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As filed with the Securities and Exchange Commission on October 23, 1998
Registration No. 333-64791
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_______________
EASTERN ENVIRONMENTAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
_______________
<TABLE>
<S> <C>
DELAWARE 59-2840783
(State of Incorporation) (I.R.S. Employer Identification Number)
LOUIS D. PAOLINO, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1000 CRAWFORD PLACE, SUITE 400 1000 CRAWFORD PLACE, SUITE 400
MT. LAUREL, NEW JERSEY 08054 MT. LAUREL, NEW JERSEY 08054
(609) 235-6009 (609) 235-6009
(Address, Including Zip Code, and Telephone Number, (Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices) Including Area Code, of Agent for Service)
</TABLE>
_______________
COPY TO:
H. JOHN MICHEL, JR., ESQUIRE
JAMES BIEHL, ESQUIRE
DRINKER BIDDLE & REATH LLP
1345 CHESTNUT STREET
PHILADELPHIA, PENNSYLVANIA 19107-3496
(215) 988-2700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Title of Shares Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 521,726 25.9375 $13,532,269 $3,762
- ------------------------------------------------------------------------------------------------------------------------------
(1) Includes 156,250 shares issuable upon exercise of a common stock purchase warrant
(2) Calculated pursuant to Rule 457(c).
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
- ----------
SUBJECT TO COMPLETION, DATED OCTOBER 23, 1998
660,853 SHARES
EASTERN ENVIRONMENTAL SERVICES, INC.
COMMON STOCK
This Prospectus relates to 504,603 shares of Common Stock (the "Common
Stock") of Eastern Environmental Services, Inc. (the "Company") currently
outstanding (the "Outstanding Shares") and 156,250 shares of Common Stock (the
"Warrant Shares") issuable upon exercise of a common stock purchase warrant of
the Company (the "Warrant") (the Outstanding Shares and the Warrant Shares are
collectively referred to herein as the "Shares"). The Shares are being offered
for sale pursuant to this Prospectus (the "Offering"), from time to time, by or
for the account of the stockholders named herein (the "Registered
Stockholders"). See "Registered Stockholders." The Company will not receive any
of the proceeds of the Offering.
The Warrant was granted to Sanders Morris Mundy Inc. as partial
consideration for acting as a broker in connection with a private placement of
securities by the Company in August 1996 and all of the Outstanding Shares were
issued by the Company in connection with acquisitions of solid waste management
businesses since March 1998. All of the Shares are included in this Prospectus
pursuant to the exercise of registration rights granted the holders thereof in
connection with such private placement and acquisitions.
The Registered Stockholders, either directly, through agents designated or
to be designated from time to time by them, or through underwriters or dealers,
may sell the Shares from time to time on terms to be determined by the
Registered Stockholders at the time of sale. The Registered Stockholders may
also seek, to the extent permitted by applicable laws, to sell the Shares in
transactions under Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act").
All expenses of the Offering, other than commissions or discounts of
broker-dealers, will be borne by the Company. It is estimated that such
expenses to be borne by the Company will approximate $28,000.
The Registered Stockholders and any broker-dealers, agents, underwriters or
dealers that participate with the Registered Stockholders in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Common Stock is currently traded on the Nasdaq National Market under
the symbol "EESI." The closing sale price of the Common Stock on the Nasdaq
National Market on October 20, 1998 was $27 per share.
__________________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 5 OF THIS PROSPECTUS FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
__________________
The date of this Prospectus is ___________, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's Regional Offices at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Information regarding the operation of the Public
Reference Room may be obtained by calling the Commission at 1800-SEC-0330. The
Commission maintains a web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants,
like the Company, that file electronically with the Commission. The Company's
Common Stock is quoted on the Nasdaq National Market, and reports, proxy
statements and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments thereto, the "Registration Statement") under
the Securities Act with respect to the securities offered hereby. As permitted
by the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement and exhibits
thereto. Statements contained in this Prospectus or in any document
incorporated by reference in this Prospectus as to the contents of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance where such contract or document has been filed as an
exhibit to the Registration Statement, or other document incorporated by
reference, reference is made to the copy of such contract or other document,
each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with the
Commission and are hereby incorporated by reference in this Prospectus as of
their respective dates:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997 (as amended on Form 10-K/A filed October 28, 1997),
excluding the financial statements and notes thereto, selected
consolidated financial data, and the information contained under
Management's Discussion and Analysis of Financial Condition and
Results of Operations which have been superseded by the financial
statements and notes thereto, the selected consolidated financial
data, and the information contained under Management's Discussion and
Analysis of Financial Condition and Results of Operations included in
the Company's Current Report on Form 8-K dated September 22, 1998.
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1997 (filed November 13, 1997), December 31, 1997 (filed
February 17, 1998), March 31, 1998 (as amended on Form 10-Q/A filed
August 14, 1998) and June 30, 1998 (filed August 14, 1998); the
financial statements and notes thereto contained in the Quarterly
Report on Form 10-Q for the quarters ended September 30, 1997,
December 31, 1997 and March 31, 1998 are deemed to be outdated as they
are not on a basis consistent with the consolidated financial
statements and notes thereto included in the Company's Current Report
on Form 8-K dated September 22, 1998 as they do not reflect:
(a) pooling of interests accounting for acquisitions that occurred
subsequent to the date of the respective Quarterly Reports on
Form 10-Q.
(b) as it relates to the quarter ended September 30, 1997, earnings
per share information calculated in accordance with the recently
issued pronouncement FASB 128, Earnings Per Share.
------------------
(iii) The Company's Transition Report on Form 10-K for the six months
ended December 31, 1997 (filed July 1, 1998), excluding the financial
statements and notes thereto, selected consolidated financial data,
and the information contained under Management's Discussion and
Analysis of Financial Condition and Results of Operations which have
been superseded by the financial statements and notes thereto, the
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selected consolidated financial data, and the information contained
under Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Current Report on Form
8-K dated September 22, 1998.
(iv) The following Current Reports on Form 8-K of the Company:
(a) five Forms 8-K/A filed on July 10, 1997, for the purpose of: (1)
amending the Company's Form 8-K/A dated July 2, 1996; (2)
amending the Company's Form 8-K dated September 27, 1996; (3)
amending the Company's Form 8-K dated December 10, 1996; (4)
amending the Company's Form 8-K dated January 31, 1997; and (5)
amending the Company's Form 8-K dated March 31, 1997;
(b) Form 8-K dated May 12, 1997 (as amended on Form 8-K/A filed July
11, 1997 and as amended on Form 8-K/A filed July 25, 1997);
(c) Form 8-K dated August 15, 1997 (as amended on Form 8-K/A filed
October 10, 1997);
(d) Form 8-K dated August 20, 1997 (as amended on Form 8-K/A filed
November 3, 1997);
(e) Form 8-K dated October 17, 1997;
(f) Form 8-K dated October 27, 1997;
(g) Form 8-K dated December 1, 1997 (as amended on Form 8-K/A filed
February 17, 1998);
(h) Form 8-K dated December 1, 1997 (as amended on Form 8-K/A filed
February 13, 1998);
(i) Form 8-K dated February 12, 1998 (as amended on Form 8-K/A filed
April 27, 1998);
(j) Form 8-K dated February 27, 1998, excluding the financial
statements and notes thereto, selected consolidated financial
data, and the information contained in the Management's
Discussion and Analysis of Financial Condition and Results of
Operations included therein, which have been superseded by the
financial statements and notes thereto, the selected consolidated
financial data, and the information contained under Management's
Discussion and Analysis of Financial Condition and Result of
Operations included in Eastern's Current Report on Form 8-K dated
September 22, 1998;
(k) Form 8-K dated March 9, 1998 (as amended on Form 8-K/A filed
April 8, 1998);
(l) Form 8-K dated March 31, 1998 (as amended on Form 8-K/A filed
April 24, 1998);
(m) Form 8-K dated March 31, 1998;
(n) Form 8-K dated April 1, 1998;
(o) Form 8-K dated April 20, 1998 (as amended on Form 8-K/A filed May
20, 1998 and August 7, 1998);
(p) Form 8-K dated April 24, 1998, excluding the financial
statements and notes thereto, selected consolidated financial
data, and the information contained in the Management's
Discussion and Analysis of Financial Condition and Results of
Operations included therein, which have been superseded by the
financial statements and notes thereto, the selected consolidated
financial data, and the information contained under Management's
Discussion and Analysis of Financial Condition and Result of
Operations included in Eastern's Current Report on Form 8-K dated
September 22, 1998;
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(q) Form 8-K dated May 1, 1998;
(r) Form 8-K dated May 20, 1998, excluding the financial statements
and notes thereto, selected consolidated financial data, and the
information contained in the Management's Discussion and Analysis
of Financial Condition and Results of Operations included
therein, which have been superseded by the financial statements
and notes thereto, the selected consolidated financial data, and
the information contained under Management's Discussion and
Analysis of Financial Condition and Result of Operations included
in Eastern's Current Report on Form 8-K dated September 22, 1998;
(s) Form 8-K dated May 27, 1998;
(t) Forms 8-K dated June 26, 1998 (both amended on Forms 8-K/A filed
September 4, 1998);
(u) Form 8-K dated August 17, 1998;
(v) Form 8-K dated August 20, 1998 (as amended on Form 8-K/A filed
October 19, 1998);
(w) Form 8-K dated August 21, 1998;
(x) Form 8-K dated September 4, 1998 (as amended on Form 8-K/A filed
October 19, 1998);
(y) Form 8-K dated September 22, 1998; and
(z) Form 8-K dated September 30, 1998.
(v) The description of the Common Stock contained in the Registration
Statement on Form 8-A (File No. 0-16102), including all amendments and
reports filed for the purpose of updating such description prior to
the termination of the Offering.
Additionally, all documents and reports filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to termination of the
Offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents or reports. Any
statement or information contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement or information so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE
TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR
ORAL REQUEST, A COPY OF ANY OR ALL OF THE DOCUMENTS THAT HAVE BEEN INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE DOCUMENTS THAT
THIS PROSPECTUS INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO:
INVESTOR RELATIONS, EASTERN ENVIRONMENTAL SERVICES, INC., 1000 CRAWFORD PLACE,
MT. LAUREL, NEW JERSEY 08054, (609) 235-6009. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE FIVE BUSINESS DAYS PRIOR
TO THE DATE ON WHICH THE FINAL INVESTMENT DECISION IS MADE.
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RISK FACTORS
An investment in the shares of Common Stock being offered by this
Prospectus involves a high degree of risk. In addition, this Prospectus and the
Company's reports under the Securities Exchange Act of 1934, as amended,
incorporated herein by reference (the "Incorporated Documents") contain forward-
looking statements that involve risks and uncertainties. Discussions containing
such forward-looking statements may be found under "Risk Factors," as well as in
this Prospectus and the Incorporated Documents generally. The Company's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus and the Incorporated
Documents. Accordingly, prospective investors should consider carefully the
following Risk Factors, in addition to the other information concerning the
Company and its business contained in this Prospectus and in the Incorporated
Documents, before purchasing the shares of Common Stock offered hereby.
RISKS ASSOCIATED WITH COMPLETING PENDING ACQUISITIONS
The Company has entered into definitive agreements to acquire
additional waste management businesses, the completion of which are subject to
customary closing conditions, including due diligence and the requirements of
obtaining certain governmental and other third party consents. No assurances
can be given that the closing conditions will be satisfied or that the parties
will be able to obtain such governmental and other third party consents.
Accordingly, there can be no assurance that any of these pending acquisitions
will occur.
HISTORY OF LOSSES; WORKING CAPITAL DEFICITS; CONTINUING CHARGES
The Company has reported net losses and working capital deficits in prior
fiscal years. In connection with the financing of its acquisitions and business
growth, the Company has incurred, and anticipates that it will continue to
incur, significant debt and interest charges under its revolving credit
facility. In addition, the Company will continue to recognize a significant
amount of goodwill amortization charges in connection with its acquisitions of
collection and transportation businesses and transfer stations that are
accounted for under the "purchase" method of accounting. Such goodwill is
amortized over a period not to exceed 40 years depending on the business
acquired, resulting in an annual non-cash charge to earnings during that period.
As the Company continues to pursue its acquisition program, its financial
position and results of operations may fluctuate significantly from period to
period.
LIMITED OPERATING HISTORY IN REGARD TO SIGNIFICANT ASSETS
The Company's acquisition of solid waste collection, transportation and
disposal businesses from July 1, 1996 through June 30, 1998 contributed
approximately $115 million or 96% of the Company's revenues for the six months
year ended December 31, 1997 and approximately $265 million or 93% of the
Company's assets at December 31, 1997. Because of the Company's relatively
limited operating history with respect to these recently acquired businesses, no
assurances can be given that the Company will be able to replicate or improve
upon their historical financial performance.
ABILITY TO MANAGE GROWTH
The Company's strategy of growing primarily through acquisitions has
placed, and is expected to continue to place, significant burdens on the
Company's management and on its operational and other resources. The Company
will need to attract, train, motivate, retain and supervise its senior managers,
technical professionals and other employees. Any failure to expand its
management information system capabilities, to implement and improve its
operational and financial systems and controls or to recruit appropriate
additional personnel in an efficient manner and at a pace consistent with the
Company's business growth, could have a material adverse effect on the Company's
business and results of operations.
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DEPENDENCE ON ACQUISITIONS FOR GROWTH
The rate of future growth and profitability of the Company is largely
dependent on its ability to identify and acquire additional solid waste
collection, transportation, and disposal businesses. This strategy involves
risks inherent in assessing the values, strengths, weaknesses, risks and
profitability of acquisition candidates, including adverse short-term effects on
the Company's reported operating results, diversion of management's attention,
dependence on retaining, hiring and training key personnel, and risks associated
with unanticipated problems or latent liabilities. There can be no assurance
that acquisition opportunities will be available, that the Company will have
access to the capital required to finance potential acquisitions, that the
Company will continue to acquire businesses, or that any business acquired by
the Company will be integrated successfully into the Company's operations or
prove profitable.
AVAILABILITY OF ACQUISITION TARGETS
Increased competition for acquisition candidates may result in fewer
acquisition opportunities being made available to the Company as well as less
advantageous acquisition terms which may increase acquisition costs to levels
that are beyond the Company's financial capability or that may have an adverse
effect on the Company's business and results of operations. Accordingly, no
assurance can be given as to the number or timing of the Company's acquisitions
or as to the availability of financing necessary to complete an acquisition.
The Company also believes that a significant factor in its ability to consummate
acquisitions following the Offering will be the attractiveness of the Common
Stock as an investment to potential acquisition candidates. Such attractiveness
may, in large part, be dependent upon the market price and capital appreciation
prospects of the Common Stock compared to the equity securities of the Company's
competitors. Many of the Company's competitors for acquisitions are larger,
more established companies with significantly greater capital resources than the
Company and whose equity securities may be more attractive than the Common
Stock. To the extent the Common Stock is less attractive to acquisition
candidates, the Company's acquisition program may be adversely affected.
ABILITY TO INTEGRATE ACQUIRED BUSINESSES AND ACHIEVE OPERATING EFFICIENCIES
The Company is in the process of combining the businesses and assets that
it has recently acquired into an integrated operating structure. This process
may require, among other things, changes in the operation methods and strategies
of these separate businesses. The future growth and profitability of the
Company will be substantially dependent upon its ability to operate recently
acquired companies as well as additional businesses that may be acquired in the
future, and integrate them in the Company's operations. The Company's strategy
is to achieve economies of scale and operating efficiencies through increases in
its size resulting from acquisitions. There can be no assurance that the
Company's efforts to integrate acquired operations will be effective or that
expected efficiencies and economies of scale will be realized. The failure to
achieve any of these results could have a material adverse effect on the
Company's business and results of operations.
POTENTIAL LIABILITIES ASSOCIATED WITH ACQUISITIONS
The businesses acquired by the Company may have liabilities that the
Company does not discover or may be unable to discover during its preacquisition
investigations, including liabilities arising from environmental contamination
or noncompliance by prior owners with environmental laws or regulatory
requirements, and for which the Company, as a successor owner or operator, may
be responsible. Certain environmental liabilities, even if not expressly
assumed by the Company, may nonetheless be imposed on the Company under certain
legal theories of successor liability, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended. The businesses
acquired by the Company handled and stored petroleum, motor oil, and other
hazardous substances at their facilities. In the past, there may have been
releases of these hazardous substances into the soil or groundwater. The
Company may be required under federal, state, or local law to investigate and
remediate this contamination, if any. Any indemnities or warranties, due to
their limited scope, amount, duration, the financial limitations of the
indemnitor or warrantor, or other reasons, may not fully cover such liabilities.
NEED FOR ADDITIONAL CAPITAL; POTENTIAL DILUTION
The Company's acquisition program required a steady increase in capital,
which is expected to continue in the future as the Company pursues its strategy.
The Company has used with respect to completed acquisitions and intends to
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use with respect to future acquisitions a combination of Common Stock, cash and
the assumption of debt as consideration. In the event the Company issues Common
Stock to make future acquisitions, the Company's stockholders may experience
dilution in the net tangible book value per share of Common Stock and a regular
infusion of additional Common Stock into the capital markets. To the extent the
Company is unable to use Common Stock to make future acquisitions, its ability
to grow may be adversely affected. The Company's capital requirements also
include working capital needs to maintain daily operations and significant
capital expenditures for cell construction and expansion of its landfills,
closure and post-closure care costs associated with its landfills, equipment
purchases, and debt repayment obligations and/or financial assurance
obligations. To the extent that generated cash is not sufficient to meet the
Company's capital needs, the Company will be required to raise additional funds
through bank borrowings (such as its existing credit facility) and significant
additional equity and/or debt financings. No assurance can be given that
additional funding will be available on terms favorable to the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's operations are substantially dependent upon the services of
its executive officers, particularly Louis D. Paolino, Jr., the Chairman of the
Board, Chief Executive Officer, and President of the Company. The loss of the
services of Mr. Paolino or one or more of the other executive officers of the
Company could have a material adverse effect on the Company's business and
results of operations. The Company does not maintain key-man life insurance
policies on its executive officers.
DEPENDENCE ON THIRD PARTY LANDFILLS
A substantial portion of the solid waste collected by the Company is
delivered to third party landfills under informal arrangements or without long-
term contracts. If these third parties increase their disposal fees and the
Company is unable to pass along the increase to its customers, or if these third
parties discontinue their arrangements with the Company and the Company is
unable to locate alternative disposal sites, the Company's business and results
of operations would be materially adversely affected.
EXTENSIVE PERMITTING AND LICENSING REQUIREMENTS
The Company is required to obtain and maintain in effect various federal,
state and local permits and licenses in connection with its solid waste
collection and transportation operations. The Company also is required to
obtain and maintain in effect various facility permits and other governmental
approvals, including those related to environmental, zoning and land use, in
order to develop and operate a landfill, a transfer station or a waste hauling
operation, and is required to obtain additional permits and approvals to expand
its existing landfill operations. These permits and approvals are difficult,
time consuming, and costly to obtain, may be subject to community opposition,
opposition by various local elected officials or citizens, regulatory delays and
other uncertainties, and may be dependent upon the Company's facilities being
included in state or local solid waste management plans and the Company's
entering into satisfactory host agreements with local communities. In addition,
operating permits may be subject to modification, renewal or revocation by the
issuing agencies after issuance, which may increase the Company's obligations
and reopen opportunities for opposition relating to the permits. Moreover, from
time to time, regulatory agencies may impose moratoria on, or otherwise delay,
the review or granting of these permits or approvals or such agencies may modify
the procedures or increase the stringency of the standards applicable to the
review or granting of such permits or approvals.
There can be no assurance that the Company will be successful in obtaining
and maintaining in effect the permits and approvals required for the successful
operation and growth of its business, including permits and approvals required
for the development of additional disposal capacity needed to replace existing
capacity that becomes exhausted. The failure of the Company to obtain or
maintain in effect a permit or approval significant to its business would have a
material adverse effect on the Company's business and results of operations.
POTENTIAL PENNSYLVANIA LANDFILL RESTRICTIONS
One of the Company's Pennsylvania landfill operations, acquired by the
Company in December 1996, has been in existence since 1972. From 1972 to 1988,
the 110-acre area of the landfill which received waste or was authorized by
state permits to receive waste had either received all necessary local zoning
approvals or was not required by local ordinance to
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receive a zoning permit or other approval to operate. In 1988, the Company
received a state expansion permit for a 32-acre lined expansion area increasing
the size of the permitted disposal area to 142 acres as well as a conditional
use zoning approval from the local township. However, in 1990, the township
adopted a new zoning ordinance which limited the height of municipal waste
landfills to 35 feet above the original land contour. The landfill, as permitted
in 1988 and as currently designed and permitted, exceeds the height limit in
certain areas. The Company has maintained that the current permitted area is an
existing nonconforming use and is not subject to the 35 foot height limitation
imposed by the 1990 ordinance. If the township seeks to impose this limitation,
and is successful, the existing permitted capacity of the landfill would be
materially reduced resulting in significant costs to the Company.
KENTUCKY LANDFILL OBLIGATIONS
The Company ceased operations at its Somerset, Kentucky landfill on June
30, 1995 because the existing permitted disposal area did not meet current state
law design requirements. From June 30, 1995 to June 30, 1996, the Company
operated a transfer station at the landfill site and disposed of waste at an
alternate location. The Company simultaneously pursued a final state permit for
an expansion area designed to meet the new state standards. The suspension of
landfill operations and the diversion of waste to an alternate location had an
adverse effect on the Company's operating results and the Company discontinued
its transfer station operation on July 1, 1996. On July 1, 1997, the Company
recommenced operation of its transfer station to fulfill the obligations of the
disposal franchise until the Company's expansion area is completed. The Company
received a final permit to construct its expansion area on October 14, 1996
(reissued February 26, 1997). The final permit issued for the Kentucky landfill
expansion area incorporated the requirements contained in an October 8, 1996
Agreed Order which settled an administrative appeal filed by the Somerset
Pulaski County Concerned Citizens Group. Prior to actual construction of the
expansion area, the Company was required to complete an additional hydrogeologic
investigation to confirm the adequacy of the groundwater monitoring program
approved in the final permit. These studies are complete and indicate that the
groundwater monitoring program is adequate. The Company, however, has not yet
received final approval from the state regulatory authority with respect to the
final permit.
GOVERNMENT REGULATION
The Company is subject to extensive and evolving federal, state and local
environmental laws and regulations that have become increasingly stringent in
recent years as a result of greater public interest in protecting the
environment. These laws and regulations affect the Company's business in many
ways and will continue to impose substantial costs on the Company.
The design, operation and closure of landfills is extensively regulated.
These regulations include, among others, the regulations establishing minimum
federal requirements adopted by the United States Environmental Protection
Agency (the "EPA") in October 1991 under Subtitle D (the "Subtitle D
Regulations") of the Resource Conservation and Recovery Act of 1976 ("RCRA").
The Subtitle D Regulations, which generally became effective in October 1993,
include location restrictions, facility design standards, operating criteria,
closure and post-closure requirements, financial assurance requirements,
groundwater monitoring requirements, groundwater remediation standards, and
corrective action requirements. In addition, the Subtitle D Regulations require
that new landfill units meet more stringent liner design criteria (typically,
composite soil and synthetic liners or two or more synthetic liners) designed to
keep leachate out of groundwater and have extensive collection systems to
collect leachate for treatment prior to disposal. Groundwater monitoring wells
must also be installed at virtually all landfills to monitor groundwater quality
and, indirectly, the effectiveness of the leachate collection system operation.
The Subtitle D Regulations also require, where threshold test levels are
present, that methane gas generated at landfills be controlled in a manner that
protects human health and the environment. Each state is required to revise its
landfill regulations to meet these requirements or such requirements will be
automatically imposed upon it by the EPA. Each state is also required to adopt
and implement a permit program or other appropriate system to ensure that
landfills within the state comply with Subtitle D Regulations' criteria. Most
states have adopted extensive landfill regulations that have been updated or
replaced with new regulations consistent with, or more stringent than, the
Subtitle D Regulations. Failure to comply with these regulations could require
the Company to undertake investigatory or remedial activities, to curtail or
modify operations, or to close a landfill temporarily or permanently. Future
changes in federal or state regulations may require the Company to modify,
supplement or replace equipment or facilities at costs that may be substantial.
The failure of regulatory agencies to enforce these regulations vigorously or
consistently may give an advantage to competitors of the Company whose
facilities do not comply with the
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Subtitle D Regulations or its state counterparts. The Company's ultimate
financial obligations related to any failure to comply with these regulations
could have a material adverse effect on the Company's business and results of
operations.
The Company is also regulated under the Federal Water Pollution Control Act
of 1972 (the "Clean Water Act") and the Clean Air Act, as amended in 1990 (the
"Clean Air Act"). The Clean Water Act regulates the discharge of pollutants
from a variety of sources, including landfills, into streams or other surface
waters. If runoff or collected leachate from the Company's landfills or
transfer stations is discharged into surface waters, the Clean Water Act would
require the Company to apply for and obtain a discharge permit, conduct sampling
and monitoring and, under certain circumstances, reduce the quantity of
pollutants in such discharge. Also, virtually all landfills are required to
comply with federal storm water regulations issued in November 1990, which are
designed to prevent contaminated landfill storm water runoff from flowing into
surface waters. The Clean Water Act also requires permits for discharges of
fill material into wetlands. These permits, which are occasionally required for
landfill construction or expansion, can take the form of categorical "nationwide
permits," for which little paperwork is required, or site specific permits,
which require detailed applications and extensive administrative review. Site-
specific permits are issued by the Army Corps of Engineers, with input from the
relevant state, pursuant to criteria developed by the U.S. EPA, and may require
mitigation measures such as the creation of substitute wetlands.
The Clean Air Act, including the 1990 amendments, provides for federal,
state and local regulation of emissions of air pollutants into the atmosphere,
including emissions resulting from landfill operations. The EPA recently
promulgated new standards regulating air emissions of certain regulated
pollutants from municipal solid waste landfills. The EPA and the states in
which the Company has operated also have adopted regulations under Title V of
the Clean Air Act requiring permits for certain disposal facilities. These
standards, combined with the new permitting programs established under the 1990
Clean Air Act amendments, will subject many of the Company's landfills to new
permitting requirements and may require the installation of gas recovery
systems. Landfills located in areas with air pollution problems may be subject
to even more extensive air pollution controls and emissions limitations. The
Company's continued compliance with these existing and future regulations may
impose a significant expense upon the Company which could have a material
adverse effect on the Company's business and results of operations.
The Occupational Safety and Health Act of 1970, as amended ("OSHA"),
authorizes the Occupational Safety and Health Administration to promulgate
occupational safety and health standards. Various of those promulgated
standards, including standards for notices of hazards, safety in excavation and
the handling of asbestos, may apply to certain of the Company's operations.
OSHA regulations set forth requirements for the training of employees handling,
or who may be exposed in the work place to, concentrations of asbestos-
containing materials that exceed specified action levels. The OSHA regulations
also set standards for employee protection, including medical surveillance, the
use of respirators, protective clothing and decontamination units, during
asbestos demolition, removal, or encapsulation as well as its storage,
transportation, and disposal. In addition, OSHA specifies a maximum permissible
exposure level for airborne asbestos in the workplace. The Company has no
direct involvement in asbestos removal or abatement projects. However,
asbestos-containing waste materials are accepted at certain of the Company's
landfills that are authorized to accept such materials, and some of the
Company's collection businesses receive asbestos-containing waste materials
which have already been packaged and labeled. These packages are loaded onto
the Company's vehicles by employees of the asbestos abatement contractors for
transportation to and disposal at the Company's authorized landfills.
Accordingly, OSHA regulations designed to minimize employees' exposure to
airborne asbestos fibers and provide employees with proper training and
protection generally apply to the Company's operations in the transportation,
handling and disposal of asbestos waste.
In addition, most states and municipalities in which the Company operates
or may operate have adopted laws or requirements which limit or ban certain
categories of waste or mandate the disposal or recycling of local refuse. These
recycling laws and requirements have the effect of reducing landfill disposal
tonnage. Additionally, certain permits and approvals, as well as state and
local regulations, may seek to limit a landfill to accepting waste that
originates from specified geographic areas or seek to restrict the importation
of out-of-state waste. Legislative or regulatory restrictions generally have
not withstood judicial challenges. However, from time to time, federal
legislation is proposed which would allow individual states to prohibit the
disposal of out-of-state waste or to limit the amount that could be imported for
disposal. This legislation would also authorize in certain instances local
governmental units to mandate the flow of waste to certain designated facilities
or impose other flow control restrictions. Although no such federal legislation
has been enacted to date, if such federal legislation should be enacted in the
future, states in which the Company operates landfills could act to limit or
prohibit the importation of out-of-state waste or require the Company's
collection operations to utilize
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certain designated sites. Such federal or state actions could have an adverse
effect on the Company's landfills that receive a significant portion of waste
originating from other states and on the Company's collection operations. A
restriction on out-of-state waste also could result in higher disposal costs for
the Company's collection operations. If the Company were unable to pass such
higher costs through to its customers, the Company's business and results of
operations could be adversely affected.
Each state in which the Company currently operates, or may operate in the
future, also has laws and regulations governing the generation, storage,
treatment, handling, transportation and disposal of solid waste, water and air
pollution and, in most cases, the siting, design, operation, maintenance,
closure and post-closure maintenance of landfills and other solid waste
management facilities. Many states also have programs that require
investigation and clean-up of sites containing hazardous materials in a manner
comparable to or more stringent than CERCLA. These statutes impose requirements
for investigation and clean-up of contaminated sites and liability for costs and
damages associated with such sites. Some of the state laws provide for the
imposition of liens on property owned by responsible parties. Many
municipalities also have ordinances, local laws and regulations affecting the
Company's operations. These include zoning and health measures that limit solid
waste management activities to specified sites or activities.
REGULATION BY NEW YORK CITY TRADE WASTE COMMISSION
In 1996, the New York City Council enacted Local Law 42 ("Local Law 42") in
order to control the corrupting influence of organized crime on the waste
hauling industry. Local Law 42 created the Trade Waste Commission (the "TWC")
and established rules for licensing and regulating the operations of the
commercial and industrial waste industry in New York City. The law prohibits
the collection, disposal or transfer of commercial and industrial waste without
a license issued by the TWC and requires TWC approval of all acquisitions or
other business combinations in New York City proposed by all licensees. Each
such acquisition or sale transaction generally must be submitted for review by
the TWC 30 days before the transaction takes effect, although the amount of time
required for review depends on the complexity of the transaction and the need to
investigate the background of the principals involved. In September 1997, one
of the Company's subsidiaries received a license from the TWC which enables it
to conduct New York City collections operations. The license, like all TWC
licenses, has a term of two years. The TWC also sets maximum rates for the
industry and establishes operational requirements. The Company's New York City
collection operations are subject to Local Law 42, which could preclude or
materially impact the Company's operations in this region, the time and cost of
completing future acquisitions in this region, and the rates which may be
charged for collection services.
PUBLIC UTILITY REGULATION
The rates that the Company may charge at its West Virginia landfill for the
disposal of municipal solid waste are regulated by the West Virginia Public
Service Commission. Rate regulation in West Virginia and the adoption of rate
regulation in other states in which the Company owns landfills could have an
adverse effect on the Company's business and results of operations.
POSSIBLE LEGAL ACTION
Companies in the solid waste management business, including the Company,
are frequently subject in the normal course of business to judicial and
administrative proceedings involving federal, state or local agencies or citizen
groups. These governmental agencies may seek to impose fines or penalties on
the Company, to revoke or deny renewal of the Company's operating permits or
licenses for violations or alleged violations of environmental laws or
regulations, or require that the Company make expenditures to remediate
potential environmental problems relating to waste disposed of or stored by the
Company or its predecessors, or resulting from its or its predecessors'
transportation and collection operations. Any adverse outcome in these
proceedings could have an adverse effect on the Company's business and results
of operations and may subject the Company to adverse publicity. The Company may
also be subject to actions brought by local governments, individuals or
community groups in connection with the permitting or licensing of its
operations, any alleged violation of such permits or licenses, or other
matters.
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POTENTIAL ENVIRONMENTAL LIABILITY
GENERAL. The Company is subject to liability for any environmental damage
that its solid waste facilities may cause to neighboring landowners,
particularly as a result of the contamination of drinking water sources or soil,
including damage resulting from the conditions existing prior to the acquisition
of such facilities by the Company. The Company also may be subject to liability
from any off-site environmental contamination caused by pollutants or hazardous
substances whose transportation, treatment or disposal was arranged by the
Company or its predecessors. Any substantial liability for environmental damage
incurred by the Company could have a material adverse effect on the Company's
business and results of operations.
CERCLA imposes strict, joint, and several liability on the present owners
and operators of facilities from which a release of hazardous substances into
the environment has occurred, as well as any party that owned or operated the
facility at the time of disposal of the hazardous substances regardless of when
the hazardous substance was first detected. Similar liability is imposed upon
the generators of waste that contains hazardous substances and hazardous
substance transporters that select the treatment, storage, or disposal site.
All such persons, who are referred to as potentially responsible parties
("PRPs"), generally are jointly and severally liable for the expense of
investigation, clean-up and natural resource damages relating to environmental
contamination, regardless of whether they exercised due care or complied with
all relevant laws and regulations. These costs can be substantial. Liability
can be based upon the existence of even very small amounts of the more than 700
"hazardous substances" listed by the EPA and is not limited to the disposal of
"hazardous wastes," as statutorily defined. It is likely that hazardous
substances have in the past come to be located in landfills which the Company
has been associated as an owner or operator or as a result of its solid waste
collection operations. Moreover, the Company's solid waste collection
operations may have transported hazardous substances in the past and may do so
on occasion in the future.
The National Emission Standards for Hazardous Air Pollutants ("NESHAPs")
regulate the collection, packaging, transportation and disposal of asbestos-
containing material. NESHAPs regulate visible emissions of asbestos fibers to
outside air and require emissions controls and appropriate work practices.
Asbestos is listed as a hazardous substance under CERCLA. A few states have
classified asbestos as hazardous waste and require appropriate handling and
disposal practices. The Company transports and disposes of asbestos-containing
materials. There can be no assurance that the Company will not face claims
resulting from environmental liabilities relating to these and other materials
in its solid waste management operations.
PENNSYLVANIA LANDFILL. Prior to 1990, one of the Company's Pennsylvania
landfills disposed of municipal solid waste in an unlined disposal area. This
unlined area was operated by the former owner and has caused localized
groundwater contamination. As a condition to a recent permit modification, the
Company has agreed to remove all waste from unlined areas to remove the source
of contamination and relocate the waste to a Subtitle D approved disposal area
at the landfill. For the period of trash relocation, the Company will operate a
groundwater removal and treatment system which has received a permit for the
associated surface water discharge. Relocation of solid waste began in April
1997 and is scheduled to be completed over a 12-year period in connection with
new pad construction. At December 31, 1997, the Company had accrued
approximately $5.4 million for such relocation. An additional condition of the
permit modification requires groundwater monitoring of five private water supply
wells off-site. Low levels of volatile organic compounds have been detected in
two of these private water supply wells. The Company has not established a
specific financial reserve for potential costs relating to this remediation or
any additional potential liabilities associated with this contamination, but it
is not expected to be significant. The Company currently believes that ultimate
resolution of these matters should not be material to it and should not have a
material adverse effect on its business or results of operations. However,
there can be no assurance that the Company's ultimate financial obligations
related to these matters will not have a material adverse effect on the
Company's business and results of operations.
SUPERFUND LIABILITY. One of the Company's solid waste collection
subsidiaries is a party to a Superfund litigation, which has been settled by
substantially all of the defendants. The Company is being defended in this
action by one of its insurance carriers, which did not accept a $13,000
settlement offer. Because the settlement offer was not accepted, the Company
could be subject to claims for any deficiency between the amount contributed by
all settling parties and the actual costs of remediating the site. While the
Company has no reason to believe that any such claims will be asserted and has
no meaningful basis to estimate the amount of such claims, no assurances can be
given that they would not be brought or that the amount claimed would not be
substantial. Were any such claim to be asserted, the Company would expect to
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vigorously defend them and believes that its liability, if any, would be either
covered by insurance or, under applicable law, the responsibility of the carrier
because of its failure to accept settlement. However, no assurances can be given
that insurance proceeds would cover the entire amount of the claim or that the
Company would prevail in any action against the carrier. Accordingly, there can
be no assurance that the Company's ultimate financial obligations related to
this matter will not have a material adverse effect on the Company's business
and results of operations.
POTENTIAL INADEQUACY OF ACCRUALS FOR CLOSURE AND POST-CLOSURE COSTS
The Company has material financial obligations relating to closure and
post-closure costs of the landfills it operates. While the precise amounts of
these future obligations cannot be determined, the Company estimated the total
costs to be approximately $29.3 million for final closure of its landfills, of
which $9.5 million had been accrued at June 30, 1998. The Company makes an
accrual for these costs based on consumed airspace in relation to the
management's estimate of total available airspace of the landfills. Post-
closure monitoring costs pursuant to applicable regulations (generally for a
term of 30 to 40 years after final closure) are estimated at $18.5 million. At
June 30, 1998, the Company had accrued $6.1 million for such projected post-
closure costs. The Company will provide additional accruals based on
engineering estimates of consumption of permitted landfill airspace over the
useful lives of its landfills. There can be no assurance that the Company's
ultimate financial obligations for actual closing or post-closing costs will not
exceed the amount then accrued and reserved or amounts otherwise receivable
pursuant to insurance policies or trust funds. Such a circumstance could have a
material adverse effect on the Company's business and results of operations.
ABILITY TO MEET BONDING REQUIREMENTS
The Company is required to post a form of financial assurance at its
landfills to ensure proper closure and post-closure monitoring and maintenance.
Additionally, some of the Company's collection and transportation contracts
require performance and payment bonds to guarantee project completion and
certain states may require collateral bonds to secure compliance with hazardous
waste transportation requirements. The Company's ability to meet these bonding
requirements is contingent upon the Company's performance record and
creditworthiness. Any inability by the Company to maintain bonding capacity or
a sizable increase in payment could have a material adverse impact on the
Company's business and results of operations.
LIMITS ON INSURANCE COVERAGE
The Company carries insurance covering its assets and operations, including
pollution liability coverage. Specifically, each of the Company's landfills has
pollution liability coverage of $5.0 million per occurrence or $5.0 million in
the aggregate subject to a $500,000 deductible per occurrence. Nevertheless,
there can be no assurance that the Company's insurance will provide sufficient
coverage in the event an environmental claim is made against the Company or that
the Company will be able to maintain in place such insurance at reasonable
costs. An uninsured or underinsured claim against the Company of sufficient
magnitude could have a material adverse effect on the Company's business and
results of operations. The Company also is subject to the risk of claims by
employees and others made after the expiration of the policy coverage period,
including asbestos-related illnesses (such as asbestosis, lung cancer,
mesothelioma and other cancers), which may not become apparent until many years
after exposure. From May 15, 1985 through April 28, 1988, the Company carried
claims-made general liability coverage. Any claims presented on the basis of
exposure during that period may not be covered by insurance and any liability
resulting therefrom could, consequently, have an adverse effect on the Company's
business and results of operations.
WASTE REDUCTION PROGRAMS
Alternatives to landfill disposal, such as recycling, incineration and
composting, are increasingly being used. There also has been an increasing
trend at the state and local levels to mandate recycling and waste reduction at
the source and to prohibit the disposal of certain types of wastes at landfills.
Many states (including states in which the Company operates) have enacted laws
that require counties to adopt comprehensive plans to reduce the volume of solid
waste deposited in landfills through waste planning, composting, recycling or
other programs. Some states (including most states in which the Company
operates) have adopted legislation that prohibits the disposal of yard waste,
tires, and other items in landfills. These developments could result in a
reduction in the volume of waste destined for landfills in certain areas, which
may affect the Company's ability to operate its landfills at their full capacity
and/or affect the prices that can be
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charged for landfill disposal services. Such effects could have a material
adverse effect on the Company's business and results of operations.
COMPETITION
The solid waste management industry is highly competitive and the Company
believes that industry consolidation will increase competitive pressures. The
Company competes with several large national waste management companies,
including Waste Management, Inc., Browning Ferris Industries, Inc. and Allied
Waste Industries, Inc. A number of these competitors have significantly greater
financial, technical, marketing and other resources than the Company. The
Company also competes with numerous well-established smaller, local or regional
firms. In addition, municipalities that operate their own waste collection and
disposal facilities often enjoy the benefits of tax-exempt financing and may
control the disposal of waste collected within their jurisdictions. Increased
competition from these companies or municipalities could have a material adverse
effect on the Company's business and results of operations.
The Company provides residential collection services under municipal
contracts with terms ranging from one to five years. As is customary in the
waste management industry, such contracts come up for competitive bidding
periodically and there is no assurance that the Company will be the successful
bidder or will be able to retain such contracts. If the Company is unable to
replace any contract lost through the competitive bidding process with a
comparable contract within a reasonable time period or to use any surplus
equipment in other service areas, the Company's business and results of
operations could be adversely affected.
SEASONALITY; ECONOMIC CONDITIONS
The Company's revenues tend to be somewhat lower in the winter months.
This is primarily attributable to the fact that the volume of waste relating to
construction and demolition activities tends to increase in the spring and
summer months and the volume of industrial and residential waste in the regions
in which the Company operates tends to decrease during the winter months. In
addition, particularly harsh weather conditions may affect the Company's
operations by interfering with collection, transportation and disposal
operations, delaying the development of landfill capacity, and/or reducing the
volume of waste generated by the Company's customers, which could have a
material adverse effect on the Company's business and results of operations.
The Company's business is affected by general economic conditions, both
nationally and in the geographic regions in which the Company's operations are
currently located. There can be no assurance that a national or local economic
downturn will not result in a reduction in the volume of waste being collected,
transported and disposed of by the Company and/or the prices that the Company
can charge for its services.
ANTI-TAKEOVER PROVISIONS; CHANGE IN CONTROL PROVISIONS
The Company's Certificate of Incorporation authorizes the issuance of up to
50,000,000 shares of Preferred Stock. No shares of preferred stock are
outstanding as of the date of this Prospectus. It is not possible to state the
precise effect of preferred stock upon the rights of the holders of the
Company's Common Stock until the Board of Directors determines the respective
preferences, limitations and relative rights of the holders of one or more
series or classes of the preferred stock. However, such effect might include:
(i) reduction of the amount otherwise available for payment of dividends on
Common Stock, to the extent dividends are payable on any issued shares of
preferred stock, and restrictions on dividends on Common Stock if dividends on
the preferred stock are in arrears; (ii) dilution of the voting power of the
Common Stock to the extent that the preferred stock has voting rights; and (iii)
the holders of Common Stock not being entitled to share in the Company's assets
upon liquidation until satisfaction of any liquidation preference granted to the
preferred stock.
The preferred stock may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Company and may therefore have an anti-takeover effect. Issuances of authorized
preferred shares can be implemented and have been implemented by some companies
in recent years with voting or conversion privileges intended to make
acquisition of the Company more difficult or costly. Such an issuance could
discourage or limit the stockholders' participation in certain types of
transactions that might be proposed (such as a tender offer), whether or not
such transactions were favored by the majority of the stockholders, and could
enhance the ability of officers and directors to retain their positions.
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In addition, certain of the Company's executive officers that have entered
into employment agreements with the Company will be entitled to receive certain
bonuses in cash or Common Stock upon a change in control of the Company in such
amounts that, in the aggregate, could have an adverse effect on the Company's
liquidity and capital resources. Accordingly, such provisions could discourage
or prevent bids to take over the Company and decrease values that would
otherwise be obtained by stockholders for their Common Stock.
The Company is subject to the anti-takeover provisions of Section 203 of
the Delaware General Corporation Law, which prohibits the Company from engaging
in a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. The application of Section 203 also could have the effect of
delaying or preventing a change in control of the Company without further action
by the stockholders.
CONTROL BY MANAGEMENT
Executive officers and directors of the Company as a group beneficially own
a significant amount of the outstanding shares of Common Stock. As a result,
these existing stockholders, if acting together, will be able to influence
significantly the election of individuals to the Board of Directors and the
outcome of other matters submitted for stockholder consideration.
VOLATILITY OF STOCK PRICE
The market price of the Common Stock has been and is likely to continue to
be highly volatile. Factors such as fluctuations in the Company's quarterly
revenues and operating results, the Company's ongoing acquisition program,
governmental regulations, market conditions for waste management Stocks in
general, and economic conditions generally may have a significant impact on the
market price of the Common Stock. In addition, as the Company pursues its
acquisition program, it may agree to issue shares of Common Stock that will
generally become available for resale which may have an impact on the market
price of the Common Stock.
LACK OF CASH DIVIDENDS ON COMMON STOCK
The Company does not expect to pay any cash dividends on the Common Stock
in the foreseeable future. Any cash otherwise available for such dividends will
be reinvested in the Company's business. In addition, the Company's current
credit facility agreement prohibits the payment of cash dividends without prior
bank approval.
YEAR 2000 DISCLOSURE
Currently, there is significant uncertainty regarding the impact of the
Year 2000 on information systems, such as those used by the Company. The
Company does not currently believe that the effects of any Year 2000 non-
compliance on the Company's information systems should have any material adverse
impact on the Company's business or results of operations; however, there can be
no assurance that the Company will not incur expenses or experience business
disruption as a result of system problems associated with the century change.
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USE OF PROCEEDS
All of the Shares offered hereby are being offered for the account of
the Registered Stockholders. The Company will not receive any of the proceeds
of the Offering.
THE COMPANY
Eastern Environmental Services, Inc. is a non-hazardous solid waste
management company specializing in the collection, transportation, and disposal
of residential, industrial, commercial, and special waste, principally in the
eastern United States. In June 1996, the Company's Board of Directors and
management team implemented an aggressive acquisition program in the solid waste
industry.
The Company believes that significant opportunities exist to acquire
solid waste collection, transportation, and disposal businesses in the eastern
United States and to develop within its existing markets. As part of its
acquisition program, the Company reviews acquisition opportunities on an ongoing
basis and is currently in various stages of negotiating the acquisition of
additional solid waste management businesses. There can be no assurance that
any of such acquisition negotiations will result in the actual acquisition of
additional solid waste management businesses.
The Company's principal executive offices are located at 1000 Crawford
Place, Suite 400, Mt. Laurel, New Jersey 08054, and its telephone number is
(609) 235-6009.
RECENT DEVELOPMENTS
On August 17, 1998, the Company entered into a merger agreement (the
"Merger Agreement") with Waste Management, Inc., a New York Stock Exchange
listed, waste management company ("WMI"), pursuant to which a wholly-owned
subsidiary of WMI will be merged with and into the Company (the "Merger"). As a
result of the Merger, each stockholder of the Company will receive .6406 shares
of WMI common stock in exchange for each share of Company Common Stock. The
closing of the Merger is subject to customary closing conditions, including the
requirements of obtaining approval from the Company's stockholders and certain
governmental entities. There can be no assurance, however, that the Merger
will occur.
On August 19, 1998, a complaint (the "Complaint"), purporting to be a
class action, was filed in Delaware Chancery Court, naming certain Eastern
directors and Eastern as defendants and seeking to enjoin consummation of the
Merger and compensatory damages. The Complaint alleges generally that Eastern
directors breached their fiduciary duties to Eastern stockholders. Eastern
believes that the allegations in the Complaint are without merit and intends to
vigorously defend the case.
Additional information concerning the Merger, as well as a copy of the
Merger Agreement and the Complaint, is included in the Company's reports filed
under the Exchange Act that are incorporated by reference in this Prospectus.
See "Available Information" and "Incorporation of Certain Documents by
Reference."
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REGISTERED STOCKHOLDERS
The Warrant was granted to Sanders Morris Mundy Inc. as partial
consideration for acting as a broker in connection with a private placement of
securities by the Company in August 1996 and all of the 504,603 Outstanding
Shares included in this Prospectus were issued by the Company in connection with
acquisitions of solid waste management businesses since March 1998. All of
the Shares are included in this Prospectus pursuant to the exercise of
registration rights granted the holders thereof in connection with such private
placement and acquisitions.
The following table lists the names of the persons whose Shares are covered
by this Prospectus (the "Registered Stockholders"), and for each, the number of
Shares beneficially owned at the commencement of the Offering, the number of
Shares being offered for sale and the number of Shares and percentage interest
of the Company to be beneficially owned after the Offering.
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF SHARES OWNED
BENEFICIALLY OUTSTANDING NUMBER OF AFTER OFFERING
OWNED AT SHARES BEING WARRANT SHARES --------------
REGISTERED STOCKHOLDERS COMMENCEMENT OF OFFERING OFFERED BEING OFFERED NUMBER PERCENT
- -------------------------------------- ------------------------ -------------------- -------------- --------------
<S> <C> <C> <C> <C>
Red Ball Sanitation Service Corp. 156,870 156,870 -- -- --
Sanders Morris Mundy Inc. 156,250 -- 156,250 -- --
Frank Savino 129,721 64,861 -- 64,860 *
Joseph Savino 129,721 64,860 -- 64,861 *
Thomas Gaudet 95,000 95,000 -- -- --
Frank and Joseph Savino Partnership 50,840 25,420 -- 25,420 *
Allegro Carting and Recycling Inc. 44,788 22,394 -- 22,394 *
Allegro Transportation and Recycling, Inc. 19,770 9,885 -- 9,885 *
Manfredi Brothers, Inc. 13,773 13,773 -- -- --
Madison Enterprises, Inc. 13,314 6,657 -- 6,657 *
J. Marmo Carting Corp. 12,052 12,052 -- -- --
V&S Carting Corp. 12,052 12,052 -- -- --
Joseph Savino & Sons, Inc. 11,702 5,851 -- 5,851 *
Richard Devereux 6,863 6,863 -- -- --
Spartan Holding Group LLC 6,250 6,250 -- -- --
Lee Bin Containers, Inc. 3,228 1,614 -- 1,614 *
Allegro Enterprises, Inc. 402 201 -- 201 *
</TABLE>
____________________________
* Less than 1%
16
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time to purchasers directly by any of
the Registered Stockholders or by pledgees, donees, transferees or other
successors in interest, or, alternatively, any of the Registered Stockholders
may from time to time offer the Shares through dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from a Registered Stockholder and/or the purchasers of the Shares
for whom they may act as agent. Any discounts, commissions or concessions
received by any such dealers or agents and any profits on the sale of Shares by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. This Prospectus may be used by any such pledgee, donee,
transferee or other successor in interest to offer and sell the Shares, provided
this Prospectus is appropriately supplemented to disclose the name and the
number of shares beneficially owned by such person.
The Shares may be sold from time to time in one or more transactions at a
fixed offering price, which may be changed, at varying prices determined at the
time of sale, or at negotiated prices. Such prices will be determined by a
Registered Stockholder or by agreement between a Registered Stockholder and/or
dealers. The Shares are listed on the Nasdaq National Market and may be sold in
transactions on the Nasdaq National Market. In addition, the Shares may be
sold, to the extent permitted, from time to time in transactions effected in
accordance with the provisions of Rule 144 under the Securities Act.
In connection with the offer and sale of the Shares, various state
securities laws and regulations require that any such offer and sale should be
made only through the use of a broker-dealer registered as such in any state
where a Registered Stockholder engages such broker-dealer and in any state where
such broker-dealer intends to offer and sell the Shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not bid for or purchase the Shares
until after such person has completed his or her participation in such
distribution, including the period of five business days prior to the
commencement of such distribution. In addition to and without limiting the
foregoing, the Registered Stockholders and any other person participating in
such distribution will be subject to other applicable provisions of the Exchange
Act and the Rules and Regulations thereunder, including without limitation
Regulation M, which provisions may affect the timing of purchases and sales of
any of the Shares by the Registered Stockholders and any such other person. All
of the foregoing may affect the marketability of the Shares and the ability of
any person or entity to engage in market-making activities with respect to the
Shares.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania, counsel for
the Company.
EXPERTS
The consolidated financial statements of Eastern Environmental Services,
Inc. at December 31, 1997 and June 30, 1997 and 1996 and for the six-month
period ended December 31, 1997 and each of the three years in the period ended
June 30, 1997 appearing in the Company's Current Report on Form 8-K (dated
September 22, 1998), which are incorporated by reference herein, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated by reference herein which, as to the
six-month period ended December 31, 1997 and each of the three years in the
period ended June 30, 1997, is based in part on the reports of Christopher
Rayner & Associates, independent auditors, and as to each of the two years in
the period ended June 30, 1996, is based in part on the reports of Bardall,
Weintraub P.C. and Paternostro, Callahan, & DeFreitas, LLP, independent
auditors. Such financial statements are incorporated by reference herein in
reliance upon such reports given upon the authority of such firms as experts in
accounting and auditing.
17
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
THE REGISTERED STOCKHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE SUCH DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information............................................. 2
Incorporation of Certain Documents by Reference................... 2
Risk Factors...................................................... 5
Use of Proceeds................................................... 15
The Company....................................................... 15
Recent Developments............................................... 15
Registered Stockholders........................................... 16
Plan of Distribution.............................................. 17
Legal Matters..................................................... 17
Experts........................................................... 17
</TABLE>
660,853 SHARES
Common Stock
EASTERN ENVIRONMENTAL SERVICES, INC.
PROSPECTUS
_________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following tables sets forth the estimated costs and expenses of the
issuance and distribution of the securities being registered hereby, all of
which are being borne by the Company:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 4,993
-------
Legal fees and expenses.......................................... $ 7,000
-------
Accounting fees and expenses..................................... $12,000
-------
Miscellaneous.................................................... $ 4,007
-------
Total........................................................ $28,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in general, that a corporation incorporated under the laws of
the State of Delaware, such as the Company, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
enterprise, against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit, or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. In the case of an action by or in the right of the corporation, a
Delaware corporation may indemnify any such person against expenses (including
attorneys' fees), actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the court determines upon application that, despite the adjudication
of liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses.
Article Tenth, Paragraph (a) of the Certificate of Incorporation provides
that each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit, or proceeding, whether civil, criminal,
administrative or investigative (hereinafter, a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the Company or is or was serving at the
request of the Company as a director, officer, employee, or agent of another
company or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether or not the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee, or agent, or in any other capacity while serving as a director,
officer, employee, or agent, shall be indemnified and held harmless by the
Company to the fullest extent authorized by the DGCL, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment),
against all expense, liability, and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. Such indemnification continues as to a person who has ceased to be a
director, officer, employee, or agent or in any other capacity while serving as
a director, officer, employee, or agent and inures to the benefit of his or her
heirs, executors, and administrators; provided, however, that except as provided
in Paragraph (b) of the Article Tenth (described below), the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the Company.
Article Tenth, Paragraph (a) further provides that such right to indemnification
shall be a contract right and shall include the right to be paid by the Company
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided,
II-1
<PAGE>
however, that, if the DCGL requires, the payment of such expenses incurred by a
director or officer (in his or her capacity as a director or officer and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Company of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
the Certificate of Incorporation or otherwise. The Company may, by action of its
Board of Directors, provide indemnification to employees and agents of the
Company with the same scope and effect as the foregoing indemnification of
directors and officers. The foregoing right to indemnification and advancement
of expenses is not exclusive.
Article Tenth, Paragraph (b) of the Certificate of Incorporation further
provides that if a claim described under Paragraph (a) of Article Tenth is not
paid in full by the Company within thirty days after a written claim has been
received by the Company, the claimant may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim and, if
successful, in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Company) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL for the Company to indemnify the claimant for the amount claimed, but
the burden of providing such defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the DGCL, nor an actual determination by the Company (including its
Board of Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard or conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
As permitted by Article Tenth of the Certificate of Incorporation and
Section 145(g) of the DGCL, the directors and officers of the Company and its
subsidiaries are covered by policies of insurance under which they are insured,
within limits and subject to certain limitations, against certain expenses in
connection with the defense of actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such actions, suits or
proceedings, in which they are parties by reason of being or having been
directors or officers; the Company is similarly insured, with respect to certain
payments it might be required to make to its directors or officers under the
applicable statutes and its charter provisions. The Company has also entered
into indemnification agreements with certain of its directors and officers.
The Company is also indemnified against certain liabilities, including
liabilities under the Exchange Act, or will contribute payments that the certain
underwriters may be required to make in respect thereof, in an underwriting
agreement executed in connection with the public offering of 7,500,000 shares of
Common Stock of the Company under a Registration Statement on Form S-3 (File No.
333- 49613) filed by the Company.
II-2
<PAGE>
ITEM 16. EXHIBITS.
The following Exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DOCUMENT
- -------------- --------
<C> <S>
5 Opinion of Drinker Biddle & Reath LLP
23.13 Consent of Ernst & Young LLP
23.14 Consent of Marden, Harrison & Kreuter, Certified
Public Accountants, P.C.
23.15 Consent of Drinker Biddle & Reath LLP
(included in Exhibit 5)
</TABLE>
________________
ITEM 17. UNDERTAKINGS.
(a) The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
II-3
<PAGE>
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however that the undertakings set forth in paragraphs
-------- -------
(1)(i) and (1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions permitted under Item 15 above or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in
connection with the securities being registered hereby, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Form S-3 Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Mt. Laurel, New Jersey on October 23, 1998.
EASTERN ENVIRONMENTAL SERVICES, INC.
By /s/ Louis D. Paolino, Jr.
------------------------------------------------
Louis D. Paolino, Jr.
Chairman of the Board, Chief Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Form S-3 Registration Statement has been signed by the following
persons, in the capacities indicated, on October 23, 1998.
<TABLE>
<CAPTION>
Signatures Title
- ------------------------------------ --------------------------------------------------------------------
<S> <C>
/s/ Louis D. Paolino, Jr. Chairman of the Board, Chief Executive Officer, President and
- ------------------------------------ Director (Principal Executive Officer)
Louis D. Paolino, Jr.
/s/ Gregory M. Krzemien Chief Financial Officer and Treasurer (Principal Financial Officer)
- ------------------------------------
Gregory M. Krzemien
/s/ Ronald Pirollo Controller (Principal Accounting Officer)
- ------------------------------------
Ronald Pirollo
George O. Moorehead * Director
- ------------------------------------
George O. Moorehead
Constantine N. Papadakis * Director
- ------------------------------------
Constantine N. Papadakis
Matthew J. Paolino * Director
- ------------------------------------
Matthew J. Paolino
</TABLE>
* Gregory M. Krzemien, pursuant to a Power of Attorney executed by each of the
directors and officers noted above and included in the signature page of the
initial filing of this Registration Statement, by signing his name hereto, does
hereby sign and execute this Amendment No. 1 to Form S-3 Registration Statement
on behalf of each of the persons noted above, in the capacities indicated, and
does hereby sign and execute this Amendment No. 1 to Form S-3 Registration
Statement on his own behalf, in the capacities indicated.
/S/ GREGORY M. KRZEMIEN
-----------------------------------
GREGORY M. KRZEMIEN
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DOCUMENT
- -------------- --------
<S> <C>
5 Opinion of Drinker Biddle & Reath LLP
23.13 Consent of Ernst & Young LLP
23.14 Consent of Marden, Harrison & Kreuter, Certified Public
Accountants, P.C.
</TABLE>
<PAGE>
Exhibit 5
---------
DRINKER BIDDLE & REATH LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
Phone: (215) 988-2700
October 23, 1998
Eastern Environmental Services, Inc.
1000 Crawford Place, Suite 400
Mt. Laurel, New Jersey 08054
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Eastern Environmental Services, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), registering an aggregate of 660,853 shares of
the Company's Common Stock, par value $.01 per share (the "Shares"), 504,603 of
which are currently issued and outstanding (the "Outstanding Shares") and
156,250 of which are issuable upon the exercise of a warrant (the "Warrant
Shares"), for resale by the several Registered Stockholders (as defined in the
Registration Statement).
In this connection, we have examined the originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
and the By-laws of the Company, resolutions of the Company's Board of
Directors, and such other documents and corporate records relating to the
Company and the issuance and sale of the Outstanding Shares and the Warrant
Shares as we have deemed appropriate. This opinion is based exclusively on the
General Corporation Law of the State of Delaware.
In all cases, we have assumed the legal capacity of each natural person
signing any of the documents and corporate records examined by us, the
genuineness of signatures, the authenticity of documents submitted to us as
originals, the conformity to authentic original documents of documents submitted
to us as copies and the accuracy and completeness of all corporate records and
other information made available to us by the Company.
On the basis of the foregoing, we are of the opinion that the Outstanding
Shares have been validly issued and are fully paid and non-assessable by the
Company, and that the Warrant Shares, upon exercise of the warrant and payment
therefor in accordance with the terms thereof, will be validly issued, fully
paid and non-assessable by the Company.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus included in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement. In giving
this consent we do not admit that we come within the categories of persons whose
consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
DRINKER BIDDLE & REATH LLP
<PAGE>
Exhibit 23.13
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in Amendment
No.1 to the Registration Statement Form S-3 and related Prospectus of Eastern
Environmental Services, Inc. for the registration of 660,853 shares of its
common stock and to the incorporation by reference therein of our reports dated:
(i) June 19, 1997 with respect to the combined financial statements of
Waste Services, Inc. and Affiliates, included in the Eastern
Environmental Services, Inc. Current Report on Form 8-K dated May 12,
1997 (as amended July 11, 1997 and July 25, 1997 on Form 8-K/A);
(ii) September 12, 1997 with respect to the financial statements of Pappy,
Inc. included in the Eastern Environmental Services, Inc. Current
Report on Form 8-K dated August 15, 1997 (as amended October 10, 1997
on Form 8-K/A);
(iii) December 12, 1997 with respect to the consolidated financial statements
of Pine Grove, Inc. included in the Eastern Environmental Services,
Inc. Current Report on Form 8-K dated December 1, 1997 (as amended
February 17, 1998 on Form 8-K/A); and
(iv) September 16, 1998 with respect to the consolidated financial
statements of Eastern Environmental Services, Inc. included in the
Eastern Environmental Services, Inc. Current Report on Form 8-K dated
September 22, 1998.
all filed with the Securities Exchange Commission.
Philadelphia, Pennsylvania /s/ Ernst & Young LLP
October 19, 1998
(v) April 18, 1998, except for Note 13, as to which the date is July 17,
1998 with respect to the financial statements of the Waste Management
Division of Kimmins Recycling Corp. (a wholly owned subsidiary of
TransCor Waste Services, Inc.) included in the Eastern Environmental
Services, Inc. current report on form 8-K dated September 4, 1998 (as
amended October 19, 1998 on Form 8-K/A).
filed with the Securities Exchange Commission.
Tampa, Florida /s/ Ernst & Young LLP
October 19, 1998
<PAGE>
Exhibit 23.14
Consent of Independent Auditors
We consent to the incorporation by reference in this Registration Statement and
related prospectus of Eastern Environmental Services, Inc. on Form S-3
(Registration No. 333-64791) of our report dated October 5, 1998, with respect
to the combined financial statements of Regional Recycling Corp. and affiliates
as of and for the twelve month periods ended June 30, 1998 and 1997 appearing in
Eastern Environmental Services, Inc.'s Current Report on Form 8-K dated August
20, 1998 (as amended on Form 8-K/A dated October 19, 1998), filed with the
Securities and Exchange Commission.
/s/ MARDEN, HARRISON & KREUTER
Certified Public Accountants, P.C.
Port Chester, New York
October 21, 1998
