The rate of future growth and profitability of the Company is largely
dependent on its ability to identify and acquire additional solid waste
collection, transportation, and disposal businesses. This
-4-
<PAGE>
strategy involves risks inherent in assessing the values, strengths,
weaknesses, risks, and profitability of acquisition candidates, including
adverse short-term effects on the Company's reported operating results,
diversion of management's attention, dependence on retaining, hiring and
training key personnel, and risks associated with unanticipated problems or
latent liabilities. There can be no assurance that acquisition
opportunities will be available, that the Company will have access to the
capital required to finance potential acquisitions, that the Company will
continue to acquire businesses or that any business acquired by the Company
will be integrated successfully into the Company's operations or prove
profitable.
Availability of Acquisition Targets
Increased competition for acquisition candidates may result in fewer
acquisition opportunities being made available to the Company as well as
less advantageous acquisition terms which may increase acquisition costs to
levels that are beyond the Company's financial capability or that may have
an adverse effect on the Company's business and results of operations.
Accordingly, no assurance can be given as to the number or timing of the
Company's acquisitions or as to the availability of financing necessary to
complete an acquisition. The Company also believes that a significant
factor in its ability to consummate acquisitions following the Offering
will be the attractiveness of the Common Stock as an investment to
potential acquisition candidates. Such attractiveness may, in large part,
be dependent upon the market price and capital appreciation prospects of
the Common Stock compared to the equity securities of the Company's
competitors. Many of the Company's competitors for acquisitions are larger,
more established companies with significantly greater capital resources
than the Company and whose equity securities may be more attractive than
the Common Stock. To the extent the Common Stock is less attractive to
acquisition candidates, the Company's acquisition program may be adversely
affected.
Ability to Integrate Acquired Businesses and Achieve Operating Efficiencies
The Company is in the process of combining the businesses and assets that
it has acquired since July 1996 into an integrated operating structure.
This process may require, among other things, changes in the operating
methods and strategies of these separate businesses. The future growth and
profitability of the Company will be substantially dependent upon its
ability to operate recently acquired companies, as well as additional
businesses that may be acquired in the future, and integrate them in the
Company's operations. The Company's strategy is to achieve economies of
scale and operating efficiencies through increases in its size resulting
from acquisitions. There can be no assurance that the Company's efforts to
integrate acquired operations will be effective or that expected
efficiencies and economies of scale will be realized. The failure to
achieve any of these results could have a material adverse effect on the
Company's business and results of operations.
Potential Liabilities Associated with Acquisitions
The businesses acquired by the Company may have liabilities that the
Company does not discover or may be unable to discover during its pre-
acquisition investigations, including liabilities arising from
environmental contamination or non-compliance by prior owners with
environmental laws or regulatory requirements, and for which the Company,
as a successor owner or operator, may be responsible. Certain environmental
liabilities, even if expressly not assumed by the Company, may nonetheless
be imposed on the Company under certain legal theories of successor
liability, including particularly under Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA" or
"Superfund"). The businesses acquired by the Company handled and stored
petroleum, motor oil, and other hazardous substances at their facilities.
In the past, there may have been releases of these hazardous substances
into the soil or groundwater. The Company may be required under federal,
state, or local law to investigate and remediate this contamination. Any
indemnities or warranties, due to their limited scope, amount, duration,
the financial limitations of the indemnitor or warrantor, or other reasons,
may not fully cover such liabilities.
-5-
<PAGE>
Need for Additional Capital; Potential Dilution
The Company's acquisition program required a steady increase in capital,
which is expected to continue in the future as the Company pursues its
strategy. The Company has used with respect to completed acquisitions and
intends to use with respect to future acquisitions a combination of Common
Stock, cash, and the assumption of debt as consideration. In the event the
Company issues Common Stock to make future acquisitions, purchasers of
Common Stock in the Offering may experience dilution in the net tangible
book value per share of Common Stock. To the extent the Company is unable
to use Common Stock to make future acquisitions, its ability to grow may be
adversely affected. The Company's capital requirements also include working
capital needs to maintain daily operations and significant capital
expenditures for cell construction and expansion of its landfills, closure
and post-closure care costs associated with its landfills, equipment
purchases, and debt repayment obligations and/or financial assurance
obligations. To the extent that cash available under the Company's credit
facility and internally generated cash are not sufficient to meet the
Company's capital needs, the Company will be required to raise additional
funds through significant additional equity and/or debt financing. No
assurance can be given that additional funding will be available on terms
favorable to the Company.
Dependence on Key Personnel
In June 1996, the Company appointed a new Board of Directors and hired a
new management team. The Company's operations are substantially dependent
upon the services of its executive officers, particularly Louis D. Paolino,
Jr., the Chairman of the Board, Chief Executive Officer, and President of
the Company, and Terry W. Patrick, the Chief Operating Officer and an
Executive Vice President of the Company. The loss of the services of Mr.
Paolino, Mr. Patrick or one or more of the other executive officers of the
Company could have a material adverse effect on the Company's business and
results of operations. All of the Company's executive officers have entered
into employment agreements with the Company, most of which contain
noncompetition agreements. The Company does not maintain key-man life
insurance policies on its executive officers.
Dependence on Third Party Landfills
A substantial portion of the solid waste collected by the Company is
delivered to third party landfills under informal arrangements or without
long-term contracts. If these third parties increase their disposal fees
and the Company is unable to pass along such increase to its customers, or
if these third parties discontinue their arrangements with the Company and
the Company is unable to locate alternative disposal sites, the Company's
business and results of operations would be materially adversely affected.
Extensive Permitting and Licensing Requirements
The Company is required to obtain and maintain in effect various federal,
state, and local permits and licenses in connection with its solid waste
collection and transportation operations. The Company is also required to
obtain and maintain in effect various facility permits and other
governmental approvals, including those related to zoning, environmental,
and land use, in order to develop and operate a landfill, a transfer
station, or a waste hauling operation, and is required to obtain additional
permits and approvals to expand its existing landfill operations. These
permits and approvals are difficult, time consuming, and costly to obtain,
may be subject to community opposition, opposition by various local elected
officials or citizens, regulatory delays and other uncertainties, and may
be dependent upon the Company's facilities being included in state or local
solid waste management plans and the Company's entering into satisfactory
host agreements with local communities. In addition, operating permits may
be subject to modification, renewal, or revocation by the issuing agencies
after issuance, which may increase the Company's obligations and reopen
opportunities for opposition relating to the permits. Moreover, from time
to time, regulatory agencies may impose moratoria on, or otherwise delay,
the review or granting of these permits or approvals or such agencies may
modify the procedures or increase the stringency of the standards
applicable to the review or granting of such permits or approvals.
-6-
<PAGE>
There can be no assurance that the Company will be successful in
obtaining and maintaining in effect the permits and approvals required for
the successful operation and growth of its business, including permits and
approvals required for the development of additional disposal capacity
needed to replace existing capacity that becomes exhausted. The failure of
the Company to obtain or maintain in effect a permit or approval
significant to its business would have a material adverse effect on the
Company's business and results of operations.
Potential Pennsylvania Landfill Restrictions
The Company's Pennsylvania landfill operation, acquired by the Company in
December 1996, has been in existence since 1972. From 1972 to 1988, the
110-acre area of the landfill which received waste or was authorized by
state permits to receive waste had either received all necessary local
zoning approvals or was not required by local ordinance to receive a zoning
permit or other approval to operate. In 1988, the Company received a state
expansion permit for a 32-acre lined expansion area increasing the size of
the permitted disposal area to 142 acres as well as a conditional use
zoning approval from the local township. In 1990, the township, however,
adopted a new zoning ordinance which limited the height of municipal waste
landfills to 35 feet above the original land contour. The landfill, as
permitted in 1988 and as currently designed and permitted, exceeds 35 feet
in certain areas. The Company has maintained that the current permitted
area is an existing nonconforming use and is not subject to the 35 foot
height limitation imposed by the 1990 ordinance. However, if the township
seeks to impose this limitation, and is successful, the existing permitted
capacity of the Company's Pennsylvania landfill would be materially
affected.
Kentucky Landfill Obligations
The Company ceased operations at its Kentucky landfill on June 30, 1995
because the existing permitted disposal area did not meet current state law
design requirements. From June 30, 1995 to June 30, 1996, the Company
operated a transfer station at the landfill site and disposed of waste at
an alternate location. The Company simultaneously pursued a final state
permit for an expansion area designed to meet the new state standards. The
suspension of landfill operations and the diversion of waste to an
alternate location had an adverse effect on the Company's operating results
and the Company discontinued its transfer station operation on July 1,
1996. The Company received a final permit to construct its expansion area
on October 14, 1996. The planned development of the expansion area is
currently expected to begin in the fall of 1997. The initial capital costs
required to meet the new state requirements are anticipated to be
approximately $3.3 million. The final permit issued for the Kentucky
landfill expansion area incorporated the requirements contained in an
October 8, 1996 Agreed Order which settled an administrative appeal filed
by the Somerset Pulaski County Concerned Citizens Group. Prior to actual
construction of the expansion area, the Company is required to complete an
additional hydrogeologic investigation to confirm the adequacy of the
groundwater monitoring program approved in the final permit. Any negative
results of this investigation could have a material adverse effect on the
permitted disposal capacity at the Kentucky landfill expansion area and
cause a delay in reopening the landfill.
The final permit issued for the Kentucky landfill expansion area also
requires closure of the original disposal area, which ceased operations on
June 30, 1995, by August 15, 1997. The Company will commence but does not
expect to complete closure of this area by that date. Failure to complete
closure activities by such date would result in a violation of the final
permit and could result in the assessment of penalties and/or a forfeiture
of the existing $1.3 million payment bond posted by the Company to assure a
proper closure of this area.
Government Regulation
The Company is subject to extensive and evolving federal, state, and
local environmental laws and regulations that have become increasingly
stringent in recent years as a result of greater public interest
-7-
<PAGE>
in protecting the environment. These laws and regulations affect the
Company's business in many ways and will continue to impose substantial
costs on the Company.
The design, operation, and closure of landfills is extensively regulated.
These regulations include, among others, the regulations establishing
minimum federal requirements adopted by the United States Environmental
Protection Agency (the "EPA") in October 1991 under Subtitle D (the
"Subtitle D Regulations") of the Resource Conservation and Recovery Act of
1976 ("RCRA"). The Subtitle D Regulations, which generally became effective
in October 1993, include location restrictions, facility design standards,
operating criteria, closure and post-closure requirements, financial
assurance requirements, groundwater monitoring requirements, groundwater
remediation standards, and corrective action requirements. In addition, the
Subtitle D Regulations require that new landfill units meet more stringent
liner design criteria (typically, composite soil and synthetic liners or
two or more synthetic liners) designed to keep leachate out of groundwater
and have extensive collection systems to collect leachate for treatment
prior to disposal. Groundwater monitoring wells must also be installed at
virtually all landfills to monitor groundwater quality and, indirectly, the
effectiveness of the leachate collection system operation. Most states have
adopted extensive landfill regulations that have been updated or replaced
with new regulations consistent with, or more stringent than, the Subtitle
D Regulations. Failure to comply with these regulations could require the
Company to undertake investigatory or remedial activities, to curtail or
modify operations, or to close a landfill temporarily or permanently.
Future changes in federal or state regulations may require the Company to
modify, supplement, or replace equipment or facilities at costs that may be
substantial. The failure of regulatory agencies to enforce these
regulations vigorously or consistently may give an advantage to competitors
of the Company whose facilities do not comply with the Subtitle D
Regulations or its state counterparts. The Company's ultimate financial
obligations related to any failure to comply with these regulations could
have a material adverse effect on the Company's business and results of
operations.
The Company is also regulated under the Federal Water Pollution Control
Act of 1972 (the "Clean Water Act"), and the Clean Air Act, as amended in
1990 (the "Clean Air Act"). The Clean Water Act regulates the discharge of
pollutants from a variety of sources, including landfills, into streams or
other surface waters. The Clean Air Act, including the 1990 amendments,
provides for federal, state, and local regulation of emissions of air
pollutants into the atmosphere, including emissions resulting from landfill
operations. The EPA recently promulgated new standards regulating air
emissions of certain regulated pollutants from municipal solid waste
landfills. These standards, combined with the new permitting programs
established under the 1990 Clean Air Act amendments, likely will subject
four of the Company's landfills to new permitting requirements and may
require the installation of gas recovery systems. In addition to these
requirements, the Company's landfills are subject to Clean Air Act
regulations regulating the handling and disposal of asbestos-containing
materials. The Company's continued compliance with these existing and
future regulations may impose a significant expense upon the Company which
could have a material adverse effect on the Company's business and results
of operations.
In addition, most states and municipalities in which the Company operates
or may operate have adopted laws or requirements which limit or ban certain
categories of waste or mandate the disposal or recycling of local refuse.
These recycling laws and requirements have the effect of reducing landfill
disposal tonnage. Additionally, certain permits and approvals, as well as
state and local regulations, may seek to limit a landfill to accepting
waste that originates from specified geographic areas or seek to restrict
the importation of out-of-state waste. Generally, such legislative or
regulatory restrictions have not withstood judicial challenges. However,
from time to time, federal legislation is proposed which would allow
individual states to prohibit the disposal of out-of-state waste or to
limit the amount that could be imported for disposal. This legislation
would also authorize in certain instances local governmental units to
mandate the flow of waste to certain designated facilities. Although, to
date, no such federal legislation has been enacted, if such federal
legislation should be enacted in the future, states in which the Company
operates landfills could act to limit or prohibit the importation of out-
of-state waste or require the Company's collection operations to utilize
certain designated sites. Such federal or state
-8-
<PAGE>
actions could have an adverse effect on the Company's landfills that
receive a significant portion of waste originating from other states and on
the Company's collection operations.
Regulation by New York City Trade Waste Commission
In 1996, the New York City Council enacted Local Law 42 ("Local Law 42")
in order to control the corrupting influence of organized crime on the
waste hauling industry. Local Law 42 created the Trade Waste Commission
(the "TWC") and established rules for licensing and regulating the
operations of the commercial and industrial waste industry in New York
City. The law prohibits the collection, disposal, or transfer of commercial
and industrial waste without a license issued by the TWC and requires TWC
approval of all acquisitions or other business combinations proposed by all
licensees. Each acquisition, sale, or merger transaction generally must be
submitted for review by the TWC 30 days before the transaction takes
effect, although the amount of time required for review depends on the
complexity of the transaction and the need to investigate the background of
the principals involved. In considering applications for licenses, which
are now only temporary licenses, the TWC closely examines the backgrounds
of the applicant and the applicant's principals for any history of criminal
and other unlawful activity or involvement with members of organized crime.
The license issued to the Company by the TWC for the Company's New York
City collection operations is only a temporary license that is subject to
revocation by the TWC and there is no assurance that the Company will be
issued a permanent license. The TWC also sets maximum rates for the
industry and establishes operational requirements. In May 1997, the TWC
lowered the maximum collection rates that may be charged by licensed
companies. The Company's New York City collection operations are subject to
Local Law 42, which could preclude or materially impact the Company's
operations in this region, the time and cost of completing future
acquisitions in this region, and the rates which may be charged for
collection services.
Possible Legal Action
Companies in the solid waste management business, including the Company,
are frequently subject in the normal course of business to judicial and
administrative proceedings involving federal, state, or local agencies or
citizen groups. These governmental agencies may seek to impose fines or
penalties on the Company or to revoke or deny renewal of the Company's
operating permits or licenses for violations or alleged violations of
environmental laws or regulations or require that the Company make
expenditures to remediate potential environmental problems relating to
waste disposed of or stored by the Company or its predecessors, or
resulting from its or its predecessors' transportation and collection
operations. Any adverse outcome in these proceedings could have an adverse
effect on the Company's business and results of operations and may subject
the Company to adverse publicity. The Company may also be subject to
actions brought by local governments, individuals, or community groups in
connection with the permitting or licensing of its operations, any alleged
violation of such permits or licenses, or other matters.
Potential Environmental Liability
General. The Company is subject to liability for any environmental
damage that its solid waste facilities may cause to neighboring landowners,
particularly as a result of the contamination of drinking water sources or
soil, including damage resulting from the conditions existing prior to the
acquisition of such facilities by the Company. The Company also may be
subject to liability from any off-site environmental contamination caused
by pollutants or hazardous substances whose transportation, treatment, or
disposal was arranged by the Company or its predecessors. Any substantial
liability for environmental damage incurred by the Company could have a
material adverse effect on the Company's business and results of
operations.
CERCLA imposes strict, joint, and several liability on the present owners
and operators of facilities from which a release of hazardous substances
into the environment has occurred, as well as any party that owned or
operated the facility at the time of disposal of the hazardous substances
regardless of when the hazardous substance was first detected. Similar
liability is imposed upon the generators of waste that
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<PAGE>
contains hazardous substances and hazardous substance transporters that
select the treatment, storage, or disposal site. All such persons, who are
referred to as potentially responsible parties ("PRPs"), generally are
jointly and severally liable for the expense of investigation, cleanup, and
natural resource damages relating to environmental contamination,
regardless of whether they exercised due care and complied with all
relevant laws and regulations. These costs can be substantial. Liability
can be based upon the existence of even very small amounts of the more than
700 "hazardous substances" listed by the EPA and is not limited to the
disposal of "hazardous wastes," as statutorily defined. It is likely that
hazardous substances have in the past come to be located in landfills which
the Company has been associated as an owner or operator or as a result of
its solid waste collection operations. Moreover, the Company's solid waste
collection operations may have transported hazardous substances in the past
and may do so on occasion in the future.
The National Emission Standards for Hazardous Air Pollutants ("NESHAPs")
regulate the collection, packaging, transportation, and disposal of
asbestos-containing material. NESHAPs regulate visible emissions of
asbestos fibers to outside air and require emissions controls and
appropriate work practices. Asbestos is listed as a hazardous substance
under CERCLA. A few states have classified asbestos as hazardous waste and
require appropriate handling and disposal practices. The Company transports
and disposes of asbestos-containing materials. There can be no assurance
that the Company will not face claims resulting from environmental
liabilities relating to these and other materials in its solid waste
management operations.
Pennsylvania Landfill. Prior to 1990, the Company's Pennsylvania
landfill disposed of municipal solid waste in an unlined disposal area.
This unlined area was operated by the former owner and has caused localized
ground water contamination. As a condition to a recent permit modification,
the Company has agreed to remove all waste from unlined areas to remove the
source of contamination and relocate the waste to a Subtitle D approved
disposal area at the landfill. For the period of trash relocation, the
Company will operate a groundwater removal and treatment system which has
received a permit for the associated surface water discharge. Relocation of
trash began in April 1997, is coordinated with new pad construction, and is
scheduled to be completed in fiscal year 2008. At March 31, 1997, the
Company had accrued $4.5 million for such relocation and removal costs. An
additional condition of the permit modification requires groundwater
monitoring of five private water supply wells off-site. Low levels of
volatile organic compounds have been detected in two of these private water
supply wells. The Company does not believe that this off-site contamination
is related to the Company's on-site groundwater contamination.
Nevertheless, the Company voluntarily has supplied one private residence
with a carbon treatment unit on its water supply; the other private
residence is on bottled water. The Company has not established a specific
financial reserve for potential costs relating to this remediation or any
additional potential liabilities associated with this contamination. The
Company currently believes that ultimate resolution of these matters should
not have a material adverse effect on the Company's business or results of
operations. However, there can be no assurance that the Company's ultimate
financial obligations related to these matters will not have a material
adverse effect on the Company's business and results of operations.
Kentucky Landfill. The permit issued October 14, 1996 (reissued
February 26, 1997) for the Company's Kentucky landfill approved corrective
action measures to abate a ground water discharge containing vinyl chloride
at an off-site spring. The corrective action requires the installation of
three vertical gas wells. This corrective action has been completed by the
Company and the Company is monitoring the spring on a quarterly basis. On
December 30, 1994, the Company received a notice of intent to sue from a
neighbor of the Kentucky landfill for an alleged unauthorized discharge of
hazardous substances resulting in damage to the neighboring property. No
lawsuit has been initiated. The Company believes any lawsuit by this
neighboring landowner would lack merit and vigorously would defend such a
lawsuit. The Company currently believes that ultimate resolution of these
matters should not have a material adverse effect on the Company's business
or results of operations. However, there can be no assurance that the
Company's ultimate financial obligations related to these matters will not
have a material adverse effect on the Company's business and results of
operations.
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Illinois Landfill. The Company has received all required permits to
construct the new Illinois landfill, but intends to delay such construction
until a closure permit for an adjacent unlined landfill is issued. The
Company currently anticipates commencement of construction of the new
landfill in the fall of 1997 and commencement of operations in the spring
of 1998 upon issuance of an operating permit. The Company estimates that
the cost of construction of the initial landfill area will be $1.7 million.
Although the Company is not the owner or operator of the adjacent unlined
landfill and therefore disclaims financial responsibility for its closure
and any other potential liability associated therewith, the Company has
contracted with the owner to facilitate and partially fund closure. As part
of the Company's Landfill Management Agreement to operate the new Illinois
landfill, the Company agreed to contribute up to a maximum of $365,000
towards closure of the adjacent unlined landfill. In addition, the Company
has entered into an agreement with a surety providing financial assurance
for the closure and post-closure care requirements for the adjacent unlined
landfill pursuant to which the Company agreed to indemnify the surety in
the amount of $646,000 in the event the owner of the adjacent landfill
defaults on its closure and/or post-closure care obligations. The Company
believes that the ultimate resolution of this matter should not have a
material adverse effect on its business and results of operations. However,
there can be no assurance that the Company's ultimate financial obligations
related to these matters, including a significant delay in commencement of
operations of the new landfill area, will not have a material adverse
effect on the Company's business and results of operations.
West Virginia Landfill. The Company has been advised by the State
regulatory agency that the Company's West Virginia landfill is in violation
of regulatory requirements and its permit relating to stabilization of a
slope area and closure of a portion of the landfill. The State regulatory
agency has not issued a formal notice of violation. The Company submitted a
schedule for a phased closure on July 1, 1997, and advised the State
regulatory agency that it will commence closure activities by August 15,
1997, and submit a slope stabilization plan by October 1, 1997. The costs
associated with these activities are estimated to be $348,000. Although the
State could assess penalties and/or cause a forfeiture of the Company's
closure bond, the Company believes that such activities are unlikely. The
Company believes that the ultimate resolution of this matter will not have
a material adverse effect on the Company's business or results of
operations. However, there can be no assurance that the Company's ultimate
financial obligations related to this matter will not have a material
adverse effect on the Company's business and results of operations.
Superfund Liability. One of the Company's solid waste collection
subsidiaries, is a defendant, along with approximately 350 other
defendants, in a private cost recovery action under various state statutory
and common law theories for allegedly sending waste to a landfill now
undergoing a remedial clean-up. The suit seeks reimbursement of an
unspecified amount for soil and groundwater remediation. The case is in the
early stages of discovery and neither the total potential remediation costs
nor the Company's allocable share of liability has been quantified. Based
on information available to the Company, the subsidiary did not contribute
a significant proportion of the waste to the site and any waste that was
transported by the subsidiary to the site appears to have been construction
and demolition waste and municipal solid waste. To date, one of the
Company's insurance carriers has agreed to provide defense up to the policy
limits of $70,000, which the Company expects will be sufficient to cover
its liability, and four other carriers are expected to be placed on notice.
Given the limited quantities of waste potentially transported to the
landfill, the nature of the waste sent to the site, the availability of
insurance coverage, and other potential defenses, the resolution of the
action should not have a material adverse effect on the Company's business
and results of operations. No assurance can be given, however, that the
Company's ultimate financial obligations related to this matter will not
have a material adverse effect on the Company's business and results of
operations.
The same subsidiary is also a party to a Superfund litigation, which has
been settled by substantially all of the defendants. The Company is being
defended in this action by one of its insurance carriers, which did not
accept a $13,000 settlement offer. Because the settlement offer was not
accepted, the Company could be subject to claims for any deficiency between
the amount contributed by all settling
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<PAGE>
parties and the actual costs of remediating the site. While the Company has
no reason to believe that any such claims will be asserted and no
meaningful basis to estimate the amount of such claims, no assurances can
be given that they would not be brought or that the amount claimed would
not be substantial. Were any such claim to be asserted, the Company would
expect to vigorously assert all available defenses and believes that its
liability, if any, would either be covered by insurance or, under
applicable law, the responsibility of the carrier because of its failure to
accept settlement. However, no assurances can be given that insurance
proceeds would cover the entire amount of the claim or that the Company
would prevail in any action against the carrier. Accordingly, there can be
no assurance that the Company's ultimate financial obligations related to
this matter will not have a material adverse effect on the Company's
business and results of operations.
Potential Inadequacy of Accruals for Closure and Post-Closure Costs
The Company has material financial obligations relating to closure and
post-closure costs of the landfills it operates. While the precise amounts
of these future obligations cannot be determined, at March 31, 1997 the
Company estimated the total costs (on a current dollar as opposed to a
discounted present value basis) to be approximately $13.6 million for final
closure of its landfills, of which $3.2 million has been accrued as of
March 31, 1997. The Company makes an accrual for these costs based on
consumed airspace in relation to Management's estimate of total available
airspace of the landfills. Post-closure monitoring costs pursuant to
applicable regulations (generally for a term of 30 to 40 years after final
closure) are estimated at $7.5 million. At March 31, 1997, the Company had
accrued $1.5 million for such projected post-closure costs. The Company
will provide additional accruals based on engineering estimates of
consumption of permitted landfill airspace over the useful lives of its
landfills. There can be no assurance that the Company's ultimate financial
obligations for actual closing or post-closing costs will not exceed the
amount then accrued and reserved or amounts otherwise receivable pursuant
to insurance policies or trust funds. Such a circumstance could have a
material adverse effect on the Company's business and results of
operations.
Ability to Meet Bonding Requirements
The Company is required to post a form of financial assurance at its
landfills to ensure proper closure and post-closure monitoring and
maintenance. Additionally, some of the Company's collection and
transportation contracts require performance and payment bonds to guarantee
project completion and certain states may require collateral bonds to
secure compliance with hazardous waste transportation requirements. The
Company's ability to meet these bonding requirements is contingent upon the
Company's performance record and creditworthiness. Any inability by the
Company to maintain bonding capacity or a sizable increase in payment could
have a material adverse impact on the Company's business and results of
operations.
Limits on Insurance Coverage
The Company carries insurance covering its assets and operations,
including pollution liability coverage. Specifically, each of the Company's
landfills has pollution liability coverage of $5.0 million per occurrence
or $5.0 million in the aggregate subject to a $500,000 deductible per
occurrence. Nevertheless, there can be no assurance that the Company's
insurance will provide sufficient coverage in the event an environmental
claim was made against the Company or that the Company will be able to
maintain in place such insurance at reasonable costs. An uninsured or
underinsured claim against the Company of sufficient magnitude could have a
material adverse effect on the Company's business and results of
operations. The Company also is subject to the risk of claims by employees
and others made after the expiration of the policy coverage period,
including asbestos-related illnesses (such as asbestosis, lung cancer,
mesothelioma, and other cancers), which may not become apparent until many
years after exposure. From May 15, 1985 through April 28, 1988, the Company
carried claims-made general liability coverage. Any claims presented on the
basis of exposure during that period may not be covered
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<PAGE>
by insurance and any liability resulting therefrom could, consequently,
have an adverse effect on the Company's business and results of operations.
Waste Reduction Programs
Alternatives to landfill disposal, such as recycling, incineration, and
composting, are increasingly being used. There also has been an increasing
trend at the state and local levels to mandate recycling and waste
reduction at the source and to prohibit the disposal of certain types of
wastes at landfills. Many states (including states in which the Company
operates) have enacted laws that require counties to adopt comprehensive
plans to reduce the volume of solid waste deposited in landfills through
waste planning, composting, recycling, or other programs. Some states
(including Florida, Illinois, Kentucky, Pennsylvania, South Carolina, and
West Virginia) have adopted legislation that prohibits the disposal of yard
waste, tires, and other items in landfills. These developments could result
in a reduction in the volume of waste destined for landfills in certain
areas, which may affect the Company's ability to operate its landfills at
their full capacity and/or affect the prices that can be charged for
landfill disposal services. Such effects could have a material adverse
effect on the Company's business and results of operations.
Competition
The solid waste management industry is highly competitive and the Company
believes that industry consolidation will increase competitive pressures
even further. The Company competes with several large national waste
management companies, including Waste Management, Inc. (formerly WMX
Technologies, Inc.), Browning-Ferris Industries, Inc., U.S.A. Waste
Services, Inc., United Waste Systems, Inc., and Allied Waste Industries,
Inc. A number of these competitors have significantly greater financial,
technical, marketing, and other resources than the Company. The Company
also competes with numerous well-established smaller, local, or regional
firms, some of which have accumulated substantial goodwill. In addition,
municipalities that operate their own waste collection and disposal
facilities often enjoy the benefits of tax-exempt financing and may control
the disposal of waste collected within their jurisdictions. Increased
competition from these companies or municipalities could have a material
adverse effect on the Company's business and results of operations.
At August 11, 1997, the Company provided residential collection services
under 56 municipal contracts with terms ranging between one to five years.
As is customary in the waste management industry, such contracts come up
for competitive bidding periodically and there is no assurance that the
Company will be the successful bidder and will be able to retain such
contracts. If the Company is unable to replace any contract lost through
the competitive bidding process with a comparable contract within a
reasonable time period or to use any surplus equipment in other service
areas, the Company's business and results of operations could be adversely
affected.
Seasonality; Economic Conditions
The Company's revenues tend to be somewhat lower in the winter months.
This is primarily attributable to the fact that (i) the volume of waste
relating to construction and demolition activities tends to increase in the
spring and summer months and (ii) the volume of industrial and residential
waste in the regions in which the Company operates tends to decrease during
the winter months. In addition, particularly harsh weather conditions may
affect the Company's operations by interfering with collection,
transportation, and disposal operations, delaying the development of
landfill capacity, and/or reducing the volume of waste generated by the
Company's customers which could have a material adverse effect on the
Company's business and results of operations.
The Company's business is affected by general economic conditions, both
nationally and in the geographic regions in which the Company's operations
are currently located. There can be no assurance that a national or local
economic downturn will not result in a reduction in the volume of waste
being
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collected, transported, and disposed of by the Company and/or the prices
that the Company can charge for its services.
Anti-Takeover Provisions; Severance Agreements
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 10,000,000 shares of Class A Common Stock, of
which 8,319,799 shares are available for issuance as of the date of this
Prospectus. Holders of Class A Common Stock are entitled to four votes for
each share held on all matters submitted to a vote of the stockholders. The
issuance of Class A Common Stock could have the effect of delaying or
preventing a change in control of the Company without further action by the
stockholders. As of the date of this Prospectus, no shares of Class A
Common Stock were outstanding, and the Company has no present plans to
issue any shares of Class A Common Stock in the future. In the future, the
Company may adopt other charter provisions, such as authorizing the Board
of Directors to issue undesignated preferred stock, that also may have an
anti-takeover effect.
In addition, certain of the Company's executive officers that have
entered into employment agreements with the Company will be entitled to
receive certain bonuses in cash or Common Stock upon a change in control of
the Company in such amounts that, in the aggregate, could have an adverse
effect on the Company's liquidity and capital resources. Accordingly, such
provisions could discourage or prevent bids to takeover the Company and
decrease values that would otherwise be obtained by stockholders for their
Common Stock.
The Company is subject to the anti-takeover provisions of Section 203 of
the Delaware General Corporation Law, which prohibits the Company from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is
approved in a prescribed manner. The application of Section 203 also could
have the effect of delaying or preventing a change in control of the
Company without further action by the stockholders.
Control by Management
At August 11, 1997, executive officers and directors of the Company as a
group beneficially owned 5,948,233 shares or approximately 27.0% of the
outstanding Common Stock. As a result, these existing stockholders, if
acting together, will be able to influence significantly the election of
individuals to the Board of Directors and the outcome of other matters
submitted for stockholder consideration.
Volatility of Stock Price
The market price of the Common Stock has been and is likely to continue
to be highly volatile. Factors such as fluctuations in the Company's
quarterly revenues and operating results, the Company's on-going
acquisition program, governmental regulations, market conditions for waste
management stocks in general, and economic conditions generally may have a
significant impact on the market price of the Common Stock. In addition,
as the Company pursues its acquisition program, it may agree to issue
shares of Common Stock that will generally become available for resale
which may have an impact on the market price of the Common Stock.
Shares Eligible for Future Sale; Subsequent Registrations
Sales in the public market of substantial amounts of Common Stock
(including the Shares offered hereby) could have an adverse effect on the
market price of the Common Stock and may make it more difficult for the
Company to sell its equity securities in the future at times and prices
that it deems appropriate. At August 11, 1997, the Company had outstanding
21,461,224 shares of Common Stock. Of these shares, approximately
11,389,084 shares of Common Stock will generally be tradeable without
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<PAGE>
restriction or limitation under the Securities Act, except for any shares
owned by "affiliates" of the Company, which will be subject to the resale
limitations under Rule 144 of the Securities Act. The remaining
approximately 10,072,140 outstanding shares of Common Stock held by
existing stockholders are "restricted securities" and may not be sold in a
public distribution except in compliance with the registration requirements
of the Securities Act or pursuant to an exemption therefrom, including that
provided by Rule 144. Of these restricted securities, 7,154,373 shares will
be saleable in the public market 180 days following the date of this
Prospectus subject to compliance with Rule 144. At August 11, 1997, there
were outstanding options and warrants to purchase a total of 3,288,155
shares of Common Stock and an additional 359,264 shares reserved for
issuance pursuant to future option grants under the Company's stock option
plans. In addition, in connection with certain of the Company's
acquisitions, the Company has held back a certain portion of the purchase
price that was payable in Common Stock to generally secure the sellers'
indemnification obligations to the Company under the acquisition
agreements. Such Common Stock will be issued to the sellers upon the
occurrence of certain events and/or the satisfaction of certain liabilities
by the sellers. At August 11, 1997, a total of 481,059 shares of unissued
Common Stock were subject to such hold backs.
In addition, certain stockholders of the Company that hold restricted
securities have registration rights for an aggregate of up to 2,707,500
shares of Common Stock and an additional 406,250 shares of Common Stock
issuable upon exercise of warrants. The Company has agreed to pay
substantially all expenses incident to such registration, other than
underwriting discounts and commissions.
The Company intends to register 2 million shares of Common Stock under
the Securities Act not earlier than August 30, 1997 for its use in
connection with future acquisitions. These shares generally will be freely
tradable after their issuance by persons not affiliated with the Company;
however, resales of these shares during the 180-day period following the
date of the related shelf registration statement would require the prior
written consent of Smith Barney Inc.
Lack of Cash Dividends on Common Stock
The Company does not expect to pay any cash dividends on the Common Stock
in the foreseeable future. Any cash otherwise available for such dividends
will be reinvested in the Company's business. In addition, the Company's
credit facility agreement prohibits the payment of cash dividends without
prior bank approval.
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<PAGE>
THE COMPANY
Eastern Environmental Services, Inc. is a non-hazardous solid waste
management company specializing in the collection, transportation, and
disposal of residential, industrial, commercial, and special waste,
principally in the eastern United States. In June 1996, control of the
Company was acquired by a group of investors who repositioned the Company
for the purpose of implementing an aggressive acquisition program in the
solid waste industry. Since June 1996 the Company appointed a new Board of
Directors, hired a new management team with an average of 17 years of
experience in the waste management industry, raised a total of
approximately $10.0 million through two private placements of Common Stock,
established a credit facility principally for acquisitions and raised a
total of approximately $85.8 million through a public offering of 5,175,000
shares of the Company's Common Stock.
The Company believes that significant opportunities exist to acquire
solid waste collection, transportation, and disposal businesses in the
eastern United States and to develop within its existing markets. As part
of its acquisition program, the Company reviews acquisition opportunities
on an ongoing basis and is currently in various stages of negotiating the
acquisition of additional solid waste management businesses. There can be
no assurance that any of such acquisition negotiations will result in the
actual acquisition of additional solid waste management businesses.
The Company's principal executive offices are located at 1000 Crawford
Place, Suite 101, Mt. Laurel, New Jersey 08054, and its telephone number is
(609) 235-6009.
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SELLING STOCKHOLDERS
The following table lists the names of the persons whose Shares are
covered by this Prospectus (the "Selling Stockholders"), and for each, the
number of Shares beneficially owned at the commencement of the Offering,
the number of Shares being offered for sale and the number of Shares and
percentage interest of the Company to be beneficially owned after the
Offering.
<TABLE>
<CAPTION>
Number of Shares Shares Owned
Beneficially Owned Number of Number of After Offering
at Commencement Outstanding Shares Warrant Shares --------------
Selling Stockholders of Offering Being Offered Being Offered Number Percent
- -------------------- ---------------- --------------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
George Agramonte 2,000 667/(4)/ -- 1,333 *
Ameri Carting, Inc. 430,816/(3)/ 155,714/(1)(2)/ -- 275,102 1.3%
John Beardmore 20,834 20,834/(4)/ -- 0 *
M. Beckman 20,000 20,000/(4)/ -- 0 *
Alice Field Bender 23,124/(5)/ 15,744/(1)/ 7,380/(1)/ 0 *
Douglas R. Bender 8,397/(6)/ 5,717/(1)/ 2,680/(1)/ 0 *
Jeffrey L. Bender 20,758/(7)/ 14,133/(1)/ 6,625/(1)/ 0 *
Karen L. Bender 28,107/(8)/ 19,137/(1)/ 8,970/(1)/ 0 *
Richard G. Bender, Jr. 20,868/(9)/ 14,208/(1)/ 6,660/(1)/ 0 *
Richard G. Bender, Sr. 12,236/(10)/ 8,331/(1)/ 3,905/(1)/ 0 *
Stephen R. Bender 20,758/(11)/ 14,133/(1)/ 6,625/(1)/ 0 *
C&R Waste Removal, Inc. 29,347 9,782/(1)(2)/ -- 19,565 *
Kim Cappel 10,000 10,000/(4)/ -- 0 *
Albert Casagrande 14,096 4,699/(4)/ -- 9,397 *
Carl Casagrande 30,000 10,000/(4)/ -- 20,000 *
Carl M. Casagrande, Jr. 12,000 4,000/(4)/ -- 8,000 *
Daniel Albert Casagrande 9,595 3,198/(4)/ -- 6,397 *
Jack Casagrande 1,000 333/(4)/ -- 667 *
Nicholas Robert Casagrande 10,500 3,500/(4)/ -- 7,000 *
John Cinelli 8,000 2,667/(4)/ -- 5,333 *
</TABLE>
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<TABLE>
<CAPTION>
Number of Shares Shares Owned
Beneficially Owned Number of Number of After Offering
at Commencement Outstanding Shares Warrant Shares --------------
Selling Stockholders of Offering Being Offered Being Offered Number Percent
- -------------------- ---------------- --------------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C>
Victor Cinelli 8,000 2,667/(4)/ -- 5,333 *
Scott Cook 67,167 17,167/(4)/ -- 50,000 *
Rusty Culbreath 16,667 16,667/(4)/ -- 0 *
Curbside Leasing, Inc. 102,061 23,732/(1)(2)/ -- 78,329 *
Robert Donno 379,317 379,317/(1)(2)/ -- 0 *
Ivor Flannery 10,000 10,000/(4)/ -- 0 *
Founders Equity Group, Inc. 35,167/(12)/ 1,167 25,000/(2)/ 9,000 *
Dennis M. Grimm 278,924 278,924/(1)(13)/ -- 0 *
William and Barbara
Henderson 46,004 46,004/(1)/ -- 0 *
William H. Holbrook 172,039/(14)/ 119,539/(1)/ -- 52,500/(15)/ *
K.C. Waste Services, Inc. 2,307 536/(1)(2)/ -- 1,771 *
Thomas J. King 379,317 379,317/(1)(2)/ -- 0 *
Robert A. Kinsley 199,232 199,232/(1)/ -- 0 *
Phil La Barbara 8,333 8,333/(4)/ -- 0 *
LH Properties, Inc. 25,000/(16)/ -- 25,000/(2)/ 0 *
L.I. Waste Services, Inc. 221,150 51,423/(1)(2)/ -- 169,727 *
Dominick Marzano 38,095 12,698/(4)/ -- 25,397 *
Glen Miller 1,161,302/(17)/ 1,028,395/(2)/ 131,907/(2)/ 1,000 *
Teresa Bender Miller 8,397/(18)/ 5,717/(1)/ 2,680/(1)/ 0 *
W&G Miller Family
Limited Partnership 151,322/(19)/ 19,415/(2)(4)/ 131,907/(2)(4)/ 0 *
Willard Miller 1,264,366 1,260,366/(1)(2)(20)/ -- 4,000 *
Bill Moseley 4,166 4,166/(4)/ -- 0 *
Lynette Bender Mowery 14,022/(21)/ 9,547/(1)/ 4,475/(1)/ 0 *
N.Y. Waste Services, Inc. 576,385 179,281/(1)(2)/ -- 397,104 1.9%
Frances Pasquale 13,973 4,658/(1)(2)/ -- 9,315 *
Carlo J. Piccinonna 8,163 2,721/(1)(2)/ -- 5,442 *
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Number of
Beneficially Owned Number of Warrant Shares Shares Owned
at Commencement Outstanding Shares Being After Offering
Selling Stockholders of Offering Being Offered Offered Number Percent
- -------------------- ----------- ------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Anna Russo 5,000 1,667/(4)/ -- 3,333 *
Tim Schweizer 8,333 8,333/(4)/ -- 0 *
Daniel Sementilly 9,000 3,000/(4)/ -- 6,000 *
William C. Skuba 1,049,376/(22)/ 5,625/(2)/ -- 1,043,751/(22)/ 4.9%
Stephen C. Stamos 6,600/(23)/ -- 6,600 0 *
Timothy W. Sweeney 11,800/(24)/ -- 11,800 0 *
Norman Taylor 379,317 379,317/(1)(2)/ -- 0 *
Beatrice Tolin 24,490 8,163/(1)/ -- 16,327 *
Pietro Tomassi 9,000 3,000/(4)/ -- 6,000 *
Scott R. Wagner 199,232 199,232/(1)/ -- 0 *
Waste Services, Inc. 258,079 60,010/(1)(2)/ -- 198,069 *
Matthew Wittkin 22,000 1,600/(4)/ -- 20,400 *
Terry Wittkin &
Chester Wittkin Jt Ten 114,768 54,318/(4)/ -- 60,450 *
</TABLE>
- -------------------------------------------------
* Less than 1%
(1) The shares were acquired by the Selling Stockholder in connection with
an acquisition by the Company.
(2) The shares are subject to a lock-up agreement that expires on
October 29, 1997.
(3) Includes 20,000 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(4) The shares represented hereby were originally acquired in connection
with an acquisition by the Company and were subsequently transferred to
the Selling Stockholder.
(5) Includes 7,380 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
-19-
<PAGE>
(6) Includes 2,680 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(7) Includes 6,625 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(8) Includes 8,970 shares of Common Stock issuable upon exercise of
warrants, all of which have vested. Ms. Bender is the Vice President
and General Manger of R & A Bender, Inc., a subsidiary of the
Company.
(9) Includes 6,660 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(10) Includes 3,905 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(11) Includes 6,625 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(12) Includes 25,000 shares of Common Stock issuable upon the exercise of
warrants, all of which have vested and which are subject to a lock-up
agreement that expires on October 29, 1997.
(13) All of such shares are subject to a lock-up agreement that expires on
November 28, 1997. Mr. Grimm is currently Vice President of
Operations of the Company.
(14) Includes 52,500 shares of Common Stock issuable upon exercise of
warrants. Mr. Holbrook is a consultant to the Company.
(15) Represents 52,500 shares of Common Stock issuable upon exercise of
warrants.
(16) Represents 25,000 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(17) Includes 131,907 shares of Common Stock issuable upon the exercise of
warrants held by Mr. Miller, 81,907 of which are currently vested and
50,000 of which vest in September 1997. Does not include an
additional 150,000 shares of Common Stock issuable upon exercise of
warrants that are not exercisable within 60 days of August 11, 1997.
All of the shares are subject to a lock-up agreement that expires on
October 29, 1997. Mr. Miller is the Executive Vice President of the
Company. He acquired all but 1,000 of the shares beneficially owned by
him in connection with an acquisition by the Company.
(18) Includes 2,680 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(19) Includes 131,907 shares of Common Stock issuable upon the exercise of
warrants held by the W&G Miller Family Limited Partnership, 81,907 of
which are currently vested and 50,000 of which vest in September 1997.
Does not include an additional 150,000 shares of Common Stock issuable
upon exercise of warrants that are not exercisable within 60 days of
August 11, 1997.
-20-
<PAGE>
All such shares are subject to a lock-up agreement that
expires on October 29, 1997. The Partnership acquired such shares in
connection with an acquisition by the Company.
(20) Does not include 19,415 shares of Common Stock held of record by W&G Miller
Family Limited Partnership of which Mr. Miller serves as a general partner,
or 131,907 shares of Common Stock purchasable under currently exercisable
warrants held by such partership. Mr. Miller is Executive Vice President of
the Company. He acquired all but 4,000 of the shares beneficially owned by
him in connection with an acquisition by the Company.
(21) Includes 4,475 shares of Common Stock issuable upon exercise of
warrants, all of which have vested.
(22) Includes 13,400 shares of Common Stock held by Mr. Skuba's mother over
which he exercises voting control and 9,700 shares held by a trust of which
Mr. Skuba is the trustee. Does not include 25,000 shares of Common Stock
purchasable under currently exercisable warrants held by LH Properties,
Inc. of which Mr. Skuba is the sole stockholder, which are set forth above.
Mr. Skuba is the former Chairman and Chief Executive Officer of the
Company. He now acts as a consultant for the Company.
(23) Represents 6,600 shares of Common Stock issuable upon exercise of
warrants, all of which have vested. Mr. Stamos is a former director
of the Company.
(24) Represents 11,800 shares of Common Stock issuable upon exercise of
warrants, all of which have vested. Mr. Sweeney is a former member of
the Board of Directors.
-21-
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time to purchasers directly by any
of the Selling Stockholders, or, alternatively, any of the Selling
Stockholders may from time to time offer the Shares through dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from a Selling Stockholder and/or the purchasers
of the Shares for whom they may act as agent. Any discounts, commissions or
concessions received by any such dealers or agents and any profits on the
sale of Shares by them may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Shares may be sold from time to time in one or more transactions
at a fixed offering price, which may be changed, at varying prices
determined at the time of sale, or at negotiated prices. Such prices will
be determined by a Selling Stockholder or by agreement between a Selling
Stockholder and/or dealers. The Shares are listed on the Nasdaq National
Market and may be sold in transactions on the Nasdaq National Market. In
addition, the Shares may be sold, to the extent permitted, from time to
time in transactions effected in accordance with the provisions of Rule 144
under the Securities Act.
Pursuant to lockup agreements with Smith Barney Inc., an aggregate of
3,939,609 shares of Common Stock and 313,814 shares of Common Stock
issuable upon exercise of warrants, each of which are covered by this
prospectus, are subject to lockups that expire on October 29, 1997. In
addition, 278,972 shares of Common Stock covered by this prospectus are
subject to lockup that expires on November 28, 1997.
In connection with the offer and sale of the Shares, various state
securities laws and regulations require that any such offer and sale should
be made only through the use of a broker-dealer registered as such in any
state where a Selling Stockholder engages such broker-dealer and in any
state where such broker-dealer intends to offer and sell the Shares.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Shares may not bid for or purchase
the Shares until after such person has completed his or her participation
in such distribution, including the period of five business days prior to
the commencement of such distribution. In addition to and without limiting
the foregoing, the Selling Stockholders and any other person participating
in such distribution will be subject to other applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation Regulation M, which provisions may affect the timing of
purchases and sales of any of the Shares by the Selling Stockholders and
any such other person. All of the foregoing may affect the marketability of
the Shares and the ability of any person or entity to engage in market
making activities with respect to the Shares.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania,
counsel for the Company.
EXPERTS
The consolidated financial statements of the Company at and for the
period ended March 31, 1997, June 30, 1996 and June 30, 1995, and at and
for the nine months ended March 31, 1997 and for each of the three years in
the period ended June 30, 1996, which are incorporated by reference herein,
appearing in Amendment No. 3 to the Registration Statement on Form S-3
(Reg. No. 333-27245) were
-22-
<PAGE>
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated by reference herein,
which, as to each of the three years in the period ended June 30, 1996, is
based in part on the reports of Bardall, Weintraub P.C. and Paternostro,
Callahan & DeFreitas, LLP, independent auditors. The financial statements
referred to above are incorporated by reference herein in reliance upon
such reports given upon the authority of such firms as experts in
accounting and auditing.
The combined financial statements of Allied Environmental Services,
Inc. and affiliates as of and for the period ended June 30, 1996 and 1995
and at and for the years then ended appearing in the Company's Current
Report on Form 8-K dated July 2, 1996, as amended by its Forms 8-K/A filed
September 16, 1996, May 13, 1997, June 6, 1997, and July 10, 1997, which
are incorporated by reference herein, have been audited by BDO Seidman LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated by reference herein. Such financial statements are
incorporated by reference herein in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The combined financial statements of Allied Environmental Services,
Inc., Allied Environmental Services, West, Inc., Allied Mid-Atlantic, Inc.,
and Allied Waste Management, Inc. as of and for the period ended June 30,
1994 and at and for the year then ended appearing in the Company's Current
Report on Form 8-K dated July 2, 1996, as amended by its Form 8-K/A filed
September 16, 1996, May 13, 1997, June 6, 1997, and July 10, 1997, which
are incorporated by reference herein, have been audited by B.J. Klinger &
Co., P.C., independent auditors, as set forth in their report thereon
included therein and incorporated by reference herein. Such financial
statements are incorporated by reference herein in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The combined financial statements of Super Kwik, Inc. and Waste
Maintenance Services, Inc. appearing in the Company's Current Report on
Form 8-K dated September 27, 1996, as amended by its Forms 8-K/A filed
December 9, 1996, June 6, 1997, and July 10, 1997, which are incorporated
by reference herein, have been audited by Bardall, Weintraub P.C.,
independent auditors, as set forth in their report thereon included therein
and incorporated by reference herein. Such financial statements are
incorporated by reference herein in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The financial statements of R&A Bender, Inc. and R&A Property, Ltd.
appearing in the Company's Current Report on Form 8-K dated December 10,
1996, as amended by its Forms 8-K/A filed February 11, 1997, June 6, 1997,
and July 10, 1997, which are incorporated by reference herein, have been
audited by Boyer & Ritter, CPAs, independent auditors, as set forth in
their reports thereon included therein and incorporated by reference
herein. Such financial statements are incorporated by reference herein in
reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
The combined financial statements of Donno Company, Inc. and
affiliates appearing in the Company's Current Report on Form 8-K dated
January 31, 1997, as amended by its Form 8-K/A filed April 15, 1997 and
July 10, 1997, which are incorporated by reference herein, have been
audited by Paternostro, Callahan & DeFreitas, LLP, independent auditors, as
set forth in their report thereon included therein and incorporated by
reference herein. Such financial statements are incorporated by
-23-
<PAGE>
reference herein in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The financial statements of Apex Waste Services, Inc. appearing in the
Company's Current Report on Form 8-K dated March 31, 1997, as amended by
its Form 8-K/A filed May 15, 1997 and July 10, 1997, which are incorporated
by reference herein, have been audited by Daniel P. Irwin & Associates,
P.C., independent auditors, as set forth in their report thereon included
therein and incorporated by reference herein. Such financial statements are
incorporated by reference herein in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The combined financial statements of Waste Services, Inc. and
affiliates as of and for the period ended December 31, 1996 and at and for
the year then ended appearing in the Company's Current Report on Form 8-K
dated May 12, 1997, as amended by its Form 8-K/A filed July 11, 1997 and
July 25, 1997, which are incorporated by reference herein, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated by reference herein. Such
financial statements are incorporated by reference herein in reliance upon
such report given upon the authority of such firm as experts in accounting
and auditing.
_______________________
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in or incorporated
by reference in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company, the Selling Stockholders or any other person. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it
is unlawful to make such an offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof or that there has been
no change in the affairs of the Company since such date.
-24-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by
the Registrant in connection with this Registration Statement.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee.... $31,549
Legal Fees and Expenses................................. 15,000
Miscellaneous Expenses................................... 3,451
Total................................................. .$50,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides, in general, that a corporation incorporated under
the laws of the State of Delaware, such as the Company, may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding (other than
an action by or in the right of the corporation) by reason of the fact that
such person is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit, or proceeding if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to
the vest interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of an action by or in the right of the
corporation, a Delaware corporation may indemnify any such person against
expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court
determines upon application that, despite the adjudication of liability but
in view of all circumstances of the case, such person is fairly and
reasonable entitled to indemnity for such expenses.
Article Tenth, Paragraph (a) of the Certificate of Incorporation of
the Company provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director
or officer of the Company or is or was serving at the request of the
Company as a director, officer, employee, or agent of another company or of
a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether or not the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee, or agent, or in any other capacity while serving as a
director, officer, employee, or agent, shall be indemnified and held
harmless by the Company to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment
II-1
<PAGE>
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment), against all
expense, liability, and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. Such indemnification continues as to a person who has ceased to
be a director, officer, employee, or agent or in any other capacity while
serving as a director, officer, employee, or agent and inures to the
benefit of his or her heirs, executors, and administrators; provided,
however, that except as provided in Paragraph (b) of the Article Tenth
(described below), the Company shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was authorized by
the board of directors of the Company. Article Tenth, Paragraph (a) further
provides that such right to indemnification shall be a contract right and
shall include the right to be paid by the Company the expenses incurred in
defending any such proceeding in advance of its final disposition;
provided, however, that if the DGCL requires, the payment of such expenses
incurred by a director or officer (in his or her capacity as a director or
officer and not in any other capacity in which service was or is rendered
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of
a proceeding shall be made only upon delivery to the Company of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under the Certificate of
Incorporation or otherwise. The Company may, by action of its Board of
Directors, provide indemnification to employees and agents of the Company
with the same scope and effect as the foregoing indemnification of
directors and officers. The foregoing right to indemnification and
advancement of expenses is not exclusive.
Article Tenth, Paragraph (b) of the Certificate of Incorporation
provides further that if a claim described under Paragraph (a) of Article
Tenth is not paid in full by the Company within thirty (30) days after a
written claim has been received by the Company, the claimant may at any
time thereafter bring suit against the Company to recover the unpaid amount
of the claim and, if successful, in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall
be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is required, has
been to tendered to the Company) that the claimant has not met the
standards of conduct which make it permissible under the DGCL for the
Company to indemnify the claimant for the amount claimed, but the burden of
providing such defense shall be on the Company. Neither the failure of the
Company (including its Board of Directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct
set forth in the DGCL, nor an actual determination by the Company
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
As permitted by Article Eleventh of the Certificate of Incorporation
and Section 145(g) of the DGCL, the directors and officers of the Company
and its subsidiaries are covered by policies of insurance under which they
are insured, within limits and subject to certain limitations, against
certain expenses in connection with the defense of actions, suits or
proceedings, and certain liabilities which might be imposed as a result of
such actions, suits or proceedings, in which they are parties by reason of
being or having been directors or officers; the Company is similarly
insured, with respect to certain payments it might be required to make to
its directors or officers under the applicable statutes and its charter
II-2
<PAGE>
provisions. The Company has also entered into indemnification agreements
with certain of its directors and officers.
The Company is also indemnified against certain liabilities, including
liabilities under the Securities Exchange Act of 1934, or will contribute
payments that the certain underwriters may be required to make in respect
thereof, in an underwriting agreement executed in connection with the
public offering of 4.5 million shares of Common Stock of the Company under
a Registration Statement on Form S-3 (File No. 333-27245) filed by the
Company.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
5 Opinion of Drinker Biddle & Reath LLP
23.8 Consent of Drinker Biddle & Reath LLP (included in
Exhibit 5)
24 Powers of Attorney -- Included on signature page.
</TABLE>
Item 17. Undertakings.
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,
represents a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the
II-3
<PAGE>
low or high and 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 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, and the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Exchange Act 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) 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.
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 Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act 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 Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Mt. Laurel, New Jersey on August 20,
1997.
EASTERN ENVIRONMENTAL SERVICES,INC.
By: /s/Louis D. Paolino, Jr.
---------------------------------------
Louis D. Paolino, Jr.
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated, on August 20, 1997.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Louis D. Paolino, Jr. Chairman of the August 20, 1997
- -------------------------- Board and Chief
Louis D. Paolino, Jr. Executive Officer
(Principal
Executive Officer)
/s/Gregory M. Krzemien Chief Financial August 20, 1997
- -------------------------- Officer and
Gregory M. Krzemien Treasurer
(Principal Financial
and Accounting
Officer)
George O. Moorehead* Director August 20, 1997
- --------------------------
George O. Moorehead
Kenneth C. Leung* Director August 20, 1997
- --------------------------
Kenneth C. Leung
</TABLE>
II-5
<PAGE>
*Gregory M. Krzemien, pursuant to a Power of Attorney executed by each of
the directors and officers noted above and included in the signature page
of the initial filing of this Registration Statement, by signing his name
hereto, does hereby sign and execute this Amendment No. 1 to Registration
Statement on behalf of each of the persons noted above, in the capacities
indicated, and does hereby sign and execute this Amendment No. 1 to
Registration Statement on his own behalf, in the capacity indicated.
II-6
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5 Opinion of Drinker Biddle & Reath LLP
23.8 Consent of Drinker Biddle & Reath LLP (included in Exhibit 5)
</TABLE>
<PAGE>
Exhibit 5
---------
DRINKER BIDDLE & REATH LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
Phone: (215) 988-2700
August 20, 1997
Eastern Environmental Services, Inc.
1000 Crawford Place
Mt. Laurel, New Jersey 08054
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Eastern Environmental Services, Inc., a
Delaware corporation (the "Company"), in connection with the preparation
and filing with the Securities and Exchange Commission of a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the public
offering of up to an aggregate of 5,504,265 shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), 5,122,051 of which are
currently issued and outstanding (the "Outstanding Shares") and 382,214 of
which are issuable upon the exercises of warrants (the "Warrant Shares").
In this connection, we have examined the originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate
of Incorporation and the By-laws of the Company, resolutions of the
Company's Board of Directors, and such other documents and corporate
records relating to the Company and the issuance and sale of the Shares as
we have deemed appropriate. This opinion is based exclusively on the
General Corporation Law of the State of Delaware.
In all cases, we have assumed the legal capacity of each natural
person signing any of the documents and corporate records relating to the
Company, the genuineness of signatures, the authenticity of documents
submitted to us as originals, the conformity to authentic original
documents of documents submitted to us as copies and the accuracy and
completeness of all corporate records and other information made available
to us by the Company.
On the basis of the foregoing, we are of the opinion that the
Outstanding Shares have been validly issued and are fully paid and non-
assessable by the Company, and that the Warrant Shares, upon exercise of
such warrants and payment therefor, will be validly issued, fully paid and
non-assessable by the Company.
We hereby consent to the reference to our firm under the caption
"Legal Matters" in the prospectus included in the Registration Statement
and to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we come within the
categories of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
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DRINKER BIDDLE & REATH LLP
