EXHIBIT 2.4
December 31, 1996
TransAmerican Waste Industries, Inc.
000 Xxxxx Xxxx Xxx Xxxx
Xxxxxxx, Xxxxx 00000
RE: THIRD AMENDMENT ("THIRD AMENDMENT") TO PURCHASE AND SALE AGREEMENT
EXECUTED DECEMBER 3, 1996 BY AND AMONG TRANSAMERICAN WASTE
INDUSTRIES, INC., A DELAWARE CORPORATION ("BUYER"), AND SANIFILL,
INC., A DELAWARE CORPORATION ("SANIFILL"), SANIFILL OF TEXAS
HAULING, INC., A TEXAS CORPORATION ("HAULING"), SUNRAY SERVICES,
INC., A DELAWARE CORPORATION ("SUNRAY"), S&J LANDFILL LIMITED
PARTNERSHIP, A LIMITED PARTNERSHIP FORMED UNDER TEXAS LAW ("S&J
LANDFILL") AND BRAZORIA COUNTY RECYCLING CENTER, INC., A TEXAS
CORPORATION ("BRAZORIA RECYCLING"), (SANIFILL, HAULING, SUNRAY, S&J
LANDFILL AND BRAZORIA RECYCLING ARE COLLECTIVELY REFERRED TO HEREIN
AS "SELLERS"), AS AMENDED BY A FIRST AMENDMENT DATED DECEMBER 4,
1996 AND A SECOND AMENDMENT DATED DECEMBER 12, 1996 (COLLECTIVELY,
THE "AGREEMENT")
Gentlemen:
As we have discussed, the Agreement provides that the Closing thereunder
will take place on December 31, 1996 or at such earlier date and time as the
closing conditions specified in Article VIII have been satisfied. The Agreement
further provides, at Section 7.1(b)(ii), that it may be terminated by either
party in the event the Closing fails to occur on or before 5:00 p.m. Houston
time on December 31, 1996 (except that neither party would have the right to
terminate while such party was in default of its obligations under the
Agreement). In the event either party should terminate the Agreement pursuant to
Section 7.1(b)(ii), other than as a result of Sellers' default or the
commencement of certain legal or administrative proceedings, Sellers are
entitled to retain the Down Payment.
Pursuant to Section 6.1(e) of the Agreement, Buyer represented that it has
sufficient funds available to pay the Cash Payment on the Closing Date.
Notwithstanding such representation, Buyer has advised Sellers that it does not
have sufficient funds available to pay the Cash Payment on the Closing Date.
Buyer alleges that its inability to obtain sufficient funds has resulted from
Sellers' alleged breach of their covenants set forth at Section 9.3(b)(iii) of
the Agreement to use reasonable efforts to preserve Sellers' business
organization, maintain Sellers' rights and franchises, and keep available the
services of Sellers' officers and employees insofar as they relate to the
Subject Assets.
Without either Buyer or Sellers admitting or conceding that any such party
has in any respect been in breach of its obligations or representations or
warranties pursuant to the Agreement, the parties have agreed and confirmed
that, but for Buyer's inability to obtain sufficient funds to close the
transactions contemplated by the Agreement, both Buyer and Sellers would have
been able to have closed
such transactions as of the date hereof on such terms as are set forth in the
Agreement as in effect prior to this Third Amendment, and would have done so.
Without limiting the generality of the foregoing, Buyer confirms and agrees that
it has completed all due diligence and other review and investigation with
regard to the Subject Assets and otherwise in connection with the business and
affairs of Sellers; and Buyer further confirms that, subject to compliance by
Sellers with the agreements set forth in this Third Amendment, Buyer will not
assert, or be entitled to assert, any noncompliance or breach by Sellers of any
representation, warranty or covenant in the Agreement as a basis for not closing
the transactions contemplated by the Agreement, unless any such breach or
violation is based on actions taken, or conditions that first come into
existence, after the date hereof.
Buyer hereby further confirms and agrees that it will not assert, and
hereby forever and for all purposes waives, releases and discharges, any claim
for indemnification based on any breach of any representation or warranty of
Sellers, or any breach by Sellers of its covenants under the Agreement, in each
case unless such breach or violation is not known to Buyer as of the date hereof
and could not reasonably be known to Sellers after fully completing a thorough
due diligence review and investigation of the Subject Assets and Sellers'
businesses and operations.
The parties hereby further agree as follows:
1. Not later than noon, Houston time, on Friday, January 3, 1997, Buyer
will deliver to Sellers by cashier's check or wire transfer of immediately
available funds to Sellers' account, an additional $250,000 as an additional
down payment (the "Additional Down Payment"). In the event the Additional Down
Payment is not received by such time for any reason, Sellers shall be entitled
thereupon to terminate the Agreement, and to retain the Down Payment, without
any liability whatsoever to Buyer.
2. In the event that Sellers have not received, by the close of business
on January 10, 1997, each of (a) a written statement executed by each of Xxxxxx
X. Xxxxx ("Xxxxx") and St. Xxxxx Capital Corp. ("St. Xxxxx") confirming the
accuracy of the matters set forth in the affidavit ("Affidavit") of J. Xxxxx
Xxxxx attached hereto within Annex A, (b) a commitment letter, of like tenor
with the commitment letters of St. Xxxxx and Xxxxxxx Xxxxxx Xxxxx Inc. ("SMM")
attached as Annex A committing viable lending institutions to provide loans of
the type described in the Affidavit (or firm commitments from parties capable of
performing their obligations thereunder to make equity investments in Buyer) in
each case in such amounts, when aggregated with the financial commitments of SMM
and St. Xxxxx, and providing for the timing of such funding, as will enable
Buyer to close the transactions set forth in the Agreement, and (c) a revised
commitment letter of SMM providing for a closing date not later than January 31,
1997, then in such event Sellers shall be entitled thereupon to terminate the
Agreement and to retain the Down Payment, without any liability whatsoever to
Buyer; PROVIDED, HOWEVER, that in such event Sellers shall promptly return to
Buyer, without interest, the Additional Down Payment. Notwithstanding the
foregoing provisions, in the event Buyer receives binding commitments pursuant
to clause (b) above to provide funding to Buyer subject to no contingencies
other than the Closing taking place and receipt of customary loan or closing
documentation, and such commitments require no personal guaranties of Moses or
St. Xxxxx, Buyer shall not be required to deliver the written statements of
Moses and St. Xxxxx provided in clause (a) above.
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3. Buyer has delivered to Sellers the financial commitments attached
hereto as Annex A. Buyer hereby represents and warrants to, and covenants with,
Sellers that the parties providing such financing, as well as the parties
providing financing pursuant to the commitments referred to in Section 2 above,
will provide such financing based on the terms of the Agreement, as in effect
after giving effect to this Third Amendment, without any change or modification
thereof.
4. Buyer will, not less frequently than every third business day until the
Closing Date, provide Sellers with a status report on the availability of
financing from the parties identified on Annex A or the commitment letters
referred to in Section 2 above, listing in reasonable detail any matters that
need to be resolved prior to the provision of funds by such finance parties.
5. Section 1.1(d) of the Agreement is hereby amended to change the
reference in the last sentence of such Section from December 31, 1996 to January
31, 1997.
6. Effective upon Sellers' receipt of the Additional Down Payment, the
last sentence of Section 2.2 of the Agreement is amended to add after the term
"Down Payment" the words "and the Additional Down Payment;" to add to the end of
such sentence the clause "and, as to the Additional Down Payment, as set forth
in the Third Amendment to this Agreement;" and to add the following sentence at
the end of such Section:
"The Additional Down Payment in the amount of $250,000 was paid by Buyer
to Sellers on or before noon, Houston time, on January 3, 1997."
7. Section 2.3 is hereby deleted and the following Section 2.3 is inserted
in lieu thereof:
"Section 2.3 CASH PAYMENT. At the Closing, Buyer will pay to Sellers
Twelve Million Three Hundred Fifty Thousand Dollars ($12,350,000) (the
"Cash Payment") by wire transfer of immediately available funds to
Sellers' designated account(s) on the Closing Date. Such Cash Payment is
in addition to the Down Payment paid by Buyer to Sellers on December 3,
1996 and the Additional Down Payment paid on or before January 3, 1997."
8. Section 4.1 of the Agreement is hereby amended to delete the phrase "on
December 31, 1996 or at such earlier date and time as the closing conditions
specified in Article VIII have been satisfied" and to insert in lieu thereof the
phrase "on January 31, 1997 or at such earlier date and time as Buyer has
obtained sufficient financing to deliver the Cash Payment."
9. Section 4.2 of the Agreement is hereby amended to insert a new
subsection (i), which shall read as follows:
"(i) An agreement of Sellers not to solicit customers of the Houston
Commercial Business or the Rearload Business who are active customers of
such businesses as of January 31, 1997 for the purpose of providing
front-end or rearload collection services to such customers, which
agreement shall remain in effect for a period ending on the first
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anniversary of the Closing Date; PROVIDED HOWEVER, that such
non-solicitation agreement will not prohibit Sellers or their affiliated
parties from (A) bidding on or soliciting any business of any customer
that is put out for bid or as to which any customer makes a general
solicitation for services or (B) engaging in any business or providing any
services other than front-end or rearload collection services. Such
agreement shall provide customary provisions regarding specific
performance of the obligations set forth in such agreement."
10. Section 7.1(b) of the Agreement is hereby amended to change the
reference in Clause (ii) of such Section from December 31, 1996 to January 31,
1997.
11. Section 7.2 of the Agreement is hereby amended to add, in the last
sentence of such Section, after the term "the Down Payment", the words "and the
Additional Down Payment."
12. Section 7.3 of the Agreement is hereby amended to add to the first
sentence of such Section, after the term "the Down Payment," the words ", the
Additional Down Payment."
13. Section 9.3(b) of the Agreement is hereby deleted in its entirety and
for all purposes, and the following Section 9.3(b) shall be inserted in lieu
thereof:
(b) INTERIM OPERATION OF BUSINESS. In the period from January 1, 1997
until the Closing Date, Buyer has designated Xxxxx Xxxxxxx as its
representative to manage and monitor the Assets. Xxxxx Xxxxxxx will be
considered the General Manager of the business, subject to the control and
supervision of Xx. Xxxxxx X. Xxxxxxx, the authorized representative of
Sellers, and will report to Xx. Xxxxxxx. Buyer, through Xx. Xxxxxxx, and
subject to the control and supervision of Xx. Xxxxxxx, shall have the
right to (i) make personnel decisions, specifically including hiring at
least two new sales representatives; (ii) review and approve all
municipal, association and other residential bids or proposals; (iii)
review and approve all routing decisions; (iv) review and approve
commercial sales efforts and pricing; and (v) manage all administrative
and support services provided at the Xxxxxx Road and Channelview
facilities. Buyer shall not without the prior written consent of Sellers
authorize any capital purchases of containers or equipment, or any other
capital expenditures, during interim operations unless such purchase is
made at Buyer's expense. All compensation, benefits and other costs and
expenses in respect of Xx. Xxxxxxx will be borne by Buyer, and Buyer shall
hold Sellers harmless in respect thereof.
14. Section 9.3 of the Agreement is hereby amended to add the following
Section 9.3(c):
(c) TRANSFERRED EMPLOYEES. From January 1, 1997 through the period
terminating six months after the Closing Date, Sellers further covenant
not to call upon any Transferred Employee with the intent of enticing such
employee away from or out of the employ of Buyer. As used herein, the term
"Transferred Employee" means any person who is employed by Sellers in
connection with Sellers' operation of businesses primarily related
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to the Subject Assets prior to the Closing Date and who becomes an
employee of Buyer immediately after the Closing Date; PROVIDED HOWEVER,
that from and after the time any such persons ceases to be employed by
Buyer or its subsidiaries, for any reason, and Sellers have not breached
their covenants hereunder in respect of such former employee, such former
employee shall cease to be a "Transferred Employee."
15. Section 9.4 of the Agreement is hereby amended to add a new subsection
(b), which shall read as follows:
"(b) The parties shall use their commercially reasonable best efforts to
cause the Closing to take place as soon as is practicable."
The parties further agree that this Third Amendment is conditioned upon
the granting by the U.S. Department of Justice of an extension through January
31, 1997 of the period during which Sellers may consummate the sale of the
Subject Assets without such sale being conducted by a trustee. In the event that
such extension is not granted, this Third Amendment shall cease to be of any
force or effect; Sellers shall promptly return to Buyer, without interest, the
Additional Down Payment; and the Agreement, as amended through the Second
Amendment thereof, shall remain in full force and effect.
Capitalized terms used in this letter agreement that are not otherwise
defined herein shall have the meaning set forth in respect thereof in the
Agreement. Except as specifically amended hereby, the Agreement shall remain in
full force and effect without modification.
If the foregoing correctly sets forth the terms of our agreement, please
execute this letter agreement in the space provided below.
SELLERS:
SANIFILL, INC.
By:
Xxxxxx X. Xxxxxxx
Authorized Representative and Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Authorized Representative and Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Authorized Representative and Attorney-in-Fact
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S & J LANDFILL LIMITED PARTNERSHIP
by Sanifill of Texas, Inc., its general partner
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Authorized Representative and Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Authorized Representative and Attorney-in-Fact
Amendments set forth in above letter accepted and agreed to as of the date first
set forth above:
BUYER:
TRANSAMERICAN WASTE
INDUSTRIES, INC.
By: /s/ J. XXXXX XXXXX
J. Xxxxx Xxxxx
Senior Vice President
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