Exhibit 10.3
EASTERN ENVIRONMENTAL SERVICES, INC.
0000 XXXXXXXX XXXXX, XXXXX 000
XX. XXXXXX, XXX XXXXXX 00000
Xx. Xxxxxx Xxxxxx
Mr. Xxxxx Xxxxxx
c/o Xxxxxxxx, Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Agreements and Plans of Reorganization, dated as of May 18, 1998, by
and among Allegro Enterprises, Inc., Allegro Transportation and
Recycling, Inc., Allegro Carting and Recycling, Inc., Xxxxxx Xxxxxx
and Sons, Inc., Xxx Bin Containers, Inc., Xxxxxx and Xxxxx Xxxxxx
Partnership, Regional Recycling, Inc., Madison Enterprises, Inc.,
(collectively, the "Companies") and Xxxxxx Xxxxxx and Xxxxx Xxxxxx
(the "Sellers") and Eastern Environmental Services, Inc. ("EESI")
(hereinafter referred to as the "New Jersey Agreement", and the New
York Agreement" and collectively as the "Agreements")
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Gentlemen:
We have agreed to amend certain terms and conditions of the Agreements
as set forth below. All terms not defined in this letter shall have the
meanings set forth in the Agreements.
1. (a) An existing U. S. income tax receivable in the approximate
amount of $20,000 presently owed to several of the Companies (the "Tax
Receivable") shall be treated as a "Receivable" if the Tax Receivable is paid in
full within one hundred fifty (150) days after the Closing (as hereinafter
defined). In such event, the Tax Receivable will be deemed a bona fide
receivable, and the dollar value of the EESI Stock, if any, deliverable at the
time of the adjustments in respect of the Closing Date Balance Sheet pursuant to
the Agreements (the "Adjustment Date"), will be further increased by the amount
of the Purchasers' receipts in respect of the Tax Receivable. If the Tax
Receivable is not paid in full within one hundred fifty (150) days after the
Closing, the Tax Receivable shall be deemed to have not been a bona fide
Receivable, and no amount shall be paid by the Purchaser in respect of it.
(b) The amount of cash that the Companies are required to have at
the Closing shall be decreased by $28,900 in respect of certain amounts owed to
the Companies by Purchaser for the so-called "CVS Containers and collection
services."
(c) The aggregate dollar value of the EESI Stock deliverable at the
Closing under both Agreements shall be $26,150,000 and the number of shares
delivered shall be calculated on the basis of a stock price of $31.50 per share.
The Purchase Price is allocated between the New York agreement and New Jersey
agreement as $6.55 million and $19.6 million, respectively. The number of shares
delivered shall be reduced or increased as of the Adjustment Date as provided in
Section 1.3 of the Agreements in respect of liabilities and Debt on the Closing
Balance Sheet (without regard to the further adjustment called for by the Letter
Agreement).
2. The term "restricted stock" as used in the Agreements shall mean
EESI Stock which is not transferable under Rule 144 before August 19, 1999. The
term "Closing Balance Sheet" shall mean the balance sheet dated as of June 30,
1998 and attached hereto as attachment A.
3. New Section 6.12 shall be added to Article VI of the New Jersey
Agreement, which shall read as follows:
"Section 6.12. New York Agreement Closing. Closing under the New
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York Agreement shall occur simultaneously with the Closing under this
Agreement notwithstanding the recitals to the Agreements or any other
provisions thereof."
4. New Section 6.12 shall be added to Article VI of the New York
Agreement, which shall read as follows:
"Section 6.12 New Jersey Agreement Closing. Closing under the New
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Jersey Agreement shall occur simultaneously with the Closing under
this Agreement notwithstanding the recitals to the Agreements or any
other provisions thereof."
5. The simultaneous closing under the New Jersey Agreement and the New
York Agreement shall be referred to as the Closing.
6. At the Closing, thirty percent (30%) of the EESI Stock deliverable
shall be held in escrow by Xxxxxx Xxxxxx & Associates, P.C. The Escrow Stock
shall be made up of restricted stock and shall be disbursed to Purchaser or to
Seller as follows:
(a) One third (1/3) of the Escrow Stock (the "First Tranche") shall
be disbursed to Sellers on the first anniversary of the Closing Date; provided,
however, that if Purchaser has made any indemnity claim or claims pursuant to
Article 8 of either of the Agreements and such claim or claims have not been
fully resolved by the first anniversary of the Closing Date, the Escrow Stock
included in the First Tranche shall be retained by the Escrow Agent, until the
resolution of any such claim or claims. To the event that any shares included in
the First Tranche has not been distributed at a time when the Second Tranche is
required to be distributed to Purchaser, such shares shall also be distributed
to Purchaser.
(b) Two thirds (2/3) of the Escrow Stock shall be distributed to the
Seller if the currently filed, (as amended from time to time) Major Modification
to New Jersey
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Department of Environmental Protection ("DEP") (No. 7140012-35) (the "Permit")
is granted by DEP, and to the Purchaser if the Permit is revoked or the Major
Modification, as amended from time to time is not granted and the time to appeal
has expired; provided, however that if the Major Modification is granted with a
legal capacity of less than 600 tons (of municipal solid waste and/or recycling)
per day, the number of shares distributed to the Seller shall be reduced by the
amount that is equal to the number of tons that is less than 600 multiplied by
$5,000, with the product being divided by the closing price of a share of EESI
Stock on the date that the shares are disbursed. The Purchaser shall in good
faith pursue the granting of the Major Modification Permit and shall consult
with the consultantant recommended by Sellers throughout the entire process.
Purchaser shall not amend the Major Modification to increase the daily tonnage
in excess of 600 tons per day without the consent of Seller or the release of
the EESI stock to Seller. Purchaser may legally operate the Transfer Station at
600 tons per day of MSW and/or recycling one year after the expiration date of
the currently issued permit. The Escrow Stock should be dispensed to Seller.
(c) If EESI is required to issue to Sellers additional shares of
EESI Stock in accordance with an increase in the Purchase Price, there will be a
corresponding increase in the number of shares required to be held in Escrow.
(d) If there is a decrease in the Purchase Price, then there will be
a corresponding cancellation of the Escrowed shares.
7. In connection with the Closing under the New Jersey Agreement,
Sellers shall convey to EESI all right, title, and interest in, and to, the name
"Interboro", Interboro Disposal & Recycling, and any variants thereof.
8. The assets to be purchased under Section 1.5 (s) of the New Jersey
Agreement shall include all right, title, and interest in, and to, the Real
Property located at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx. The term "Real
Property", as used in the New Jersey Agreement or any of its affiliates shall be
deemed to include this additional property for all purposes, including the
applicability of representations, warranties, covenants and indemnities. The
amount of cash that Sellers are required to have at the Closing shall be
decreased by $175,000 in respect of this additional Asset so long as an
appraisal received arriving at that amount shall have been delivered to
Purchaser.
9. Sellers acknowledge that all costs, expenses, liabilities and claims
incurred by EESI or any of its affiliates and relating to the matter captioned
IESI Corp. v. Eastern Environmental Services, Inc., et al. shall be Sellers'
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exclusive responsibility. Any such costs, expenses, liabilities, and claims
shall be treated as Liabilities for which Seller is obligated to indemnify
Purchaser under Section 8.3 of the Agreements.
10. The Sellers represent and warrant that set forth on Attachment B to
this letter agreement is a true and correct list of all assets, licenses, and
permits (including, without limitation, all containers and all other equipment
located at the Seller's Transfer Station at 00 Xxx Xxxxxx, Xxxxxxxx, Xxx Xxxx)
used by Sellers in connection with the asbestos collection business of the
Sellers conducted in the City of New York and all accounts receivable from that
business
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as of the date hereof, other than assets which are jointly used in the Asbestos
and the solid xxxxx xxxxxxx business (the "Asbestos Assets").
11. The Sellers consent and agree that, notwithstanding any provision of
the Agreements, EESI may assign its rights to purchase any or all of the
Asbestos Assets and any and all rights or claims that it may have under the
Agreements relating to the Asbestos Assets to a third-party after the Closing.
12. A new sentence shall be added at the end of Section 8.1 of each the
Agreements, which shall read in its entirety as follows:
In addition to (but without in any way limiting the preceding or any
other provision of this Agreement) the Sellers shall jointly,
severally and specifically indemnify, defend, protect and hold
harmless the Purchaser and each other person indemnified under this
Section 8.1 from and against any and all Liabilities, damages or
diminution in value resulting from (A) any assertion by the City of
Newark, State of New Jersey, in respect of solid waste received at the
Sellers' Newark transfer station from January 1, 1987 through the
present, together with all penalties and other amounts payable thereon
or in respect thereof, or (B) any failure of the Sellers to convey to
the Purchaser good and marketable title to the assets of Pandora
Sanitation, Inc. free of all Encumbrances and claims.
13. [Intentionally deleted].
14. A new Section 4.12 shall be added to each of the Agreements which
shall read as follows:
Section 4.12. Condition of Real Property. Prior to the Closing, the
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Sellers shall take all actions necessary so the Transfer Stations
shall have no more municipal solid waste, asbestos waste, and other
materials on the premises than the daily through put amount under the
applicable permit.
All other terms and conditions of the Agreements shall remain in full
force and effect.
If you agree that the terms contained in this letter sets forth an
accurate reflection of our understanding and you intend to be legally bound
hereby, please sign the duplicate copy and return the same to us.
Very truly yours,
EASTERN ENVIRONMENTAL
SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Accepted and Agreed to this 18 day of August , 1998
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/s/ Xxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
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Xxxxxx Xxxxxx Xxxxx Xxxxxx
Each is signing for himself and as a shareholder, partner, or officer of the
Sellers.
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