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PLAN AND AGREEMENT OF MERGER
AMONG
SYNAGRO TECHNOLOGIES, INC.,
SYNAGRO SUB FLORIDA, INC.,
A&J CARTAGE, INC. SOUTHEAST
XXXXX X. XXXXXXX
AND
XXXX X. XXXXXXX
DATED AS OF JUNE 23, 1998
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TABLE OF CONTENTS
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ARTICLE 1 MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Name and Continued Corporate Existence of Surviving Corporation . . . . . . . . . . . . . . . . 3
1.4.1 Name and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4.2 Federal Income Tax Treatment of Merger . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Governing Law and Articles of Incorporation of Surviving Corporation . . . . . . . . . . . . . 3
1.6 Bylaws of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Directors and Officers of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7.1 Directors of Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7.2 Officers of Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7.3 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Capital Stock of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Conversion of Securities upon Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9.2 Conversion of A&J Southeast Common Stock. . . . . . . . . . . . . . . . . . . . . 4
1.9.2.1 Post-Closing Adjustment to Exchange Value . . . . . . . . . . . . . . . . 5
1.9.3 Exchange of A&J Southeast Stock Certificates . . . . . . . . . . . . . . . . . . . 6
1.9.4 Conversion of, and Exchange of Certificates for Sub Corp Common Stock. . . . . . . 6
1.9.5 Sub Corp Transfer Books Closed . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10.1 Assets and Liabilities of Merging Corporations Become Those of Surviving
Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10.2 Conveyances to Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . 7
1.10.3 Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.11 Other Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.11.1 Opinion of Synagro Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.11.2 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND A&J SOUTHEAST . . . . . . . . . . . . . . 9
2.1 Representations and Warranties of the Stockholders and A&J Southeast . . . . . . . . . . . . . . 9
2.1.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.2 Agreement Authorized and its Effect on Other Obligations . . . . . . . . . . . . . 9
2.1.3 Capitalization of A&J Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.4 Ownership of A&J Southeast Shares . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.5 No Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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2.1.7 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.8 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.8.1 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.8.2 Machinery and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.8.3 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.8.4 Payables . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.6 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.7 Employee Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.8 Certain Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.9 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.10 Employee Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.12 Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.8.13 Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.8.14 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.8.15 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.8.16 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.9 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10 Absence of Certain Changes and Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10.1 Financial Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10.2 Property Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10.4 Capitalization Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.10.5 Labor Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.10.6 Other Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.11.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.11.2 Subchapter S Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.13 Title to and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.15 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.17 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.17.1 Environmental Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.17.2 Permits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.17.3 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.17.4 Past Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.17.5 Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.17.6 Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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2.1.17.7 Asbestos and PCBs . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.18 Compliance with Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.19 ERISA Plans or Labor Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.20 Investigations; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.21 Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.22 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.23 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.1 Stockholders Investment Suitability and Related Matters . . . . . . . . . . . . . . 21
2.2.2 Synagro Shares Not Registered . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.3 Reliance on Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.4 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.5 Permitted Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.6 Investor Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.7 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.8 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SYNAGRO . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Agreement Authorized and its Effect on Other Obligations . . . . . . . . . . . . . . . . . . . 22
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 Absence of Certain Changes and Events in Synagro . . . . . . . . . . . . . . . . . . . . . . . 24
3.5.1 Financial Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.5.2 Other Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.6 Synagro's Compliance with Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 Investigations; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.10 Nasdaq Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4 OBLIGATIONS PENDING CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Agreements of Synagro and A&J Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.1 Maintenance of Present Business. . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.2 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.3 Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.4 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.5 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1.6 Notice of Material Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.2 Additional Agreements of A&J Southeast and the Stockholders . . . . . . . . . . . . . . . . . . 26
4.2.1 Prohibition of Certain Employment Contracts . . . . . . . . . . . . . . . . . . . . 26
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4.2.2 Prohibition of Certain Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2.3 Prohibition of Certain Commitments . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2.4 Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2.5 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2.6 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2.7 No Amendment to Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . 27
4.2.8 No Issuance, Sale, or Purchase of Securities . . . . . . . . . . . . . . . . . . . 27
4.2.9 Prohibition on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 Agreements of Synagro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3.1 No Amendment to Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . 27
4.3.2 Notice of Material Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Conditions Precedent to Obligations of A&J Southeast and the
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1.1 Representations and Warranties of Synagro True at Effective Date . . . . . . . . . 28
5.1.2 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1.3 Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.1.4 Consent of Certain Parties in Privity With Synagro . . . . . . . . . . . . . . . . 28
5.1.5 Other Merger Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Conditions Precedent to Obligations of Synagro . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2.1 Representations and Warranties of A&J Southeast and the Stockholders True at
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2.2 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2.3 Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2.4 Consent of Certain Parties in Privity with A&J Southeast or the Stockholders . . . 29
5.2.5 Other Merger Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1 Indemnification by the Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Indemnification by Synagro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4 Termination of Indemnity, Representations and Warranties . . . . . . . . . . . . . . . . . . . 31
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ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Entirety; Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Counterparts and Facsimile Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Notices and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Table of Contents and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement"), dated as of June
23, 1998, is by and among Synagro Technologies, Inc., a Delaware corporation
("Synagro"), Synagro Sub Florida, Inc., a Florida corporation and a wholly
owned subsidiary of Synagro formed for the purpose of carrying out the
transactions contemplated hereby ("Sub Corp"), A&J Cartage, Inc. Southeast, a
Florida corporation ("A&J Southeast" or the "Surviving Corporation"), Xxxxx X.
Xxxxxxx ("Xxxxxxx"), and Xxxx X. Xxxxxxx ("Xxxxxxx," and together with Xxxxxxx,
the "Shareholders"). Sub Corp and A&J Southeast are hereinafter collectively
referred to as the "Merging Corporations."
W I T N E S S E T H:
WHEREAS, Synagro is a corporation duly organized and validly existing
under the laws of the State of Delaware, with its registered office at 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and its principal executive office at
0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000;
WHEREAS, the authorized capital stock of Synagro consists of (i)
10,000,000 shares of preferred stock, par value $.002 per share, of which
500,000 shares have been designated as "Preferred Stock-Junior Participating
Series A" and reserved for issuance upon exercise of Rights evidenced by the
certificates representing all outstanding shares of Synagro Common Stock,
though no such shares are issued or outstanding; all of which were issued and
outstanding; and (ii) 100,000,000 shares of common stock, par value $.002 per
share ("Synagro Common Stock"), of which, at June 6, 1998 9,082,638 shares were
issued and outstanding, and an additional 2,261,031 shares were reserved for
issuance pursuant to stock options and 600,000 shares were reserved for
issuance pursuant to outstanding warrants; at the same date, no shares of
Common Stock were held in Synagro's treasury;
WHEREAS, Sub Corp is a corporation duly organized and validly existing
under the laws of the State of Florida, with its registered office at 0000
Xxxxx Xxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000.
WHEREAS, the authorized capital stock of Sub Corp consists of 1,000
shares of common stock, $.01 par value per share, of which at the date hereof
1,000 shares were issued and outstanding and held beneficially and of record by
Synagro ("Sub Corp Common Stock");
WHEREAS, A&J Southeast is a corporation duly organized and validly
existing under the laws of the State of Florida, with its registered office at
and its principal executive office at 0000 Xxxx Xxxxxxxxx, Xxxx 0, Xxxxxxxxxx,
Xxxxxxx 00000.
8
WHEREAS, the authorized capital stock of A&J Southeast consists of
10,000 shares (the "A&J Southeast Shares") of common stock, $1.00 par value per
share ("A&J Southeast Stock"), 135 of which are issued and outstanding,100 of
which are held beneficially and of record by Xxxxxxx and 35 of which are held
of record and beneficially by Xxxxxxx;
WHEREAS, the Shareholders own all of the issued and outstanding A&J
Southeast Shares and, as such, the Shareholders expect to receive, directly or
indirectly, substantial benefit from the transactions contemplated hereby;
WHEREAS, the respective boards of directors of Sub Corp and A&J
Southeast deem it desirable and in the best interests of their respective
corporations and their respective stockholders, and the Shareholders deem it
desirable and in their best interest, that Sub Corp be merged with and into A&J
Southeast, pursuant to the applicable provisions of Section 607.224 of the
Florida General Corporation Act (the "Corporations Act") in exchange for the
consideration herein provided for, and have proposed, declared advisable, and
approved such merger pursuant to this Agreement which has been duly approved by
resolutions of the respective boards of directors of Sub Corp and A&J
Southeast;
WHEREAS, Synagro, A&J Southeast and others have executed a letter
agreement dated April 21, 1998 (the "Letter Agreement") relating to the
acquisition by Synagro of substantially all of the assets of A&J Southeast,
such acquisition being subject to change to accommodate the needs of the
parties thereto; and
WHEREAS, the parties desire to evidence their agreement with respect
to the form of and the other terms and provisions not set forth in the Letter
Agreement with respect to the transaction contemplated by the Letter Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and in order to set forth the terms
and conditions of the merger, the mode of carrying the same into effect, the
manner and basis of converting (i) the outstanding shares of Sub Corp Common
Stock into shares of A&J Southeast Stock, and (ii) the outstanding shares of
A&J Southeast Stock into shares of Synagro Common Stock, and such other details
and provisions as are deemed necessary or proper, the parties hereto agree as
follows:
ARTICLE 1
MERGER
1.1 Surviving Corporation. Subject to the adoption and approval
of this Agreement by the requisite vote of the stockholders of Sub Corp and to
the other conditions hereinafter set forth, Sub Corp and A&J Southeast shall
be, upon the Effective Date (as defined in Section 1.3 hereof), merged into a
single surviving corporation, which shall be A&J Southeast, one of the Merging
Corporations, which shall continue its corporate existence and remain a Florida
corporation governed by and subject to the laws of that state.
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1.2 Stockholder Approval. This Agreement shall be submitted for
adoption and approval by the stockholders of Sub Corp in accordance with its
articles of incorporation and the applicable laws of the State of Florida.
1.3 Effective Date. The merger shall become effective upon the
filing by A&J Southeast of Articles of Merger with the Department of State of
the State of Florida in accordance with the Corporations Act. The date upon
which the merger shall become effective is referred to in this Agreement as the
"Effective Date."
1.4 Name and Continued Corporate Existence of Surviving Corporation
1.4.1 Name and Existence. Effective as of the Effective
Date, the Articles of Incorporation of A&J Southeast (the "A&J
Southeast Articles"), the corporation whose corporate existence is to
survive the merger and continue thereafter as the surviving
corporation, shall be the Articles of Incorporation of the Surviving
Corporation and the identity, existence, purposes, powers, objects,
franchises, rights, and immunities of A&J Southeast, the surviving
corporation of the merger, shall continue unaffected and unimpaired by
the merger, and the corporate identity, existence, purposes, powers,
objects, franchises, rights, and immunities of Sub Corp shall be
wholly merged into A&J Southeast, and A&J Southeast shall be fully
vested therewith. Accordingly, on the Effective Date, the separate
existence of Sub Corp, except insofar as continued by statute, shall
cease.
1.4.2 Federal Income Tax Treatment of Merger. The merger
is intended to qualify as and, subject to the requirements of Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), shall be characterized as a tax-free reverse subsidiary
merger transaction described in Section 368(a)(2)(E) of the Code.
1.5 Governing Law and Articles of Incorporation of Surviving
Corporation. The laws of Florida shall continue to govern the Surviving
Corporation. On the Effective Date, the A&J Southeast Articles shall be the
articles of incorporation of A&J Southeast until further amended in the manner
provided by law.
1.6 Bylaws of Surviving Corporation. Effective as of the
Effective Date, the bylaws of A&J Southeast (the "A&J Southeast Bylaws") shall
be the bylaws of the Surviving Corporation until altered, amended, or repealed,
or until new bylaws shall be adopted in accordance with the provisions of law,
the A&J Southeast Articles and the A&J Southeast Bylaws.
1.7 Directors and Officers of Surviving Corporation
1.7.1 Directors of Surviving Corporation. The names and
addresses of the persons who, upon the Effective Date, shall
constitute the board of directors of the Surviving Corporation, and
who shall hold office until the first annual meeting of stockholders
of the Surviving Corporation next following the Effective Date, are as
follows:
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NAME ADDRESS
---- -------
Xxxxx X. Xxxxxxx 0000 Xxxxx 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000
Xxxx X. Xxxxxx 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
Xxxx X. Rome 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
1.7.2 Officers of Surviving Corporation. The names and
addresses of the persons who, upon the Effective Date, shall
constitute the officers of the Surviving Corporation, and who shall
hold their respective offices of the Surviving Corporation, subject to
the A&J Southeast Bylaws, from and after the Effective Date, are as
follows:
Xxxx X. Xxxxxx President
Xxxxx X. Xxxxxxx Vice President
Xxxx X. Rome Secretary and Treasurer
1.7.3 Vacancies. On or after the Effective Date, if a
vacancy shall exist for any reason in the board of directors or in any
of the offices of the Surviving Corporation, such vacancy shall be
filled in the manner provided in the A&J Southeast Articles and/or A&J
Southeast Bylaws.
1.8 Capital Stock of Surviving Corporation. The authorized
number of shares of capital stock of the Surviving Corporation, and the par
value, designations, preferences, rights, and limitations thereof, and the
express terms thereof, shall be as set forth in the A&J Southeast Articles.
1.9 Conversion of Securities upon Merger
1.9.1 General. The manner and basis of converting the
issued and outstanding shares of the capital stock of (A) Sub Corp
into shares of the capital stock of A&J Southeast and (B) A&J
Southeast into shares of the capital stock of Synagro and/or other
consideration herein provided for shall be as hereinafter set forth in
this Section 1.9.
1.9.2 Conversion of A&J Southeast Common Stock. On the
Effective Date, the A&J Southeast Shares, without any action on the
part of the holder thereof, shall automatically become and be
converted into the right to receive (i) certificates evidencing
288,447 fully paid and nonassessable shares of issued and outstanding
Synagro Common Stock (which, together with associated Preferred Stock
Purchase Rights, are hereinafter referred to as the "Synagro Shares"),
(ii) cash in the amount of $251,664 (the "Cash Amount"), and (iii) a
promissory note, substantially in the form of Exhibit A hereto, in the
principal amount of $241,580 (plus any amounts payable under Section
1.9.2(iii) of each of the Other Merger Agreements (as hereinafter
defined)) (the "Promissory Note"), upon surrender, in accordance with
Section 1.9.3 hereof, of certificates theretofore evidencing the A&J
Southeast Shares (the Synagro Shares together with the Cash Amount and
the Promissory Note collectively, the "Exchange Value").
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1.9.2.1 Post-Closing Adjustment to Exchange
Value
(a) Preparation of Closing Balance
Sheet. Not later than 60 days following the
Effective Date (as hereinafter defined),
Stockholders shall prepare and deliver to Synagro
for its review in accordance with this section a
balance sheet (the "Closing Balance Sheet") of A&J
Southeast prepared as of the Effective Date and
prepared in accordance with generally accepted
accounting principles ("GAAP") in a manner
consistent with the financial statements described
in Section 2.1.6 hereof. All of the parties hereto
shall cooperate fully with each other in the
preparation of the Closing Balance Sheet, and
Synagro shall have access at all reasonable times
to review workpapers, books and records relating to
the preparation of the Closing Balance Sheet.
(b) Right to Dispute Closing Balance
Sheet. Synagro shall have the right to dispute the
Closing Balance Sheet by giving notice of dispute
to Stockholders within 30 days after the Closing
Balance Sheet has been given to Synagro. Such
notice shall set forth in detail the reasons for
the dispute and Synagro's proposed adjustments to
the Closing Balance Sheet. If Synagro does not
give notice of dispute to Stockholders within such
30 day period in accordance with the foregoing, the
Closing Balance Sheet as prepared by Stockholders
shall become final and binding upon Synagro. If
Synagro does give notice of dispute to Stockholders
within such 30 day period, Stockholders and Synagro
shall endeavor in good faith to reach agreement on
all of the disputed items. If the parties are
unable to reach an agreement on the disputed items
during such 30 day period, then the disputed items
which have not been resolved shall be submitted to
the accounting firm of Xxxxxx Xxxxxxxx, Houston,
Texas for determination and resolution on the basis
of such procedures as such accounting firm, in its
sole judgement, deems applicable and appropriate,
taking into account GAAP and the terms of this
Agreement. Such accounting firm shall review the
disputed matters and as promptly as practicable
deliver to Stockholders and to Synagro a statement
setting forth its determination as to the proper
treatment of the matters in dispute, and such
determination shall be final and binding upon the
parties without any further right of appeal;
provided, however, neither such determination nor
any other provisions of this Section 1.9.2.1 shall
affect Synagro's right to seek indemnification for
any breaches of representations and warranties by
Stockholders pursuant to Article 7 hereof. All
charges of such accounting firm and other expenses
directly incurred in making such determination
shall be borne equally by the parties hereto.
(c) Adjustment of Consideration. In the
event that A&J Southeast's tangible assets net of
liabilities ("Net Assets") as shown on the
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Closing Balance Sheet, as finally prepared and
binding upon the parties in accordance with Sections
1.9.2.1(a) and (b) is less than the Net Assets on
April 30, 1998, then Synagro shall have the right
to give notice thereof to the Stockholders,
whereupon the Stockholders shall have 10 days to
refund to Synagro a cash amount equal to the amount
by which the Net Assets on April 30,1998 exceeds
the amount of the Net Assets as shown on the
Closing Balance Sheet, or cancel the Promissory
Note and promptly surrender it to Synagro whereupon
Synagro shall execute and deliver to Stockholders a
new promissory note, which note shall be in the
same from and contain the same terms and provisions
as the Promissory Note, in the aggregate principal
amount of $241,580 (plus any amounts payable under
Section 1.9.2(iii) of each of the Other Merger
Agreements) less the difference between the Net
Assets on April 30, 1998 and the Effective Date
(and any other adjustments pursuant to Section
1.9.2.1 of each of the Other Merger Agreements).
1.9.3 Exchange of A&J Southeast Stock Certificates. On
the Effective Date, the Stockholders shall surrender the certificates
representing the A&J Southeast Shares to Synagro, and Stockholders
shall be entitled upon such surrender to receive in exchange therefor
a certificate or certificates representing the Synagro Shares together
with the Cash Amount, and the Promissory Note (the "Exchange"), in the
respective amounts as shown on Exhibit 1.9.3 hereto.
1.9.4 Conversion of, and Exchange of Certificates for Sub
Corp Common Stock. On the Effective Date, each share of Sub Corp
Common Stock then issued and outstanding, without any action on the
part of the holder thereof (and after giving effect to the conversion
in the merger of all then outstanding shares of capital stock of A&J
Southeast into capital stock of Synagro and/or other consideration
herein provided for) shall automatically become and be converted into
one-tenth of one fully paid and nonassessable share of issued and
outstanding A&J Southeast Stock. On the Effective Date, Synagro shall
surrender the outstanding certificate theretofore representing shares
of Sub Corp Common Stock to A&J Southeast, A&J Southeast will cancel
the certificates representing the Sub Corp Common Stock, and shall
receive in exchange therefor a certificate or certificates
representing the number of whole shares of A&J Southeast Stock into
which the shares of Sub Corp Common Stock theretofore represented by
the certificate so surrendered shall have been converted as aforesaid.
1.9.5 Sub Corp Transfer Books Closed. Upon the Effective
Date, the stock transfer books of Sub Corp shall be deemed closed, and
no transfer of any certificates theretofore representing shares of Sub
Corp Common Stock shall thereafter be made or consummated.
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1.10 Assets and Liabilities
1.10.1 Assets and Liabilities of Merging Corporations
Become Those of Surviving Corporation. On the Effective Date, all
rights, privileges, powers, immunities, and franchises of each of the
Merging Corporations, both of a public and private nature, and all
property, real, personal, and mixed, and all debts due on whatever
account, as well as stock subscriptions and all other choices or
things in action, and all and every other interest of or belonging to
or due to either of the Merging Corporations, shall be taken by and
deemed to be transferred to and shall be vested in the Surviving
Corporation without further act or deed, and all such rights,
privileges, powers, immunities, and franchises, property, debts,
choices or things in action, and all and every other interest of each
of the Merging Corporations shall be thereafter as effectually the
property of the Surviving Corporation as they were of the respective
Merging Corporations, and the title to any real or other property, or
any interest therein, whether vested by deed or otherwise, in either
of the Merging Corporations, shall not revert or be in any way
impaired by reason of the merger, provided, however, that all rights
of creditors and all liens upon any properties of each of the Merging
Corporations shall be preserved unimpaired, and all debts,
liabilities, restrictions, obligations, and duties of the respective
Merging Corporations, including without limitation all obligations,
liabilities and duties as lessee under any existing lease, shall
thenceforth attach to the Surviving Corporation and may be enforced
against and by it to the same extent as if such debts, liabilities,
duties, restrictions and obligations had been incurred or contracted
by it. Any action or proceeding pending by or against either of the
Merging Corporations may be prosecuted to judgment as if the merger
had not taken place, or the Surviving Corporation may be substituted
in place of either of the Merging Corporations.
1.10.2 Conveyances to Surviving Corporation. The Merging
Corporations hereby agree, respectively, that from time to time, as
and when requested by the Surviving Corporation, or by its successors
and assigns, they will execute and deliver or cause to be executed and
delivered, all such deeds, conveyances, assignments, permits, licenses
and other instruments, and will take or cause to be taken such further
or other action as the Surviving Corporation, its successors or
assigns, may deem necessary or desirable to vest or perfect in or
confirm to the Surviving Corporation, its successors and assigns,
title to and possession of all the property, rights, privileges,
powers, immunities, franchises, and interests referred to in Section
1.10.1 and otherwise carry out the intent and purposes of this
Agreement.
1.10.3 Accounting Treatment. The assets and liabilities
of the Merging Corporations shall be taken up on the books of the
Surviving Corporation in accordance with generally accepted accounting
principles, and the capital surplus and retained earnings accounts of
the Surviving Corporation shall be determined, in accordance with
generally accepted accounting principles, by the board of directors of
the Surviving Corporation. Nothing herein shall prevent the board of
directors of the Surviving Corporation from making any future changes
in its accounts in accordance with law.
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1.11 Other Closing Deliveries. Contemporaneously with the
Exchange, (i) Synagro shall execute and deliver to Stockholders the Promissory
Note; (ii) Synagro shall deliver to the Stockholders the certificate required
by Section 5.1.1 hereof, and the Stockholders shall deliver to Synagro the
certificate required by Section 5.2.1 hereof; and (iii) Synagro and the
Stockholders will deliver to one another the opinions of counsel described
below:
1.11.1 Opinion of Synagro Counsel. Xxxxxx & Xxxxxx,
L.L.P., counsel for Synagro, shall issue an opinion to the
Stockholders, in form and substance satisfactory to the Stockholders,
to the effect that (i) Synagro has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware; (ii) all corporate proceedings required to be
taken by or on the part of Synagro to authorize the execution of this
Agreement and the implementation of the transactions contemplated
hereby have been taken; (iii) the shares of Synagro Common Stock which
are to be delivered in accordance with this Agreement will, when
issued, be validly issued, fully paid and nonassessable outstanding
securities of Synagro; (iv) this Agreement and the Promissory Note to
which Synagro is a party have been duly executed and delivered by, are
the legal, valid and binding obligation of, and are enforceable
against Synagro in accordance with their respective terms, except as
enforceability may be limited by (a) equitable principles of general
applicability or (b) bankruptcy, insolvency, reorganization,
fraudulent conveyance or similar laws affecting the rights of
creditors generally; provided that said opinion shall be limited to
federal law, the laws of the State of Texas and the general corporate
law of the State of Delaware; and (v) except as specified by such
counsel (such exceptions to be acceptable to A&J Southeast) such
counsel does not know of any material litigation, proceedings, or
governmental investigation pending or threatened against or relating
to Synagro, any of its subsidiaries, or their respective properties or
businesses in which it is sought to restrain, prohibit or otherwise
affect the consummation of the transactions contemplated by this
Agreement. Such opinion also shall cover such other matters incident
to the transactions herein contemplated as A&J Southeast and its
counsel may reasonably request. In rendering such opinion, such
counsel may rely upon (i) certificates of public officials and of
officers of Synagro as to matters of fact and (ii) the opinion or
opinions of other counsel, which opinions shall be reasonably
satisfactory to A&J Southeast, as to matters other than federal or
Texas law.
1.11.2 Opinion of Counsel. Domnitz, Mawicke, Goisman &
Xxxxxxxxx, S.C., counsel to A&J Southeast and the Stockholders, shall
issue an opinion to Synagro in form and substance satisfactory to
Synagro, to the effect that (i) A&J Southeast has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Florida; (ii) all corporate proceedings
required to be taken by or on the part of the Stockholders to
authorize the execution of this Agreement and the implementation of
the transactions contemplated hereby have been taken; (iii) all
outstanding shares of the A&J Southeast Stock have been validly issued
and are fully paid and nonassessable; (iv) this Agreement has been
duly executed and delivered by, and are the legal, valid and binding
obligation of the Stockholders, and are enforceable against the
Stockholders in accordance with its terms, except as the
enforceability may be limited by (a) equitable principles of
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general applicability or (b) bankruptcy, insolvency, reorganization,
fraudulent conveyance or similar laws affecting the rights of
creditors generally; and (v) except as specified by such counsel (such
exceptions to be acceptable to Synagro) such counsel does not know of
any material litigation, proceedings or governmental investigation,
pending or threatened against or relating to A&J Southeast, its
properties or businesses, or the Stockholders in which it is sought to
restrain, prohibit or otherwise affect consummation of the
transactions contemplated by this Agreement. Such opinion shall also
cover such other matters incident to the transactions herein
contemplated as Synagro and its counsel may reasonably request. In
rendering such opinion, such counsel may rely upon (i) certificates of
public officials and of officers of A&J Southeast as to matters of
fact and (ii) on the opinion or opinions of other counsel, which
opinions shall be reasonably satisfactory to Synagro, as to matters
other than federal or Florida law.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS AND A&J SOUTHEAST
2.1 Representations and Warranties of the Stockholders and A&J
Southeast. The Stockholders and A&J Southeast jointly and severally represent
and warrant to Synagro as follows:
2.1.1 Organization and Standing. A&J Southeast is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, has full requisite corporate
power and authority to carry on its business as it is currently
conducted and to own and operate the properties currently owned and
operated by it, and is duly qualified or licensed to do business and
is in good standing as a foreign corporation authorized to do business
in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be
so qualified or licensed would not have a material adverse effect on
its financial condition, properties or business.
2.1.2 Agreement Authorized and its Effect on Other
Obligations. The execution, delivery and performance of this
Agreement have been duly and validly authorized by all necessary
corporate action on the part of A&J Southeast. This Agreement is a
valid and binding obligation of A&J Southeast and the Stockholders
enforceable against A&J Southeast and the Stockholders in accordance
with its terms, except as such enforceability may be limited by (a)
equitable principles of general applicability or (b) bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws
affecting the rights of creditors generally. The execution, delivery
and performance of this Agreement by A&J Southeast and the
Stockholders will not conflict with or result in a violation or breach
of any term or provision of, nor constitute a default under (i) the
Articles of Incorporation or Bylaws of A&J Southeast or (ii) to the
extent such conflict, violation, breach or default could have a
material adverse effect on the business, operations, assets or
financial condition of A&J Southeast or the Stockholders, any
obligation, indenture, mortgage, deed of trust, lease,
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contract or other agreement to which A&J Southeast or the Shareholders
are a party or by which A&J Southeast or the Stockholders or their
respective properties are bound.
2.1.3 Capitalization of A&J Southeast. The authorized
capitalization of A&J Southeast consists of 10,000 shares of A&J
Southeast Stock, 100 shares of which are issued and outstanding and
all of which are held beneficially and of record by the Stockholders.
A&J Southeast does not have any outstanding options, warrants, calls
or commitments of any character relating to its capital stock. All
issued and outstanding shares of A&J Southeast Stock are validly
issued, fully paid and non-assessable. None of the outstanding shares
of A&J Southeast Stock is subject to any voting trust, voting
agreement or other agreement or understanding with respect to the
voting thereof, nor is any proxy in existence with respect thereto.
2.1.4 Ownership of A&J Southeast Shares. The
Shareholders hold good and valid title to all of the A&J Southeast
Shares free and clear of all Encumbrances. The Shareholders possess
full authority and legal right to sell, transfer and assign to Synagro
the A&J Southeast Shares, free and clear of all Encumbrances. Upon
transfer to Synagro by the Stockholders of the A&J Southeast Shares,
Synagro will own the A&J Southeast Shares free and clear of all
Encumbrances. There are no claims pending or, to the knowledge of A&J
Southeast, and the Stockholders, threatened, against A&J Southeast or
the Stockholders that concern or affect title to the A&J Southeast
Shares, or that seek to compel the issuance of capital stock or other
securities of A&J Southeast.
2.1.5 No Subsidiaries. As of the date hereof, A&J
Southeast has no subsidiaries, whether wholly or partially owned, and
does not own, beneficially or of record, or have any obligation to
acquire, any material amount of, or have any material investment in,
any stock, partnership or membership interest or other equity or debt
securities of any other business, enterprise or entity.
2.1.6 Financial Statements. The Shareholders have
delivered to Synagro A&J Southeast's audited balance sheet and related
statements of income, retained earnings and cash flows, with appended
notes which are an integral part of such statements, as of and for the
twelve months ended December 31, 1997 (the "Audited A&J Southeast
Financial Statements"), and also has delivered to Synagro copies of
A&J Southeast's unaudited balance sheet and related statements of
income, retained earnings and cash flows as of and for the four-month
period ending April 30, 1998 (the "Unaudited A&J Southeast Financial
Statements", and, together with the Audited A&J Southeast Financial
Statements" the "A&J Southeast Financial Statements"). Copies of the
A&J Southeast Financial Statements are attached hereto as Schedule
2.1.6. All of the A&J Southeast Financial Statements are complete in
all material respects (except, with respect to the Unaudited A&J
Southeast Financial Statements, for the omission of notes and
schedules), present fairly the financial condition of A&J Southeast as
of the dates indicated, and the results of operations for the
respective periods indicated, and have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis, except as noted therein and subject, in
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the case of the Unaudited A&J Southeast Financial Statements, to
normal year-end adjustments and other adjustments described therein;
in addition, the Unaudited A&J Southeast Financial Statements, though
unaudited, include all adjustments which A&J Southeast, the
Stockholders and consider necessary for a fair presentation of A&J
Southeast's results for that period. December 31, 1997 may sometimes
be hereinafter referred to as the "Balance Sheet Date".
2.1.7 Liabilities. Except as disclosed on Schedule 2.1.7
hereto, A&J Southeast has no pending or, to A&J Southeast's and the
Shareholders' knowledge, threatened liabilities or obligations, either
accrued, absolute or contingent, nor does A&J Southeast or
Stockholders have any knowledge of any potential liabilities or
obligations, which would materially adversely affect the value and
conduct of the business of A&J Southeast, other than those (i)
reflected or reserved against in the Unaudited A&J Southeast Financial
Statements or (ii) incurred in the ordinary course of business since
the Balance Sheet Date.
2.1.8 Additional Information. Attached as Schedule 2.1.8
hereto are true, complete and correct lists of the following items:
2.1.8.1 Real Estate. All real property and
structures thereon (i) owned, or subject to a contract of
purchase and sale, by A&J Southeast, with a description of
the nature and amount of any Encumbrances thereon created by
A&J Southeast or Stockholders, or (ii) leased, or subject to
a lease commitment, by A&J Southeast, with a description of
the terms of each lease and lease commitment. The term
"Encumbrances" means all liens, security interests, pledges,
mortgages, deeds of trust, claims, rights of first refusal,
options, charges, restrictions or conditions to transfer or
assignment, liabilities, obligations, privileges, equities,
easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind or nature;
2.1.8.2 Machinery and Equipment. All machinery,
vehicles, trailers, transportation equipment, tools,
equipment, furnishings, and fixtures (i) owned or subject to
a contract of purchase and sale, by A&J Southeast with a
description of the nature and amount of any Encumbrances
thereon or (ii) leased, or subject to a lease commitment, by
A&J Southeast, with a description of each lease and lease
commitment;
2.1.8.3 Receivables. All accounts and notes
receivable of A&J Southeast, together with (i) aging
schedules by invoice date and due date, (ii) the amounts
provided for as an allowance for bad debts, (iii) the
identity and location of any asset in which A&J Southeast
holds a security interest to secure payment of the underlying
indebtedness, and (iv) a description of the nature and amount
of any Encumbrance on such accounts and notes receivable;
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2.1.8.4 Payables. All accounts and notes
payable of A&J Southeast, together with an appropriate aging
schedule;
2.1.8.5 Insurance. All insurance policies or
bonds currently maintained by A&J Southeast, including title
insurance policies, and those covering A&J Southeast's
properties, machinery, equipment, fixtures, employees and
operations, as well as a listing of any deductibles,
premiums, audit adjustments or retroactive adjustments due or
pending on such policies or any predecessor policies;
2.1.8.6 Contracts. All sludge contracts,
bulking agent contracts and all other material contracts to
which A&J Southeast is a party which are to be performed in
whole or in part after the date hereof;
2.1.8.7 Employee Compensation Plans. All bonus,
incentive compensation, deferred compensation,
profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other fringe benefit plans,
arrangements or trust agreements of A&J Southeast, whether or
not subject to ERISA (as hereinafter defined), together with
copies of the most recent reports with respect to such plans,
arrangements, or trust agreements filed with any governmental
agency, and all Internal Revenue Service determination
letters that have been received with respect to such plans;
2.1.8.8 Certain Salaries. The names and salary
rates of all present employees of A&J Southeast who have
salaries in excess of $25,000, and all arrangements with
respect to any bonuses to be paid to them from and after the
date of this Agreement;
2.1.8.9 Bank Accounts. The name of each bank in
which A&J Southeast has an account, the account numbers of
each account and the names of all persons authorized to draw
thereon;
2.1.8.10 Employee Agreements. Any collective
bargaining agreements of A&J Southeast with any labor union
or other representative of employees, including amendments,
supplements, and written or oral understandings, and all
employment and consulting and severance agreements of A&J
Southeast;
2.1.8.11 Intellectual Property. All patents,
trademarks, copyrights and other intellectual property rights
owned, licensed, or used by A&J Southeast;
2.1.8.12 Trade Names. All trade names, assumed
names and fictitious names used or held by A&J Southeast,
whether and where such names are registered, and where used;
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2.1.8.13 Promissory Notes. All long-term and
short-term promissory notes, installment contracts, loan
agreements, credit agreements, and any other agreements of
A&J Southeast relating thereto or with respect to collateral
securing the same;
2.1.8.14 Guaranties. All indebtedness,
liabilities and commitments of others and as to which A&J
Southeast is a , endorser, co-maker, surety, or accommodation
maker, or contingently liable therefor and all letters of
credit, whether stand-by or documentary, issued by any third
party;
2.1.8.15 Leases. All material leases to which
A&J Southeast is a party whether as lessor or lessee not
previously described on Schedule 2.1.8.1 or Schedule 2.1.8.2;
and
2.1.8.16 Permits. All permits, authorizations,
variances, waivers, exemptions, rights-of-way, franchises,
ordinances, approvals, certifications, licenses,
registrations, orders, decrees and other similar rights
applicable to current operations conducted by A&J Southeast
(collectively, "Permits") and all environmental audits,
assessments, investigations and reviews conducted by or on
behalf of A&J Southeast within the last five years on any
property owned or used by it.
2.1.9 No Defaults. Except as set forth on Schedule 2.1.9,
A&J Southeast is not in default in any material obligation or covenant on
its part to be performed under any obligation, lease, contract, order,
plan or other agreement or arrangement.
2.1.10 Absence of Certain Changes and Events. Other than as
a result of the transactions contemplated by this Agreement, since the
Balance Sheet Date, there has not been:
2.1.10.1 Financial Change. Any material adverse
change in the financial condition, backlog, operations,
assets, liabilities or business of A&J Southeast;
2.1.10.2 Property Damage. Any material damage,
destruction, or loss to the business or properties of A&J
Southeast (whether or not covered by insurance);
2.1.10.3 Dividends. Except as set forth on
Schedule 2.1.10.3, any declaration, setting aside, or payment
of any dividend or other distribution in respect of the A&J
Southeast Stock, or any direct or indirect redemption,
purchase or any other acquisition by A&J Southeast of any
such stock;
2.1.10.4 Capitalization Change. Any change in
the capital stock or in the number of shares or classes of
the authorized or outstanding capital stock of A&J Southeast
as described in Section 2.1.3 hereof;
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2.1.10.5 Labor Disputes. Except as disclosed on
Schedule 2.1.16, any labor disputes involving A&J Southeast;
or
2.1.10.6 Other Material Changes. Except as set
forth on Schedule 2.1.10.6, any other event or condition
known to A&J Southeast or the Stockholders pertaining to and
adversely affecting the operations, assets or business of A&J
Southeast which could constitute a material adverse change in
the business, assets or financial condition of A&J Southeast,
other than events or conditions which are of a general or
industry wide nature and of general public knowledge, or
which have been disclosed to Synagro in writing.
2.1.11 Taxes.
2.1.11.1 General. All federal, state and local
income, value added, sales, use, franchise, gross revenue,
turnover, excise, payroll, property, employment, customs
duties (collectively, "Taxes") and any and all other tax
returns, reports, and estimates have been filed with
appropriate governmental agencies, domestic and foreign, by
A&J Southeast for each period for which any such returns,
reports, or estimates were due; all taxes shown by such
returns to be payable and, except as set forth in Schedule
2.1.11, any and all other taxes due and payable have been
paid other than those being contested in good faith by A&J
Southeast; and the tax provisions reflected in the Unaudited
A&J Southeast Balance Sheet are adequate, in accordance with
generally accepted accounting principles, to cover
liabilities of A&J Southeast at the date thereof for all
taxes, including any assessed interest, assessed penalties
and additions to taxes of any character whatsoever applicable
to A&J Southeast or its assets or business. No waiver of any
statute of limitations executed by A&J Southeast with respect
to any income or other tax is in effect for any period.
Except as set forth on Schedule 2.1.11 hereto, the income tax
returns of A&J Southeast have never been examined by the
Internal Revenue Service or the taxing authorities of any
other jurisdiction. There are no tax liens on any assets of
A&J Southeast except for taxes not yet currently due.
2.1.11.2 Subchapter S Matters. A&J Southeast (i)
made an effective, valid and binding S election pursuant to
Section 1362 of the Code effective January 30, 1997 (ii) has
maintained its status as an S Corporation pursuant to Section
1361 of the Code without lapse or interruption since the date
of said election, and (iii) made and continuously maintained,
since the effective date of its federal S election, elections
similar to the federal S election in each state or local
jurisdiction where A&J Southeast does business or is required
to file a tax return to the extent such states or
jurisdictions permit such elections. A&J Southeast neither
is nor will or can be subject to the built-in gains tax under
Section 1374 of the Code or any similar corporate level tax
imposed on A&J Southeast by any taxing authority. A&J
Southeast (i) has not adopted or used LIFO as a method of
accounting for inventory, and (ii) has no other tax item,
election, agreement or
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adjustment which will accelerate or trigger income or
deferred deductions of A&J Southeast as a result of
termination of A&J Southeast's status as an S Corporation.
2.1.12 Intellectual Property. A&J Southeast owns or
possesses licenses to use all patents, patent applications, trademarks
and service marks (including registrations and applications therefor),
trade names, copyrights and written know-how, trade secrets and all
other similar proprietary data and the goodwill associated therewith
(collectively, the "Intellectual Property") that are either material
to its business or that are necessary for the rendering of any
services rendered by it and the use or sale of any equipment or
products used or sold by it, including all such Intellectual Property
listed in Schedule 2.1.8 hereto. The Intellectual Property so owned
or possessed by A&J Southeast is owned or licensed free and clear of
any Encumbrance. A&J Southeast has not granted to any other person
any license to use any Intellectual Property. A&J Southeast has not
received any notice of infringement, misappropriation, or conflict
with, the intellectual property rights of others in connection with
the use by it of the Intellectual Property or otherwise in connection
with the operation of its business.
2.1.13 Title to and Condition of Assets. A&J Southeast has
good, indefeasible and marketable title to all its properties,
interests in properties and assets, real and personal, reflected in
the Unaudited A&J Southeast Financial Statements or in Schedule 2.1.8
hereto, free and clear of any Encumbrance, except (i) Encumbrances
reflected in Schedule 2.1.8 hereto, (ii) liens for current taxes not
yet due and payable, and (iii) such imperfections of title, easements
and Encumbrances, if any, as are not substantial in character, amount,
or extent and do not and will not materially detract from the value,
or interfere with the present use, of the property subject thereto or
affected thereby, or otherwise materially impair business operations
(the matters described in clauses (ii) and (iii) collectively,
"Permitted Encumbrances"). All leases pursuant to which A&J Southeast
leases (whether as lessee or lessor) any substantial amount of real or
personal property are in good standing, valid, and effective; and
there is not, under any such leases, any existing default or event of
default or, to A&J Southeast's and the Shareholders' knowledge, any
event which with notice or lapse of time, or both, would constitute a
default by A&J Southeast and in respect to which A&J Southeast has not
taken adequate steps to prevent a default from occurring. The
buildings and premises of A&J Southeast that are used in its business
are in good operating condition and repair, subject only to ordinary
wear and tear. All equipment, machinery, vehicles, trailers,
transportation equipment, tools and other major items of equipment of
A&J Southeast are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted,
and are free from any known defects except as may be repaired by
routine maintenance and such minor defects as will not substantially
interfere with the continued use thereof in the conduct of normal
operations. To A&J Southeast's and the Shareholders' knowledge, all
such assets conform in all material respects to all applicable laws
governing their use. Except as set forth in Schedule 2.1.18 hereto,
no notice of any violation of any law, statute, ordinance, or
regulation relating to any such assets has been (or are being)
received by A&J Southeast or the Stockholders, except such as have
been fully complied with.
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2.1.14 Contracts. All material contracts, leases, plans
or other arrangements to which A&J Southeast is a party, by which it
is bound or to which A&J Southeast or the assets of A&J Southeast are
subject are in full force and effect and constitute valid and binding
obligations of A&J Southeast. A&J Southeast is not, and to the
knowledge of A&J Southeast and the Stockholders, no other party to
any such contract, lease, plan or other arrangement, is in default of
any material obligation or provision thereunder, and, to A&J
Southeast's and the Shareholders' knowledge, no event has occurred
which (with or without notice, lapse of time, or the happening of any
other event) would constitute a material default thereunder. No
contract has been entered into on terms which could reasonably be
expected to have a material adverse effect on A&J Southeast. Neither
A&J Southeast nor the Stockholders has received any information that
would cause A&J Southeast or the Stockholders to conclude that any
customer of A&J Southeast will (or is likely to) cease doing business
with A&J Southeast (or any successors thereto) as a result of the
consummation of the transactions contemplated hereby.
2.1.15 Licenses and Permits. Except as set forth on
Schedule 2.1.15, A&J Southeast possesses all Permits necessary under
law or otherwise for it to conduct its business as now being conducted
and to construct, own, operate, maintain and use its assets in the
manner in which they are now being constructed, operated, maintained
and used. Each of such Permits and the rights of A&J Southeast with
respect thereto is (and will be following the consummation of the
transactions contemplated hereby) valid and subsisting, in full force
and effect, and enforceable by A&J Southeast subject to administrative
powers of regulatory agencies having jurisdiction. Except as set
forth in Schedule 2.1.15 hereto, A&J Southeast is in compliance in all
material respects with the terms of such Permits and there is no
pending, or to A&J Southeast's and the Shareholders' knowledge,
threatened claim that A&J Southeast is not in compliance with any
Permit. Except as set forth in Schedule 2.1.15 hereto, none of such
Permits have been, or to the knowledge of A&J Southeast and the
Stockholders, are threatened to be, revoked, canceled, suspended or
modified.
2.1.16 Litigation. Except as set forth on Schedule 2.1.16
hereto, there is no suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation pending
to which A&J Southeast is a party or, to the knowledge of A&J
Southeast and the Stockholders, might become a party or which
particularly affect A&J Southeast. Neither A&J Southeast nor the
Shareholders have received notice of any pending change in the zoning
or building ordinances directly affecting the real property or
leasehold interests of A&J Southeast, nor, to the knowledge of A&J
Southeast and the Stockholders, is any such change threatened.
2.1.17 Environmental Compliance.
2.1.17.1 Environmental Conditions. Except as set
forth in Schedule 2.1.17 hereto, to the best knowledge of A&J
Southeast and the Stockholders, there are no environmental
conditions or circumstances, including,
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without limitation, the presence or release of any hazardous
substance, on any property presently or previously owned by
A&J Southeast, or on any property to which hazardous
substances or waste generated by the operations of A&J
Southeast or by the use of the assets of A&J Southeast were
disposed of. The term "hazardous substance" means (i)
asbestos, polychlorinated biphenyls, urea formaldehyde, lead
based paint, radon gas, petroleum, oil, solid waste,
pollutants and contaminants, and (ii) any chemicals,
materials, wastes or substances that are defined, regulated,
determined or identified as toxic or hazardous in any
Applicable Environmental Laws (as hereinafter defined),
including, but not limited to, substances defined as
"hazardous substances," "hazardous materials," or "hazardous
waste" in CERCLA, RCRA, HMTA (as such terms are hereinafter
defined), or comparable state and local statutes or in the
regulations adopted and promulgated pursuant to said
statutes;
2.1.17.2 Permits, etc. Except as set forth in
schedule 2.1.17 hereto, to the best knowledge of A&J
Southeast and the Stockholders, A&J Southeast has in full
force and effect all environmental permits, licenses,
approvals and other authorizations required to conduct its
operations, other than those that are not material to its
business or operations, and is operating in substantial
compliance thereunder;
2.1.17.3 Compliance. To the best knowledge of
A&J Southeast and the Stockholders, except as set forth on
Schedule 2.1.17 hereto, neither the operations of A&J
Southeast nor the use of the assets of A&J Southeast violate
in any respect any applicable federal, state or local law,
statute, ordinance, rule, regulation, order or notice
requirement pertaining to (a) the condition or protection of
air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or
any activity which affects the environment, or (c) the
regulation of any pollutants, contaminants, waste, or
substances (whether or not hazardous or toxic), including,
without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et
seq.) ("CERCLA"), the Hazardous Materials Transportation Act
(49 U.S.C. Section 1801 et seq.) ("HMTA"), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) ("RCRA"), the Clean Water Act (33 U.S.C. 1251 et seq.),
the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (17 U.S.C. Section 2601 et seq.), the
Federal Insecticide Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), the Safe Drinking Water Act (42 U.S.C.
Section 201 and Section 300f et seq.), the Rivers and Harbors
Act (33 U.S.C. Section 401 et seq.), the Oil Pollution Act
(33 U.S.C. Section 2701 et seq.) and analogous federal,
interstate, state and local requirements, as any of the
foregoing may have been amended or supplemented from time to
time (collectively, the "Applicable Environmental Laws"),
other than violations that in the aggregate are not material
to the business or operations of A&J Southeast;
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2.1.17.4 Past Compliance. To the best knowledge
of A&J Southeast and the Stockholders, except as set forth in
Schedule 2.1.17 hereto, none of the operations or assets of
A&J Southeast has ever been conducted or used in such a
manner as to constitute a violation of any of the Applicable
Environmental Laws, other than violations that in the
aggregate are not material to the business or operations of
A&J Southeast;
2.1.17.5 Environmental Claims. Except as set
forth in Schedule 2.1.17 hereto, no notice has been served on
A&J Southeast or the Stockholders from any entity,
governmental agency or individual regarding any existing,
pending or threatened investigation, inquiry, enforcement
action or litigation related to alleged violations under any
Applicable Environmental Laws, or regarding any claims for
remedial obligations, response costs or contribution under
any Applicable Environmental Laws;
2.1.17.6 Renewals. Except as set forth on
Schedule 2.1.17 hereto, neither A&J Southeast nor the
Stockholders knows of any reason A&J Southeast or its
successors would not be able to renew any of the permits,
licenses, or other authorizations required pursuant to any of
the Applicable Environmental Laws to operate and use any of
assets of A&J Southeast for their current purposes and uses;
and
2.1.17.7 Asbestos and PCBs. Except as set forth
on Schedule 2.1.17 hereto, to the best knowledge of A&J
Southeast and the Stockholders, no material amounts of
friable asbestos currently exist on any property owned or
operated by A&J Southeast, nor do polychlorinated biphenyls
exist in concentrations of 50 parts per million or more in
electrical equipment owned or being used by A&J Southeast in
the operations or on the properties of A&J Southeast.
2.1.18 Compliance with Other Laws. Except as set forth on
Schedule 2.1.18, A&J Southeast is not in violation of or in default
with respect to, or in alleged violation of or alleged default with
respect to, the Occupational Safety and Health Act (29 U.S.C. Sections
651 et seq.), as amended, or any other applicable law or any
applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality,
other than such violations, defaults or delinquencies that in the
aggregate are not material to the business or operations of A&J
Southeast.
2.1.19 ERISA Plans or Labor Issues. Schedule 2.1.8 sets
forth a brief description all Employee Compensation Plans which A&J
Southeast maintains, to which A&J Southeast contributes or has an
obligation to contribute, or with respect to which A&J Southeast has
any liability or reasonable expectation of liability (all such plans,
policies, programs and arrangements individually, a "Plan" and
collectively, "Plans") as of the Effective Date.
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Except as set forth in Schedule 2.1.8, A&J Southeast does not maintain
any Plans. For purposes of this Section 2.1.19, all references to A&J
Southeast shall be deemed to refer to A&J Southeast and any trade or
business, whether or not incorporated, which together with A&J
Southeast would be deemed or treated as a "single employer" within the
meaning of Section 414 of the Code or ERISA Section 4001. None of the
Plans (i) is an "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), (ii) is subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code or Section 302
of ERISA, (iii) is a plan of the type described in Section 4063 of
ERISA or Section 413(c) of the Code, (iv) is a "multiemployer plan"
(as defined in Section 3(37) of ERISA), (v) provides for medical,
dental, life, disability or other insurance benefits to current or
future retired employees or former employees of A&J Southeast (other
than as required for group health plan continuation coverage under
Code Section 4980B or similar state law), (vi) obligates A&J Southeast
to pay any severance or similar benefits solely as a result of a
change in control or ownership within the meaning of Code Section
280G, or (vii) is a "voluntary employees' beneficiary association"
within the meaning of Code Section 501(c)(9). Each Plan is, in all
material respects, in compliance, and has been administered,
maintained and funded in all material respects in accordance, with the
applicable provisions of ERISA and the Code and all other applicable
laws, rules and regulations. To the best knowledge of A&J Southeast
and the Stockholders, neither A&J Southeast nor any fiduciary to any
Plan, with respect to any Plan, has (i) engaged in any prohibited
transaction under ERISA or the Code; (ii) breached any fiduciary duty
owed by it; or (iii) failed to file and distribute, timely and
properly, all reports and information required to be filed or
distributed in accordance with ERISA or the Code. There are no
pending or threatened, actions, suits, investigations, arbitrations or
claims with respect to any Plan (other than routine claims for
benefits) which could reasonably be expected to result in material
liability to A&J Southeast, and there are no changes in contributions
or benefit levels that have been implemented, or negotiated and not
yet been implemented, with respect to any Plan that have not been
disclosed in Schedule 2.1.8. All contributions or premiums which are
due on or before the Effective Date with respect to the Plans have
been or will be timely paid by A&J Southeast. None of the Plans
requires A&J Southeast to make any bonus, severance or other payment
to or on behalf of any current or former employee, officer or
director of A&J Southeast solely by reason of the change of ownership
or control contemplated by this Agreement. Each Plan may be amended or
terminated after the Effective Date without contravening the terms of
such Plan or any applicable laws and without material liability to the
adopting employer. With respect to each Plan, A&J Southeast has
provided Synagro with true, complete and correct copies, to the extent
applicable, of (i) all documents pursuant to which the Plans are
maintained, funded and administered, (ii) the most recent annual
report (Form 5500 series) filed with the Internal Revenue Service
(with attachments including, without limitation, audited financial
statements), and (iii) all rulings, determinations, notices and
opinions issued by any governmental entity in the last three years
(and pending requests for governmental rulings, determinations, and
opinions). A&J Southeast has not engaged in any unfair labor
practices which could reasonably be expected to result in a material
adverse effect on the operations or assets of A&J Southeast. Except
as described in Schedule 2.1.16 hereto, A&J Southeast
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has no dispute with any of the existing or former employees of A&J
Southeast. There are no labor or employment disputes affecting A&J
Southeast or, to the knowledge of A&J Southeast and the Stockholders,
any disputes threatened by current or former employees of A&J
Southeast. There will not be any penalty for the termination of any
Plan listed on Schedule 2.1.8 or any other item listed in Section
2.1.8.7.
2.1.20 Investigations; Litigation. Except as set forth in
Schedule 2.1.20 hereto, neither A&J Southeast nor the Stockholders has
received notice of any investigation or review by any governmental
entity with respect to A&J Southeast or any of the transactions
contemplated by this Agreement nor, to the knowledge of A&J Southeast
and the Stockholders, is any such investigation or review threatened,
nor has any governmental entity indicated to A&J Southeast an
intention to conduct the same, and there is no action, suit or
proceeding pending or, to the knowledge of A&J Southeast and the
Stockholders, threatened against or affecting A&J Southeast at law or
in equity, or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, that either individually or in the aggregate, has or
is likely to result in a material adverse change in the financial
condition, properties or business of A&J Southeast.
2.1.21 Absence of Certain Business Practices. Neither A&J
Southeast, the Stockholders nor any officer or director of A&J
Southeast, nor, to the knowledge of A&J Southeast and the
Stockholders, any employee or agent of A&J Southeast or any other
person acting on behalf of A&J Southeast or the Shareholders, have
directly or indirectly, within the past five years, given or agreed to
give any gift or similar benefit to any customer, supplier, government
employee or other person who is or may be in a position to help or
hinder the business of A&J Southeast (or to assist A&J Southeast in
connection with any actual or proposed transaction) which (i) might
subject A&J Southeast to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the
past, might have had a material adverse effect on the assets, business
or operations of A&J Southeast, or (iii) if not continued in the
future, might materially and adversely affect the assets, business
operations or prospects of A&J Southeast or which might result in
liability to A&J Southeast in a private or governmental litigation or
proceeding.
2.1.22 Consents and Approvals. No consent, approval or
authorization of, or filing or registration with, any governmental or
regulatory authority, or any other person or entity other than the
Shareholders, is required to be made or obtained by A&J Southeast in
connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby
except for the consents, approvals or authorizations listed on
Schedule 2.1.22 hereto (which were obtained on or before the date
hereof) or that could not have a material adverse effect on the
business, operations, assets or financial condition of the
Stockholders or A&J Southeast.
2.1.23 Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried
on by A&J Southeast and the Stockholders and their counsel directly
with Synagro and its counsel, without the
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intervention of any other person as the result of any act of A&J
Southeast or the Stockholders in such manner as to give rise to any
valid claim against Synagro, Sub Corp or A&J Southeast for a brokerage
commission, finder's fee or any similar payments.
2.2 Investment Representations. Each of A&J Southeast and the
Stockholders acknowledge, represent and agree that:
2.2.1 Stockholders Investment Suitability and Related
Matters. (i) Synagro has made available to A&J Southeast and the
Stockholders the information and documents described in Section 3.4.
hereof, (ii) the Shareholders understand the risks associated with
ownership of Synagro Common Stock, and (iii) the Shareholders are
capable of bearing the financial risks associated with such ownership;
2.2.2 Synagro Shares Not Registered. The Synagro Shares
have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or registered or qualified under any
applicable state securities laws.
2.2.3 Reliance on Representations. The Synagro Shares
are being issued to the Stockholders in reliance upon exemptions from
such registration or qualification requirements, and the availability
of such exemptions depends in part upon the Shareholders' bona fide
investment intent with respect to the Synagro Shares;
2.2.4 Investment Intent. The Shareholders' acquisition
of the Synagro Shares is solely for their own accounts for investment,
and the Shareholders are not acquiring the Synagro Shares for the
account of any other person or with a view toward resale, assignment,
fractionalization, or distribution thereof;
2.2.5 Permitted Resale. The Stockholders shall not offer
for sale, sell, transfer, pledge, hypothecate or otherwise dispose of
any of the Synagro Shares except in accordance with the registration
requirements of the Securities Act and applicable state securities
laws or upon delivery to Synagro of an opinion of legal counsel
reasonably satisfactory to Synagro that an exemption from registration
is available or pursuant to an effective registration statement
covering the Synagro Shares to be sold;
2.2.6 Investor Sophistication. The Shareholders have
such knowledge and experience in financial and business matters that
they are capable of evaluating the merits and risks of an investment
in the Synagro Shares, and to make an informed investment decision
with respect thereto;
2.2.7 Availability of Information. The Shareholders have
had the opportunity to ask questions of, and receive answers from
Synagro's officers and directors concerning the Shareholders'
acquisition of the Synagro Shares and to obtain such other information
concerning Synagro and the Synagro Shares, to the extent Synagro's
officers and directors possessed the same or could acquire it without
unreasonable effort or expense, as the
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Shareholders deemed necessary in connection with making an informed
investment decision; and
2.2.8 Restrictive Legends. In addition to any other
legends required by law or the other agreements entered into in
connection herewith, each certificate evidencing the Synagro Shares
will bear a conspicuous restrictive legend substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH OTHER STATE LAWS OR UPON
DELIVERY TO THIS CORPORATION OF AN OPINION OF LEGAL COUNSEL
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SYNAGRO
Synagro represents and warrants to A&J Southeast and the Stockholders
as follows:
3.1 Organization and Standing. Synagro is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned or
the nature of the business conducted by it would make such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a material adverse effect on its financial condition, properties
or business. Sub Corp is, or on the Effective Date will be, a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
3.2 Agreement Authorized and its Effect on Other Obligations.
The execution, delivery and performance of this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Synagro and
Sub Corp, and this Agreement is a valid and binding obligation of Synagro and
Sub Corp enforceable against Synagro in accordance with its terms, except as
such enforceability may be limited by (a) equitable principles of general
applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement by Synagro will not
conflict with or result in a violation or breach of any term or provision of,
or constitute a default under (i) the Certificate of Incorporation or Bylaws of
Synagro or Sub Corp or (ii) any obligation, indenture,
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mortgage, deed of trust, lease, contract or other agreement to which Synagro or
Sub Corp or any of their respective properties are bound.
3.3 Capitalization. The capitalization of Synagro consists of
(i) 10,000,000 shares of preferred stock, par value $.002 per share, of which
500,000 shares have been designated as "Preferred Stock - Junior Participating
Series A" and reserved for issuance upon exercise of Rights evidenced by the
certificates representing all outstanding shares of Synagro Common Stock, but
no such shares are issued or outstanding, and (ii) 100,000,000 shares of
Synagro Common Stock, of which as of June 6, 1998, 9,082,638 shares were issued
and outstanding, 2,261,031 shares were reserved for issuance pursuant to stock
options and 600,000 shares were reserved for issuance pursuant to outstanding
warrants. Except as set forth in this Section 3.3., there are outstanding as
of the date hereof (i) no securities of Synagro or any other person convertible
into or exchangeable or exercisable for shares of capital stock or other voting
securities of Synagro, and (ii) no subscriptions, options, warrants, calls, or
rights obligating Synagro to issue, deliver, sell, purchase, redeem or acquire
shares of capital stock or other voting securities of Synagro except as a
result of letters of intent or other agreements relating to acquisitions by
Synagro. All of the outstanding Synagro Common Stock is, and, when issued, the
Synagro Shares will be, validly issued, fully paid and nonassessable and not
subject to any preemptive right. There is no stockholder agreement, voting
trust, or other agreement or understanding to which Synagro is a party or by
which it is bound relating to the voting of any shares of capital stock of
Synagro.
3.4 Reports and Financial Statements. Synagro has previously
furnished to the Stockholders true and complete copies of (i) Synagro's annual
report filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), for Synagro's fiscal year ended December 31, 1997; (ii) Synagro's
quarterly and other reports filed with the Commission since December 31, 1997;
(iii) all definitive proxy solicitation materials filed with the Commission
since December 31, 1997; and (iv) any registration statements (other than those
relating to employee benefit plans) declared effective by the Commission since
December 31, 1997. All of the foregoing items are listed on Schedule 3.4
hereto (collectively, the "Synagro SEC Documents"). The consolidated financial
statements of Synagro and its consolidated subsidiaries included in Synagro's
most recent report on Form 10-K and most recent report on Form 10-Q were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved and fairly present the
consolidated financial position of Synagro and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and
changes in financial position for the periods then ended; and the Synagro SEC
Documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were,
made not misleading. Since December 31, 1997, Synagro has filed with the
Commission all material reports, registration statements and other material
filings required to be filed with the Commission under the rules and
regulations of the Commission.
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3.5 Absence of Certain Changes and Events in Synagro. Since
March 31, 1998, there has not been:
3.5.1 Financial Change. Any material adverse change in
the financial condition, backlog, operations, assets, liabilities or
business of Synagro; or
3.5.2 Other Material Changes. Any other event or
condition known to Synagro particularly pertaining to and adversely
affecting the operations, assets or business of Synagro which could
constitute a material adverse change in the business, assets or
financial condition of Synagro, other than events or conditions which
are of a general or industry-wide nature and of general public
knowledge, or which have been disclosed to the Stockholders in
writing.
3.6 Synagro's Compliance with Other Laws. Synagro is not in
violation of or in default with respect to any applicable law, rule or
regulation, or any writ or decree of any court or any governmental commission,
board, bureau, agency, or instrumentality, or delinquent with respect to any
report required to be filed with any governmental commission, board, bureau,
agency or instrumentality which could have a material adverse effect upon its
financial condition, properties or business.
3.7 Consents and Approvals. No consent, approval or
authorization of, or filing of a registration with, any governmental or
regulatory authority, or any other person or entity is required to be made or
obtained by Synagro in connection with the execution, delivery or performance
of this Agreement or the consummation of the transactions contemplated hereby.
3.8 Investigations; Litigation. No investigation or review by
any governmental entity with respect to Synagro in connection with any of the
transactions contemplated by this Agreement is pending or, to the best of
Synagro's knowledge, threatened, nor has any governmental entity indicated to
Synagro an intention to conduct the same. There is no action, suit or
proceeding pending or, to the best of Synagro's knowledge, threatened against
or affecting Synagro by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, which either
individually or in the aggregate, has or is likely to result in any material
adverse change in the financial condition, properties or businesses of Synagro.
3.9 Finder's Fee. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Synagro and
its counsel directly with A&J Southeast and the Stockholders and their counsel,
without the intervention by any other person as the result of any act of
Synagro in such a manner as to give rise to any valid claim against the
Stockholders or A&J Southeast for any brokerage commission, finder's fee or any
similar payments.
3.10 Nasdaq Compliance. Synagro meets all current requirements
for listing on the Nasdaq Market for Small- Cap Issues and has not received any
notice, whether written or oral, from the National Association of Securities
Dealers, Inc. suggesting that its listing is not in good standing.
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ARTICLE 4
OBLIGATIONS PENDING CLOSING DATE
4.1 Agreements of Synagro and A&J Southeast. Except as expressly
contemplated elsewhere in this Agreement, each of Synagro and A&J Southeast
agree that since March 31, 1998, it has not:
4.1.1 Maintenance of Present Business. Operated its
business only in the usual, regular, and ordinary manner so as to
maintain the goodwill it now enjoys and, to the extent consistent with
such operation, used all reasonable efforts to preserve intact its
present business organization, keep available the services of its
present officers and employees, and preserve its relationships with
customers, suppliers, jobbers, distributors, and others having
business dealings with it;
4.1.2 Maintenance of Properties. At its expense,
maintained all of its property and assets in customary repair, order,
and condition, reasonable wear and tear excepted;
4.1.3 Maintenance of Books and Records. Maintained its
books of account and records in the usual, regular, and ordinary
manner, in accordance with generally accepted accounting principles
applied on a consistent basis;
4.1.4 Compliance with Law. Duly complied in all material
respects with all laws, rules, regulations and orders, and fully
complied with all Permits, applicable to it and to the conduct of its
business;
4.1.5 Inspection. Permitted Synagro and its authorized
representatives, during normal business hours, to inspect its records
and to consult with its officers, employees, attorneys, and agents for
the purpose of determining the accuracy of the representations and
warranties herein made and the compliance with covenants contained in
this Agreement; and
4.1.6 Notice of Material Developments. Promptly notified
the other party hereto in writing of any "material adverse change" in,
or any changes which, in the aggregate, could result in a "material
adverse change" in, the consolidated financial condition, business or
affairs of A&J Southeast, whether or not occurring in the ordinary
course of business. As used in this Agreement, the term "material
adverse change" means any change, event, circumstance or condition
(collectively, a "Change") which when considered with all other
Changes would reasonably be expected to result in a "loss" having the
effect of so fundamentally adversely affecting the business or
financial prospects of A&J Southeast or Synagro, as applicable, that
the benefits reasonably expected to be obtained by Synagro, with
respect to losses by A&J Southeast, and the Stockholders, with respect
to losses by Synagro, as a result of the consummation of the
transactions contemplated by this Agreement would be jeopardized with
relative certainty. The term "loss" shall mean any and all direct or
indirect payments, obligations, assessments, losses, loss of income,
liabilities, fines, penalties, costs and expenses paid or incurred or
more likely than not to be paid or incurred,
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or diminutions in value of any kind or character (whether known or
unknown, conditional or unconditional, xxxxxx or inchoate, liquidated
or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise) that are more likely than not to occur, including
without limitation penalties, interest on any amount payable to a
third party as a result of the foregoing and any legal or other
expenses reasonably incurred or more likely than not to be incurred in
connection with investigating or defending any demands, claims,
actions or causes of action that, if adversely determined, would
likely result in losses, and all amounts paid in settlement of claims
or actions; provided, that losses shall be net of any recoveries by
A&J Southeast or Synagro, as applicable, from third parties and any
insurance proceeds A&J Southeast or Synagro, as applicable, is
entitled to receive from a nonaffiliated insurance company on account
of such losses (after taking into account any costs incurred in
obtaining such proceeds and any increase in insurance premiums as a
result of a claim with respect to such proceeds). The parties agree,
however, that a reduction in the trading price of Synagro Common Stock
on the Nasdaq National Market for Small-Cap Issues shall not, in and
of itself, constitute a material adverse change.
4.2 Additional Agreements of A&J Southeast and the Stockholders.
Except as expressly contemplated elsewhere in this Agreement, A&J Southeast and
the Stockholders agree that since the Balance Sheet Date, A&J Southeast has
not:
4.2.1 Prohibition of Certain Employment Contracts.
Entered into any contracts of employment which cannot be terminated on
notice of 30 days or less or which provide for any severance payments
or benefits covering a period beyond the earlier of the termination
date or notice thereof;
4.2.2 Prohibition of Certain Loans. Incurred any
borrowings which would exceed $25,000, in the aggregate, for any
purpose except (i) the refunding of indebtedness now outstanding, (ii)
the prepayment by customers of amounts due or to become due for
services rendered or to be rendered in the future, or (iii) as is
otherwise approved in writing by Synagro;
4.2.3 Prohibition of Certain Commitments. Entered into
commitments of a capital expenditure nature or incur any contingent
liabilities which would exceed $10,000 in the aggregate except (i) as
may be necessary for the maintenance of existing facilities, machinery
and equipment in good operating condition and repair in the ordinary
course of business, or (ii) as is otherwise approved in writing by
Synagro;
4.2.4 Disposal of Assets. Sold, disposed of, or
encumbered, any property or assets, except (i) in the usual and
ordinary course of business, (ii) property or assets which
individually have a value of less than $1,000; or (iii) as may be
approved in writing by Synagro;
4.2.5 Maintenance of Insurance. Discontinued its current
level of insurance;
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4.2.6 Acquisition Proposals. Directly or indirectly (i)
solicited, initiated or encouraged any inquiry or Acquisition Proposal
(as hereinafter defined) from any person or (ii) participated in any
discussions or negotiations regarding, or furnish to any person other
than Synagro or its representatives any information with respect to,
or otherwise facilitate or encourage any Acquisition Proposal by any
other person. As used herein "Acquisition Proposal" means any
proposal for a merger, consolidation or other business combination
involving A&J Southeast or for the acquisition or purchase of any
equity interest in, or a material portion of the assets of, A&J
Southeast, other than the transactions with Synagro contemplated by
this Agreement. A&J Southeast shall promptly communicate to Synagro
the terms of any such written Acquisition Proposals which it may
receive or any written inquiries made to it or any of its directors,
officers, representatives or agents;
4.2.7 No Amendment to Articles of Incorporation. Amended
its Articles of Incorporation or merged or consolidated with or into
any other corporation or changed in any manner the rights of its
common stock or the character of its business;
4.2.8 No Issuance, Sale, or Purchase of Securities.
Issued or sold, or issued options or rights to subscribe to, or
entered into any contract or commitment to issue or sell (upon
conversion or otherwise), any shares of A&J Southeast Stock, or
subdivided or in any way reclassified any shares of A&J Southeast
Stock, or acquired, or agreed to acquire, any shares of A&J Southeast
Stock; and
4.2.9 Prohibition on Dividends. Declared or paid any
dividend on shares of A&J Southeast Stock or made any other
distribution of assets to the holders thereof.
4.3 Agreements of Synagro. Synagro agrees that since March 31,
1998 it has not:
4.3.1 No Amendment to Articles of Incorporation. Amended
its Certificate of Incorporation or merged with or into any other
corporation or changed in any manner the rights of the Synagro Shares;
and
4.3.2 Notice of Material Developments. Promptly
furnished to the Stockholders copies of all Synagro's communications
to its stockholders and all reports filed by it with the Commission
and the National Association of Securities Dealers, Inc. and relating
to periodic or other material developments concerning Synagro's
financial condition, business, or affairs.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 Conditions Precedent to Obligations of A&J Southeast and the
Stockholders. The obligations of A&J Southeast and the Stockholders to
consummate and effect the transactions contemplated hereunder shall be subject
to the satisfaction of the following conditions, or to the
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waiver thereof by the Stockholders, on behalf of himself and A&J Southeast, on
or before the Effective Date:
5.1.1 Representations and Warranties of Synagro True at
Effective Date. The representations and warranties of Synagro herein
contained shall be, in all material respects, true as of and at the
Effective Date, except as affected by transactions permitted or
contemplated by this Agreement; Synagro shall have performed and
complied, in all material respects, with all covenants required by
this Agreement to be performed or complied with by Synagro before the
Effective Date; and Synagro shall have delivered to the Stockholders a
certificate, dated the Effective Date and signed by its president or a
vice president and its secretary, to such effect.
5.1.2 No Material Litigation. No suit, action, or other
proceeding shall be pending, or to Synagro's knowledge, threatened,
before any court or governmental agency in which it will be, or it is,
sought to restrain or prohibit or to obtain damages or provide other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby or which might result in a material
adverse change in the value of the consolidated assets and business of
Synagro.
5.1.3 Closing Documents. Synagro shall have executed and
delivered to the appropriate parties the documents and instruments to
be executed and delivered by it pursuant to Section 1.11 hereof, the
Exchange shall have occurred, and the Stockholders shall have received
the opinion required by Section 1.11.1 hereof.
5.1.4 Consent of Certain Parties in Privity With Synagro.
The holders of any material indebtedness of Synagro, the lessors of
any material property leased by Synagro, and the other parties to any
other material agreements to which Synagro is a party shall, when and
to the extent necessary in the reasonable opinion of the Stockholders,
have consented to the transactions contemplated hereby.
5.1.5 Other Merger Agreements. The Other Merger
Agreements (as hereinafter defined), and all documents and instruments
contemplated thereby, shall have been duly executed and delivered, and
the transactions contemplated by the Other Merger Agreements shall
have been consummated. As used herein, the "Other Merger Agreements"
shall mean (i) that certain Plan and Agreement of Merger, of even date
herewith, among Synagro, Synagro Sub Corp. Michigan, Inc. ("Synagro
Michigan"), Michigan Organic Resources, Inc. ("MORI"), Xxxxxx X.
Xxxxxxxx, and the Stockholders regarding the merger of Synagro
Michigan with and into MORI; and (ii) that certain Plan and Agreement
of Merger, of even date herewith, among Synagro, Synagro Sub Corp.
Wisconsin, Inc. ("Synagro Wisconsin"), A&J Cartage, Inc. ("A&J"), and
the Stockholders regarding the merger of Synagro Wisconsin with and
into A&J.
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5.2 Conditions Precedent to Obligations of Synagro. The
obligation of Synagro to consummate and effect the transactions contemplated
hereunder shall be subject to the satisfaction of the following conditions, or
to the waiver thereof by Synagro, on or before the Effective Date.
5.2.1 Representations and Warranties of A&J Southeast and
the Stockholders True at Effective Date. The representations and
warranties of A&J Southeast and the Stockholders herein contained
shall be, in all material respects, true as of and at the Effective
Date, except as affected by transactions permitted or contemplated by
this Agreement; A&J Southeast and the Stockholders shall have
performed and complied in all material respects, with all covenants
required by this Agreement to be performed or complied with by them
before the Effective Date; and A&J Southeast and the Stockholders
shall have delivered to Synagro a certificate, dated the Effective
Date and signed by an executive officer of A&J Southeast and by the
Stockholders to such effect.
5.2.2 No Material Litigation. No suit, action, or other
proceeding shall be pending, or to the Shareholders' knowledge,
threatened, before any court or governmental agency in which it will
be, or it is, sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby or which might result in a
material adverse change in the value of the assets and business of A&J
Southeast.
5.2.3 Closing Documents. The Stockholders and A&J
Southeast shall have executed and delivered to the appropriate parties
the documents and instruments to be executed and delivered by them
pursuant to Section 1.11 hereof, the Exchange shall have occurred and
Synagro shall have received the opinion required by Section 1.11.2
hereof.
5.2.4 Consent of Certain Parties in Privity with A&J
Southeast or the Stockholders. The holders of any material
indebtedness of A&J Southeast or the Stockholders, the lessors of any
material property leased by A&J Southeast or the Stockholders, the
other parties to any other material agreements to which A&J Southeast
or the Stockholders are a party and the appropriate authority issuing
any Permits shall, when and to the extent necessary in the reasonable
opinion of Synagro, have consented to the transaction contemplated
hereby.
5.2.5 Other Merger Agreements. The Other Merger
Agreements, and all documents and instruments contemplated thereby,
shall have been duly executed and delivered, and the transactions
contemplated by the Other Merger Agreements shall have been
consummated.
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ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Further Assurances. From time to time, as and when requested
by any party hereto, any other party hereto shall execute and deliver, or cause
to be executed and delivered, such documents and instruments and shall take, or
cause to be taken, such further or other actions as may be reasonably necessary
to effect the transactions contemplated hereby.
6.2 Payment of Taxes. The Shareholders agree to pay timely all
Taxes assessed or assessable against him or A&J Southeast arising out of or in
any way related to the ownership, business or operations of A&J Southeast
through the end of the Effective Date, including, without limitation, any Taxes
resulting from the consummation of the transactions contemplated hereby, except
to the extent the Shareholders are contesting any portion of such taxes in good
faith and have made appropriate reserves for the payment thereof.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by the Stockholders. After the Effective
Date, in addition to any other remedies available to Synagro under this
Agreement, or at law or in equity, the Stockholders shall indemnify, defend and
hold harmless Synagro, A&J Southeast and their respective officers, directors,
employees, agents, and stockholders, against and with respect to any and all
claims, costs, damages, losses, expenses, obligations, liabilities, recoveries,
suits, causes of action and deficiencies, including interest, penalties and
reasonable attorneys' fees and expenses (collectively, "Damages") that such
indemnitees shall incur or suffer, which arise, result from or relate to (i)
any breach of, or failure by, A&J Southeast or the Stockholders to perform
their respective representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument
furnished or delivered to Synagro by A&J Southeast, or the Stockholders under
this Agreement; (ii) the ownership or operations of A&J Southeast before the
Closing Date, and (iii) all Taxes arising out of or in any way related to the
ownership, business or operations of A&J Southeast through the end of the
Effective Date, including, without limitation, any Taxes resulting from the
consummation of the transaction contemplated hereby.
7.2 Indemnification by Synagro. After the Effective Date, in
addition to any other remedies available to the Stockholders under this
Agreement, or at law or in equity, Synagro shall indemnify, defend and hold
harmless and the Stockholders, against and with respect to any and all Damages
that the Stockholders shall incur or suffer, which arise, result from or relate
to (i) any breach of, or failure by Synagro to perform, any of its
representations, warranties, covenants or agreements in this Agreement or in
any schedule, certificate, exhibit or other instrument furnished or delivered
to or the Stockholders by or on behalf of Synagro under this Agreement; and
(ii) the ownership or operations of A&J Southeast from and after the Effective
Date.
7.3 Indemnification Procedures. If any party hereto discovers or
otherwise becomes aware of a claim for Damages arising under this Article 7,
such indemnified party shall give written
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notice (an "Indemnification Notice") to the indemnifying party, specifying such
claim, and may thereafter exercise any remedies available to such party under
this Agreement; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of any
obligations hereunder, to the extent the indemnifying party is not materially
prejudiced thereby. Further, promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding
with respect to which a claim for Damages arising under this Article 7 may be
made, such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of any obligations hereunder, to the extent the indemnifying
party is not materially prejudiced thereby. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof unless the indemnifying party
has failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such indemnified person. An indemnifying party who elects not
to assume the defense of a claim shall not be liable for the fees and expenses
of more than one counsel in any single jurisdiction for all parties indemnified
by such indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the
same general allegations. Notwithstanding any of the foregoing to the
contrary, the indemnified party will be entitled to select its own counsel and
assume the defense of any action brought against it if the indemnifying party
fails to select counsel reasonably satisfactory to the indemnified party, and
the expenses of such defense shall be paid by the indemnifying party. No
indemnifying party shall consent to entry of any judgment or enter into any
settlement with respect to a claim without the consent of the indemnified
party, which consent shall not be unreasonably withheld, or unless such
judgment or settlement includes as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability with respect to such claim. No indemnified party shall consent to
entry of any judgment or enter into any settlement of any such action, the
defense of which has been assumed by an indemnifying party, without the consent
of such indemnifying party, which consent shall not be unreasonably withheld.
7.4 Termination of Indemnity, Representations and Warranties.
The indemnities provided in Sections 7.1 and 7.2 shall terminate with respect
to all Damages which are not the subject of an Indemnification Notice received
by the indemnifying party within two years after the Effective Date; except
that the time period for receipt of an Indemnification Notice for the
indemnities contained in Section 7.1(i), with respect to a breach of the
representations, warranties, covenants and agreements contained in Sections
2.1.4, 2.1.11, 2.1.13, 2.1.15, 2.2, and 6.2, shall survive for the applicable
statute of limitations period; and provided that the indemnity contained in
Section 7.2(ii) shall survive indefinitely. The indemnities provided in
Sections 7.1 and 7.2 shall survive indefinitely with respect to Damages for
which an Indemnification Notice is received by the indemnifying party within
the applicable period provided in the preceding sentence. The
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representations and warranties contained in Articles 2 and 3 hereof shall
terminate two years after the Closing Date, except that the representations
warranties, covenants and agreements contained in Sections 2.1.4, 2.1.11,
2.1.13, 2.1.15, and 6.2, shall survive for the applicable statute of
limitations period.
ARTICLE 8
MISCELLANEOUS
8.1 Press Releases. The Stockholders shall not make any public
statement or announcement concerning this Agreement or the transactions
contemplated herein without the prior consent of Synagro, subject, however, to
the right of the Stockholders to make such an announcement when in the opinion
of its counsel such public statement or announcement is legally required.
Prior to making any public statement or announcement concerning this Agreement
or the transactions contemplated hereby, Synagro shall provide a copy thereof
to the Stockholders.
8.2 Entirety; Conflict. This Agreement and the Letter Agreement
embody the entire agreement among the parties with respect to the subject
matter hereof, and all prior representations, warranties and agreements between
the parties with respect thereto, whether written or oral, are hereby
superseded in their entirety. This Agreement may not be modified or amended in
any manner except by written instrument executed by all of the parties hereto.
In the event of any conflict between the terms and provisions of this Agreement
and those of the Letter Agreement, the terms and provisions of this Agreement
shall control.
8.3 Counterparts and Facsimile Signature. Any number of
counterparts of this Agreement may be executed and each such counterpart shall
be deemed to be an original instrument, but all such counterparts together
shall constitute but one instrument. This Agreement may be executed by any
party by facsimile signature, with the original signature to be promptly
delivered thereafter, and such facsimile signature shall be binding upon the
party so executing this Agreement.
8.4 Notices and Waivers. Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered in person or by
courier, sent by facsimile transmission or first class registered or certified
mail, postage prepaid, return receipt requested.
IF TO SYNAGRO OR SUB CORP:
Addressed to: With a copy to:
Synagro Technologies, Inc. Xxxxxx & Xxxxxx, L.L.P.
0000 Xxx Xxxxxx, Xxxxx 000 700 Louisiana, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Rome Attention: T. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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IF TO A&J SOUTHEAST OR THE STOCKHOLDERS:
Addressed to: With a copy to:
Xxxxx X. Jolvec Domnitz, Mawicke, Goisman
c/o A&J Cartage, Inc. & Xxxxxxxxx, S.C.
0000 Xxxxx 0xx Xxxxx 0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx Milwaukee, Florida
Telephone: (000) 000-0000 Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxx X. Xxxxxxx
000 Xxxxxxx Xxxx Xxxx, Xxxxx X
Xxxxx Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered in
person or by courier or facsimile to such address, upon delivery during normal
business hours on any business day.
8.5 Table of Contents and Captions. The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.
8.6 Successors and Assigns. Neither Synagro, A&J Southeast nor
the Stockholders may transfer or assign this Agreement or any of their
respective rights, duties or obligations hereunder without the prior written
consent of the other parties hereto.
8.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such which may be hereafter declared invalid, void or unenforceable.
8.8 Applicable Law. The laws of the State of Texas will govern
the interpretation, validity and effect of this Agreement without regard to the
place of execution or the place for performance thereof, except to the extent
that the form and content of the Articles of Merger and the consequences of the
filing thereof shall be governed by the Corporations Act, and the Stockholders,
A&J Southeast, Sub Corp and Synagro agree that the state and federal courts
situated in Xxxxxx, County, Texas shall have personal jurisdiction over the
Stockholders, A&J Southeast, Sub Corp and Synagro, and shall be the sole venue,
to hear all disputes arising under this Agreement. This Agreement is to be at
least partially performed in Xxxxxx, County, Texas and, as such, the
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Stockholders, A&J Southeast, Sub Corp and Synagro, agree that venue shall be
proper with the state or federal courts in Xxxxxx County, Texas to hear such
disputes. In the event either the Stockholders, A&J Southeast, Sub Corp or
Synagro is not able to effect service of process upon the other with respect to
such disputes, the Stockholders, A&J Southeast, Sub Corp and Synagro expressly
agree that the Secretary of State for the State of Texas shall be an agent of
the Stockholders, A&J Southeast, Sub Corp and/or the Synagro, as applicable, to
receive service of process on behalf of the Stockholders, A&J Southeast, Sub
Corp and/or Synagro, as applicable, with respect to such disputes.
34
41
IN WITNESS WHEREOF, the Shareholders have executed this Agreement, and
Synagro, Sub Corp. and A&J Southeast have caused this Agreement to be signed in
their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
SYNAGRO TECHNOLOGIES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SYNAGRO SUB FLORIDA, INC.
By:
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
A&J CARTAGE, INC. SOUTHEAST
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SHAREHOLDERS
---------------------------------------
XXXXX X. XXXXXXX
---------------------------------------
XXXX X. XXXXXXX
35
