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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 31, 1998
EASTERN ENVIRONMENTAL SERVICES, INC.
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(Exact name of issuer as specified in charter)
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<S> <C> <C>
Delaware 0-16102 59-2840783
(State or Other Jurisdiction Commission (I.R.S. Employer
Or Incorporation or File Number Identification
Organization) Number)
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1000 CRAWFORD PLACE, MT. LAUREL, NEW JERSEY 08054
(Address of principal executive offices)
(609)235-6009
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On March 31, 1998, Eastern Environmental Services, Inc. (the "Registrant")
consummated the acquisition of Ecology Systems, Inc., Tactical Management, Inc.,
and Transpro, Inc. (collectively, the "Ecology Companies") pursuant to the terms
of a Stock Purchase Agreement dated March 31, 1998 by and among Anthony Rizzo,
Jr., Darren Rizzo, Michael Colombino and the Registrant. The description of the
acquisition transaction set forth herein is qualified in its entirety by the
Stock Purchase Agreement which is incorporated as Exhibit 10.1.
Pursuant to the Stock Purchase Agreement, the Registrant purchased all of
the outstanding common stock of the Ecology Companies for unregistered common
stock of the Registrant resulting in the Shareholders receiving 155,665
unregistered shares of the Registrant's common stock, $.01 par value. The
shares of the Registrant's common stock were valued at $25.375 per share. No
cash was paid to the Shareholders for the acquisition of the shares of the
Company. The acquisition is to be accounted for using the "pooling of
interests" method. The Registrant has agreed to register one-half of the stock
for resale under the Securities Act of 1933 within 120 days after closing,
pursuant to the terms of the Registration Rights included within the Stock
Purchase Agreement as Section 6.2 (Registration Rights).
At the date of closing the Stock Purchase Agreement, the Registrant assumed
approximately $1,000,000 of outstanding indebtedness of the Company.
The transaction includes all of the assets and liabilities relating to the
operation of the Companies. The acquired assets were used by the Shareholders
in the solid waste transportation and disposal business. The Registrant intends
to continue to use the acquired assets for these purposes.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA
Financial Information and Exhibits.
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(a) Financial statements of businesses acquired are not required due to the
transactions being below the financial statement filing requirements as per
applicable regulations under the Securities Exchange Act of 1934.
(b) Pro forma financial information
Pro forma financial information of Eastern Environmental Services, Inc. are
not required due to transactions being below financial statement filing
requirements as per applicable regulations under the Securities Exchange
Act of 1934.
(c) Exhibits
10.1 Stock Purchase Agreement dated March 31, 1998 between Eastern
Environmental Services, Inc., Anthony Rizzo, Jr., Darren Rizzo and Michael
Colombino.
SIGNATURE
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Eastern Environmental Services, Inc.
Date: April 9, 1998 By: /s/ Gregory M. Krzemien
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Gregory M. Krzemien, Chief Financial Officer
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EXHIBIT INDEX
Exhibit
No. Description
- ---- -----------
10.1 Stock Purchase Agreement dated March 31, 1998 between Eastern
Environmental Services, Inc., Anthony Rizzo, Jr., Darren Rizzo and
Michael Colombino.
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Exhibit 10.1
STOCK PURCHASE AGREEMENT
BETWEEN
EASTERN ENVIRONMENTAL SERVICES, INC.
AND
THE SHAREHOLDERS OF
ECOLOGY SYSTEMS, INC.
TACTICAL MANAGEMENT, INC.
AND
TRANSPRO, INC.
MARCH 31, 1998
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TABLE OF CONTENTS
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Page
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RECITALS....................................................... 1
ARTICLE I - CLOSING............................................ 1
ARTICLE II - [OMITTED]......................................... 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS........ 4
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF EASTERN......... 14
ARTICLE V - ADDITIONAL AGREEMENTS OF SELLERS................... 15
ARTICLE VI - ADDITIONAL AGREEMENTS OF EASTERN.................. 19
ARTICLE VII - CONDITIONS OF EASTERN............................ 21
ARTICLE VIII - CONDITIONS OF SELLERS........................... 22
ARTICLE IX - INDEMNIFICATION................................... 23
ARTICLE X - OTHER PROVISIONS................................... 26
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SECTION OF DISCLOSURE SCHEDULE
ATTACHED TO THIS AGREEMENT
1.7(b) Opinion of Eastern Counsel
1.7(c) Employment Agreement
1.8(e) Opinion of Sellers Counsel
1.8(f) Release
ATTACHED AS PART OF DISCLOSURE BINDER
1.3(a) Company Debt
1.3(b) Capital Structure; Share Allocation
3.1 Subsidiaries
3.3 Contracts, Permits, Mortgages and Material Documents
3.4(b) Rolling Stock
3.4(c) Trailers
3.5 Customer Contracts
3.6 Real Property
3.7 Adverse Changes
3.8(a)(iii) Liabilities not in Ordinary Course of Business
3.9 Fiscal Condition of Companies
3.10 Tax Status of Companies
3.11 Insurance Policies, Performance Bonds and Letters of Credit
3.12(a) Contracts with Employees
3.12(b) Employees
3.12(c) Benefit Plans
3.13(a) Violations of federal, state or local laws or regulations
3.13(b) Environmental Violations
3.13(f) List and Synopsis of All Litigation
3.15 Required Consents
3.18 Related Party Transactions
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), is made and entered into on
March 31, 1998, by and between Eastern Environmental Services, Inc., a Delaware
corporation ("Eastern"), on one part, and Anthony Rizzo, Jr., Darren Rizzo, and
Michael Colombino (collectively, the "Sellers"), on the other part.
RECITALS
Eastern is a waste services company engaged in the collection,
transportation and disposal of residential, commercial and industrial waste in
several eastern, southern, and Midwestern states. Ecology Systems, Inc.,
Tactical Management, Inc., and Transpro, Inc.(collectively, the "Companies")
are waste services companies engaged in the transportation and disposal of
residential, commercial and industrial waste in several eastern states. Sellers
own all of the issued and outstanding shares of the Companies ("Company
Shares"). For purposes of this Agreement, Eastern is sometimes hereinafter
referred to as "Purchaser."
In accordance with the provisions of this Agreement, Sellers desire to sell
all of the outstanding shares of stock of the Companies to Eastern in exchange
for common stock of Eastern, all on the terms contained herein. The parties
intend that the transactions contemplated hereby qualify as a reorganization,
within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended, and be treated as a "pooling of interests" for accounting purposes.
Throughout this Agreement various Schedules are referenced as being
attached to this Agreement. Notwithstanding the fact that all Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead appear in a Disclosure Binder prepared by the Sellers. The
Disclosure Binder is organized under subheadings which correspond to the various
Schedules described in this Agreement. For purposes of identification, the
Disclosure Binder has been identified by the parties by a written statement
executed by the parties and appearing as the first page of the Disclosure
Binder.
ARTICLE I
CONSIDERATION AND CLOSING
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SECTION 1.1 Incorporation of Recitals. The recitals set forth above are
-------------------------
incorporated herein by reference and are a part of this Agreement.
SECTION 1.2 Time and Place for Closing. Closing under this Agreement
--------------------------
shall take place within fifteen days of the conditions set forth in Article VII
and Article VIII being satisfied or waived, time being of the essence, at the
offices of Eastern, 1000 Crawford Place, Mount Laurel, New Jersey, or such other
place as the parties hereto may agree upon. The date that Closing occurs is
referred to hereinafter as the "Closing Date" and the act of closing as
"Closing." The exact Closing Date shall be established by a written notice sent
by Purchaser to Sellers.
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SECTION 1.3 Agreement to Sell Stock of Companies; Consideration.
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(a) At the Closing, each of the Sellers agrees to transfer and deliver to
Purchaser all of the Company Shares owned by such Seller, as applicable, and
Purchaser agrees to purchase and pay for the Company Shares, the total
consideration, subject to adjustment as provided herein, of $4,956,000 as
follows: (i) a number of shares of Eastern's common stock ("EESI Stock") having
a value of $3,950,000, each share being valued at the closing price of the
common stock on the Nasdaq Stock Market on the date of this Agreement ("Per
Share Value"), and (ii) Purchaser accepting the Company Shares with the
Companies having total liabilities, excluding accounts payable, of $1,006,000,
as set forth on Schedule 1.3(a) attached ("Company Debt"). If the Company Debt,
at Closing, is less than or more than $1,006,000, the EESI Stock to be delivered
at Closing shall be increased or decreased, dollar for dollar, by the amount by
which the principal and accrued interest owed on the Company Debt at Closing is
less than or exceeds $1,006,000. The increase or decrease, as applicable, shall
be calculated by valuing the EESI Stock at the Per Share Value.
(b) The EESI Stock shall be allocated between the Companies as set forth on
Schedule 1.3(b). The Sellers shall receive the shares of EESI Stock as
allocated among the Companies and in the same proportions that the Sellers own
shares in each of the Companies, as set forth on Schedule 1.3(b).
SECTION 1.4 Closing. Following execution of this Agreement, Purchaser and
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Sellers shall be obligated to conclude the transaction strictly in accordance
with its terms within fifteen (15) days after the conditions of Closing set
forth in Article VII and Article VIII have been satisfied or waived, time being
of the essence. If the failure to conclude this transaction is due to the
refusal and failure of Sellers to perform their obligations under this
Agreement, Purchaser may seek to enforce this Agreement with an action of
specific performance, in addition to, and not in limitation of, any other rights
and remedies available to the Purchaser under this Agreement, or at law or in
equity, including, without limitation an action to recover their actual damages
resulting from the default of Sellers. If the failure to conclude this
transaction is due to the refusal and failure of Purchaser to perform its
obligations under this Agreement, Sellers may, in addition to and not in
limitation of any other rights and remedies available to the Sellers under this
Agreement, or at law or in equity, bring legal action to recover their actual
damages resulting from the default of Purchaser.
SECTION 1.5 Termination. This Agreement and the transactions contemplated
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hereby may be terminated at any time prior to the Closing Date:
(a) by mutual written agreement of Eastern and Sellers;
(b) by Eastern within forty-five (45) days after the date of this
Agreement, if Eastern is not satisfied, in its sole discretion, with the due
diligence it has conducted on the Companies;
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(c) by Eastern or Sellers, in the event the other makes a material
misrepresentation under this Agreement or breaches a material covenant or
agreement under this Agreement; or
(d) by Eastern or Sellers, if the Closing shall not have occurred by May
31, 1998, or such other date as may be agreed to by the parties hereto in
writing, due to the non-fulfillment of a condition precedent to such party's
obligation to close as set forth at Article VII or VIII hereof, as applicable
(through no fault or breach by the terminating party).
In the event this Agreement is terminated as provided herein, this
Agreement shall become void and be of no further force and effect and no party
hereto shall have any further liability to any other party hereto, except that
Sections 1.5, Article IX, Section 10.1, Section 10.2 and Section 10.15 shall
survive and continue in full force and effect, notwithstanding termination. The
termination of this Agreement shall not limit, waive or prejudice the remedies
available to the parties, at law or in equity, for a breach of this Agreement.
If this Agreement is terminated, all due diligence and other documentation
delivered to Eastern by the Companies and Sellers shall be returned to the
Sellers.
SECTION 1.6 Deliveries by Eastern. At the Closing, Eastern shall
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deliver or cause to be delivered, all duly and properly executed, authorized and
issued (where applicable):
(a) Certificates representing shares of EESI, as provided in Section 1.3
above, to be delivered upon delivery of the Company Shares.
(b) A favorable opinion from counsel for Eastern, dated the Closing Date,
in the form attached as Schedule 1.6(b);
(c) Employment Agreements with each of the Sellers, in the form and
content attached hereto as Schedule 1.6(c) (the "Employment Agreements"); and
(d) A copy of resolutions of the directors of Eastern certified by its
secretary authorizing the execution and delivery of this Agreement and each
other agreement to be executed in connection herewith (collectively, the
"Collateral Documents") and the consummation and performance of the transactions
contemplated herein and therein.
SECTION 1.7 Deliveries by Sellers. At the Closing, Sellers shall deliver
----------------------
to Eastern or cause to be delivered, all duly and properly executed, authorized
and issued (where applicable) the following:
(a) Certificates in valid form evidencing all of the Company Shares owned
by each Seller, each duly endorsed in blank or accompanied by a duly executed
stock power attached or otherwise executed in the presence of authorized
representatives of Purchaser;
(b) Except as may be otherwise required by Eastern, the written
resignations of all officers and directors of the Companies as of the time of
Closing;
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(c) The Employment Agreements;
(d) A current certificate of good standing for each of the Companies from
each applicable jurisdiction of incorporation;
(e) An opinion from counsel for Sellers, dated the Closing Date, in form
attached as Schedule 1.7(e);
(f) A release from each Seller, in a form and content reasonably
satisfactory to Purchaser, which provides that the Sellers are releasing the
Companies from any and all claims, causes of action, debts and obligations
whatsoever existing on the Closing Date;
(g) The Certificate described at Section 7.1 executed by the President of
each of the Companies; and
(h) The books and records of the Companies, including, without limitation,
all original financial and operating records, the corporate minute books and
seals, the corporate stock ledgers, and all title documents.
ARTICLE II
[Intentionally Left Blank.]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
With knowledge that Eastern is relying upon the representations, warranties
and covenants herein contained, Sellers each represent and warrant to Eastern
and make the following covenants for Eastern's benefit. When the phrase "to
Sellers' knowledge" or any equivalent phrase is used in this Agreement, the
phrase shall mean the actual knowledge of any Seller or the information and/or
knowledge any Seller who is or was a director or officer of any Company would
actually possess had such Seller acted with reasonable diligence in the conduct
of his or her duties as an officer or director.
SECTION 3.1 Organization and Standing. The Companies are corporations
-------------------------
duly organized, validly existing and in good standing under the laws of the
state of their incorporation, with full power and authority to own their
properties and conduct their businesses as now being conducted. Except as listed
in Schedule 3.1, the Companies do not own any stock or interest in any other
corporation, partnership, or other business organization. Sellers own all of
the outstanding securities issued by the Companies, as set forth on Schedule
1.3(b).
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SECTION 3.2 Securities. The Companies have the authorized and outstanding
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securities set forth on Schedule 1.3(b). All outstanding shares of stock are
legally and validly authorized and issued, fully-paid and nonassessable. There
are no outstanding rights of any kind to acquire additional shares of any class
of stock of the Companies, except as set forth on Schedule 1.3(b).
SECTION 3.3 Contracts, Permits and Material Documents. The items listed
-----------------------------------------
in Schedule 3.3 attached hereto are all of the following ("Material Documents")
with respect to the Companies which provide a benefit or imposes a detriment of
a value of $10,000 or more: (i) leases for real and personal property, (ii)
licenses, (iii) franchises, (iv) promissory notes, guarantees, bonds, mortgages,
liens, pledges, and security agreements under which any of the Companies are
bound or under which any of the Companies are the beneficiary, (v) collective
bargaining agreements, (vi) patents, trademarks, trade names, copyrights, trade
secrets, proprietary rights, symbols, service marks, and logos, (vii) all
permits, licenses, consents and other approvals from governments, governmental
agencies (federal, state and local) and/or third parties relating to, used in or
required for the operation of any of the business of the Companies, (viii) all
surety bonds, closure bonds or any other obligation which the Companies have
liability for with respect to their operations and (ix) other contracts,
agreements and instruments not listed on another Schedule attached to this
Agreement (such as the customer contracts listed on Schedule 3.5) which are
binding on any of the Companies or any of their property and pursuant to which
the Companies derive a benefit or incur a detriment having a value of $10,000 or
more. The Material Documents listed on Schedule 3.3 are organized under
separate headings for each of the Companies and under subheadings for each of
the different type of documents listed. Except as set forth on Schedule 3.3,
neither the Companies nor any person or party to any of the Material Documents
or bound thereby is in material default under any of the Material Documents,
and, to the knowledge of Sellers, no act or event has occurred which with notice
or lapse of time, or both, would constitute such a default. The Companies are
not a party to, and none of Companies' properties are bound by, any agreement
or instrument which is material to the continued conduct of business operations
of the Companies, as now being conducted, except as listed in Schedule 3.3.
SECTION 3.4 Personal Property.
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(a) All furniture, office equipment, computer equipment, and radio
equipment, owned by the Companies is in reasonably good condition, normal wear
and tear excepted, and is sufficient in type, quantity and quality to operate
the business currently conducted by the Companies consistent with good industry
practice.
(b) Listed on Schedule 3.4(b) is all of the rolling stock, including motor
vehicles, trucks, tractors, front and rear end loaders, and compactors and
accessories and attachments used in the business of the Companies together with
information as to the make, description of body and chassis, model number,
serial number and year of each such vehicle ("Rolling Stock"). The Rolling
Stock is owned or leased by each of the Companies as listed on Schedule 3.4(b).
The Rolling Stock is in reasonably good condition, normal wear and tear
excepted, except as noted on Schedule 3.4(b). The
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Companies own and/or lease a sufficient number and type of Rolling Stock to
service their customers consistent with good industry practice.
(c) Schedule 3.4(c), attached hereto, lists by each of the Companies the
trailers used in the business of each of the Companies. All of the trailers
owned and used by the Companies are in reasonably good condition, normal wear
and tear excepted, except as noted on Schedule 3.4(c). The Companies own and/
or lease a sufficient number and type of trailers to service their customers
consistent with good industry practice.
(d) The inventory of parts, tires and accessories and the shop tools owned
by the Companies are in reasonably good condition, normal wear and tear
excepted, and are sufficient in type, quantity and quality to operate the
business currently conducted by the Companies consistent with good industry
practice.
(e) All loading and weighing equipment and other equipment not listed on
one of the above schedules owned by the Companies is in reasonably good
condition, normal wear and tear excepted, and is sufficient in type, quantity
and quality to operate the business currently conducted by the Companies
consistent with good industry practice.
SECTION 3.5 Customers. A list of customers each of the Companies serves
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together with information as to the services rendered to each such customer,
frequency of service and rates charged and the contractual rights of each
customer, whether oral or in writing, is listed on Schedule 3.5 attached hereto.
None of the Companies and, to Sellers' knowledge, no other person or party to
any of the customer contracts is in material default under any of the customer
contracts, and to Sellers' knowledge no act or event has occurred which with
notice or lapse of time, or both, would constitute such a default. The purchase
of the Companies by Eastern will not create a default under any customer
contract.
SECTION 3.6 Title.
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(a) Listed on Schedule 3.6 attached are the addresses and ownership
interest which each Company has in any real property, including, without
limitation, fee ownership, lease, license or other form of interest.
(b) The Companies have good and marketable title to, or a valid leasehold
interest in, all of their assets both real property and personal property, each
free and clear of any mortgages, pledges, liens, encumbrances, charge, claim,
security agreement or title retention or other security arrangement ("Liens"),
except the types of liens set forth in subparagraphs (i) through (iii), and the
items listed on Schedule 3.6 ("Permitted Encumbrances").
(i) Liens imposed by law and incurred in the ordinary course of
business for indebtedness not yet due to carriers, warehousemen, laborers or
materialmen and the like;
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(ii) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation; and
(iii) Liens for property taxes, assessments, or governmental charges
not yet subject to penalties for nonpayment.
SECTION 3.7 Financial Statements. Sellers have delivered to Eastern true
--------------------
and correct copies of the following financial statements of the Companies (the
"Financial Statements"):
(a) Balance sheets of the Companies as of December 31, 1995, December 31,
1996, and December 31, 1997, and a statement of income, cash flow and retained
earnings for the twelve-month periods ended December 31, 1995, December 31,
1996, and December 31, 1997, all prepared on an accrual basis and compiled by
Arthur J. Hamer, C.P.A.; and
(b) A balance sheet as of December 31, 1997 ("Most Recent Balance Sheet"),
and a statement of income, cash flow and retained earnings for the three-month
period ended December 31, 1997 ("Most Recent Income Statement"), with respect to
the Companies, both prepared on an accrual basis internally by the Companies.
The Most Recent Balance Sheet and Most Recent Income Statement are hereafter
referred to as the "Most Recent Financial Statements."
The Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis in
accordance with past custom and practice of the Companies. The balance sheets
present fairly, in all material respects, the financial condition of the
Companies as of the dates indicated thereon and the statements of income present
fairly, in all material respects, on an accrual basis the results of the
operations of the Companies for the periods indicated thereon. Since the date
of the Most Recent Balance Sheet, the Companies have not (i) made any material
change in their accounting policies or (ii) effected any prior period adjustment
to, or other restatement of, their financial statements for any period. The
Financial Statements are consistent with the books and records of the Companies
(which books and records are correct and complete in all material respects).
Since the date of the Most Recent Financial Statements, except as set forth on
Schedule 3.7, there has not been any material adverse change in the income,
expenses or assets of the Companies.
SECTION 3.8 Liabilities; Accounts Receivable and Working Capital.
----------------------------------------------------
(a) The Companies do not have any liabilities, fixed or contingent, other
than:
(i) liabilities fully reflected in the Most Recent Balance Sheet,
except for liabilities not required to be disclosed therein in accordance with
GAAP;
(ii) accounts payable arising since the date of the Most Recent
Balance Sheet arising during the normal course of business consistent with past
custom and practice; and
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(iii) the Company Debt.
(b) All accounts receivable of the Companies are, and all accounts
receivable arising since the date of this Agreement, will be valid and
enforceable accounts receivable, and will be fully collectible in the ordinary
course of business within 120 days after the Closing, less an allowance for bad
debt set forth on Most Recent Balance Statement. All accounts receivable have
been generated in the ordinary course of business of the Companies consistent
with past practice. To Sellers' knowledge, there are no defenses or set-offs to
any of the accounts receivable. At Closing, the cash and accounts receivable of
the Companies on a consolidated basis, less an allowance for bad debt set forth
on Most Recent Balance Statement, shall exceed the accounts payable of the
Companies on a consolidated basis by at least $950,000.
(c) For the three months ending March 31, 1998, the Companies have net
income before taxes equal to or exceeding $700,000, as determined in accordance
with GAAP.
SECTION 3.9 Fiscal Condition of the Companies. Since the date of the Most
---------------------------------
Recent Balance Sheet, except as set forth in Schedule 3.9, there has not (except
as otherwise specifically permitted by this Agreement or as set forth in the
Schedules to this Agreement) been:
(a) Any material adverse change in the financial condition, business
organization or personnel of the Companies or in the relationships of the
Companies with suppliers, customers or other third parties;
(b) Any disposition by any of the Companies of any of its capital stock or
any grant of any option or right to acquire any of its capital stock, or any
acquisition or retirement by any of the Companies of any of its capital stock or
any declaration or payment of any dividend or other distribution of its capital
stock;
(c) Any sale or other disposition of any asset owned by any of the
Companies at the close of business on the date of the Most Recent Balance Sheet,
or acquired by it since that date, other than in the ordinary course of business
consistent with past practice;
(d) Any expenditure or commitment by the Companies for the acquisition of
any single asset or any single business, except in the ordinary course of
business consistent with past practices and having an acquisition price of
$10,000 or less;
(e) Any damage, destruction or loss (whether or not insured) adversely
affecting the property, business or prospects of the Companies taken as a whole,
except damage, destruction or loss which does not exceed $10,000 in the
aggregate;
(f) Any material bonuses or increases in the compensation payable or to
become payable by the Companies to any officer or key employee, except in the
ordinary course of business or as required by law or pursuant to a contract
which is listed on a Schedule to this Agreement;
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(g) Any loans or advances to or by any of the Companies other than
renewals or extensions of existing indebtedness and other than in the ordinary
course of business consistent with past practice; or
(h) Any change in accounting method or practice.
SECTION 3.10 Tax Returns. The Companies have filed all Federal and other
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tax returns for all periods on or before the due date of such return (as may
have been extended by any valid extension of time) and have paid all taxes due
for the periods covered by the said returns. Ecology Systems, Inc., is a
Subchapter "C" corporation and Tactical Management, Inc., and Transpro, Inc.,
are Subchapter "S" corporations under the Internal Revenue Code of 1986, as
amended (the "Code"). All taxes, interest and penalties in connection with the
Business and the Companies that may be assessed for the period(s) ending on the
Closing Date and for all prior periods will not exceed $238,000. The Companies
have filed, and will file (if due), in a timely manner all requisite federal,
state, local and other tax returns due for all fiscal periods ended on or before
the date hereof, and as of the Closing shall have or will in a timely manner
file all such returns due for all periods ended on or before the Closing Date.
SECTION 3.11 Policies of Insurance. All insurance policies, performance
---------------------
bonds, and letters of credit insuring the Companies or which the Companies have
had issued and which have not expired are listed on Schedule 3.11 attached
hereto. Schedule 3.11 includes the names and addresses of the insurers and
sureties, policy and bond numbers, types of coverage or bond, time periods or
projects covered and the names and addresses of all known banks, beneficiaries,
agents or agencies with respect to each listed insurance policy, performance
bond and letter of credit. All current insurance policies, performance bonds
and letters of credits of the Companies are in force and effect and the premiums
thereon are not delinquent. Except as set forth in Schedule 3.11, the Companies
have not received any notification from any insurance carrier denying or
disputing any claim made by any of the Companies or denying or disputing any
coverage for any such claim or denying or disputing the amount of any claim.
The Companies have no claim against any of their insurance carriers under any of
policies insuring them pending or anticipated and there has been no occurrence
of any kind which would give rise to any such claim.
SECTION 3.12 Employees, Pensions, and ERISA.
------------------------------
(a) The Companies do not have any contract of employment with any officer
or other employee, except as listed on Schedule 3.12(a).
(b) Except as set forth on Schedule 3.12(b), no employee of the Companies
is represented by any union. A list of the name, address and social security
number and current rate of compensation of each of the Companies' employees and
capacity in which each person is employed is set forth on Schedule 3.12(b).
There is no pending or threatened dispute between any of the
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Companies and any of its employees which might materially and adversely affect
the continuance of the business operations of the Companies.
(c) Attached hereto made a part hereof and marked Schedule 3.12(c) lists
all employee benefit plans, funds or programs (within the meaning of the Code or
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which
are currently maintained and/or were established or sponsored by any of the
Companies (whether or not they are now terminated) or to which any of the
Companies currently contributes, or has an obligation to contribute in the
future, including, without limitation, employment agreements and any other
agreements containing "golden parachute" provisions ("Plans"), whether or not
the Plans are or are intended to be (i) covered or qualified under the Code,
ERISA or any other applicable law, (ii) written or oral, (iii) funded or
unfunded, or (iv) generally available to all employees of the Companies.
(d) The Sellers have delivered to Eastern (i) true and complete copies of
all Plan documents and other instruments relating thereto, (ii) true and
complete copies of the most recent financial statements with respect to the
Plans, (iii) true and complete copies of all annual reports for any Plan
prepared within the past 5 years, and (iv) all material filings submitted to and
any correspondence received from any government agency relating to any Plan
within the past 5 years.
(e) Each Plan which is intended to be qualified under Section 401(a) and
exempt from tax under Section 501(a) of the Code has been determined by the IRS
to be so qualified and such determination remains in effect and has not been
revoked. Except as set forth in the Disclosure Schedule, nothing has occurred
since the date of any such determination which may adversely affect such
qualification or exemption, or result in the imposition of excise taxes or tax
on unrelated business income under the Code or ERISA. No Plan is funded through
a trust intended to be exempt from tax under Section 501(c) of the Code.
(f) No reportable event (as defined in Section 4043 of ERISA or the
regulations thereunder) for which the reporting requirements have not been fully
waived, or accumulated funding deficiency whether or not waived (as defined in
Section 302 of ERISA), or liability to the Pension Benefit Guaranty Corporation
("PBGC") under Section 4062 of ERISA, nor any prohibited transaction (as defined
in Section 406 of ERISA or Section 4975 of the Code), has occurred or exists
with respect to any Plan. All Plans are in substantial compliance with all
material applicable provisions of ERISA and the regulations issued thereunder,
as well as with all other material law applicable to such Plans, and, in all
material respects, have been administered, operated and managed in substantial
accordance with the governing documents of the Plan and the requirements of
ERISA.
(g) There is no matter, action, audit, suit or claim pending or, to the
best knowledge of Sellers, threatened relating to any Plan, fiduciary of any
Plan or assets of any Plan, before any court, tribunal or government agency.
(h) Each most recent Plan audit report, actuarial report and annual
report, certified by the Plan's actuaries and auditors, as the case may be,
fairly presents the actuarial status and the financial condition of the Plan as
at the date thereof and the results of operations of the Plan for the plan year
10
<PAGE>
reflected therein and, subject to changes in amounts attributable to investment
performance and normal employee turnover, there has been no adverse change in
the condition of the Plan since the date of the most recent Form 5500, audited
annual financial statement or actuarial valuation report.
(i) The transaction contemplated herein will not accelerate any liability
under the Plans because of an acceleration of any rights or benefits to which
any employee may be entitled thereunder.
SECTION 3.13 Legality of Operation. In regard to the Companies:
---------------------
(a) Except as disclosed in Schedule 3.13(a) to this Agreement, and except
as to Environmental Laws, as hereinafter defined in Section 3.13(b) below, the
Companies are in material compliance with all federal, state and local laws,
rules and regulations including, without limitation, the following laws: land
use or zoning laws; payroll, employment, labor, interstate commerce,
transportation or safety laws; or federal, state or local "anti-trust" or
"unfair competition" or "racketeering" laws such as but not limited to the
Sherman Act, Clayton Act, Robinson Patman Act, Federal Trade Commission Act, or
Racketeer Influenced and Corrupt Organization Act (collectively, "Law"). Except
as disclosed in Schedule 3.13(a), the Companies are in material compliance with
all permits, franchises, licenses, and orders that have been issued with respect
to the Laws and are or may be applicable to any of their property and
operations, including, without limitation, any order, decree or directive of any
court or federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality wherever located, federal,
state and local permits, orders, franchises and consents. Except as set forth
on Schedule 3.13(a), with respect to any Law there are no claims, actions,
suits, investigations or proceedings pending, or to Sellers' knowledge
threatened against or affecting any of the Companies, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, wherever located, which
would result in any adverse change in the financial condition or business of the
Companies or which would invalidate this Agreement or any action taken in
connection with this Agreement. Except as disclosed in Schedule 3.13(a), the
Companies have received no notification of any past or present failure by any of
the Companies to comply with any Law applicable to it or its assets.
(b) Except as disclosed in Schedule 3.13(b) to this Agreement, the
Companies are in compliance with all Federal, state and local laws, rules and
regulations relating to environmental issues of any kind and/or the receipt,
transport or disposal of any hazardous or non-hazardous waste materials from any
source ("Environmental Law"). Except as disclosed in Schedule 3.13(b), with
respect to any Environmental Law, the Companies are in compliance with all
permits, licenses, and orders related thereto or issued thereunder, as are or
may be applicable to the property and operations of the Companies, including,
without limitation, any order, decree or directive of any court or federal,
state, municipal, or other governmental department, commission, board, bureau,
agency or instrumentality wherever located. Except as set forth on Schedule
3.13(b), there are no Environmental Law related claims, actions, suits or
proceedings pending or threatened against or affecting the Companies, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, wherever
located,
11
<PAGE>
which would result in an adverse change in the financial condition or business
of the Companies or which would invalidate this Agreement or any action taken in
connection with this Agreement. Except as set forth on Schedule 3.13(b), the
Companies have not transported, stored, treated or disposed of, nor to Sellers'
knowledge have the Companies allowed any third persons, on their behalf, to
transport, store, treat or dispose of waste to or at (i) any location other than
a site lawfully permitted to receive such waste for such purpose or, (ii) any
location currently designated for remedial action pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any similar
federal or state statute; nor have the Companies performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of state or federal laws and regulations or in any other manner
which may result in any liability for contamination of the environment; and the
Companies have not disposed of, nor have the Companies knowingly allowed third
parties to dispose of waste upon property owned or leased by the Companies other
than as permitted by, and in conformity with, applicable Environmental Law.
Except as disclosed in Schedule 3.13(b), the Companies have not received any
notification of any past or present failure by the Companies to comply with any
Environmental Law applicable to their operations or their assets. Without
limiting the generality of the foregoing, except as set forth in Schedule
3.13(b), the Companies have not received any notification (including requests
for information directed to the Companies or an owner thereof) from any
governmental agency asserting that any of the Companies is or may be a
"potentially responsible person" for a remedial action at a waste storage,
treatment or disposal facility, pursuant to the provisions of CERCLA, or any
similar federal or state statute assigning responsibility for the costs of
investigating or remediating releases of contaminants into the environment. The
Companies have not received any hazardous waste as defined in the Resource
Conservation and Recovery Act, 42 USCA Section 6901 et seq., or in any similar
-- ---
federal or state statute in quantities which would require remediation or
abatement.
(c) Except for the businesses which the Companies currently conduct, the
Companies have never owned, operated, had an interest in, engaged in and/or
leased a waste transfer, recycling, treatment, storage, landfill or other
disposal facility. The Companies have obtained and maintained, when required to
do so under applicable Environmental Laws, trip tickets, signed by the
applicable waste generators demonstrating the nature of all waste deposited and
or transported by the Companies. To Sellers' knowledge, no employee, contractor
or agent of the Companies has, in the course and scope of employment with the
Companies, been harmed by exposure to hazardous materials, as defined under the
Environmental Laws. No liens with respect to environmental liability have been
imposed against the Companies under CERCLA, any comparable state statute or any
other applicable Environmental Law, and Sellers have no knowledge that any facts
or circumstances exist which would give rise to the same.
(d) Schedules 3.13(a) and 3.13(b) list all remedied violations of Laws and
Environmental Laws which existed within the past three years and all outstanding
unremedied notices of violations issued to the Companies by any federal, state
or local regulatory agency.
(e) To Sellers' knowledge, no employee, officer, director, or shareholder
of the Companies is under investigation by the Attorney General of any state, by
the District Attorney of any county of any state, or by any United States
Attorney or any other governmental investigative agency for the
12
<PAGE>
violation of any Laws, including, without limitation, the violation of any anti-
trust, racketeering, or unfair competition Laws.
(f) All pending or to Sellers' knowledge threatened litigation and
administrative or judicial proceedings involving the Companies, or their assets
or liabilities, are set forth on Schedule 3.13(f) attached, together with a
description of each such proceeding.
SECTION 3.14 Corrupt Practices. The Companies have not made, offered or
-----------------
agreed to offer anything of value to any employees of any customers of the
Companies (except in conformity with Law) for the purpose of attracting business
to any of the Companies or any foreign or domestic governmental official,
political party or candidate for government office or any of their respective
employees or representatives, nor have the Companies otherwise taken any action
which would cause them to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended.
SECTION 3.15 Legal Compliance. Sellers have the right, power, legal
----------------
capacity and authority to enter into, and perform its obligations under this
Agreement, and, except as set forth in Schedule 3.15, no approvals or consents
of any other persons, business or governmental units are necessary to be
obtained by Sellers or the Companies in connection with the transactions,
filings with or notices to, contemplated by this Agreement. Except as disclosed
in Schedule 3.15 to this Agreement, the execution and performance of this
Agreement will not result in a material breach of or constitute a material
default or result in the loss of any material right or benefit under:
(a) Any charter, by-law, agreement or other document to which the
Companies are a party or by which the Companies or any of their properties are
bound, including, without limitation, any agreement by or between any
shareholder of any Company; or
(b) Any decree, order or rule of any court or governmental authority which
is binding on any of the Companies or on any property of the Companies; or
(c) Any permit, certificate or license issued by any governmental
authority under which any of the Companies operate or pursuant to which any of
the property of the Companies is bound; or
(d) Any agreement to which the Companies are bound, including, without
limitation, bank loan documents, agreements with customers or suppliers and
leases for equipment.
SECTION 3.16 Transaction Intermediaries. Except as disclosed in Schedule
--------------------------
3.16, Sellers have no agreement or understanding with any agent, broker,
financial advisor or other person acting pursuant to the express authority of
any of the Companies with respect to any commission or finder's fee in
connection with the transactions contemplated by this Agreement.
SECTION 3.17 Intellectual Property. To Sellers' knowledge, the Companies
---------------------
have not infringed, and are not now infringing, on any trade name, trademark,
service mark or copyright belonging to any person, firm or corporation
("Intellectual Property") and no one has or is infringing
13
<PAGE>
any Intellectual Property right of the Companies. The Companies own or have
legally licensed all computer software used in connection with their business
and have not infringed, and are not now infringing, on the rights of any third
parties by their use of computer software.
SECTION 3.18 Competition. Except as set forth on Schedule 3.18, no
-----------
salaried officer, nor any spouse or child of any of them, has any direct or
indirect interest in any competitor of the Companies within the geographical
area in which the Companies currently conduct business, or an interest in any
supplier or customer of the Companies or in any person from whom or to whom the
Companies lease any real or personal property, or in any other person with whom
the Companies are doing business. Excluded from the scope of this Section 3.18
is any ownership of stock in a publicly traded entity.
SECTION 3.19 Disclosure. The representations and warranties of Sellers
----------
contained in this Agreement, or in any Schedule or other document delivered by
Sellers pursuant hereto, do not contain any untrue statement of a material fact,
or omit any statement of a material fact necessary to make the statements
contained not misleading. If, prior to Closing, Sellers become aware of any
inaccuracy or misrepresentation or omission in any of the Schedules, they shall
immediately advise Eastern in writing of the inaccuracy, misrepresentation or
omission.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EASTERN
-----------------------------------------
With knowledge that Sellers are relying upon the representations,
warranties and covenants contained herein, Eastern represents and warrants to
Sellers and makes the following covenants for Sellers' benefit.
SECTION 4.1 Organization and Existence. Eastern is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted. Eastern has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement.
SECTION 4.2 Authority Relative to this Agreement. The execution, delivery
------------------------------------
and performance of this Agreement and the Employment Agreements by Eastern has
been duly authorized and approved by the Board of Directors of Eastern. No
further corporate action is necessary on the part of Eastern to consummate this
Agreement and the Employment Agreement in accordance with their terms. Eastern
has full authority to enter into and perform its obligations under this
Agreement and the Employment Agreements, and neither the execution, delivery nor
performance by Eastern of this Agreement or the Employment Agreements will (i)
result in a violation or breach of any term or provision nor constitute a
default under the certificate of incorporation or bylaws of Eastern or under any
contract or agreement to which Eastern is a party or by which it is bound, or
violate any order, writ, injunction or decree of any court, administrative
agency or governmental body, or (ii) result in a violation or breach of any term
or provision, or constitute a default or accelerate the performance
14
<PAGE>
required, under any indenture, mortgage, deed of trust or other contract or
agreement to which Eastern is a party or by which it or its properties is bound.
SECTION 4.3 Commission Filings. Eastern has delivered to Sellers current
------------------
(for the quarter ending December 31, 1997) and all historical filings made by
Eastern on Forms 8-K, 10-K, 10-Q and Proxy Statements timely filed with the
Securities and Exchange Commission ("SEC") for fiscal year ending June 30, 1997
(the "Public Reports"). The Public Reports accurately and completely describe,
in all material respects, Eastern's financial status, business operations and
prospects as of the date of such filings and as of the date hereof, and do not
omit any material fact(s) necessary to make the information contained in the
filings not misleading.
SECTION 4.4 Issued Common Stock. The EESI Stock to be issued pursuant to
-------------------
this Agreement has been duly authorized and, when issued, will be validly
issued, fully paid and nonassessable.
SECTION 4.5 Transaction Intermediaries. Eastern has no agreement or
--------------------------
understanding with any agent, broker, financial advisor or other person acting
pursuant to the express authority of Eastern with respect to any commission or
finder's fee in connection with the transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES AND SELLERS
------------------------------------------------
The parties hereto covenant and agree with the other, as applicable, as
follows:
SECTION 5.1 Plan of Reorganization. This Agreement contemplates the
----------------------
acquisition of all the outstanding stock of the Companies solely in exchange for
voting stock of Eastern in a transaction intended to qualify as a reorganization
within the meaning of Section 368(a)(1)(B) of the Code, and shall constitute a
"plan of reorganization" within the meaning of the Code. The parties hereto
agree to take no action inconsistent with the treatment of such exchange as a
reorganization under Code Section 368(a)(1)(B) and to comply with all IRS filing
and other requirements for such exchange. Eastern and Sellers agree that a
material factor in their execution of this Agreement is that the transactions
contemplated by this Agreement shall constitute a "plan of reorganization"
within the meaning of the Code. If for any reason a provision in this Agreement
would prevent the transaction from qualifying as a reorganization within the
meaning of the Code, the parties agree to negotiate in good faith to modify the
Agreement so the transaction can qualify as a reorganization, as long as the
economics of the transaction are not materially changed.
SECTION 5.2 Pooling Restrictions. Eastern and Sellers have agreed that a
--------------------
material factor in their execution of this Agreement is that the transactions
contemplated by this Agreement be treated as a "pooling of interests" for
accounting purposes. If for any reason a provision in this Agreement would
prevent the transaction being accounted for as a "pooling of interests," the
parties agree to negotiate in good faith to modify the Agreement so the
transaction can be accounted for as a "pooling of interests" while maintaining
materially the same financial terms. Notwithstanding any other provision of
this Agreement, prior to the publication and dissemination by Eastern of
consolidated
15
<PAGE>
financial results which include results of combined operations of the Companies
and Eastern for at least 30 days on a consolidated basis following the Closing
Date, Sellers shall not sell or otherwise transfer or dispose of, or in any way
reduce their risk relative to, any shares of the EESI Stock received by Sellers
(including by way of example and not limitation, engaging in put, call, short-
sale, straddle or similar market transactions). Eastern agrees that such
consolidated financial results shall be published and disseminated no later than
120 days after the Closing Date. The Securities Exchange Commission ("SEC") has
issued Accounting Series Release Nos. 130 and 135, as amended (collectively, the
"ASRs"), setting forth certain restrictions applicable to the availability of
"pooling-of-interests" accounting treatment in transactions of the type
contemplated by this Agreement. Sellers therefore covenant and agree with
Eastern to hold the EESI Stock and to comply with the ASRs until the
requirements of the ASRs have been met. In addition, the certificates evidencing
the EESI Stock to be received by Sellers will bear a legend substantially in the
form set forth below:
"The shares represented by this certificate may not be sold, transferred or
assigned, and Eastern Environmental Services, Inc., shall not be required
to give effect to any attempted sale, transfer or assignment prior to the
publication and dissemination of financial statements by Eastern
Environmental Services, Inc., which include the results of at least 30 days
of combined operations of Eastern Environmental Services, Inc., and the
companies acquired by Eastern Environmental Services, Inc., for which these
shares are issued. Upon the written request of the holder hereof directed
to Eastern Environmental Services, Inc., the issuer agrees to remove this
restrictive legend (and any stop order places with the transfer agents)
when the requirements of Accounting Series Releases Nos. 130 and 135, as
amended, of the Securities Exchange Commission have been met."
SECTION 5.3 Restrictions on Transfer of Unregistered Stock. If the EESI
----------- ----------------------------------------------
Stock delivered to Sellers at Closing is not registered under the Securities Act
of 1933 (the "Act"), the Sellers understand and agree that the following
restrictions and limitations are applicable to the Sellers' purchase and resale
or other transfer of the EESI Stock, pursuant to the Act:
(a) Sellers agree that the EESI Stock shall not be sold or otherwise
transferred, unless the EESI Stock is registered under the Act and state
securities laws or is exempt therefrom.
(b) Until the EESI Stock is registered under the Act, a legend in
substantially the following form will be placed on the certificates evidencing
the EESI Stock to be issued to the Sellers:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities act. These shares
have been acquired for investment and may not be sold, transferred, pledged
or hypothecated unless (i) they shall have been registered under the
Securities Act of 1933 and any applicable states securities act or (ii)
Eastern Environmental Services, Inc., shall have been furnished with an
opinion of counsel, reasonably satisfactory to counsel for Eastern
Environmental Services, Inc., that registration is not required under any
such acts."
16
<PAGE>
(c) Stop transfer instructions will be imposed with respect to the EESI
Stock issued to Sellers pursuant to this Agreement so as to restrict resale or
other transfer thereof except in accordance with the foregoing provisions of
this Agreement.
SECTION 5.4 Representations as to Private Offering. The EESI Stock is
--------------------------------------
being delivered to the Sellers in a private placement under Section 4.2 of the
Act and under Regulation D promulgated under the Act. To induce Eastern to
issue the EESI Stock, each Seller represents and warrants as follows:
(a) Each Seller represents and warrants that he is a resident of New
Jersey and is an accredited investor, as that term is defined in Regulation D
under the Act.
(b) Each Seller acknowledges that he has received a copy of the Public
Reports.
(c) The Sellers represent and warrant that the EESI Stock is being
acquired for their own account without a view to public distribution or resale
and that the Sellers have no contract, undertaking, agreement or arrangement to
sell or otherwise transfer or dispose of EESI Stock, or any portion thereof, to
any other person.
(d) The Sellers represent and warrant that, in determining to acquire the
EESI Stock, they have relied solely upon their independent investigation,
including the advice of their legal counsel and accountants or other financial
advisers or purchaser representatives, and have, during the course of
discussions concerning their acquisition of the EESI Stock, been offered the
opportunity to ask such questions and inspect such documents concerning Eastern
and its business and affairs as they have requested so as to more fully
understand the nature of the investment and to verify the accuracy of the
information supplied.
(e) THE SELLERS ACKNOWLEDGE THAT THE ACQUISITION OF THE EESI STOCK
INVOLVES A HIGH DEGREE OF RISK, and represent and warrant that they can bear the
economic risk of the acquisition of the EESI Stock, including the total loss of
their investment.
(f) The Sellers represent and warrant that (i) they have adequate means of
providing for their current needs and financial contingencies, (ii) they have no
need for liquidity in this investment, (iii) they have no debts or other
obligations, and cannot reasonably foresee any other circumstances, that are
likely in the future to require them to dispose of the EESI Stock, and (iv) all
their investments in and commitments to non-liquid investments are, and after
their acquisition of the EESI Stock will be reasonable in relation to their net
worth and current needs.
(g) The Sellers understand that no federal or state agency has approved or
disapproved the EESI Stock or made any finding or determination as to the
fairness of the EESI Stock for investment.
17
<PAGE>
(h) The Sellers understand that the EESI Stock is being offered and sold
in reliance on specific exemptions from the registration requirements of federal
and state securities laws and that Eastern is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings set forth herein in order to determine the applicability of such
exemption and the suitability of Sellers to acquire the EESI Stock.
SECTION 5.5 Access to Records. Sellers will give to Eastern and its
-----------------
representatives, from the date hereof until the Closing Date, full access during
normal business hours, upon reasonable notice, to all of the properties, books,
contracts, documents and records of the Companies, and will make available to
Eastern and its representatives all additional financial statements of and all
information with respect to the business and affairs of the Companies that
Eastern may reasonably request.
SECTION 5.6 Continuation of Business. Sellers will operate the businesses
------------------------
of the Companies until the Closing Date in the ordinary course of business,
consistent with past practice, so as to preserve its business organizations
intact, to assure, to the extent possible, the availability to Eastern of the
present key employees of the Companies and to preserve for Eastern the
relationships of the Companies with suppliers, customers, and others.
SECTION 5.7 Continuation of Insurance. Sellers will keep in existence all
-------------------------
policies of insurance insuring the Companies against liability and property
damage, fire and other casualty through the Closing Date, consistent with the
policies currently in effect.
SECTION 5.8 Standstill Agreement. Until the Closing Date, unless this
--------------------
Agreement is earlier terminated pursuant to the provisions hereof, Sellers will
not, directly or indirectly, solicit offers for the shares or the assets of the
Companies or for a merger or consolidation involving any of the Companies, or
respond to inquiries from, share information with, negotiate with or in any way
facilitate inquiries or offers from, third parties who express or who have
heretofore expressed an interest in acquiring any or all of the Companies by
merger, consolidation or other combination or acquiring any of the Companies'
assets.
SECTION 5.9 Consents. Sellers and Eastern shall cooperate with each other
--------
and use their best efforts to obtain all approvals, authorizations and consents
required to be obtained to consummate the transaction set forth in this
Agreement, including, without limitation, (i) any required approval of the
shareholders of Eastern of the transactions contemplated by this Agreement, and
(ii) the approval of every regulatory agency of federal, state, or local
government that may be required in the opinion of either Eastern or Sellers.
SECTION 5.10 Audited Financial Statements. Before and after Closing,
----------------------------
Sellers agree to cooperate with Eastern to have the Companies prepare audited
balance sheets for the Companies as of June 30, 1995, June 30, 1996, and June
30, 1997, and statements of income, cash flow and retained earnings for the
Companies for the twelve-month periods ended June 30, 1995, June 30, 1996, and
June 30, 1997 ("Historical Financial Statements"), as rapidly as possible.
Sellers' cooperation shall include, without limitation, the execution of
standard representation letters requested by Eastern's auditors. Sellers shall
prepare a compiled stub balance sheet and statements
18
<PAGE>
of income, cash flow and retained earnings for the period commencing July 1,
1997, and ending on the last day of the last calendar quarter ending prior to
Closing ("Interim Financial Statements"). The Historical Financial Statements
and the Interim Financial Statements shall be prepared by Ernst & Young at
Eastern's cost. Sellers shall cause the Companies' usual accountants to
cooperate with Ernst & Young. Eastern shall pay for the cost of the Companies'
usual accountants in the preparation of the Historical Financial Statements and
the Interim Financial Statements.
ARTICLE VI
ADDITIONAL AGREEMENTS OF THE PARTIES AND EASTERN
------------------------------------------------
The parties hereto covenant and agree with the other, as applicable, as
follows:
SECTION 6.1 Payment of Expenses. Eastern will pay all expenses incurred
-------------------
by Eastern in connection with the negotiation, execution and performance of this
Agreement. Sellers will pay all legal and accounting expenses incurred by
Sellers and the Companies in connection with the negotiation, execution and pre-
Closing performance of this Agreement and the Collateral Documents.
SECTION 6.2 Registration Rights.
----------- -------------------
(a) Within 120 days after the Closing Date, Eastern shall file a
registration statement to register one-half of the EESI Stock delivered at
Closing ("Unregistered Stock") under the Act for sale to the public pursuant to
a registration statement on Form S-3 or other appropriate form, if Form S-3 is
not available under Rule 415 of the Act. Eastern will give written notice to
the Sellers of the "shelf registration" at least 15 days before the registration
statement is filed. After receiving the notice of the "shelf" registration,
each Seller will advise Eastern in writing of the intended method of disposition
of the Unregistered Stock to be registered. Notwithstanding the above,
Eastern's obligation to file the shelf registration and/or keep the shelf
registration continuously effective shall be suspended during any period that
there exists material, non-public information relating to Eastern. Eastern shall
keep such registration statement current and effective, until such time as the
shares may be sold by the Sellers at any time without restriction or pursuant to
the provisions of Rule 144 or until such earlier date as all of the shares
registered pursuant to such registration statement shall have been sold or
otherwise transferred to a third party. Eastern shall also prepare and file
with the Securities and Exchange Commission such amendments and supplements to
such registration statement (and the prospectus used in connection therewith) as
may be necessary to update and keep such registration statement current and
effective for such period and to comply with the provisions of the Act with
respect to the sale of all securities covered by such registration statement.
(b) Within 390 days after the Closing Date, if Sellers are not then
eligible to sell the shares of EESI Stock not registered under Section 6.2(a)
above, pursuant to Rule 144 under the Act, Eastern shall file a second
registration statement to register the remaining EESI Stock delivered at Closing
("Remaining Unregistered Stock") under the Act for sale to the public pursuant
to a registration statement on Form S-3 or other appropriate form, if Form S-3
is not available under Rule 415 of the
19
<PAGE>
Act. Eastern will give written notice to the Sellers of the second "shelf
registration" at least 15 days before the second registration statement is
filed. After receiving the notice of the second "shelf" registration, each
Seller will advise Eastern in writing of the intended method of disposition of
the Remaining Unregistered Stock to be registered. Notwithstanding the above,
Eastern's obligation to file the second shelf registration and/or keep the
second shelf registration continuously effective shall be suspended during any
period that there exists material, non-public information relating to Eastern.
Eastern shall keep such second registration statement current and effective,
until such time as the shares may be sold by the Sellers at any time without
restriction or pursuant to the provisions of Rule 144 or until such earlier date
as all of the shares registered pursuant to such registration statement shall
have been sold or otherwise transferred to a third party. Eastern shall also
prepare and file with the Securities and Exchange Commission such amendments and
supplements to such registration statement (and the prospectus used in
connection therewith) as may be necessary to update and keep such registration
statement current and effective for such period and to comply with the
provisions of the Act with respect to the sale of all securities covered by such
registration statement.
(c) With respect to the registration of the Unregistered Stock or the
Remaining Unregistered Stock, Eastern will, as expeditiously as possible: (i)
furnish to the Sellers such number of prospectuses, including copies of
preliminary prospectuses, prepared in conformity with the requirements of the
Act, and such other documents as the Sellers may reasonably request in order to
facilitate the public sale or other disposition of the securities to be sold by
the Sellers; and (ii) before filing the registration statement, prospectus or
amendments or supplements thereto, furnish to counsel for Sellers copies of all
such documents proposed to be filed.
(d) Upon any registration under the Act of any of the Unregistered Stock or
Remaining Unregistered Stock, Eastern shall indemnify Sellers in accordance with
the provisions of Article IX from and against any and all losses, claims,
damages and liabilities (collectively a "Security Liability") to which Sellers
may become subject under the Act, any state securities or "blue sky" law, any
other statute or at common law, insofar as such Security Liability (or action in
respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto or any filing or other application under the Act or applicable federal
or state securities law or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein (i.e., in any registration
statement, prospectus, application or filing, or necessary in order to make the
statements therein not misleading), or (iii) any violation or alleged violation
by Eastern to which such Seller may become subject under the Act, or other
Federal or state laws or regulations, at common law or otherwise.
Notwithstanding the above, Eastern shall not be liable to Sellers if and to the
extent that any Security Liability arises out of or is based upon any untrue
statement or omission made in such registration statement, preliminary or final
prospectus or amendment or supplement thereto, in reliance upon and in
conformity with information furnished to Eastern by Sellers which is intended
for such use; and provided further, that Eastern shall not be required to
indemnify Sellers against any Security Liability which arises out of the failure
of Sellers to deliver a prospectus.
20
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(e) All expenses incurred in effecting the registrations provided for in
this Section 5.2 shall be paid by Eastern, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for Eastern, underwriting expenses (other than commissions or discounts
which shall be shared by the parties registering shares of Eastern's common
stock in proportion to the number of shares registered in each particular
offering), expenses of any audits incident to or required by any such
registration and expenses of complying with the securities or "blue sky" laws of
any jurisdictions.
ARTICLE VII
CONDITIONS OF EASTERN
---------------------
The obligations of Eastern to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following items which are conditions to the Closing:
SECTION 7.1 Compliance by Sellers. Sellers and the Companies shall have
---------------------
performed and complied with all material obligations and conditions required by
this Agreement to be performed or complied with by Sellers and the Companies at
or prior to the Closing Date. All representations and warranties of Sellers
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes expressly permitted by this
Agreement, and Eastern shall have received a Certificate duly executed by the
President of each Company representing and warranting the foregoing.
SECTION 7.2 Litigation Affecting This Transaction. There shall be no
-------------------------------------
actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of Eastern to own, operate in its entirety or control the
Companies or the business the Companies operate, which, as a result of the
transaction contemplated by this Agreement, might affect such right as to
Eastern or any affiliate thereof subsequent to the Closing Date and which, in
the judgment of the Board of Directors of Eastern, made in good faith and based
upon advice of its counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement.
SECTION 7.3 Fiscal Condition of Business. There shall have been no
----------------------------
material adverse change in the results of operations, financial condition or
business of the Companies, and the Companies shall have not suffered any
material loss or damage or any of their properties or assets, whether or not
covered by insurance, since the date of the Most Recent Balance Sheet.
SECTION 7.4 Opinion of Counsel. Sellers shall have delivered to Eastern
------------------
the opinion of counsel, dated the Closing Date, in the form annexed hereto as
Schedule 1.8(e).
SECTION 7.5 Employment Agreements. The Sellers shall have executed and
---------------------
delivered to Eastern the Employment Agreements.
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SECTION 7.6 Release. Sellers shall have executed and delivered to Eastern
-------
the Releases described at Section 1.8(f).
SECTION 7.7 Consents. All approvals, authorizations and consents required
--------
to be obtained shall have been obtained, including, without limitation, (i) the
consent of the New Jersey Department of Environmental Protection to the change
in control of the Companies, and (ii) the approval of every regulatory agency of
federal, state, or local government that may be required in the opinion of
either Eastern or Sellers. Eastern shall have been furnished with appropriate
evidence, reasonably satisfactory to Eastern and its counsel, of the granting of
such approvals, authorizations and consents.
SECTION 7.8 Pooling Determination. Purchaser shall have received
---------------------
notification from its regular accountants that the transaction contemplated
herein may be treated for accounting purposes as a "pooling of interests."
ARTICLE VIII
CONDITIONS OF SELLERS
---------------------
The obligations of Sellers to effect the transaction contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
SECTION 8.1 Compliance by Eastern. Eastern shall have performed and
---------------------
complied with all material obligations and conditions required by this Agreement
to be performed or complied with by it at or prior to the Closing Date. All
representations and warranties of Eastern contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, with
the same force and effect as though made at and as of the Closing Date, except
for changes expressly permitted by this Agreement.
SECTION 8.2 Litigation Affecting This Transaction. There shall be no
-------------------------------------
actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or which
might affect the right of Eastern to own, operate in its entirety or control the
Companies or the business the Companies operate which, as a result of the
transaction contemplated by this Agreement, might affect such right as to
Eastern or any affiliate thereof subsequent to the Closing Date and which, in
the reasonable judgment of Sellers, made in good faith and based upon advice of
their counsel, makes it inadvisable to proceed with the transactions
contemplated by this Agreement.
SECTION 8.3 Material Adverse Change. There shall not have been, and on
-----------------------
the Closing Date shall not be in existence, any event, condition or state of
facts which could reasonably be expected to result in, any material adverse
change in the condition (financial or otherwise), assets, real property,
personal property, results of operations, business or prospects of Eastern and
its subsidiaries taken as a whole.
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SECTION 8.4 Employment Agreements. Eastern shall have executed and
---------------------
delivered the Employment Agreements.
SECTION 8.5 Opinion of Counsel. Eastern shall have delivered to Sellers
------------------
the opinion of counsel to Eastern, dated the Closing Date, in the form annexed
hereto as Schedule 1.7(c).
SECTION 8.6 Consents. All approvals, authorizations and consents required
--------
to be obtained shall have been obtained, including, without limitation, (i) the
consent of the New Jersey Department of Environmental Protection to the change
in control of the Companies, and (ii) the approval of every regulatory agency of
federal, state, or local government that may be required in the opinion of
either Eastern or Sellers. Sellers shall have been furnished with appropriate
evidence, reasonably satisfactory to Sellers and their counsel, of the granting
of such approvals, authorizations and consents.
ARTICLE IX
INDEMNIFICATION
---------------
SECTION 9.1 Indemnification by Sellers. Each Seller, jointly and
--------------------------
severally, agrees that he will indemnify, defend, protect and hold harmless
Eastern and its officers, shareholders, directors, divisions, subdivisions,
affiliates, subsidiaries, parents, agents, employees, legal representatives,
successors and assigns from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, penalties, costs and expenses
whatsoever (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) whether equitable or legal,
matured or contingent, known or unknown to such Seller, foreseen or unforeseen,
ordinary or extraordinary, patent or latent, whether arising out of occurrences
prior to, at, or after the date of this Agreement, from: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties by the Seller, set forth in this Agreement or in the Schedules
attached to this Agreement or in the Collateral Documents; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of a Seller
made in this Agreement and to be performed by Seller before or after the Closing
Date; (c) violation of the requirements of any governmental authority relating
to the reporting and payment (to the extent payment exceeds $238,000) of
federal, state, local or other income, sales, use, franchise, excise or property
tax liabilities of the Companies arising or accrued prior to the Closing Date;
(d) any violation by Sellers or the Companies of any federal, state or local
"anti-trust" or "racketeering" or "unfair competition law", including, without
limitation, the Sherman Act, Clayton Act, Robinson Patman Act, Federal Trade
Commission Act, or Racketeer Influenced and Corrupt Organization Act; and (e)
any claim by a third party that, if true, would mean that a condition for
indemnification set forth in subsections (a), (b), (c) or (d) of this Section
9.1 of this Agreement has occurred.
SECTION 9.2 Indemnification by Eastern. Eastern agrees that it will
--------------------------
indemnify, defend, protect and hold harmless Sellers and their agents,
employees, heirs, legal representatives, successors and assigns, as applicable,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, penalties, costs and expenses whatsoever (including
specifically,
23
<PAGE>
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by it, as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties of Eastern set forth in this Agreement or in the Schedule attached to
this Agreement or in the Collateral Documents; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of Eastern
made in this Agreement and to be performed by Eastern before or after the
Closing Date; (c) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in subsections (a), (b), or (c) of this
Section 9.2 has occurred.
SECTION 9.3 Procedure for Indemnification with Respect to Third Party
---------------------------------------------------------
Claims.
- ------
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") that may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article IX, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party is thereby prejudiced. Such notice shall state the amount of the claim
and the relevant details thereof.
(b) Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice satisfactory to
the Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within ten days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Party pursuant to the provisions of Article IX, as applicable,
from and against the entirety of any adverse consequences (which will include,
without limitation, all losses, claims, liens, and attorneys' fees and related
expenses) the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves only
monetary damages and does not seek an injunction or equitable relief, (iv)
settlement of, or adverse judgment with respect to the Third Party Claim is not,
in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.3(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in (but not control) the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which will not be unreasonably withheld), and
(iii) the Indemnifying Party will not consent to the
24
<PAGE>
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (which
will not be unreasonably withheld). In the case of (c)(ii) or (c)(iii) above,
any such consent to judgment or settlement shall include, as an unconditional
term thereof, the release of the Indemnifying Party from all liability in
connection therewith.
(d) If any condition set forth in Section 9.3(b) above is or becomes
unsatisfied, (i) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim and any matter it may deem appropriate and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith, (ii) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the cost of defending against the Third
Party Claim (including attorneys' fees and expenses), and (iii) the Indemnifying
Party will remain responsible for any adverse consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this Article
IX.
SECTION 9.4 Procedure for Non-Third Party Claims. If Eastern or any
------------------------------------
Seller wishes to make a claim for indemnity under Section 9.1 or Section 9.2, as
applicable, and the claim does not arise out of a third party notification which
makes the provisions of Section 9.3 applicable, the party desiring
indemnification ("Indemnified Party") shall deliver to the party from which
indemnification is sought ("Indemnifying Party") a written demand for
indemnification ("Indemnification Demand"). The Indemnification Demand shall
state: (a) the amount of losses, damages or expenses to which the Indemnified
Party has incurred or has suffered or is expected to incur or suffer to which
the Indemnified Party is entitled to indemnification pursuant to Section 9.1 or
Section 9.2, as applicable; (b) the nature of the event or occurrence which
entitles the Indemnified Party to receive payment under Section 9.1 or Section
9.2, as applicable. If the Indemnifying Party wishes to object to an
Indemnification Demand, the Indemnifying Party must send written notice to the
Indemnified Party stating the objections and the grounds for the objections
("Indemnification Objection"). If no Indemnification Objection is sent within
thirty (30) days after the Indemnification Demand is sent, the Indemnifying
Party shall be deemed to have acknowledged the correctness of the claim or
claims specified in the Indemnification Demand and shall pay the full amount
claimed in the Indemnification Demand within forty-five (45) days of the day the
Indemnification Demand is dated. If for any reason the Indemnifying Party does
not pay the amounts claimed in the Indemnification Demand, within thirty days of
the Indemnification Demand's date, the Indemnified Party may institute legal
proceedings to enforce payment of the indemnification claim contained in the
Indemnification Demand and any other claim for indemnification that the
Indemnified Party may have.
SECTION 9.5 Survival of Claim. All of the respective representations,
-----------------
warranties and obligations of the parties to this Agreement shall survive
consummation of the transactions contemplated by this Agreement as follows: (i)
all representations and warranties pertaining to federal, state and local taxes,
including, without limitation, the representations and warranties set forth in
Section 3.10 shall survive until the expiration of the applicable statute of
limitations on any
25
<PAGE>
claim which can be brought against the Companies by tax authorities or
governmental agencies or governmental units and (ii) all representations and
warranties other than set forth in (i) above shall survive until two years from
the Closing Date. Notwithstanding the prior sentence which provides that the
representations and warranties expire after certain stated periods of time, if
within the stated period of time, a notice of a claim for indemnification or
Indemnification Demand is given, or a suit or action based upon representation
or warranty is commenced, the Indemnified Party shall not be precluded from
pursuing such claim or action, or from recovering from the Indemnifying Party
(whether through the courts or otherwise) on the claim or action, by reason of
the expiration of the representation or warranty.
SECTION 9.6 Limitation of Liability. The Parties agree that they shall
-----------------------
not bring a claim for indemnification under this Article IX unless and until all
claims a party has exceed $100,000, and that the first $100,000 of damages are
not recoverable. Notwithstanding the prior sentence, any damages Eastern incurs
for any misrepresentations under the representations and warranties of Sections
3.8(a), 3.8(b), 3.8(c) and 3.10, or indemnification under Sections 9.1(b) and
9.1(c) shall not be limited by the prior sentence. Notwithstanding anything
else contained herein to the contrary, the obligations of the Sellers pursuant
to the indemnification contained in Section 9.1 shall be limited to $6,000,000.
SECTION 9.7 Prompt Payment. In the event that any party is required to
--------------
make any payment under this Article IX, such party shall promptly pay the
Indemnifying Party the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity obligation owed under
this Article IX, the Indemnifying Party shall, nevertheless, pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
portion in dispute shall be paid upon a final and non-appealable resolution of
such dispute. Upon the payment in full of any claim, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person
with respect to the subject matter of such claim.
ARTICLE X
OTHER PROVISIONS
----------------
SECTION 10.1 Nondisclosure by Sellers. Sellers recognize and acknowledge
------------------------
that they have in the past, currently have, and in the future will have certain
confidential information of Eastern such as lists of customers, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of Eastern. Sellers agree that for a period of ten (10) years from the
Closing Date they will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except to authorized representatives of Eastern, unless (i) such
information becomes known to the public generally through no fault of any
Seller, (ii) a Seller is compelled to disclose such information by a
governmental entity or pursuant to a court proceeding, or (iii) the Closing does
not take place. In the event of a breach or threatened breach by any Seller of
the provisions of this Section, Eastern shall be entitled to an injunction
restraining such Seller from disclosing, in whole or in part, such confidential
information.
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Nothing herein shall be construed as prohibiting Eastern from pursuing any other
available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
SECTION 10.2 Nondisclosure by Eastern. Eastern recognizes and
------------------------
acknowledges that it has in the past, currently has, and prior to the Closing
Date, will have access to certain confidential information of the Companies,
such as lists of customers, operational policies, and pricing and cost policies
that are valuable, special and unique assets of the Companies. Eastern agrees
that it will not utilize such information in the business or operation of
Eastern or any of its affiliates or disclose such confidential information to
any person, firm, corporation, association, or other entity for any purpose or
reason whatsoever, unless (i) such information becomes known to the public
generally through no fault of Eastern or any of its affiliates, (ii) Eastern is
compelled to disclose such information by a governmental entity or pursuant to a
court proceeding, or (iii) Closing takes place. In the event of a breach or
threatened breach by Eastern of the provisions of this Section, Sellers shall be
entitled to an injunction restraining Eastern from utilizing or disclosing, in
whole or in part, such confidential information. Nothing contained herein shall
be construed as prohibiting Sellers from pursuing any other available remedy for
such breach or threatened breach, including, without limitation, the recovery of
damages.
SECTION 10.3 Assignment; Binding Effect; Amendment. This Agreement and
-------------------------------------
the rights of the parties hereunder may not be assigned (except after Closing by
operation of law by the merger of Eastern) and shall be binding upon and shall
inure to the benefit of the parties hereto, and the successors of Eastern. This
Agreement, upon execution and delivery, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms and may
be modified or amended only by a written instrument executed by all parties
hereto.
SECTION 10.4 Entire Agreement. This Agreement, is the final, complete and
----------------
exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as the Agreement. The Agreement supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior to contemporaneous
discussions, correspondence, or oral or written agreements of any kind. The
parties to this Agreement have relied on their own advisors for all legal,
accounting, tax or other advice whatsoever with respect to the Agreement and the
transactions contemplated hereby.
SECTION 10.5 Counterparts. This Agreement may be executed simultaneously
------------
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signatures.
SECTION 10.6 Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid,
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
27
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(a) If to Eastern, addressed to it at:
President
1000 Crawford Place, Suite 400
Mount Laurel, New Jersey 08054
with a copy to:
Robert M. Kramer, Esq.
Robert M. Kramer & Associates, P.C.
1150 First Avenue, Suite 900
King of Prussia, Pennsylvania 19406
(b) If to Sellers, addressed to them at:
1000 Valley Brook Avenue
Lyndhurst, New Jersey 07071
with a copy to:
Mario M. Kranjac, Esq.
Schnader Harrison Segal & Lewis, LLP
330 Madison Avenue
New York, New York 10017
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three business days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received, if earlier. Any
party may change the address for notice by notifying the other parties of such
change in accordance with this Section 10.6.
SECTION 10.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New Jersey,
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey.
SECTION 10.8 No Waiver. No delay of or omission in the exercise of any
---------
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of or in any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach of default occurring before or after that waiver.
28
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SECTION 10.9 Time of the Essence. Time is of the essence of this
-------------------
Agreement.
SECTION 10.10 Captions. The headings of this Agreement are inserted for
--------
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
SECTION 10.11 Severability. In case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 10.12 Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means included, without limitation.
SECTION 10.13 Extension or Waiver of Performance. Either Sellers or
-----------------------------------
Eastern may extend the time for or waive the performance of any of the
obligations of the other, waive any inaccuracies in the representations or
warranties by the other, or waive compliance by the other with any of the
covenants or conditions contained in this Agreement, provided that any such
extension or waiver shall be in writing and signed by Sellers and Eastern.
SECTION 10.14 Liabilities of Third Parties. Nothing in this Agreement,
----------------------------
whether expressed or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the parties to it
and their respective officers, shareholders, directors, affiliates,
subsidiaries, parents, agents, employees, legal representatives, successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provisions give any third person any rights of subrogation or action
over or against any party to this Agreement.
SECTION 10.15 Publicity. Prior to Closing, except as may be required by
---------
law, no party to this Agreement shall issue any press release or otherwise make
any statement with respect to the transactions contemplated by this Agreement
without the prior consent of the other party, which shall not be unreasonably
withheld.
SECTION 10.16 Arbitration.
-----------
29
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(a) Each and every controversy or claim arising out of or relating to
this Agreement shall be settled by arbitration in Trenton, New Jersey, in
accordance with the commercial rules (the "Rules") of the American Arbitration
Association then obtaining, and judgment upon the award rendered in such
arbitration shall be final and binding upon the parties and may be confirmed in
any court having jurisdiction thereof. Notwithstanding the foregoing, this
Agreement to arbitrate shall not bar any party from seeking temporary or
provisional remedies in any Court having jurisdiction. Notice of the demand for
arbitration shall be filed in writing with the other party to this Agreement,
which such demand shall set forth in the same degree of particularity as
required for complaints under the Federal Rules of Civil Procedure the claims to
be submitted to arbitration. Additionally, the demand for arbitration shall be
stated with reasonable particularity with respect to such demand with documents
attached as appropriate. In no event shall the demand for arbitration be made
after the date when institution of legal or equitable proceedings based on such
claim, dispute or other matter in question would be barred by the applicable
statutes of limitations.
(b) The arbitrators shall have the authority and jurisdiction to
determine their own jurisdiction and enter any preliminary awards that would aid
and assist the conduct of the arbitration or preserve the parties' rights with
respect to the arbitration as the arbitrators shall deem appropriate in their
discretion. The award of the arbitrators shall be in writing and it shall
specify in detail the issues submitted to arbitration and the award of the
arbitrators with respect to each of the issues so submitted.
(c) Within sixty (60) days after the commencement of any arbitration
proceeding under this Agreement, each party shall file with the arbitrators its
contemplated discovery plan outlining the desired documents to be produced, the
depositions to be take, if ordered by the arbitrators in accordance with the
Rules, and any other discovery action sought in the arbitration proceeding.
After a preliminary hearing, the arbitrators shall fix the scope and content of
each party's discovery plan as the arbitrators deem appropriate. The
arbitrators shall have the authority to modify, amend or change the discovery
plans of the parties upon application by either party, if good cause appears for
doing so.
(d) The award pursuant to such arbitration will be final, binding and
conclusive.
(e) Counsel to Seller and Purchaser in connection with the
negotiation of and consummation of the transactions under this Agreement shall
be entitled to represent their respective party in any and all proceedings under
this Section or in any other proceeding (collectively, "Proceedings"). Seller
and Purchaser, respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such Proceedings for any reason, including
but not limited to the fact that such counsel or any member thereof may be a
witness in any such Proceedings or possess or have learned of information of a
confidential or financial nature of the party whose interests are adverse to the
party represented by such counsel in any such Proceedings.
30
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
EASTERN ENVIRONMENTAL SERVICES, INC.
By: /s/ Robert M. Kramer
-------------------------------------
Robert M. Kramer
Executive Vice President
Sellers:
/s/ Anthony Rizzo, Jr. /s/ Darren Rizzo
- --------------------------- ------------------------------------
Anthony Rizzo, Jr. Darren Rizzo
/s/ Michael Colombino
- ---------------------------
Michael Colombino
31
